Fair Value Accounting (Tables)

12 Months Ended

Dec. 31, 2015

Gains and Losses from Fair Value Changes Included in Consolidated Statement of Operations

For the years ended December 31, 2015, 2014, and 2013 securities gains and losses from fair value changes were as follows:



	Changes in Fair Values for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
	Unrealized Gain/(Loss) on Assets and Liabilities Measured at Fair Value, Net			Interest Income on Securities		Interest Expense on Junior Subordinated Debt			Total Changes Included in Current-Period Earnings			Total Changes Included in OCI (1)
	(in thousands)
Year Ended December 31, 2015
Securities measured at fair value	$	(32	)	$	2	$	—		$	(30	)	$	—
Junior subordinated debt	(6,491		)	—		(2,151		)	(2,151		)	(4,276		)
Total	$	(6,523	)	$	2	$	(2,151	)	$	(2,181	)	$	(4,276	)
Year Ended December 31, 2014
Securities measured at fair value	$	(41	)	$	7	$	—		$	(34	)	$	—
Junior subordinated debt	1,421			—		(1,754		)	(333		)	—
Total	$	1,380		$	7	$	(1,754	)	$	(367	)	$	—
Year Ended December 31, 2013
Securities measured at fair value	$	(260	)	$	6	$	—		$	(254	)	$	—
Junior subordinated debt	(5,640		)	—		(1,823		)	(7,463		)	—
Total	$	(5,900	)	$	6	$	(1,823	)	$	(7,717	)	$	—

Fair Value of Assets and Liabilities

The fair value of assets and liabilities measured at fair value on a recurring basis was determined using the following inputs as of the periods presented:



	Fair Value Measurements at the End of the Reporting Period Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(in thousands)
December 31, 2015
Assets:
Measured at fair value
Residential MBS issued by GSEs	$	—	$	1,481	$	—	$	1,481
Available-for-sale
Collateralized debt obligations	$	—	$	—	$	10,060	$	10,060
Commercial MBS issued by GSEs	—		19,114		—		19,114
Corporate debt securities	—		13,251		—		13,251
CRA investments	34,685		—		—		34,685
Municipal obligations	—		334,830		—		334,830
Preferred stock	111,236		—		—		111,236
Private label commercial MBS	—		4,691		—		4,691
Private label residential MBS	—		257,128		—		257,128
Residential MBS issued by GSEs	—		1,170,221		—		1,170,221
Trust preferred securities	—		24,314		—		24,314
U.S. treasury securities	2,993		—		—		2,993
Total AFS securities	$	148,914	$	1,823,549	$	10,060	$	1,982,523
Loans - HFS	$	—	$	23,809	$	—	$	23,809
Derivative assets (1)	—		3,569		—		3,569
Liabilities:
Junior subordinated debt (2)	$	—	$	—	$	46,928	$	46,928
Derivative liabilities (1)	—		64,785		—		64,785

(1)

Derivative assets and liabilities relate to interest rate swaps, see "Note 13. Derivatives and Hedging Activities." In addition, the carrying value of loans includes a net positive value of $64,184 and the net carrying value of subordinated debt includes a net negative value of $3,569 as of December 31, 2015, which relates to the effective portion of the hedges put in place to mitigate against fluctuations in interest rates.


(2)	Includes only the portion of junior subordinated debt that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.



	Fair Value Measurements at the End of the Reporting Period Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(in thousands)
December 31, 2014
Assets:
Measured at fair value
Residential MBS issued by GSEs	$	—	$	1,858	$	—	$	1,858
Available-for-sale
Collateralized debt obligations	$	—	$	—	$	11,445	$	11,445
Commercial MBS issued by GSEs	—		2,147		—		2,147
Corporate debt securities	—		52,489		—		52,489
CRA investments	24,332		—		—		24,332
Municipal obligations	—		299,037		—		299,037
Mutual funds	37,702		—		—		37,702
Preferred stock	82,612		—		—		82,612
Private label commercial MBS	—		5,149		—		5,149
Private label residential MBS	—		70,243		—		70,243
Residential MBS issued by GSEs	—		891,189		—		891,189
Trust preferred securities	—		25,546		—		25,546
U.S. government sponsored agency securities	—		18,346		—		18,346
Total AFS securities	$	144,646	$	1,364,146	$	11,445	$	1,520,237
Derivative assets (1)	$	—	$	7	$	—	$	7
Liabilities:
Junior subordinated debt	$	—	$	—	$	40,437	$	40,437
Derivative liabilities (1)	—		57,820		—		57,820


(1)	Derivative assets and liabilities relate to interest rate swaps, see "Note 13. Derivatives and Hedging Activities." In addition, the carrying value of loans includes a positive value of $57,140 as of December 31, 2014, which relates to the effective portion of the hedges put in place to mitigate against fluctuations in interest rates.

Change in Level 3 Liabilities Measured at Fair Value on Recurring Basis

For the years ended December 31, 2015, 2014, and 2013, the change in Level 3 assets and liabilities measured at fair value on a recurring basis was as follows:



	Junior Subordinated Debt
	Year Ended December 31,
	2015			2014			2013
	(in thousands)
Beginning balance	$	(40,437	)	$	(41,858	)	$	(36,218	)
Transfers into Level 3	—			—			—
Total gains (losses) for the period
Included in earnings (1)	—			1,421			(5,640		)
Included in other comprehensive income (2)	$	(6,491	)	$	—		$	—
Ending balance	$	(46,928	)	$	(40,437	)	$	(41,858	)


(1)	Total gains (losses) for the period are included in the non-interest income line, Unrealized gains (losses) on assets and liabilities measured at fair value, net.

(2)

Due to the Company's election to early adopt an element of ASU 2016-01, changes in the fair value of junior subordinated debt are presented as part of OCI rather than earnings effective January 1, 2015. Accordingly, total losses for 2015 are included in the other comprehensive income line, Unrealized gain (loss) on junior subordinated debt, which is net of tax. The above amount represents the gross loss from changes in fair value of junior subordinated debt.



	CDO Securities
	Year Ended December 31,
	2015			2014		2013
	(in thousands)
Beginning balance	$	11,445		$	—	$	—
Transfers into Level 3	—			6,243		—
Total gains (losses) for the period
Included in other comprehensive income (3)	(1,385		)	5,202		—
Ending balance	$	10,060		$	11,445	$	—


(3)	Total gains (losses) for the period are included in the other comprehensive income line, Unrealized gain (loss) on AFS securities.

For Level 3 liabilities measured at fair value on a recurring basis as of December 31, 2015 and 2014, the significant unobservable inputs used in the fair value measurements were as follows:



	December 31, 2015		Valuation Technique	Significant Unobservable Inputs
	(in thousands)
Junior subordinated debt	$	46,928	Discounted cash flow	Implied credit rating of the Company
CDO securities	10,060		S&P Model	Pricing indications from comparable securities



	December 31, 2014		Valuation Technique	Significant Unobservable Inputs
	(in thousands)
Junior subordinated debt	$	40,437	Discounted cash flow	Adjusted Corporate Bond over Treasury Index with comparable credit spread
CDO securities	11,445		S&P Model	Pricing indications from comparable securities

Assets Measured at Fair Value on Nonrecurring Basis

The following table presents such assets carried on the balance sheet by caption and by level within the ASC 825 hierarchy:



	Fair Value Measurements at the End of the Reporting Period Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Active Markets for Similar Assets (Level 2)		Unobservable Inputs (Level 3)
	(in thousands)
As of December 31, 2015:
Impaired loans with specific valuation allowance	$	19,629	$	—	$	—	$	19,629
Impaired loans without specific valuation allowance (1)	66,754		—		—		66,754
Other assets acquired through foreclosure	43,942		—		—		43,942
As of December 31, 2014:
Impaired loans with specific valuation allowance	$	114,163	$	—	$	—	$	114,163
Impaired loans without specific valuation allowance (1)	38,019		—		—		38,019
Other assets acquired through foreclosure	57,150		—		—		57,150


(1)	Excludes loan balances with charge-offs of $37.8 million and $3.8 million as of December 31, 2015 and 2014, respectively.

Estimated Fair Value of Financial Instruments

The estimated fair value of the Company’s financial instruments is as follows:



	December 31, 2015
	Carrying Amount		Fair Value
	Carrying Amount		Level 1		Level 2		Level 3		Total
	(in thousands)
Financial assets:
Investment securities:
AFS	$	1,982,523	$	148,914	$	1,823,549	$	10,060	$	1,982,523
Trading	1,481		—		1,481		—		1,481
Derivative assets	3,569		—		3,569		—		3,569
Loans, net	11,017,595		—		10,766,826		86,383		10,853,209
Accrued interest receivable	54,445		—		54,445		—		54,445
Financial liabilities:
Deposits	$	12,030,624	$	—	$	12,034,199	$	—	$	12,034,199
Customer repurchases	38,155		—		38,155		—		38,155
FHLB advances	150,000		—		150,000		—		150,000
Qualifying debt	210,328		—		—		207,437		207,437
Derivative liabilities	64,785		—		64,785		—		64,785
Accrued interest payable	13,626		—		13,626		—		13,626



	December 31, 2014
	Carrying Amount		Fair Value
	Carrying Amount		Level 1		Level 2		Level 3		Total
	(in thousands)
Financial assets:
Investment securities:
AFS	$	1,520,237	$	144,646	$	1,364,146	$	11,445	$	1,520,237
Trading	1,858		—		1,858		—		1,858
Derivative assets	7		—		7		—		7
Loans, net	8,288,049		—		7,984,692		152,182		8,136,874
Accrued interest receivable	36,705		—		36,705		—		36,705
Financial liabilities:
Deposits	$	8,931,043	$	—	$	8,935,566	$	—	$	8,935,566
Customer repurchases	54,899		—		54,899		—		54,899
FHLB advances	307,081		—		307,081		—		307,081
Other borrowed funds	83,182		—		25,000		61,074		86,074
Qualifying debt	40,437		—		—		40,437		40,437
Derivative liabilities	57,820		—		57,820		—		57,820
Accrued interest payable	9,890		—		9,890		—		9,890