Fair Value Accounting (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

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

For the three and nine months ended September 30, 2018 and 2017, gains and losses from fair value changes on junior subordinated debt and trading securities 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			Changes Included in OCI
	(in thousands)
Three Months Ended September 30, 2018
Junior subordinated debt	$	(2,689	)	$	—	$	1,056		$	1,056		$	(2,028	)
Nine Months Ended September 30, 2018
Junior subordinated debt	$	247		$	—	$	2,979		$	2,979		$	186
Three Months Ended September 30, 2017
Junior subordinated debt	$	1,035		$	—	$	(835	)	$	(835	)	$	641
Nine Months Ended September 30, 2017
Trading securities	$	—		$	9	$	—		$	9		$	—
Junior subordinated debt	(4,327		)	—		(2,376		)	(2,376		)	(2,677		)
Total	$	(4,327	)	$	9	$	(2,376	)	$	(2,367	)	$	(2,677	)

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)
September 30, 2018
Assets:
Available-for-sale debt securities
CDO	$	—	$	19,148	$	—	$	19,148
Commercial MBS issued by GSEs	—		100,943		—		100,943
Corporate debt securities	—		99,384		—		99,384
Private label residential MBS	—		855,942		—		855,942
Residential MBS issued by GSEs	—		1,450,059		—		1,450,059
Tax-exempt	—		504,907		—		504,907
Trust preferred securities	—		28,617		—		28,617
U.S. government sponsored agency securities	—		45,601		—		45,601
U.S. treasury securities	—		2,475		—		2,475
Total AFS debt securities	$	—	$	3,107,076	$	—	$	3,107,076
Equity securities
CRA investments	50,744		—		—		50,744
Preferred stock	121,550		—		—		121,550
Total equity securities	$	172,294	$	—	$	—	$	172,294
Derivative assets (1)	$	—	$	8,978	$	—	$	8,978
Liabilities:
Junior subordinated debt (2)	$	—	$	—	$	55,987	$	55,987
Derivative liabilities (1)	—		38,973		—		38,973

(1) Derivative assets and liabilities relate to interest rate swaps, see "Note 9. Derivatives and Hedging Activities." In addition, the carrying value of loans is decreased by $1,997 and the net carrying value of subordinated debt is increased by $28,160 as of September 30, 2018 for the effective portion of the hedge, which relates to the fair value 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, 2017
Assets:
Available-for-sale debt securities
CDO	$	—	$	21,857	$	—	$	21,857
Commercial MBS issued by GSEs	—		109,077		—		109,077
Corporate debt securities	—		103,483		—		103,483
Private label residential MBS	—		868,524		—		868,524
Residential MBS issued by GSEs	—		1,689,295		—		1,689,295
Tax-exempt	—		510,910		—		510,910
Trust preferred securities	—		28,617		—		28,617
U.S. government sponsored agency securities	—		61,462		—		61,462
U.S. treasury securities	—		2,482		—		2,482
Available-for-sale equity securities
CRA investments	50,616		—		—		50,616
Preferred stock	53,196		—		—		53,196
Total AFS securities	$	103,812	$	3,395,707	$	—	$	3,499,519
Derivative assets (1)	$	—	$	3,711	$	—	$	3,711
Liabilities:
Junior subordinated debt (2)	$	—	$	—	$	56,234	$	56,234
Derivative liabilities (1)	—		55,340		—		55,340

(1) Derivative assets and liabilities relate to interest rate swaps, see "Note 9. Derivatives and Hedging Activities." In addition, the carrying value of loans is increased by $41,919 and the net carrying value of subordinated debt is decreased by $9,959 as of December 31, 2017 for the effective portion of the hedge, which relates to the fair value 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.

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

For the three and nine months ended September 30, 2018 and 2017, the change in Level 3 liabilities measured at fair value on a recurring basis was as follows:

	Junior Subordinated Debt
	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
	(in thousands)
Beginning balance	$	(53,298	)	$	(55,772	)	$	(56,234	)	$	(50,410	)
Change in fair value	(2,689		)	1,035			247			(4,327		)
Ending balance	$	(55,987	)	$	(54,737	)	$	(55,987	)	$	(54,737	)

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 September 30, 2018;
Impaired loans with specific valuation allowance	$	2,430	$	—	$	—	$	2,430
Impaired loans without specific valuation allowance (1)	81,445		—		—		81,445
Other assets acquired through foreclosure	20,028		—		—		20,028
As of December 31, 2017:
Impaired loans with specific valuation allowance	$	13,709	$	—	$	—	$	13,709
Impaired loans without specific valuation allowance (1)	63,607		—		—		63,607
Other assets acquired through foreclosure	28,540		—		—		28,540

(1) Net of loan balances with charge-offs of $40.5 million and $15.6 million as of September 30, 2018 and December 31, 2017, respectively.

Estimated Fair Value of Financial Instruments

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

	September 30, 2018
	Carrying Amount		Fair Value
			Level 1		Level 2		Level 3		Total
	(in thousands)
Financial assets:
Federal funds sold	$	70,000	$	—	$	70,000	$	—	$	70,000
Investment securities:
HTM	288,290		—		279,033		—		279,033
AFS	3,107,076		—		3,107,076		—		3,107,076
Equity	172,294		172,294		—		—		172,294
Derivative assets	8,978		—		8,978		—		8,978
Loans, net	16,582,754		—		15,964,980		83,875		16,048,855
Accrued interest receivable	88,847		—		88,847		—		88,847
Financial liabilities:
Deposits	$	18,908,580	$	—	$	18,918,956	$	—	$	18,918,956
Customer repurchase agreements	20,969		—		20,969		—		20,969
Qualifying debt	359,082		—		328,448		67,013		395,461
Derivative liabilities	38,973		—		38,973		—		38,973
Accrued interest payable	14,268		—		14,268		—		14,268

	December 31, 2017
	Carrying Amount		Fair Value
			Level 1		Level 2		Level 3		Total
	(in thousands)
Financial assets:
Investment securities:
HTM	$	255,050	$	—	$	256,314	$	—	$	256,314
AFS	3,499,519		103,812		3,395,707		—		3,499,519
Derivative assets	3,711		—		3,711		—		3,711
Loans, net	14,953,885		—		14,577,010		77,316		14,654,326
Accrued interest receivable	85,517		—		85,517		—		85,517
Financial liabilities:
Deposits	$	16,972,532	$	—	$	16,980,066	$	—	$	16,980,066
Customer repurchase agreements	26,017		—		26,017		—		26,017
FHLB advances	390,000		—		390,000		—		390,000
Qualifying debt	376,905		—		336,803		67,210		404,013
Derivative liabilities	55,340		—		55,340		—		55,340
Accrued interest payable	16,366		—		16,366		—		16,366