XML 121 R23.htm IDEA: XBRL DOCUMENT

Disclosure About Fair Values of Financial Instruments

3 Months Ended

Mar. 31, 2020

Disclosure About Fair Values of Financial Instruments

Note 14—Disclosure About Fair Values of Financial Instruments

See Note 20 to the consolidated financial statements of the Annual Report on Form 10-K for the year ended December 31, 2019 for a description of valuation methodologies for assets and liabilities measured at fair value on a recurring and non-recurring basis.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis categorized by the level of inputs used in the valuation of each asset at March 31, 2020 and December 31, 2019:

(In thousands)	Carrying Value		(Level 1)		(Level 2)		(Level 3)
March 31, 2020
Assets
Investment securities available-for-sale	$	2,461,644	$	—	$	2,461,644	$	—
Equity securities with readily determinable fair values not held for trading		1,529		1,529		—		—
Derivative assets		66,333		—		66,333		—
Other assets		27,798		—		—		27,798
Total recurring basis measured assets	$	2,557,304	$	1,529	$	2,527,977	$	27,798
Liabilities
Derivative liabilities	$	19,543	$	—	$	19,543	$	—
Total recurring basis measured liabilities	$	19,543	$	—	$	19,543	$	—

(In thousands)	Carrying Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2019
Assets
Investment securities available-for-sale	$	2,368,592	$	—	$	2,368,592	$	—
Equity securities with readily determinable fair values not held for trading		1,862		1,862		—		—
Derivative assets		257,137		—		257,137		—
Other assets		26,882		—		—		26,882
Total recurring basis measured assets	$	2,654,473	$	1,862	$	2,625,729	$	26,882
Liabilities
Derivative liabilities	$	11,211	$	—	$	11,211	$	—
Total recurring basis measured liabilities	$	11,211	$	—	$	11,211	$	—

Changes in Level 3 Fair Value Measurements

The tables below include a roll-forward of the consolidated balance sheet amounts for the three months ended March 31, 2020 and 2019 for changes in the fair value of financial instruments within Level 3 of the valuation hierarchy that are recorded on a recurring basis. Level 3 financial instruments typically include unobservable components but may also include some observable components that may be validated to external sources. The gains or (losses) in the following table (which are reported in other noninterest income in the consolidated income statements) may include changes to fair value due in part to observable factors that may be part of the valuation methodology.

Level 3 Assets Measured at Fair Value on a Recurring Basis

	For the Three Months Ended March 31,
	2020			2019			2020			2019			2020			2019
(In thousands)	Net Profits Interests						Investments in Limited Partnerships						SBA Servicing Rights
Beginning Balance	$	4,330		$	5,779		$	18,742		$	11,191		$	3,811		$	—
Acquired		—			—			—			—			—			6,213
Originations		—			—			—			—			299			320
Sales proceeds		—			—			—			—			—			—
Net gains (losses) included in earnings		(259	)		(174	)		(316	)		746			(168	)		(2,730	)
Reclassifications		—			—			525			(800	)		—			—
Contributions paid		—			—			1,283			608			—			—
Distributions received		—			(288	)		(449	)		(144	)		—			—
Ending Balance	$	4,071		$	5,317		$	19,785		$	11,601		$	3,942		$	3,803
Net unrealized (losses) gains included in earnings relating to assets held at the end of the period	$	(259	)	$	(174	)	$	(316	)	$	746		$	(168	)	$	(2,730	)
Net unrealized gains (losses) recognized in other comprehensive income relating to assets held at the end of the period	$	—		$	—		$	—		$	—		$	—		$	—

Assets Recorded at Fair Value on a Nonrecurring Basis

From time to time, the Company may be required to measure certain other financial assets at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from the application of lower of cost or fair value accounting or write-downs of individual assets. For assets measured at fair value on a nonrecurring basis which were still held on the balance sheets at March 31, 2020 and December 31, 2019, the following tables provide the level of valuation assumptions used to determine each adjustment and the related carrying value:

(In thousands)	Carrying Value		(Level 1)		(Level 2)		(Level 3)
March 31, 2020
Loans held for sale	$	38,221	$	—	$	38,221	$	—
Individually evaluated loans, net of allocated allowance for credit losses ⁽¹⁾		128,519		—		—		128,519
Other real estate and repossessed assets		11,608		—		—		11,608
Total assets measured on a nonrecurring basis	$	178,348	$	—	$	38,221	$	140,127

(In thousands)	Carrying Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2019
Loans held for sale	$	87,649	$	—	$	87,649	$	—
Individually evaluated loans, net of allocated allowance for credit losses ⁽¹⁾		101,561		—		—		101,561
Other real estate		1,628		—		—		1,628
Total assets measured on a nonrecurring basis	$	190,838	$	—	$	87,649	$	103,189
(1) Prior to the adoption of CECL on January 1, 2020, these loans were known as Impaired loans, net of specific allowance.

Significant unobservable inputs used in Level 3 fair value measurements for financial assets measured at fair value on a nonrecurring basis are summarized below:

Quantitative Information about Level 3 Fair Value Measurements

(In thousands)

Carrying

Value

Valuation

Methods

Unobservable Inputs

Range

Weighted Average ⁽²⁾

March 31, 2020

Individually evaluated loans, net of allowance for credit losses ⁽³⁾

128,519

Appraised value, as adjusted

Discount to fair value

0% - 50%

38%

Discounted cash flow

Discount rate

3.75%-5.8%

4.7%

Enterprise value

Comparables and average multiplier

5.0-6.6 X

5.33 X

Enterprise value

Discount rates and comparables

6.4%-16.0%

12%

Net recoverable oil and gas reserves and forward-looking commodity prices

Capitalization rate and discount rate

18%

Other real estate

1,008

Appraised value, as adjusted

Discount to fair value

0% - 20%

10%

Estimated closing costs

10%

Quantitative Information about Level 3 Fair Value Measurements

(In thousands)

Carrying

Value

Valuation

Methods

Unobservable

Inputs

Range

December 31, 2019

Individually evaluated loans, net of allowance for credit losses⁽³⁾

101,561

Appraised value, as adjusted

Discount to fair value

0% - 50%

Appraised value, as adjusted

Minimum guaranteed proceeds per Settlement Agreement

0%⁽¹⁾

Discounted cash flow

Discount rate 5.8%

0%⁽¹⁾

Enterprise value

Exit and earnings multiples,

discounted cash flows,

and market comparables

0% - 46%⁽¹⁾

Other real estate

1,628

Appraised value, as adjusted

Discount to fair value

0% - 20%

Estimated closing costs

10%

(1) Represents difference of remaining balance to fair value.

(2) Weighted averages were calculated using the input attribute and the outstanding balance of the loan.

(3) Prior to the adoption of CECL on January 1, 2020, these loans were known as Impaired loans, net of specific allowance.

The estimated fair values of the Company’s financial instruments are as follows:

	March 31, 2020
(In thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and due from banks	$	212,658	$	212,658	$	212,658	$	—	$	—
Interest-bearing deposits in other banks		391,362		391,362		391,362		—		—
Federal funds sold		5,331		5,331		5,331		—		—
Investment securities available-for-sale		2,461,644		2,461,644		—		2,461,644		—
Equity securities with readily determinable fair values not held for trading		1,529		1,529		1,529		—		—
Loans held for sale		38,221		38,221		—		38,221		—
Net loans		13,146,945		13,030,957		—		—		13,030,957
Derivative assets		66,333		66,333		—		66,333		—
Other assets		83,225		83,225		—		—		83,225
Financial Liabilities:
Deposits		14,489,505		14,499,103		—		14,499,103		—
Advances from FHLB		100,000		100,000		—		100,000		—
Senior debt		49,955		51,313		—		51,313		—
Subordinated debt		183,032		187,781		—		187,781		—
Junior subordinated debentures		37,351		45,728		—		45,728		—
Notes payable		2,102		2,102		—		2,102		—
Derivative liabilities		19,543		19,543		—		19,543		—

	December 31, 2019
(In thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and due from banks	$	252,447	$	252,447	$	252,447	$	—	$	—
Interest-bearing deposits in other banks		725,343		725,343		725,343		—		—
Federal funds sold		10,974		10,974		10,974		—		—
Investment securities available-for-sale		2,368,592		2,368,592		—		2,368,592		—
Equity securities with readily determinable fair values not held for trading		1,862		1,862		1,862		—		—
Loans held for sale		87,649		87,649		—		87,649		—
Net loans		12,864,012		12,755,360		—		—		12,755,360
Derivative assets		257,137		257,137		—		257,137		—
Other assets		72,719		72,719		—		—		72,719
Financial Liabilities:
Deposits		14,742,794		14,753,192		—		14,753,192		—
Advances from FHLB		100,000		100,000		—		100,000		—
Senior debt		49,938		51,202		—		51,202		—
Subordinated debt		182,712		189,386		—		189,386		—
Junior subordinated debentures		37,445		48,012		—		48,012		—
Notes payable		2,078		2,078		—		2,078		—
Derivative liabilities		11,211		11,211		—		11,211		—

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details