Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2016

Summary of assets measured at fair value on a recurring basis

For assets and liabilities measured at fair value on a recurring basis, quantitative disclosures about the fair value measurements for each major category of assets were as follows:



(Dollars in thousands)	Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
September 30, 2016
Investment securities – available-for-sale:
U.S. Treasury securities	$	5,801	$	—	$	—	$	5,801
Government sponsored agencies	—		224,038		—		224,038
State and political subdivisions	—		305,537		—		305,537
Residential mortgage-backed securities	—		303,398		—		303,398
Collateralized mortgage obligations	—		343,739		—		343,739
Corporate bonds	—		96,085		—		96,085



Preferred stock and trust preferred securities	—		24,783		—		24,783
Total investment securities – available-for-sale	5,801		1,297,580		—		1,303,381
Loans held-for-sale	—		276,061		—		276,061
Loan servicing rights	—		—		41,928		41,928
Derivative assets:
Customer-initiated derivatives	—		12,250		—		12,250
Forward contracts related to mortgage loans to be delivered for sale	—		89		—		89
Interest rate lock commitments	—		2,674		—		2,674
Power Equity CD	—		2,183		—		2,183
Total derivatives	—		17,196		—		17,196
Total assets at fair value	$	5,801	$	1,590,837	$	41,928	$	1,638,566
Derivative liabilities:
Customer-initiated derivatives	—		12,787		—		12,787
Forward contracts related to mortgage loans to be delivered for sale	—		944		—		944
Interest rate lock commitments	—		56		—		56
Power Equity CD	—		2,183		—		2,183
Total derivatives	—		15,970		—		15,970
Total liabilities at fair value	$	—	$	15,970	$	—	$	15,970
December 31, 2015
Investment securities – available-for-sale:
U.S. Treasury securities	$	5,765	$	—	$	—	$	5,765
Government sponsored agencies	—		194,989		—		194,989
State and political subdivisions	—		15,120		—		15,120
Residential mortgage-backed securities	—		187,768		—		187,768
Collateralized mortgage obligations	—		132,230		—		132,230
Corporate bonds	—		14,627		—		14,627
Preferred stock and trust preferred securities	—		3,232		—		3,232
Total investment securities – available-for-sale	5,765		547,966		—		553,731
Loans held-for-sale	—		10,327		—		10,327
Derivative assets:
Forward contracts related to mortgage loans to be delivered for sale	—		144		—		144
Interest rate lock commitments	—		42		—		42
Power Equity CD	—		1,832		—		1,832
Total derivatives	—		2,018		—		2,018
Total assets at fair value	$	5,765	$	560,311	$	—	$	566,076
Derivative liabilities:
Forward contracts related to mortgage loans to be delivered for sale	—		57		—		57
Interest rate lock commitments	—		90		—		90
Power Equity CD	—		1,832		—		1,832
Total derivatives	—		1,979		—		1,979
Total liabilities at fair value	$	—	$	1,979	$	—	$	1,979

Summary of changes in Level 3 assets measured at fair value on a recurring basis

The following table summarizes the changes in Level 3 assets measured at fair value on a recurring basis.



(Dollars in thousands)	Three and nine months ended September 30, 2016
	Loan servicing rights
Balance, beginning of period	$	—
Additions due to acquisition	42,462
Gains (losses):
Recorded in earnings (realized):
Recorded in “Mortgage banking revenue”	(1,344		)
New originations	810
Balance, end of period	$	41,928

Schedule of aggregate fair value contractual balance and gain (loss) for loans held-for-sale

The aggregate fair value, contractual balance (including accrued interest), and gain or loss for loans held-for-sale carried at fair value was as follows:



(Dollars in thousands)	September 30, 2016		December 31, 2015
Aggregate fair value	$	276,061	$	10,327
Contractual balance	274,406		10,366
Unrealized gain (loss)	1,655		(39		)

Amount of gains (losses) from loans held for sale included in the Consolidated Statements of Income

The total amount of gains (losses) from loans held for sale included in the Consolidated Statements of Income were as follows:



	For the three months ended September 30,				For the nine months ended September 30,
(Dollars in thousands)	2016		2015		2016		2015
Interest income⁽¹⁾	$	811	$	23	$	849	$	56
Change in fair value⁽²⁾	43		76		199		(15		)
Total included in earnings	$	854	$	99	$	1,048	$	41

(1) Included in "Interest and fees on loans" in the Consolidated Statements of Income.

(2) Included in "Mortgage banking revenue" in the Consolidated Statements of Income.

Summary of assets measured at fair value on a nonrecurring basis

For assets measured at fair value on a nonrecurring basis, quantitative disclosures about fair value measurements for each major category of assets were as follows:



(Dollars in thousands)	Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
September 30, 2016
Impaired originated loans	$	—	$	—	$	25,344	$	25,344
Other real estate/repossessed assets	—		—		380		380
Loan servicing rights	—		—		5,688		5,688
Total	$	—	$	—	$	31,412	$	31,412
December 31, 2015
Impaired originated loans	$	—	$	—	$	42,065	$	42,065
Other real estate/repossessed assets	—		—		3,068		3,068
Total	$	—	$	—	$	45,133	$	45,133

Additional information about significant unobservable inputs used in the fair value measurement of financial assets

The following table presents additional information about the significant unobservable inputs used in the fair value measurement of financial assets measured on a nonrecurring basis that were categorized within the Level 3 of the fair value hierarchy:



(Dollars in thousands)	Fair Value at September 30, 2016		Valuation Technique	Significant Unobservable Inputs	Range
Impaired originated loans	$	25,344	Appraisal of collateral	Discount for type of collateral and age of appraisal	20%-30%
Other real estate/repossessed assets	380		Appraisal of property	Discount for type of property and age of appraisal	10%-33%
Loan servicing rights	5,688		Discounted cash flow	Constant prepayment rate	13%-22%
				Discount rate	10%-11%

Summary of carrying amounts and estimated fair values of the financial instruments

A summary of carrying amounts and estimated fair values of the Corporation’s financial instruments not recorded at fair value in their entirety on a recurring basis on the Consolidated Statements of Financial Position was as follows:



	Level in Fair Value Measurement Hierarchy	September 30, 2016				December 31, 2015
(Dollars in thousands)	Level in Fair Value Measurement Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and cash equivalents	Level 1	$	556,567	$	556,567	$	238,789	$	238,789
Investment securities:
Held-to-maturity	Level 2	563,221		574,844		509,471		512,405
Held-to-maturity	Level 3	500		300		500		300
Nonmarketable equity securities	NA	77,396		77,396		36,907		36,907
Net loans⁽¹⁾	Level 3	12,642,014		12,650,332		7,197,819		7,201,994
Interest receivable	Level 2	43,131		43,131		21,953		21,953
Liabilities:
Deposits without defined maturities	Level 2	$	9,924,502	$	9,924,502	$	5,809,355	$	5,809,355
Time deposits	Level 2	3,348,360		3,348,942		1,647,412		1,647,412
Interest payable	Level 2	5,097		5,097		1,578		1,578
Short-term borrowings	Level 2	726,789		726,789		397,199		397,199
Long-term borrowings	Level 2	676,612		676,750		242,391		242,391


(1)	Included $25.3 million and $42.1 million of impaired loans recorded at fair value on a nonrecurring basis at September 30, 2016 and December 31, 2015, respectively.