Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2017

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 and liabilities follow:



(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
March 31, 2017
Investment securities – available-for-sale:
U.S. Treasury securities	$	5,793	$	—	$	—	$	5,793
Government sponsored agencies	—		224,339		—		224,339
State and political subdivisions	—		300,409		—		300,409
Residential mortgage-backed securities	—		256,544		—		256,544
Collateralized mortgage obligations	—		367,321		—		367,321
Corporate bonds	—		89,253		—		89,253
Preferred stock and trust preferred securities	—		32,187		—		32,187
Total investment securities – available-for-sale	5,793		1,270,053		—		1,275,846
Loans held-for-sale	—		39,123		—		39,123
Loan servicing rights	—		—		64,604		64,604
Derivative assets:
Customer-initiated derivatives	—		6,377		—		6,377
Interest rate lock commitments	—		2,178		—		2,178
Power Equity CD	—		2,234		—		2,234
Total derivatives	—		10,789		—		10,789
Total assets at fair value	$	5,793	$	1,319,965	$	64,604	$	1,390,362
Derivative liabilities:
Customer-initiated derivatives	—		6,342		—		6,342
Forward contracts related to mortgage loans to be delivered for sale	—		342		—		342
Power Equity CD	—		2,234		—		2,234
Total derivatives	—		8,918		—		8,918
Total liabilities at fair value	$	—	$	8,918	$	—	$	8,918
December 31, 2016
Investment securities – available-for-sale:
U.S. Treasury securities	$	5,793	$	—	$	—	$	5,793
Government sponsored agencies	—		215,011		—		215,011
State and political subdivisions	—		300,088		—		300,088
Residential mortgage-backed securities	—		272,282		—		272,282
Collateralized mortgage obligations	—		320,025		—		320,025
Corporate bonds	—		89,474		—		89,474
Preferred stock and trust preferred securities	—		32,291		—		32,291
Total investment securities – available-for-sale	5,793		1,229,171		—		1,234,964
Loans held-for-sale	—		81,830		—		81,830
Loan servicing rights	—		—		48,085		48,085
Derivative assets:
Customer-initiated derivatives	—		4,406		—		4,406
Forward contracts related to mortgage loans to be delivered for sale	—		635		—		635
Interest rate lock commitments	—		956		—		956
Power Equity CD	—		2,218		—		2,218
Total derivatives	—		8,215		—		8,215
Total assets at fair value	$	5,793	$	1,319,216	$	48,085	$	1,373,094
Derivative liabilities:
Customer-initiated derivatives	—		4,141		—		4,141
Power Equity CD	—		2,218		—		2,218
Total derivatives	—		6,359		—		6,359
Total liabilities at fair value	$	—	$	6,359	$	—	$	6,359

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.



	Three months ended March 31, 2017
(Dollars in thousands)	Loan servicing rights
Balance, beginning of period	$	48,085
Transfer in based on new accounting policy election⁽¹⁾	15,891
Gains (losses):
Recorded in earnings (realized):
Recorded in “Mortgage banking revenue”	(1,125		)
New originations	1,753
Balance, end of period	$	64,604

(1) Refer to Note 1 for further details.

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)	March 31, 2017		December 31, 2016
Aggregate fair value	$	39,123	$	81,830
Contractual balance	37,701		81,009
Unrealized gain (loss)	1,422		821

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 March 31,
(Dollars in thousands)	2017		2016
Interest income⁽¹⁾	$	551	$	19
Change in fair value⁽²⁾	601		—
Total included in earnings	$	1,152	$	19

(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 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
March 31, 2017
Impaired originated loans	$	—	$	—	$	63,180	$	63,180
Other real estate/repossessed assets	—		—		2,240		2,240
Total	$	—	$	—	$	65,420	$	65,420
December 31, 2016
Impaired originated loans	$	—	$	—	$	62,184	$	62,184
Other real estate/repossessed assets	—		—		1,386		1,386
Loan servicing rights	—		—		2		2
Total	$	—	$	—	$	63,572	$	63,572

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 March 31, 2017		Valuation Technique	Significant Unobservable Inputs	Range
Impaired originated loans	$	63,180	Appraisal of collateral	Discount for type of collateral and age of appraisal	10%-25%
Other real estate/repossessed assets	2,240		Appraisal of property	Discount for type of property and age of appraisal	10%-25%

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	March 31, 2017				December 31, 2016
(Dollars in thousands)	Level in Fair Value Measurement Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	Level 1	$	441,780	$	441,780	$	474,402	$	474,402
Investment securities:
Held-to-maturity	Level 2	646,692		639,450		622,927		608,221
Held-to-maturity	Level 3	500		350		500		310
Nonmarketable equity securities	Level 2	129,939		129,939		97,350		97,350
Net loans⁽¹⁾	Level 3	13,194,618		13,347,793		12,912,511		13,069,315
Interest receivable	Level 2	45,863		45,863		42,235		42,235
Financial liabilities:
Deposits:
Deposits without defined maturities	Level 2	$	10,213,518	$	10,213,518	$	9,862,755	$	9,862,755
Time deposits	Level 2	2,918,829		2,919,153		3,010,367		3,010,048
Total deposits		13,132,347		13,132,671		12,873,122		12,872,803
Interest payable	Level 2	5,225		5,225		5,415		5,415
Securities sold under agreements to repurchase with customers	Level 2	398,910		398,910		343,047		343,047
Short-term borrowings	Level 2	900,000		899,777		825,000		825,000
Long-term borrowings	Level 2	490,876		486,161		597,847		591,227


(1)	Included $63.2 million and $62.2 million of impaired loans recorded at fair value on a nonrecurring basis at March 31, 2017 and December 31, 2016, respectively.