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Fair Value of Assets and Liabilities (Tables)
9 Months Ended
Sep. 30, 2015
Fair Value Disclosures [Abstract]  
Balances of assets and liabilities measured at fair value on a recurring basis
The table below presents the balances of assets and liabilities measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014:
 
Quoted Prices
in Active
Markets for
Identical Assets
or Liabilities

 
Significant
Other
Observable
Inputs

 
Significant
Unobservable
Inputs

 
 

(dollars in thousands)
(Level 1)

 
(Level 2)

 
(Level 3)

 
Total

September 30, 2015
 

 
 

 
 

 
 

Assets:
 

 
 

 
 

 
 

Investment Securities Available-for-Sale
 

 
 

 
 

 
 

Debt Securities Issued by the U.S. Treasury
      and Government Agencies
$
60,706

 
$
307,951

 
$

 
$
368,657

Debt Securities Issued by States and Political Subdivisions

 
737,210

 

 
737,210

Debt Securities Issued by Corporations

 
310,561

 

 
310,561

Mortgage-Backed Securities:
 

 
 

 
 

 


  Residential - Government Agencies

 
348,469

 

 
348,469

  Residential - U.S. Government-Sponsored Enterprises

 
412,261

 

 
412,261

    Commercial - Government Agencies

 
102,564

 

 
102,564

Total Mortgage-Backed Securities

 
863,294

 

 
863,294

Total Investment Securities Available-for-Sale
60,706

 
2,219,016



 
2,279,722

Loans Held for Sale

 
3,222

 

 
3,222

Mortgage Servicing Rights

 

 
2,072

 
2,072

Other Assets
19,548

 

 

 
19,548

Derivatives 1

 
186

 
16,614

 
16,800

Total Assets Measured at Fair Value on a
Recurring Basis as of September 30, 2015
$
80,254

 
$
2,222,424

 
$
18,686

 
$
2,321,364

 
 
 
 
 
 
 
 
Liabilities:
 

 
 

 
 

 
 

Derivatives 1
$

 
$
39

 
$
16,212

 
$
16,251

Total Liabilities Measured at Fair Value on a
Recurring Basis as of September 30, 2015
$

 
$
39


$
16,212

 
$
16,251

 
 
 
 
 
 
 
 
December 31, 2014
 

 
 

 
 

 
 

Assets:
 

 
 

 
 

 
 

Investment Securities Available-for-Sale
 

 
 

 
 

 
 

Debt Securities Issued by the U.S. Treasury
      and Government Agencies
$
61,271

 
$
269,987

 
$

 
$
331,258

Debt Securities Issued by States and Political Subdivisions

 
743,970

 

 
743,970

Debt Securities Issued by Corporations

 
294,833

 

 
294,833

Mortgage-Backed Securities:
 

 
 

 
 

 


  Residential - Government Agencies

 
462,436

 

 
462,436

  Residential - U.S. Government-Sponsored Enterprises

 
278,461

 

 
278,461

    Commercial - Government Agencies

 
178,232

 

 
178,232

Total Mortgage-Backed Securities

 
919,129




919,129

Total Investment Securities Available-for-Sale
61,271

 
2,227,919



 
2,289,190

Loans Held for Sale

 
5,136

 

 
5,136

Mortgage Servicing Rights

 

 
2,604

 
2,604

Other Assets
18,794

 

 

 
18,794

Derivatives 1

 
101

 
16,414

 
16,515

Total Assets Measured at Fair Value on a
Recurring Basis as of December 31, 2014
$
80,065

 
$
2,233,156

 
$
19,018

 
$
2,332,239

 
 
 
 
 
 
 


Liabilities:
 

 
 

 
 

 


Derivatives 1
$

 
$
459

 
$
16,296

 
$
16,755

Total Liabilities Measured at Fair Value on a
Recurring Basis as of December 31, 2014
$

 
$
459


$
16,296

 
$
16,755

1 
The fair value of each class of derivatives is shown in Note 11 to the Consolidated Financial Statements.
Changes in Level 3 assets and liabilities measured at fair value on a recurring basis
For the three and nine months ended September 30, 2015 and 2014, the changes in Level 3 assets and liabilities measured at fair value on a recurring basis were as follows:
(dollars in thousands)
Mortgage
Servicing Rights 1

 
Net Derivative
Assets and
Liabilities 2

Three Months Ended September 30, 2015
 

 
 

Balance as of July 1, 2015
$
2,188

 
$
370

Realized and Unrealized Net Gains (Losses):
 

 
 

Included in Net Income
(116
)
 
752

Transfers to Loans Held for Sale

 
(720
)
Balance as of September 30, 2015
$
2,072

 
$
402

Total Unrealized Net Gains (Losses) Included in Net Income
Related to Assets Still Held as of September 30, 2015
$

 
$
402

 
 
 
 
Three Months Ended September 30, 2014
 

 
 

Balance as of July 1, 2014
$
2,960

 
$
107

Realized and Unrealized Net Gains (Losses):
 

 
 

Included in Net Income
(217
)
 
369

Transfers to Loans Held for Sale

 
(408
)
Balance as of September 30, 2014
$
2,743

 
$
68

Total Unrealized Net Gains (Losses) Included in Net Income
Related to Assets Still Held as of September 30, 2014
$
(145
)
 
$
68

 
 
 
 
Nine Months Ended September 30, 2015
 

 
 

Balance as of January 1, 2015
$
2,604

 
$
118

Realized and Unrealized Net Gains (Losses):
 

 
 

Included in Net Income
(532
)
 
2,164

Transfers to Loans Held for Sale

 
(1,880
)
Balance as of September 30, 2015
$
2,072

 
$
402

Total Unrealized Net Gains (Losses) Included in Net Income
Related to Assets Still Held as of September 30, 2015
$
(251
)
 
$
402

 
 
 
 
Nine Months Ended September 30, 2014
 

 
 

Balance as of January 1, 2014
$
3,826

 
$
379

Realized and Unrealized Net Gains (Losses):
 

 
 

Included in Net Income
(1,083
)
 
2,363

Transfers to Loans Held for Sale

 
(2,674
)
Balance as of September 30, 2014
$
2,743

 
$
68

Total Unrealized Net Gains (Losses) Included in Net Income
Related to Assets Still Held as of September 30, 2014
$
(816
)
 
$
68

1 
Realized and unrealized gains and losses related to mortgage servicing rights are reported as a component of mortgage banking income in the Company’s consolidated statements of income.
2 
Realized and unrealized gains and losses related to interest rate lock commitments are reported as a component of mortgage banking income in the Company’s consolidated statements of income.  Realized and unrealized gains and losses related to interest rate swap agreements are reported as a component of other noninterest income in the Company’s consolidated statements of income.
Summary of the significant unobservable inputs
For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of September 30, 2015 and December 31, 2014, the significant unobservable inputs used in the fair value measurements were as follows:
 
 
 
 
Significant Unobservable Inputs
(weighted-average)
 
Fair Value
(dollars in thousands)
 
Valuation
 Technique
 
Description
 
Sept. 30,
2015

 
Dec. 31,
2014

 
Sept. 30,
2015

 
Dec. 31,
2014

Mortgage Servicing Rights
 
Discounted Cash Flow
 
Constant Prepayment Rate 1
 
10.01
%
 
11.62
%
 
$
26,491

 
$
25,441

 
 
 
 
Discount Rate 2
 
9.71
%
 
10.61
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Derivative Assets and Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Interest Rate Lock Commitments
 
Pricing Model
 
Closing Ratio
 
92.32
%
 
93.85
%
 
$
437

 
$
152

Interest Rate Swap Agreements
 
Discounted Cash Flow
 
Credit Factor
 
0.21
%
 
0.21
%
 
$
(35
)
 
$
(34
)

1 
Represents annualized loan repayment rate assumption.
2 
Derived from multiple interest rate scenarios that incorporate a spread to the London Interbank Offered Rate swap curve and market volatilities.
Assets and liabilities measured at fair value on a nonrecurring basis
The following table represents the assets measured at fair value on a nonrecurring basis as of September 30, 2015 and December 31, 2014.

(dollars in thousands)
Fair Value
Hierarchy
 
Net Carrying
Amount

 
Valuation
Allowance

September 30, 2015
 
 
 
 
 
Mortgage Servicing Rights - amortization method
Level 3
 
$
21,229

 
$
21

Foreclosed Real Estate
Level 3
 
1,392

 

Other Assets - Equipment Held for Sale
Level 3
 
4,657

 
9,453

 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
Mortgage Servicing Rights - amortization method
Level 3
 
$
22,091

 
$
57

Foreclosed Real Estate
Level 3
 
2,311

 
89

Schedule of difference between the aggregate fair value and the aggregate unpaid principal balance of the Company's residential mortgage loans held for sale
The following table reflects the difference between the aggregate fair value and the aggregate unpaid principal balance of the Company’s residential mortgage loans held for sale as of September 30, 2015 and December 31, 2014.
(dollars in thousands)
Aggregate Fair Value

 
Aggregate Unpaid Principal
 
 
Aggregate Fair Value
Less Aggregate
 Unpaid Principal
 
September 30, 2015
 

 
 
 

 
 
 

Loans Held for Sale
$
3,222

 
 
$
3,009

 
 
$
213

 
 
 
 
 
 
 
 
December 31, 2014
 

 
 
 

 
 
 

Loans Held for Sale
$
5,136

 
 
$
4,740

 
 
$
396

Schedule of carrying amount, fair value, and fair value hierarchy of financial instruments
The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments not recorded at fair value on a recurring basis as of September 30, 2015 and December 31, 2014.  This table excludes financial instruments for which the carrying amount approximates fair value.  For short-term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization.  For non-marketable equity securities such as Federal Home Loan Bank and Federal Reserve Bank stock, the carrying amount is a reasonable estimate of fair value as these securities can only be redeemed or sold at their par value and only to the respective issuing government supported institution or to another member institution.  For financial liabilities such as noninterest-bearing demand, interest-bearing demand, and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity.
 
 
 
 
 
Fair Value Measurements
 
Carrying

 
 
 
Quoted Prices
 in Active
 Markets for
Identical
 Assets or
Liabilities

 
Significant
Other
Observable
Inputs

 
Significant
Unobservable
Inputs

(dollars in thousands)
Amount

 
Fair Value

 
(Level 1)

 
(Level 2)

 
(Level 3)

September 30, 2015
 

 
 

 
 

 
 

 
 

Financial Instruments - Assets
 

 
 

 
 

 
 

 
 

Investment Securities Held-to-Maturity
$
4,121,768

 
$
4,181,613

 
$
504,344

 
$
3,677,269

 
$

Loans 1
7,354,296

 
7,837,382

 

 

 
7,837,382

 
 
 


 
 
 
 
 
 
Financial Instruments - Liabilities
 

 


 
 

 
 

 
 

Time Deposits
1,186,245

 
1,190,119

 

 
1,190,119

 

Securities Sold Under Agreements to Repurchase
632,138

 
700,916

 

 
700,916

 

Other Debt 2
259,938

 
262,061

 

 
262,061

 

 
 
 


 
 
 
 
 
 
December 31, 2014
 

 


 
 

 
 

 
 

Financial Instruments - Assets
 

 


 
 

 
 

 
 

Investment Securities Held-to-Maturity
$
4,466,679

 
$
4,504,495

 
$
499,616

 
$
4,004,879

 
$

Loans 1
6,542,719

 
7,048,757

 

 

 
7,048,757

 
 
 
 
 
 
 
 
 
 
Financial Instruments - Liabilities
 

 


 
 

 
 

 
 

Time Deposits
1,434,001

 
1,437,064

 

 
1,437,064

 

Securities Sold Under Agreements to Repurchase
688,601

 
758,781

 

 
758,781

 

Other Debt 2
163,005

 
163,911

 

 
163,911

 

1 
Net of unearned income and the Allowance.
2 
Excludes capitalized lease obligations.