Fair Value (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which we have elected the fair value option, are summarized below:


			Fair Value Measurements at December 31, 2017 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Trading securities	$	5,584	$	5,584	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury		5,551		5,551		—		—
U.S. government-sponsored entities and agencies		664,286		—		664,286		—
Mortgage-backed securities - Agency		1,667,682		—		1,667,682		—
States and political subdivisions		530,193		—		530,193
Pooled trust preferred securities		8,448		—		—		8,448
Other securities		320,047		30,965		289,082		—
Residential loans held for sale		17,930		—		17,930		—
Derivative assets		14,118		—		14,118		—
Financial Liabilities
Derivative liabilities		16,292		—		16,292		—

			Fair Value Measurements at December 31, 2016 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Trading securities	$	4,982	$	4,982	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury		7,103		7,103		—		—
U.S. government-sponsored entities and agencies		493,956		—		493,956		—
Mortgage-backed securities - Agency		1,525,019		—		1,525,019		—
States and political subdivisions		436,684		—		436,684
Pooled trust preferred securities		8,119		—		—		8,119
Other securities		326,293		30,905		295,388		—
Residential loans held for sale		90,682		—		90,682		—
Derivative assets		17,701		—		17,701		—
Financial Liabilities
Derivative liabilities		23,574		—		23,574		—

Reconciliation of All Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):


	Years Ended December 31,
(dollars in thousands)	2017			2016
Balance at beginning of period	$	8,119		$	7,900
Accretion of discount		17			18
Sales/payments received		(424	)		(327	)
Increase in fair value of securities		736			528

Balance at end of period	$	8,448		$	8,119

Quantitative Information about Significant Unobservable Inputs Used in Fair Value Measurements

The table below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy:


(dollars in thousands)	Fair Value		Valuation Techniques	Unobservable Input	Range (Weighted Average)
December 31, 2017
Pooled trust preferred securities	$	8,448	Discounted cash flow	Constant prepayment rate (a)	0.00%
				Additional asset defaults (b)	4.2% - 9.6% (7.5%)
				Expected asset recoveries (c)	0.0% - 4.1% (0.6%)
December 31, 2016
Pooled trust preferred securities	$	8,119	Discounted cash flow	Constant prepayment rate (a)	0.00%
				Additional asset defaults (b)	4.5% - 10.0% (7.9%)
				Expected asset recoveries (c)	0.0% - 6.1% (0.9%)

(a)	Assuming no prepayments.

(b)	Each currently performing pool asset is assigned a default probability based on the banking environment, which is adjusted for specific issuer evaluation, of 0%, 50%, or 100%.

(c)	Each currently defaulted pool asset is assigned a recovery probability based on specific issuer evaluation of 0%, 25%, or 100%.

The table below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy:

Valuation

Unobservable

Range (Weighted

(dollars in thousands)

Fair Value

Techniques

Input

Average)

December 31, 2017 Collateral Dependent Impaired Loans

Commercial loans

2,217

Fair value of collateral

Discount for type of property, age of appraisal, and current status

0% - 98% (49%)

Commercial real estate loans

26,319

Fair value of collateral

Discount for type of property, age of appraisal and current status

10% -78% (32%)

Foreclosed Assets

Commercial real estate

1,726

Fair value of collateral

Discount for type of property, age of appraisal, and current status

7% - 25% (18%)

Residential (1)

Fair value of collateral

Discount for type of property, age of appraisal, and current status

39%

(1)	There was only one foreclosed residential asset at December 31, 2017, so no range or weighted average rate is reported.

December 31, 2016

Collateral Dependent Impaired Loans

Commercial loans

6,771

Fair value of collateral

Discount for type of property, age of appraisal, and current status

0% - 99% (53%)

Commercial real estate loans

11,632

Fair value of collateral

Discount for type of property, age of appraisal, and current status

10% - 67% (36%)

Foreclosed Assets

Commercial real estate

1,352

Fair value of collateral

Discount for type of property, age of appraisal, and current status

4% - 80% (39%)

Residential

394

Fair value of collateral

Discount for type of property, age of appraisal, and current status

7% - 60% (30%)

Assets Measured at Fair Value on a Non-Recurring Basis

Assets measured at fair value on a non-recurring basis at December 31, 2017 are summarized below:

Fair Value Measurements at December 31, 2017 Using

Significant

Quoted Prices in

Other

Significant

Active Markets for

Observable

Unobservable

Carrying

Identical Assets

Inputs

(dollars in thousands)

Value

(Level 1)

(Level 2)

(Level 3)

Collateral Dependent Impaired Loans:

Commercial loans

2,217

—

2,217

Commercial real estate loans

26,319

—

26,319

Foreclosed Assets:

Commercial real estate

1,726

—

1,726

Residential

—

Loan servicing rights

2,964

—

2,964

—

Assets measured at fair value on a non-recurring basis at December 31, 2016 are summarized below:


			Fair Value Measurements at December 31, 2016 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Collateral Dependent Impaired Loans:
Commercial loans	$	6,771	$	—	$	—	$	6,771
Commercial real estate loans		11,632		—		—		11,632
Foreclosed Assets:
Commercial real estate		1,352		—		—		1,352
Residential		394		—		—		394
Loan servicing rights		2,181		—		2,181		—

Schedule of Difference Between the Aggregate Fair Value and the Aggregate Remaining Principal Balance

The difference between the aggregate fair value and the aggregate remaining principal balance for loans for which the fair value option has been elected as of December 31, 2017 and 2016 was as follows:


	Aggregate				Contractual
(dollars in thousands)	Fair Value		Difference		Principal
December 31, 2017
Residential loans held for sale	$	17,930	$	546	$	17,384

December 31, 2016
Residential loans held for sale	$	90,682	$	133	$	90,549

The following table presents the amount of gains and losses from fair value changes included in income before income taxes for financial assets carried at fair value for the years ended December 31:


								Total Changes
								in Fair Values
	Other							Included in
	Gains and			Interest		Interest		Current Period
(dollars in thousands)	(Losses)			Income		(Expense)		Earnings
Year Ended December 31, 2017
Residential loans held for sale	$	409		$	4	$	—	$	413

Year Ended December 31, 2016
Residential loans held for sale	$	(103	)	$	—	$	—	$	(103	)

Carrying Amounts and Estimated Fair Values of Financial Instruments, Not Previously Presented

The carrying amounts and estimated fair values of financial instruments, not previously presented in this note, at December 31, 2017 and 2016 were as follows:

Fair Value Measurements at December 31, 2017 Using

Significant

Quoted Prices in

Other

Significant

Active Markets for

Observable

Unobservable

Carrying

Identical Assets

Inputs

(dollars in thousands)

Value

(Level 1)

(Level 2)

(Level 3)

Financial Assets

Cash, due from banks, money market, and other interest-earning investments

290,432

—

Investment securities held-to-maturity:

Mortgage-backed securities—Agency

6,903

—

7,056

—

State and political subdivisions

677,160

—

720,647

—

FHLB/Federal Reserve Bank stock

119,686

N/A

Loans, net:

Commercial

2,698,023

—

2,707,385

Commercial real estate

4,333,116

—

4,347,949

Residential real estate

2,165,290

—

2,210,951

Consumer credit

1,871,311

—

1,998,194

Accrued interest receivable

87,102

24,001

63,085

Financial Liabilities

Deposits:

Noninterest-bearing demand deposits

3,680,807

—

NOW, savings, and money market deposits

7,290,521

—

Time deposits

1,634,436

—

1,620,685

—

Federal funds purchased and interbank borrowings

335,033

—

Securities sold under agreements to repurchase

384,810

359,810

25,133

—

FHLB advances

1,609,579

—

1,607,189

Other borrowings

248,782

—

250,443

—

Accrued interest payable

7,029

—

7,029

—

Standby letters of credit

351

—

351

Off-Balance Sheet Financial Instruments

Commitments to extend credit

—

2,449

N/A = not applicable


			Fair Value Measurements at December 31, 2016 Using
(dollars in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Cash, due from banks, money market, and other interest-earning investments	$	255,519	$	255,519	$	—	$	—
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies		40,131		—		40,558		—
Mortgage-backed securities - Agency		10,640		—		10,940		—
State and political subdivisions		694,319		—		732,674		—
FHLB/Federal Reserve Bank stock		101,716		N/A		N/A		N/A
Loans, net:
Commercial		1,895,618		—		—		1,971,296
Commercial real estate		3,112,680		—		—		3,400,365
Residential real estate		2,085,887		—		—		2,228,542
Consumer credit		1,866,519		—		—		1,974,180
Accrued interest receivable		81,381		16		22,880		58,485
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits	$	3,016,093	$	3,016,093	$	—	$	—
NOW, savings, and money market deposits		6,259,052		6,259,052		—		—
Time deposits		1,468,108		—		1,460,778		—
Federal funds purchased and interbank borrowings		213,003		213,003		—		—
Securities sold under agreements to repurchase		367,052		317,052		50,612		—
FHLB advances		1,353,092		—		—		1,360,599
Other borrowings		218,939		—		217,647		—
Accrued interest payable		5,979		—		5,979		—
Standby letters of credit		315		—		—		315
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	—	$	—	$	—	$	2,527

N/A = not applicable

- Definition

Tabular disclosure of the application of the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected, provide the aggregate carrying amount of ineligible items included in each line item in the balance sheet, if any; (b) the difference between the aggregate fair value and the aggregate unpaid principal balance (assuming contractual principal amounts and fair value option elected) of: (i) loans and long-term receivables (other than securities otherwise reported at fair value) and (ii) long-term debt instruments; (c) for loans held as assets for which the fair value option has been elected: (i) the aggregate fair value of loans that are 90 days or more past due, (ii) if the policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status, and (iii) the difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both; (2) for items included in the income statement: (a) the amounts of gains and losses from fair value changes included in earnings and in which line in the income statement those gains and losses are reported whether or not combined with gains and losses from items required to be accounted for at fair value; (b) for loans and other receivables held as assets, the estimated amount of gains or losses included in earnings attributable to changes in instrument-specific credit risk; (c) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk, the estimated amount of gains and losses from fair value changes included in earnings that are attributable to changes in the instrument-specific credit risk; and (3) certain other disclosures as required or determined to be provided.

+ References + Details