FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2012

Assets and Liabilities Measured at Fair Value on Recurring and Non-Recurring Basis

The following tables present the assets and liabilities that are measured at fair value on a recurring and nonrecurring basis by level within the fair value hierarchy as reported on the consolidated statements of financial condition at December 31, 2012 and 2011. The assets presented under “nonrecurring fair value measurements” in the table below are not measured at fair value on an ongoing basis but are subject to fair value adjustments under certain circumstances (e.g., when an impairment loss is recognized).


			Fair Value Measurements at Reporting Date Using:
	December 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Recurring fair value measurements:
Assets
Investment securities:
Available for sale:
U.S. Treasury securities	$	97,625	$	97,625	$	—	$	—
U.S. government agency securities		45,762		—		45,762		—
Obligations of states and political subdivisions		16,627		—		16,627		—
Residential mortgage-backed securities		510,154		—		478,783		31,371
Trust preferred securities		57,432		—		17,129		40,303
Corporate and other debt securities		30,708		28,444		2,264		—
Equity securities		49,508		28,608		20,900		—

Total available for sale		807,816		154,677		581,465		71,674
Trading securities		22,157		—		22,157		—
Loans held for sale ⁽¹⁾		120,230		—		120,230		—
Other assets ⁽²⁾		7,916		—		7,916		—

Total assets	$	958,119	$	154,677	$	731,768	$	71,674

Liabilities
Junior subordinated debentures issued to VNB Capital Trust I ⁽³⁾	$	147,595	$	147,595	$	—	$	—
Other liabilities ⁽²⁾		26,594		—		26,594		—

Total liabilities	$	174,189	$	147,595	$	26,594	$	—

Non-recurring fair value measurements:
Collateral dependent impaired loans ⁽⁴⁾	$	65,231	$	—	$	—	$	65,231
Loan servicing rights		16,201		—		—		16,201
Foreclosed assets		33,251		—		—		33,251

Total	$	114,683	$	—	$	—	$	114,683


			Fair Value Measurements at Reporting Date Using:
	December 31, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Recurring fair value measurements:
Assets
Investment securities:
Available for sale:
U.S. government agency securities	$	90,748	$	—	$	90,748	$	—
Obligations of states and political subdivisions		20,214		—		20,214		—
Residential mortgage-backed securities		310,137		—		259,977		50,160
Trust preferred securities		70,424		19,575		23,698		27,151
Corporate and other debt securities		33,044		30,604		2,440		—
Equity securities		41,953		23,506		18,447		—

Total available for sale		566,520		73,685		415,524		77,311
Trading securities		21,938		—		21,938		—
Loans held for sale ⁽¹⁾		25,169		—		25,169		—
Other assets ⁽²⁾		5,211		—		5,211		—

Total assets	$	618,838	$	73,685	$	467,842	$	77,311

Liabilities
Junior subordinated debentures issued to VNB Capital Trust I ⁽³⁾	$	160,478	$	160,478	$	—	$	—
Other liabilities ⁽²⁾		21,854		—		21,854		—

Total liabilities	$	182,332	$	160,478	$	21,854	$	—

Non-recurring fair value measurements:
Collateral dependent impaired loans ⁽⁴⁾	$	66,854	$	—	$	—	$	66,854
Loan servicing rights		9,078		—		—		9,078
Foreclosed assets		15,874		—		—		15,874

Total	$	91,806	$	—	$	—	$	91,806

⁽¹⁾	Loans held for sale (which consist of residential mortgages) are carried at fair value and had contractual unpaid principal balances totaling approximately $115.4 million and $24.3 million at December 31, 2012 and 2011, respectively.

⁽²⁾	Derivative financial instruments are included in this category.

⁽³⁾	The junior subordinated debentures had contractual unpaid principal obligations totaling $146.7 million and $157.0 million at December 31, 2012 and 2011, respectively.

⁽⁴⁾	Excludes covered loans acquired in the FDIC-assisted transactions completed in 2010 and other purchased credit-impaired loans acquired in 2012.

Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis

The changes in Level 3 assets measured at fair value on a recurring basis for the years ended December 31, 2012 and 2011 are summarized below:


	2012					2011
			Available						Available
	Trading		For Sale			Trading			For Sale
	Securities		Securities			Securities			Securities
	(in thousands)
Balance, beginning of the period	$	—	$	77,311		$	21,903		$	138,655
Transfers into Level 3:
Residential mortgage-backed securities		—		—			—			8,798
Transfers out of Level 3:
Residential mortgage-backed securities		—		—			—			(44,771	)
Trust preferred securities		—		—			(21,903	)		(17,397	)
Corporate and other debt securities		—		—			—			(12,914	)
Equity securities		—		—			—			(9,353	)
Transfers from held-to-maturity ⁽¹⁾		—		—			—			23,452
Total net (losses) gains for the period included in:
Net income		—		(5,247	)		—			(1,654	)
Other comprehensive income		—		18,482			—			765
Sales		—		(9,146	)		—			—
Settlements		—		(9,726	)		—			(8,270	)

Balance, end of the period	$	—	$	71,674		$	—		$	77,311

Change in unrealized losses for the period included in earnings for assets held at year end ⁽²⁾	$	—	$	(5,247	)	$	—		$	(19,968	)⁽³⁾

⁽¹⁾	Represents impaired trust preferred securities issued by one bank holding company transferred at fair value from held-to-maturity to available-for-sale at December 31, 2011.

⁽²⁾	Represents the net impairment losses on securities recognized in earnings for the period.

⁽³⁾	Includes $18.3 million related to trust preferred securities transferred from held-to-maturity at December 31, 2011.

Schedule of Quantitative Information About Level 3 Inputs Used to Measure the Fair Value of Available For Sale Securities

The following table presents quantitative information about Level 3 inputs used to measure the fair value of these securities at December 31, 2012:


Security Type	Technique	Input	Range			Average
Private label mortgage-backed securities	Discounted cash flow	Prepayment rate		2.7 - 27.4	%		15.9	%
		Default rate		4.0 - 17.2			8.0
		Loss severity		40.0 - 59.4			50.9

Single issuer trust preferred securities	Discounted cash flow	Loss severity		0.0 - 100.0	%		28.8	%
		Market credit spreads		6.3 - 6.9			6.7
		Discount rate		6.6 - 8.7			7.8

Schedule of Gains and Losses from Fair Value Changes

The following table presents the amount of gains and losses from fair value changes included in income before income taxes for financial assets and liabilities carried at fair value for the years ended December 31, 2012, 2011 and 2010:


Reported in Consolidated Statements of Financial Condition	Reported in Consolidated Statements of Income	Gains (Losses) on Change in Fair Value
Reported in Consolidated Statements of Financial Condition	Reported in Consolidated Statements of Income	2012			2011			2010
		(in thousands)
Assets:
Available for sale securities	Net impairment losses on securities	$	(5,247	)	$	(19,968	)*	$	(4,642	)
Trading securities	Trading gains (losses), net		219			1,015			(1,056	)
Loans held for sale	Gains on sales of loans, net		46,998			10,699			12,591
Liabilities:
Junior subordinated debentures issued to capital trusts	Trading gains (losses), net		2,574			1,256			(5,841	)

		$	44,544		$	(6,998	)	$	1,052

*	Includes $18.3 million related to impaired trust preferred securities transferred from held-to-maturity to available for sale at December 31, 2011.

Carrying Amounts and Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values of financial instruments not measured and not reported at fair value on the consolidated statements of financial condition at December 31, 2012 and 2011 were as follows:


			December 31,
			2012				2011
	Fair Value Hierarchy		Carrying Amount		Fair Value		Carrying Amount		Fair Value
			(in thousands)
Financial assets
Cash and due from banks		Level 1	$	390,078	$	390,078	$	372,566	$	372,566
Interest bearing deposits with banks		Level 1		463,022		463,022		6,483		6,483
Investment securities held to maturity:
U.S. Treasury securities		Level 1		99,869		115,329		100,018		113,859
Obligations of states and political subdivisions		Level 2		506,473		531,966		433,284		453,201
Residential mortgage-backed securities		Level 2		813,647		838,116		1,180,104		1,230,993
Trust preferred securities		Level 2		127,505		113,657		193,312		174,753
Corporate and other debt securities		Level 2		52,213		58,882		52,198		54,391

Total investment securities held to maturity				1,599,707		1,657,950		1,958,916		2,027,197

Net loans		Level 3		10,892,599		10,908,742		9,665,839		9,645,517
Accrued interest receivable		Level 1		52,375		52,375		52,527		52,527
Federal Reserve Bank and Federal Home Loan Bank stock⁽¹⁾		Level 2		138,533		138,533		129,669		129,669
Financial liabilities
Deposits without stated maturities		Level 1		8,755,252		8,755,252		7,171,718		7,171,718
Deposits with stated maturities		Level 2		2,508,766		2,563,726		2,501,384		2,557,119
Short-term borrowings		Level 1		154,323		154,323		212,849		215,179
Long-term borrowings		Level 2		2,697,299		3,100,173		2,726,099		3,154,150
Junior subordinated debentures issued to capital trusts		Level 2		40,927		40,776		25,120		25,620
Accrued interest payable⁽²⁾		Level 1		15,917		15,917		17,736		17,736

⁽¹⁾	Included in other assets.

⁽²⁾	Included in accrued expenses and other liabilities.

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References+ Details

- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 14

-Subparagraph a

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 18

-Subparagraph c(2), d, e, f

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 10

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13433-108611

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 15

-Subparagraph b-d

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 11

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13467-108611

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 19

-Subparagraph a, b, c(1), d(1)

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 2

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19207-110258

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 45

-Paragraph 2

-URI http://asc.fasb.org/extlink&oid=6447952&loc=d3e13220-108610

Reference 9: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 32

-Subparagraph a, c(1), c(2), c(3), d

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 10

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 12

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13476-108611

Reference 12: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 30

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612

+ Details