Estimated Fair Values (Tables)

6 Months Ended

Jun. 30, 2018

Estimated Fair Values For Certain Financial Assets And Financial Liabilities

For all other financial assets and financial liabilities, the carrying value is a reasonable estimate of the fair value as of June 30, 2018 and December 31, 2017. The carrying value and fair value for these assets and liabilities are equivalent because they are relatively short term in nature and there is no interest rate or credit risk that would cause the fair value to differ from the carrying value. Cash and due from banks is classified on the fair value hierarchy as Level 1. Overnight investments, income earned not collected, short-term borrowings and accrued interest payable are considered Level 2.

The table presents the carrying values and estimated fair values for financial instruments as of June 30, 2018 and December 31, 2017.



(Dollars in thousands)	June 30, 2018				December 31, 2017
	Carrying value		Fair value		Carrying value		Fair value
Cash and due from banks	$	260,525	$	260,525	$	336,150	$	336,150
Overnight investments	1,223,311		1,223,311		1,387,927		1,387,927
Investment securities available for sale	4,783,507		4,783,507		7,180,180		7,180,180
Investment securities held to maturity	2,299,774		2,302,093		76		81
Marketable equity securities	107,264		107,264		—		—
Loans held for sale	58,961		58,961		51,179		51,179
Net loans and leases	24,313,572		23,704,523		23,374,932		22,257,803
Income earned not collected	99,567		99,567		95,249		95,249
Federal Home Loan Bank stock	22,658		22,658		52,685		52,685
Mortgage servicing rights	21,657		28,668		21,945		26,170
Deposits	30,408,884		30,362,605		29,266,275		29,230,768
Short-term borrowings	613,993		613,993		693,807		693,807
Long-term obligations	241,360		250,823		870,240		852,112
Payable to the FDIC for shared-loss agreements	103,487		103,966		101,342		102,684
Accrued interest payable	1,909		1,909		3,952		3,952

Assets And Liabilities Carried At Fair Value On A Recurring Basis

For assets and liabilities carried at fair value on a recurring basis, the following table provides fair value information as of June 30, 2018 and December 31, 2017.



	June 30, 2018
			Fair value measurements using:
(Dollars in thousands)	Fair value		Level 1 inputs		Level 2 inputs		Level 3 inputs
Assets measured at fair value
Investment securities available for sale
U.S. Treasury	$	1,503,974	$	—	$	1,503,974	$	—
Government agency	131,035		—		131,035		—
Mortgage-backed securities	3,034,065		—		3,034,065		—
Corporate bonds	108,790		—		—		108,790
Other	5,643		—		—		5,643
Total investment securities available for sale	$	4,783,507	$	—	$	4,669,074	$	114,433
Marketable equity securities	$	107,264	$	21,667	$	85,597	$	—
Loans held for sale	$	58,961	$	—	$	58,961	$	—

	December 31, 2017
			Fair value measurements using:
	Fair value		Level 1 inputs		Level 2 inputs		Level 3 inputs
Assets measured at fair value
Investment securities available for sale
U.S. Treasury	$	1,657,864	$	—	$	1,657,864	$	—
Government agency	8,670		—		8,670		—
Mortgage-backed securities	5,340,756		—		5,340,756		—
Equity securities	105,208		19,341		85,867		—
Corporate bonds	59,963		—		59,963		—
Other	7,719		—		7,719		—
Total investment securities available for sale	$	7,180,180	$	19,341	$	7,160,839	$	—
Loans held for sale	$	51,179	$	—	$	51,179	$	—

Fair Value of Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

The following tables summarize activity for Level 3 assets:



	Three months ended June 30, 2018
(Dollars in thousands)	Corporate bonds			Other
Balance at April 1, 2018	$	59,653		$	5,618
Amounts included in net income	48			7
Unrealized net (losses) gains included in other comprehensive income	(97		)	18
Purchases	51,591			—
Sales	(2,405		)	—
Balance at June 30, 2018	$	108,790		$	5,643



	Six months ended June 30, 2018
(Dollars in thousands)	Corporate bonds			Other
Balance at January 1, 2018	$	—		$	—
Transfers in	59,653			5,618
Amounts included in net income	48			7
Unrealized net (losses) gains included in other comprehensive income	(97		)	18
Purchases	51,591			—
Sales	(2,405		)	—
Balance at June 30, 2018	$	108,790		$	5,643

Fair Value Level 3 Significant Unobservable Input Assumptions



(Dollars in thousands)			June 30, 2018
Level 3 assets	Valuation technique	Significant unobservable input	Fair Value
Corporate bonds	Indicative bid provided by broker	Multiple factors, including but not limited to, current operations, financial condition, cash flows, and recently executed financing transactions related to the company	$	108,790
Other	Indicative bid provided by broker	Multiple factors, including but not limited to, current operations, financial condition, cash flows, and recently executed financing transactions related to the company	5,643

Fair Value Option

The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance for residential real estate originated for sale measured at fair value as of June 30, 2018 and December 31, 2017.



	June 30, 2018
(Dollars in thousands)	Fair Value		Aggregate Unpaid Principal Balance		Difference
Originated loans held for sale	$	58,961	$	57,334	$	1,627

	December 31, 2017
	Fair Value		Aggregate Unpaid Principal Balance		Difference
Originated loans held for sale	$	51,179	$	49,796	$	1,383

No originated loans held for sale were 90 or more days past due or on nonaccrual status as of June 30, 2018 or December 31, 2017.

Certain other assets are adjusted to their fair value on a nonrecurring basis, including impaired loans, OREO, and goodwill, which are periodically tested for impairment, and mortgage servicing rights, which are carried at the lower of amortized cost or market. Non-impaired loans held for investment, deposits, short-term borrowings and long-term obligations are not reported at fair value.

Impaired loans are deemed to be at fair value if an associated allowance or current period charge-off has been recorded. The value of impaired loans is determined by either collateral valuations or discounted present value of the expected cash flow calculations. Collateral values are determined using appraisals or other third-party value estimates of the subject property with discounts generally between 6 and 11 percent applied for estimated holding and selling costs and other external factors that may impact the marketability of the property. Expected cash flows are determined using expected payment information at the individual loan level, discounted using the effective interest rate. The effective interest rate generally ranges between 2 and 18 percent.

OREO that has been acquired or written down in the current year is deemed to be at fair value, which uses asset valuations. Asset values are determined using appraisals or other third-party value estimates of the subject property with discounts generally between 6 and 11 percent applied for estimated holding and selling costs and other external factors that may impact the marketability of the property. Changes to the value of the assets between scheduled valuation dates are monitored through continued communication with brokers and monthly reviews by the asset manager assigned to each asset. If there are any significant changes in the market or the subject property, valuations are adjusted or new appraisals ordered to ensure the reported values reflect the most current information.

Assets And Liabilities Carried At Fair Value On A Nonrecurring Basis

For financial assets and liabilities carried at fair value on a nonrecurring basis, the following table provides fair value information as of June 30, 2018 and December 31, 2017.



	June 30, 2018
			Fair value measurements using:
(Dollars in thousands)	Fair value		Level 1 inputs		Level 2 inputs		Level 3 inputs
Impaired loans	$	74,301	$	—	$	—	$	74,301
Other real estate remeasured during current year	21,105		—		—		21,105

	December 31, 2017
			Fair value measurements using:
	Fair value		Level 1 inputs		Level 2 inputs		Level 3 inputs
Impaired loans	$	72,539	$	—	$	—	$	72,539
Other real estate remeasured during current year	40,167		—		—		40,167