Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instruments.

Cash and Cash Equivalents.

For cash and cash equivalents, the carrying amount was assumed to be a reasonable estimate of fair value, a Level

measurement.

Short-term Investments.

For short-term investments, the carrying amount was assumed to be a reasonable estimate of fair value, a Level

measurement.

Securities.

For securities, including securities held-to-maturity, available-for-sale and for trading, fair values were based on quoted market prices at the reporting date. If a quoted market price was

not

available, fair value was estimated using quoted market prices for similar securities or dealer quotes. For certain actively traded agency preferred stocks

, U.S. Treasury securities, and other equity securities, the Company measures the fair value based on quoted market prices in active exchange markets at the reporting date, a Level

measurement. The Company also measures securities by using quoted market prices for similar securities or dealer quotes, a Level

measurement. This category generally includes U.S. Government agency securities, state and municipal securities, mortgage-backed securities (“MBS”), commercial MBS, collateralized mortgage obligations, asset-backed securities, and corporate bonds.

Loans held for sale

. The Company records loans held for sale at fair value based on quoted price from

third

party sources, or appraisal reports adjusted by sales commission assumption, a Level

measurement.

Loans.

Fair values were estimated for portfolios of loans with similar financial characteristics. Each loan category was further segmented into fixed and adjustable rate interest terms and by performing and non-performing categories.

The fair value of performing loans was calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the loan, a Level

measurement.

The fair value of impaired loans was calculated based on the net realizable fair value of the collateral or the observable market price of the most recent sale or quoted price from loans held for sale. The Company does

not

record loans at fair value on a recurring basis. Nonrecurring fair value adjustments to collateral dependent impaired loans are recorded based on the current appraised value of the collateral, a Level

measurement, or management’s judgment and estimation of value reported on old appraisals which are then adjusted based on recent market trends, a Level

measurement.

Deposit Liabilities.

The fair value of demand deposits, savings accounts, and certain money market deposits was assumed to be the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit was estimated using the rates currently offered for deposits with similar remaining maturities, a Level

measurement.

Securities Sold under Agreements to Repurchase.

The fair value of securities sold under agreements to repurchase is based on dealer quotes, a Level

measurement.

Advances from Federal Home Loan Bank.

The fair value of the advances is based on quotes from the FHLB to settle the advances, a Level

measurement.

Other Borrowings.

This category includes borrowings from other financial institutions. The fair value of other borrowings is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk, a Level

measurement.

Long-term Debt.

The fair value of long-term debt is estimated based on the quoted market prices or dealer quotes, a Level

measurement.

Currency Option and Foreign

Exchange Contracts

. The Company measures the fair value of currency option and foreign exchange contracts based on observable market rates, a Level

measurement.

nterest Rate Swaps

. Fair value of interest rate swaps is derived from

third

party models with observable market data, a Level

measurement.

Off-Balance-Sheet Financial Instruments.

The fair value of commitments to extend credit, standby letters of credit, and financial guarantees written were estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counter parties. The fair value of guarantees and letters of credit was based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counter parties at the reporting date. Off-balance-sheet financial instruments were valued based on the assumptions that a market participant would use, a Level

measurement.

Fair value was estimated in accordance with ASC Topic

825.

Fair value estimates were made at specific points in time, based on relevant market information and information about the financial instrument. These estimates do

not

reflect any premium or discount that could result from offering for sale at

one

time the Bank’s entire holdings of a particular financial instrument and therefore do

not

represent an “exit price”. Because

market exists for a significant portion of the Bank’s financial instruments, fair value estimates were based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates were subjective in nature and involved uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair Value of Financial Instruments

	December 31, 2017				December 31, 2016
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
	(In thousands)
Financial Assets
Cash and due from banks	$	247,056	$	247,056	$	218,017	$	218,017
Short-term investments		292,745		292,745		967,067		967,067
Securities available-for-sale		1,333,626		1,333,626		1,314,345		1,314,345
Loans held for sale		8,000		8,000		7,500		7,500
Loans, net		12,743,766		12,663,049		11,077,315		11,006,344
Investment in Federal Home Loan Bank stock		23,085		23,085		17,250		17,250
Warrants		91		91		79		79

	Notional				Notional
	Amount		Fair Value		Amount		Fair Value
Foreign exchange contracts	$	108,530	$	1,832	$	82,439	$	1,302
Interest rate swaps		514,159		5,218		361,526		938

Financial Liabilities	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value

Deposits	$	12,689,893	$	12,700,674	$	11,674,726	$	11,680,017
Securities sold under agreements to repurchase		100,000		100,163		350,000		351,989
Advances from Federal Home Loan Bank		430,000		429,482		350,000		350,062
Other borrowings		52,885		51,075		17,662		15,944
Long-term debt		194,136		141,865		119,136		63,169

	Notional				Notional
	Amount		Fair Value		Amount		Fair Value
Option contracts	$	1,014	$	9	$	12,117	$	121
Foreign exchange contracts		32,127		453		89,545		3,132
Interest rate swaps		145,399		2,699		119,136		3,744

	Notional					Notional
	Amount		Fair Value			Amount		Fair Value
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	2,366,368	$	(7,224	)	$	2,062,241	$	(6,025	)
Standby letters of credit		140,814		(1,805	)		75,396		(668	)
Other letters of credit		27,353		(52	)		37,283		(16	)
Bill of lading guarantees		24		(0	)		75		(0	)

The following table

s present the level in the fair value hierarchy for the estimated fair values of only financial instruments that are

not

already on the Consolidated Balance Sheets at fair value at

December 31, 2017,

and

December 31, 2016

	As of December 31, 2017
	Estimated
	Fair Value
	Measurements		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets
Cash and due from banks	$	247,056	$	247,056	$	-	$	-
Short-term investments		292,745		292,745		-		-
Securities available-for-sale		1,333,626		277,622		1,056,004		-
Loans held-for-sale		8,000		-		-		8,000
Loans, net		12,663,049		-		-		12,663,049
Investment in Federal Home Loan Bank stock		23,085		-		23,085		-
Warrants		91		-		-		91
Financial Liabilities
Deposits		12,700,674		-		-		12,700,674
Securities sold under agreement to repurchase		100,163		-		100,163		-
Advances from Federal Home Loan Bank		429,482		-		429,482		-
Other borrowings		51,075		-		-		51,075
Long-term debt		141,865		-		141,865		-

	As of December 31, 2016
	Estimated
	Fair Value
	Measurements		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets
Cash and due from banks	$	218,017	$	218,017	$	-	$	-
Short-term investments		967,067		967,067		-		-
Securities available-for-sale		1,314,345		513,376		800,969		-
Loans held-for-sale		7,500		-		-		7,500
Loans, net		11,006,344		-		-		11,006,344
Investment in Federal Home Loan Bank stock		17,250		-		17,250		-
Warrants		79		-		-		79
Financial Liabilities
Deposits		11,680,017		-		-		11,680,017
Securities sold under agreement to repurchase		351,989		-		351,989		-
Advances from Federal Home Loan Bank		350,062		-		350,062		-
Other borrowings		15,944		-		-		15,944
Long-term debt		63,169		-		63,169		-