. Fair Value of Financial Instruments

The Company uses the following methods and assumptions 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

and interest bearing deposits

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

measurement.

Securities Purchased under Agreements to Resell

The fair value of securities purchased under agreements to resell is based on dealer quotes, 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 stock, 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

eld for

ale

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

third

party sources, or appraisal reports adjusted by sales commission assumptions.

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 values were based primarily on

third

-party vendor pricing to determine fair values based on the exit price notion.

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 or adjusted appraised value of the collateral, a Level

or Level

measurement.

FHLB Stock.

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. Management considers these non-marketable equity securities to be long-term investments. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than recognizing temporary declines in value.

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

FHLB

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

ebt.

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 dealer quotes, a Level

measurement.

Interest 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 counterparties. 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 counterparties at the reporting date. The fair value of off-balance-sheet financial instruments was 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. 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.

The following table presents the carrying and notional amounts and estimated fair value of financial instruments as of

September 30, 2018,

and

December 31, 2017:

	September 30, 2018				December 31, 2017
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
	(In thousands)
Financial Assets
Cash and due from banks	$	204,178	$	204,178	$	247,056	$	247,056
Short-term investments and interest bearing deposits		377,839		377,839		292,745		292,745
Securities available-for-sale		1,283,060		1,283,060		1,333,626		1,333,626
Equity securities		23,522		23,522		-		-
Loans held for sale		-		-		8,000		8,000
Loans, net (1)		13,522,103		13,502,232		12,743,766		12,663,049
Investment in Federal Home Loan Bank stock		17,250		17,250		23,085		23,085
Warrants		168		168		91		91

	Notional				Notional
	Amount		Fair Value		Amount		Fair Value
Foreign exchange contracts	$	53,361	$	400	$	108,530	$	1,832
Interest rate swaps		756,819		18,419		514,159		5,218

Financial Liabilities	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value

Deposits	$	13,581,078	$	13,617,846	$	12,689,893	$	12,700,674
Securities sold under agreements to repurchase		-		-		100,000		100,163
Advances from Federal Home Loan Bank		315,000		314,507		430,000		429,482
Other borrowings		35,585		33,791		52,885		51,075
Long-term debt		194,136		142,068		194,136		141,865

	Notional				Notional
	Amount		Fair Value		Amount		Fair Value
Option contracts	$	1,623	$	4	$	1,014	$	9
Foreign exchange contracts		117,634		1,648		32,127		453
Interest rate swaps		-		-		145,399		2,699

	Notional					Notional
	Amount		Fair Value			Amount		Fair Value
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	2,645,086	$	(9,095	)	$	2,366,368	$	(7,224	)
Standby letters of credit		167,050		(1,509	)		140,814		(1,805	)
Other letters of credit		30,420		(20	)		27,353		(52	)
Bill of lading guarantees		1,108		-			24		-

(

) In accordance with the prospective adoption of ASU

2016

01,

the fair value of loans as of

September 30, 2018

was measured using an exit price notion. The fair value of loans as of

December 31, 2017

was measured using an entry price notion.

The following tables present the level in the fair value hierarchy for the estimated fair values of financial instruments as of

September 30, 2018,

and

December 31, 2017.

	As of September 30, 2018
	Estimated
	Fair Value
	Measurements		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets
Cash and due from banks	$	204,178	$	204,178	$	-	$	-
Short-term investments and interest bearing deposits		377,839		377,839		-		-
Debt securities available-for-sale		1,283,060		199,374		1,083,686		-
Equity securities		23,522		23,522		-		-
Loans, net (1)		13,502,232		-		-		13,502,232
Investment in Federal Home Loan Bank stock		17,250		-		17,250		-
Warrants		168		-		-		168
Financial Liabilities
Deposits		13,617,846		-		-		13,617,846
Advances from Federal Home Loan Bank		314,507		-		314,507		-
Other borrowings		33,791		-		-		33,791
Long-term debt		142,068		-		142,068		-

	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 and interest bearing deposits		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 (1)		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		-

(

) In accordance with the prospective adoption of ASU

2016

01,

the fair value of loans as of

September 30, 2018

was measured using an exit price notion. The fair value of loans as of

December 31, 2017

was measured using an entry price notion.