14.

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 Available for Sale

- For certain U.S. Treasury 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, U.S. Government sponsored entities, state and municipal securities, mortgage-backed securities (“MBS”), collateralized mortgage obligations and corporate bonds.

Equity Securities –

The Company measures the fair value based on quoted market prices in active exchange markets at the reporting date, a level

measurement. Equity securities are comprised of mutual funds, preferred stock of government-sponsored entities and other equity securities.

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.

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 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 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

March 31, 2019,

and as of

December 31, 2018:

	March 31, 2019				December 31, 2018
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
	(In thousands)
Financial Assets
Cash and due from banks	$	194,928	$	194,928	$	225,333	$	225,333
Short-term investments		343,452		343,452		374,957		374,957
Securities available-for-sale		1,309,853		1,309,853		1,242,509		1,242,509
Loans, net		14,153,318		14,373,444		13,871,832		13,928,162
Equity securities		29,261		29,261		25,098		25,098
Investment in Federal Home Loan Bank stock		17,250		17,250		17,250		17,250
Warrants		181		181		184		184

	Notional				Notional
	Amount		Fair Value		Amount		Fair Value
Foreign exchange contracts	$	76,768	$	459	$	86,875	$	397
Interest rate swaps		358,509		4,480		467,410		7,810

	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
Financial Liabilities
Deposits	$	14,086,364	$	14,143,470	$	13,702,340	$	13,754,028
Advances from Federal Home Loan Bank		420,000		420,450		530,000		529,500
Other borrowings		48,099		42,361		35,756		34,031
Long-term debt		174,448		123,897		189,448		132,615

	Notional				Notional
	Amount		Fair Value		Amount		Fair Value
Option contracts	$	2,188	$	12	$	1,215	$	6
Foreign exchange contracts		57,273		645		94,977		1,763
Interest rate swaps		346,357		5,727		265,166		1,543

	Notional					Notional
	Amount		Fair Value			Amount		Fair Value
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	2,776,325	$	(5,703	)	$	2,691,579	$	(8,843	)
Standby letters of credit		260,268		(2,890	)		245,087		(2,662	)
Other letters of credit		29,354		(28	)		35,759		(30	)
Bill of lading guarantees		662		—			730		—

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

March 31, 2019,

and

December 31, 2018.

	As of March 31, 2019
	Estimated
	Fair Value
	Measurements		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets
Cash and due from banks	$	194,928	$	194,928	$	—	$	—
Short-term investments		343,452		343,452		—		—
Securities available-for-sale		1,309,853		149,240		1,160,613		—
Loans, net		14,373,444		—		—		14,373,444
Equity securities		29,261		29,261		—		—
Investment in Federal Home Loan Bank stock		17,250		—		17,250		—
Warrants		181		—		—		181
Financial Liabilities
Deposits		14,143,470		—		—		14,143,470
Advances from Federal Home Loan Bank		420,450		—		420,450		—
Other borrowings		42,361		—		—		42,361
Long-term debt		123,897		—		123,897		—

	As of December 31, 2018
	Estimated
	Fair Value
	Measurements		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets
Cash and due from banks	$	225,333	$	225,333	$	—	$	—
Short-term investments		374,957		374,957		—		—
Securities available-for-sale		1,242,509		124,751		1,117,758		—
Loans, net		13,928,162		—		—		13,928,162
Equity securities		25,098		25,098		—		—
Investment in Federal Home Loan Bank stock		17,250		—		17,250		—
Warrants		184		—		—		184
Financial Liabilities
Deposits		13,754,028		—		—		13,754,028
Advances from Federal Home Loan Bank		529,500		—		529,500		—
Other borrowings		34,031		—		—		34,031
Long-term debt		132,615		—		132,615		—