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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2021
Fair Value Disclosures [Abstract] |
Fair Value Measurements | 12. Fair Value Measurements The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2021, and December 31, 2020, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value. Fair values determined by Level 1 inputs utilize quoted prices in active markets for identical assets and liabilities that the Company has the ability to access. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the hierarchy. In such cases, the fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Assets and liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020 (in thousands):
|  | Fair Value Measurement at September 30, 2021 |
Description |  | September 30, 2021 |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury |  | $ | 25,086 |  |  | $ | 25,086 |  |  | $ | — |  |  | $ | — |
U.S. Agencies |  |  | 3,231 |  |  |  | — |  |  |  | 3,231 |  |  |  | — |
Mortgage-backed |  |  | 303 |  |  |  | — |  |  |  | 303 |  |  |  | — |
State and political subdivisions |  |  | 33,023 |  |  |  | — |  |  |  | 33,023 |  |  |  | — |
Corporates |  |  | 6,792 |  |  |  | 6,792 |  |  |  | — |  |  |  | — |
Trading – other |  |  | 447 |  |  |  | 447 |  |  |  | — |  |  |  | — |
Trading securities |  |  | 68,882 |  |  |  | 32,325 |  |  |  | 36,557 |  |  |  | — |
U.S. Treasury |  |  | 69,859 |  |  |  | 69,859 |  |  |  | — |  |  |  | — |
U.S. Agencies |  |  | 93,655 |  |  |  | — |  |  |  | 93,655 |  |  |  | — |
Mortgage-backed |  |  | 7,370,221 |  |  |  | — |  |  |  | 7,370,221 |  |  |  | — |
State and political subdivisions |  |  | 3,461,903 |  |  |  | — |  |  |  | 3,461,903 |  |  |  | — |
Corporates |  |  | 167,052 |  |  |  | 167,052 |  |  |  | — |  |  |  | — |
Available-for-sale securities |  |  | 11,162,690 |  |  |  | 236,911 |  |  |  | 10,925,779 |  |  |  | — |
Equity securities with readily determinable fair values |  |  | 66,316 |  |  |  | 66,316 |  |  |  | — |  |  |  | — |
Company-owned life insurance |  |  | 66,218 |  |  |  | — |  |  |  | 66,218 |  |  |  | — |
Bank-owned life insurance |  |  | 495,333 |  |  |  | — |  |  |  | 495,333 |  |  |  | — |
Derivatives |  |  | 68,701 |  |  |  | — |  |  |  | 68,701 |  |  |  | — |
Total |  | $ | 11,928,140 |  |  | $ | 335,552 |  |  | $ | 11,592,588 |  |  | $ | — |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives |  | $ | 13,860 |  |  | $ | — |  |  | $ | 13,860 |  |  | $ | — |
Securities sold not yet purchased |  |  | 2,328 |  |  |  | — |  |  |  | 2,328 |  |  |  | — |
Total |  | $ | 16,188 |  |  | $ | — |  |  | $ | 16,188 |  |  | $ | — |
|  | Fair Value Measurement at December 31, 2020 |
Description |  | December 31, 2020 |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury |  | $ | 651 |  |  | $ | 651 |  |  | $ | — |  |  | $ | — |
U.S. Agencies |  |  | 1,568 |  |  |  | — |  |  |  | 1,568 |  |  |  | — |
Mortgage-backed |  |  | 4 |  |  |  | — |  |  |  | 4 |  |  |  | — |
State and political subdivisions |  |  | 18,545 |  |  |  | — |  |  |  | 18,545 |  |  |  | — |
Corporates |  |  | 711 |  |  |  | 711 |  |  |  | — |  |  |  | — |
Trading – other |  |  | 13,541 |  |  |  | 13,541 |  |  |  | — |  |  |  | — |
Trading securities |  |  | 35,020 |  |  |  | 14,903 |  |  |  | 20,117 |  |  |  | — |
U.S. Treasury |  |  | 30,740 |  |  |  | 30,740 |  |  |  | — |  |  |  | — |
U.S. Agencies |  |  | 95,949 |  |  |  | — |  |  |  | 95,949 |  |  |  | — |
Mortgage-backed |  |  | 5,468,181 |  |  |  | — |  |  |  | 5,468,181 |  |  |  | — |
State and political subdivisions |  |  | 3,623,619 |  |  |  | — |  |  |  | 3,623,619 |  |  |  | — |
Corporates |  |  | 81,199 |  |  |  | 81,199 |  |  |  | — |  |  |  | — |
Available-for-sale securities |  |  | 9,299,688 |  |  |  | 111,939 |  |  |  | 9,187,749 |  |  |  | — |
Equity securities with readily determinable fair values |  |  | 134,197 |  |  |  | 134,197 |  |  |  | — |  |  |  | — |
Company-owned life insurance |  |  | 63,575 |  |  |  | — |  |  |  | 63,575 |  |  |  | — |
Bank-owned life insurance |  |  | 387,513 |  |  |  | — |  |  |  | 387,513 |  |  |  | — |
Derivatives |  |  | 103,554 |  |  |  | — |  |  |  | 103,554 |  |  |  | — |
Total |  | $ | 10,023,547 |  |  | $ | 261,039 |  |  | $ | 9,762,508 |  |  | $ | — |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives |  | $ | 9,375 |  |  | $ | — |  |  | $ | 9,375 |  |  | $ | — |
Securities sold not yet purchased |  |  | 2,177 |  |  |  | — |  |  |  | 2,177 |  |  |  | — |
Total |  | $ | 11,552 |  |  | $ | — |  |  | $ | 11,552 |  |  | $ | — |
Valuation methods for instruments measured at fair value on a recurring basis The following methods and assumptions were used to estimate the fair value of each class of financial instruments measured on a recurring basis: Trading Securities Fair values for trading securities (including financial futures), are based on quoted market prices where available. If quoted market prices are not available, fair values are based on quoted market prices for similar securities. Available-for-Sale Securities Fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. Prices are provided by third-party pricing services and are based on observable market inputs. On an annual basis, the Company compares a sample of these prices to other independent sources for the same securities. Additionally, throughout the year, if securities are sold, comparisons are made between the pricing services prices and the market prices at which the securities were sold. Variances are analyzed, and, if appropriate, additional research is conducted with the third-party pricing services. Based on this research, the pricing services may affirm or revise their quoted price. No significant adjustments have been made to the prices provided by the pricing services. The pricing services also provide documentation on an ongoing basis that includes reference data, inputs and methodology by asset class, which is reviewed to ensure that security placement within the fair value hierarchy is appropriate. Equity securities with readily determinable fair values Fair values are based on quoted market prices. Company-owned Life Insurance Fair value is equal to the cash surrender value of the life insurance policies. Bank-owned Life Insurance Fair value is equal to the cash surrender value of the life insurance policies. Derivatives Fair values are determined using valuation techniques including discounted cash flow analysis on the expected cash flows from each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign exchange rates, and implied volatilities. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. Securities sold not yet purchased Fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. Prices are provided by third-party pricing services and are based on observable market inputs. Assets measured at fair value on a non-recurring basis as of September 30, 2021 and December 31, 2020 (in thousands):
|  | Fair Value Measurement at September 30, 2021 Using |
Description |  | September 30, 2021 |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |  |  | Total Gains (Losses) Recognized During the Nine Months Ended September 30 |
Collateral dependent assets |  | $ | 53,435 |  |  | $ | — |  |  | $ | — |  |  | $ | 53,435 |  |  | $ | 4,499 |
Other real estate owned |  |  | 1,050 |  |  |  | — |  |  |  | — |  |  |  | 1,050 |  |  |  | (810 | )
Total |  | $ | 54,485 |  |  | $ | — |  |  | $ | — |  |  | $ | 54,485 |  |  | $ | 3,689 |
|  | Fair Value Measurement at December 31, 2020 Using |
Description |  | December 31, 2020 |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |  |  | Total Losses Recognized During the Twelve Months Ended December 31 |
Collateral dependent assets |  | $ | 35,995 |  |  | $ | — |  |  | $ | — |  |  | $ | 35,995 |  |  | $ | (9,389 | )
Other real estate owned |  |  | 2,798 |  |  |  | — |  |  |  | — |  |  |  | 2,798 |  |  |  | (938 | )
Total |  | $ | 38,793 |  |  | $ | — |  |  | $ | — |  |  | $ | 38,793 |  |  | $ | (10,327 | )
Valuation methods for instruments measured at fair value on a non-recurring basis The following methods and assumptions were used to estimate the fair value of each class of financial instruments measured on a non-recurring basis: Collateral Dependent Assets Collateral dependent assets are assets evaluated as part of the ACL on an individual basis. Those assets for which there is an associated allowance are considered financial assets measured at fair value on a non-recurring basis. Adjustments are recorded on certain assets to reflect write-downs that are based on the external appraised value of the underlying collateral. The external appraisals are generally based on recent sales of comparable properties which are then adjusted for the unique characteristics of the property being valued. In the case of non-real estate collateral, reliance is placed on a variety of sources, including external estimates of value and judgments based on the experience and expertise of internal specialists within the Company’s property management group and the Company’s credit department. The valuation s of the collateral dependent assets are reviewed on a quarterly basis. Because many of these inputs are not observable, the measurements are classified as Level 3. Other real estate owned Other real estate owned consists of loan collateral which has been repossessed through foreclosure. This collateral is comprised of commercial and residential real estate and other non-real estate property, including auto, recreational and marine vehicles. Other real estate owned is recorded as held for sale initially at the fair value of the collateral less estimated selling costs. The initial valuation of the foreclosed property is obtained through an appraisal process similar to the process described in the impaired loans paragraph above. Subsequent to foreclosure, valuations are reviewed quarterly and updated periodically, and the assets may be marked down further, reflecting a new cost basis. Fair value measurements may be based upon appraisals, third-party price opinions, or internally developed pricing methods and those measurements are classified as Level 3. Fair value disclosures require disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The estimated fair value of the Company’s financial instruments at September 30, 2021 and December 31, 2020 are as follows (in thousands):
|  | Fair Value Measurement at September 30, 2021 Using |
|  | Carrying Amount |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |  |  | Total Estimated Fair Value |
FINANCIAL ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and short-term investments |  | $ | 7,258,214 |  |  | $ | 6,166,110 |  |  | $ | 1,092,104 |  |  | $ | — |  |  | $ | 7,258,214 |
Securities available for sale |  |  | 11,162,690 |  |  |  | 236,911 |  |  |  | 10,925,779 |  |  |  | — |  |  |  | 11,162,690 |
Securities held to maturity (exclusive of allowance for credit losses) |  |  | 1,089,424 |  |  |  | — |  |  |  | 1,064,816 |  |  |  | — |  |  |  | 1,064,816 |
Trading securities |  |  | 68,882 |  |  |  | 32,325 |  |  |  | 36,557 |  |  |  | — |  |  |  | 68,882 |
Other securities |  |  | 274,645 |  |  |  | 66,316 |  |  |  | 208,329 |  |  |  | — |  |  |  | 274,645 |
Loans (exclusive of allowance for credit losses) |  |  | 16,474,108 |  |  |  | — |  |  |  | 16,682,840 |  |  |  | — |  |  |  | 16,682,840 |
Derivatives |  |  | 68,701 |  |  |  | — |  |  |  | 68,701 |  |  |  | — |  |  |  | 68,701 |
FINANCIAL LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Demand and savings deposits |  |  | 30,651,129 |  |  |  | 30,651,129 |  |  |  | — |  |  |  | — |  |  |  | 30,651,129 |
Time deposits |  |  | 584,681 |  |  |  | — |  |  |  | 584,681 |  |  |  | — |  |  |  | 584,681 |
Other borrowings |  |  | 2,500,340 |  |  |  | 110,722 |  |  |  | 2,389,618 |  |  |  | — |  |  |  | 2,500,340 |
Long-term debt |  |  | 271,049 |  |  |  | — |  |  |  | 290,064 |  |  |  | — |  |  |  | 290,064 |
Derivatives |  |  | 13,860 |  |  |  | — |  |  |  | 13,860 |  |  |  | — |  |  |  | 13,860 |
OFF-BALANCE SHEET ARRANGEMENTS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commitments to extend credit for loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 5,652 |
Commercial letters of credit |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 166 |
Standby letters of credit |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,659 |
|  | Fair Value Measurement at December 31, 2020 Using |
|  | Carrying Amount |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |  |  | Total Estimated Fair Value |
FINANCIAL ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and short-term investments |  | $ | 5,191,015 |  |  | $ | 3,540,680 |  |  | $ | 1,650,335 |  |  | $ | — |  |  | $ | 5,191,015 |
Securities available for sale |  |  | 9,299,688 |  |  |  | 111,939 |  |  |  | 9,187,749 |  |  |  | — |  |  |  | 9,299,688 |
Securities held to maturity (exclusive of allowance for credit losses) |  |  | 1,014,614 |  |  |  | — |  |  |  | 1,029,444 |  |  |  | — |  |  |  | 1,029,444 |
Trading securities |  |  | 35,020 |  |  |  | 14,903 |  |  |  | 20,117 |  |  |  | — |  |  |  | 35,020 |
Other securities |  |  | 296,053 |  |  |  | 134,197 |  |  |  | 161,856 |  |  |  | — |  |  |  | 296,053 |
Loans (exclusive of allowance for credit losses) |  |  | 16,110,359 |  |  |  | — |  |  |  | 16,413,132 |  |  |  | — |  |  |  | 16,413,132 |
Derivatives |  |  | 103,554 |  |  |  | — |  |  |  | 103,554 |  |  |  | — |  |  |  | 103,554 |
FINANCIAL LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Demand and savings deposits |  |  | 26,175,156 |  |  |  | 26,175,156 |  |  |  | — |  |  |  | — |  |  |  | 26,175,156 |
Time deposits |  |  | 876,095 |  |  |  | — |  |  |  | 879,841 |  |  |  | — |  |  |  | 879,841 |
Other borrowings |  |  | 2,315,497 |  |  |  | 65,636 |  |  |  | 2,249,861 |  |  |  | — |  |  |  | 2,315,497 |
Long-term debt |  |  | 269,595 |  |  |  | — |  |  |  | 299,858 |  |  |  | — |  |  |  | 299,858 |
Derivatives |  |  | 9,375 |  |  |  | — |  |  |  | 9,375 |  |  |  | — |  |  |  | 9,375 |
OFF-BALANCE SHEET ARRANGEMENTS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commitments to extend credit for loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 6,405 |
Commercial letters of credit |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 150 |
Standby letters of credit |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3,365 |
Cash and short-term investments The carrying amounts of cash and due from banks, federal funds sold and resell agreements are reasonable estimates of their fair values. Securities held to maturity Fair value of held-to-maturity securities are estimated by discounting the future cash flows using current market rates. Other securities Amount consists of FRB and FHLB stock held by the Company, equity securities with readily determinable fair values, and equity securities without readily determinable fair values, including equity-method investments and other miscellaneous investments. The carrying amount of the FRB and FHLB stock equals its fair value because the shares can only be redeemed by the FRB and FHLB at their carrying amount. Equity securities with readily determinable fair values are measured at fair value using quoted market prices. Equity securities without readily determinable fair values are carried at cost, which approximates fair value. As of December 31, 2020, equity securities without readily determinable fair values also included PCM equity-method investments, for which the Company’s proportionate share of the income or loss was recognized on a one-quarter lag based on the valuation of the underlying investment(s). Loans Fair values are estimated for portfolios with similar financial characteristics. Loans are segregated by type, such as commercial, real estate, consumer, and credit card. Each loan category is further segmented into fixed and variable interest rate categories. The fair value of loans are estimated by discounting the future cash flows. The discount rates used are estimated using comparable market rates for similar types of instruments adjusted to be commensurate with the credit risk, overhead costs, and optionality of such instruments. Demand and savings deposits The fair value of demand deposits and savings accounts is the amount payable on demand at September 30, 2021 and December 31, 2020. Time deposits The fair value of fixed-maturity certificates of deposit is estimated by discounting the future cash flows using the rates that are currently offered for deposits of similar remaining maturities. Other borrowings The carrying amounts of federal funds purchased, repurchase agreements and other short-term debt are reasonable estimates of their fair value because of the short-term nature of their maturities. Federal funds purchased are classified as Level 1 based on availability of quoted market prices and repurchase agreements and other short-term debt are classified as Level 2. Long-term debt Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate fair value of existing debt. Other off-balance sheet instruments The fair value of loan commitments and letters of credit are determined based on the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreement and the present creditworthiness of the counterparties. Neither the fees earned during the year on these instruments nor their fair value at period-end are significant to the Company’s consolidated financial position.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=123874694&loc=d3e19207-110258 + Details
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