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Fair Value Measurements
 9 Months Ended
Sep. 30, 2023
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
FASB ASC Topic 820 establishes a fair value hierarchy for the inputs to valuation techniques used to measure assets and liabilities at fair value using the following three categories (from highest to lowest priority):

•Level 1 – Inputs that represent quoted prices for identical instruments in active markets.
•Level 2 – Inputs that represent quoted prices for similar instruments in active markets or quoted prices for identical instruments in non-active markets. Also includes valuation techniques whose inputs are derived principally from observable market data other than quoted prices, such as interest rates or other market-corroborated means.
•Level 3 – Inputs that are largely unobservable, as little or no market data exists for the instrument being valued.
All assets and liabilities measured at fair value on both a recurring and nonrecurring basis have been categorized into the above three levels. The following tables present assets and liabilities measured at fair value on a recurring basis and reported on the consolidated balance sheets:
 September 30, 2023
 Level 1Level 2Level 3Total
 (dollars in thousands)
Loans held for sale$— $20,368 $— $20,368 
Available for sale investment securities:
U.S. Government securities222,446 — — 222,446 
U.S. Government-sponsored agency securities— 987 — 987 
State and municipal securities— 949,146 — 949,146 
Corporate debt securities— 428,484 — 428,484 
Collateralized mortgage obligations— 112,217 — 112,217 
Residential mortgage-backed securities— 189,275 — 189,275 
Commercial mortgage-backed securities— 516,313 — 516,313 
Total available for sale investment securities222,446 2,196,422 — 2,418,868 
Other assets:
Investments held in Rabbi Trust27,116 — — 27,116 
Derivative assets1,295 228,782 — 230,077 
Total assets$250,857 $2,445,572 $— $2,696,429 
Other liabilities:
Deferred compensation liabilities$27,116 $— $— $27,116 
Derivative liabilities1,080 372,529 — 373,609 
Total liabilities$28,196 $372,529 $— $400,725 

 December 31, 2022
 Level 1Level 2Level 3Total
 (dollars in thousands)
Loans held for sale$— $7,264 $— $7,264 
Available for sale investment securities:
U.S. Government securities218,485 — — 218,485 
U.S. Government sponsored agency securities— 1,008 — 1,008 
State and municipal securities— 1,105,712 — 1,105,712 
Corporate debt securities— 422,309 — 422,309 
Collateralized mortgage obligations— 134,033 — 134,033 
Residential mortgage-backed securities— 212,698 — 212,698 
Commercial mortgage-backed securities— 552,522 — 552,522 
Total available for sale investment securities218,485 2,428,282 — 2,646,767 
Other assets:
Investments held in Rabbi Trust23,435 — — 23,435 
Derivative assets672 166,796 — 167,468 
Total assets$242,592 $2,602,342 $— $2,844,934 
Other liabilities:
Deferred compensation liabilities$23,435 $— $— $23,435 
Derivative liabilities584 296,465 — 297,049 
Total liabilities$24,019 $296,465 $— $320,484 
The valuation techniques used to measure fair value for the items in the preceding tables are as follows:

Loans held for sale – This category includes mortgage loans held for sale that are measured at fair value. Fair values as of September 30, 2023 and December 31, 2022 were measured at the price that secondary market investors were offering for loans with similar characteristics.

Available for sale investment securities – Included in this asset category are debt securities. Level 2 investment securities are valued by a third-party pricing service. The pricing service uses pricing models that vary based on asset class and incorporate available market information, including quoted prices of investment securities with similar characteristics. Because many fixed income securities do not trade on a daily basis, pricing models use available information, as applicable, through processes such as benchmark yield curves, benchmarking of like securities, sector groupings and matrix pricing.

Standard market inputs include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data, including market research publications. For certain security types, additional inputs may be used, or some of the standard market inputs may not be applicable.

•U.S. Government securities – These securities are classified as Level 1. Fair values are based on quoted prices with active markets.

•State and municipal securities/Collateralized mortgage obligations/Residential mortgage-backed securities/Commercial mortgage-backed securities – These debt securities are classified as Level 2. Fair values are determined by a third-party pricing service, as detailed above.

•Corporate debt securities – This category consists of subordinated debt and senior debt issued by financial institutions ($421.5 million at September 30, 2023 and $415.4 million at December 31, 2022) and other corporate debt issued by non-financial institutions ($7.0 million at September 30, 2023 and $6.9 million at December 31, 2022).

Level 2 investments include subordinated debt and senior debt, and other corporate debt issued by non-financial institutions at September 30, 2023 and December 31, 2022. The fair values for these corporate debt securities are determined by a third-party pricing service, as detailed above.

Investments held in Rabbi Trust – This category consists of mutual funds that are held in trust for employee deferred compensation plans that the Corporation has elected to measure at fair value. Shares of mutual funds are valued based on net asset value, which represent quoted market prices for the underlying shares held in the mutual funds, and as such, are classified as Level 1.

Derivative assets – Fair value of foreign currency exchange contracts are classified as Level 1 assets ($1.3 million at September 30, 2023 and $0.7 million at December 31, 2022). The mutual funds and foreign exchange prices used to measure these items at fair value are based on quoted prices for identical instruments in active markets.

Level 2 assets, representing the fair value of mortgage banking derivatives in the form of interest rate locks and forward commitments with secondary market investors ($1.0 million at September 30, 2023 and $0.2 million at December 31, 2022) and the fair value of interest rate derivatives ($227.8 million at September 30, 2023 and $166.6 million at December 31, 2022). The fair values of the interest rate locks, forward commitments and interest rate derivatives represent the amounts that would be required to settle the derivative financial instruments at the balance sheet date. See "Note 7 - Derivative Financial Instruments," for additional information.

Deferred compensation liabilities – Fair value of amounts due to employees under deferred compensation plans, classified as Level 1 liabilities and are included in other liabilities on the consolidated balance sheets. The fair values of these liabilities are determined in the same manner as the related assets, as described under the heading "Investments held in Rabbi Trust" above.

Derivative liabilities – Level 1 liabilities, representing the fair value of foreign currency exchange contracts ($1.1 million at September 30, 2023 and $0.6 million at December 31, 2022).

Level 2 liabilities, representing the fair value of mortgage banking derivatives in the form of interest rate locks and forward commitments with secondary market investors (nominal at September 30, 2023 and $0.2 million at December 31, 2022) and the fair value of interest rate derivatives ($372.5 million at September 30, 2023 and $296.3 million at December 31, 2022).
The fair values of these liabilities are determined in the same manner as the related assets, as described under the heading "Derivative assets" above.

Certain financial instruments are not measured at fair value on an ongoing basis but are subject to fair value measurement in certain circumstances, such as upon their acquisition or when there is evidence of impairment. The following table presents Level 3 financial assets measured at fair value on a nonrecurring basis:
 September 30,
2023		December 31,
2022
 (dollars in thousands)
Loans, net$90,359 $121,115 
OREO2,549 5,790 
MSRs(1)
51,523 50,044 
Total assets$144,431 $176,949 
(1) Amounts shown are estimated fair value. MSRs are recorded on the Corporation's consolidated balance sheets at the lower of amortized cost or fair value.
See "Note 6 - Mortgage Servicing Rights" for additional information.

The valuation techniques used to measure fair value for the items in the table above are as follows:

•Loans, net – This category consists of loans that were individually evaluated for impairment and have been classified as Level 3 assets. The amount shown is the balance of non-accrual loans, net of related ACL. See "Note 5 - Loans and Allowance for Credit Losses," for additional details.

•OREO – This category consists of OREO classified as Level 3 assets, for which the fair values were based on estimated selling prices less estimated selling costs for similar assets in active markets.

•MSRs – This category consists of MSRs, which were initially recorded at fair value upon the sale of residential mortgage loans to secondary market investors, and subsequently carried at the lower of amortized cost or fair value. MSRs are amortized as a reduction to servicing income over the estimated lives of the underlying loans. MSRs are stratified by product type and evaluated for impairment by comparing each stratum's carrying amount to its estimated fair value. Fair values are determined at the end of each quarter through a discounted cash flows valuation performed by a third-party valuation expert. Significant inputs to the valuation included expected net servicing income, the discount rate and the expected life of the underlying loans. Expected life is based on the contractual terms of the loans, as adjusted for prepayment projections. The weighted average annual constant prepayment rate and the weighted average discount rate used in the September 30, 2023 valuation were 7.6% and 9.0%, respectively. Management reviews the reasonableness of the significant inputs to the third-party valuation in comparison to market data. See "Note 6 - Mortgage Servicing Rights," for additional information.
The following tables detail the book values and the estimated fair values of the Corporation's financial instruments as of September 30, 2023 and December 31, 2022:
 September 30, 2023
Estimated Fair Value
Carrying AmountLevel 1Level 2Level 3Total
(dollars in thousands)
FINANCIAL ASSETS
Cash and cash equivalents$420,460 $420,460 $— $— $420,460 
FRB and FHLB stock106,363 — 106,363 — 106,363 
Loans held for sale 20,368 — 20,368 — 20,368 
AFS securities 2,418,868 222,446 2,196,422 — 2,418,868 
HTM securities1,279,733 — 1,019,844 — 1,019,844 
Loans, net20,884,769 — — 19,508,510 19,508,510 
Accrued interest receivable101,624 101,624 — — 101,624 
Other assets 734,736 451,882 228,782 54,072 734,736 
FINANCIAL LIABILITIES  
Demand and savings deposits$18,040,590 $18,040,590 $— $— $18,040,590 
Brokered deposits941,059 143,238 795,500 — 938,738 
Time deposits2,439,940 — 2,421,009 — 2,421,009 
Accrued interest payable26,848 26,848 — — 26,848 
Federal funds purchased544,000 543,995 — — 543,995 
Federal Home Loan Bank advances730,000 736,030 — — 736,030 
Senior debt and subordinated debt540,174 — 449,078 — 449,078 
Other borrowings555,938 554,986 924 — 555,910 
Other liabilities 560,431 171,792 372,529 16,110 560,431 

December 31, 2022
Estimated Fair Value
Carrying AmountLevel 1Level 2Level 3Total
(dollars in thousands)
FINANCIAL ASSETS
Cash and cash equivalents$681,921 $681,921 $— $— $681,921 
FRB and FHLB stock130,186 — 130,186 — 130,186 
Loans held for sale7,264 — 7,264 — 7,264 
AFS securities2,646,767 218,485 2,428,282 — 2,646,767 
HTM securities1,321,256 — 1,125,049 — 1,125,049 
Loans, net20,010,181 — — 18,862,701 18,862,701 
Accrued interest receivable91,579 91,579 — — 91,579 
Other assets642,049 419,419 166,796 55,834 642,049 
FINANCIAL LIABILITIES
Demand and savings deposits$18,851,912 $18,851,912 $— $— $18,851,912 
Brokered deposits208,416 188,416 25,085 — 213,501 
Time deposits1,589,210 — 1,574,747 — 1,574,747 
Accrued interest payable10,185 10,185 — — 10,185 
Federal funds purchased191,000 190,998 — — 190,998 
Federal Home Loan Bank advances1,250,000 1,249,629 — — 1,249,629 
Senior debt and subordinated debt539,634 — 456,867 — 456,867 
Other borrowings890,573 889,393 1,180 — 890,573 
Other liabilities467,705 154,912 296,465 16,328 467,705 
Fair values of financial instruments are significantly affected by the assumptions used, principally the timing of future cash flows and discount rates. Because assumptions are inherently subjective in nature, the estimated fair values cannot be substantiated by comparison to independent market quotes and, in many cases, the estimated fair values could not necessarily be realized in an immediate sale or settlement of the instrument. The aggregate fair value amounts presented do not necessarily represent management’s estimate of the underlying value of the Corporation.

For short-term financial instruments, defined as those with remaining maturities of 90 days or less, and excluding those recorded at fair value on the Corporation's consolidated balance sheets, book value was considered to be a reasonable estimate of fair value.

The following instruments are predominantly short-term:
Assets  Liabilities
Cash and cash equivalents  Demand and savings deposits
Accrued interest receivable  Other borrowings
  Accrued interest payable

FRB and FHLB stock represent restricted investments and are carried at cost on the consolidated balance sheets, which is a reasonable estimate of fair value.

As of September 30, 2023, fair values for loans and time deposits were estimated by discounting future cash flows using the current rates, as adjusted for liquidity considerations, at which similar loans would be made to borrowers and similar deposits would be issued to customers for the same remaining maturities. Fair values of loans also include estimated credit losses that would be assumed in a market transaction, which represents estimated exit prices.

Brokered deposits consist of demand and saving deposits, which are classified as Level 1, and time deposits, which are classified as Level 2. The fair value of these deposits is determined in a manner consistent with the respective type of deposits discussed above.