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FAIR VALUES OF FINANCIAL INSTRUMENTS | 12 Months Ended
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Dec. 31, 2017
Fair Value Disclosures [Abstract] |
FAIR VALUES OF FINANCIAL INSTRUMENTS | FAIR VALUES OF FINANCIAL INSTRUMENTS Fair Value Hierarchy ASC 820-10 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The topic describes three levels of inputs that may be used to measure fair value:
• | Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
• | Level 2: Significant observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
• | Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Assets and Liabilities Measured on a Recurring Basis Securities Available-for-Sale: The fair values of securities available-for-sale are generally determined by quoted market prices in active markets, if available (Level 1). If quoted market prices are not available, the Company primarily employs independent pricing services that utilize pricing models to calculate fair value. Such fair value measurements consider observable data such as dealer quotes, market spreads, cash flows, yield curves, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and respective terms and conditions for debt instruments. The Company employs procedures to monitor the pricing service's assumptions and establishes processes to challenge the pricing service's valuations that appear unusual or unexpected. Level 2 securities include SBA loan pool securities, U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities, non-agency residential mortgage-backed securities, non-agency commercial mortgage-backed securities, collateralized loan obligations, and corporate debt securities. When a market is illiquid or there is a lack of transparency around the inputs to valuation, including at least one unobservable input, the securities are classified as Level 3 and reliance is placed upon internally developed models, and management judgment and evaluation for valuation. The Company had no securities available-for-sale classified as Level 3 at December 31, 2017 and 2016. Loans Held-for-Sale, Carried at Fair Value: The fair value of loans held-for-sale is based on commitments outstanding from investors as well as what secondary market investors are currently offering for portfolios with similar characteristics, except for loans that are repurchased out of Ginnie Mae loan pools that become severely delinquent which are valued based on an internal model that estimates the expected loss the Company will incur on these loans. Therefore, loans held-for-sale subjected to recurring fair value adjustments are classified as Level 2 or, in the case of loans repurchased or eligible to be repurchased out of Ginnie Mae loan pools, Level 3. The fair value includes the servicing value of the loans as well as any accrued interest. Derivative Assets and Liabilities: Derivative Instruments Related to Mortgage Banking Activities. The Company had no derivative instruments related to mortgage banking activities at December 31, 2017. The Company previously entered into IRLCs with prospective residential mortgage borrowers. These commitments were carried at fair value based on the fair value of the underlying mortgage loans which were based on observable market data. The Company adjusted the outstanding IRLCs with prospective borrowers based on an expectation that it would be exercised and the loan would be funded. These commitments were classified as Level 2 in the fair value disclosures, as the valuations are based on market observable inputs. The Company hedged the risk of the overall change in the fair value of loan commitments to borrowers with forward loan sale commitments and trades in to-be-announced (TBA) mortgage-backed securities of GSEs. These forward settling contracts were classified as Level 2, as valuations are based on market observable inputs at December 31, 2016. Fair values of these derivatives were included in assets and liabilities of discontinued operations. Interest Rate Swaps and Caps. The Company offers interest rate swaps and caps products to certain loan customers to allow them to hedge the risk of rising interest rates on their variable rate loans. The Company originates a variable rate loan and enters into a variable-to-fixed interest rate swap with the customer. The Company also enters into an offsetting swap with a correspondent bank. These back-to-back agreements are intended to offset each other and allow the Company to originate a variable rate loan, while providing a contract for fixed interest payments for the customer. The net cash flow for the Company is equal to the interest income received from a variable rate loan originated with the customer. The fair value of these derivatives is based on a discounted cash flow approach. Due to the observable nature of the inputs used in deriving the fair value of these derivative contracts, the valuation of interest rate swaps is classified as Level 2. Foreign Exchange Contracts. The Company offers short-term foreign exchange contracts to its customers to purchase and/or sell foreign currencies at set rates in the future. These products allow customers to hedge the foreign exchange rate risk of their deposits and loans denominated in foreign currencies. In conjunction with these products the Company also enters into offsetting contracts with institutional counterparties to hedge the Company’s foreign exchange rate risk. These back-to-back contracts allow the Company to offer its customers foreign exchange products while minimizing its exposure to foreign exchange rate fluctuations. The fair value of these instruments is determined at each reporting period based on the change in the foreign exchange rate. Given the short-term nature of the contracts, the counterparties’ credit risks are considered nominal and resulted in no adjustments to the valuation of the short-term foreign exchange contracts. Due to the observable nature of the inputs used in deriving the fair value of these derivative contracts, the valuation of these contracts is classified as Level 2. The Company had no foreign exchange contracts at December 31, 2017. Mortgage Servicing Rights: The Company retains servicing on some of its mortgage loans sold and elected the fair value option for these MSRs. Generally, the value is estimated based on a valuation from a third party provider that calculates the present value of the expected net servicing income from the portfolio based on key factors that include interest rates, prepayment assumptions, discount rate and estimated cash flows. Because of the significance of unobservable inputs, these servicing rights are classified as Level 3. At December 31, 2017, MSRs held-for-sale of $29.8 million were valued based on a market bid adjusted for value associated with early payoffs and paydowns and included as Level 3. The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2017:
|  |  |  | Fair Value Measurement Level
($ in thousands) |  | Carrying Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
December 31, 2017 |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Securities available-for-sale: |  |  |  |  |  |  |  |
SBA loan pools securities |  | $ | 1,058 |  |  | $ | — |  |  | $ | 1,058 |  |  | $ | — |
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities |  | 476,929 |  |  | — |  |  | 476,929 |  |  | — |
Non-agency residential mortgage-backed securities |  | 756 |  |  | — |  |  | 756 |  |  | — |
Non-agency commercial mortgage-backed securities |  | 310,511 |  |  | — |  |  | 310,511 |  |  | — |
Collateralized loan obligations |  | 1,702,318 |  |  | — |  |  | 1,702,318 |  |  | — |
Corporate debt securities |  | 83,897 |  |  | — |  |  | 83,897 |  |  | — |
Loans held-for-sale, carried at fair value (1) |  | 105,299 |  |  | — |  |  | 6,359 |  |  | 98,940 |
Mortgage servicing rights (2) |  | 31,852 |  |  | — |  |  | — |  |  | 31,852 |
Derivative assets: |  |  |  |  |  |  |  |
Interest rate swaps and caps (3) |  | 1,005 |  |  | — |  |  | 1,005 |  |  | — |
Liabilities |  |  |  |  |  |  |  |
Derivative liabilities: |  |  |  |  |  |  |  |
Interest rate swaps and caps (4) |  | 1,033 |  |  | — |  |  | 1,033 |  |  | — |
(1) | Includes loans held-for-sale carried at fair value of $38.7 million ($6.4 million at Level 2 and $32.3 million at Level 3) of discontinued operations, which are included in Assets of Discontinued Operations on the Consolidated Statements of Financial Condition
(2) | Included in Servicing Rights, Net on the Consolidated Statements of Financial Condition
(3) | Included in Other Assets on the Consolidated Statements of Financial Condition
(4) | Included in Accrued Expenses and Other Liabilities on the Consolidated Statements of Financial Condition
The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2016:
|  |  |  | Fair Value Measurement Level
($ in thousands) |  | Carrying Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
December 31, 2016 |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Securities available-for-sale: |  |  |  |  |  |  |  |
SBA loan pools securities |  | $ | 1,221 |  |  | $ | — |  |  | $ | 1,221 |  |  | $ | — |
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities |  | 807,273 |  |  | — |  |  | 807,273 |  |  | — |
Non-agency residential mortgage-backed securities |  | 117,177 |  |  | — |  |  | 117,177 |  |  | — |
Collateralized loan obligations |  | 1,406,869 |  |  | — |  |  | 1,406,869 |  |  | — |
Corporate debt securities |  | 48,948 |  |  | — |  |  | 48,948 |  |  | — |
Loans held-for-sale, carried at fair value (1) |  | 416,974 |  |  | — |  |  | 358,714 |  |  | 58,260 |
Mortgage servicing rights (2) |  | 76,121 |  |  | — |  |  | — |  |  | 76,121 |
Derivative assets |  |  |  |  |  |  |  |
Interest rate lock commitments (3) |  | 8,317 |  |  | — |  |  | 8,317 |  |  | — |
Mandatory forward commitments (3) |  | 8,897 |  |  | — |  |  | 8,897 |  |  | — |
Interest rate swaps and caps (4) |  | 707 |  |  | — |  |  | 707 |  |  | — |
Foreign exchange contracts (4) |  | 47 |  |  | — |  |  | 47 |  |  | — |
Liabilities |  |  |  |  |  |  |  |
Derivative liabilities |  |  |  |  |  |  |  |
Interest rate lock commitments (5) |  | 231 |  |  | — |  |  | 231 |  |  | — |
Mandatory forward commitments (5) |  | 1,212 |  |  | — |  |  | 1,212 |  |  | — |
Interest rate swaps and caps (6) |  | 655 |  |  | — |  |  | 655 |  |  | — |
Foreign exchange contracts (6) |  | 18 |  |  | — |  |  | 18 |  |  | — |
(1) | Includes loans held-for-sale carried at fair value of $406.3 million ($348.1 million at Level 2 and $58.3 million at Level 3) of discontinued operations, which are included in Assets of Discontinued Operations on the Consolidated Statements of Financial Condition
(2) | Included in Servicing Rights, Net, except for $37.7 million included in Assets of Discontinued Operations, on the Consolidated Statements of Financial Condition
(3) | Included in Assets of Discontinued Operations on the Consolidated Statements of Financial Condition
(4) | Included in Other Assets on the Consolidated Statements of Financial Condition
(5) | Included in Liabilities of Discontinued Operations on the Consolidated Statements of Financial Condition
(6) | Included in Accrued Expenses and Other Liabilities on the Consolidated Statements of Financial Condition
The following table presents a reconciliation of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3), on a consolidated operations basis, for the periods indicated:
|  | Year Ended December 31,
($ in thousands) |  | 2017 |  | 2016 |  | 2015
Mortgage servicing rights (1) |  |  |  |  |  |
Balance at beginning of period |  | $ | 76,121 |  |  | $ | 49,939 |  |  | $ | 19,082 |
Transfers in and (out) of Level 3 (2) |  | — |  |  | — |  |  | — |
Total gains or losses (realized/unrealized): |  |  |  |  |  |
Included in earnings—fair value adjustment |  | (10,240 | ) |  | (5,709 | ) |  | (3,568 | )
Additions |  | 12,127 |  |  | 49,293 |  |  | 45,263 |
Sales, paydowns, and other (3) |  | (46,156 | ) |  | (17,402 | ) |  | (10,838 | )
Balance at end of period |  | $ | 31,852 |  |  | $ | 76,121 |  |  | $ | 49,939 |
Loans Repurchased or eligible to be repurchased from Ginnie Mae Loan Pools (4) |  |  |  |  |  |
Balance at beginning of period |  | $ | 58,260 |  |  | $ | 18,291 |  |  | $ | — |
Transfers in and (out) of Level 3 (2) |  | — |  |  | — |  |  | 1,088 |
Total gains or losses (realized/unrealized): |  |  |  |  |  |
Included in earnings—fair value adjustment |  | (781 | ) |  | 216 |  |  | — |
Additions |  | 117,215 |  |  | 51,123 |  |  | 18,555 |
Sales, settlements, and other |  | (75,754 | ) |  | (11,370 | ) |  | (1,352 | )
Balance at end of period |  | $ | 98,940 |  |  | $ | 58,260 |  |  | $ | 18,291 |
(1) | Includes MSRs of discontinued operations, which is included in Assets of Discontinued Operations on the Consolidated Statements of Financial Condition, of $37.7 million, $22.9 million, and $10.7 million, respectively, in balance at beginning of period, and $0, $37.7 million, and $22.9 million, respectively, in balance at end of period for the years ended December 31, 2017, 2016 and 2015
(2) | The Company’s policy is to recognize transfers in and transfers out as of the actual date of the event or change in circumstances that causes the transfer
(3) | Includes $37.8 million of MSRs sold as a part of discontinued operations for the year ended December 31, 2017
(4) | Includes loans repurchased or eligible to be repurchased from Ginnie Mae Loan Pools of discontinued operations, which is included in Assets of Discontinued Operations on the Consolidated Statements of Financial Condition, of $58.3 million, $18.3 million and $0, respectively, in balance at beginning of period, and $32.3 million, $58.3 million and $18.3 million, respectively, in balance at end of period for the years ended December 31, 2017, 2016 and 2015
Loans repurchased or eligible to be repurchased from Ginnie Mae Loan pools had aggregate unpaid principal balances of $99.7 million and $58.3 million at December 31, 2017 and 2016, respectively. The following table presents, as of the dates indicated, quantitative information about Level 3 fair value measurements on a recurring basis, other than loans that become severely delinquent and are repurchased out of Ginnie Mae loan pools that were valued based on an estimate of the expected loss the Company will incur on these loans, which was included as Level 3 at December 31, 2017 and 2016:
($ in thousands) |  | Fair Value |  | Valuation Technique(s) |  | Unobservable Input(s) |  | Range (Weighted-Average)
December 31, 2017 |  |  |  |  |  |  |  |
Mortgage servicing rights (1) |  | $ | 2,059 |  |  | Discounted cash flow |  | Discount rate |  | 13.00% to 13.00% (13.00%)
|  |  |  |  |  | Prepayment rate |  | 10.04% to 49.97% (16.54%)
December 31, 2016 |  |  |  |  |  |  |  |
Mortgage servicing rights (2) |  | $ | 76,121 |  |  | Discounted cash flow |  | Discount rate |  | 9.11% to 15.00% (10.18%)
|  |  |  |  |  | Prepayment rate |  | 7.00% to 39.90% (11.84%)
(1) | Excludes MSRs held-for-sale of $29.8 million, which were valued based on a market bid adjusted for value associated with early payoffs and paydowns
(2) | Includes MSRs of $37.7 million of discontinued operations
The significant unobservable inputs used in the fair value measurement of the Company’s servicing rights include the discount rate and prepayment rate. The significant unobservable inputs used in the fair value measurement of the Company's loans repurchased from Ginnie Mae pools at December 31, 2017 included an expected loss rate of 1.55 percent for insured loans and 20.00 percent for uninsured loans. The significant unobservable inputs used in the fair value measurement of the Company's loans repurchased from Ginnie Mae pools at December 31, 2016 included an expected loss rate of 1.55 percent. There may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results. Fair Value Option Loans Held-for-Sale, Carried at Fair Value: The Company elected to measure certain SFR mortgage loans held-for-sale under the fair value option. Electing to measure SFR mortgage loans held-for-sale at fair value reduces certain timing differences and better matches changes in the value of these assets with changes in the value of derivatives used as economic hedges for these assets. The Company also elected to record loans repurchased from GNMA at fair value, as the Company intends to sell them after curing any defects and, accordingly, they are classified as held-for-sale. Loans previously sold to GNMA that are delinquent more than 90 days are subject to a repurchase option when that condition exists. These loans were re-recognized at fair value and offset by a secured borrowing, as the loans were still legally owned by GNMA. The following table presents the fair value and aggregate principal balance of certain assets, on a consolidated operations basis, under the fair value option:
|  | December 31,
|  | 2017 |  | 2016
($ in thousands) |  | Fair Value |  | Unpaid Principal Balance |  | Difference |  | Fair Value |  | Unpaid Principal Balance |  | Difference
Loans held-for-sale, carried at fair value in continuing operations: |  |  |  |  |  |  |  |  |  |  |  |
Total loans |  | $ | 66,603 |  |  | $ | 67,415 |  |  | $ | (812 | ) |  | $ | 10,636 |  |  | $ | 10,606 |  |  | $ | 30 |
Non-accrual loans (1) |  | 60,999 |  |  | 61,900 |  |  | (901 | ) |  | — |  |  | — |  |  | — |
Loans past due 90 days or more and still accruing |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Loans held-for-sale, carried at fair value in discontinued operations: |  |  |  |  |  |  |  |  |  |  |  |
Total loans |  | $ | 38,696 |  |  | $ | 39,541 |  |  | $ | (845 | ) |  | $ | 406,338 |  |  | $ | 397,283 |  |  | $ | 9,055 |
Non-accrual loans (2) |  | 24,073 |  |  | 24,297 |  |  | (224 | ) |  | 54,151 |  |  | 54,824 |  |  | (673 | )
Loans past due 90 days or more and still accruing |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
(1) | Includes loans guaranteed by the U.S. government of $54.2 million and $0, respectively, at December 31, 2017 and 2016
(2) | Includes loans guaranteed by the U.S. government of $20.7 million and $43.8 million, respectively, at December 31, 2017 and 2016
The assets and liabilities accounted for under the fair value option are initially measured at fair value. Gains and losses from initial measurement and subsequent changes in fair value are recognized in earnings. The following table presents changes in fair value related to initial measurement and subsequent changes in fair value included in earnings for these assets and liabilities measured at fair value for the periods indicated:
|  | Year Ended December 31,
($ in thousands) |  | 2017 |  | 2016 |  | 2015
Net gains (losses) from fair value changes |  |  |  |  |  |
Net gain on sale of loans (continuing operations) |  | $ | (170 | ) |  | $ | 29 |  |  | $ | 67 |
Net revenue on mortgage banking activities (discontinued operations) |  | (288 | ) |  | 7,365 |  |  | 11,326 |
Changes in fair value due to instrument-specific credit risk were insignificant for the years ended December 31, 2017, 2016 and 2015. Interest income on loans held-for-sale under the fair value option is measured based on the contractual interest rate and reported in Loans and Leases, including Fees under Interest and Dividend Income and Income from Discontinued Operations on the Consolidated Statements of Operations. Assets and Liabilities Measured on a Non-Recurring Basis Securities Held-to-Maturity: Investment securities that the Company has the ability and the intent to hold to maturity are classified as held-to-maturity. Investment securities classified as held-to-maturity are carried at amortized cost. The fair values of securities held-to-maturity are generally determined by quoted market prices in active markets, if available (Level 1). If quoted market prices are not available, the Company employs independent pricing services that utilize pricing models to calculate fair value. Such fair value measurements consider observable data such as dealer quotes, market spreads, cash flows, yield curves, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and respective terms and conditions for debt instruments (Level 2). The Company employs processes and procedures to monitor and challenge the pricing assumptions and valuations that appear unusual or unexpected. When a market is illiquid or there is a lack of transparency around the inputs to valuation, including at least one unobservable input, the securities are classified as Level 3 and reliance is placed upon internally developed models, and management judgment and evaluation. Only securities held-to-maturity with OTTI are considered to be carried at fair value. The Company had no securities classified as held-to-maturity at December 31, 2017, and the Company did not have any OTTI on securities held-to-maturity at December 31, 2016. Impaired Loans and Leases: The fair value of impaired loans and leases with specific allocations of the ALLL based on collateral values is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically deemed significant unobservable inputs used for determining fair value and result in a Level 3 classification. Loans Held-for-Sale, Carried at Lower of Cost or Fair Value: The Company records non-conforming jumbo mortgage loans held-for-sale and certain non-residential mortgage loans held-of-sale at the lower of cost or fair value, on an aggregate basis. The Company obtains fair values from a third party independent valuation service provider. Loans held-for-sale accounted for at the lower of cost or fair value are considered to be recognized at fair value when they are recorded at below cost, on an aggregate basis, and are classified as Level 2. SBA Servicing Assets: SBA servicing assets represent the value associated with servicing SBA loans that have been sold. The fair value for SBA servicing assets is determined through a discounted cash flow analysis that utilizes estimated market yield and projected prepayment speeds as inputs. All of these assumptions require a significant degree of management estimation and judgment. The fair market valuation is performed on a quarterly basis for SBA servicing assets. SBA servicing assets are accounted for at the lower of cost or market value and considered to be recognized at fair value when they are recorded at below cost and are classified as Level 3. Other Real Estate Owned Assets: OREO assets initially are recorded at fair value at the time of foreclosure. Thereafter, they are recorded at the lower of cost or fair value. The fair value of other real estate owned assets is generally based on recent real estate appraisals adjusted for estimated selling costs. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments may be significant and result in a Level 3 classification due to the unobservable inputs used for determining fair value. Only OREO assets with a valuation allowance are considered to be carried at fair value. The Company recorded valuation allowance expense for OREO assets of $236 thousand, $31 thousand and $38 thousand, respectively, for the years ended December 31, 2017, 2016 and 2015 in All Other Expense on the Consolidated Statements of Operations. The following table presents the Company’s financial assets and liabilities measured at fair value on a non-recurring basis as of the dates indicated:
|  |  |  | Fair Value Measurement Level
($ in thousands) |  | Carrying Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
December 31, 2017 |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Impaired loans: |  |  |  |  |  |  |  |
SBA |  | $ | 174 |  |  | — |  |  | — |  |  | $ | 174 |
Other real estate owned: |  |  |  |  |  |  |  |
Single family residential |  | 1,415 |  |  | — |  |  | — |  |  | 1,415 |
December 31, 2016 |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Impaired loans: |  |  |  |  |  |  |  |
Single family residential mortgage |  | $ | 2,956 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,956 |
Other real estate owned: |  |  |  |  |  |  |  |
Single family residential |  | 2,502 |  |  | — |  |  | — |  |  | 2,502 |
The following table presents the gains and (losses) recognized on assets measured at fair value on a non-recurring basis for the periods indicated:
|  | Year Ended December 31,
($ in thousands) |  | 2017 |  | 2016 |  | 2015
Impaired loans: |  |  |  |  |  |
Single family residential mortgage |  | $ | (164 | ) |  | $ | — |  |  | $ | — |
SBA |  | (200 | ) |  | — |  |  | 4 |
Other consumer |  | (29 | ) |  | — |  |  | — |
Other real estate owned |  |  |  |  |  |
Single family residential |  | (284 | ) |  | (235 | ) |  | (15 | )
Estimated Fair Values of Financial Instruments The following table presents the carrying amounts and estimated fair values of financial assets and liabilities as of the dates indicated:
|  | Carrying Amount |  | Fair Value Measurement Level
($ in thousands) |  |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
December 31, 2017 |  |  |  |  |  |  |  |  |  |
Financial assets |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 387,699 |  |  | $ | 387,699 |  |  | $ | — |  |  | $ | — |  |  | $ | 387,699 |
Securities available-for-sale |  | 2,575,469 |  |  | — |  |  | 2,575,469 |  |  | — |  |  | 2,575,469 |
Federal Home Loan Bank and other bank stock |  | 75,654 |  |  | — |  |  | 75,654 |  |  | — |  |  | 75,654 |
Loans held-for-sale (1) |  | 105,765 |  |  | — |  |  | 6,866 |  |  | 98,940 |  |  | 105,806 |
Loans and leases receivable, net of allowance |  | 6,610,074 |  |  | — |  |  | — |  |  | 6,601,767 |  |  | 6,601,767 |
Accrued interest receivable |  | 35,355 |  |  | 35,355 |  |  | — |  |  | — |  |  | 35,355 |
Derivative assets |  | 1,005 |  |  | — |  |  | 1,005 |  |  | — |  |  | 1,005 |
Financial liabilities |  |  |  |  |  |  |  |  |  |
Deposits |  | 7,292,903 |  |  | — |  |  | — |  |  | 7,063,613 |  |  | 7,063,613 |
Advances from Federal Home Loan Bank |  | 1,695,000 |  |  | — |  |  | 1,695,039 |  |  | — |  |  | 1,695,039 |
Long-term debt |  | 172,941 |  |  | — |  |  | 180,560 |  |  | — |  |  | 180,560 |
Derivative liabilities |  | 1,033 |  |  | — |  |  | 1,033 |  |  | — |  |  | 1,033 |
Accrued interest payable |  | 7,321 |  |  | 7,321 |  |  | — |  |  | — |  |  | 7,321 |
December 31, 2016 |  |  |  |  |  |  |  |  |  |
Financial assets |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 439,510 |  |  | $ | 439,510 |  |  | $ | — |  |  | $ | — |  |  | $ | 439,510 |
Time deposits in financial institutions |  | 1,000 |  |  | 1,000 |  |  | — |  |  | — |  |  | 1,000 |
Securities available-for-sale |  | 2,381,488 |  |  | — |  |  | 2,381,488 |  |  | — |  |  | 2,381,488 |
Securities held-to-maturity |  | 884,234 |  |  | — |  |  | 899,743 |  |  | — |  |  | 899,743 |
Federal Home Loan Bank and other bank stock |  | 67,842 |  |  | — |  |  | 67,842 |  |  | — |  |  | 67,842 |
Loans held-for-sale (2) |  | 704,651 |  |  | — |  |  | 652,928 |  |  | 58,260 |  |  | 711,188 |
Loans and leases receivable, net of allowance |  | 5,994,308 |  |  | — |  |  | — |  |  | 5,999,791 |  |  | 5,999,791 |
Accrued interest receivable |  | 36,382 |  |  | 36,382 |  |  | — |  |  | — |  |  | 36,382 |
Derivative assets |  | 17,968 |  |  | — |  |  | 17,968 |  |  | — |  |  | 17,968 |
Financial liabilities |  |  |  |  |  |  |  |  |  |
Deposits |  | 9,142,150 |  |  | — |  |  | — |  |  | 8,908,406 |  |  | 8,908,406 |
Advances from Federal Home Loan Bank |  | 490,000 |  |  | — |  |  | 490,351 |  |  | — |  |  | 490,351 |
Other borrowings |  | 67,922 |  |  | — |  |  | 68,000 |  |  | — |  |  | 68,000 |
Long-term debt |  | 175,378 |  |  | — |  |  | 174,006 |  |  | — |  |  | 174,006 |
Derivative liabilities |  | 2,116 |  |  | — |  |  | 2,116 |  |  | — |  |  | 2,116 |
Accrued interest payable |  | 4,114 |  |  | 4,114 |  |  | — |  |  | — |  |  | 4,114 |
(1) | Includes loans held-for-sale carried at fair value of $38.7 million ($6.4 million at Level 2 and $32.3 million at Level 3) of discontinued operations
(2) | Includes loans held-for-sale carried at fair value of $406.3 million ($348.1 million at Level 2 and $58.3 million at Level 3) of discontinued operations
The methods and assumptions used to estimate fair value are described as follows: Cash and Cash Equivalents and Time Deposits in Financial Institutions: The carrying amounts of cash and cash equivalents and time deposits in financial institutions approximate fair value due to the short-term nature of these instruments (Level 1). Federal Home Loan Bank and Other Bank Stock: Federal Home Loan Bank and other bank stock are recorded at cost, which approximates fair value. Ownership of FHLB stock is restricted to member banks, and purchases and sales of these securities are at par value with the issuer (Level 2). Securities Held-to-Maturity: Investment securities that the Company has the ability and the intent to hold to maturity are classified as held-to-maturity. Investment securities classified as held-to-maturity are carried at amortized cost. The fair values of securities held-to-maturity are generally determined by quoted market prices in active markets, if available (Level 1). If quoted market prices are not available, the Company employs independent pricing services that utilize pricing models to calculate fair value. Such fair value measurements consider observable data such as dealer quotes, market spreads, cash flows, yield curves, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and respective terms and conditions for debt instruments (Level 2). The Company employs procedures to monitor the pricing service's assumptions and establishes processes to challenge the pricing service's valuations that appear unusual or unexpected. When a market is illiquid or there is a lack of transparency around the inputs to valuation, the securities are classified as Level 3 and reliance is placed upon internally developed models, and management judgment and evaluation for valuation. The Company did not have any securities held-to-maturity at December 31, 2017. Loans and Leases Receivable, Net of ALLL: The fair value of loans and leases receivable is estimated based on the discounted cash flow approach. The discount rate was derived from the associated yield curve plus spreads and reflects the rates offered by the Bank for loans with similar financial characteristics. Yield curves are constructed by product and payment types. These rates could be different from what other financial institutions could offer for these loans. Additionally, the fair value of our loans may differ significantly from the values that would have been used had a ready market existed for such loans and may differ materially from the values that we may ultimately realize (Level 3). This method of estimating fair value does not incorporate the exit-price concept of fair value prescribed by ASC Topic 820. Accrued Interest Receivable: The carrying amount of accrued interest receivable approximates its fair value (Level 1). Deposits: The fair value of deposits is estimated based on discounted cash flows. The cash flows for non-maturity deposits, including savings accounts and money market checking, are estimated based on their historical decaying experiences. The discount rate used for fair valuation is based on interest rates currently being offered by the Bank on comparable deposits as to amount and term (Level 3). Advances from Federal Home Loan Bank and Other Borrowings: The fair values of advances from FHLB and other borrowings are estimated based on a discounted cash flow approach. The discount rate was derived from the current market rates for borrowings with similar remaining maturities (Level 2). Long-Term Debt: Fair value of long-term debt is determined by observable data such as market spreads, cash flows, yield curves, credit information, and respective terms and conditions for debt instruments (Level 2). Accrued Interest Payable: The carrying amount of accrued interest payable approximates its fair value (Level 1).

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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