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Disclosures about Fair Value of Financial Instruments | 12 Months Ended
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Dec. 31, 2017
Fair Value Disclosures [Abstract] |
Disclosures about Fair Value of Financial Instruments | DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS - As Restated Customers uses fair value measurements to record fair value adjustments to certain assets and liabilities and to disclose the fair value of its financial instruments. FASB ASC Topic 825, Financial Instruments, requires disclosure of the estimated fair value of an entity’s assets and liabilities considered to be financial instruments. For Customers, as for most financial institutions, the majority of its assets and liabilities are considered to be financial instruments. However, many of these instruments lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction. For fair value disclosure purposes, Customers utilized certain fair value measurement criteria under the FASB ASC 820, Fair Value Measurements and Disclosures, as explained below. In accordance with ASC 820, the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for Customers’ various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. The fair value guidance provides a consistent definition of fair value, focusing on an exit price in an orderly transaction (i.e., not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions. The fair value guidance also establishes a fair value hierarchy and describes the following three levels used to classify fair value measurements:
Level 1: | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2: | Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.
Level 3: | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).
A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The following methods and assumptions were used to estimate the fair values of Customers’ financial instruments as of December 31, 2017 and 2016: Cash and cash equivalents: The carrying amounts reported on the balance sheet for cash and cash equivalents approximate those assets’ fair values. These assets are classified as Level 1 fair values, based upon the lowest level of input that is significant to the fair value measurements. Investment securities: The fair values of investment securities available for sale are determined by obtaining quoted market prices on nationally recognized and foreign securities exchanges (Level 1), matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted prices, or externally developed models that use unobservable inputs due to limited or no market activity of the instrument (Level 3). These assets are classified as Level 1, 2 or 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. The carrying amount of FHLB, Federal Reserve Bank and other restricted stock approximates fair value and considers the limited marketability of such securities. These assets are classified as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. Loans held for sale - Consumer residential mortgage loans (fair value option): Customers generally estimates the fair values of residential mortgage loans held for sale based on commitments on hand from investors within the secondary market for loans with similar characteristics. These assets are classified as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. Loans receivable - Commercial mortgage warehouse loans (fair value option): The fair value of mortgage warehouse loans is the amount of cash initially advanced to fund the mortgage, plus accrued interest and fees, as specified in the respective agreements. The loan is used by mortgage companies as short-term bridge financing between the funding of mortgage loans and the finalization of the sale of the loans to an investor. Changes in fair value are not expected to be recognized since at inception of the transaction the underlying loans have already been sold to an approved investor. Additionally, the interest rate is variable, and the transaction is short-term, with an average life of 22 days from purchase to sale. These assets are classified as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. Loans held for sale - Multi-family loans: The fair values of multi-family loans held for sale are estimated using pricing indications from letters of intent with third party investors, recent sale transactions within the secondary markets for loans with similar characteristics, non-binding indicative bids from brokers or estimates made by management considering current market rates and terms. These assets are classified as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. Loans receivable, net of allowance for loan losses: The fair values of loans held for investment are estimated using discounted cash flows, using market rates at the balance sheet date that reflect the credit and interest-rate risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. These assets are classified as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. Impaired loans: Impaired loans are those that are accounted for under ASC 310, Receivables, for which Customers has measured impairment generally based on the fair value of the loan’s collateral or discounted cash flow analysis. Fair value is generally determined based upon independent third-party appraisals of the properties that collateralize the loans or discounted cash flows based upon the expected proceeds. These assets are classified as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. Other real estate owned: The fair value of other real estate owned ("OREO") is determined using appraisals, which may be discounted based on management’s review and changes in market conditions or sales agreements with third parties. All appraisals must be performed in accordance with the Uniform Standards of Professional Appraisal Practice. Appraisals are certified to Customers and performed by appraisers on Customers' approved list of appraisers. Evaluations are completed by a person independent of management. The content of the appraisal depends on the complexity of the property. Appraisals are completed on a “retail value” and an “as is value.” These assets are classified as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. Deposit liabilities: The fair values disclosed for interest and non-interest checking, savings and money market deposit accounts are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). These liabilities are classified as Level 1 fair values, based upon the lowest level of input that is significant to the fair value measurements. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits. These liabilities are classified as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. Federal funds purchased: For these short-term instruments, the carrying amount is considered a reasonable estimate of fair value. These liabilities are classified as Level 1 fair values, based upon the lowest level of input that is significant to the fair value measurements. Borrowings: Borrowings consist of long-term and short-term FHLB advances, 5-year senior unsecured notes, and subordinated debt. For overnight borrowings, the carrying amounts are considered reasonable estimates of fair value and are classified as Level 1 fair values measurements. Fair values of all other FHLB advances are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit-risk characteristics, terms and remaining maturity. The prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party. These liabilities are classified as Level 2 fair value measurements. Fair values of privately placed subordinated and senior unsecured debt are estimated by a third-party financial adviser using discounted cash flow analysis, based on market rates currently offered on such debt with similar credit-risk characteristics, terms and remaining maturity. These liabilities are included as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. The $63.3 million senior unsecured notes issued during third quarter 2013 are traded on the New York Stock Exchange, and their price can be obtained daily. This fair value measurement is classified as Level 1. Derivatives (Assets and Liabilities): The fair values of interest rate swaps and credit derivatives are determined using models that incorporate readily observable market data into a market standard methodology. This methodology nets the discounted future fixed cash receipts and the discounted expected variable cash payments. The discounted variable cash payments are based on expectations of future interest rates derived from observable market interest rate curves. In addition, fair value is adjusted for the effect of nonperformance risk by incorporating credit valuation adjustments for Customers and its counterparties. These assets and liabilities are included as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. The fair values of the residential mortgage loan commitments are derived from the estimated fair values that can be generated when the underlying mortgage loan is sold in the secondary market. Customers generally uses commitments on hand from third-party investors to estimate an exit price and adjusts for the probability of the commitment being exercised based on Customers' internal experience (i.e., pull-through rate). These assets and liabilities are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. Derivative assets and liabilities are presented in "Other assets" and "Accrued interest payable and other liabilities" on the consolidated balance sheet. Off-balance-sheet financial instruments: The fair values of unused commitments to lend and standby letters of credit are considered to be the same as their contractual amounts. The following information should not be interpreted as an estimate of Customers' fair value in its entirety because fair value calculations are only provided for a limited portion of Customers’ assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making these estimates, comparisons between Customers’ disclosures and those of other companies may not be meaningful. The estimated fair values of Customers’ financial instruments were as follows at December 31, 2017 and 2016.
| Carrying Amount |  | Estimated Fair Value |  | Fair Value Measurements at December 31, 2017
Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
(amounts in thousands) (as restated) |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 146,323 |  |  | $ | 146,323 |  |  | $ | 146,323 |  |  | $ | — |  |  | $ | — |
Investment securities, available for sale | 471,371 |  |  | 471,371 |  |  | 3,352 |  |  | 468,019 |  |  | — |
Loans held for sale (as restated) | 146,077 |  |  | 146,251 |  |  | — |  |  | 1,886 |  |  | 144,365 |
Total loans receivable, net of allowance for loan losses (as restated) | 8,523,651 |  |  | 8,470,171 |  |  | — |  |  | 1,793,408 |  |  | 6,676,763 |
FHLB, Federal Reserve Bank and other restricted stock | 105,918 |  |  | 105,918 |  |  | — |  |  | 105,918 |  |  | — |
Derivatives | 9,752 |  |  | 9,752 |  |  | — |  |  | 9,692 |  |  | 60 |
Liabilities |  |  |  |  |  |  |  |  |
Deposits | $ | 6,800,142 |  |  | $ | 6,796,095 |  |  | $ | 4,894,449 |  |  | $ | 1,901,646 |  |  | $ | — |
Federal funds purchased | 155,000 |  |  | 155,000 |  |  | 155,000 |  |  | — |  |  | — |
FHLB advances | 1,611,860 |  |  | 1,611,603 |  |  | 881,860 |  |  | 729,743 |  |  | — |
Other borrowings | 186,497 |  |  | 193,557 |  |  | 65,072 |  |  | 128,485 |  |  | — |
Subordinated debt | 108,880 |  |  | 115,775 |  |  | — |  |  | 115,775 |  |  | — |
Derivatives | 10,074 |  |  | 10,074 |  |  | — |  |  | 10,074 |  |  | — |
| Carrying Amount |  | Estimated Fair Value |  | Fair Value Measurements at December 31, 2016
Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
(amounts in thousands) (as restated) |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 264,709 |  |  | $ | 264,709 |  |  | $ | 264,709 |  |  | $ | — |  |  | $ | — |
Investment securities, available for sale | 493,474 |  |  | 493,474 |  |  | 15,246 |  |  | 478,228 |  |  | — |
Loans held for sale (as restated) | 695 |  |  | 695 |  |  | — |  |  | 695 |  |  | — |
Total loans receivable, net of allowance for loan losses (as restated) | 8,234,137 |  |  | 8,278,835 |  |  | — |  |  | 2,116,815 |  |  | 6,162,020 |
FHLB and Federal Reserve Bank, and other restricted stock | 68,408 |  |  | 68,408 |  |  | — |  |  | 68,408 |  |  | — |
Derivatives | 10,864 |  |  | 10,864 |  |  | — |  |  | 10,819 |  |  | 45 |
Liabilities |  |  |  |  |  |  |  |  |
Deposits | $ | 7,303,775 |  |  | $ | 7,303,663 |  |  | $ | 4,472,013 |  |  | $ | 2,831,650 |  |  | $ | — |
Federal funds purchased | 83,000 |  |  | 83,000 |  |  | 83,000 |  |  | — |  |  | — |
FHLB advances | 868,800 |  |  | 869,049 |  |  | 688,800 |  |  | 180,249 |  |  | — |
Other borrowings | 87,123 |  |  | 91,761 |  |  | 66,261 |  |  | 25,500 |  |  | — |
Subordinated debt | 108,783 |  |  | 111,375 |  |  | — |  |  | 111,375 |  |  | — |
Derivatives | 14,172 |  |  | 14,172 |  |  | — |  |  | 14,172 |  |  | — |
For financial assets and liabilities measured at fair value on a recurring and non-recurring basis, the fair value measurements by level within the fair value hierarchy used at December 31, 2017 and 2016, were as follows:
| December 31, 2017
| Fair Value Measurements at the End of the Reporting Period Using
| Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total
(amounts in thousands) (as restated) |
Measured at Fair Value on a Recurring Basis |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |
Available-for-sale securities |  |  |  |  |  |  |
Agency-guaranteed residential mortgage-backed securities | $ | — |  |  | $ | 183,458 |  |  | $ | — |  |  | $ | 183,458 |
Agency-guaranteed commercial mortgage-backed securities | — |  |  | 238,472 |  |  | — |  |  | 238,472 |
Corporate notes | — |  |  | 46,089 |  |  | — |  |  | 46,089 |
Equity securities | 3,352 |  |  | — |  |  | — |  |  | 3,352 |
Derivatives | — |  |  | 9,692 |  |  | 60 |  |  | 9,752 |
Loans held for sale – fair value option (as restated) | — |  |  | 1,886 |  |  | — |  |  | 1,886 |
Loans receivable, mortgage warehouse – fair value option (as restated) | — |  |  | 1,793,408 |  |  | — |  |  | 1,793,408 |
Total assets - recurring fair value measurements | $ | 3,352 |  |  | $ | 2,273,005 |  |  | $ | 60 |  |  | $ | 2,276,417 |
Liabilities |  |  |  |  |  |  |
Derivatives | $ | — |  |  | $ | 10,074 |  |  | $ | — |  |  | $ | 10,074 |
Measured at Fair Value on a Nonrecurring Basis |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |
Impaired loans, net of specific reserves of $1,451 | $ | — |  |  | $ | — |  |  | $ | 13,902 |  |  | $ | 13,902 |
Other real estate owned | — |  |  | — |  |  | 1,449 |  |  | 1,449 |
Total assets - nonrecurring fair value measurements | $ | — |  |  | $ | — |  |  | $ | 15,351 |  |  | $ | 15,351 |
| December 31, 2016
| Fair Value Measurements at the End of the Reporting Period Using
| Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total
(amounts in thousands) (as restated) |
Measured at Fair Value on a Recurring Basis |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |
Available-for-sale securities: |  |  |  |  |  |  |
Agency-guaranteed residential mortgage-backed securities | $ | — |  |  | $ | 231,263 |  |  | $ | — |  |  | $ | 231,263 |
Agency-guaranteed commercial mortgage-backed securities | — |  |  | 201,817 |  |  | — |  |  | 201,817 |
Corporate notes | — |  |  | 45,148 |  |  | — |  |  | 45,148 |
Equity securities | 15,246 |  |  | — |  |  | — |  |  | 15,246 |
Derivatives | — |  |  | 10,819 |  |  | 45 |  |  | 10,864 |
Loans held for sale – fair value option (as restated) | — |  |  | 695 |  |  | — |  |  | 695 |
Loans receivable, mortgage warehouse – fair value option (as restated) | — |  |  | 2,116,815 |  |  | — |  |  | 2,116,815 |
Total assets - recurring fair value measurements | $ | 15,246 |  |  | $ | 2,606,557 |  |  | $ | 45 |  |  | $ | 2,621,848 |
Liabilities |  |  |  |  |  |  |
Derivatives | $ | — |  |  | $ | 14,172 |  |  | $ | — |  |  | $ | 14,172 |
Measured at Fair Value on a Nonrecurring Basis |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |
Impaired loans, net of specific reserves of $1,360 | $ | — |  |  | $ | — |  |  | $ | 6,527 |  |  | $ | 6,527 |
Other real estate owned | — |  |  | — |  |  | 2,731 |  |  | 2,731 |
Total assets - nonrecurring fair value measurements | $ | — |  |  | $ | — |  |  | $ | 9,258 |  |  | $ | 9,258 |
The changes in Level 3 assets and liabilities measured at fair value on a recurring basis at December 31, 2017 and 2016, were as follows:
|  | For the Years Ended December 31,
|  | 2017 |  | 2016
|  | Residential Mortgage Loan Commitments
(amounts in thousands) |  |  |  |
Balance at December 31, |  | $ | 45 |  |  | $ | 45 |
Issuances |  | 360 |  |  | 400 |
Settlements |  | (345 | ) |  | (400 | )
Balance at December 31, |  | $ | 60 |  |  | $ | 45 |
Customers' policy is to recognize transfers between fair value levels when events or circumstances warrant transfers. There were no transfers between levels during the years ended December 31, 2017 and 2016. The following table summarizes financial assets and financial liabilities measured at fair value as of December 31, 2017 and 2016, for which Customers utilized Level 3 inputs to measure fair value:
| Quantitative Information about Level 3 Fair Value Measurements
December 31, 2017 | Fair Value Estimate |  | Valuation Technique |  | Unobservable Input |  | Range (Weighted Average) (4)
(dollars in thousands) |
Impaired loans | $ | 13,902 |  |  | Collateral appraisal (1) |  | Liquidation expenses (2) |  | (8 | )%
Other real estate owned | 1,449 |  |  | Collateral appraisal (1) |  | Liquidation expenses (2) |  | (8 | )%
Residential mortgage loan commitments | 60 |  |  | Adjusted market bid |  | Pull-through rate |  | 90 | %
| Quantitative Information about Level 3 Fair Value Measurements
December 31, 2016 | Fair Value Estimate |  | Valuation Technique |  | Unobservable Input |  | Range (Weighted Average) (4)
(dollars in thousands) |
Impaired loans | $ | 1,431 |  |  | Collateral appraisal (1) |  | Liquidation expenses (2) |  | (8 | )%
Impaired loans | 5,096 |  |  | Discounted cash flow |  | Projected cash flows (3) |  | 4 times EBIDTA |
Other real estate owned | 2,731 |  |  | Collateral appraisal (1) |  | Liquidation expenses (2) |  | (8 | )%
Residential mortgage loan commitments | 45 |  |  | Adjusted market bid |  | Pull-through rate |  | 90 | %
(1) | Obtained from approved independent appraisers. Appraisals are current and in compliance with credit policy. Customers does not generally discount appraisals.
(2) | Fair value is adjusted for estimated costs to sell based on a percentage of the value determined by appraisal.
(3) | Projected cash flows of the business derived using EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) multiple based on management's best estimate.
(4) | Presented as a percentage of the value determined by appraisal for impaired loans and other real estate owned.

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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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