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Disclosures About Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Estimated Fair Values of Financial Instruments

The estimated fair values of Customers' financial instruments at September 30, 2020 and December 31, 2019 were as follows.

															Fair Value Measurements at September 30, 2020
(amounts in thousands)			Carrying Amount						Estimated Fair Value						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
Assets:
Cash and cash equivalents			$	331,416					$	331,416					$	331,416					$	—					$	—
Debt securities, available for sale			1,131,365						1,131,365						—						1,131,365						—
Equity securities			2,466						2,466						2,466						—						—
Loans held for sale			26,689						26,689						—						6,998						19,691
Total loans and leases receivable, net of allowance for credit losses on loans and leases			16,423,029						17,070,867						—						3,913,593						13,157,274
FHLB, Federal Reserve Bank and other restricted stock			70,387						70,387						—						70,387						—
Derivatives			60,810						60,810						—						60,355						455
Liabilities:
Deposits			$	10,839,077					$	10,843,133					$	9,866,651					$	976,482					$	—
FRB advances			4,811,009						4,811,009						—						4,811,009						—
Federal funds purchased			680,000						680,000						680,000						—						—
FHLB advances			850,000						854,104						—						854,104						—
Other borrowings			123,935						102,594						—						102,594						—
Subordinated debt			181,324						178,958						—						178,958						—
Derivatives			110,649						110,649						—						110,649						—

															Fair Value Measurements at December 31, 2019
(amounts in thousands)			Carrying Amount						Estimated Fair Value						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
Assets:
Cash and cash equivalents			$	212,505					$	212,505					$	212,505					$	—					$	—
Debt securities, available for sale			577,198						577,198						—						577,198						—
Interest-only GNMA securities			16,272						16,272						—						—						16,272
Equity securities			2,406						2,406						2,406						—						—
Loans held for sale			486,328						486,328						—						2,130						484,198
Total loans and leases receivable, net of allowance for credit losses on loans and leases			9,508,367						9,853,037						—						2,245,758						7,607,279
FHLB, Federal Reserve Bank and other restricted stock			84,214						84,214						—						84,214						—
Derivatives			23,608						23,608						—						23,529						79
Liabilities:
Deposits			$	8,648,936					$	8,652,340					$	6,980,402					$	1,671,938					$	—
Federal funds purchased			538,000						538,000						538,000						—						—
FHLB advances			850,000						852,162						—						852,162						—
Other borrowings			123,630						127,603						—						127,603						—
Subordinated debt			181,115						192,217						—						192,217						—
Derivatives			45,939						45,939						—						45,939						—

Summary of Financial Assets and Liabilities Measured at Fair Value on a Recurring and Nonrecurring Basis

For financial assets and liabilities measured at fair value on a recurring and nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2020 and December 31, 2019 were as follows:

			September 30, 2020
			Fair Value Measurements at the End of the Reporting Period Using
(amounts in thousands)			Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
Measured at Fair Value on a Recurring Basis:
Assets
Available for sale debt securities:
Asset-backed securities			$	—					$	375,381					$	—					$	375,381
U.S. government agencies securities			—						40,008						—						40,008
Agency-guaranteed residential mortgage-backed securities			—						$	61,079					—						$	61,079
Agency guaranteed collateralized mortgage obligations			—						153,779						—						153,779
State and political subdivision debt securities			—						18,259						—						18,259
Private label collateralized mortgage obligations			—						118,987						—						118,987
Corporate notes			—						363,872						—						363,872
Equity securities			2,466						—						—						2,466
Derivatives			—						60,355						455						60,810
Loans held for sale – fair value option			—						6,998						—						6,998
Loans receivable, mortgage warehouse – fair value option			—						3,913,593						—						3,913,593
Total assets – recurring fair value measurements			$	2,466					$	5,112,311					$	455					$	5,115,232
Liabilities
Derivatives			$	—					$	110,649					$	—					$	110,649
Measured at Fair Value on a Nonrecurring Basis:
Assets
Loans held for sale			$	—					$	—					$	18,366					$	18,366
Collateral-dependent loans			—						—						22,539						22,539
Total assets – nonrecurring fair value measurements			$	—					$	—					$	40,905					$	40,905

			December 31, 2019
			Fair Value Measurements at the End of the Reporting Period Using
(amounts in thousands)			Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
Measured at Fair Value on a Recurring Basis:
Assets
Available for sale debt securities:
Agency-guaranteed residential mortgage–backed securities			$	—					$	278,321					$	—					$	278,321
Corporate notes			—						298,877						—						298,877
Interest-only GNMA securities			—						—						16,272						16,272
Equity securities			2,406						—						—						2,406
Derivatives			—						23,529						79						23,608
Loans held for sale – fair value option			—						2,130						—						2,130
Loans receivable, mortgage warehouse – fair value option			—						2,245,758						—						2,245,758
Total assets – recurring fair value measurements			$	2,406					$	2,848,615					$	16,351					$	2,867,372
Liabilities
Derivatives			$	—					$	45,939					$	—					$	45,939
Measured at Fair Value on a Nonrecurring Basis:
Assets
Impaired loans, net of specific reserves of $852			$	—					$	—					$	14,272					$	14,272
Other real estate owned			—						—						78						78
Total assets – nonrecurring fair value measurements			$	—					$	—					$	14,350					$	14,350

Statement of Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis

The changes in residential mortgage loan commitments (Level 3 assets) measured at fair value on a recurring basis for the three and nine months ended September 30, 2020 and 2019 are summarized in the tables below. Additional information about residential mortgage loan commitments can be found in NOTE 12 - DERIVATIVES INSTRUMENTS AND HEDGING ACTIVITIES.

			Residential Mortgage Loan Commitments
			Three Months Ended September 30,
(amounts in thousands)			2020						2019
Balance at June 30			$	52					$	145
Issuances			455						150
Settlements			(52)						(145)
Balance at September 30			$	455					$	150

			Residential Mortgage Loan Commitments
			Nine Months Ended September 30,
(amounts in thousands)			2020						2019
Balance at December 31			$	79					$	69
Issuances			722						372
Settlements			(346)						(291)
Balance at September 30			$	455					$	150

Summary of Financial Assets and Financial Liabilities Measured at Fair Value on Recurring and Nonrecurring Basis

The following table summarizes financial assets and financial liabilities measured at fair value as of September 30, 2020 and December 31, 2019 on a recurring and nonrecurring basis for which Customers utilized Level 3 inputs to measure fair value. The unobservable Level 3 inputs noted below contain a level of uncertainty that may differ from what is realized in an immediate settlement of the assets. Therefore, Customers may realize a value higher or lower than the current estimated fair value of the assets.

Quantitative Information about Level 3 Fair Value Measurements

September 30, 2020

Fair Value Estimate

Valuation Technique

Unobservable Input

Range  (Weighted Average) (4)

(amounts in thousands)

Collateral-dependent loans – real estate

$

21,572

Collateral appraisal (1)

Liquidation expenses (2)

8% - 8% (8%)

Collateral-dependent loans – commercial & industrial

967

Collateral appraisal (1) Business asset valuation (3)

Liquidation expenses (2) Business asset valuation adjustments (4)

7% - 8% (8%) 60% - 60% (60%)

Residential mortgage loan commitments

455

Adjusted market bid

Pull-through rate

81% - 81% (81%)

(1)Obtained from approved independent appraisers. Appraisals are current and in compliance with credit policy. Customers does not generally discount appraisals.
Fair value is also estimated based on sale agreements or letters of intent with third parties.

(2)Appraisals are adjusted by management for liquidation expenses. The range and weighted average of liquidation expense adjustments are presented as a percentage of the appraisal.

(3)Business asset valuation obtained from independent party.

(4)Business asset valuations may be adjusted by management for qualitative factors including economic conditions and the condition of the business assets. The range and weighted average of the business asset adjustments are presented as a percent of the business asset valuation.

Quantitative Information about Level 3 Fair Value Measurements

December 31, 2019

Fair Value Estimate

Valuation Technique

Unobservable Input

Range  (Weighted Average) (4)

(amounts in thousands)

Impaired loans – real estate

$

12,767

Collateral appraisal (1) Business asset valuation (3)

Liquidation expenses (2) Business asset valuation (4)

8% - 10% (8%) 34% - 45% (37%)

Impaired loans – commercial & industrial

1,505

Collateral appraisal (1) Business asset valuation (3)

Liquidation expenses (2) Business asset valuation adjustments (4)

8% - 8% (8%) 8% - 50% (22%)

Interest-only GNMA securities

16,272

Discounted cash flow

Constant prepayment rate

9% - 14% 12%

Other real estate owned

78

Collateral appraisal (1)

Liquidation expenses (2)

8% - 9% (9%)

Residential mortgage loan commitments

79

Adjusted market bid

Pull-through rate

85% - 85% (85%)

(1)Obtained from approved independent appraisers. Appraisals are current and in compliance with credit policy. Customers does not generally discount appraisals.

(2)Appraisals are adjusted by management for liquidation expenses. The range and weighted average of liquidation expense adjustments are presented as a percentage of the appraisal.

(3)Business asset valuation obtained from independent party.

(4)Business asset valuations may be adjusted by management for qualitative factors including economic conditions and the condition of the business assets. The range and weighted average of the business asset adjustments are presented as a percent of the business asset valuation.

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- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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