A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities that are carried at fair value, including assets classified as discontinued operations on the consolidated balance sheets. See Note 3 - Discontinued Operations for more information on assets and liabilities classified as discontinued operations.



	June 30, 2019
	Level 1		Level 2		Level 3		Total
(In thousands)	Inputs		Inputs		Inputs		Fair Value
Trading security	$	—	$	—	$	11,210	$	11,210
Securities available for sale:
Municipal bonds and obligations	—		119,873		—		119,873
Agency collateralized mortgage obligations	—		888,962		—		888,962
Agency residential mortgage-backed securities	—		182,258		—		182,258
Agency commercial mortgage-backed securities	—		60,651		—		60,651
Corporate bonds	—		119,743		—		119,743
Trust preferred securities	—		8,550		—		8,550
Other bonds and obligations	—		30,041		—		30,041
Marketable equity securities	58,521		1,057		—		59,578
Loans held for sale (1)	—		191,548		—		191,548
Derivative assets (1)	—		76,764		9,005		85,769
Capitalized servicing rights (1)	—		—		11,206		11,206
Derivative liabilities (1)	1,144		79,731		—		80,875



	December 31, 2018
	Level 1		Level 2		Level 3		Total
(In thousands)	Inputs		Inputs		Inputs		Fair Value
Trading security	$	—	$	—	$	11,212	$	11,212
Securities available for sale:
Municipal bonds and obligations	—		111,207		—		111,207
Agency collateralized mortgage obligations	—		930,884		—		930,884
Agency residential mortgage-backed securities	—		170,321		—		170,321
Agency commercial mortgage-backed securities	—		58,925		—		58,925
Corporate bonds	—		111,490		—		111,490
Trust preferred securities	—		8,466		—		8,466
Other bonds and obligations	—		8,354		—		8,354
Marketable equity securities	56,074		564		—		56,638
Loans held for sale (1)	—		96,233		—		96,233
Derivative assets (1)	—		31,727		3,927		35,654
Capitalized servicing rights (1)	—		—		11,485		11,485
Derivative liabilities (1)	734		33,239		—		33,973

Trading Security at Fair Value. The Company holds one security designated as a trading security. It is a tax-advantaged economic development bond issued to the Company by a local nonprofit which provides wellness and health programs. The determination of the fair value for this security is determined based on a discounted cash flow methodology. Certain inputs to the fair value calculation are unobservable and there is little to no market activity in the security; therefore, the security meets the definition of a Level 3 security. The discount rate used in the valuation of the security is sensitive to movements in the 3-month LIBOR rate.

Securities Available for Sale and Marketable Equity Securities. Marketable equity securities classified as Level 1 consist of publicly-traded equity securities for which the fair values can be obtained through quoted market prices in active exchange markets. AFS and marketable equity securities classified as Level 2 include most of the Company’s debt securities. The pricing on Level 2 was primarily sourced from third party pricing services, overseen by management, and is based on models that consider standard input factors such as dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the bond’s terms and condition, among other things.

The changes in fair value of loans held for sale for the three months ended June 30, 2019, were gains of $31 thousand from continuing operations and $1.4 million from discontinued operations. The changes in fair value of loans held for sale for the six months ended June 30, 2019, were gains of $91 thousand from continuing operations and $2.6 million from discontinued operations. There were no changes in fair value of loans held for sale from continuing operations for the three months ended June 30, 2018. The changes in fair value of loans held for sale from discontinued operations for the three months ended June 30, 2018 were gains of $1.3 million. The changes in fair value of loans held for sale for the six months ended June 30, 2018, were losses of $20 thousand from continuing operations and $1.1 million from discontinued operations. During the three months ended June 30, 2019, originations of loans held for sale from continuing operations totaled $17.4 million and sales of loans originated for sale from continuing operations totaled $14.5 million. During the three months ended June 30, 2018, originations of loans held for sale from continuing operations totaled $12.9 million and sales of loans originated for sale from continuing operations totaled $12.3 million.

Interest Rate Swaps. The valuation of the Company’s interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves.

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.

Although the Company has determined that the majority of the inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of June 30, 2019, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

Commitments to Lend. The Company enters into commitments to lend for residential mortgage loans intended for sale, which commit the Company to lend funds to a potential borrower at a specific interest rate and within a specified period of time. The estimated fair value of commitments to originate residential mortgage loans for sale is based on quoted prices for similar loans in active markets. However, this value is adjusted by a factor which considers the likelihood that the loan in a lock position will ultimately close, and by the non-refundable costs of originating the loan. The closing ratio is derived from the Bank’s internal data and is adjusted using significant management judgment. The costs to originate are primarily based on the Company’s internal commission rates that are not observable. As such, these commitments are classified as Level 3 measurements. Commitments to lend are included in discontinued operations. See Note 3 - Discontinued Operations for more information on assets and liabilities classified as discontinued operations.

Forward Sale Commitments. The Company utilizes forward sale commitments as economic hedges against potential changes in the values of the commitments to lend and loans originated for sale. To Be Announced (“TBA”) mortgage-backed securities forward commitment sales are used as the hedging instrument, are classified as Level 1, and consist of publicly-traded debt securities for which identical fair values can be obtained through quoted market prices in active exchange markets. The fair values of the Company’s best efforts and mandatory delivery loan sale commitments are determined similarly to the commitments to lend using quoted prices in the market place that are observable. However, costs to originate and closing ratios included in the calculation are internally generated and are based on management’s judgment and prior experience, which are considered factors that are not observable. As such, best efforts and mandatory forward commitments are classified as Level 3 measurements. Forward sale commitments are included in discontinued operations. See Note 3 - Discontinued Operations for more information on assets and liabilities classified as discontinued operations.

Capitalized Servicing Rights. The Company accounts for certain capitalized servicing rights at fair value in its Consolidated Financial Statements, as the Company is permitted to elect the fair value option for each specific instrument. A loan servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans exceed adequate compensation for performing the servicing. The fair value of servicing rights is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy. Capitalized servicing rights held at fair value are included in discontinued operations on the consolidated balance sheet. See Note 3 - Discontinued Operations for more information on assets and liabilities classified as discontinued operations.



	Assets (Liabilities)
									Capitalized
	Trading			Commitments			Forward		Servicing
(In thousands)	Security			to Lend (1)			Commitments (1)		Rights (1)
Three Months Ended June 30, 2019
March 31, 2019	$	11,164		$	6,318		$	—	$	11,351
Unrealized gain/(loss), net recognized in other non-interest income	219			—			—		—
Unrealized gain/(loss), net recognized in discontinued operations	—			17,117			—		(1,972		)
Paydown of trading security	(173		)	—			—		—
Transfers to held for sale loans	—			(14,430		)	—		—
Additions to servicing rights	—			—			—		1,827
June 30, 2019	$	11,210		$	9,005		$	—	$	11,206

Six Months Ended June 30, 2019
December 31, 2018	$	11,212		$	3,927		$	—	$	11,485
Unrealized gain, net recognized in other non-interest income	345			—			—		—
Unrealized gain/(loss), net recognized in discontinued operations	—			28,338			—		(3,114		)
Paydown of trading security	(347		)	—			—		—
Transfers to held for sale loans	—			(23,260		)	—		—
Additions to servicing rights	—			—			—		2,835
June 30, 2019	$	11,210		$	9,005		$	—	$	11,206

Unrealized gains relating to instruments still held at June 30, 2019	$	1,466		$	9,005		$	—	—



										Capitalized
	Trading			Commitments			Forward			Servicing
(In thousands)	Security			to Lend (1)			Commitments (1)			Rights (1)
Three Months Ended June 30, 2018
March 31, 2018	$	11,795		$	6,531		$	—		$	5,705
Unrealized gain/(loss), net recognized in other non-interest income	(148		)	—			—			—
Unrealized gain/(loss), net recognized in discontinued operations	—			12,787			—			339
Paydown of trading security	(164		)	—			—			—
Transfers to held for sale loans	—			(12,033		)	—			—
Additions to servicing rights	—			—			—			1,795
June 30, 2018	$	11,483		$	7,285		$	—		$	7,839

Six Months Ended June 30, 2018
December 31, 2017	$	12,277		$	5,259		$	19		$	3,834
Unrealized gain, net recognized in other non-interest income	(465		)	—			(19		)	—
Unrealized gain/(loss), net recognized in discontinued operations	—			25,000			—			804
Paydown of trading security	(329		)	—			—			—
Transfers to held for sale loans	—			(22,974		)	—
Additions to servicing rights	—			—			—			3,201
June 30, 2018	$	11,483		$	7,285		$	—		$	7,839

Unrealized gains relating to instruments still held at June 30, 2018	$	1,056		$	7,285		$	—		—



	Fair Value				Significant Unobservable Input
(In thousands)	June 30, 2019		Valuation Techniques	Unobservable Inputs	Value
Assets (Liabilities)
Trading security	$	11,210	Discounted Cash Flow	Discount Rate	2.28		%

Commitments to lend (1)	9,005		Historical Trend	Closing Ratio	72.48		%
			Pricing Model	Origination Costs, per loan	$	3,137
Capitalized servicing rights (1)	11,206		Discounted cash flow	Constant Prepayment Rate (CPR)	12.74		%
				Discount Rate	9.99		%
Total	$	31,421



	Fair Value				Significant Unobservable Input
(In thousands)	December 31, 2018		Valuation Techniques	Unobservable Inputs	Value
Assets (Liabilities)
Trading security	$	11,212	Discounted Cash Flow	Discount Rate	3.07		%

Commitments to lend (1)	3,927		Historical Trend	Closing Ratio	82.36		%
			Pricing Model	Origination Costs, per loan	$	3,063
Capitalized servicing rights (1)	11,485		Discounted Cash Flow	Constant Prepayment Rate (CPR)	9.30		%
				Discount Rate	10.00		%
Total	$	26,624

The Company is required, on a non-recurring basis, to adjust the carrying value or provide valuation allowances for certain assets using fair value measurements in accordance with GAAP. The following is a summary of applicable non-recurring fair value measurements. There are no liabilities measured at fair value on a non-recurring basis.



	Fair Value
(In thousands)	June 30, 2019		Valuation Techniques	Unobservable Inputs	Range (Weighted Average) (a)
Assets
Impaired Loans	$	4,614	Fair Value of Collateral	Discounted Cash Flow - Loss Severity	25.66% to 0.11% (3.44%)
				Appraised Value	$0.3 to $731 ($316.8)
Capitalized servicing rights	14,221		Discounted Cash Flow	Constant Prepayment Rate (CPR)	8.40% to 12.73% (11.50%)
				Discount Rate	10.00% to 12.73% (11.30%)
Other Real Estate Owned	154		Fair Value of Collateral	Appraised Value	$49 to $105 ($87)
Total	$	18,989



	Fair Value
(In thousands)	December 31, 2018		Valuation Techniques	Unobservable Inputs	Range (Weighted Average) (a)
Assets
Impaired Loans	$	4,892	Fair Value of Collateral	Discounted Cash Flow - loss severity	51.16% to 0.00% (6.75%)
				Appraised Value	$0.3 to $877 ($363)
Capitalized servicing rights	11,891		Discounted Cash Flow	Constant Prepayment Rate (CPR)	7.74% to 11.29% (9.74%)
				Discount Rate	10.00% to 14.13% (11.99%)
Total	$	16,783

Impaired loans. Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records non-recurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Non-recurring adjustments can also include certain impairment amounts for collateral-dependent loans calculated when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace. However, the choice of observable data is subject to significant judgment, and there are often adjustments based on judgment in order to make observable data comparable and to consider the impact of time, the condition of properties, interest rates, and other market factors on current values. Additionally, commercial real estate appraisals frequently involve discounting of projected cash flows, which relies inherently on unobservable data. Therefore, nonrecurring fair value measurement adjustments that relate to real estate collateral have generally been classified as Level 3. Estimates of fair value for other collateral that supports commercial loans are generally based on assumptions not observable in the marketplace and therefore such valuations have been classified as Level 3.

Capitalized loan servicing rights. A loan servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans exceed adequate compensation for performing the servicing. The fair value of servicing rights is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Adjustments are only recorded when the discounted cash flows derived from the valuation model are less than the carrying value of the asset. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy.

The following tables summarize the estimated fair values (represents exit price), and related carrying amounts, of the Company’s financial instruments. Certain financial instruments and all non-financial instruments are excluded. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company. Certain assets and liabilities in the following disclosures include balances classified as discontinued operations. See Note 3 - Discontinued Operations for more information on assets and liabilities classified as discontinued operations.



	June 30, 2019
	Carrying		Fair
(In thousands)	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	229,306	$	229,306	$	229,306	$	—	$	—
Trading security	11,210		11,210		—		—		11,210
Marketable equity securities	59,578		59,578		58,521		1,057		—
Securities available for sale	1,410,078		1,410,078		—		1,410,078		—
Securities held to maturity	364,463		377,056		—		359,084		17,972
FHLB bank stock and restricted securities	59,356		N/A		N/A		N/A		N/A
Net loans	9,879,672		10,151,656		—		—		10,151,656
Loans held for sale (1)	367,692		370,114		—		191,548		178,566
Accrued interest receivable	41,864		41,864		—		41,864		—
Cash surrender value of bank-owned life insurance policies	227,458		227,458		—		227,458		—
Derivative assets (1)	85,769		85,769		—		76,764		9,005
Financial Liabilities
Total deposits	$	10,565,956	$	10,576,006	$	—	$	10,576,006	$	—
Short-term debt	608,928		608,946		—		608,946		—
Long-term Federal Home Loan Bank advances	295,886		297,184		—		297,184		—
Subordinated borrowings	96,927		100,924		—		100,924		—
Derivative liabilities (1)	80,875		80,875		1,144		79,731		—



	December 31, 2018
	Carrying		Fair
(In thousands)	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	183,189	$	183,189	$	183,189	$	—	$	—
Trading security	11,212		11,212		—		—		11,212
Marketable equity securities	56,638		56,638		56,074		564		—
Securities available for sale and other	1,399,647		1,399,647		—		1,399,647		—
Securities held to maturity	373,763		371,224		—		353,182		18,042
FHLB bank stock and restricted securities	77,344		N/A		N/A		N/A		N/A
Net loans	8,981,784		9,026,442		—		—		9,026,442
Loans held for sale (1)	96,233		96,233		—		96,233		—
Accrued interest receivable	36,879		36,879		—		36,879		—
Derivative assets (1)	35,654		35,654		—		31,727		3,927
Financial Liabilities
Total deposits	$	8,982,381	$	8,970,321	$	—	$	8,970,321	$	—
Short-term debt	1,118,832		1,118,820		—		1,118,820		—
Long-term Federal Home Loan Bank advances	309,466		308,336		—		308,336		—
Subordinated borrowings	89,518		97,376		—		97,376		—
Derivative liabilities (1)	33,973		33,973		734		33,239		—