SECURITIES PURCHASED UNDER RESALE AGREEMENTS AND SOLD UNDER REPURCHASE AGREEMENTS

12 Months Ended

Dec. 31, 2014

SECURITIES PURCHASED UNDER RESALE AGREEMENTS AND SOLD UNDER REPURCHASE AGREEMENTS

SECURITIES PURCHASED UNDER RESALE AGREEMENTS AND SOLD UNDER REPURCHASE AGREEMENTS

NOTE 5 — SECURITIES PURCHASED UNDER RESALE AGREEMENTS AND SOLD UNDER REPURCHASE

AGREEMENTS

Resale agreements

Resale agreements are recorded at the amounts at which the securities were acquired. The Company’s policy is to obtain possession of securities purchased under resale agreements that are equal to or greater than the principal amount loaned. The market values of the underlying securities, collateralizing the related receivable of the resale agreements, including accrued interest are monitored. Additional collateral may be requested by the Company from the counterparty when deemed appropriate. Gross resale agreements were $1.43 billion and $1.40 billion as of December 31, 2014 and 2013, respectively. The weighted average interest rates were 1.55% and 1.44% as of December 31, 2014 and 2013, respectively. The maturities of the gross resale agreements are as follows: 2015 — $875.0 million; 2016 and 2017 — $0.0 million; 2018 — $50.0 million; 2019 — $0.0 million; 2020 and thereafter — $500.0 million.

Repurchase agreements

Long-term repurchase agreements are accounted for as collateralized financing transactions and recorded at the amounts at which the securities were sold. The collaterals for these agreements are mainly comprised of U.S. government agency and U.S. government sponsored enterprise debt and mortgage-backed securities. The Company may have to provide additional collateral for the repurchase agreements, as necessary. Gross repurchase agreements were $995.0 million as of December 31, 2014 and 2013. The weighted average interest rates were 3.70% and 4.06% as of December 31, 2014 and 2013, respectively. As of December 31, 2014, total gross repurchase agreements that matures during the next five years are as follows: 2015 — $245.0 million; 2016 — $250.0 million; 2017 — $50.0 million; 2018 and 2019— $0.0 million; 2020 and thereafter — $450.0 million.

Balance Sheet Offsetting

The Company’s resale agreements and repurchased agreements are transacted under legally enforceable master repurchase agreements that give the Company, in the event of default by the counterparty, the right to liquidate securities held and to offset receivables and payables with the same counterparty. The Company nets repurchase and resale transactions with the same counterparty on the consolidated balance sheet where it has a legally enforceable master netting agreement and when the transactions are eligible for netting under ASC 210-20-45. Collateral pledged consists of securities which are not netted on the consolidated balance sheet against the related collateralized liability. Collateral accepted includes securities that are not recognized on the consolidated balance sheets. Collateral accepted or pledged in resale and repurchase agreements with other financial institutions also may be sold or re-pledged by the secured party, but is usually delivered to and held by the third party trustees.

	As of December 31, 2014
	(In thousands)
	Gross Amounts of Recognized Assets		Gross Amounts Offset on the Consolidated Balance Sheet			Net Amounts of Assets Presented on the Consolidated Balance Sheet		Gross Amounts Not Offset on the Consolidated Balance Sheets
Assets								Financial Instruments				Collateral Received				Net Amount
Resale agreements	$	1,425,000	$	(200,000	)	$	1,225,000	$	(425,000	)	(1)	$	(797,172	)	(2)	$	2,828
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset on the Consolidated Balance Sheet			Net Amounts of Liabilities Presented on the Consolidated Balance Sheet		Gross Amounts Not Offset on the Consolidated Balance Sheets
Liabilities								Financial Instruments				Collateral  Posted				Net Amount
Repurchase agreements	$	995,000	$	(200,000	)	$	795,000	$	(425,000	)	(1)	$	(370,000	)	(3)	$	—

	As of December 31, 2013
	(In thousands)
	Gross Amounts of Recognized Assets		Gross Amounts Offset on the Consolidated Balance Sheet		Net Amounts of Assets Presented on the Consolidated Balance Sheet			Gross Amounts Not Offset on the Consolidated Balance Sheets
Assets								Financial Instruments				Collateral Received				Net Amount
Resale agreements	$	1,400,000	$	—	$	1,400,000	(4)	$	(495,000	)	(1)	$	(905,000	)	(2)	$	—
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset on the Consolidated Balance Sheet		Net Amounts of Liabilities Presented on the Consolidated Balance Sheet			Gross Amounts Not Offset on the Consolidated Balance Sheets
Liabilities								Financial Instruments				Collateral  Posted				Net Amount
Repurchase agreements	$	995,000	$	—	$	995,000		$	(495,000	)	(1)	$	(500,000	)	(3)	$	—

(1) Includes financial instruments subject to enforceable master netting arrangements that are not permitted to be offset under ASC 210-20-45 but would be eligible for offsetting to the extent an event of default has occurred.

(2) Represents the fair value of securities the Company has received under resale agreements, limited for table presentation purposes to the amount of the recognized asset due from each counterparty.

(3) Represents the fair value of securities the Company has pledged under repurchase agreements, limited for table presentation purposes to the amount of the recognized liability owed to each counterparty.

(4) Of the $1.40 billion resale agreements as of December 31, 2013, $100.0 million was recorded in cash and cash equivalents and $1.30 billion was recorded in securities under resale agreements in the consolidated balance sheet.