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FAIR VALUES OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Assets Measured on a Recurring Basis

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of the dates indicated:



			Fair Value Measurement Level
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
September 30, 2016
Assets
Securities available-for-sale:
SBA loan pools securities	$	1,265	$	—	$	1,265	$	—
Private label residential mortgage-backed securities	117,112		—		117,112		—
Corporate bonds	73,596		—		73,596		—
Collateralized loan obligation	1,334,002		—		1,334,002		—
Agency mortgage-backed securities	415,613		—		415,613		—
Loans held-for-sale, carried at fair value:	498,054		—		450,406		47,648
Derivative assets ⁽¹⁾	15,746		—		15,746		—
Mortgage servicing rights ⁽²⁾	62,676		—		—		62,676
Liabilities
Derivative liabilities ⁽³⁾	4,650		—		4,650		—
December 31, 2015
Assets
Securities available-for-sale:
SBA loan pools securities	$	1,504	$	—	$	1,504	$	—
Private label residential mortgage-backed securities	1,768		—		1,768		—
Corporate bonds	26,152		—		26,152		—
Collateralized loan obligation	111,468		—		111,468		—
Agency mortgage-backed securities	692,704		—		692,704		—
Loans held-for-sale, carried at fair value:	379,155		—		360,864		18,291
Derivative assets ⁽¹⁾	9,042		—		9,042		—
Mortgage servicing rights ⁽²⁾	49,939		—		—		49,939
Liabilities
Derivative liabilities ⁽³⁾	1,067		—		1,067		—


(1)	Included in Other Assets in the Consolidated Statements of Financial Condition


(2)	Included in Servicing Rights, Net in the Consolidated Statements of Financial Condition


(3)	Included in Accrued Expenses and Other Liabilities in the Consolidated Statements of Financial Condition

Fair Value Liabilities Measured on a Recurring Basis

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of the dates indicated:



			Fair Value Measurement Level
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
September 30, 2016
Assets
Securities available-for-sale:
SBA loan pools securities	$	1,265	$	—	$	1,265	$	—
Private label residential mortgage-backed securities	117,112		—		117,112		—
Corporate bonds	73,596		—		73,596		—
Collateralized loan obligation	1,334,002		—		1,334,002		—
Agency mortgage-backed securities	415,613		—		415,613		—
Loans held-for-sale, carried at fair value:	498,054		—		450,406		47,648
Derivative assets ⁽¹⁾	15,746		—		15,746		—
Mortgage servicing rights ⁽²⁾	62,676		—		—		62,676
Liabilities
Derivative liabilities ⁽³⁾	4,650		—		4,650		—
December 31, 2015
Assets
Securities available-for-sale:
SBA loan pools securities	$	1,504	$	—	$	1,504	$	—
Private label residential mortgage-backed securities	1,768		—		1,768		—
Corporate bonds	26,152		—		26,152		—
Collateralized loan obligation	111,468		—		111,468		—
Agency mortgage-backed securities	692,704		—		692,704		—
Loans held-for-sale, carried at fair value:	379,155		—		360,864		18,291
Derivative assets ⁽¹⁾	9,042		—		9,042		—
Mortgage servicing rights ⁽²⁾	49,939		—		—		49,939
Liabilities
Derivative liabilities ⁽³⁾	1,067		—		1,067		—


(1)	Included in Other Assets in the Consolidated Statements of Financial Condition


(2)	Included in Servicing Rights, Net in the Consolidated Statements of Financial Condition


(3)	Included in Accrued Expenses and Other Liabilities in the Consolidated Statements of Financial Condition

Reconciliation of Assets Measured at Fair Value on Recurring Basis

The following table presents a reconciliation of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the periods indicated:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(In thousands)
Mortgage servicing rights
Balance at beginning of period	$	52,567		$	34,198		$	49,939		$	19,082
Transfers in and (out) of Level 3 ⁽¹⁾	—			—			—			—
Total gains or losses (realized/unrealized):
Included in earnings—fair value adjustment	(465		)	(3,097		)	(14,497		)	(2,087		)
Additions	14,300			12,143			35,648			36,034
Sales, paydowns, and other	(3,726		)	(2,407		)	(8,414		)	(12,192		)
Balance at end of period	$	62,676		$	40,837		$	62,676		$	40,837
Loans Repurchased from Ginnie Mae Loan Pools
Balance at beginning of period	$	34,251		$	—		$	18,291		$	—
Transfers in and (out) of Level 3 ⁽¹⁾	—			—			—			—
Total gains or losses (realized/unrealized):
Included in earnings—fair value adjustment	(21		)	—			121			—
Additions	14,445			—			35,548			—
Sales, settlements, and other	(1,027		)	—			(6,312		)	—
Balance at end of period	$	47,648		$	—		$	47,648		$	—


(1)	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.

Quantitative Information About Level 3 Fair Value Measurements

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 September 30, 2016 and December 31, 2015:



	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
	($ in thousands)
September 30, 2016
Mortgage servicing rights	$	62,676	Discounted cash flow	Discount rate	8.73% to 14.50% (9.81%)
				Prepayment rate	6.00% to 52.69% (15.54%)
December 31, 2015
Mortgage servicing rights	$	49,939	Discounted cash flow	Discount rate	9.00% to 18.00% (9.75%)
				Prepayment rate	6.07% to 35.01% (11.81%)

Fair value option of certain assets

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:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(In thousands)
Net revenue on mortgage banking activities:
Net gains from fair value changes	$	15,686	$	12,692	$	16,856	$	12,593

The following table presents the fair value and aggregate principal balance of certain assets under the fair value option:



	September 30, 2016							December 31, 2015
	Fair Value		Unpaid Principal Balance		Difference			Fair Value		Unpaid Principal Balance		Difference
	(In thousands)
Loans held-for-sale, carried at fair value:
Total loans	$	498,054	$	479,880	$	18,174		$	379,155	$	368,039	$	11,116
Nonaccrual loans	43,194		43,551		(357		)	19,576		19,955		(379		)
Loans past due 90 days or more and still accruing	—		—		—			—		—		—

Schedule of Assets and Liabilities Measured on Non-recurring Basis

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
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
September 30, 2016
Assets
Impaired loans:
Single family residential mortgage	$	6,557	$	—	$	—	$	6,557
Other real estate owned:
Single family residential	275		—		—		275
December 31, 2015
Assets
Impaired loans:
Single family residential mortgage	$	3,585	$	—	$	—	$	3,585
Commercial and industrial	1,073		—		—		1,073
Other real estate owned:
Single family residential	1,097		—		—		1,097

Schedule of Gains and (Losses) Recognized on Assets Measured at Fair Value on Non-recurring Basis

The following table presents the gains and (losses) recognized on assets measured at fair value on a non-recurring basis for the periods indicated:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(In thousands)
Impaired loans:
Single family residential mortgage	$	—		$	—		$	(149	)	$	—
Other real estate owned:
Single family residential	(109		)	(16		)	(74		)	(15		)

Carrying Amounts and 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		Fair Value Measurement Level
	Amount		Level 1		Level 2		Level 3		Total
	(In thousands)
September 30, 2016
Financial assets
Cash and cash equivalents	$	372,603	$	372,603	$	—	$	—	$	372,603
Time deposits in financial institutions	1,500		1,500		—		—		1,500
Securities available-for-sale	1,941,588		—		1,941,588		—		1,941,588
Securities held-to-maturity	962,315		—		996,319		—		996,319
Federal Home Loan Bank and other bank stock	69,190		—		69,190		—		69,190
Loans held-for-sale	846,844		—		808,945		47,648		856,593
Loans and leases receivable, net of ALLL	6,528,558		—		—		6,667,573		6,667,573
Accrued interest receivable	32,016		32,016		—		—		32,016
Derivative assets	15,746		—		15,746		—		15,746
Financial liabilities
Deposits	9,078,319		—		—		8,967,692		8,967,692
Advances from Federal Home Loan Bank	770,000		—		770,671		—		770,671
Other borrowings	49,903		—		50,000		—		50,000
Long term debt	176,579		—		186,079		—		186,079
Derivative liabilities	4,650		—		4,650		—		4,650
Accrued interest payable	5,502		5,502		—		—		5,502
December 31, 2015
Financial assets
Cash and cash equivalents	$	156,124	$	156,124	$	—	$	—	$	156,124
Time deposits in financial institutions	1,500		1,500		—		—		1,500
Securities available-for-sale	833,596		—		833,596		—		833,596
Securities held-to-maturity	962,203		—		932,285		—		932,285
Federal Home Loan Bank and other bank stock	59,069		—		59,069		—		59,069
Loans held-for-sale	668,841		—		654,559		18,291		672,850
Loans and leases receivable, net of ALLL	5,148,861		—		—		5,244,251		5,244,251
Accrued interest receivable	22,800		22,800		—		—		22,800
Derivative assets	9,042		—		9,042		—		9,042
Financial liabilities
Deposits	6,303,085		—		—		6,010,606		6,010,606
Advances from Federal Home Loan Bank	930,000		—		929,727		—		929,727
Long term debt	261,876		—		264,269		—		264,269
Derivative liabilities	1,067		—		1,067		—		1,067
Accrued interest payable	4,234		4,234		—		—		4,234

- Definition

Tabular disclosure of the application of the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected, provide the aggregate carrying amount of ineligible items included in each line item in the balance sheet, if any; (b) the difference between the aggregate fair value and the aggregate unpaid principal balance (assuming contractual principal amounts and fair value option elected) of: (i) loans and long-term receivables (other than securities otherwise reported at fair value) and (ii) long-term debt instruments; (c) for loans held as assets for which the fair value option has been elected: (i) the aggregate fair value of loans that are 90 days or more past due, (ii) if the policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status, and (iii) the difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both; (2) for items included in the income statement: (a) the amounts of gains and losses from fair value changes included in earnings and in which line in the income statement those gains and losses are reported whether or not combined with gains and losses from items required to be accounted for at fair value; (b) for loans and other receivables held as assets, the estimated amount of gains or losses included in earnings attributable to changes in instrument-specific credit risk; (c) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk, the estimated amount of gains and losses from fair value changes included in earnings that are attributable to changes in the instrument-specific credit risk; and (3) certain other disclosures as required or determined to be provided.

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