FAIR VALUES OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2017

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 March 31, 2017:



			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)
Assets
Securities available-for-sale:
SBA loan pools securities	$	1,145	$	—	$	1,145	$	—
Private label residential mortgage-backed securities	116,757		—		116,757		—
Corporate bonds	19,144		—		19,144		—
Collateralized loan obligation	1,502,253		—		1,502,253		—
Agency mortgage-backed securities	795,242		—		795,242		—
Loans held-for-sale, carried at fair value ⁽¹⁾	422,144		—		355,443		66,701
Mortgage servicing rights ⁽²⁾	42,833		—		—		42,833
Derivative assets:
Interest rate lock commitments ⁽³⁾	9,813		—		9,813		—
Mandatory forward commitments ⁽³⁾	153		—		153		—
Interest rate swaps and caps ⁽⁴⁾	1,099		—		1,099		—
Foreign exchange contracts ⁽⁴⁾	—		—		—		—
Liabilities
Derivative liabilities:
Interest rate lock commitments ⁽⁵⁾	81		—		81		—
Mandatory forward commitments ⁽⁵⁾	2,909		—		2,909		—
Interest rate swaps and caps ⁽⁶⁾	1,096		—		1,096		—
Foreign exchange contracts ⁽⁶⁾	—		—		—		—


(1)	Includes loans held-for-sale carried at fair value of $420.4 million ($353.7 million at Level 2 and $66.7 million at Level 3) of discontinued operations, which are included in Assets of Discontinued Operations in the Consolidated Statements of Financial Condition


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


(3)	Included in Assets of Discontinued Operations in the Consolidated Statements of Financial Condition


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


(5)	Included in Liabilities of Discontinued Operations in the Consolidated Statements of Financial Condition


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

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2016:



			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)
Assets
Securities available-for-sale:
SBA loan pools securities	$	1,221	$	—	$	1,221	$	—
Private label residential mortgage-backed securities	117,177		—		117,177		—
Corporate bonds	48,948		—		48,948		—
Collateralized loan obligation	1,406,869		—		1,406,869		—
Agency mortgage-backed securities	807,273		—		807,273		—
Loans held-for-sale, carried at fair value⁽¹⁾	416,974		—		358,714		58,260
Mortgage servicing rights ⁽²⁾	76,121		—		—		76,121
Derivative assets
Interest rate lock commitments⁽³⁾	8,317		—		8,317		—
Mandatory forward commitments⁽³⁾	8,897		—		8,897		—
Interest rate swaps and caps⁽⁴⁾	707		—		707		—
Foreign exchange contracts⁽⁴⁾	47		—		47		—
Liabilities
Derivative liabilities
Interest rate lock commitments⁽⁵⁾	231		—		231		—
Mandatory forward commitments⁽⁵⁾	1,212		—		1,212		—
Interest rate swaps and caps⁽⁶⁾	655		—		655		—
Foreign exchange contracts⁽⁶⁾	18		—		18		—


(1)	Includes loans held-for-sale carried at fair value of $406.3 million ($348.1 million at Level 2 and $58.3 million at Level 3) of discontinued operations, which are included in Assets of Discontinued Operations in the Consolidated Statements of Financial Condition.


(2)	Included in Servicing Rights, Net, except for $37.7 million included in Assets of Discontinued Operations, in the Consolidated Statements of Financial Condition


(3)	Included in Assets of Discontinued Operations in the Consolidated Statements of Financial Condition


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


(5)	Included in Liabilities of Discontinued Operations in the Consolidated Statements of Financial Condition


(6)	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 March 31, 2017:



			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)
Assets
Securities available-for-sale:
SBA loan pools securities	$	1,145	$	—	$	1,145	$	—
Private label residential mortgage-backed securities	116,757		—		116,757		—
Corporate bonds	19,144		—		19,144		—
Collateralized loan obligation	1,502,253		—		1,502,253		—
Agency mortgage-backed securities	795,242		—		795,242		—
Loans held-for-sale, carried at fair value ⁽¹⁾	422,144		—		355,443		66,701
Mortgage servicing rights ⁽²⁾	42,833		—		—		42,833
Derivative assets:
Interest rate lock commitments ⁽³⁾	9,813		—		9,813		—
Mandatory forward commitments ⁽³⁾	153		—		153		—
Interest rate swaps and caps ⁽⁴⁾	1,099		—		1,099		—
Foreign exchange contracts ⁽⁴⁾	—		—		—		—
Liabilities
Derivative liabilities:
Interest rate lock commitments ⁽⁵⁾	81		—		81		—
Mandatory forward commitments ⁽⁵⁾	2,909		—		2,909		—
Interest rate swaps and caps ⁽⁶⁾	1,096		—		1,096		—
Foreign exchange contracts ⁽⁶⁾	—		—		—		—


(1)	Includes loans held-for-sale carried at fair value of $420.4 million ($353.7 million at Level 2 and $66.7 million at Level 3) of discontinued operations, which are included in Assets of Discontinued Operations in the Consolidated Statements of Financial Condition


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


(3)	Included in Assets of Discontinued Operations in the Consolidated Statements of Financial Condition


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


(5)	Included in Liabilities of Discontinued Operations in the Consolidated Statements of Financial Condition


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

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2016:



			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)
Assets
Securities available-for-sale:
SBA loan pools securities	$	1,221	$	—	$	1,221	$	—
Private label residential mortgage-backed securities	117,177		—		117,177		—
Corporate bonds	48,948		—		48,948		—
Collateralized loan obligation	1,406,869		—		1,406,869		—
Agency mortgage-backed securities	807,273		—		807,273		—
Loans held-for-sale, carried at fair value⁽¹⁾	416,974		—		358,714		58,260
Mortgage servicing rights ⁽²⁾	76,121		—		—		76,121
Derivative assets
Interest rate lock commitments⁽³⁾	8,317		—		8,317		—
Mandatory forward commitments⁽³⁾	8,897		—		8,897		—
Interest rate swaps and caps⁽⁴⁾	707		—		707		—
Foreign exchange contracts⁽⁴⁾	47		—		47		—
Liabilities
Derivative liabilities
Interest rate lock commitments⁽⁵⁾	231		—		231		—
Mandatory forward commitments⁽⁵⁾	1,212		—		1,212		—
Interest rate swaps and caps⁽⁶⁾	655		—		655		—
Foreign exchange contracts⁽⁶⁾	18		—		18		—


(1)	Includes loans held-for-sale carried at fair value of $406.3 million ($348.1 million at Level 2 and $58.3 million at Level 3) of discontinued operations, which are included in Assets of Discontinued Operations in the Consolidated Statements of Financial Condition.


(2)	Included in Servicing Rights, Net, except for $37.7 million included in Assets of Discontinued Operations, in the Consolidated Statements of Financial Condition


(3)	Included in Assets of Discontinued Operations in the Consolidated Statements of Financial Condition


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


(5)	Included in Liabilities of Discontinued Operations in the Consolidated Statements of Financial Condition


(6)	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), on a consolidated operations basis, for the periods indicated:



	Three Months Ended
	March 31,
	2017			2016
	(In thousands)
Mortgage servicing rights ⁽¹⁾
Balance at beginning of period	$	76,121		$	49,939
Transfers in and (out) of Level 3 ⁽²⁾	—			—
Total gains or losses (realized/unrealized):
Included in earnings—fair value adjustment	(44		)	(8,201		)
Additions	7,801			8,582
Sales, paydowns, and other ⁽³⁾	(41,045		)	(1,950		)
Balance at end of period	$	42,833		$	48,370
Loans Repurchased from Ginnie Mae Loan Pools ⁽⁴⁾
Balance at beginning of period	$	58,260		$	18,291
Transfers in and (out) of Level 3 ⁽²⁾	—			—
Total gains or losses (realized/unrealized):
Included in earnings—fair value adjustment	9			47
Additions	17,296			9,826
Sales, settlements, and other	(8,864		)	(1,584		)
Balance at end of period	$	66,701		$	26,580


(1)	Includes $37.7 million and $23.0 million, respectively, of MSRs of discontinued operations for balances at beginning of period and $0 and $22.3 million, respectively, of MSRs of discontinued operations for balances at end of period for the three months ended March 31, 2017 and 2016


(2)	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


(3)	Includes $37.8 million of MSRs sold as a part of discontinued operations for the three month ended March 31, 2017


(4)	Included in Assets of Discontinued Operations in the Consolidated Statements of Financial Condition

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 March 31, 2017 and December 31, 2016:



	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
	($ in thousands)
March 31, 2017
Mortgage servicing rights	$	42,833	Discounted cash flow	Discount rate	9.25% to 15.00% (10.95%)
				Prepayment rate	7.00% to 37.80% (12.83%)
December 31, 2016
Mortgage servicing rights ⁽¹⁾	$	76,121	Discounted cash flow	Discount rate	9.11% to 15.00% (10.18%)
				Prepayment rate	7.00% to 39.90% (11.84%)


(1)	Includes $37.7 million of MSRs of discontinued operations

Fair value option of certain assets

The following table presents the fair value and aggregate principal balance of certain assets, on a consolidated operations basis, under the fair value option:



	March 31, 2017							December 31, 2016
	Fair Value		Unpaid Principal Balance		Difference			Fair Value		Unpaid Principal Balance		Difference
	(In thousands)
Loans held-for-sale, carried at fair value in continuing operations:
Total loans	$	1,695	$	1,671	$	24		$	10,636	$	10,606	$	30
Nonaccrual loans	—		—		—			—		—		—
Loans past due 90 days or more and still accruing	—		—		—			—		—		—
Loans held-for-sale, carried at fair value in discontinued operations:
Total loans	$	420,449	$	408,318	$	12,131		$	406,338	$	397,283	$	9,055
Nonaccrual loans	56,731		57,216		(485		)	54,151		54,824		(673		)
Loans past due 90 days or more and still accruing	—		—		—			—		—		—

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
	March 31,
	2017		2016
	(In thousands)
Net gains from fair value changes
Net gain on sale of loans (continuing operations)	$	24	$	55
Net revenue on mortgage banking activities (discontinued operations)	$	10,793	$	14,173

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)
March 31, 2017
Assets
Impaired loans:
Single family residential mortgage	$	1,610	$	—	$	—	$	1,610
Other real estate owned:
Single family residential	87		—		—		87
December 31, 2016
Assets
Impaired loans:
Single family residential mortgage	$	2,956	$	—	$	—	$	2,956
Other real estate owned:
Single family residential	2,502		—		—		2,502

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
	March 31,
	2017			2016
	(In thousands)
Impaired loans:
SBA	$	—		$	5
Other real estate owned:
Single family residential	(8		)	37

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, on a consolidated operations basis, as of the dates indicated:



	Carrying		Fair Value Measurement Level
	Amount		Level 1		Level 2		Level 3		Total
	(In thousands)
March 31, 2017
Financial assets
Cash and cash equivalents	$	409,281	$	409,281	$	—	$	—	$	409,281
Time deposits in financial institutions	1,000		1,000		—		—		1,000
Securities available-for-sale	2,434,541		—		2,434,541		—		2,434,541
Securities held-to-maturity	863,269		—		879,898		—		879,898
Federal Home Loan Bank and other bank stock	63,238		—		63,238		—		63,238
Loans held-for-sale ⁽¹⁾	649,327		—		586,721		66,701		653,422
Loans and leases receivable, net of ALLL	6,062,585		—		—		6,067,839		6,067,839
Accrued interest receivable	35,051		35,051		—		—		35,051
Derivative assets	11,065		—		11,065		—		11,065
Financial liabilities
Deposits	8,597,693		—		—		8,373,201		8,373,201
Advances from Federal Home Loan Bank	1,080,000		—		1,079,952		—		1,079,952
Securities sold under repurchase agreements	26,320		—		26,320		—		26,320
Other borrowings	67,981		—		68,000		—		68,000
Long term debt	174,090		—		177,126		—		177,126
Derivative liabilities	4,086		—		4,086		—		4,086
Accrued interest payable	6,606		6,606		—		—		6,606
December 31, 2016
Financial assets
Cash and cash equivalents	$	439,510	$	439,510	$	—	$	—	$	439,510
Time deposits in financial institutions	1,000		1,000		—		—		1,000
Securities available-for-sale	2,381,488		—		2,381,488		—		2,381,488
Securities held-to-maturity	884,234		—		899,743		—		899,743
Federal Home Loan Bank and other bank stock	67,842		—		67,842		—		67,842
Loans held-for-sale⁽²⁾	704,651		—		652,928		58,260		711,188
Loans and leases receivable, net of ALLL	5,994,308		—		—		5,999,791		5,999,791
Accrued interest receivable	36,382		36,382		—		—		36,382
Derivative assets	17,968		—		17,968		—		17,968
Financial liabilities
Deposits	9,142,150		—		—		8,908,406		8,908,406
Advances from Federal Home Loan Bank	490,000		—		490,351		—		490,351
Other borrowings	67,922		—		68,000		—		68,000
Long term debt	175,378		—		174,006		—		174,006
Derivative liabilities	2,116		—		2,116		—		2,116
Accrued interest payable	4,114		4,114		—		—		4,114


(1)	Includes loans held-for-sale carried at fair value of $420.4 million ($353.7 million at Level 2 and $66.7 million at Level 3) of discontinued operations


(2)	Includes loans held-for-sale carried at fair value of $406.3 million ($348.1 million at Level 2 and $58.3 million at Level 3) of discontinued operations

- 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.

+ References + Details