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Fair value measurements (Tables)
 9 Months Ended
Sep. 30, 2020
Fair Value Disclosures [Abstract]  
Assets and Liabilities Measured at Estimated Fair Value on Recurring Basis

The following tables present assets and liabilities at September 30, 2020 and December 31, 2019 measured at estimated fair value on a recurring basis:

 

 

 

Fair Value Measurements

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

(In thousands)

 

September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading account assets

 

$

1,215,573

 

 

$

50,023

 

 

$

1,165,550

 

 

$

—

 

Investment securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and federal agencies

 

 

9,370

 

 

 

—

 

 

 

9,370

 

 

 

—

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government issued or guaranteed

 

 

5,165,701

 

 

 

—

 

 

 

5,165,701

 

 

 

—

 

Privately issued

 

 

16

 

 

 

—

 

 

 

—

 

 

 

16

 

Other debt securities

 

 

127,251

 

 

 

—

 

 

 

127,251

 

 

 

—

 

 

 

 

5,302,338

 

 

 

—

 

 

 

5,302,322

 

 

 

16

 

Equity securities

 

 

101,182

 

 

 

72,856

 

 

 

28,326

 

 

 

—

 

Real estate loans held for sale

 

 

909,335

 

 

 

—

 

 

 

909,335

 

 

 

—

 

Other assets (a)

 

 

56,816

 

 

 

—

 

 

 

5,030

 

 

 

51,786

 

Total assets

 

$

7,585,244

 

 

$

122,879

 

 

$

7,410,563

 

 

$

51,802

 

Trading account liabilities

 

$

122,985

 

 

$

—

 

 

$

122,985

 

 

$

—

 

Other liabilities (a)

 

 

14,946

 

 

 

—

 

 

 

14,663

 

 

 

283

 

Total liabilities

 

$

137,931

 

 

$

—

 

 

$

137,648

 

 

$

283

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading account assets

 

$

470,129

 

 

$

49,040

 

 

$

421,089

 

 

$

—

 

Investment securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and federal agencies

 

 

9,767

 

 

 

—

 

 

 

9,767

 

 

 

—

 

Obligations of states and political subdivisions

 

 

775

 

 

 

—

 

 

 

775

 

 

 

—

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government issued or guaranteed

 

 

6,180,940

 

 

 

—

 

 

 

6,180,940

 

 

 

—

 

Privately issued

 

 

16

 

 

 

—

 

 

 

—

 

 

 

16

 

Other debt securities

 

 

127,278

 

 

 

—

 

 

 

127,278

 

 

 

—

 

 

 

 

6,318,776

 

 

 

—

 

 

 

6,318,760

 

 

 

16

 

Equity securities

 

 

140,041

 

 

 

100,637

 

 

 

39,404

 

 

 

—

 

Real estate loans held for sale

 

 

442,079

 

 

 

—

 

 

 

442,079

 

 

 

—

 

Other assets (a)

 

 

16,466

 

 

 

—

 

 

 

4,501

 

 

 

11,965

 

Total assets

 

$

7,387,491

 

 

$

149,677

 

 

$

7,225,833

 

 

$

11,981

 

Trading account liabilities

 

$

79,903

 

 

$

—

 

 

$

79,903

 

 

$

—

 

Other liabilities (a)

 

 

7,188

 

 

 

—

 

 

 

5,963

 

 

 

1,225

 

Total liabilities

 

$

87,091

 

 

$

—

 

 

$

85,866

 

 

$

1,225

 

 

 (a)

Comprised predominantly of interest rate swap agreements used for interest rate risk management (Level 2), commitments to sell real estate loans (Level 2) and commitments to originate real estate loans to be held for sale (Level 3).
Changes in Level 3 Assets and Liabilities Measured at Estimated Fair Value on Recurring Basis

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the three months ended September 30, 2020 and 2019 were as follows:

 

 

 

Investment

Securities

Available for Sale

 

 

 

 

 

 

 

 

Privately Issued Mortgage-Backed Securities

 

 

Other Assets and Other Liabilities

 

 

2020

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Balance — June 30, 2020

 

$

16

 

 

 

40,106

 

 

Total gains realized/unrealized:

 

 

 

 

 

 

 

 

 

Included in earnings

 

 

—

 

 

 

57,819

 

(a)

Settlements

 

 

—

 

 

 

—

 

 

Transfers out of Level 3

 

 

—

 

 

 

(46,422

)

(b)

Balance — September 30, 2020

 

$

16

 

 

 

51,503

 

 

Changes in unrealized gains included in earnings

   related to assets still held at September 30, 2020

 

$

—

 

 

 

44,127

 

(a)

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance — June 30, 2019

 

$

16

 

 

 

17,200

 

 

Total gains realized/unrealized:

 

 

 

 

 

 

 

 

 

Included in earnings

 

 

—

 

 

 

62,178

 

(a)

Settlements

 

 

—

 

 

 

—

 

 

Transfers out of Level 3

 

 

—

 

 

 

(55,104

)

(b)

Balance — September 30, 2019

 

$

16

 

 

 

24,274

 

 

Changes in unrealized gains included in earnings

   related to assets still held at September 30, 2019

 

$

—

 

 

 

19,350

 

(a)

 

11. Fair value measurements, continued

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the nine months ended September 30, 2020 and 2019 were as follows:

 

 

Investment

Securities

Available for Sale

 

 

 

 

 

 

 

 

Privately Issued Mortgage-Backed Securities

 

 

Other Assets and Other Liabilities

 

 

2020

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Balance — January 1, 2020

 

$

16

 

 

 

10,740

 

 

Total gains realized/unrealized:

 

 

 

 

 

 

 

 

 

Included in earnings

 

 

—

 

 

 

150,632

 

(a)

Settlements

 

 

—

 

 

 

—

 

 

Transfers out of Level 3

 

 

—

 

 

 

(109,869

)

(b)

Balance — September 30, 2020

 

$

16

 

 

 

51,503

 

 

Changes in unrealized gains included in earnings

   related to assets still held at September 30, 2020

 

$

—

 

 

 

50,411

 

(a)

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance — January 1, 2019

 

$

22

 

 

 

7,712

 

 

Total gains realized/unrealized:

 

 

 

 

 

 

 

 

 

Included in earnings

 

 

—

 

 

 

115,187

 

(a)

Settlements

 

 

(6

)

 

 

—

 

 

Transfers out of Level 3

 

 

—

 

 

 

(98,625

)

(b)

Balance — September 30, 2019

 

$

16

 

 

 

24,274

 

 

Changes in unrealized gains included in earnings

   related to assets still held at September 30, 2019

 

$

—

 

 

 

24,981

 

(a)

(a)

Reported as mortgage banking revenues in the consolidated statement of income and includes the fair value of commitment issuances and expirations.

(b)

Transfers out of Level 3 consist of interest rate locks transferred to closed loans.
Quantitative Information Related to Significant Unobservable Inputs

The following tables present quantitative information about significant unobservable inputs used in the fair value measurements for certain Level 3 assets and liabilities at September 30, 2020 and December 31, 2019:

 

 

 

Fair Value

 

 

Valuation

Technique

 

Unobservable

Inputs/Assumptions

 

 

Range

(Weighted-

Average)

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring fair value measurements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Privately issued mortgage-

   backed securities

 

$

16

 

 

Two independent pricing quotes

 

 

—

 

 

 

—

 

Net other assets (liabilities) (a)

 

 

51,503

 

 

Discounted cash flow

 

Commitment expirations

 

 

0% - 90%(18%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring fair value measurements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Privately issued mortgage-

   backed securities

 

$

16

 

 

Two independent pricing quotes

 

 

—

 

 

 

—

 

Net other assets (liabilities) (a)

 

 

10,740

 

 

Discounted cash flow

 

Commitment expirations

 

 

0% - 99% (13%)

 

(a)

Other Level 3 assets (liabilities) consist of commitments to originate real estate loans.
Carrying Amounts and Estimated Fair Value for Financial Instrument Assets (Liabilities)

The carrying amounts and estimated fair value for financial instrument assets (liabilities) are presented in the following table:

 

 

 

September 30, 2020

 

 

 

Carrying

Amount

 

 

Estimated

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

(In thousands)

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,489,232

 

 

 

1,489,232

 

 

 

1,437,569

 

 

 

51,663

 

 

 

—

 

Interest-bearing deposits at banks

 

 

20,197,937

 

 

 

20,197,937

 

 

 

—

 

 

 

20,197,937

 

 

 

—

 

Trading account assets

 

 

1,215,573

 

 

 

1,215,573

 

 

 

50,023

 

 

 

1,165,550

 

 

 

—

 

Investment securities

 

 

7,723,004

 

 

 

7,816,236

 

 

 

72,856

 

 

 

7,670,141

 

 

 

73,239

 

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans and leases

 

 

27,891,648

 

 

 

27,422,525

 

 

 

—

 

 

 

—

 

 

 

27,422,525

 

Commercial real estate loans

 

 

37,582,084

 

 

 

36,343,024

 

 

 

—

 

 

 

336,039

 

 

 

36,006,985

 

Residential real estate loans

 

 

16,663,708

 

 

 

16,935,950

 

 

 

—

 

 

 

4,070,917

 

 

 

12,865,033

 

Consumer loans

 

 

16,309,608

 

 

 

16,149,710

 

 

 

—

 

 

 

—

 

 

 

16,149,710

 

Allowance for credit losses

 

 

(1,758,505

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Loans and leases, net

 

 

96,688,543

 

 

 

96,851,209

 

 

 

—

 

 

 

4,406,956

 

 

 

92,444,253

 

Accrued interest receivable

 

 

429,751

 

 

 

429,751

 

 

 

—

 

 

 

429,751

 

 

 

—

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

(44,201,670

)

 

 

(44,201,670

)

 

 

—

 

 

 

(44,201,670

)

 

 

—

 

Savings and interest-checking deposits

 

 

(65,732,130

)

 

 

(65,732,130

)

 

 

—

 

 

 

(65,732,130

)

 

 

—

 

Time deposits

 

 

(4,329,550

)

 

 

(4,357,963

)

 

 

—

 

 

 

(4,357,963

)

 

 

—

 

Deposits at Cayman Islands office

 

 

(899,989

)

 

 

(899,989

)

 

 

—

 

 

 

(899,989

)

 

 

—

 

Short-term borrowings

 

 

(46,123

)

 

 

(46,123

)

 

 

—

 

 

 

(46,123

)

 

 

—

 

Long-term borrowings

 

 

(5,458,885

)

 

 

(5,540,675

)

 

 

—

 

 

 

(5,540,675

)

 

 

—

 

Accrued interest payable

 

 

(66,158

)

 

 

(66,158

)

 

 

—

 

 

 

(66,158

)

 

 

—

 

Trading account liabilities

 

 

(122,985

)

 

 

(122,985

)

 

 

—

 

 

 

(122,985

)

 

 

—

 

Other financial instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments to originate real estate

   loans for sale

 

$

51,503

 

 

 

51,503

 

 

 

—

 

 

 

—

 

 

 

51,503

 

Commitments to sell real estate loans

 

 

(10,010

)

 

 

(10,010

)

 

 

—

 

 

 

(10,010

)

 

 

—

 

Other credit-related commitments

 

 

(135,416

)

 

 

(135,416

)

 

 

—

 

 

 

—

 

 

 

(135,416

)

Interest rate swap agreements used for

   interest rate risk management

 

 

377

 

 

 

377

 

 

 

—

 

 

 

377

 

 

 

—

 

 

 

 

December 31, 2019

 

 

 

Carrying

Amount

 

 

Estimated

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,432,805

 

 

 

1,432,805

 

 

 

1,394,984

 

 

 

37,821

 

 

 

—

 

Interest-bearing deposits at banks

 

 

7,190,154

 

 

 

7,190,154

 

 

 

—

 

 

 

7,190,154

 

 

 

—

 

Federal funds sold

 

 

3,500

 

 

 

3,500

 

 

 

—

 

 

 

3,500

 

 

 

—

 

Trading account assets

 

 

470,129

 

 

 

470,129

 

 

 

49,040

 

 

 

421,089

 

 

 

—

 

Investment securities

 

 

9,497,251

 

 

 

9,539,540

 

 

 

100,637

 

 

 

9,351,793

 

 

 

87,110

 

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans and leases

 

 

23,838,168

 

 

 

23,510,908

 

 

 

—

 

 

 

—

 

 

 

23,510,908

 

Commercial real estate loans

 

 

35,541,914

 

 

 

35,517,180

 

 

 

—

 

 

 

28,338

 

 

 

35,488,842

 

Residential real estate loans

 

 

16,156,094

 

 

 

16,227,274

 

 

 

—

 

 

 

3,990,848

 

 

 

12,236,426

 

Consumer loans

 

 

15,386,693

 

 

 

15,413,262

 

 

 

—

 

 

 

—

 

 

 

15,413,262

 

Allowance for credit losses

 

 

(1,051,071

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Loans and leases, net

 

 

89,871,798

 

 

 

90,668,624

 

 

 

—

 

 

 

4,019,186

 

 

 

86,649,438

 

Accrued interest receivable

 

 

333,142

 

 

 

333,142

 

 

 

—

 

 

 

333,142

 

 

 

—

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

(32,396,407

)

 

 

(32,396,407

)

 

 

—

 

 

 

(32,396,407

)

 

 

—

 

Savings and interest-checking deposits

 

 

(54,932,162

)

 

 

(54,932,162

)

 

 

—

 

 

 

(54,932,162

)

 

 

—

 

Time deposits

 

 

(5,757,456

)

 

 

(5,829,347

)

 

 

—

 

 

 

(5,829,347

)

 

 

—

 

Deposits at Cayman Islands office

 

 

(1,684,044

)

 

 

(1,684,044

)

 

 

—

 

 

 

(1,684,044

)

 

 

—

 

Short-term borrowings

 

 

(62,363

)

 

 

(62,363

)

 

 

—

 

 

 

(62,363

)

 

 

—

 

Long-term borrowings

 

 

(6,986,186

)

 

 

(7,063,165

)

 

 

—

 

 

 

(7,063,165

)

 

 

—

 

Accrued interest payable

 

 

(105,374

)

 

 

(105,374

)

 

 

—

 

 

 

(105,374

)

 

 

—

 

Trading account liabilities

 

 

(79,903

)

 

 

(79,903

)

 

 

—

 

 

 

(79,903

)

 

 

—

 

Other financial instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments to originate real estate

   loans for sale

 

$

10,740

 

 

 

10,740

 

 

 

—

 

 

 

—

 

 

 

10,740

 

Commitments to sell real estate loans

 

 

300

 

 

 

300

 

 

 

—

 

 

 

300

 

 

 

—

 

Other credit-related commitments

 

 

(136,470

)

 

 

(136,470

)

 

 

—

 

 

 

—

 

 

 

(136,470

)

Interest rate swap agreements used for

   interest rate risk management

 

 

(1,762

)

 

 

(1,762

)

 

 

—

 

 

 

(1,762

)

 

 

—