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Fair value measurement (Tables)

9 Months Ended

Sep. 30, 2014

Schedule Of Fair Value Assets And Liabilities Measured On Recurring Basis Table Text Block

At September 30, 2014

(In thousands)	Level 1		Level 2		Level 3		Total

RECURRING FAIR VALUE MEASUREMENTS

Assets
Investment securities available-for-sale:
U.S. Treasury securities	$	-	$	592,810	$	-	$	592,810
Obligations of U.S. Government sponsored entities		-		1,973,405		-		1,973,405
Obligations of Puerto Rico, States and political subdivisions		-		66,118		-		66,118
Collateralized mortgage obligations - federal agencies		-		2,135,074		-		2,135,074
Collateralized mortgage obligations - private label		-		6		-		6
Mortgage-backed securities		-		938,643		5,926		944,569
Equity securities		303		3,938		-		4,241
Other		-		11,543		-		11,543
Total investment securities available-for-sale	$	303	$	5,721,537	$	5,926	$	5,727,766

Trading account securities, excluding derivatives:
Obligations of Puerto Rico, States and political subdivisions	$	-	$	8,194	$	-	$	8,194
Collateralized mortgage obligations		-		300		1,449		1,749
Mortgage-backed securities - federal agencies		-		110,468		7,534		118,002
Other		-		16,047		1,351		17,398
Total trading account securities	$	-	$	135,009	$	10,334	$	145,343
Mortgage servicing rights	$	-	$	-	$	152,282	$	152,282
Derivatives		-		25,850		-		25,850
Total assets measured at fair value on a recurring basis	$	303	$	5,882,396	$	168,542	$	6,051,241
Liabilities
Derivatives	$	-	$	(23,796)	$	-	$	(23,796)
Contingent consideration		-		-		(126,473)		(126,473)
Total liabilities measured at fair value on a recurring basis	$	-	$	(23,796)	$	(126,473)	$	(150,269)

At December 31, 2013

(In thousands)	Level 1		Level 2		Level 3		Total

RECURRING FAIR VALUE MEASUREMENTS

Assets
Investment securities available-for-sale:
U.S. Treasury securities	$	-	$	28,482	$	-	$	28,482
Obligations of U.S. Government sponsored entities		-		1,629,205		-		1,629,205
Obligations of Puerto Rico, States and political subdivisions		-		66,377		-		66,377
Collateralized mortgage obligations - federal agencies		-		2,418,296		-		2,418,296
Collateralized mortgage obligations - private label		-		513		-		513
Mortgage-backed securities		-		1,129,118		6,523		1,135,641
Equity securities		412		3,704		-		4,116
Other		-		12,170		-		12,170
Total investment securities available-for-sale	$	412	$	5,287,865	$	6,523	$	5,294,800

Trading account securities, excluding derivatives:
Obligations of Puerto Rico, States and political subdivisions	$	-	$	7,586	$	-	$	7,586
Collateralized mortgage obligations		-		426		1,423		1,849
Mortgage-backed securities - federal agencies		-		302,952		9,799		312,751
Other		-		15,545		1,929		17,474
Total trading account securities	$	-	$	326,509	$	13,151	$	339,660
Mortgage servicing rights	$	-	$	-	$	161,099	$	161,099
Derivatives		-		34,793		-		34,793
Total assets measured at fair value on a recurring basis	$	412	$	5,649,167	$	180,773	$	5,830,352
Liabilities
Derivatives	$	-	$	(32,378)	$	-	$	(32,378)
Contingent consideration		-		-		(128,299)		(128,299)
Total liabilities measured at fair value on a recurring basis	$	-	$	(32,378)	$	(128,299)	$	(160,677)

Fair Value Measurements, Nonrecurring [Table Text Block]

Nine months ended September 30, 2014

(In thousands)		Level 1		Level 2		Level 3		Total

NONRECURRING FAIR VALUE MEASUREMENTS
Assets											Write-downs
	Loans^[1]	$	-	$	-	$	53,796	$	53,796	$	(31,037)
	Loans held-for-sale^[2]		-		-		87,427		87,427		(38)
	Other real estate owned^[3]		-		4,605		74,631		79,236		(26,895)
	Other foreclosed assets^[3]		-		-		1,612		1,612		(1,269)
Total assets measured at fair value on a nonrecurring basis		$	-	$	4,605	$	217,466	$	222,071	$	(59,239)

Nine months ended September 30, 2013

(In thousands)		Level 1		Level 2		Level 3		Total

NONRECURRING FAIR VALUE MEASUREMENTS
Assets											Write-downs
	Loans^[1]	$	-	$	-	$	31,628	$	31,628	$	(29,847)
	Loans held-for-sale^[2]		-		-		-		-		(364,820)
	Other real estate owned^[3]		-		3,094		74,114		77,208		(37,833)
	Other foreclosed assets^[3]		-		-		407		407		(261)
Total assets measured at fair value on a nonrecurring basis		$	-	$	3,094	$	106,149	$	109,243	$	(432,761)

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	Quarter ended September 30, 2014
		MBS						Other
		classified		CMOs				securities
		as investment		classified		MBS		classified
		securities		as trading		classified as		as trading		Mortgage
		available-		account		trading account		account		servicing		Total		Contingent		Total
(In thousands)		for-sale		securities		securities		securities		rights		assets		consideration		liabilities
Balance at June 30, 2014		$	6,169	$	1,494	$	7,802	$	1,283	$	151,951	$	168,699	$	(127,551)	$	(127,551)
Gains (losses) included in earnings			(1)		2		(20)		70		(2,588)		(2,537)		1,078		1,078
Gains (losses) included in OCI			(20)		-		-		-		-		(20)		-		-
Additions			-		7		127		-		2,919		3,053		-		-
Settlements			(222)		(55)		(376)		-		-		(653)		-		-
Balance at September 30, 2014		$	5,926	$	1,448	$	7,533	$	1,353	$	152,282	$	168,542	$	(126,473)	$	(126,473)
Changes in unrealized gains
	(losses) included in earnings
	relating to assets still held
	at September 30, 2014	$	-	$	2	$	(4)	$	107	$	2,528	$	2,633	$	1,078	$	1,078

	Nine months ended September 30, 2014
		MBS						Other
		classified		CMOs				securities
		as investment		classified		MBS		classified
		securities		as trading		classified as		as trading		Mortgage
		available-		account		trading account		account		servicing		Total		Contingent		Total
(In thousands)		for-sale		securities		securities		securities		rights		assets		consideration		liabilities
Balance at January 1, 2014		$	6,523	$	1,423	$	9,799	$	1,929	$	161,099	$	180,773	$	(128,299)	$	(128,299)
Gains (losses) included in earnings			(4)		(9)		(134)		(576)		(18,424)		(19,147)		1,040		1,040
Gains (losses) included in OCI			(100)		-		-		-		-		(100)		-		-
Additions			-		270		778		-		9,611		10,659		-		-
Sales			-		-		(1,109)		-		-		(1,109)		-		-
Settlements			(493)		(236)		(1,801)		-		(4)		(2,534)		786		786
Balance at September 30, 2014		$	5,926	$	1,448	$	7,533	$	1,353	$	152,282	$	168,542	$	(126,473)	$	(126,473)
Changes in unrealized gains
	(losses) included in earnings
	relating to assets still held
	at September 30, 2014	$	-	$	(5)	$	(70)	$	(424)	$	(3,314)	$	(3,813)	$	1,040	$	1,040

	Quarter ended September 30, 2013
		MBS						Other
		classified		CMOs				securities
		as investment		classified		MBS		classified
		securities		as trading		classified as		as trading		Mortgage
		available-		account		trading account		account		servicing		Total		Contingent		Total
(In thousands)		for-sale		securities		securities		securities		rights		assets		consideration		liabilities
Balance at June 30, 2013		$	6,756	$	1,653	$	10,335	$	2,042	$	153,444	$	174,230	$	(119,253)	$	(119,253)
Gains (losses) included in earnings			(2)		(4)		83		(69)		3,879		3,887		(5,322)		(5,322)
Gains (losses) included in OCI			44		-		-		-		-		44		-		-
Additions			-		-		343		-		4,910		5,253		-		-
Sales			-		(103)		(100)		-		-		(203)		-		-
Settlements			(100)		(67)		(625)		-		(788)		(1,580)		-		-
Balance at September 30, 2013		$	6,698	$	1,479	$	10,036	$	1,973	$	161,445	$	181,631	$	(124,575)	$	(124,575)
Changes in unrealized gains
	(losses) included in earnings
	relating to assets still held
	at September 30, 2013	$	-	$	1	$	135	$	-	$	9,342	$	9,478	$	(5,322)	$	(5,322)

	Nine months ended September 30, 2013
		MBS						Other
		classified		CMOs				securities
		as investment		classified		MBS		classified
		securities		as trading		classified as		as trading		Mortgage
		available-		account		trading account		account		servicing		Total		Contingent		Total
(In thousands)		for-sale		securities		securities		securities		rights		assets		consideration		liabilities
Balance at January 1, 2013		$	7,070	$	2,499	$	11,818	$	2,240	$	154,430	$	178,057	$	(112,002)	$	(112,002)
Gains (losses) included in earnings			(5)		(3)		(91)		(267)		(6,862)		(7,228)		(12,573)		(12,573)
Gains (losses) included in OCI			(42)		-		-		-		-		(42)		-		-
Additions			-		25		601		-		15,107		15,733		-		-
Sales			-		(802)		(100)		-		-		(902)		-		-
Settlements			(325)		(240)		(2,192)		-		(1,230)		(3,987)		-		-
Balance at September 30, 2013		$	6,698	$	1,479	$	10,036	$	1,973	$	161,445	$	181,631	$	(124,575)	$	(124,575)
Changes in unrealized gains
	(losses) included in earnings
	relating to assets still held
	at September 30, 2013	$	-	$	4	$	90	$	(7)	$	13,355	$	13,442	$	(12,573)	$	(12,573)

Fair Value, Measured on Recurring Basis, Gain (Loss) Included in Earnings [Table Text Block]

	Quarter ended September 30, 2014				Nine months ended September 30, 2014
			Changes in unrealized				Changes in unrealized
	Total gains		gains (losses) relating to		Total gains		gains (losses) relating to
	(losses) included		assets still held at		(losses) included		assets still held at
(In thousands)	in earnings		reporting date		in earnings		reporting date
Interest income	$	(1)	$	-	$	(4)	$	-
FDIC loss share (expense) income		1,078		1,078		1,040		1,040
Mortgage banking activities		(2,588)		2,528		(18,424)		(3,314)
Trading account profit (loss)		52		105		(719)		(499)
Total	$	(1,459)	$	3,711	$	(18,107)	$	(2,773)

	Quarter ended September 30, 2013				Nine months ended September 30, 2013
			Changes in unrealized				Changes in unrealized
	Total gains		gains (losses) relating to		Total gains		gains (losses) relating to
	(losses) included		assets still held at		(losses) included		assets still held at
(In thousands)	in earnings		reporting date		in earnings		reporting date
Interest income	$	(2)	$	-	$	(5)	$	-
FDIC loss share (expense) income		(5,322)		(5,322)		(12,573)		(12,573)
Mortgage banking activities		3,879		9,342		(6,862)		13,355
Trading account profit (loss)		10		136		(361)		87
Total	$	(1,435)	$	4,156	$	(19,801)	$	869

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Table Text Block]

		Fair value
		at September 30,
(In thousands)		2014	Valuation technique	Unobservable inputs	Weighted average (range)
CMO's - trading	$	1,449	Discounted cash flow model	Weighted average life	2.2 years (0.6 - 5.0 years)
				Yield	3.9% (1.4% - 4.7%)
				Constant prepayment rate	23.9% (19.5% - 27.1%)
Other - trading	$	816	Discounted cash flow model	Weighted average life	5.5	years
				Yield	12.0	%
				Constant prepayment rate	10.8	%
Mortgage servicing rights	$	152,282	Discounted cash flow model	Prepayment speed	7.8% (5.6% - 23.1%)
				Weighted average life	12.8 years (4.3- 18.0 years)
				Discount rate	11.3% (9.5% - 15.0%)
Contingent consideration	$	(126,473)	Discounted cash flow model	Credit loss rate on covered loans	8.1% (0.0% - 100.0%)
				Risk premium component
				of discount rate	5.0	%
Loans held-in-portfolio	$	53,136^[1]	External appraisal	Haircut applied on
				external appraisals	16.5% (15.0% - 25.0%)
Other real estate owned	$	79,236^[2]	External appraisal	Haircut applied on
				external appraisals	15.5% (5.0% -35.0%)
Other foreclosed assets	$	1,465^[3]	External appraisal	Haircut applied on
				external appraisals	3.0% (1.0% -6.0%)

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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