FAIR VALUE (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following tables present the assets and liabilities that are measured at fair value on a recurring basis by major product category and fair value hierarchy as of June 30, 2014 and December 31, 2013.



	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at June 30, 2014
	(in thousands)
Financial assets:
US Treasury and government agency securities	$	—	$	8,000	$	—	$	8,000
Corporate debt	—		2,234,349		—		2,234,349
Asset-backed securities	—		1,360,789		1,243,872		2,604,661
Equity Securities	10,163		—		—		10,163
State and municipal securities	—		1,830,276		—		1,830,276
Mortgage backed securities	—		4,987,593		—		4,987,593
Total investment securities available-for-sale	10,163		10,421,007		1,243,872		11,675,042
Trading securities	—		125,116		—		125,116
Retail installment contracts held for investment	—		—		1,273,072		1,273,072
Loans held for sale	—		166,616		—		166,616
Mortgage servicing rights	—		—		124,118		124,118
Derivatives:
Fair value	—		855		—		855
Cash Flow	—		2,102		—		2,102
Mortgage banking interest rate lock commitments	—		—		4,092		4,092
Customer related	—		214,918		—		214,918
Foreign exchange	—		7,593		—		7,593
Mortgage servicing	—		722		—		722
Interest rate cap agreements	—		46,631		—		46,631
Other	—		5,902		10		5,912
Total financial assets	$	10,163	$	10,991,462	$	2,645,164	$	13,646,789
Financial liabilities:
Derivatives:
Fair value	$	—	$	2,303	$	—	$	2,303
Cash flow	—		44,281		—		44,281
Mortgage banking forward sell commitments	—		3,151		—		3,151
Customer related	—		184,624		—		184,624
Total return swap	—		—		285		285
Foreign exchange	—		6,199		—		6,199
Mortgage servicing	—		188		—		188
Interest rate swaps	—		24,240		—		24,240
Option for interest rate cap	—		46,677		—		46,677
Other	—		6,727		76		6,803
Total financial liabilities	$	—	$	318,390	$	361	$	318,751

NOTE 16. FAIR VALUE (continued)



	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		December 31, 2013
	(in thousands)
Financial assets:
US Treasury and government agency securities	$	—	$	24,997	$	—	$	24,997
Corporate debt	—		2,218,180		—		2,218,180
Asset-backed securities	—		2,679,290		52,940		2,732,230
Equity securities	9,841		—		—		9,841
State and municipal securities	—		1,850,149		—		1,850,149
Mortgage backed securities	—		4,810,843		—		4,810,843
Total investment securities available-for-sale	9,841		11,583,459		52,940		11,646,240
Loans held for sale	—		128,949		—		128,949
Mortgage servicing rights	—		—		141,787		141,787
Derivatives:
Fair value	—		1,073		—		1,073
Cash flow	—		4,803		—		4,803
Mortgage banking interest rate lock commitments	—		—		547		547
Mortgage banking forward sell commitments	—		2,101		—		2,101
Customer related	—		225,811		—		225,811
Foreign exchange	—		11,631		—		11,631
Mortgage servicing rights	—		6,155		—		6,155
Other	—		4,750		14		4,764
Total financial assets	$	9,841	$	11,968,732	$	195,288	$	12,173,861
Financial liabilities:
Derivatives:
Fair value	$	—	$	1,924	$	—	$	1,924
Cash flow	—		58,381		—		58,381
Customer related	—		198,669		—		198,669
Total return swap	—		—		285		285
Foreign exchange	—		9,745		—		9,745
Mortgage servicing rights	—		488		—		488
Other	—		4,099		112		4,211
Total financial liabilities	$	—	$	273,306	$	397	$	273,703

Fair Value Measurements, Nonrecurring

Assets measured at fair value on a nonrecurring basis that were still held on the balance sheet were as follows:

NOTE 16. FAIR VALUE (continued)



	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(in thousands)
June 30, 2014
Impaired loans held for investment	$	—	$	94,685	$	64,229	$	158,914
Foreclosed assets	—		29,840		—		29,840
Repossessed vehicle inventory	—		140,792		—		140,792

December 31, 2013
Impaired loans held for investment	$	—	$	149,796	$	137,356	$	287,152
Foreclosed assets	—		57,431		—		57,431

Increases and Decreases in Value of Certain Assets Measured at Fair Value on Nonrecurring Basis

The following table presents the increases and decreases in value of certain assets that are measured at fair value on a nonrecurring basis for which a fair value adjustment has been included in the Condensed Consolidated Statements of Operations relating to assets held at period-end:



	Statement of Operations Location	Three-Month Period Ended June 30,						Six-Month Period Ended June 30,
		(in thousands)
		2014			2013			2014			2013
Impaired loans held for investment	Provision for credit losses	$	(9,656	)	$	(29,756	)	$	(10,200	)	$	(14,324	)
Foreclosed assets	Other administrative expense	(129		)	(860		)	(352		)	(2,404		)
Repossessed vehicle inventory	Provision for credit losses	579,765			—			684,699			—
		$	569,980		$	(30,616	)	$	674,147		$	(16,728	)

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The tables below present the changes in all Level 3 balances for the three-month and six-month periods ended June 30, 2014 and 2013, respectively.



Three-Month Period Ended June 30, 2014
	Investments Available-for-Sale			Retail Installment Contracts Held for Investment			MSRs			Derivatives			Total
	(in thousands)
Balance, March 31, 2014	$	1,225,012		$	1,516,353		$	134,775		$	1,350		$	2,877,490
Gains in other comprehensive income	822			—			—			—			822
Gains/(losses) in earnings	—			215,377			(6,893		)	2,284			210,768
Additions/Issuances	102,326			—			2,129			—			104,455
Settlements⁽¹⁾	$	(84,288	)	(458,658		)	$	(5,893	)	$	107		$	(548,732	)
Balance, June 30, 2014	$	1,243,872		1,273,072			$	124,118		$	3,741		$	2,644,803
Changes in unrealized losses included in earnings related to balances still held at June 30, 2014	$	—		$	—		$	(6,893	)	$	(80	)	$	(6,973	)

Six-Month Period Ended June 30, 2014
	Investments Available-for-sale			Retail Installment Contracts Held for Investment			MSRs			Derivatives			Total
	(in thousands)
Balance, December 31, 2013	$	52,940		$	—		$	141,787		$	164		$	194,891
Gains in other comprehensive income	1,870			—			—			—			1,870
Gains/(losses) in earnings	—			359,430			(11,352		)	3,330			351,408
Additions/Issuances	102,326			1,870,383			4,003			—			1,976,712
Settlements⁽¹⁾	(84,724		)	(956,741		)	(10,320		)	247			(1,051,538		)
Transfers into level 3	1,171,460			—			—			—			1,171,460
Asset Balance, June 30, 2014	$	1,243,872		$	1,273,072		$	124,118		$	3,741		$	2,644,803
Changes in unrealized losses included in earnings related to balances still held at June 30, 2014	$	—		$	—		$	(11,352	)	$	(215	)	$	(11,567	)


(1)	Settlements include charge-offs, prepayments, paydowns and maturities.

NOTE 16. FAIR VALUE (continued)



Three-Month Period Ended June 30, 2013
	Investments Available for Sale			MSRs			Derivatives			Total
	(in thousands)
Balance, March 31, 2013	$	44,818		$	109,163		$	11,022		$	165,003
Gains in other comprehensive income	9,968			—			—			9,968
Gains/(losses) in earnings	—			23,270			(21,098		)	2,172
Additions/Issuances	—			10,874			—			10,874
Settlements⁽¹⁾	(417		)	(5,166		)	107			(5,476		)
Asset Balance, June 30, 2013	$	54,369		$	138,141		$	(9,969	)	$	182,541
Changes in unrealized gains included in earnings related to balances still held at June 30, 2013	$	—		$	23,270		$	50		$	23,320

Six-Month Period Ended June 30, 2013
	Investments Available for Sale			MSRs			Derivatives			Total
	(in thousands)
Balance, December 31, 2012	$	43,374		$	92,512		$	14,722		$	150,608
Gains in other comprehensive income	11,824			—			—			11,824
Gains/(losses) in earnings	—			33,366			(24,901		)	8,465
Additions/Issuances	—			24,046			—			24,046
Settlements⁽¹⁾	(829		)	(11,783		)	210			(12,402		)
Balance, June 30, 2013	$	54,369		$	138,141		$	(9,969	)	$	182,541
Changes in unrealized gains (losses) included in earnings related to balances still held at June 30, 2013	$	—		$	33,366		$	(33	)	$	33,333

(1) Settlements include prepayments, paydowns and maturities

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques

The following table presents quantitative information about the significant unobservable inputs within significant Level 3 recurring assets and liabilities.



	Fair Value at June 30, 2014		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
	(in thousands)
Financial Assets:
Asset-backed securities
Financing Bonds	$	1,190,008	Discounted Cash Flow	Discount Rate ⁽¹⁾	0.51%-2.01% (1.24%)
Sale-leaseback securities	$	53,864	Consensus Pricing ⁽²⁾	Offered quotes ⁽³⁾	136.47	%
Retail installment contracts held for investment	$	1,273,072	Discounted Cash Flow	ABS ⁽⁴⁾	40.00	%
				Prepayment rate (CPR) ⁽⁵⁾	11.00	%
				Discount Rate ⁽⁶⁾	5.29%-12.00% (7.12%)
				Recovery Rate ⁽⁷⁾	25.00%-47.00% (42.05%)
Mortgage servicing rights	$	124,118	Discounted Cash Flow	Prepayment rate (CPR) ⁽⁸⁾	0.54%-39.20% (10.27%)
				Discount Rate ⁽⁹⁾	9.55	%
Mortgage banking interest rate lock commitments	$	4,092	Discounted Cash Flow	Pull through percentage ⁽¹⁰⁾	72.99	%
				MSR value ⁽¹¹⁾	0.690%-1.020% (0.96%)

(1) Based on the applicable term and discount index.

(2) Consensus pricing refers to fair value estimates that are generally developed using information such as dealer quotes or other third-party valuations or comparable asset prices.

(3) Based on the nature of the input, a range or weighted average does not exist. For sale-lease back securities, the Company owns one security.

(4) Based on the historical default rate and adjustments to reflect voluntary prepayments.

(5) Based on the analysis of available data from a comparable market securitization of similar assets.

(6) Based on the cost of funding of debt issuance and recent historical equity yields.

(7) Based on the average severity utilizing reported severity rates and loss severity utilizing available market data from a comparable securitized pool.

(8) Average CPR projected from collateral stratified by loan type, note rate and maturity.

(9) Based on the nature of the input, a range or weighted average does not exist.

(10) Historical weighted average based on principal balance calculated as the percentage of loans originated for sale divided by total commitments less outstanding commitments.

(11) MSR value is the estimated value of the servicing right embedded in the underlying loan, expressed in basis points of outstanding unpaid principal balance.

Fair Value, by Balance Sheet Grouping

Fair Value of Financial Instruments



	June 30, 2014
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
	(in thousands)
Financial assets:
Cash and amounts due from depository institutions	$	4,385,648	$	4,385,648	$	4,385,648	$	—	$	—
Available-for-sale investment securities	11,675,042		11,675,042		10,163		10,421,007		1,243,872
Trading securities	125,116		125,116		—		125,116		—
Debentures of FHLB	19,957		20,000		—		20,000		—
Loans held for investment, net	74,212,032		74,442,476		—		94,685		74,347,791
Loans held for sale	290,407		290,736		—		290,736		—
Restricted Cash	2,059,673		2,059,673		2,059,673		—		—
Mortgage servicing rights	124,118		124,118		—		—		124,118
Derivatives	282,825		282,825		—		278,723		4,102

Financial liabilities:
Deposits	49,799,792		49,855,974		42,921,497		6,934,477		—
Borrowings and other debt obligations	38,213,650		38,927,956		—		31,465,006		7,462,950
Derivatives	318,751		318,751		—		318,390		361



	December 31, 2013
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
	(in thousands)
Financial assets:
Cash and amounts due from depository institutions	$	4,226,947	$	4,226,947	$	4,226,947	$	—	$	—
Available-for-sale investment securities	11,646,240		11,646,240		9,841		11,583,459		52,940
Debentures of FHLB	19,862		20,000		—		20,000		—
Loans held for investment, net	49,087,340		49,307,888		—		149,796		49,158,092
Loans held for sale	128,949		128,949		—		128,949		—
Restricted Cash	97,397		97,397		97,397		—		—
Mortgage servicing rights	141,787		141,787		—		—		141,787
Derivatives	256,885		256,885		—		256,324		561

Financial liabilities:
Deposits	49,521,406		49,609,846		41,382,336		8,227,510		—
Borrowings and other debt obligations	12,376,624		13,210,300		—		13,210,300		—
Derivatives	273,703		273,703		—		273,306		397

Fair Value, Option, Quantitative Disclosures

The following table summarizes the difference between the fair value and the principal balance for residential mortgage loans and retail installment contracts measured at fair value as of June 30, 2014.



	Fair Value		Aggregate Unpaid Principal Balance		Difference
	(in thousands)
Residential mortgage loans held for sale	$	166,616	$	163,045	$	3,571
Nonaccrual loans	—		—		—

Retail installment contracts held for investment	$	1,273,072	$	1,645,493	$	(372,421	)
Nonaccrual loans	114,400		213,250		(98,850		)

- 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.

+ References+ Details

- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

+ References+ Details

- 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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