Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2013

Assets and Liabilities Measured at Fair Value on Recurring Basis

The following tables present assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2013 and 2012, and that were included in the Company’s Consolidated Statements of Condition at those dates:


	Fair Value Measurements at December 31, 2013 Using
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Netting Adjustments⁽¹⁾			Total Fair Value
Assets:
Mortgage-Related Securities Available for Sale:
GSE certificates	$	—		$	25,200		$	—	$	—		$	25,200
GSE CMOs		—			60,819			—		—			60,819
Private label CMOs		—			10,202			—		—			10,202

Total mortgage-related securities	$	—		$	96,221		$	—	$	—		$	96,221

Other Securities Available for Sale:
Municipal bonds	$	—		$	1,026		$	—	$	—		$	1,026
Capital trust notes		—			11,798			—		—			11,798
Preferred stock		89,942			26,297			—		—			116,239
Common stock		52,740			2,714			—		—			55,454

Total other securities	$	142,682		$	41,835		$	—	$	—		$	184,517

Total securities available for sale	$	142,682		$	138,056		$	—	$	—		$	280,738

Other Assets:
Loans held for sale	$	—		$	306,915		$	—	$	—		$	306,915
Mortgage servicing rights		—			—			241,018		—			241,018
Interest rate lock commitments		—			—			258		—			258
Derivative assets-other⁽²⁾		1,267			5,155			—		(4,848	)		1,574
Liabilities:
Derivative liabilities	$	(590	)	$	(7,422	)	$	—	$	7,624		$	(388	)

(1)

Includes cash collateral received and pledged.

(2)

Includes $1.3 million to purchase Treasury options.


	Fair Value Measurements at December 31, 2012 Using
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Netting Adjustments			Total Fair Value
Assets:
Mortgage-Related Securities Available for Sale:
GSE certificates	$	—		$	92,679		$	—	$	—		$	92,679
GSE CMOs		—			67,160			—		—			67,160
Private label CMOs		—			17,416			—		—			17,416

Total mortgage-related securities	$	—		$	177,255		$	—	$	—		$	177,255

Other Securities Available for Sale:
Municipal bonds	$	—		$	46,296		$	—	$	—		$	46,296
Capital trust notes		—			19,866			18,569		—			38,435
Preferred stock		124,734			284			—		—			125,018
Common stock		39,682			2,580			—		—			42,262

Total other securities	$	164,416		$	69,026		$	18,569	$	—		$	252,011

Total securities available for sale	$	164,416		$	246,281		$	18,569	$	—		$	429,266

Other Assets:
Loans held for sale	$	—		$	1,204,370		$	—	$	—		$	1,204,370
Mortgage servicing rights		—			—			144,520		—			144,520
Interest rate lock commitments		—			—			21,446		—			21,446
Derivative assets-other⁽¹⁾		5,939			2,910			—		(4,730	)		4,119
Liabilities:
Derivative liabilities	$	(2,303	)	$	(5,808	)	$	—	$	4,730		$	(3,381	)

(1)

Includes $5.3 million to purchase Treasury options.

Difference between Fair Value Option and Unpaid Principal Balance

The following table reflects the difference between the fair value carrying amount of loans held for sale for which the Company has elected the fair value option, and the unpaid principal balance:


	December 31,
	2013						2012
(in thousands)	Fair Value Carrying Amount		Aggregate Unpaid Principal		Fair Value Carrying Amount Less Aggregate Unpaid Principal		Fair Value Carrying Amount		Aggregate Unpaid Principal		Fair Value Carrying Amount Less Aggregate Unpaid Principal
Loans held for sale	$	306,915	$	303,805		$3,110	$	1,204,370	$	1,159,071		$45,299

Changes in Fair Value of Loans Held For Sale

For loans held for sale and MSRs, the changes in fair value related to initial measurement, and the subsequent changes in fair value included in earnings, are shown for the periods indicated below:


	Gain (Loss) Included in Mortgage Banking Income from Changes in Fair Value⁽¹⁾
	For the Twelve Months Ended December 31,
(in thousands)	2013			2012			2011
Loans held for sale	$	(10,260	)	$	102,642		$	83,202
Mortgage servicing rights		15,699			(88,303	)		(71,830	)

Total gain	$	5,439		$	14,339		$	11,372

(1)

Does not include the effect of hedging activities.

Rollforward of Financial Instruments Classified in Level Three of Valuation Hierarchy

The following tables present, for the twelve months ended December 31, 2013 and 2012, a roll-forward of the balance sheet amounts (including changes in fair value) for financial instruments classified in Level 3 of the valuation hierarchy:


(in thousands)	Fair Value January 1, 2013		Total Realized/Unrealized Gains/(Losses) Recorded in					Issuances		Settlements			Transfers to/(from) Level 3			Fair Value at Dec. 31, 2013		Change in Unrealized Gains/ (Losses) Related to Instruments Held at December 31, 2013
(in thousands)	Fair Value January 1, 2013		Income/ Loss			Comprehensive (Loss) Income		Issuances		Settlements			Transfers to/(from) Level 3			Fair Value at Dec. 31, 2013
Available-for-sale capital securities	$	18,569	$	—		$	—	$	—	$	(18,569	)	$	—		$	—	$	—
Mortgage servicing rights		144,520		15,699			—		80,799		—			—			241,018		70,218
Interest rate lock commitments		21,446		(21,188	)		—		—		—			—			258		258

(in thousands)	Fair Value January 1, 2012		Total Realized/Unrealized Gains/(Losses) Recorded in					Issuances		Settlements			Transfers to/(from) Level 3			Fair Value at Dec. 31, 2012		Change in Unrealized Gains/ (Losses) Related to Instruments Held at December 31, 2012
(in thousands)	Fair Value January 1, 2012		Income/ Loss			Comprehensive (Loss) Income		Issuances		Settlements			Transfers to/(from) Level 3			Fair Value at Dec. 31, 2012
Available-for-sale capital securities and preferred stock	$	18,078	$	—		$	3,545	$	—	$	—		$	(3,054	)	$	18,569	$	3,415
Mortgage servicing rights		116,416		(88,303	)		—		116,407		—			—			144,520		(20,938	)
Interest rate lock commitments		15,633		5,813			—		—		—			—			21,446		21,446

Significant Unobservable Inputs used in Fair Value Measurement

For Level 3 assets and liabilities measured at fair value on a recurring basis as of December 31, 2013, the significant unobservable inputs used in the fair value measurements were as follows:

(dollars in thousands)

Fair Value at
Dec. 31, 2013

Valuation Technique

Significant Unobservable Inputs

Significant
Unobservable
Input Value

Mortgage Servicing Rights

241,018

Discounted Cash Flow

Weighted Average Constant Prepayment Rate ⁽¹⁾

8.30

Weighted Average Discount Rate

10.50

Interest Rate Lock Commitments

258

Pricing Model

Weighted Average Closing Ratio

67.43

(1)

Represents annualized loan repayment rate assumptions.

Assets and Liabilities Measured at Fair Value on Non-Recurring Basis

The following tables present assets and liabilities that were measured at fair value on a non-recurring basis as of December 31, 2013 and December 31, 2012, and that were included in the Company’s Consolidated Statements of Condition at those dates:


	Fair Value Measurements at December 31, 2013 Using
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Certain impaired loans	$	—	$	—	$	47,535	$	47,535
Other assets ⁽¹⁾		—		19,810		—		19,810

Total	$	—	$	19,810	$	47,535	$	67,345

(1)

Represents the fair value of OREO, based on the appraised value of the collateral subsequent to its initial classification as OREO.


	Fair Value Measurements at December 31, 2012 Using
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Certain impaired loans	$	—	$	—	$	76,704	$	76,704
Other assets ⁽¹⁾		—		22,664		—		22,664

Total	$	—	$	22,664	$	76,704	$	99,368

(1)

Represents the fair value of OREO, based on the appraised value of the collateral subsequent to its initial classification as OREO.

Summary of Carrying Values, Estimated Fair Values and Fair Value Measurement Levels of Financial Instruments

The following tables summarize the carrying values, estimated fair values, and fair value measurement levels of financial instruments that were not carried at fair value on the Company’s Consolidated Statements of Condition at December 31, 2013 and December 31, 2012:


	December 31, 2013
					Fair Value Measurement Using
(in thousands)	Carrying Value		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Financial Assets:
Cash and cash equivalents	$	644,550	$	644,550	$	644,550		$	—		$	—
Securities held to maturity		7,670,282		7,445,244		—			7,438,091			7,153
FHLB stock⁽¹⁾		561,390		561,390		—			561,390			—
Loans, net		32,727,507		32,628,361		—			—			32,628,361
Financial Liabilities:
Deposits	$	25,660,992	$	25,712,388	$	18,728,896	⁽²⁾	$	6,983,492	⁽³⁾	$	—
Borrowed funds		15,105,002		16,058,931		—			16,058,931			—

(1)

Carrying value and estimated fair value are at cost.

(2)

NOW and money market accounts, savings accounts, and non-interest-bearing accounts.

(3)

Certificates of deposit.


	December 31, 2012
					Fair Value Measurement Using
(in thousands)	Carrying Value		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Financial Assets:
Cash and cash equivalents	$	2,427,258	$	2,427,258	$	2,427,258		$	—		$	—
Securities held to maturity		4,484,262		4,705,960		—			4,648,766			57,194
FHLB stock⁽¹⁾		469,145		469,145		—			469,145			—
Loans, net		31,580,636		31,977,472		—			—			31,977,472
Mortgage servicing rights		193		193		—			—			193
Financial Liabilities:
Deposits	$	24,877,521	$	24,909,496	$	15,756,607	⁽²⁾	$	9,152,889	⁽³⁾	$	—
Borrowed funds		13,430,191		14,935,580		—			14,935,580			—

(1)

Carrying value and estimated fair value are at cost.

(2)

NOW and money market accounts, savings accounts, and non-interest-bearing accounts.

(3)

Certificates of deposit.

- 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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- 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.

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- 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) the reasons for electing a fair value option for each eligible item or group of similar eligible items and (b) if the fair value option is elected for some but not all eligible items within a group of similar eligible items: (i) a description of those similar items and the reasons for partial election and (ii) information of how the group of similar items relates to individual balance sheet line items; (c) 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, information of how each line item in the statement of financial position relates to major categories of assets and liabilities presented in accordance with other fair value disclosures; (2) for items included in the income statement: (a) a description of how interest and dividends are measured and where they are reported in the income statement; (b) how the gains or losses attributable to changes in instrument-specific credit risk were determined; (c) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk: (i) qualitative information about the reasons for the changes and (ii) how the gains and losses attributable to changes in instrument-specific credit risk were determined; and (3) certain other disclosures as required or determined to be provided.

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