FAIR VALUE MEASUREMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2014

Assets (Liabilities) Measured at Fair Value on a Recurring Basis

	Assets (Liabilities) Measured at Fair Value on a Recurring Basis
	as of September 30, 2014
				Quoted Prices in		Significant
	Fair Value			Active Markets		Other			Significant
	Measurements			for Identical		Observable			Unobservable
	September 30,			Assets		Inputs			Inputs
	2014			(Level 1)		(Level 2)			(Level 3)
	(In thousands)
Investment securities available-for-sale:
U.S. Treasury securities	$	603,647		$	603,647	$	—		$	—
U.S. government agency and U.S. government sponsored enterprise debt securities	412,981			—		412,981			—
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	125,567			—		125,567			—
Residential mortgage-backed securities	757,582			—		757,582			—
Municipal securities	296,597			—		296,597			—
Other residential mortgage-backed securities:
Investment grade	55,258			—		55,258			—
Other commercial mortgage-backed securities:
Investment grade	51,127			—		51,127			—
Corporate debt securities:
Investment grade	210,825			—		210,825			—
Non-investment grade	17,776			—		8,867			8,909
Other securities	61,307			—		61,307			—
Total investment securities available-for-sale	$	2,592,667		$	603,647	$	1,980,111		$	8,909
Foreign exchange options	$	6,155		$	—	$	6,155		$	—
Interest rate swaps and caps	29,170			—		29,170			—
Foreign exchange contracts	9,204			—		9,204			—
Derivative liabilities	(54,086		)	—		(50,660		)	(3,426		)

	Assets (Liabilities) Measured at Fair Value on a Recurring Basis
	as of December 31, 2013
				Quoted Prices in		Significant
	Fair Value			Active Markets		Other			Significant
	Measurements			for Identical		Observable			Unobservable
	December 31,			Assets		Inputs			Inputs
	2013			(Level 1)		(Level 2)			(Level 3)
	(In thousands)
Investment securities available-for-sale:
U.S. Treasury securities	$	491,632		$	491,632	$	—		$	—
U.S. government agency and U.S. government sponsored enterprise debt securities	394,323			—		394,323			—
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	178,870			—		178,870			—
Residential mortgage-backed securities	885,237			—		885,237			—
Municipal securities	280,979			—		280,979			—
Other residential mortgage-backed securities:
Investment grade	46,327			—		46,327			—
Other commercial mortgage-backed securities:
Investment grade	51,617			—		51,617			—
Corporate debt securities:
Investment grade	309,995			—		309,995			—
Non-investment grade	15,101			—		8,730			6,371
Other securities	79,716			—		79,716			—
Total investment securities available-for-sale	$	2,733,797		$	491,632	$	2,235,794		$	6,371
Foreign exchange options	$	6,290		$	—	$	6,290		$	—
Interest rate swaps and caps	28,078			—		28,078			—
Foreign exchange contracts	6,181			—		6,181			—
Derivative liabilities	(50,262		)	—		(46,607		)	(3,655		)

Reconciliation of assets and liabilities measured at fair value using significant unobservable inputs

	Corporate Debt Securities:
	Non-Investment Grade			Derivatives Liabilities
	(In thousands)
Opening balance, July 1, 2014	$	7,917		$	(3,362	)
Total gains or (losses) for the period: (1)
Included in earnings	—			(64		)
Included in other comprehensive income (unrealized) (2)	1,009			—
Purchases, issues, sales, settlements	—			—
Purchases	—			—
Issues	—			—
Sales	—			—
Settlements	(17		)	—
Transfer from investment grade to non-investment grade	—			—
Transfers in and/or out of Level 3	—			—
Closing balance, September 30, 2014	$	8,909		$	(3,426	)
Changes in unrealized losses included in earnings relating to assets and liabilities held at the end of September 30, 2014	$	—		$	64

	Corporate Debt Securities:
	Non-Investment Grade			Derivatives Liabilities
	(In thousands)
Opening balance, July 1, 2013	$	5,517		$	(3,257	)
Total gains or (losses) for the period: (1)
Included in earnings	—			(254		)
Included in other comprehensive income (unrealized) (2)	619			—
Purchases, issues, sales, settlements
Purchases	—			—
Issues	—			—
Sales	—			—
Settlements	(4		)	—
Transfer from investment grade to non-investment grade	—			—
Transfers in and/or out of Level 3	—			—
Closing balance, September 30, 2013	$	6,132		$	(3,511	)
Changes in unrealized losses included in earnings relating to assets and liabilities held at the end of September 30, 2013	$	—		$	254

⁽¹⁾ Total gains or losses represent the total realized and unrealized gains and losses recorded for Level 3 assets and liabilities. Realized gains or losses are included in net gains on sale of investment securities in the consolidated statements of income.

⁽²⁾ Unrealized gains or losses on investment securities are reported in other comprehensive income (loss), net of tax, in the consolidated statements of comprehensive income.

The following tables provide a reconciliation of the beginning and ending balances for major asset and liability categories measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2014 and 2013:

	Corporate Debt Securities:
	Non-Investment Grade			Derivatives Liabilities
	(In thousands)
Beginning balance, January 1, 2014	$	6,371		$	(3,655	)
Total gains or (losses) for the period: (1)
Included in earnings	—			229
Included in other comprehensive income (unrealized) (2)	2,652			—
Purchases, issues, sales, settlements
Purchases	—			—
Issues	—			—
Sales	—			—
Settlements	(114		)	—
Transfer from investment grade to non-investment grade	—			—
Transfers in and/or out of Level 3	—			—
Closing balance, September 30, 2014	$	8,909		$	(3,426	)
Changes in unrealized gains included in earnings relating to assets and liabilities held at the end of September 30, 2014	$	—		$	(229	)

	Corporate Debt Securities:
	Non-Investment Grade			Derivatives Liabilities
	(In thousands)
Beginning balance, January 1, 2013	$	4,800		$	(3,052	)
Total gains or (losses) for the period: (1)
Included in earnings	—			(459		)
Included in other comprehensive income (unrealized) (2)	1,406			—
Purchases, issues, sales, settlements
Purchases	—			—
Issues	—			—
Sales	—			—
Settlements	(74		)	—
Transfer from investment grade to non-investment grade	—			—
Transfers in and/or out of Level 3	—			—
Closing balance, September 30, 2013	$	6,132		$	(3,511	)
Changes in unrealized losses included in earnings relating to assets and liabilities held at the end of September 30, 2013	$	—		$	459

⁽²⁾ Unrealized gains or losses on investment securities are reported in other comprehensive income (loss), net of tax, in the consolidated statements of comprehensive income.

Assets Measured at Fair Value on a Nonrecurring Basis

	Assets Measured at Fair Value on a Nonrecurring Basis as of September 30, 2014
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
	Measurements		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
Non-covered impaired loans:
Total residential	$	19,930	$	—	$	—	$	19,930
Total commercial real estate	25,122		—		—		25,122
Total commercial and industrial	11,355		—		—		11,355
Total consumer	107		—		—		107
Total non-covered loans	$	56,514	$	—	$	—	$	56,514
Non-covered OREO	$	15,556	$	—	$	—	$	15,556
Covered OREO	$	2,400	$	—	$	—	$	2,400

	Assets Measured at Fair Value on a Nonrecurring Basis as of December 31, 2013
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
	Measurements		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
Non-covered impaired loans:
Total residential	$	12,791	$	—	$	—	$	12,791
Total commercial real estate	29,559		—		—		29,559
Total commercial and industrial	15,120		—		—		15,120
Total consumer	281		—		—		281
Total non-covered loans	$	57,751	$	—	$	—	$	57,751
Non-covered OREO	$	13,031	$	—	$	—	$	13,031
Covered OREO	$	17,284	$	—	$	—	$	17,284

Summary of increase (decrease) in value of certain assets for which a nonrecurring fair value adjustment has been recognized

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Non-covered impaired loans:
Total residential	$	(538	)	$	(96	)	$	(475	)	$	(677	)
Total commercial real estate	(281		)	1,412			1,049			(1,706		)
Total commercial and industrial	(3,457		)	(7,172		)	(8,488		)	(8,599		)
Total consumer	(1		)	—			(1		)	(112		)
Total non-covered loans	$	(4,277	)	$	(5,856	)	$	(7,915	)	$	(11,094	)
Non-covered OREO	$	(1,527	)	$	(17	)	$	(1,527	)	$	(1,420	)
Covered OREO (1)	$	(608	)	$	(219	)	$	(852	)	$	(1,344	)

⁽¹⁾ Covered OREO results from the Washington First International Bank (“WFIB”) and United Commercial Bank (“UCB”) FDIC-assisted acquisitions for which the Company entered into shared-loss agreements with the FDIC whereby the FDIC will reimburse the Company for 80% of eligible losses. As such, the Company’s liability for losses is 20% of the $608 thousand in losses, or $122 thousand, and 20% of the $852 thousand in losses, or $170 thousand, for the three and nine months ended September 30, 2014, respectively. In comparison, the Company’s liability for losses is 20% of the $219 thousand in losses, or $44 thousand, and 20% of the $1.3 million in losses, or $269 thousand, for the three and nine months ended September 30, 2013, respectively.

Carrying amounts and fair values of financial instruments

	September 30, 2014
	Carrying								Estimated
	Amount		Level 1		Level 2		Level 3		Fair Value
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	1,115,753	$	1,115,753	$	—	$	—	$	1,115,753
Short-term investments	336,419		—		336,419		—		336,419
Securities purchased under resale agreements	1,475,000		—		1,443,390		—		1,443,390
Investment securities available-for-sale	2,592,667		603,647		1,980,111		8,909		2,592,667
Loans held for sale	239,649		—		258,512		—		258,512
Loans receivable, net	20,733,516		—		—		19,933,809		19,933,809
Investment in Federal Home Loan Bank stock	34,691		—		34,691		—		34,691
Investment in Federal Reserve Bank stock	54,324		—		54,324		—		54,324
Accrued interest receivable	96,054		—		96,054		—		96,054
Foreign exchange options	6,155		—		6,155		—		6,155
Interest rate swaps and caps	29,170		—		29,170		—		29,170
Foreign exchange contracts	9,204		—		9,204		—		9,204
Financial Liabilities:
Customer deposit accounts:
Demand, savings and money market deposits	17,676,394		—		17,676,394		—		17,676,394
Time deposits	6,135,870		—		—		6,116,966		6,116,966
Federal Home Loan Bank advances	316,699		—		333,681		—		333,681
Securities sold under repurchase agreements	805,106		—		879,564		—		879,564
Accrued interest payable	10,817		—		10,817		—		10,817
Long-term debt	230,790		—		201,209		—		201,209
Derivative liabilities	54,086		—		50,660		3,426		54,086

	December 31, 2013
	Carrying								Estimated
	Amount		Level 1		Level 2		Level 3		Fair Value
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	895,820	$	895,820	$	—	$	—	$	895,820
Short-term investments	257,473		—		257,473		—		257,473
Securities purchased under resale agreements	1,300,000		—		1,279,406		—		1,279,406
Investment securities available-for-sale	2,733,797		491,632		2,235,794		6,371		2,733,797
Loans held for sale	204,970		—		212,469		—		212,469
Loans receivable, net	17,600,613		—		—		16,741,674		16,741,674
Investment in Federal Home Loan Bank stock	62,330		—		62,330		—		62,330
Investment in Federal Reserve Bank stock	48,333		—		48,333		—		48,333
Accrued interest receivable	116,314		—		116,314		—		116,314
Foreign exchange options	6,290		—		6,290		—		6,290
Interest rate swaps and caps	28,078		—		28,078		—		28,078
Foreign exchange contracts	6,181		—		6,181		—		6,181
Financial Liabilities:
Customer deposit accounts:
Demand, savings and money market deposits	14,588,570		—		14,588,570		—		14,588,570
Time deposits	5,824,348		—		—		5,791,659		5,791,659
Federal Home Loan Bank advances	315,092		—		308,521		—		308,521
Securities sold under repurchase agreements	995,000		—		1,134,774		—		1,134,774
Accrued interest payable	11,178		—		11,178		—		11,178
Long-term debt	226,868		—		184,415		—		184,415
Derivative liabilities	50,262		—		46,607		3,655		50,262

Fair Value, Measurements, Recurring

Quantitative information

Schedule of quantitative information about significant unobservable inputs used in the valuation of assets and liabilities classified as Level 3

	Fair Value Measurements (Level 3)			Valuation Technique(s)	Unobservable Input(s)	Range of Inputs	Weighted Average
September 30, 2014
Investment securities available-for-sale:
Corporate debt securities:
Non-investment grade	$	8,909		Discounted cash flow	Constant prepayment rate	0% - 1%	0.73%
					Constant default rate	0.75% - 1.20%	0.87%
					Loss severity	85% - 100%	85%
					Discount margin	4.50% - 9.50%	7.99%
Derivative liabilities	(3,426		)	Discounted cash flow	Credit risk	0.035% - 0.046%	0.043%

December 31, 2013
Investment securities available-for-sale:
Corporate debt securities:
Non-investment grade	$	6,371		Discounted cash flow	Constant prepayment rate	0% - 1%	0.74%
					Constant default rate	0.75% - 1.20%	0.87%
					Loss severity	85% - 100%	85%
					Discount margin	6.50% - 11.50%	9.97%
Derivative liabilities	(3,655		)	Discounted cash flow	Credit risk	0.175% - 0.212%	0.200%

Fair Value, Measurements, Nonrecurring

Quantitative information

Schedule of quantitative information about significant unobservable inputs used in the valuation of assets and liabilities classified as Level 3

Fair Value
Measurements
(Level 3)

Valuation
Technique(s)

Unobservable
Input(s)

Range of Inputs

Weighted Average

September 30, 2014

Non-covered impaired loans

56,514

Market comparables

Discount rate(1)

0% - 100%

15%

Non-covered OREO

15,556

Appraisal

Selling cost

Covered OREO

2,400

Appraisal

No Discount

December 31, 2013

Non-covered impaired loans

57,751

Market comparables

Discount rate(1)

0% - 100%

13%

Non-covered OREO

13,031

Appraisal

Selling cost

Covered OREO

17,284

Appraisal

No Discount

⁽¹⁾ Discount rate is adjusted for factors such as liquidation cost of collateral and selling cost.

- 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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