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Fair value measurements
6 Months Ended
Jun. 30, 2022
Fair Value Disclosures [Abstract]  
Fair value measurements

13. Fair value measurements

GAAP permits an entity to choose to measure eligible financial instruments and other items at fair value. The Company has not made any fair value elections at June 30, 2022.

Pursuant to GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level hierarchy exists in GAAP for fair value measurements based upon the inputs to the valuation of an asset or liability.

Level 1 — Valuation is based on quoted prices in active markets for identical assets and liabilities.
Level 2 — Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active or by model-based techniques in which all significant inputs are observable in the market.
Level 3 — Valuation is derived from model-based and other techniques in which at least one significant input is unobservable and which may be based on the Company's own estimates about the assumptions that market participants would use to value the asset or liability.

When available, the Company attempts to use quoted market prices in active markets to determine fair value and classifies such items as Level 1 or Level 2. If quoted market prices in active markets are not available, fair value is often determined using model-based techniques incorporating various assumptions including interest rates, prepayment speeds and credit losses. Assets and liabilities valued using model-based techniques are classified as either Level 2 or Level 3, depending on the lowest level classification of an input that is considered significant to the overall valuation. The following is a description of the valuation methodologies used for the Company's assets and liabilities that are measured on a recurring basis at estimated fair value.

Trading account

Mutual funds held in connection with deferred compensation and other arrangements have been classified as Level 1 valuations. Valuations of investments in municipal and other bonds can generally be obtained through reference to quoted prices in less active markets for the same or similar securities or through model-based techniques in which all significant inputs are observable and, therefore, such valuations have been classified as Level 2.

Investment securities available for sale and equity securities

The majority of the Company's available-for-sale investment securities have been valued by reference to prices for similar securities or through model-based techniques in which all significant inputs are observable and, therefore, such valuations have been classified as Level 2. Certain investments in mutual funds and equity securities are actively traded and, therefore, have been classified as Level 1 valuations.

Real estate loans held for sale

The Company utilizes commitments to sell real estate loans to hedge the exposure to changes in fair value of real estate loans held for sale. The carrying value of hedged real estate loans held for sale includes changes in estimated fair value during the hedge period. Typically, the Company attempts to hedge real estate loans held for sale from the date of close through the sale date. The fair value of hedged real estate loans held for sale is generally calculated by reference to quoted prices in secondary markets for commitments to sell real estate loans with similar characteristics and, accordingly, such loans have been classified as a Level 2 valuation.

13. Fair value measurements, continued

Commitments to originate real estate loans for sale and commitments to sell real estate loans

The Company enters into various commitments to originate real estate loans for sale and commitments to sell real estate loans. Such commitments are accounted for as derivative financial instruments and, therefore, are carried at estimated fair value on the consolidated balance sheet. The estimated fair values of such commitments were generally calculated by reference to quoted prices in secondary markets for commitments to sell real estate loans to certain government-sponsored entities and other parties. The fair valuations of commitments to sell real estate loans generally result in a Level 2 classification. The estimated fair value of commitments to originate real estate loans for sale are adjusted to reflect the Company's anticipated commitment expirations. The estimated commitment expirations are considered significant unobservable inputs contributing to the Level 3 classification of commitments to originate real estate loans for sale. Significant unobservable inputs used in the determination of estimated fair value of commitments to originate real estate loans for sale are included in the accompanying table of significant unobservable inputs to Level 3 measurements.

Interest rate swap agreements used for interest rate risk management

The Company utilizes interest rate swap agreements as part of the management of interest rate risk to modify the repricing characteristics of certain portions of its portfolios of earning assets and interest-bearing liabilities. The Company generally determines the fair value of its interest rate swap agreements using externally developed pricing models based on market observable inputs and, therefore, classifies such valuations as Level 2. The Company has considered counterparty credit risk in the valuation of its interest rate swap agreement assets and has considered its own credit risk in the valuation of its interest rate swap agreement liabilities.

Non-hedging derivatives

Non-hedging derivatives consist primarily of interest rate contracts and foreign exchange contracts with customers who require such services with offsetting positions with third parties to minimize the Company's risk with respect to such transactions. The Company generally determines the fair value of its non-hedging derivative assets and liabilities using externally developed pricing models based on market observable inputs and, therefore, classifies such valuations as Level 2.

13. Fair value measurements, continued

The following tables present assets and liabilities at June 30, 2022 and December 31, 2021 measured at estimated fair value on a recurring basis:

 



 

 

Fair Value Measurements

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

(In thousands)

 

June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Trading account

 

$

133,855

 

 

$

133,855

 

 

$

 

 

$

 

Investment securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and federal agencies

 

 

5,182,571

 

 

 

 

 

 

5,182,571

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

Government issued or guaranteed

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

614,784

 

 

 

 

 

 

614,784

 

 

 

 

Residential

 

 

2,726,769

 

 

 

 

 

 

2,726,769

 

 

 

 

Other debt securities

 

 

180,831

 

 

 

 

 

 

180,831

 

 

 

 

 

 

 

8,704,955

 

 

 

 

 

 

8,704,955

 

 

 

 

Equity securities

 

 

101,872

 

 

 

91,820

 

 

 

10,052

 

 

 

 

Real estate loans held for sale

 

 

319,421

 

 

 

 

 

 

319,421

 

 

 

 

Other assets (a)

 

 

243,764

 

 

 

 

 

 

237,240

 

 

 

6,524

 

Total assets

 

$

9,503,867

 

 

$

225,675

 

 

$

9,271,668

 

 

$

6,524

 

Other liabilities (a)

 

 

808,439

 

 

 

 

 

 

777,734

 

 

 

30,705

 

Total liabilities

 

$

808,439

 

 

$

 

 

$

777,734

 

 

$

30,705

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Trading account

 

$

49,745

 

 

$

49,545

 

 

$

200

 

 

$

 

Investment securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and federal agencies

 

 

678,690

 

 

 

 

 

 

678,690

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

Government issued or guaranteed

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

 

3,155,312

 

 

 

 

 

 

3,155,312

 

 

 

 

Other debt securities

 

 

121,802

 

 

 

 

 

 

121,802

 

 

 

 

 

 

 

3,955,804

 

 

 

 

 

 

3,955,804

 

 

 

 

Equity securities

 

 

77,640

 

 

 

68,850

 

 

 

8,790

 

 

 

 

Real estate loans held for sale

 

 

899,282

 

 

 

 

 

 

899,282

 

 

 

 

Other assets (a)

 

 

442,453

 

 

 

 

 

 

430,725

 

 

 

11,728

 

Total assets

 

$

5,424,924

 

 

$

118,395

 

 

$

5,294,801

 

 

$

11,728

 

Other liabilities (a)

 

 

93,843

 

 

 

 

 

 

88,555

 

 

 

5,288

 

Total liabilities

 

$

93,843

 

 

$

 

 

$

88,555

 

 

$

5,288

 

 

(a)
Comprised predominantly of interest rate swap agreements used for interest rate risk management (Level 2), interest rate and foreign exchange contracts not designated as hedging instruments (Level 2), commitments to sell real estate loans (Level 2) and commitments to originate real estate loans to be held for sale (Level 3).

13. Fair value measurements, continued

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the three months ended June 30, 2022 and 2021 were as follows:

 

 

 

Investment Securities
Available for Sale

 

 

 

 

 

 

 

Privately Issued Mortgage-Backed Securities

 

 

Other Assets and Other Liabilities

 

 

2022

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

Balance — March 31, 2022

 

$

 

 

$

(15,428

)

 

Total gains realized/unrealized:

 

 

 

 

 

 

 

Included in earnings

 

 

 

 

 

(6,609

)

(a)

Transfers out of Level 3

 

 

 

 

 

(2,144

)

(b)

Balance — June 30, 2022

 

$

 

 

$

(24,181

)

 

Changes in unrealized gains included in earnings
   related to assets still held at June 30, 2022

 

$

 

 

$

(8,441

)

(a)

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance — March 31, 2021

 

$

16

 

 

$

13,757

 

 

Total gains realized/unrealized:

 

 

 

 

 

 

 

Included in earnings

 

 

 

 

 

52,312

 

(a)

Settlements

 

 

(16

)

 

 

 

 

Transfers out of Level 3

 

 

 

 

 

(30,403

)

(b)

Balance — June 30, 2021

 

$

 

 

$

35,666

 

 

Changes in unrealized gains included in earnings
   related to assets still held at June 30, 2021

 

$

 

 

$

37,300

 

(a)

 

 

13. Fair value measurements, continued

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the six months ended June 30, 2022 and 2021 were as follows:

 

 

 

Investment Securities
Available for Sale

 

 

 

 

 

 

 

Privately Issued Mortgage-Backed Securities

 

 

Other Assets and Other Liabilities

 

 

2022

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

Balance — January 1, 2022

 

$

 

 

$

6,440

 

 

Total gains realized/unrealized:

 

 

 

 

 

 

 

Included in earnings

 

 

 

 

 

(25,309

)

(a)

Transfers out of Level 3

 

 

 

 

 

(5,312

)

(b)

Balance — June 30, 2022

 

$

 

 

$

(24,181

)

 

Changes in unrealized gains included in earnings
   related to assets still held at June 30, 2022

 

$

 

 

$

3,405

 

(a)

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance — January 1, 2021

 

$

16

 

 

$

43,234

 

 

Total gains realized/unrealized:

 

 

 

 

 

 

 

Included in earnings

 

 

 

 

 

58,337

 

(a)

Settlements

 

 

(16

)

 

 

 

 

Transfers out of Level 3

 

 

 

 

 

(65,905

)

(b)

Balance — June 30, 2021

 

$

 

 

$

35,666

 

 

Changes in unrealized gains included in earnings
   related to assets still held at June 30, 2021

 

$

 

 

$

35,492

 

(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.

 

 

 

13. Fair value measurements, continued

The Company is required, on a nonrecurring basis, to adjust the carrying value of certain assets or provide valuation allowances related to certain assets using fair value measurements. The more significant of those assets follow.

Loans

Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records nonrecurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectable portions of those loans. Nonrecurring adjustments also include certain impairment amounts for collateral-dependent loans when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace and the related nonrecurring fair value measurement adjustments have been classified as Level 2, unless significant adjustments have been made to the valuation that are not readily observable by market participants. Non-real estate collateral supporting commercial loans generally consists of business assets such as receivables, inventory and equipment. Fair value estimations are typically determined by discounting recorded values of those assets to reflect estimated net realizable value considering specific borrower facts and circumstances and the experience of credit personnel in their dealings with similar borrower collateral liquidations. Such discounts were in the range of 15% to 90% with a weighted-average of 50% at June 30, 2022. As these discounts are not readily observable and are considered significant, the valuations have been classified as Level 3. Automobile collateral is typically valued by reference to independent pricing sources based on recent sales transactions of similar vehicles and, accordingly, the related nonrecurring fair value measurement adjustments have been classified as Level 2. Collateral values for other consumer installment loans are generally estimated based on historical recovery rates for similar types of loans which at June 30, 2022 was 68%. As these recovery rates are not readily observable by market participants, such valuation adjustments have been classified as Level 3. Loans subject to nonrecurring fair value measurement were $761 million at June 30, 2022 ($424 million and $337 million of which were classified as Level 2 and Level 3, respectively), $574 million at December 31, 2021 ($340 million and $234 million of which were classified as Level 2 and Level 3, respectively) and $629 million at June 30, 2021 ($386 million and $243 million of which were classified as Level 2 and Level 3, respectively). Changes in fair value recognized for partial charge-offs of loans and loan impairment reserves on loans held by the Company on June 30, 2022 were decreases of $73 million and $117 million for the three-month and six-month periods ended June 30, 2022, respectively. Changes in fair value recognized for partial charge-offs of loans and loan impairment reserves on loans held by the Company on June 30, 2021 were decreases of $46 million and $104 million for the three-month and six-month periods ended June 30, 2021, respectively.

13. Fair value measurements, continued

Assets taken in foreclosure of defaulted loans

Assets taken in foreclosure of defaulted loans are primarily comprised of commercial and residential real property and are generally measured at the lower of cost or fair value less costs to sell. The fair value of the real property is generally determined using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace and the related nonrecurring fair value measurement adjustments have generally been classified as Level 2. Assets taken into foreclosure of defaulted loans subject to nonrecurring fair value measurement were less than $1 million and $10 million at June 30, 2022 and 2021, respectively. Changes in fair value recognized for those foreclosed assets held by the Company were not material during the three-month and six-month periods ended June 30, 2022 and 2021.

Capitalized servicing rights

Capitalized servicing rights are initially measured at fair value in the Company’s consolidated balance sheet. The Company utilizes the amortization method to subsequently measure its capitalized servicing assets. In accordance with GAAP, the Company must record impairment charges, on a nonrecurring basis, when the carrying value of certain strata exceed their estimated fair value. To estimate the fair value of servicing rights, the Company considers market prices for similar assets, if available, and the present value of expected future cash flows associated with the servicing rights calculated using assumptions that market participants would use in estimating future servicing income and expense. Such assumptions include estimates of the cost of servicing loans, loan default rates, an appropriate discount rate, and prepayment speeds. For purposes of evaluating and measuring impairment of capitalized servicing rights, the Company stratifies such assets based on the predominant risk characteristics of the underlying financial instruments that are expected to have the most impact on projected prepayments, cost of servicing and other factors affecting future cash flows associated with the servicing rights. Such factors may include financial asset or loan type, note rate and term. The amount of impairment recognized is the amount by which the carrying value of the capitalized servicing rights for a stratum exceed estimated fair value. Impairment is recognized through a valuation allowance. The determination of fair value of capitalized servicing rights is considered a Level 3 valuation. Capitalized servicing rights related to residential mortgage loans of $123 million and $138 million at June 30, 2022 and December 31, 2021, respectively, required a valuation allowance of $10 million and $24 million, respectively. Significant unobservable inputs used in this Level 3 valuation included weighted-average prepayment speeds of 8.81% and 14.64% at June 30, 2022 and December 31, 2021, respectively, and a weighted-average option-adjusted spread of 900 basis points at each date. Changes in fair value recognized for impairment of capitalized servicing rights were decreases in the valuation allowance of $11 million and $14 million, respectively, for the three-month and six-month periods ended June 30, 2022 and an increase in the valuation allowance of $8 million during the three months ended June 30, 2021 and a decrease in the valuation allowance of $1 million during the six months ended June 30, 2021.

Significant unobservable inputs to Level 3 measurements

The following table presents quantitative information about significant unobservable inputs used in the fair value measurements for certain Level 3 assets and liabilities at June 30, 2022 and December 31, 2021:

 

 

 

Fair Value

 

 

Valuation
Technique

 

Unobservable
Inputs/Assumptions

 

Range
(Weighted-
Average)

 

 

(In thousands)

 

 

 

 

 

 

 

June 30, 2022

 

 

 

 

 

 

 

 

 

Recurring fair value measurements

 

 

 

 

 

 

 

 

 

Net other assets (liabilities) (a)

 

$

(24,181

)

 

Discounted cash flow

 

Commitment expirations

 

0% - 93% (3%)

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

 

 

 

 

 

 

Recurring fair value measurements

 

 

 

 

 

 

 

 

 

Net other assets (liabilities) (a)

 

$

6,440

 

 

Discounted cash flow

 

Commitment expirations

 

0% - 80% (10%)

 

(a)
Other Level 3 assets (liabilities) consist of commitments to originate real estate loans.

13. Fair value measurements, continued

Sensitivity of fair value measurements to changes in unobservable inputs

An increase (decrease) in the estimate of expirations for commitments to originate real estate loans would generally result in a lower (higher) fair value measurement. Estimated commitment expirations are derived considering loan type, changes in interest rates and remaining length of time until closing.

Disclosures of fair value of financial instruments

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

 

 

 

June 30, 2022

 


 

 

Carrying
Amount

 

 

Estimated
 Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

(In thousands)

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,688,274

 

 

 

1,688,274

 

 

 

1,535,535

 

 

 

152,739

 

 

 

 

Interest-bearing deposits at banks

 

 

33,437,454

 

 

 

33,437,454

 

 

 

 

 

 

33,437,454

 

 

 

 

Federal funds sold and agreements to resell securities

 

 

250,250

 

 

 

250,250

 

 

 

 

 

 

250,250

 

 

 

 

Trading account

 

 

133,855

 

 

 

133,855

 

 

 

133,855

 

 

 

 

 

 

 

Investment securities

 

 

22,801,717

 

 

 

22,124,661

 

 

 

91,820

 

 

 

21,977,313

 

 

 

55,528

 

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans and leases

 

 

39,108,676

 

 

 

38,785,142

 

 

 

 

 

 

 

 

 

38,785,142

 

Commercial real estate loans

 

 

46,795,139

 

 

 

45,504,741

 

 

 

 

 

 

254,822

 

 

 

45,249,919

 

Residential real estate loans

 

 

22,767,107

 

 

 

21,579,180

 

 

 

 

 

 

11,386,865

 

 

 

10,192,315

 

Consumer loans

 

 

19,815,198

 

 

 

19,630,170

 

 

 

 

 

 

 

 

 

19,630,170

 

Allowance for credit losses

 

 

(1,823,790

)

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases, net

 

 

126,662,330

 

 

 

125,499,233

 

 

 

 

 

 

11,641,687

 

 

 

113,857,546

 

Accrued interest receivable

 

 

475,776

 

 

 

475,776

 

 

 

 

 

 

475,776

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

(72,375,515

)

 

 

(72,375,515

)

 

 

 

 

 

(72,375,515

)

 

 

 

Savings and interest-checking deposits

 

 

(92,711,597

)

 

 

(92,711,597

)

 

 

 

 

 

(92,711,597

)

 

 

 

Time deposits

 

 

(5,271,284

)

 

 

(5,270,713

)

 

 

 

 

 

(5,270,713

)

 

 

 

Short-term borrowings

 

 

(1,119,321

)

 

 

(1,119,321

)

 

 

 

 

 

(1,119,321

)

 

 

 

Long-term borrowings

 

 

(3,017,363

)

 

 

(2,992,593

)

 

 

 

 

 

(2,992,593

)

 

 

 

Accrued interest payable

 

 

(44,471

)

 

 

(44,471

)

 

 

 

 

 

(44,471

)

 

 

 

Other financial instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments to originate real estate
   loans for sale

 

$

(24,181

)

 

 

(24,181

)

 

 

 

 

 

 

 

 

(24,181

)

Commitments to sell real estate loans

 

 

47,471

 

 

 

47,471

 

 

 

 

 

 

47,471

 

 

 

 

Other credit-related commitments

 

 

(128,344

)

 

 

(128,344

)

 

 

 

 

 

 

 

 

(128,344

)

Interest rate swap agreements used for
   interest rate risk management

 

 

41,417

 

 

 

41,417

 

 

 

 

 

 

41,417

 

 

 

 

Interest rate and foreign exchange contracts
   not designated as hedging instruments

 

 

(629,382

)

 

 

(629,382

)

 

 

 

 

 

(629,382

)

 

 

 

 

13. Fair value measurements, continued

 

 

 

December 31, 2021

 


 

 

Carrying
Amount

 

 

Estimated
Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

 

 

 

(In thousands)

 

 

 

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,337,577

 

 

 

1,337,577

 

 

 

1,205,269

 

 

 

132,308

 

 

 

 

Interest-bearing deposits at banks

 

 

41,872,304

 

 

 

41,872,304

 

 

 

 

 

 

41,872,304

 

 

 

 

Trading account

 

 

49,745

 

 

 

49,745

 

 

 

49,545

 

 

 

200

 

 

 

 

Investment securities

 

 

7,155,860

 

 

 

7,192,476

 

 

 

68,850

 

 

 

7,066,293

 

 

 

57,333

 

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans and leases

 

 

23,473,324

 

 

 

23,285,224

 

 

 

 

 

 

 

 

 

23,285,224

 

Commercial real estate loans

 

 

35,389,730

 

 

 

34,730,191

 

 

 

 

 

 

425,010

 

 

 

34,305,181

 

Residential real estate loans

 

 

16,074,445

 

 

 

16,160,799

 

 

 

 

 

 

4,524,018

 

 

 

11,636,781

 

Consumer loans

 

 

17,974,953

 

 

 

18,121,363

 

 

 

 

 

 

 

 

 

18,121,363

 

Allowance for credit losses

 

 

(1,469,226

)

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases, net

 

 

91,443,226

 

 

 

92,297,577

 

 

 

 

 

 

4,949,028

 

 

 

87,348,549

 

Accrued interest receivable

 

 

335,162

 

 

 

335,162

 

 

 

 

 

 

335,162

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

(60,131,480

)

 

 

(60,131,480

)

 

 

 

 

 

(60,131,480

)

 

 

 

Savings and interest-checking deposits

 

 

(68,603,966

)

 

 

(68,603,966

)

 

 

 

 

 

(68,603,966

)

 

 

 

Time deposits

 

 

(2,807,963

)

 

 

(2,810,143

)

 

 

 

 

 

(2,810,143

)

 

 

 

Short-term borrowings

 

 

(47,046

)

 

 

(47,046

)

 

 

 

 

 

(47,046

)

 

 

 

Long-term borrowings

 

 

(3,485,369

)

 

 

(3,562,223

)

 

 

 

 

 

(3,562,223

)

 

 

 

Accrued interest payable

 

 

(40,866

)

 

 

(40,866

)

 

 

 

 

 

(40,866

)

 

 

 

Other financial instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments to originate real estate
   loans for sale

 

$

6,440

 

 

 

6,440

 

 

 

 

 

 

 

 

 

6,440

 

Commitments to sell real estate loans

 

 

7,525

 

 

 

7,525

 

 

 

 

 

 

7,525

 

 

 

 

Other credit-related commitments

 

 

(123,032

)

 

 

(123,032

)

 

 

 

 

 

 

 

 

(123,032

)

Interest rate swap agreements used
   for interest rate risk management

 

 

(207

)

 

 

(207

)

 

 

 

 

 

(207

)

 

 

 

Interest rate and foreign exchange contracts
   not designated as hedging instruments

 

 

334,852

 

 

 

334,852

 

 

 

 

 

 

334,852

 

 

 

 

 

With the exception of marketable securities, certain off-balance sheet financial instruments and mortgage loans originated for sale, the Company’s financial instruments are not readily marketable and market prices do not exist. The Company, in attempting to comply with the provisions of GAAP that require disclosures of fair value of financial instruments, has not attempted to market its financial instruments to potential buyers, if any exist. Since negotiated prices in illiquid markets depend greatly upon the then present motivations of the buyer and seller, it is reasonable to assume that actual sales prices could vary widely from any estimate of fair value made without the benefit of negotiations. Additionally, changes in market interest rates can dramatically impact the value of financial instruments in a short period of time.

The Company does not believe that the estimated information presented herein is representative of the earnings power or value of the Company. The preceding analysis, which is inherently limited in depicting fair value, also does not consider any value associated with existing customer relationships nor the ability of the Company to create value through loan origination, deposit gathering or fee generating activities. Many of the estimates presented herein are based upon the use of highly subjective information and assumptions and, accordingly, the results may not be precise. Management believes that fair value estimates may not be comparable between financial institutions due to the wide range of permitted valuation techniques and numerous estimates which must be made. Furthermore, because the disclosed fair value amounts were estimated as of the balance sheet date, the amounts actually realized or paid upon maturity or settlement of the various financial instruments could be significantly different.