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Fair value measurements (Tables)
 6 Months Ended
Jun. 30, 2017
Fair Value Disclosures [Abstract]  
Assets and Liabilities Measured at Estimated Fair Value on Recurring Basis

The following tables present assets and liabilities at June 30, 2017 and December 31, 2016 measured at estimated fair value on a recurring basis:

 

 

 

Fair Value Measurements

 

 

Level 1 (a)

 

 

Level 2 (a)

 

 

Level 3

 

 

 

(In thousands)

 

June 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading account assets

 

$

174,646

 

 

 

47,276

 

 

 

127,370

 

 

 

—

 

Investment securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and federal agencies

 

 

2,107,866

 

 

 

—

 

 

 

2,107,866

 

 

 

—

 

Obligations of states and political subdivisions

 

 

2,913

 

 

 

—

 

 

 

2,913

 

 

 

—

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government issued or guaranteed

 

 

9,608,182

 

 

 

—

 

 

 

9,608,182

 

 

 

—

 

Privately issued

 

 

35

 

 

 

—

 

 

 

—

 

 

 

35

 

Other debt securities

 

 

125,823

 

 

 

—

 

 

 

125,823

 

 

 

—

 

Equity securities

 

 

84,046

 

 

 

47,892

 

 

 

36,154

 

 

 

—

 

 

 

 

11,928,865

 

 

 

47,892

 

 

 

11,880,938

 

 

 

35

 

Real estate loans held for sale

 

 

548,250

 

 

 

—

 

 

 

548,250

 

 

 

—

 

Other assets (b)

 

 

22,754

 

 

 

—

 

 

 

9,907

 

 

 

12,847

 

Total assets

 

$

12,674,515

 

 

 

95,168

 

 

 

12,566,465

 

 

 

12,882

 

Trading account liabilities

 

$

117,209

 

 

 

—

 

 

 

117,209

 

 

 

—

 

Other liabilities (b)

 

 

2,247

 

 

 

—

 

 

 

1,825

 

 

 

422

 

Total liabilities

 

$

119,456

 

 

 

—

 

 

 

119,034

 

 

 

422

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading account assets

 

$

323,867

 

 

 

46,135

 

 

 

277,732

 

 

 

—

 

Investment securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and federal agencies

 

 

1,902,544

 

 

 

—

 

 

 

1,902,544

 

 

 

—

 

Obligations of states and political subdivisions

 

 

3,641

 

 

 

—

 

 

 

3,641

 

 

 

—

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government issued or guaranteed

 

 

10,954,861

 

 

 

—

 

 

 

10,954,861

 

 

 

—

 

Privately issued

 

 

44

 

 

 

—

 

 

 

—

 

 

 

44

 

Other debt securities

 

 

118,516

 

 

 

—

 

 

 

118,516

 

 

 

—

 

Equity securities

 

 

352,466

 

 

 

301,711

 

 

 

50,755

 

 

 

—

 

 

 

 

13,332,072

 

 

 

301,711

 

 

 

13,030,317

 

 

 

44

 

Real estate loans held for sale

 

 

1,056,180

 

 

 

—

 

 

 

1,056,180

 

 

 

—

 

Other assets (b)

 

 

58,351

 

 

 

—

 

 

 

50,291

 

 

 

8,060

 

Total assets

 

$

14,770,470

 

 

 

347,846

 

 

 

14,414,520

 

 

 

8,104

 

Trading account liabilities

 

$

174,376

 

 

 

—

 

 

 

174,376

 

 

 

—

 

Other liabilities (b)

 

 

2,481

 

 

 

—

 

 

 

1,746

 

 

 

735

 

Total liabilities

 

$

176,857

 

 

 

—

 

 

 

176,122

 

 

 

735

 

 

(a)

There were no significant transfers between Level 1 and Level 2 of the fair value hierarchy during the six months ended June 30, 2017 and the year ended December 31, 2016.                                        

(b)

Comprised predominantly of interest rate swap agreements used for interest rate risk management (Level 2), commitments to sell real estate loans (Level 2) and commitments to originate real estate loans to be held for sale (Level 3).
Changes in Level 3 Assets and Liabilities Measured at Estimated Fair Value on Recurring Basis

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the three months ended June 30, 2017 were as follows:

 

 

Investment Securities

Available for Sale

 

 

 

 

 

 

 

 

Privately Issued

Mortgage-Backed

Securities

 

 

Other Assets

and Other

Liabilities

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Balance – March 31, 2017

 

$

41

 

 

 

16,202

 

 

Total gains (losses) realized/unrealized:

 

 

 

 

 

 

 

 

 

Included in earnings

 

 

—

 

 

 

19,571

 

(b)

Settlements

 

 

(6

)

 

 

—

 

 

Transfers in and/or out of Level 3 (a)

 

 

—

 

 

 

(23,348

)

(d)

Balance – June 30, 2017

 

$

35

 

 

 

12,425

 

 

Changes in unrealized gains included in earnings

   related to assets still held at June 30, 2017

 

$

—

 

 

 

10,892

 

(b)

 

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the three months ended June 30, 2016 were as follows:

 

 

Investment Securities Available for Sale

 

 

 

 

 

 

 

 

 

Privately Issued Mortgage-Backed Securities

 

 

Collateralized

Debt Obligations

 

 

 

Other Assets and Other Liabilities

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance — March 31, 2016

 

$

65

 

 

 

45,040

 

 

 

 

16,885

 

 

Total gains (losses) realized/unrealized:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings

 

 

—

 

 

 

—

 

 

 

 

35,430

 

(b)

Included in other comprehensive income

 

 

—

 

 

 

(1,070

)

(c)

 

 

—

 

 

Settlements

 

 

(8

)

 

 

(665

)

 

 

 

—

 

 

Transfers in and/or out of Level 3 (a)

 

 

—

 

 

 

—

 

 

 

 

(30,932

)

(d)

Balance — June 30, 2016

 

$

57

 

 

 

43,305

 

 

 

 

21,383

 

 

Changes in unrealized gains included in earnings

   related to assets still held at June 30, 2016

 

$

—

 

 

 

—

 

 

 

 

19,822

 

(b)

12. 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, 2017 were as follows:

 

 

 

Investment Securities

Available for Sale

 

 

 

 

 

 

 

 

Privately Issued

Mortgage-Backed

Securities

 

 

Other Assets

and Other

Liabilities

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Balance — January 1, 2017

 

$

44

 

 

 

7,325

 

 

Total gains (losses) realized/unrealized:

 

 

 

 

 

 

 

 

 

Included in earnings

 

 

—

 

 

 

43,511

 

(b)

Settlements

 

 

(9

)

 

 

—

 

 

Transfers in and/or out of Level 3 (a)

 

 

—

 

 

 

(38,411

)

(d)

Balance — June 30, 2017

 

$

35

 

 

$

12,425

 

 

Changes in unrealized gains included in earnings

   related to assets still held at June 30, 2017

 

$

—

 

 

$

12,372

 

(b)

 

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the six months ended June 30, 2016 were as follows:

 

 

 

Investment Securities Available for Sale

 

 

 

 

 

 

 

 

 

Privately Issued Mortgage-Backed Securities

 

 

Collateralized Debt Obligations

 

 

 

Other Assets and Other Liabilities

 

 

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance — January 1, 2016

 

$

74

 

 

 

47,393

 

 

 

 

9,879

 

 

Total gains (losses) realized/unrealized:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings

 

 

—

 

 

 

—

 

 

 

 

59,328

 

(b)

Included in other comprehensive income

 

 

—

 

 

 

(3,218

)

(c)

 

 

—

 

 

Settlements

 

 

(17

)

 

 

(870

)

 

 

 

—

 

 

Transfers in and/or out of Level 3 (a)

 

 

—

 

 

 

—

 

 

 

 

(47,824

)

(d)

Balance — June 30, 2016

 

$

57

 

 

 

43,305

 

 

 

 

21,383

 

 

Changes in unrealized gains included in earnings

   related to assets still held at June 30, 2016

 

$

—

 

 

 

—

 

 

 

 

20,661

 

(b)

(a)

The Company’s policy for transfers between fair value levels is to recognize the transfer as of the actual date of the event or change in circumstances that caused the transfer.

(b)

Reported as mortgage banking revenues in the consolidated statement of income and includes the fair value of commitment issuances and expirations.

(c)

Reported as net unrealized losses on investment securities in the consolidated statement of comprehensive income.  The Company sold its collateralized debt obligations during the third and fourth quarters of 2016.

(d)

Transfers out of Level 3 consist of interest rate locks transferred to closed loans.
Quantitative Information Related to Significant Unobservable Inputs

The following tables present quantitative information about significant unobservable inputs used in the fair value measurements for certain Level 3 assets and liabilities at June 30, 2017 and December 31, 2016:

 

 

 

Fair Value

 

 

Valuation

Technique

 

Unobservable

Inputs/Assumptions

 

 

Range

(Weighted-

Average)

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

June 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring fair value measurements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Privately issued mortgage-backed

   securities

 

$

35

 

 

Two independent pricing quotes

 

 

—

 

 

 

—

 

Net other assets (liabilities) (a)

 

 

12,425

 

 

Discounted cash flow

 

Commitment expirations

 

 

0%-81% (28%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring fair value measurements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Privately issued mortgage-backed

   securities

 

$

44

 

 

Two independent pricing quotes

 

 

—

 

 

 

—

 

Net other assets (liabilities) (a)

 

 

7,325

 

 

Discounted cash flow

 

Commitment expirations

 

 

0%-77% (30%)

 

 

 

(a)

Other Level 3 assets (liabilities) consist of commitments to originate real estate loans.
Carrying Amounts and Estimated Fair Value for Financial Instrument Assets (Liabilities)

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

 

 

 

June 30, 2017

 

 

 

Carrying

Amount

 

 

Estimated

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

(In thousands)

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,345,478

 

 

 

1,345,478

 

 

 

1,251,750

 

 

 

93,728

 

 

 

—

 

Interest-bearing deposits at banks

 

 

5,023,829

 

 

 

5,023,829

 

 

 

—

 

 

 

5,023,829

 

 

 

—

 

Trading account

 

 

174,646

 

 

 

174,646

 

 

 

47,276

 

 

 

127,370

 

 

 

—

 

Investment securities

 

 

15,816,060

 

 

 

15,808,324

 

 

 

47,892

 

 

 

15,644,774

 

 

 

115,658

 

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans and leases

 

 

22,191,051

 

 

 

21,790,807

 

 

 

—

 

 

 

—

 

 

 

21,790,807

 

Commercial real estate loans

 

 

33,348,991

 

 

 

32,941,849

 

 

 

—

 

 

 

207,971

 

 

 

32,733,878

 

Residential real estate loans

 

 

20,960,171

 

 

 

21,007,049

 

 

 

—

 

 

 

4,643,237

 

 

 

16,363,812

 

Consumer loans

 

 

12,580,342

 

 

 

12,485,100

 

 

 

—

 

 

 

—

 

 

 

12,485,100

 

Allowance for credit losses

 

 

(1,008,225

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Loans and leases, net

 

 

88,072,330

 

 

 

88,224,805

 

 

 

—

 

 

 

4,851,208

 

 

 

83,373,597

 

Accrued interest receivable

 

 

310,187

 

 

 

310,187

 

 

 

—

 

 

 

310,187

 

 

 

—

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

(32,366,426

)

 

 

(32,366,426

)

 

 

—

 

 

 

(32,366,426

)

 

 

—

 

Savings and interest-checking deposits

 

 

(52,871,146

)

 

 

(52,871,146

)

 

 

—

 

 

 

(52,871,146

)

 

 

—

 

Time deposits

 

 

(8,107,749

)

 

 

(8,176,159

)

 

 

—

 

 

 

(8,176,159

)

 

 

—

 

Deposits at Cayman Islands office

 

 

(195,617

)

 

 

(195,617

)

 

 

—

 

 

 

(195,617

)

 

 

—

 

Short-term borrowings

 

 

(1,695,453

)

 

 

(1,695,453

)

 

 

—

 

 

 

(1,695,453

)

 

 

—

 

Long-term borrowings

 

 

(7,649,580

)

 

 

(7,676,747

)

 

 

—

 

 

 

(7,676,747

)

 

 

—

 

Accrued interest payable

 

 

(70,204

)

 

 

(70,204

)

 

 

—

 

 

 

(70,204

)

 

 

—

 

Trading account

 

 

(117,209

)

 

 

(117,209

)

 

 

—

 

 

 

(117,209

)

 

 

—

 

Other financial instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments to originate real estate loans for sale

 

$

12,425

 

 

 

12,425

 

 

 

—

 

 

 

—

 

 

 

12,425

 

Commitments to sell real estate loans

 

 

3,200

 

 

 

3,200

 

 

 

—

 

 

 

3,200

 

 

 

—

 

Other credit-related commitments

 

 

(121,960

)

 

 

(121,960

)

 

 

—

 

 

 

—

 

 

 

(121,960

)

Interest rate swap agreements used for interest

   rate risk management

 

 

4,882

 

 

 

4,882

 

 

 

—

 

 

 

4,882

 

 

 

—

 

 

 

 

December 31, 2016

 

 

 

Carrying

Amount

 

 

Estimated

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,320,549

 

 

 

1,320,549

 

 

 

1,249,654

 

 

 

70,895

 

 

—

 

Interest-bearing deposits at banks

 

 

5,000,638

 

 

 

5,000,638

 

 

 

—

 

 

 

5,000,638

 

 

—

 

Trading account

 

 

323,867

 

 

 

323,867

 

 

 

46,135

 

 

 

277,732

 

 

—

 

Investment securities

 

 

16,250,468

 

 

 

16,244,412

 

 

 

301,711

 

 

 

15,821,176

 

 

 

121,525

 

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans and leases

 

 

22,610,047

 

 

 

22,239,428

 

 

—

 

 

—

 

 

 

22,239,428

 

Commercial real estate loans

 

 

33,506,394

 

 

 

33,129,428

 

 

—

 

 

 

642,590

 

 

 

32,486,838

 

Residential real estate loans

 

 

22,590,912

 

 

 

22,638,167

 

 

—

 

 

 

4,912,488

 

 

 

17,725,679

 

Consumer loans

 

 

12,146,063

 

 

 

12,061,590

 

 

—

 

 

 

—

 

 

 

12,061,590

 

Allowance for credit losses

 

 

(988,997

)

 

 

—

 

 

—

 

 

 

—

 

 

 

—

 

Loans and leases, net

 

 

89,864,419

 

 

 

90,068,613

 

 

—

 

 

 

5,555,078

 

 

 

84,513,535

 

Accrued interest receivable

 

 

308,805

 

 

 

308,805

 

 

—

 

 

 

308,805

 

 

—

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

(32,813,896

)

 

 

(32,813,896

)

 

—

 

 

 

(32,813,896

)

 

—

 

Savings and interest-checking deposits

 

 

(52,346,207

)

 

 

(52,346,207

)

 

—

 

 

 

(52,346,207

)

 

—

 

Time deposits

 

 

(10,131,846

)

 

 

(10,222,585

)

 

—

 

 

 

(10,222,585

)

 

—

 

Deposits at Cayman Islands office

 

 

(201,927

)

 

 

(201,927

)

 

—

 

 

 

(201,927

)

 

—

 

Short-term borrowings

 

 

(163,442

)

 

 

(163,442

)

 

—

 

 

 

(163,442

)

 

—

 

Long-term borrowings

 

 

(9,493,835

)

 

 

(9,473,844

)

 

—

 

 

 

(9,473,844

)

 

—

 

Accrued interest payable

 

 

(75,172

)

 

 

(75,172

)

 

—

 

 

 

(75,172

)

 

—

 

Trading account

 

 

(174,376

)

 

 

(174,376

)

 

—

 

 

 

(174,376

)

 

—

 

Other financial instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments to originate real estate loans for sale

 

$

7,325

 

 

 

7,325

 

 

—

 

 

 

—

 

 

 

7,325

 

Commitments to sell real estate loans

 

 

36,653

 

 

 

36,653

 

 

—

 

 

 

36,653

 

 

—

 

Other credit-related commitments

 

 

(136,295

)

 

 

(136,295

)

 

—

 

 

 

—

 

 

 

(136,295

)

Interest rate swap agreements used for interest rate risk

   management

 

 

11,892

 

 

 

11,892

 

 

—

 

 

 

11,892

 

 

—