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Fair value measurements
9 Months Ended
Sep. 30, 2018
Fair Value Disclosures [Abstract]  
Fair value measurements

11. 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 September 30, 2018.

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.

11. Fair value measurements, continued

Trading account assets and liabilities

Trading account assets and liabilities 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 derivative trading account assets and liabilities using externally developed pricing models based on market observable inputs and, therefore, classifies such valuations as Level 2.  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.

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 considered to be 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.

11. Fair value measurements, continued

The following tables present assets and liabilities at September 30, 2018 and December 31, 2017 measured at estimated fair value on a recurring basis:

 

 

 

Fair Value Measurements

 

 

Level 1 (a)

 

 

Level 2 (a)

 

 

Level 3

 

 

 

(In thousands)

 

September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading account assets

 

$

125,038

 

 

$

47,653

 

 

$

77,385

 

 

$

 

Investment securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and federal agencies

 

 

1,608,672

 

 

 

 

 

 

1,608,672

 

 

 

 

Obligations of states and political subdivisions

 

 

1,796

 

 

 

 

 

 

1,796

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government issued or guaranteed

 

 

7,412,696

 

 

 

 

 

 

7,412,696

 

 

 

 

Privately issued

 

 

23

 

 

 

 

 

 

 

 

 

23

 

Other debt securities

 

 

131,328

 

 

 

 

 

 

131,328

 

 

 

 

 

 

 

9,154,515

 

 

 

 

 

 

9,154,492

 

 

 

23

 

Equity securities

 

 

90,129

 

 

 

72,651

 

 

 

17,478

 

 

 

 

Real estate loans held for sale

 

 

638,579

 

 

 

 

 

 

638,579

 

 

 

 

Other assets (b)

 

 

19,698

 

 

 

 

 

 

14,073

 

 

 

5,625

 

Total assets

 

$

10,027,959

 

 

$

120,304

 

 

$

9,902,007

 

 

$

5,648

 

Trading account liabilities

 

$

308,733

 

 

$

 

 

$

308,733

 

 

$

 

Other liabilities (b)

 

 

2,235

 

 

 

 

 

 

796

 

 

 

1,439

 

Total liabilities

 

$

310,968

 

 

$

 

 

$

309,529

 

 

$

1,439

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trading account assets

 

$

132,909

 

 

$

47,873

 

 

$

85,036

 

 

$

 

Investment securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and federal agencies

 

 

1,947,487

 

 

 

 

 

 

1,947,487

 

 

 

 

Obligations of states and political subdivisions

 

 

2,589

 

 

 

 

 

 

2,589

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government issued or guaranteed

 

 

8,716,392

 

 

 

 

 

 

8,716,392

 

 

 

 

Privately issued

 

 

28

 

 

 

 

 

 

 

 

 

28

 

Other debt securities

 

 

128,832

 

 

 

 

 

 

128,832

 

 

 

 

Equity securities

 

 

100,956

 

 

 

73,232

 

 

 

27,724

 

 

 

 

 

 

 

10,896,284

 

 

 

73,232

 

 

 

10,823,024

 

 

 

28

 

Real estate loans held for sale

 

 

378,047

 

 

 

 

 

 

378,047

 

 

 

 

Other assets (b)

 

 

12,696

 

 

 

 

 

 

3,899

 

 

 

8,797

 

Total assets

 

$

11,419,936

 

 

$

121,105

 

 

$

11,290,006

 

 

$

8,825

 

Trading account liabilities

 

$

137,390

 

 

$

 

 

$

137,390

 

 

$

 

Other liabilities (b)

 

 

1,796

 

 

 

 

 

 

1,302

 

 

 

494

 

Total liabilities

 

$

139,186

 

 

$

 

 

$

138,692

 

 

$

494

 

 

(a)

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

(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).

11. 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 September 30, 2018 were as follows:

 

 

 

Investment Securities

Available for Sale

 

 

 

 

 

 

 

 

Privately Issued

Mortgage-Backed

Securities

 

 

Other Assets

and Other

Liabilities

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Balance — June 30, 2018

 

$

24

 

 

 

10,751

 

 

Total gains (losses) realized/unrealized:

 

 

 

 

 

 

 

 

 

Included in earnings

 

 

 

 

 

10,284

 

(b)

Settlements

 

 

(1

)

 

 

 

 

Transfers out of Level 3 (a)

 

 

 

 

 

(16,849

)

(c)

Balance — September 30, 2018

 

$

23

 

 

 

4,186

 

 

Changes in unrealized gains included in earnings

   related to assets still held at September 30, 2018

 

$

 

 

 

4,508

 

(b)

 

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

 

 

 

Investment Securities

Available for Sale

 

 

 

 

 

 

 

 

Privately Issued

Mortgage-Backed

Securities

 

 

Other Assets

and Other

Liabilities

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Balance — June 30, 2017

 

$

35

 

 

 

12,425

 

 

Total gains (losses) realized/unrealized:

 

 

 

 

 

 

 

 

 

Included in earnings

 

 

 

 

 

22,313

 

(b)

Settlements

 

 

(5

)

 

 

 

 

Transfers out of Level 3 (a)

 

 

 

 

 

(21,016

)

(c)

Balance — September 30, 2017

 

$

30

 

 

 

13,722

 

 

Changes in unrealized gains included in earnings

   related to assets still held at September 30, 2017

 

$

 

 

 

12,659

 

(b)

 

11. Fair value measurements, continued

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the nine months ended September 30, 2018 were as follows:

 

 

 

Investment securities

available for sale

 

 

 

 

 

 

 

 

Privately Issued

Mortgage-Backed

Securities

 

 

Other Assets

and Other

Liabilities

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Balance — January 1, 2018

 

$

28

 

 

 

8,303

 

 

Total gains (losses) realized/unrealized:

 

 

 

 

 

 

 

 

 

Included in earnings

 

 

 

 

 

38,691

 

(b)

Settlements

 

 

(5

)

 

 

 

 

Transfers out of Level 3 (a)

 

 

 

 

 

(42,808

)

(c)

Balance — September 30, 2018

 

$

23

 

 

 

4,186

 

 

Changes in unrealized gains included in earnings

   related to assets still held at September 30, 2018

 

$

 

 

 

3,663

 

(b)

 

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the nine months ended September 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

 

 

 

 

 

65,824

 

(b)

Settlements

 

 

(14

)

 

 

 

 

Transfers out of Level 3 (a)

 

 

 

 

 

(59,427

)

(c)

Balance — September 30, 2017

 

$

30

 

 

 

13,722

 

 

Changes in unrealized gains included in earnings

   related to assets still held at September 30, 2017

 

$

 

 

 

13,684

 

(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)

Transfers out of Level 3 consist of interest rate locks transferred to closed loans.

 

11. 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 uncollectible 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 generally 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 generally in the range of 15% to 90% at September 30, 2018.  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 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.  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 $292 million at September 30, 2018 ($128 million and $164 million of which were classified as Level 2 and Level 3, respectively), $210 million at December 31, 2017 ($145 million and $65 million of which were classified as Level 2 and Level 3, respectively) and $184 million at September 30, 2017 ($105 million and $79 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 September 30, 2018 were decreases of $35 million and $69 million for the three-month and nine-month periods ended September 30, 2018, respectively. Changes in fair value recognized for partial charge-offs of loans and loan impairment reserves on loans held by the Company on September 30, 2017 were decreases of $16 million and $55 million for the three-month and nine-month periods ended September 30, 2017, respectively.

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 in foreclosure of defaulted loans subject to nonrecurring fair value measurement were $32 million and $36 million at September 30, 2018 and 2017, respectively.  Changes in fair value recognized for those foreclosed assets held by the Company were not material during the three-month and nine-month periods ended September 30, 2018 and 2017.

 

 

11. Fair value measurements, continued

 

Significant unobservable inputs to Level 3 measurements

The following tables present quantitative information about significant unobservable inputs used in the fair value measurements for certain Level 3 assets and liabilities at September 30, 2018 and December 31, 2017:

 

 

 

Fair Value

 

 

Valuation

Technique

 

Unobservable

Inputs/Assumptions

 

 

Range

(Weighted-

Average)

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring fair value measurements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Privately issued mortgage-backed

   securities

 

$

23

 

 

Two independent pricing quotes

 

 

 

 

 

 

Net other assets (liabilities) (a)

 

 

4,186

 

 

Discounted cash flow

 

Commitment expirations

 

 

0%-90% (16%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring fair value measurements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Privately issued mortgage-backed

   securities

 

$

28

 

 

Two independent pricing quotes

 

 

 

 

 

 

Net other assets (liabilities) (a)

 

 

8,303

 

 

Discounted cash flow

 

Commitment expirations

 

 

0%-78% (22%)

 

 

(a)

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

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.

11. Fair value measurements, continued

Disclosures of fair value of financial instruments

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

 

 

 

September 30, 2018

 

 

 

Carrying

Amount

 

 

Estimated

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

(In thousands)

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,311,611

 

 

 

1,311,611

 

 

 

1,232,393

 

 

 

79,218

 

 

 

 

Interest-bearing deposits at banks

 

 

6,523,746

 

 

 

6,523,746

 

 

 

 

 

 

6,523,746

 

 

 

 

Trading account assets

 

 

125,038

 

 

 

125,038

 

 

 

47,653

 

 

 

77,385

 

 

 

 

Investment securities

 

 

13,073,881

 

 

 

12,968,432

 

 

 

72,651

 

 

 

12,790,484

 

 

 

105,297

 

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans and leases

 

 

21,635,394

 

 

 

21,215,945

 

 

 

 

 

 

 

 

 

21,215,945

 

Commercial real estate loans

 

 

33,518,375

 

 

 

32,971,832

 

 

 

 

 

 

381,007

 

 

 

32,590,825

 

Residential real estate loans

 

 

17,721,399

 

 

 

17,429,777

 

 

 

 

 

 

3,984,387

 

 

 

13,445,390

 

Consumer loans

 

 

13,805,317

 

 

 

13,676,356

 

 

 

 

 

 

 

 

 

13,676,356

 

Allowance for credit losses

 

 

(1,019,488

)

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases, net

 

 

85,660,997

 

 

 

85,293,910

 

 

 

 

 

 

4,365,394

 

 

 

80,928,516

 

Accrued interest receivable

 

 

349,903

 

 

 

349,903

 

 

 

 

 

 

349,903

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

(31,773,560

)

 

 

(31,773,560

)

 

 

 

 

 

(31,773,560

)

 

 

 

Savings and interest-checking deposits

 

 

(51,108,962

)

 

 

(51,108,962

)

 

 

 

 

 

(51,108,962

)

 

 

 

Time deposits

 

 

(5,810,587

)

 

 

(5,872,516

)

 

 

 

 

 

(5,872,516

)

 

 

 

Deposits at Cayman Islands office

 

 

(447,287

)

 

 

(447,287

)

 

 

 

 

 

(447,287

)

 

 

 

Short-term borrowings

 

 

(1,310,110

)

 

 

(1,310,110

)

 

 

 

 

 

(1,310,110

)

 

 

 

Long-term borrowings

 

 

(9,140,268

)

 

 

(9,160,009

)

 

 

 

 

 

(9,160,009

)

 

 

 

Accrued interest payable

 

 

(68,196

)

 

 

(68,196

)

 

 

 

 

 

(68,196

)

 

 

 

Trading account liabilities

 

 

(308,733

)

 

 

(308,733

)

 

 

 

 

 

(308,733

)

 

 

 

Other financial instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments to originate real estate loans for sale

 

$

4,186

 

 

 

4,186

 

 

 

 

 

 

 

 

 

4,186

 

Commitments to sell real estate loans

 

 

10,831

 

 

 

10,831

 

 

 

 

 

 

10,831

 

 

 

 

Other credit-related commitments

 

 

(129,102

)

 

 

(129,102

)

 

 

 

 

 

 

 

 

(129,102

)

Interest rate swap agreements used for interest

   rate risk management

 

 

2,446

 

 

 

2,446

 

 

 

 

 

 

2,446

 

 

 

 

11. Fair value measurements, continued

 

 

 

December 31, 2017

 

 

 

Carrying

Amount

 

 

Estimated

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,420,888

 

 

 

1,420,888

 

 

 

1,352,035

 

 

 

68,853

 

 

 

 

Interest-bearing deposits at banks

 

 

5,078,903

 

 

 

5,078,903

 

 

 

 

 

 

5,078,903

 

 

 

 

Trading account assets

 

 

132,909

 

 

 

132,909

 

 

 

47,873

 

 

 

85,036

 

 

 

 

Investment securities

 

 

14,664,525

 

 

 

14,653,074

 

 

 

73,232

 

 

 

14,469,127

 

 

 

110,715

 

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans and leases

 

 

21,742,651

 

 

 

21,321,282

 

 

 

 

 

 

 

 

 

21,321,282

 

Commercial real estate loans

 

 

33,366,373

 

 

 

32,950,724

 

 

 

 

 

 

22,130

 

 

 

32,928,594

 

Residential real estate loans

 

 

19,613,344

 

 

 

19,596,826

 

 

 

 

 

 

4,440,645

 

 

 

15,156,181

 

Consumer loans

 

 

13,266,615

 

 

 

13,161,517

 

 

 

 

 

 

 

 

 

13,161,517

 

Allowance for credit losses

 

 

(1,017,198

)

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases, net

 

 

86,971,785

 

 

 

87,030,349

 

 

 

 

 

 

4,462,775

 

 

 

82,567,574

 

Accrued interest receivable

 

 

327,170

 

 

 

327,170

 

 

 

 

 

 

327,170

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

(33,975,180

)

 

 

(33,975,180

)

 

 

 

 

 

(33,975,180

)

 

 

 

Savings and interest-checking deposits

 

 

(51,698,008

)

 

 

(51,698,008

)

 

 

 

 

 

(51,698,008

)

 

 

 

Time deposits

 

 

(6,580,962

)

 

 

(6,635,048

)

 

 

 

 

 

(6,635,048

)

 

 

 

Deposits at Cayman Islands office

 

 

(177,996

)

 

 

(177,996

)

 

 

 

 

 

(177,996

)

 

 

 

Short-term borrowings

 

 

(175,099

)

 

 

(175,099

)

 

 

 

 

 

(175,099

)

 

 

 

Long-term borrowings

 

 

(8,141,430

)

 

 

(8,193,783

)

 

 

 

 

 

(8,193,783

)

 

 

 

Accrued interest payable

 

 

(75,641

)

 

 

(75,641

)

 

 

 

 

 

(75,641

)

 

 

 

Trading account liabilities

 

 

(137,390

)

 

 

(137,390

)

 

 

 

 

 

(137,390

)

 

 

 

Other financial instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments to originate real estate loans for sale

 

$

8,303

 

 

 

8,303

 

 

 

 

 

 

 

 

 

8,303

 

Commitments to sell real estate loans

 

 

1,958

 

 

 

1,958

 

 

 

 

 

 

1,958

 

 

 

 

Other credit-related commitments

 

 

(125,281

)

 

 

(125,281

)

 

 

 

 

 

 

 

 

(125,281

)

Interest rate swap agreements used for interest

   rate risk management

 

 

639

 

 

 

639

 

 

 

 

 

 

639

 

 

 

 

 

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.