Fair value measurements (Tables)

9 Months Ended

Sep. 30, 2019

Assets and Liabilities Measured at Estimated Fair Value on Recurring Basis

The following tables present assets and liabilities at September 30, 2019 and December 31, 2018 measured at estimated fair value on a recurring basis:

	Fair Value Measurements		Level 1 (a)		Level 2 (a)		Level 3
	(In thousands)
September 30, 2019
Trading account assets	$	614,256	$	48,724	$	565,532	$	—
Investment securities available for sale:
U.S. Treasury and federal agencies		359,394		—		359,394		—
Obligations of states and political subdivisions		934		—		934		—
Mortgage-backed securities:
Government issued or guaranteed		6,494,900		—		6,494,900		—
Privately issued		16		—		—		16
Other debt securities		130,173		—		130,173		—
		6,985,417		—		6,985,401		16
Equity securities		150,104		104,199		45,905		—
Real estate loans held for sale		588,233		—		588,233		—
Other assets (b)		27,928		—		3,465		24,463
Total assets	$	8,365,938	$	152,923	$	8,188,536	$	24,479
Trading account liabilities	$	82,042	$	—	$	82,042	$	—
Other liabilities (b)		21,708		—		21,519		189
Total liabilities	$	103,750	$	—	$	103,561	$	189

December 31, 2018
Trading account assets	$	185,584	$	46,018	$	139,566	$	—
Investment securities available for sale:
U.S. Treasury and federal agencies		1,336,931		—		1,336,931		—
Obligations of states and political subdivisions		1,659		—		1,659		—
Mortgage-backed securities:
Government issued or guaranteed		7,216,991		—		7,216,991		—
Privately issued		22		—		—		22
Other debt securities		126,906		—		126,906		—
		8,682,509		—		8,682,487		22
Equity securities		93,917		71,989		21,928		—
Real estate loans held for sale		551,697		—		551,697		—
Other assets (b)		19,626		—		10,322		9,304
Total assets	$	9,533,333	$	118,007	$	9,406,000	$	9,326
Trading account liabilities	$	178,125	$	—	$	178,125	$	—
Other liabilities (b)		12,561		—		10,969		1,592
Total liabilities	$	190,686	$	—	$	189,094	$	1,592

(a)	There were no significant transfers between Level 1 and Level 2 of the fair value hierarchy during the nine months ended September 30, 2019 and the year ended December 31, 2018.

(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 three months ended September 30, 2019 and 2018 were as follows:

	Investment Securities Available for Sale
	Privately Issued Mortgage-Backed Securities		Other Assets and Other Liabilities
2019	(In thousands)

Balance — June 30, 2019	$	16		17,200
Total gains realized/unrealized:
Included in earnings		—		62,178		(b)
Settlements		—		—
Transfers out of Level 3 (a)		—		(55,104	)	(c)
Balance — September 30, 2019	$	16		24,274
Changes in unrealized gains included in earnings related to assets still held at September 30, 2019	$	—		19,350		(b)

2018

Balance — June 30, 2018	$	24		10,751
Total gains 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)

	Investment Securities Available for Sale
	Privately Issued Mortgage-Backed Securities			Other Assets and Other Liabilities
2019	(In thousands)

Balance — January 1, 2019	$	22			7,712
Total gains realized/unrealized:
Included in earnings		—			115,187		(b)
Settlements		(6	)		—
Transfers out of Level 3 (a)		—			(98,625	)	(c)
Balance — September 30, 2019	$	16			24,274
Changes in unrealized gains included in earnings related to assets still held at September 30, 2019	$	—			24,981		(b)

2018

Balance — January 1, 2018	$	28		8,303
Total gains 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)

(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.

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 September 30, 2019 and December 31, 2018:

Fair Value

Valuation

Technique

Unobservable

Inputs/Assumptions

Range

(Weighted-

Average)

(In thousands)

September 30, 2019

Recurring fair value measurements

Privately issued mortgage-backed

securities

Two independent pricing quotes

—

Net other assets (liabilities) (a)

24,274

Discounted cash flow

Commitment expirations

0%-96% (11%)

December 31, 2018

Recurring fair value measurements

Privately issued mortgage-backed

securities

Two independent pricing quotes

—

Net other assets (liabilities) (a)

7,712

Discounted cash flow

Commitment expirations

0%-95% (13%)

(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:

	September 30, 2019
	Carrying Amount			Estimated Fair Value			Level 1		Level 2			Level 3
	(In thousands)
Financial assets:
Cash and cash equivalents	$	1,818,861			1,818,861			1,765,090		53,771			—
Interest-bearing deposits at banks		12,495,524			12,495,524			—		12,495,524			—
Federal funds sold		200			200			—		200			—
Trading account assets		614,256			614,256			48,724		565,532			—
Investment securities		10,677,583			10,721,588			104,199		10,525,863			91,526
Loans and leases:
Commercial loans and leases		23,201,372			22,844,883			—		—			22,844,883
Commercial real estate loans		34,945,231			34,772,982			—		197,141			34,575,841
Residential real estate loans		16,500,955			16,575,991			—		4,021,885			12,554,106
Consumer loans		15,175,635			15,157,025			—		—			15,157,025
Allowance for credit losses		(1,038,437	)		—			—		—			—
Loans and leases, net		88,784,756			89,350,881			—		4,219,026			85,131,855
Accrued interest receivable		340,543			340,543			—		340,543			—
Financial liabilities:
Noninterest-bearing deposits	$	(31,766,724	)		(31,766,724	)		—		(31,766,724	)		—
Savings and interest-checking deposits		(55,581,533	)		(55,581,533	)		—		(55,581,533	)		—
Time deposits		(6,203,679	)		(6,289,534	)		—		(6,289,534	)		—
Deposits at Cayman Islands office		(1,561,997	)		(1,561,997	)		—		(1,561,997	)		—
Short-term borrowings		(5,513,896	)		(5,513,896	)		—		(5,513,896	)		—
Long-term borrowings		(7,002,524	)		(7,056,344	)		—		(7,056,344	)		—
Accrued interest payable		(90,623	)		(90,623	)		—		(90,623	)		—
Trading account liabilities		(82,042	)		(82,042	)		—		(82,042	)		—
Other financial instruments:
Commitments to originate real estate loans for sale	$	24,274			24,274			—		—			24,274
Commitments to sell real estate loans		(11,912	)		(11,912	)		—		(11,912	)		—
Other credit-related commitments		(130,413	)		(130,413	)		—		—			(130,413	)
Interest rate swap agreements used for interest rate risk management		(6,142	)		(6,142	)		—		(6,142	)		—

	December 31, 2018
	Carrying Amount			Estimated Fair Value			Level 1		Level 2			Level 3
				(In thousands)
Financial assets:
Cash and cash equivalents	$	1,605,439			1,605,439			1,528,302		77,137			—
Interest-bearing deposits at banks		8,105,197			8,105,197			—		8,105,197			—
Trading account assets		185,584			185,584			46,018		139,566			—
Investment securities		12,692,813			12,631,656			71,989		12,456,467			103,200
Loans and leases:
Commercial loans and leases		22,977,976			22,587,387			—		—			22,587,387
Commercial real estate loans		34,363,556			33,832,558			—		346,775			33,485,783
Residential real estate loans		17,154,446			16,974,545			—		3,920,447			13,054,098
Consumer loans		13,970,499			13,819,545			—		—			13,819,545
Allowance for credit losses		(1,019,444	)		—			—		—			—
Loans and leases, net		87,447,033			87,214,035			—		4,267,222			82,946,813
Accrued interest receivable		353,965			353,965			—		353,965			—
Financial liabilities:
Noninterest-bearing deposits	$	(32,256,668	)		(32,256,668	)		—		(32,256,668	)		—
Savings and interest-checking deposits		(50,963,744	)		(50,963,744	)		—		(50,963,744	)		—
Time deposits		(6,124,254	)		(6,201,957	)		—		(6,201,957	)		—
Deposits at Cayman Islands office		(811,906	)		(811,906	)		—		(811,906	)		—
Short-term borrowings		(4,398,378	)		(4,398,378	)		—		(4,398,378	)		—
Long-term borrowings		(8,444,914	)		(8,385,289	)		—		(8,385,289	)		—
Accrued interest payable		(95,274	)		(95,274	)		—		(95,274	)		—
Trading account liabilities		(178,125	)		(178,125	)		—		(178,125	)		—
Other financial instruments:
Commitments to originate real estate loans for sale	$	7,712			7,712			—		—			7,712
Commitments to sell real estate loans		(6,177	)		(6,177	)		—		(6,177	)		—
Other credit-related commitments		(131,688	)		(131,688	)		—		—			(131,688	)
Interest rate swap agreements used for interest rate risk management		5,530			5,530			—		5,530			—