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Fair value measurement (Tables)

9 Months Ended

Sep. 30, 2017

Schedule Of Fair Value Assets And Liabilities Measured On Recurring Basis Table Text Block

At September 30, 2017

(In thousands)	Level 1		Level 2		Level 3		Total

RECURRING FAIR VALUE MEASUREMENTS

Assets
Investment securities available-for-sale:
U.S. Treasury securities	$	-	$	2,764,863	$	-	$	2,764,863
Obligations of U.S. Government sponsored entities		-		611,646		-		611,646
Obligations of Puerto Rico, States and political subdivisions		-		6,615		-		6,615
Collateralized mortgage obligations - federal agencies		-		1,015,597		-		1,015,597
Mortgage-backed securities		-		4,658,238		1,288		4,659,526
Equity securities		-		1,885		-		1,885
Other		-		869		-		869
Total investment securities available-for-sale	$	-	$	9,059,713	$	1,288	$	9,061,001

Trading account securities, excluding derivatives:
Obligations of Puerto Rico, States and political subdivisions	$	-	$	172	$	-	$	172
Collateralized mortgage obligations		-		276		572		848
Mortgage-backed securities - federal agencies		-		32,709		43		32,752
Other		-		11,630		549		12,179
Total trading account securities, excluding derivatives	$	-	$	44,787	$	1,164	$	45,951
Mortgage servicing rights	$	-	$	-	$	180,157	$	180,157
Derivatives		-		14,234		-		14,234
Total assets measured at fair value on a recurring basis	$	-	$	9,118,734	$	182,609	$	9,301,343
Liabilities
Derivatives	$	-	$	(12,841)	$	-	$	(12,841)
Contingent consideration		-		-		(166,876)		(166,876)
Total liabilities measured at fair value on a recurring basis	$	-	$	(12,841)	$	(166,876)	$	(179,717)

At December 31, 2016

(In thousands)	Level 1		Level 2		Level 3		Total

RECURRING FAIR VALUE MEASUREMENTS

Assets
Investment securities available-for-sale:
U.S. Treasury securities	$	-	$	2,136,620	$	-	$	2,136,620
Obligations of U.S. Government sponsored entities		-		711,850		-		711,850
Obligations of Puerto Rico, States and political subdivisions		-		22,771		-		22,771
Collateralized mortgage obligations - federal agencies		-		1,221,526		-		1,221,526
Mortgage-backed securities		-		4,103,940		1,392		4,105,332
Equity securities		-		2,122		-		2,122
Other		-		9,585		-		9,585
Total investment securities available-for-sale	$	-	$	8,208,414	$	1,392	$	8,209,806

Trading account securities, excluding derivatives:
Obligations of Puerto Rico, States and political subdivisions	$	-	$	1,164	$	-	$	1,164
Collateralized mortgage obligations		-		-		1,321		1,321
Mortgage-backed securities - federal agencies		-		37,991		4,755		42,746
Other		-		13,963		602		14,565
Total trading account securities, excluding derivatives	$	-	$	53,118	$	6,678	$	59,796
Mortgage servicing rights	$	-	$	-	$	196,889	$	196,889
Derivatives		-		14,094		-		14,094
Total assets measured at fair value on a recurring basis	$	-	$	8,275,626	$	204,959	$	8,480,585
Liabilities
Derivatives	$	-	$	(12,842)	$	-	$	(12,842)
Contingent consideration		-		-		(153,158)		(153,158)
Total liabilities measured at fair value on a recurring basis	$	-	$	(12,842)	$	(153,158)	$	(166,000)

Fair Value Measurements, Nonrecurring [Table Text Block]

Nine months ended September 30, 2017

(In thousands)		Level 1		Level 2		Level 3		Total

NONRECURRING FAIR VALUE MEASUREMENTS
Assets											Write-downs
	Loans^[1]	$	-	$	-	$	66,221	$	66,221	$	(16,282)
	Other real estate owned^{[2] [3]}		-		-		89,825		89,825		(17,405)
	Other foreclosed assets^[2]		-		-		2,223		2,223		(475)
Total assets measured at fair value on a nonrecurring basis		$	-	$	-	$	158,269	$	158,269	$	(34,162)

Nine months ended September 30, 2016

(In thousands)		Level 1		Level 2		Level 3		Total

NONRECURRING FAIR VALUE MEASUREMENTS
Assets											Write-downs
	Loans^[1]	$	-	$	-	$	61,309	$	61,309	$	(31,097)
	Other real estate owned^[2]		-		-		39,996		39,996		(8,482)
	Other foreclosed assets^[2]		-		-		46		46		(2)
Total assets measured at fair value on a nonrecurring basis		$	-	$	-	$	101,351	$	101,351	$	(39,581)

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	Quarter ended September 30, 2017
		MBS						Other
		classified		CMOs				securities
		as investment		classified		MBS		classified
		securities		as trading		classified as		as trading		Mortgage
		available-		account		trading account		account		servicing		Total		Contingent		Total
(In thousands)		for-sale		securities		securities		securities		rights		assets		consideration		liabilities
Balance at June 30, 2017		$	1,289	$	858	$	4,334	$	557	$	188,728	$	195,766	$	(163,668)	$	(163,668)
Gains (losses) included in earnings			-		5		(77)		(8)		(10,262)		(10,342)		(3,208)		(3,208)
Gains (losses) included in OCI			(1)		-		-		-		-		(1)		-		-
Additions			-		31		-		-		1,691		1,722		-		-
Settlements			-		(46)		(326)		-		-		(372)		-		-
Transfers out of Level 3			-		(276)		(3,888)		-		-		(4,164)		-		-
Balance at September 30, 2017		$	1,288	$	572	$	43	$	549	$	180,157	$	182,609	$	(166,876)	$	(166,876)
Changes in unrealized gains
	(losses) included in earnings
	relating to assets still held
	at September 30, 2017	$	-	$	1	$	-	$	1	$	(6,241)	$	(6,239)	$	(3,208)	$	(3,208)

	Nine months ended September 30, 2017
		MBS						Other
		classified		CMOs				securities
		as investment		classified		MBS		classified
		securities		as trading		classified as		as trading		Mortgage
		available-		account		trading account		account		servicing		Total		Contingent		Total
(In thousands)		for-sale		securities		securities		securities		rights		assets		consideration		liabilities
Balance at January 1, 2017		$	1,392	$	1,321	$	4,755	$	602	$	196,889	$	204,959	$	(153,158)	$	(153,158)
Gains (losses) included in earnings			-		-		(124)		(53)		(24,262)		(24,439)		(13,718)		(13,718)
Gains (losses) included in OCI			9		-		-		-		-		9		-		-
Additions			-		39		332		-		7,530		7,901		-		-
Sales			-		(365)		(156)		-		-		(521)		-		-
Settlements			(25)		(147)		(876)		-		-		(1,048)		-		-
Transfers out of Level 3			(88)		(276)		(3,888)		-		-		(4,252)		-		-
Balance at September 30, 2017		$	1,288	$	572	$	43	$	549	$	180,157	$	182,609	$	(166,876)	$	(166,876)
Changes in unrealized gains
	(losses) included in earnings
	relating to assets still held
	at September 30, 2017	$	-	$	(5)	$	(23)	$	22	$	(9,863)	$	(9,869)	$	(13,718)	$	(13,718)

	Quarter ended September 30, 2016
		MBS						Other
		classified		CMOs				securities
		as investment		classified		MBS		classified
		securities		as trading		classified as		as trading		Mortgage
		available-		account		trading account		account		servicing		Total		Contingent		Total
(In thousands)		for-sale		securities		securities		securities		rights		assets		consideration		liabilities
Balance at June 30, 2016		$	1,398	$	1,399	$	5,364	$	640	$	203,577	$	212,378	$	(128,511)	$	(128,511)
Gains (losses) included in earnings			-		10		(32)		(17)		(6,062)		(6,101)		(6,611)		(6,611)
Gains (losses) included in OCI			(1)		-		-		-		-		(1)		-		-
Additions			-		5		128		-		2,854		2,987		-		-
Sales			-		-		(110)		-		-		(110)		-		-
Settlements			-		(43)		(100)		-		(15)		(158)		-		-
Balance at September 30, 2016		$	1,397	$	1,371	$	5,250	$	623	$	200,354	$	208,995	$	(135,122)	$	(135,122)
Changes in unrealized gains
	(losses) included in earnings
	relating to assets still held
	at September 30, 2016	$	-	$	10	$	(29)	$	8	$	(1,082)	$	(1,093)	$	(6,611)	$	(6,611)

	Nine months ended September 30, 2016
		MBS						Other
		classified		CMOs				securities
		as investment		classified		MBS		classified
		securities		as trading		classified as		as trading		Mortgage
		available-		account		trading account		account		servicing		Total		Contingent		Total
(In thousands)		for-sale		securities		securities		securities		rights		assets		consideration		liabilities
Balance at January 1, 2016		$	1,434	$	1,831	$	6,454	$	687	$	211,405	$	221,811	$	(120,380)	$	(120,380)
Gains (losses) included in earnings			(2)		(3)		85		(64)		(18,879)		(18,863)		(14,742)		(14,742)
Gains (losses) included in OCI			15		-		-		-		-		15		-		-
Additions			-		214		1,076		-		7,843		9,133		-		-
Sales			-		(308)		(1,826)		-		-		(2,134)		-		-
Settlements			(50)		(363)		(539)		-		(15)		(967)		-		-
Balance at September 30, 2016		$	1,397	$	1,371	$	5,250	$	623	$	200,354	$	208,995	$	(135,122)	$	(135,122)
Changes in unrealized gains
	(losses) included in earnings
	relating to assets still held
	at September 30, 2016	$	-	$	4	$	74	$	29	$	(4,315)	$	(4,208)	$	(14,742)	$	(14,742)

Fair Value, Measured on Recurring Basis, Gain (Loss) Included in Earnings [Table Text Block]

	Quarter ended September 30, 2017				Nine months ended September 30, 2017
			Changes in unrealized				Changes in unrealized
	Total gains		gains (losses) relating to		Total gains		gains (losses) relating to
	(losses) included		assets still held at		(losses) included		assets still held at
(In thousands)	in earnings		reporting date		in earnings		reporting date
FDIC loss share expense	$	(3,208)	$	(3,208)	$	(13,718)	$	(13,718)
Mortgage banking activities		(10,262)		(6,241)		(24,262)		(9,863)
Trading account profit (loss)		(80)		2		(177)		(6)
Total	$	(13,550)	$	(9,447)	$	(38,157)	$	(23,587)

	Quarter ended September 30, 2016				Nine months ended September 30, 2016
			Changes in unrealized				Changes in unrealized
	Total gains		gains (losses) relating to		Total gains		gains (losses) relating to
	(losses) included		assets still held at		(losses) included		assets still held at
(In thousands)	in earnings		reporting date		in earnings		reporting date
Interest income	$	-	$	-	$	(2)	$	-
FDIC loss share expense		(6,611)		(6,611)		(14,742)		(14,742)
Mortgage banking activities		(6,062)		(1,082)		(18,879)		(4,315)
Trading account profit (loss)		(39)		(11)		18		107
Total	$	(12,712)	$	(7,704)	$	(33,605)	$	(18,950)

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Table Text Block]

		Fair value
		at September 30,
(In thousands)		2017	Valuation technique	Unobservable inputs	Weighted average (range)
CMO's - trading	$	572	Discounted cash flow model	Weighted average life	2.1 years (1.6 - 2.2 years)
				Yield	3.9% (3.7% - 4.2%)
				Prepayment speed	21.2% (20.2% - 22.9%)
Other - trading	$	549	Discounted cash flow model	Weighted average life	5.3	years
				Yield	12.5	%
				Prepayment speed	10.8	%
Mortgage servicing rights	$	180,157	Discounted cash flow model	Prepayment speed	5.8% (0.3% - 18.0%)
				Weighted average life	6.7 years (0.1 - 15.6 years)
				Discount rate	11.2% (9.5% - 15.0%)
Contingent consideration	$	(166,876)	Discounted cash flow model	Credit loss rate on covered loans	3.9% (0.0% - 100.0%)
				Risk premium component
				of discount rate	2.9	%
Loans held-in-portfolio	$	66,221 ^[1]	External appraisal	Haircut applied on
				external appraisals	25.0% (11.6% - 54.1%)
Other real estate owned	$	83,870 ^[2]	External appraisal	Haircut applied on
				external appraisals	21.3% (20.0% - 30.0%)