Fair Value Measurements (Tables)

9 Months Ended

Jun. 30, 2014

Fair Value of Assets Measured on Recurring Basis

The following tables present the balance of assets measured at fair value on a recurring basis at June 30, 2014 and September 30, 2013:



	Fair Value at June 30, 2014
	Level 1		Level 2		Level 3		Total
	(In thousands)
Available-for-sale securities
Equity securities	$	101,981	$	—	$	—	$	101,981
Obligations of U.S. government	—		721,312		—		721,312
Obligations of states and political subdivisions	—		23,277		—		23,277
Corporate debt securities	—		485,083		—		485,083
Mortgage-backed securities					—
Agency pass-through certificates	—		1,662,001		—		1,662,001
Other Commercial MBS	—		109,367		—		109,367
Total balance at end of period	$	101,981	$	3,001,040	$	—	$	3,103,021

There were no transfers between, into and/or out of Levels 1, 2 or 3 during the quarter ended June 30, 2014.



	Fair Value at September 30, 2013
	Level 1		Level 2		Level 3		Total
	(In thousands)
Available-for-sale securities
Equity securities	$	101,237	$	—	$	—	$	101,237
Obligations of U.S. government	—		533,975		—		533,975
Obligations of states and political subdivisions	—		22,545		—		22,545
Corporate debt securities	—		452,015		—		452,015
Mortgage-backed securities
Agency pass-through certificates	—		1,251,176		—		1,251,176
Total balance at end of period	$	101,237	$	2,259,711	$	—	$	2,360,948

Aggregated Balance of Assets Measured at Estimated Fair Value on a Nonrecurring Basis and Total Losses Resulting from Those Fair Value Adjustments

The following tables present the aggregated balance of assets that were measured at estimated fair value on a nonrecurring basis through the nine months ended June 30, 2014 and June 30, 2013, and the total losses (gains) resulting from those fair value adjustments for the quarters and nine months ended June 30, 2014 and June 30, 2013. These estimated fair values are shown gross of estimated selling costs.



	Nine Months Ended June 30, 2014								Quarter Ended June 30, 2014			Nine Months Ended June 30, 2014
	Level 1		Level 2		Level 3		Total		Total Losses (Gains)
	(In thousands)
Impaired loans (1)	$	—	$	—	$	10,156	$	10,156	$	(775	)	$	(1,311	)
Covered REO (2)	—		—		8,935		8,935		374			503
Real estate held for sale (2)	—		—		43,082		43,082		10,400			16,782
Balance at end of period	$	—	$	—	$	62,173	$	62,173	$	9,999		$	15,974



	Nine Months Ended June 30, 2013								Quarter Ended June 30, 2013		Nine Months Ended June 30, 2013
	Level 1		Level 2		Level 3		Total		Total Losses
	(In thousands)
Impaired loans (1)	$	—	$	—	$	64,500	$	64,500	$	1,967	$	13,005
Covered REO (2)	—		—		18,312		18,312		231		603
Real estate held for sale (2)	—		—		77,080		77,080		5,626		19,650
Balance at end of period	$	—	$	—	$	159,892	$	159,892	$	7,824	$	33,258

___________________


(1)	The losses represents remeasurements of collateral-dependent loans.


(2)	The losses represents aggregate writedowns and charge-offs on real estate held for sale.

Fair Value of Financial Instruments by Balance Sheet Grouping

Although management is not aware of any factors that would materially affect the estimated fair value amounts presented below, such amounts have not been comprehensively revalued for purposes of these financial statements since the dates shown, and therefore, estimates of fair value subsequent to those dates may differ significantly from the amounts presented below.



		June 30, 2014				September 30, 2013
	Level in Fair Value Hierarchy	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
		(In thousands)
Financial assets
Cash and cash equivalents	1	$	861,304	$	861,304	$	203,563	$	203,563
Available-for-sale securities
Equity securities	1	101,981		101,981		101,237		101,237
Obligations of U.S. government	2	721,312		721,312		533,975		533,975
Obligations of states and political subdivisions	2	23,277		23,277		22,545		22,545
Corporate debt securities	2	485,083		485,083		452,015		452,015
Mortgage-backed securities
Agency pass-through certificates	2	1,662,001		1,662,001		1,251,176		1,251,176
Other Commercial MBS	2	109,367		109,367		—		—
Total available-for-sale securities		3,103,021		3,103,021		2,360,948		2,360,948
Held-to-maturity securities	2
Total held-to-maturity securities		1,583,852		1,534,239		1,654,666		1,582,849

Loans receivable	3	7,965,954		8,516,535		7,528,030		8,070,279
Covered loans	3	207,207		212,002		295,947		300,610
FDIC indemnification asset	3	44,065		43,117		64,615		62,300
FHLB and FRB stock	2	162,904		162,904		173,009		173,009

Financial liabilities
Customer accounts	2	10,765,680		10,050,132		9,090,271		8,585,068
FHLB advances and other borrowings	2	1,930,000		2,055,239		1,930,000		2,064,248

The following table presents the fair value and balance sheet classification of derivatives not designated as hedging instruments at June 30, 2014 and September 30, 2013:

Asset Derivatives

Liability Derivatives

June 30, 2014

September 30, 2013

June 30, 2014

September 30, 2013

Balance Sheet

Location

Fair Value

Location

Fair Value

Location

Fair Value

Location

Fair Value

(In thousands)

Interest rate contracts

Other assets

2,731

Other assets

Other liabilities

2,731

Other liabilities

Commitments to purchase MBS

AFS securities

—

AFS securities

3,188

N/A

Reconciliation of Amortized Cost to Fair Value of Available-for-Sale and Held-to-Maturity Securities

The following tables provide a reconciliation of amortized cost to fair value of available-for-sale and held-to-maturity securities as of June 30, 2014, and September 30, 2013:



	June 30, 2014
	Amortized Cost		Gross Unrealized					Fair Value		Yield
	Amortized Cost		Gains		Losses			Fair Value		Yield
	(In thousands)
Available-for-sale securities
U.S. government and agency securities due
1 to 5 years	$	111,002	$	2,834	$	(381	)	$	113,455	1.57
5 to 10 years	140,989		562		(62		)	141,489		1.55
Over 10 years	465,229		1,761		(622		)	466,368		1.56
Equity Securities
Within 1 year	500		13		—			513		1.80
1 to 5 years	100,000		1,468		—			101,468		1.90
5 to 10 years	—		—		—			—		—
Corporate bonds due
Within 1 year	—		—		—			—		—
1 to 5 years	317,452		2,562		—			320,014		0.72
5 to 10 years	113,165		2,064		(160		)	115,069		1.49
Over 10 years	50,000		—		—			50,000		3.00
Municipal bonds due
Over 10 years	20,407		2,870		—			23,277		6.45
Mortgage-backed securities
Agency pass-through certificates	1,636,366		27,896		(2,261		)	1,662,001		2.59
Other Commercial MBS	109,300		67		—			109,367		1.69
	3,064,410		42,097		(3,486		)	3,103,021		2.09
Held-to-maturity securities
Mortgage-backed securities
Agency pass-through certificates	1,583,853		6,010		(55,623		)	1,534,240		3.13
	$	4,648,263	$	48,107	$	(59,109	)	$	4,637,261	2.46	%



	September 30, 2013
	Amortized Cost		Gross Unrealized						Fair Value		Yield
	Amortized Cost		Gains		Losses				Fair Value		Yield
	(In thousands)
Available-for-sale securities
U.S. government and agency securities due
1 to 5 years	$	61,002	$	3,393		$	(252	)	$	64,143	1.98
5 to 10 years	129,219		—			(1,547		)	127,672		0.86
Over 10 years	344,571		—			(2,411		)	342,160		0.93
Equity Securities
1 to 5 years	500		11			—			511		2.17
5 to 10 years	100,000		726			—			100,726		1.80
Corporate bonds due
Within 1 year	19,500		3			—			19,503		0.49
1 to 5 years	317,190		1,980			(130		)	319,040		0.75
5 to 10 years	113,060		1,180			(768		)	113,472		1.53
Municipal bonds due
Over 10 years	20,422		2,123			—			22,545		6.45
Mortgage-backed securities
Agency pass-through certificates	1,245,400		10,270			(4,494		)	1,251,176		2.18
	2,350,864		19,686			(9,602		)	2,360,948		1.70
Mortgage-backed securities
Agency pass-through certificates	1,654,666		3,387			(75,204		)	1,582,849		3.14
	$	4,005,530	$	23,073		$	(84,806	)	$	3,943,797	2.30	%

Schedule of Unrealized Losses and Fair Value of Securities

The following tables indicate the total unrealized gross losses in the securities portfolio (shown above). The unrealized gross losses and fair value of securities as of June 30, 2014 and September 30, 2013 are also shown by the length of time that individual securities in each category have been in a continuous loss position. Management believes that the declines in fair value of these investments are not an other than temporary impairment.



June 30, 2014	Less than 12 months					12 months or more					Total
	Unrealized Gross Losses			Fair Value		Unrealized Gross Losses			Fair Value		Unrealized Gross Losses			Fair Value
	(In thousands)
Corporate bonds due	$	(98	)	$	24,903	$	(62	)	$	9,938	$	(160	)	$	34,841
U.S. government and agency securities due	(464		)	74,536		(602		)	217,016		(1,066		)	291,552
Agency pass-through certificates	(3,332		)	156,691		(54,551		)	1,434,549		(57,883		)	1,591,240
	$	(3,894	)	$	256,130	$	(55,215	)	$	1,661,503	$	(59,109	)	$	1,917,633



September 30, 2013	Less than 12 months					12 months or more					Total
	Unrealized Gross Losses			Fair Value		Unrealized Gross Losses			Fair Value		Unrealized Gross Losses			Fair Value
	(In thousands)
Corporate bonds due	$	(660	)	$	52,434	$	(238	)	$	9,763	$	(898	)	$	62,197
U.S. government and agency securities due	(4,144		)	309,109		(66		)	14,091		(4,210		)	323,200
Agency pass-through certificates	(78,291		)	1,703,948		(1,407		)	166,503		(79,698		)	1,870,451
	$	(83,095	)	$	2,065,491	$	(1,711	)	$	190,357	$	(84,806	)	$	2,255,848

- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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