Fair Value Measurements (Tables)

6 Months Ended

Mar. 31, 2016

Fair Value of Assets Measured on Recurring Basis

The following tables present the balance of assets and liabilities measured at fair value on a recurring basis.



	March 31, 2016
	Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets
Available-for-sale securities:
Equity securities	$	101,591	—		—		$	101,591
Obligations of U.S. government	—		264,544		—		264,544
Obligations of states and political subdivisions	—		27,335		—		27,335
Corporate debt securities	—		506,269		—		506,269
Mortgage-backed securities
Agency pass-through certificates	—		1,105,016		—		1,105,016
Other Commercial MBS	—		92,331		—		92,331
Total available-for-sale securities	101,591		1,995,495		—		2,097,086
Interest rate contracts	—		17,498		—		17,498
Total financial assets	$	101,591	$	2,012,993	$	—	$	2,114,584

Financial Liabilities
Interest rate contracts	$	—	$	17,498	$	—	$	17,498
Commercial loan hedge	—		2,329		—		2,329
Long term borrowing hedge	—		25,242		—		25,242
Total financial liabilities	$	—	$	45,069	$	—	$	45,069

There were no transfers between, into and/or out of Levels 1, 2 or 3 during the six months ended March 31, 2016.



	September 30, 2015
	Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets
Available-for-sale securities:
Equity securities	$	101,952	—		—		$	101,952
Obligations of U.S. government	—		482,464		—		482,464
Obligations of states and political subdivisions	—		27,123		—		27,123
Corporate debt securities	—		505,800		—		505,800
Mortgage-backed securities
Agency pass-through certificates	—		1,160,518		—		1,160,518
Other Commercial MBS	—		102,706		—		102,706
Total available-for-sale securities	101,952		2,278,611		—		2,380,563
Interest rate contracts	—		11,879		—		11,879
Total financial assets	$	101,952	$	2,290,490	$	—	$	2,392,442

Financial Liabilities
Interest rate contracts	$	—	$	11,879	$	—	$	11,879
Commercial loan hedge	—		966		—		966
Long term borrowing hedge	—		14,555		—		14,555
Total financial liabilities	$	—	$	27,400	$	—	$	27,400

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 fair value on a nonrecurring basis at March 31, 2016 and March 31, 2015, and the total gains (losses) resulting from those fair value adjustments for the six months ended March 31, 2016 and March 31, 2015. The estimated fair value measurements are shown gross of estimated selling costs.



	March 31, 2016								Three Months Ended March 31, 2016			Six Months Ended March 31, 2016
	Level 1		Level 2		Level 3		Total		Total Gains (Losses)
	(In thousands)
Impaired loans (1)	$	—	$	—	$	12,164	$	12,164	$	(1,389	)	$	(3,070	)
Real estate owned (2)	—		—		12,804		12,804		(577		)	(2,332		)
Balance at end of period	$	—	$	—	$	24,968	$	24,968	$	(1,966	)	$	(5,402	)

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

(2) The gains (losses) represent aggregate writedowns and charge-offs on REO.



	March 31, 2015								Three Months Ended March 31, 2015			Six Months Ended March 31, 2015
	Level 1		Level 2		Level 3		Total		Total Gains (Losses)
	(In thousands)
Impaired loans (1)	$	—	$	—	$	3,478	$	3,478	$	(515	)	$	(580	)
Real estate owned (2)	—		—		48,255		48,255		2,533			10,769
Balance at end of period	$	—	$	—	$	51,733	$	51,733	$	2,018		$	10,189


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


(2)	The gains (losses) represent aggregate writedowns and charge-offs on REO.

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.



		March 31, 2016				September 30, 2015
	Level in Fair Value Hierarchy	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
		(In thousands)
Financial assets
Cash and cash equivalents	1	$	276,084	$	276,084	$	284,049	$	284,049
Available-for-sale securities
Equity securities	1	101,591		101,591		101,952		101,952
Obligations of U.S. government	2	264,544		264,544		482,464		482,464
Obligations of states and political subdivisions	2	27,335		27,335		27,123		27,123
Corporate debt securities	2	506,269		506,269		505,800		505,800
Mortgage-backed securities
Agency pass-through certificates	2	1,105,016		1,105,016		1,160,518		1,160,518
Other commercial MBS	2	92,331		92,331		102,706		102,706
Total available-for-sale securities		2,097,086		2,097,086		2,380,563		2,380,563
Held-to-maturity securities	2
Mortgage-backed securities
Agency pass-through certificates	2	1,558,087		1,564,349		1,643,216		1,637,420
Total held-to-maturity securities		1,558,087		1,564,349		1,643,216		1,637,420

Loans receivable	3	9,545,322		10,059,040		9,170,634		9,667,750
FDIC indemnification asset	3	13,480		12,803		16,275		15,522
FHLB and FRB stock	2	113,187		113,187		107,198		107,198
Other assets - interest rate contracts	2	17,498		17,498		11,879		11,879

Financial liabilities
Customer accounts	2	10,543,384		9,671,338		10,631,703		10,004,290
FHLB advances	2	1,980,000		2,086,109		1,830,000		1,938,384
Other liabilities - interest rate contracts	2	17,498		17,498		11,879		11,879
Other liabilities - commercial loan hedge	2	2,329		2,329		966		966
Other liabilities - long term borrowing hedge	2	25,242		25,242		14,555		14,555

The following table presents the fair value and balance sheet classification of derivatives at March 31, 2016 and September 30, 2015:



	Asset Derivatives						Liability Derivatives
	March 31, 2016			September 30, 2015			March 31, 2016			September 30, 2015
	Balance Sheet			Balance Sheet			Balance Sheet			Balance Sheet
	Location	Fair Value		Location	Fair Value		Location	Fair Value		Location	Fair Value
	(In thousands)
Interest rate contracts	Other assets	$	17,498	Other assets	$	11,879	Other liabilities	$	17,498	Other liabilities	$	11,879
Commercial loan hedge	Other assets	—		Other assets	—		Other liabilities	2,329		Other liabilities	966
Long term borrowing hedge	Other assets	—		Other assets	—		Other liabilities	25,242		Other liabilities	14,555
		$	17,498		$	11,879		$	45,069		$	27,400

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.



	March 31, 2016
	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	$	44,763	$	1,467	$	(257	)	$	45,973	2.72	%
5 to 10 years	50,399		—		(1,726		)	48,673		1.04
Over 10 years	173,258		—		(3,361		)	169,897		1.06
Equity Securities
Within 1 year	500		19		—			519		1.80
1 to 5 years	99,922		1,150		—			101,072		1.90
Corporate bonds due
Within 1 year	274,957		258		—			275,215		1.02
1 to 5 years	91,505		355		(113		)	91,747		1.85
5 to 10 years	89,953		1,167		(2,787		)	88,333		2.00
Over 10 years	50,000		974		—			50,974		3.00
Municipal bonds due
1 to 5 years	2,300		8		—			2,308		1.23
5 to 10 years	1,319		34		—			1,353		2.05
Over 10 years	20,372		3,302		—			23,674		6.45
Mortgage-backed securities
Agency pass-through certificates	1,093,626		15,593		(4,202		)	1,105,017		2.58
Other Commercial MBS	92,542		260		(471		)	92,331		1.73
	2,085,416		24,587		(12,917		)	2,097,086		2.13
Held-to-maturity securities
Mortgage-backed securities
Agency pass-through certificates	1,558,087		12,358		(6,096		)	1,564,349		3.19
	$	3,643,503	$	36,945	$	(19,013	)	$	3,661,435	2.58	%



	September 30, 2015
	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	$	105,065	$	1,923		$	(274	)	$	106,714	1.74	%
5 to 10 years	119,071		35			(1,247		)	117,859		1.54
Over 10 years	262,832		—			(4,941		)	257,891		1.23
Equity Securities
Within 1 year	500		17			—			517		1.80
1 to 5 years	99,922		1,513			—			101,435		1.90
Corporate bonds due
Within 1 year	24,787		191			—			24,978		0.53
1 to 5 years	311,435		1,190			(58		)	312,567		0.88
5 to 10 years	100,000		876			(3,524		)	97,352		1.47
Over 10 years	69,950		953			—			70,903		3.00
Municipal bonds due
1 to 5 years	2,285		8			—			2,293		1.23
5 to 10 years	1,303		7			—			1,310		2.05
Over 10 years	20,382		3,138			—			23,520		6.45
Mortgage-backed securities
Agency pass-through certificates	1,144,787		18,222			(2,491		)	1,160,518		2.48
Other Commercial MBS	103,131		85			(510		)	102,706		1.51
	2,365,450		28,158			(13,045		)	2,380,563		1.97
Held-to-maturity securities
Mortgage-backed securities
Agency pass-through certificates	1,643,216		10,516			(16,312		)	1,637,420		3.19
	$	4,008,666	$	38,674		$	(29,357	)	$	4,017,983	2.46	%

Schedule of Unrealized Losses and Fair Value of Securities

The following tables show the unrealized gross losses and fair value of securities as of March 31, 2016 and September 30, 2015, by length of time that individual securities in each category have been in a continuous loss position. The decline in fair value is attributable to changes in interest rates. Because the Company does not intend to sell these securities and does not consider it more likely than not that it will be required to sell these securities before the recovery of amortized cost basis, which may be upon maturity, the Company does not consider these investments to be other than temporarily impaired.



March 31, 2016	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	$	(1,001	)	$	24,000	$	(1,899	)	$	33,101	$	(2,900	)	$	57,101
U.S. government and agency securities due	(3,136		)	138,259		(2,208		)	115,518		(5,344		)	253,777
Agency pass-through certificates	(1,475		)	308,151		(9,294		)	1,217,456		(10,769		)	1,525,607
	$	(5,612	)	$	470,410	$	(13,401	)	$	1,366,075	$	(19,013	)	$	1,836,485



September 30, 2015	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	$	(183	)	$	72,862	$	(3,399	)	$	46,601	$	(3,582	)	$	119,463
U.S. government and agency securities due	(5,010		)	336,243		(1,452		)	57,344		(6,462		)	393,587
Agency pass-through certificates	(1,036		)	169,541		(18,277		)	1,193,463		(19,313		)	1,363,004
	$	(6,229	)	$	578,646	$	(23,128	)	$	1,297,408	$	(29,357	)	$	1,876,054