FAIR VALUES OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Assets Measured on a Recurring Basis

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of the dates indicated:



			Fair Value Measurement Level
($ in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2019
Assets
Securities available-for-sale:
SBA loan pools securities	$	820	$	—	$	820	$	—
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities	434,461		—		434,461		—
Non-agency residential mortgage-backed securities	331		—		331		—
Collateralized loan obligations	1,035,691		—		1,035,691		—
Loans held-for-sale, carried at fair value	25,191		—		2,122		23,069
Derivative assets:
Interest rate swaps and caps ⁽¹⁾	2,309		—		2,309		—
Foreign exchange contracts ⁽¹⁾	57		—		57		—
Liabilities
Derivative liabilities:
Interest rate swaps and caps ⁽²⁾	2,497		—		2,497		—
Foreign exchange contracts ⁽²⁾	32		—		32		—
December 31, 2018
Assets
Securities available-for-sale:
SBA loan pools securities	$	910	$	—	$	910	$	—
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities	437,442		—		437,442		—
Non-agency residential mortgage-backed securities	427		—		427		—
Non-agency commercial mortgage-backed securities	132,199		—		132,199		—
Collateralized loan obligations	1,421,522		—		1,421,522		—
Loans held-for-sale, carried at fair value ⁽³⁾	27,180		—		2,140		25,040
Derivative assets:
Interest rate swaps and caps ⁽¹⁾	1,534		—		1,534		—
Liabilities
Derivative liabilities:
Interest rate swaps and caps ⁽²⁾	1,600		—		1,600		—


(1)	Included in Other Assets in the Consolidated Statements of Financial Condition.


(2)	Included in Accrued Expenses and Other Liabilities in the Consolidated Statements of Financial Condition.


(3)	Includes loans held-for-sale carried at fair value of $19.5 million ($2.1 million at Level 2 and $17.4 million at Level 3) of discontinued operations, which are included in Assets of Discontinued Operations in the Consolidated Statements of Financial Condition.

Fair Value Liabilities Measured on a Recurring Basis

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of the dates indicated:



			Fair Value Measurement Level
($ in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2019
Assets
Securities available-for-sale:
SBA loan pools securities	$	820	$	—	$	820	$	—
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities	434,461		—		434,461		—
Non-agency residential mortgage-backed securities	331		—		331		—
Collateralized loan obligations	1,035,691		—		1,035,691		—
Loans held-for-sale, carried at fair value	25,191		—		2,122		23,069
Derivative assets:
Interest rate swaps and caps ⁽¹⁾	2,309		—		2,309		—
Foreign exchange contracts ⁽¹⁾	57		—		57		—
Liabilities
Derivative liabilities:
Interest rate swaps and caps ⁽²⁾	2,497		—		2,497		—
Foreign exchange contracts ⁽²⁾	32		—		32		—
December 31, 2018
Assets
Securities available-for-sale:
SBA loan pools securities	$	910	$	—	$	910	$	—
U.S. government agency and U.S. government sponsored enterprise residential mortgage-backed securities	437,442		—		437,442		—
Non-agency residential mortgage-backed securities	427		—		427		—
Non-agency commercial mortgage-backed securities	132,199		—		132,199		—
Collateralized loan obligations	1,421,522		—		1,421,522		—
Loans held-for-sale, carried at fair value ⁽³⁾	27,180		—		2,140		25,040
Derivative assets:
Interest rate swaps and caps ⁽¹⁾	1,534		—		1,534		—
Liabilities
Derivative liabilities:
Interest rate swaps and caps ⁽²⁾	1,600		—		1,600		—


(1)	Included in Other Assets in the Consolidated Statements of Financial Condition.


(2)	Included in Accrued Expenses and Other Liabilities in the Consolidated Statements of Financial Condition.


(3)	Includes loans held-for-sale carried at fair value of $19.5 million ($2.1 million at Level 2 and $17.4 million at Level 3) of discontinued operations, which are included in Assets of Discontinued Operations in the Consolidated Statements of Financial Condition.

Reconciliation of Assets Measured at Fair Value on Recurring Basis

The following table presents a reconciliation of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3), on a consolidated operations basis, for the periods indicated:



	Three Months Ended March 31,
($ in thousands)	2019			2018
Loans repurchased from GNMA Loan Pools ⁽¹⁾
Balance at beginning of period	$	25,040		$	98,940
Total gains or losses (realized/unrealized):
Included in earnings—fair value adjustment	3			(6		)
Additions	—			24,620
Sales, settlements, and other	(1,974		)	(80,592		)
Balance at end of period	$	23,069		$	42,962

(1)

Includes loans repurchased from GNMA Loan Pools of discontinued operations, which is included in Assets of Discontinued Operations in the Consolidated Statements of Financial Condition, of $17.3 million and $32.3 million, respectively, for the three months ended March 31, 2019 and 2018 in balance at beginning of period, and zero and $24.0 million, respectively, for the three months ended March 31, 2019 and 2018 in balance at end of period.

Fair value option of certain assets

The following table presents changes in fair value related to initial measurement and subsequent changes in fair value included in earnings for these assets and liabilities measured at fair value for the periods indicated:



	Three Months Ended March 31,
($ in thousands)	2019		2018
Net gains (losses) from fair value changes
Net gain (loss) on sale of loans (continuing operations)	$	1	$	(15	)
Net revenue on mortgage banking activities (discontinued operations)	—		8

The following table presents the fair value and aggregate principal balance of certain assets, on a consolidated operations basis, under the fair value option:



	March 31, 2019							December 31, 2018
($ in thousands)	Fair Value		Unpaid Principal Balance		Difference			Fair Value		Unpaid Principal Balance		Difference
Loans held-for-sale, carried at fair value in continuing operations:
Total loans	$	25,191	$	25,932	$	(741	)	$	7,690	$	7,906	$	(216	)
Non-accrual loans ⁽¹⁾	9,217		9,350		(133		)	2,427		2,538		(111		)
Loans held-for-sale, carried at fair value in discontinued operations:
Total loans	$	—	$	—	$	—		$	19,490	$	20,027	$	(537	)
Non-accrual loans ⁽²⁾	—		—		—			8,430		8,496		(66		)


(1)	Includes loans guaranteed by the U.S. government of $8.0 million and $1.6 million, respectively, at March 31, 2019 and December 31, 2018.


(2)	Includes loans guaranteed by the U.S. government of zero and $7.6 million, respectively, at March 31, 2019 and December 31, 2018.

Schedule of Assets and Liabilities Measured on Non-recurring Basis

The following table presents the Company’s financial assets and liabilities measured at fair value on a non-recurring basis as of the dates indicated:



			Fair Value Measurement Level
($ in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2019
Assets
Impaired loans:
Single family residential mortgage	$	674	$	—	$	—	$	674
SBA	765		—		—		765
December 31, 2018
Assets
Impaired loans:
SBA	$	226	—		—		$	226

Schedule of Gains and (Losses) Recognized on Assets Measured at Fair Value on Non-recurring Basis

The following table presents the gains (losses) recognized on assets measured at fair value on a non-recurring basis for the periods indicated:



	Three Months Ended March 31,
($ in thousands)	2019			2018
Impaired loans:
Single family residential mortgage	$	(490	)	$	(115	)
Commercial and industrial	—			(60		)
SBA	(54		)	(381		)
Other consumer	(88		)	(141		)

Carrying Amounts and Estimated Fair Values of Financial Instruments

nts

The following table presents the carrying amounts and estimated fair values of financial assets and liabilities, on a consolidated operations basis, as of the dates indicated:



	Carrying Amount		Fair Value Measurement Level
($ in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total
March 31, 2019
Financial assets
Cash and cash equivalents	$	304,705	$	304,705	$	—	$	—	$	304,705
Securities available-for-sale	1,471,303		—		1,471,303		—		1,471,303
Federal Home Loan Bank and other bank stock	55,794		—		55,794		—		55,794
Loans held-for-sale	25,191		—		2,122		23,069		25,191
Loans and leases receivable, net of ALLL	7,493,315		—		—		7,360,071		7,360,071
Accrued interest receivable	36,468		36,468		—		—		36,468
Derivative assets	2,366		—		2,366		—		2,366
Financial liabilities
Deposits	7,724,932		—		—		7,536,887		7,536,887
Advances from Federal Home Loan Bank	935,000		—		938,536		—		938,536
Long term debt	173,203		—		173,483		—		173,483
Derivative liabilities	2,529		—		2,529		—		2,529
Accrued interest payable	16,726		16,726		—		—		16,726
December 31, 2018
Financial assets
Cash and cash equivalents	$	391,592	$	391,592	$	—	$	—	$	391,592
Securities available-for-sale	1,992,500		—		1,992,500		—		1,992,500
Federal Home Loan Bank and other bank stock	68,094		—		68,094		—		68,094
Loans held-for-sale⁽¹⁾	27,606		—		2,566		25,040		27,606
Loans and leases receivable, net of allowance	7,638,681		—		—		7,513,910		7,513,910
Accrued interest receivable	38,807		38,807		—		—		38,807
Derivative assets	1,534		—		1,534		—		1,534
Financial liabilities
Deposits	7,916,644		—		—		7,689,324		7,689,324
Advances from Federal Home Loan Bank	1,520,000		—		1,517,761		—		1,517,761
Long-term debt	173,174		—		174,059		—		174,059
Derivative liabilities	1,600		—		1,600		—		1,600
Accrued interest payable	13,253		13,253		—		—		13,253


(1)	Includes loans held-for-sale carried at fair value of $19.5 million ($2.1 million at Level 2 and $17.4 million at Level 3) of discontinued operations.