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Fair Value (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis 1 [Table Text Block]

Assets and liabilities measured at fair value on a recurring and non-recurring basis are summarized below:

	June 30, 2016
	Fair Value Measurements
	Level 1			Level 2			Level 3			Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-		$	664,302		$	-		$	664,302
Trading securities		-			348			-			348
Money market investments		5,740			-			-			5,740
Derivative assets		-			1,739			187			1,926
Servicing assets		-			-			7,932			7,932
Derivative liabilities		-			(5,413)			(181)			(5,594)
	$	5,740		$	660,976		$	7,938		$	674,654
Non-recurring fair value measurements:
Impaired commercial loans	$	-		$	-		$	219,393		$	219,393
Foreclosed real estate		-			-			51,220			51,220
Other repossessed assets		-			-			3,866			3,866
	$	-		$	-		$	274,479		$	274,479

	December 31, 2015
	Fair Value Measurements
	Level 1			Level 2			Level 3			Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-		$	974,609		$	-		$	974,609
Trading securities		-			288			-			288
Money market investments		4,699			-			-			4,699
Derivative assets		-			1,855			1,170			3,025
Servicing assets		-			-			7,455			7,455
Derivative liabilities		-			(6,162)			(1,095)			(7,257)
	$	4,699		$	970,590		$	7,530		$	982,819
Non-recurring fair value measurements:
Impaired commercial loans	$	-		$	-		$	235,767		$	235,767
Foreclosed real estate		-			-			58,176			58,176
Other repossessed assets		-			-			6,226			6,226
	$	-		$	-		$	300,169		$	300,169

The table below presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the quarters and six-month periods ended June 30, 2016 and 2015:

	Quarter Ended June 30, 2016
	Derivative						Derivative
	asset						liability
	(S&P						(S&P
	Purchased				Servicing		Embedded
Level 3 Instruments Only	Options)				assets		Options)			Total
Balance at beginning of period	$	772		$	7,819		$	(746)		$	7,845
Gains (losses) included in earnings		(585)			-			557			(28)
New instruments acquired		-			717			-			717
Principal repayments		-			(121)			-			(121)
Amortization		-			-			8			8
Changes in fair value of servicing assets		-			(483)			-			(483)
Balance at end of period	$	187		$	7,932		$	(181)		$	7,938
	Six-Month Period Ended June 30, 2016
	Derivative							Derivative
	asset							liability
	(S&P							(S&P
	Purchased				Servicing			Embedded
Level 3 Instruments Only	Options)				assets			Options)			Total
Balance at beginning of period	$	1,171		$	7,455		$	(1,095)		$	7,531
Gains (losses) included in earnings		(984)			-			886			(98)
New instruments acquired		-			1,275			-			1,275
Principal repayments		-			(225)			-			(225)
Amortization		-			-			28			28
Changes in fair value of servicing assets		-			(573)			-			(573)
Balance at end of period	$	187		$	7,932		$	(181)		$	7,938
	Quarter Ended June 30, 2015
	Derivative							Derivative
	asset							liability
	(S&P							(S&P
	Purchased				Servicing			Embedded
Level 3 Instruments Only	Options)				assets			Options)			Total
Balance at beginning of period	$	3,734		$	12,164		$	(3,617)		$	12,281
(Losses) included in earnings		(1,596)			-			1,517			(79)
Sale of mortgage servicing rights held-for-sale		-			(6,985)			-			(6,985)
Changes due to payments on loans		-			(313)			-			(313)
New instruments acquired		-			1,529			-			1,529
Changes in fair value related to price of MSRs held for sale		-			(835)			-			(835)
Amortization		-			-			56			56
Changes in fair value of servicing assets		-			231			-			231
Balance at end of period	$	2,138		$	5,791		$	(2,044)		$	5,885

Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Table Text Block]

The table below presents quantitative information for all assets and liabilities measured at fair value on a recurring and non-recurring basis using significant unobservable inputs (Level 3) at June 30, 2016:

		June 30, 2016
		Fair Value			Valuation Technique		Unobservable Input		Range
		(In thousands)
Derivative assets (S&P Purchased Options)		$	187		Option pricing model		Implied option volatility		41.87%
							Counterparty credit risk (based on 5-year credit default swap ("CDS") spread)		79.96%-89.03%
Servicing assets		$	7,932		Cash flow valuation		Constant prepayment rate		4.41% - 11.40%
							Discount rate		10.00% - 12.00%
Derivative liability (S&P Embedded Options)		$	(181)		Option pricing model		Implied option volatility		41.87%
							Counterparty credit risk (based on 5-year CDS spread)		79.96%-89.03%
Collateral dependant impaired loans		$	28,558		Fair value of property or collateral		Appraised value less disposition costs		29.20% - 43.20%
Puerto Rico Electric Power Authority line of credit, net		$	183,020		Cash flow valuation		Discount rate		7.25%
Other non-collateral dependant impaired loans		$	7,814		Cash flow valuation		Discount rate		4.25%-10.50%
Foreclosed real estate		$	51,220		Fair value of property or collateral		Appraised value less disposition costs		29.20% - 43.20%
Other repossessed assets		$	3,866		Fair value of property or collateral		Appraised value less disposition costs		29.20% - 43.20%

Fair Value By Balance Sheet Grouping [Text Block]

The estimated fair value and carrying value of the Company’s financial instruments at June 30, 2016 and December 31, 2015 is as follows:

	June 30,						December 31,
	2016						2015
	Fair			Carrying			Fair			Carrying
	Value			Value			Value			Value
	(In thousands)
Level 1
Financial Assets:
Cash and cash equivalents	$	517,048		$	517,048		$	536,709		$	536,709
Restricted cash		3,030			3,030			3,349			3,349
Level 2
Financial Assets:
Trading securities		348			348			288			288
Investment securities available-for-sale		664,302			664,302			974,609			974,609
Investment securities held-to-maturity		643,530			635,399			614,679			620,189
Federal Home Loan Bank (FHLB) stock		19,838			19,838			20,783			20,783
Other investments		3			3			3			3
Derivative assets		1,739			1,739			1,855			1,855
Financial Liabilities:
Derivative liabilities		5,413			5,413			6,162			6,162
Level 3
Financial Assets:
Total loans (including loans held-for-sale)		4,163,769			4,373,617			4,101,219			4,434,213
Derivative assets		187			187			1,170			1,170
FDIC indemnification asset		11,064			18,426			17,786			22,599
Accrued interest receivable		20,009			20,009			20,637			20,637
Servicing assets		7,932			7,932			7,455			7,455
Accounts receivable and other assets		42,243			42,243			42,786			42,786
Financial Liabilities:
Deposits		4,633,864			4,643,873			4,705,878			4,715,764
Securities sold under agreements to repurchase		630,933			626,109			955,859			934,691
Advances from FHLB		308,583			306,480			335,812			332,476
Other borrowings		2,599			1,753			2,593			1,734
Subordinated capital notes		98,944			102,983			94,940			102,633
Accrued expenses and other liabilities		88,930			88,930			92,935			92,935
Derivative liabilities embedded in deposits		181			181			1,095			1,095

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- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
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Tabular disclosure of the inputs and valuation techniques used to measure fair value, and a discussion of changes in valuation techniques and related inputs, if any, applied during the period to each separate class of assets, liabilities, and financial instruments classified in shareholders' equity that are measured on a recurring and/or nonrecurring basis.

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

+ References

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