Borrowings

9 Months Ended

Sep. 30, 2018

Note 17 – Borrowings

The following table presents the balances of assets sold under agreements to repurchase at September 30, 2018 and December 31, 2017.


(In thousands)	September 30, 2018		December 31, 2017
Assets sold under agreements to repurchase	$	300,116	$	390,921
Total assets sold under agreements to repurchase	$	300,116	$	390,921

The Corporation’s repurchase transactions are overcollateralized with the securities detailed in the table below. The Corporation’s repurchase agreements have a right of set-off with the respective counterparty under the supplemental terms of the master repurchase agreements. In an event of default each party has a right of set-off against the other party for amounts owed in the related agreement and any other amount or obligation owed in respect of any other agreement or transaction between them.

The following table presents information related to the Corporation’s repurchase transactions accounted for as secured borrowings that are collateralized with debt securities available-for-sale, other assets held-for-trading purposes or which have been obtained under agreements to resell. It is the Corporation’s policy to maintain effective control over assets sold under agreements to repurchase; accordingly, such securities continue to be carried on the Consolidated Statements of Financial Condition.

Repurchase agreements accounted for as secured borrowings

		September 30, 2018		December 31, 2017
			Repurchase		Repurchase
(In thousands)			liability		liability
U.S. Treasury securities
	Within 30 days	$	93,129	$	148,516
	After 30 to 90 days		19,831		87,357
	After 90 days		159,292		43,500
Total U.S. Treasury securities			272,252		279,373
Obligations of U.S. government sponsored entities
	Within 30 days		-		30,656
	After 30 to 90 days		-		19,463
	After 90 days		6,055		15,937
Total obligations of U.S. government sponsored entities			6,055		66,056
Mortgage-backed securities
	Within 30 days		12,228		31,383
Total mortgage-backed securities			12,228		31,383
Collateralized mortgage obligations
	Within 30 days		9,581		14,109
Total collateralized mortgage obligations			9,581		14,109
Total		$	300,116	$	390,921

Repurchase agreements in this portfolio are generally short-term, often overnight. As such our risk is very limited. We manage the liquidity risks arising from secured funding by sourcing funding globally from a diverse group of counterparties, providing a range of securities collateral and pursuing longer durations, when appropriate.

The following table presents information related to the Corporation’s other short-term borrowings for the periods ended September 30, 2018 and December 31, 2017.

(In thousands)	September 30, 2018		December 31, 2017
Advances with the FHLB	$	-	$	95,000
Others		1,200		1,208
Total other short-term borrowings	$	1,200	$	96,208
Note: Refer to the Corporation's 2017 Form 10-K for rates information at December 31, 2017.

During the quarter ended September 30, 2018, Popular North America, Inc. (“PNA”), a wholly-owned subsidiary of the Corporation, redeemed all outstanding capital securities issued by BanPonce Trust I (the “Trust”), a statutory trust established by PNA, along with the common securities issued by the Trust, which resulted in the concurrent extinguishment of the related junior subordinated debentures with an aggregate book value of $55 million. Refer to Note 18 for additional information on the redemption of these trust preferred securities.

Also, during the quarter ended September 30, 2018, the Corporation issued an aggregate of $300 million principal amount of its 6.125% senior notes due 2023 and recorded debt issuance costs of $6.3 million. On October 15, 2018, the Corporation used the net proceeds, together with available cash, to redeem $450 million of its outstanding 7.00% senior notes due 2019.

The following table presents the composition of notes payable at September 30, 2018 and December 31, 2017.

(In thousands)		September 30, 2018		December 31, 2017

Advances with the FHLB with maturities ranging from 2018 through 2029 paying interest at
	monthly fixed rates ranging from 0.89% to 4.19 %	$	567,031	$	572,307
Advances with the FHLB with maturing in 2019 paying interest monthly
	at a floating rate of 0.34% over the 1 month LIBOR		13,000		34,164
Advances with the FHLB with maturing in 2019 paying interest quarterly
	at a floating rate from 0.12% to 0.24% over the 3 month LIBOR		19,724		25,019
Unsecured senior debt securities with maturities ranging from 2019 through 2023 paying interest
	semiannually at fixed rates ranging from of 6.125% to 7.00%, net of debt issuance costs of $7,841		742,159		446,873
Junior subordinated deferrable interest debentures (related to trust preferred securities)
	with maturities ranging from 2033 to 2034 with fixed interest rates ranging from
	6.125% to 6.7%, net of debt issuance costs of $429		384,869		439,351
Others			17,904		18,642
Total notes payable		$	1,744,687	$	1,536,356

Note: Refer to the Corporation’s 2017 Form 10-K for rates information at December 31, 2017.

A breakdown of borrowings by contractual maturities at September 30, 2018 is included in the table below.

	Assets sold under			Short-term
(In thousands)	agreements to repurchase			borrowings	Notes payable			Total
2018	$	134,769	$	1,200	$	83,103		$	219,072
2019		165,347		-		650,159	[1]		815,506
2020		-		-		111,960			111,960
2021		-		-		21,877			21,877
2022		-		-		105,175			105,175
Later years		-		-		772,413			772,413
Total borrowings	$	300,116	$	1,200	$	1,744,687		$	2,046,003
[1] On October 15, 2018, the Corporation redeemed $450 million principal amount of its senior notes due on 2019.

At September 30, 2018 and December 31, 2017, the Corporation had FHLB borrowing facilities whereby the Corporation could borrow up to $3.4 billion and $3.9 billion, respectively, of which $600 million and $726 million, respectively, were used. In addition, at September 30, 2018 and December 31, 2017, the Corporation had placed $1.1 billion and $260 million, respectively, of the available FHLB credit facility as collateral for a municipal letter of credit to secure deposits. The FHLB borrowing facilities are collateralized with loans held-in-portfolio, and do not have restrictive covenants or callable features.

Also, at September 30, 2018, the Corporation has a borrowing facility at the discount window of the Federal Reserve Bank of New York amounting to $1.2 billion (2017 - $1.1 billion), which remained unused at September 30, 2018 and December 31, 2017. The facility is a collateralized source of credit that is highly reliable even under difficult market conditions.