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INVESTMENT SECURITIES (Tables)

9 Months Ended

Sep. 30, 2018

Other Than Temporary Impairment Credit Losses Recognized In Earnings [Line Items]

Available-for-Sale Investments' Fair Value and Gross Unrealized Losses

The following tables show the Corporation’s available-for-sale investments’ fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of September 30, 2018 and December 31, 2017. The tables also include debt securities for which an OTTI was recognized and only the amount related to a credit loss was recognized in earnings. For unrealized losses for which OTTI was recognized, the related credit loss was charged against the amortized cost basis of the debt security.

		As of September 30, 2018
		Less than 12 months						12 months or more						Total
					Unrealized						Unrealized						Unrealized
		Fair Value			Losses			Fair Value			Losses			Fair Value			Losses
	(In thousands)
	Debt securities:
	Puerto Rico-government obligations	$	-		$	-		$	2,798		$	1,313		$	2,798		$	1,313
	U.S. Treasury and U.S. government
	agenciesʼ obligations		251,555			5,585			366,761			6,280			618,316			11,865
	MBS:
	FNMA		342,334			6,489			369,408			19,870			711,742			26,359
	FHLMC		183,780			3,508			173,733			9,655			357,513			13,163
	GNMA		34,354			491			32,999			1,253			67,353			1,744
	Collateralized mortgage obligations
	issued or guaranteed by
	FHLMC and GNMA		31,963			91			-			-			31,963			91
	Other mortgage pass-through
	trust certificates		-			-			14,571			5,467			14,571			5,467
		$	843,986		$	16,164		$	960,270		$	43,838		$	1,804,256		$	60,002
		As of December 31, 2017
		Less than 12 months						12 months or more						Total
					Unrealized						Unrealized						Unrealized
		Fair Value			Losses			Fair Value			Losses			Fair Value			Losses
(In thousands)
Debt securities:
Puerto Rico-government obligations		$	-		$	-		$	2,695		$	1,277		$	2,695		$	1,277
U.S. Treasury and U.S. government
agenciesʼ obligations			136,459			494			362,050			4,085			498,509			4,579
MBS:
FNMA			189,699			1,705			274,963			5,623			464,662			7,328
FHLMC			91,174			590			166,331			4,326			257,505			4,916
GNMA			39,145			334			-			-			39,145			334
Other mortgage pass-through
trust certificates			-			-			17,060			5,731			17,060			5,731
Equity securities (1)			-			-			407			6			407			6
		$	456,477		$	3,123		$	823,506		$	21,048		$	1,279,983		$	24,171
(1)	As of January 1, 2018, the Corporation adopted ASU 2016-01, resulting in the reclassification of $0.4 million in equity securities from available-for-sale investment securities to other investment securities.

Available for sale Securities [Member]

Other Than Temporary Impairment Credit Losses Recognized In Earnings [Line Items]

Investment Securities Available for Sale

The amortized cost, non-credit loss component of OTTI recorded in OCI, gross unrealized gains and losses recorded in OCI, estimated fair value, and weighted-average yield of investment securities available for sale by contractual maturities as of September 30, 2018 and December 31, 2017 were as follows:

		September 30, 2018
		Amortized cost			Noncredit Loss Component of OTTI Recorded in OCI									Fair value
								Gross Unrealized									Weighted-
								gains			losses						average yield%
(Dollars in thousands)
U.S. Treasury securities:
	Due within one year	$	7,481		$	-		$	-		$	55		$	7,426		1.29
U.S. government-sponsored
agencies obligations:
Due within one year			156,575			-			-			1,584			154,991		1.25
After 1 to 5 years			236,368			-			-			4,480			231,888		1.82
After 5 to 10 years			191,119			-			47			5,505			185,661		2.94
After 10 years			43,638			-			-			241			43,397		2.50
Puerto Rico government
obligations:
After 5 to 10 years			4,013			-			129			-			4,142		3.14
After 10 years			4,111			-			-			1,313			2,798		6.97
United States and Puerto Rico
government obligations			643,305			-			176			13,178			630,303		2.10
Mortgage-backed securities (“MBS”):
Freddie Mac (“FHLMC”) certificates:
After 5 to 10 years			96,598			-			8			3,527			93,079		2.09
After 10 years			274,233			-			-			9,636			264,597		2.50
			370,831			-			8			13,163			357,676		2.39
Ginnie Mae (“GNMA”) certificates:
After 1 to 5 years			160			-			2			-			162		3.52
After 5 to 10 years			65,411			-			305			714			65,002		2.89
After 10 years			122,975			-			2,962			1,030			124,907		3.93
			188,546			-			3,269			1,744			190,071		3.57
Fannie Mae (“FNMA”) certificates:
Due within one year			379			-			8			-			387		1.91
After 1 to 5 years			25,872			-			-			468			25,404		2.75
After 5 to 10 years			191,965			-			-			6,982			184,983		2.22
After 10 years			557,882			-			1,055			18,909			540,028		2.65
			776,098			-			1,063			26,359			750,802		2.55
Collateralized mortgage obligations
guaranteed by the FHLMC
and GNMA:
After 1 to 5 years			7,462			-			4			10			7,456		2.91
After 10 years			59,575			-			348			81			59,842		3.07
			67,037			-			352			91			67,298		3.05
Other mortgage pass-through
trust certificates:
After 10 years			20,038			5,467			-			-			14,571		4.57
Total MBS			1,422,550			5,467			4,692			41,357			1,380,418		2.70
Other
After 1 to 5 years			500			-			-			-			500		2.96
Total investment securities
available for sale		$	2,066,355		$	5,467		$	4,868		$	54,535		$	2,011,221		2.51

		December 31, 2017
		Amortized cost			Noncredit Loss Component of OTTI Recorded in OCI			Gross Unrealized						Fair value
																	Weighted-
								gains			losses						average yield%
(Dollars in thousands)
U.S. Treasury securities:
	After 1 to 5 years	$	7,458		$	-		$	-		$	57		$	7,401		1.29
U.S. government-sponsored
agencies obligations:
	Due within one year		122,471			-			-			319			122,152		1.06
	After 1 to 5 years		309,472			-			28			3,735			305,765		1.42
	After 5 to 10 years		133,451			-			117			319			133,249		2.72
	After 10 years		40,769			-			1			149			40,621		1.84
Puerto Rico government
obligations:
	After 5 to 10 years		4,071			-			47			-			4,118		3.14
	After 10 years		3,972			-			-			1,277			2,695		6.97
United States and Puerto Rico
government obligations			621,664			-			193			5,856			616,001		1.70
MBS:
FHLMC certificates:
	After 5 to 10 years		18,658			-			14			63			18,609		2.14
	After 10 years		297,733			-			217			4,853			293,097		2.23
			316,391			-			231			4,916			311,706		2.23
GNMA certificates:
	After 1 to 5 years		81			-			1			-			82		3.23
	After 5 to 10 years		69,661			-			1,244			-			70,905		3.05
	After 10 years		145,067			-			5,910			334			150,643		3.81
			214,809			-			7,155			334			221,630		3.56
FNMA certificates:
	After 1 to 5 years		20,831			-			294			109			21,016		2.69
	After 5 to 10 years		49,934			-			-			818			49,116		1.83
	After 10 years		613,129			-			3,180			6,401			609,908		2.43
			683,894			-			3,474			7,328			680,040		2.39
Collateralized mortgage
	obligations issued or guaranteed
	by the FHLMC and GNMA:
	After 1 to 5 years		5,918			-			14			-			5,932		2.21
	After 5 to 10 years		2,556			-			11			-			2,567		2.23
	After 10 years		35,331			-			231			-			35,562		2.22
			43,805			-			256			-			44,061		2.22
Other mortgage pass-through
trust certificates:
	After 10 years		22,791			5,731			-			-			17,060		2.44
Total MBS			1,281,690			5,731			11,116			12,578			1,274,497		2.54
Other
	Due within one year		100			-			-			-			100		1.48
Equity securities (1)			424			-			-			6			418		2.11
Total investment securities
	available for sale	$	1,903,878		$	5,731		$	11,309		$	18,440		$	1,891,016		2.27
(1)	As of January 1, 2018, the Corporation adopted ASU 2016-01, resulting in the reclassification of $0.4 million in equity securities from available-for-sale investment securities to other investment securities.

Roll-Forward of Credit Losses on Debt Securities Held by Corporation

The Corporation recorded OTTI losses on available-for-sale debt securities as follows:

		Quarter Ended						Nine-Month Period Ended
		September 30,						September 30,
		2018			2017			2018			2017
(In thousands)
Total OTTI losses		$	-		$	-		$	-		$	(12,231)
Portion of OTTI recognized in OCI			-			-			-			-
Net impairment losses recognized in earnings (1)		$	-		$	-		$	-		$	(12,231)
(1)	Credit losses on Puerto Rico government debt securities, recorded in the first quarter of 2017.

The following tables summarize the roll-forward of credit losses on debt securities held by the Corporation for which a portion of an OTTI is recognized in OCI:

Cumulative OTTI credit losses recognized in earnings on securities still held

Credit impairments

Credit loss

June 30,

recognized in earnings on

reductions for

September 30,

2018

securities that have been

securities sold

2018

Balance

previously impaired

during the period

Balance

(In thousands)

Available-for-sale securities

Private label MBS

$

6,792

$

-

$

-

$

6,792

Cumulative OTTI credit losses recognized in earnings on securities still held

Credit impairments

Credit loss

December 31,

recognized in earnings on

reductions for

September 30,

2017

securities that have been

securities sold

2018

Balance

previously impaired

during the period

Balance

(In thousands)

Available-for-sale securities

Private label MBS

$

6,792

$

-

$

-

$

6,792

		Cumulative OTTI credit losses recognized in earnings on securities still held
					Credit impairments
		June 30,			recognized in earnings			Credit loss reductions			September 30,
		2017			on securities that have been			for securities sold			2017
		Balance			previously impaired			during the period			Balance
(In thousands)
Available-for-sale securities
Private label MBS		$	6,792		$	-		$	-		$	6,792

		Cumulative OTTI credit losses recognized in earnings on securities still held
					Credit impairments
		December 31,			recognized in earnings			Credit loss reductions			September 30,
		2016			on securities that have been			for securities sold			2017
		Balance			previously impaired			during the period			Balance
(In thousands)
Available-for-sale securities
Puerto Rico government obligations		$	22,189		$	12,231		$	(34,420)		$	-
Private label MBS			6,792			-			-			6,792
Total OTTI credit losses for available-for-sale
debt securities		$	28,981		$	12,231		$	(34,420)		$	6,792

Held-to-maturity Securities [Member]

Other Than Temporary Impairment Credit Losses Recognized In Earnings [Line Items]

Investment Securities Available for Sale

The amortized cost, gross unrecognized gains and losses, estimated fair value, weighted-average yield and contractual maturities of investment securities held to maturity as of September 30, 2018 and December 31, 2017 were as follows:

		September 30, 2018
		Amortized cost										Fair value
						Gross Unrecognized
						gains			losses						Weighted- average yield%
Puerto Rico Municipal Bonds:
	After 1 to 5 years	$	6,096			$	-		$	364		$	5,732		4.73
	After 5 to 10 years		53,006				-			3,374			49,632		5.94
	After 10 years		85,697				-			9,358			76,339		5.78
Total investment securities
	held to maturity	$	144,799			$	-		$	13,096		$	131,703		5.79

		December 31, 2017
		Amortized cost									Fair value
					Gross Unrecognized
					gains			losses						Weighted- average yield%
Puerto Rico Municipal Bonds:
	After 1 to 5 years	$	3,853		$	-		$	173		$	3,680		5.38
	After 5 to 10 years		39,523			-			3,048			36,475		5.28
	After 10 years		107,251			-			16,374			90,877		4.93
Total investment securities
	held to maturity	$	150,627		$	-		$	19,595		$	131,032		5.03

	As of September 30, 2018
	Less than 12 months						12 months or more						Total
				Unrecognized						Unrecognized						Unrecognized
	Fair Value			Losses			Fair Value			Losses			Fair Value			Losses
		(In thousands)
Debt securities:
Puerto Rico Municipal Bonds	$	-		$	-		$	131,703		$	13,096		$	131,703		$	13,096
	As of December 31, 2017
	Less than 12 months						12 months or more						Total
				Unrecognized						Unrecognized						Unrecognized
	Fair Value			Losses			Fair Value			Losses			Fair Value			Losses
		(In thousands)
Debt securities:
Puerto Rico Municipal Bonds	$	-		$	-		$	131,032		$	19,595		$	131,032		$	19,595

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