Borrowings

9 Months Ended

Sep. 30, 2015

NOTE 11 — BORROWINGS AND RELATED INTEREST

Securities Sold under Agreements to Repurchase

At September 30, 2015, securities underlying agreements to repurchase were delivered to, and are being held by, the counterparties with whom the repurchase agreements were transacted. The counterparties have agreed to resell to the Company the same or similar securities at the maturity of these agreements.

At September 30, 2015 and December 31, 2014, securities sold under agreements to repurchase (classified by counterparty), excluding accrued interest in the amount of $2.1 million and $2.3 million, respectively, were as follows:

	September 30,				December 31,
	2015				2014
			Fair Value of				Fair Value of
	Borrowing		Underlying		Borrowing		Underlying
	Balance		Collateral		Balance		Collateral
	(In thousands)
JP Morgan Chase Bank NA		328,532		354,353		307,816		328,198
Credit Suisse Securities (USA) LLC		670,000		745,025		670,000		760,327
Total	$	998,532	$	1,099,378	$	977,816	$	1,088,525

The following table shows a summary of the Company’s repurchase agreements and their terms, excluding accrued interest in the amount of $2.1 million, at September 30, 2015:

				Weighted-
		Borrowing		Average		Maturity
Year of Maturity		Balance		Coupon	Settlement Date	Date
		(In thousands)
2015	$		57,400	0.500%	8/20/2015	10/1/2015
			31,132	0.470%	9/22/2015	10/22/2015

2016			170,000	1.500%	12/6/2012	12/8/2016
			240,000	0.950%	12/10/2012	9/30/2016

2017			500,000	4.780%	3/2/2007	3/2/2017
		$	998,532	2.921%

The following table presents the repurchase liability associated with the repurchase agreement transactions (excluding accrued interest) by maturity. Also, it includes the carrying value and approximate market value of collateral (excluding accrued interest) at September 30, 2015 and December 31, 2014. The information excludes repurchase agreement transactions which were collateralized with cash.

	September 30, 2015
					Market Value of Underlying Collateral

			Weighted		FNMA and
	Repurchase		Average		FHLMC		GNMA
	Liability		Rate		Certificates		Certificates		Total
	(Dollars in thousands)
Less than 90 days		88,532		0.49%		95,023		-		95,023
Over 90 days		910,000		3.16%		1,001,926		2,429		1,004,355
Total	$	998,532		2.92%	$	1,096,949	$	2,429	$	1,099,378

	December 31, 2014
					Market Value of Underlying Collateral

			Weighted		FNMA and
	Repurchase		Average		FHLMC		GNMA
	Liability		Rate		Certificates		Certificates		Total
	(Dollars in thousands)
Less than 90 days	$	52,816		0.39%	$	56,066	$	-	$	56,066
Over 90 days		925,000		2.83%		1,031,206		1,253		1,032,459

Total	$	977,816		2.89%	$	1,087,272	$	1,253	$	1,088,525

Advances from the Federal Home Loan Bank of New York

Advances are received from the Federal Home Loan Bank of New York (the “FHLB-NY”) under an agreement whereby the Company is required to maintain a minimum amount of qualifying collateral with a fair value of at least 110% of the outstanding advances. At September 30, 2015 and December 31, 2014, these advances were secured by mortgage and commercial loans amounting to $1.1 billion and $1.2 billion, respectively. Also, at September 30, 2015 and December 31, 2014, the Company had an additional borrowing capacity with the FHLB-NY of $600.4 million and $606.6 million, respectively. At September 30, 2015 and December 31, 2014, the weighted average remaining maturity of FHLB’s advances was 6.9 months and 8.8 months, respectively. The original terms of these advances range between one day and seven years, and the FHLB-NY does not have the right to exercise put options at par on any advances outstanding as of September 30, 2015.

The following table shows a summary of these advances and their terms, excluding accrued interest in the amount of $343 thousand, at September 30, 2015:

			Weighted-
		Borrowing	Average		Maturity
Year of Maturity		Balance	Coupon	Settlement Date	Date
		(In thousands)
2015	$	25,000	0.47%	9/4/2015	10/5/2015
		50,000	0.48%	9/10/2015	10/13/2015
		100,000	0.53%	9/16/2015	10/16/2015
		25,000	0.44%	9/24/2015	10/26/2015
		25,000	0.40%	9/30/2015	10/30/2015
		38,322	0.41%	9/1/2015	10/1/2015
		263,322

2017		4,326	1.24%	4/3/2012	4/3/2017

2018		30,000	2.19%	1/16/2013	1/16/2018
		25,000	2.18%	1/16/2013	1/16/2018
		55,000

2020		9,945	2.59%	7/19/2013	7/20/2020
	$	332,593	0.83%

All of the advances referred to above with maturity dates up to the date of this report were renewed as one-month short-term advances.

Subordinated Capital Notes

Subordinated capital notes amounted to $102.4 million at September 30, 2015 and $101.6 million at December 31, 2014.

Under the requirements of Puerto Rico Banking Act, the Bank must establish a redemption fund for the subordinated capital notes by transferring from undivided profits pre-established amounts as follows:

	Redemption fund
	(In thousands)
Redemption fund - September 30, 2015	$	60,300
2015		1,675
2016		5,025
	$	67,000

Other borrowings

Other borrowings, presented in the unaudited consolidated statements of financial condition amounted to $1.7 million and $4.0 million at September 30, 2015 and December 31, 2014, respectively, which mainly consists of unsecured fixed-rate borrowings.