Borrowings

3 Months Ended

Mar. 31, 2016

NOTE 11 — BORROWINGS AND RELATED INTEREST

Securities Sold under Agreements to Repurchase

At March 31, 2016, 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 March 31, 2016 and December 31, 2015, securities sold under agreements to repurchase (classified by counterparty), excluding accrued interest in the amount of $1.7 million and $2.2 million, respectively, were as follows:

	March 31,				December 31,
	2016				2015
			Fair Value of				Fair Value of
	Borrowing		Underlying		Borrowing		Underlying
	Balance		Collateral		Balance		Collateral
	(In thousands)
JP Morgan Chase Bank NA		232,500		252,402		262,500		283,483
Credit Suisse Securities (USA) LLC		402,000		439,538		670,000		737,887
Total	$	634,500	$	691,940	$	932,500	$	1,021,370

The following table shows a summary of the Company’s repurchase agreements and their terms, excluding accrued interest in the amount of $1.7 million, at March 31, 2016:

			Weighted-
	Borrowing		Average		Maturity
Year of Maturity	Balance		Coupon	Settlement Date	Date
	(In thousands)
2016		170,000	1.500%	12/6/2012	12/8/2016

2017		232,000	4.780%	3/2/2007	3/2/2017

2018		232,500	1.420%	12/10/2012	4/29/2018
	$	634,500	2.670%

The Company's repurchase agreement in the original amount of $500 million with an original term of ten years, maturing on March 2, 2017, was modified in February 2016 to terminate before maturity $268.0 million of this repurchase agreement at a cost of $12.0 million, included as a loss on early extinguishment of debt in the unaudited statements of operations. The remaining balance of this repurchase agreement was $232.0 million at March 31, 2016.

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 March 31, 2016 and December 31, 2015. There was no cash collateral at March 31, 2016 and at December 31, 2015.

	March 31, 2016
					Market Value of Underlying Collateral

			Weighted		FNMA and					US Treasury
	Repurchase		Average		FHLMC		GNMA			Treasury
	Liability		Rate		Certificates		Certificates			Notes	Total
	(Dollars in thousands)
Over 90 days		634,500		2.67%		665,206		1,721		25,013		691,940
Total	$	634,500		2.67%	$	665,206	$	1,721	$	25,013	$	691,940

	December 31, 2015
					Market Value of Underlying Collateral

			Weighted		FNMA and					US Treasury
	Repurchase		Average		FHLMC		GNMA			Treasury
	Liability		Rate		Certificates		Certificates			Notes	Total
	(Dollars in thousands)
Less than 90 days		30,000		0.70%		31,961		-		-		31,961
Over 90 days		902,500		3.18%		974,698		2,131		12,580		989,409
Total	$	932,500		3.10%	$	1,006,659	$	2,131	$	12,580	$	1,021,370

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 March 31, 2016 and December 31, 2015, these advances were secured by mortgage and commercial loans amounting to $1.5 billion and $1.3 billion, respectively. Also, at March 31, 2016 and December 31, 2015, the Company had an additional borrowing capacity with the FHLB-NY of $875.3 million and $770.6 million, respectively. At March 31, 2016 and December 31, 2015, the weighted average remaining maturity of FHLB’s advances was 5.6 months and 6.3 months, respectively. The original terms of these advances ranges between one month and seven years, and the FHLB-NY does not have the right to exercise put options at par on any advances outstanding as of March 31, 2016.

The following table shows a summary of these advances and their terms, excluding accrued interest in the amount of $348 thousand, at March 31, 2016:

			Weighted-
		Borrowing	Average		Maturity
Year of Maturity		Balance	Coupon	Settlement Date	Date
		(In thousands)
2016	$	25,000	0.59%	3/4/2016	4/4/2016
		50,000	0.60%	3/10/2016	4/11/2016
		100,000	0.58%	3/16/2016	4/18/2016
		25,000	0.58%	3/24/2016	4/25/2016
		25,000	0.52%	3/30/2016	4/29/2016
		37,638	0.60%	3/1/2016	4/1/2016
		262,638

2017		4,209	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		9,785	2.59%	7/19/2013	7/20/2020
	$	331,632	0.92%

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 $102.8 million and $102.6 million at March 31, 2016 and December 31, 2015, respectively.

Under the requirements of Puerto Rico Banking Act, the Bank must establish a redemption fund for the subordinated capital notes, which will mature in September 29, 2016, by transferring from undivided profits pre-established amounts as follows:

	Redemption fund
	(In thousands)
Redemption fund at March 31, 2016	$	64,488
2016		2,512
	$	67,000

Other borrowings

Other borrowings, presented in the unaudited consolidated statements of financial condition amounted to $1.8 million at March 31, 2016 and $1.7 million at December 31, 2015 which mainly consists of unsecured fixed-rate borrowings.