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Investment Securities | 12 Months Ended
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Dec. 31, 2018
Investments [Abstract] |
Investments Securities | NOTE 4 – INVESTMENT SECURITIES Money Market Investments Oriental considers as cash equivalents all money market instruments that are not pledged and that have maturities of three months or less at the date of acquisition. At December 31, 2018 and 2017, money market instruments included as part of cash and cash equi valents amounted to $4.9 mill ion and $7.0 million, respectively. Investment Securities The amortized cost, gross unrealized gains and losses, fair value, and weighted average yield of the securities owned by Oriental at December 31, 2018 and 2017 were as follows:
| December 31, 2018
|  |  | Gross |  | Gross |  |  |  | Weighted
| Amortized |  | Unrealized |  | Unrealized |  | Fair |  | Average
| Cost |  | Gains |  | Losses |  | Value |  | Yield
| (In thousands)
Available-for-sale |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities |  |  |  |  |  |  |  |  |  |  |  |  |
FNMA and FHLMC certificates | $ | 561,878 |  | $ | 404 |  | $ | 8,951 |  | $ | 553,331 |  | 2.59%
GNMA certificates |  | 211,947 |  |  | 1,050 |  |  | 2,827 |  |  | 210,170 |  | 3.10%
CMOs issued by US government-sponsored agencies |  | 66,230 |  |  | - |  |  | 2,166 |  |  | 64,064 |  | 1.90%
Total mortgage-backed securities |  | 840,055 |  |  | 1,454 |  |  | 13,944 |  |  | 827,565 |  | 2.66%
Investment securities |  |  |  |  |  |  |  |  |  |  |  |  |
US Treasury securities |  | 10,924 |  |  | - |  |  | 119 |  |  | 10,805 |  | 1.36%
Obligations of US government-sponsored agencies |  | 2,325 |  |  | - |  |  | 60 |  |  | 2,265 |  | 1.38%
Other debt securities |  | 1,207 |  |  | 15 |  |  | - |  |  | 1,222 |  | 2.99%
Total investment securities |  | 14,456 |  |  | 15 |  |  | 179 |  |  | 14,292 |  | 1.50%
Total securities available for sale | $ | 854,511 |  | $ | 1,469 |  | $ | 14,123 |  | $ | 841,857 |  | 2.64%
Held-to-maturity |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities |  |  |  |  |  |  |  |  |  |  |  |  |
FNMA and FHLMC certificates | $ | 424,740 |  | $ | - |  | $ | 14,387 |  | $ | 410,353 |  | 2.07%
| December 31, 2017
|  |  | Gross |  | Gross |  |  |  | Weighted
| Amortized |  | Unrealized |  | Unrealized |  | Fair |  | Average
| Cost |  | Gains |  | Losses |  | Value |  | Yield
| (In thousands)
Available-for-sale |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities |  |  |  |  |  |  |  |  |  |  |  |  |
FNMA and FHLMC certificates | $ | 383,194 |  | $ | 1,402 |  | $ | 2,881 |  | $ | 381,715 |  | 2.39%
GNMA certificates |  | 166,436 |  |  | 1,486 |  |  | 584 |  |  | 167,338 |  | 2.94%
CMOs issued by US government-sponsored agencies |  | 82,026 |  |  | - |  |  | 1,955 |  |  | 80,071 |  | 1.90%
Total mortgage-backed securities |  | 631,656 |  |  | 2,888 |  |  | 5,420 |  |  | 629,124 |  | 2.47%
Investment securities |  |  |  |  |  |  |  |  |  |  |  |  |
US Treasury securities |  | 10,276 |  |  | - |  |  | 113 |  |  | 10,163 |  | 1.25%
Obligations of US government-sponsored agencies |  | 2,927 |  |  | - |  |  | 48 |  |  | 2,879 |  | 1.38%
Obligations of Puerto Rico government and public instrumentalities |  | 2,455 |  |  | - |  |  | 362 |  |  | 2,093 |  | 5.55%
Other debt securities |  | 1,486 |  |  | 52 |  |  | - |  |  | 1,538 |  | 2.97%
Total investment securities |  | 17,144 |  |  | 52 |  |  | 523 |  |  | 16,673 |  | 2.04%
Total securities available-for-sale | $ | 648,800 |  | $ | 2,940 |  | $ | 5,943 |  | $ | 645,797 |  | 2.46%
Held-to-maturity |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities |  |  |  |  |  |  |  |  |  |  |  |  |
FNMA and FHLMC certificates | $ | 506,064 |  | $ | - |  | $ | 8,383 |  | $ | 497,681 |  | 2.07%
The amortized cost and fair value of Oriental’s investment securities at December 31, 2018, by contractual maturity, are shown in the next table. Securities not due on a single contractual maturity date, such as collateralized mortgage obligations, are classified in the period of final contractual maturity. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
| December 31, 2018
| Available-for-sale |  | Held-to-maturity
| Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
| (In thousands)
Mortgage-backed securities |  |  |  |  |  |  |  |  |  |  |
Due from 1 to 5 years |  |  |  |  |  |  |  |  |  |  |
FNMA and FHLMC certificates | $ | 3,617 |  | $ | 3,570 |  | $ | - |  | $ | -
Total due from 1 to 5 years |  | 3,617 |  |  | 3,570 |  |  | - |  |  | -
Due after 5 to 10 years |  |  |  |  |  |  |  |  |  |  |
CMOs issued by US government-sponsored agencies | $ | 58,221 |  | $ | 56,202 |  | $ | - |  | $ | -
FNMA and FHLMC certificates |  | 253,447 |  |  | 249,808 |  |  | - |  |  | -
Total due after 5 to 10 years |  | 311,668 |  |  | 306,010 |  |  | - |  |  | -
Due after 10 years |  |  |  |  |  |  |  |  |  |  |
FNMA and FHLMC certificates | $ | 304,814 |  | $ | 299,953 |  | $ | 424,740 |  | $ | 410,353
GNMA certificates |  | 211,947 |  |  | 210,170 |  |  | - |  |  | -
CMOs issued by US government-sponsored agencies |  | 8,009 |  |  | 7,862 |  |  | - |  |  | -
Total due after 10 years |  | 524,770 |  |  | 517,985 |  |  | 424,740 |  |  | 410,353
Total mortgage-backed securities |  | 840,055 |  |  | 827,565 |  |  | 424,740 |  |  | 410,353
Investment securities |  |  |  |  |  |  |  |  |  |  |
Due less than one year |  |  |  |  |  |  |  |  |  |  |
US Treasury securities | $ | 10,924 |  | $ | 10,805 |  | $ | - |  | $ | -
Total due in less than one year |  | 10,924 |  |  | 10,805 |  |  | - |  |  | -
Due from 1 to 5 years |  |  |  |  |  |  |  |  |  |  |
Obligations of US government-sponsored agencies | $ | 2,325 |  | $ | 2,265 |  | $ | - |  | $ | -
Other debt securities |  | 100 |  |  | 100 |  |  | - |  |  | -
Total due from 1 to 5 years |  | 2,425 |  |  | 2,365 |  |  | - |  |  | -
Due from 5 to 10 years |  |  |  |  |  |  |  |  |  |  |
Other debt securities |  | 1,107 |  |  | 1,122 |  |  | - |  |  | -
Total due after 5 to 10 years |  | 1,107 |  |  | 1,122 |  |  | - |  |  | -
Total investment securities |  | 14,456 |  |  | 14,292 |  |  | - |  |  | -
Total | $ | 854,511 |  | $ | 841,857 |  | $ | 424,740 |  | $ | 410,353
During the year ended December 31, 2018, Oriental retained securitized GNMA pools totaling $56.8 million amortized cost, at a yield of 3.93% from its own originations while during the year ended December 31, 2017 that amount totaled $74.9 million amortized cost, at a yield of 3.14%. During the year ended December 31, 2016, that amount totaled $112.2 million, amortized cost, at a yield of 2.89%. During the year ended December 31, 2018, Oriental sold $17.8 million of available-for-sale G overnment National Mortgage Association (“GNMA”) certificates from its recurring mortgage loan origination and securitization activities. These sales did not realize any gains or losses during such period. During the year ended December 31, 2017, Oriental sold $166.0 million of mortgage-backed securities and $84.1 million of US Treasury securities, and recorded a net gain on sale of securities of $6.9 million. During the year ended December 31, 2016, Oriental sold $277.2 million of mortgage-backed securi ties and $11.1 million of Puerto Rico government bonds, and recor ded a net gain on sale of securities of $12.2 million.
| Year Ended December 31, 2018
|  |  | Book Value |  |  |  |
Description | Sale Price |  | at Sale |  | Gross Gains |  | Gross Losses
| (In thousands)
Sale of securities available-for-sale |  |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities |  |  |  |  |  |  |  |  |  |  |
GNMA certificates | $ | 17,837 |  | $ | 17,837 |  | $ | - |  | $ | -
Total | $ | 17,837 |  | $ | 17,837 |  | $ | - |  | $ | -
| Year Ended December 31, 2017
|  |  | Book Value |  |  |  |
Description | Sale Price |  | at Sale |  | Gross Gains |  | Gross Losses
| (In thousands)
Sale of securities available-for-sale |  |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities |  |  |  |  |  |  |  |  |  |  |
FNMA and FHLMC certificates | $ | 107,510 |  | $ | 102,311 |  | $ | 5,199 |  | $ | -
GNMA certificates |  | 65,284 |  |  | 63,704 |  |  | 1,580 |  |  | -
Investment securities |  |  |  |  |  |  |  |  |  |  |
US Treasury securities |  | 84,202 |  |  | 84,085 |  |  | 117 |  |  | -
Total mortgage-backed securities | $ | 256,996 |  | $ | 250,100 |  | $ | 6,896 |  | $ | -
| Year Ended December 31, 2016
|  |  | Book Value |  |  |  |
Description | Sale Price |  | at Sale |  | Gross Gains |  | Gross Losses
| (In thousands)
Sale of securities available-for-sale |  |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities |  |  |  |  |  |  |  |  |  |  |
FNMA and FHLMC certificates | $ | 293,505 |  | $ | 277,181 |  | $ | 16,324 |  | $ | -
Investment securities |  |  |  |  |  |  |  |  |  |  |
Obligations of PR government and public instrumentalities |  | 6,978 |  |  | 11,095 |  |  | - |  |  | 4,117
Total mortgage-backed securities | $ | 300,483 |  | $ | 288,276 |  | $ | 16,324 |  | $ | 4,117
The following tables show Oriental’s gross unrealized losses and fair value of investment securities available-for-sale and held-to-maturity, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position at December 31, 2018 and 2017:
| December 31, 2018
| 12 months or more
| Amortized |  | Unrealized |  | Fair
| Cost |  | Loss |  | Value
| (In thousands)
Securities available-for-sale |  |  |  |  |  |  |  |
CMOs issued by US Government-sponsored agencies | $ | 66,230 |  | $ | 2,166 |  | $ | 64,064
FNMA and FHLMC certificates |  | 357,955 |  |  | 8,603 |  |  | 349,352
Obligations of US Government and sponsored agencies |  | 2,325 |  |  | 60 |  |  | 2,265
GNMA certificates |  | 131,044 |  |  | 2,739 |  |  | 128,305
US Treasury Securities |  | 9,977 |  |  | 119 |  |  | 9,858
| $ | 567,531 |  | $ | 13,687 |  | $ | 553,844
Securities held to maturity |  |  |  |  |  |  |  |
FNMA and FHLMC certificates | $ | 424,740 |  | $ | 14,387 |  | $ | 410,353
| Less than 12 months
| Amortized |  | Unrealized |  | Fair
| Cost |  | Loss |  | Value
| (In thousands)
Securities available-for-sale |  |  |  |  |  |  |  |
FNMA and FHLMC certificates |  | 109,772 |  |  | 348 |  |  | 109,424
GNMA certificates |  | 17,126 |  |  | 88 |  |  | 17,038
US Treasury Securities |  | 323 |  |  | - |  |  | 323
| $ | 127,221 |  | $ | 436 |  | $ | 126,785
| Total
| Amortized |  | Unrealized |  | Fair
| Cost |  | Loss |  | Value
| (In thousands)
Securities available-for-sale |  |  |  |  |  |  |  |
CMOs issued by US government-sponsored agencies | $ | 66,230 |  | $ | 2,166 |  | $ | 64,064
FNMA and FHLMC certificates |  | 467,727 |  |  | 8,951 |  |  | 458,776
Obligations of US government and sponsored agencies |  | 2,325 |  |  | 60 |  |  | 2,265
GNMA certificates |  | 148,170 |  |  | 2,827 |  |  | 145,343
US Treausury Securities |  | 10,300 |  |  | 119 |  |  | 10,181
| $ | 694,752 |  | $ | 14,123 |  | $ | 680,629
Securities held-to-maturity |  |  |  |  |  |  |  |
FNMA and FHLMC certificates | $ | 424,740 |  | $ | 14,387 |  | $ | 410,353
| December 31, 2017
| 12 months or more
| Amortized |  | Unrealized |  | Fair
| Cost |  | Loss |  | Value
| (In thousands)
Securities available-for-sale |  |  |  |  |  |  |  |
CMOs issued by US Government-sponsored agencies | $ | 72,562 |  | $ | 1,857 |  | $ | 70,705
FNMA and FHLMC certificates |  | 111,635 |  |  | 2,122 |  |  | 109,513
Obligations of US Government and sponsored agencies |  | 2,927 |  |  | 48 |  |  | 2,879
Obligations of Puerto Rico government and public instrumentalities |  | 2,455 |  |  | 362 |  |  | 2,093
GNMA certificates |  | 20,803 |  |  | 499 |  |  | 20,304
US Treasury Securities |  | 9,952 |  |  | 113 |  |  | 9,839
| $ | 220,334 |  | $ | 5,001 |  | $ | 215,333
Securities held to maturity |  |  |  |  |  |  |  |
FNMA and FHLMC certificates | $ | 352,399 |  |  | 7,264 |  |  | 345,135
| Less than 12 months
| Amortized |  | Unrealized |  | Fair
| Cost |  | Loss |  | Value
| (In thousands)
Securities available-for-sale |  |  |  |  |  |  |  |
CMOs issued by US Government-sponsored agencies |  | 9,464 |  |  | 98 |  |  | 9,366
FNMA and FHLMC certificates |  | 125,107 |  |  | 759 |  |  | 124,348
GNMA certificates |  | 14,001 |  |  | 85 |  |  | 13,916
US Treasury Securities |  | 324 |  |  | - |  |  | 324
| $ | 148,896 |  | $ | 942 |  | $ | 147,954
Securities held to maturity |  |  |  |  |  |  |  |
FNMA and FHLMC certificates | $ | 153,665 |  | $ | 1,119 |  | $ | 152,546
| Total
| Amortized |  | Unrealized |  | Fair
| Cost |  | Loss |  | Value
| (In thousands)
Securities available-for-sale |  |  |  |  |  |  |  |
CMOs issued by US Government-sponsored agencies |  | 82,026 |  |  | 1,955 |  |  | 80,071
FNMA and FHLMC certificates |  | 236,742 |  |  | 2,881 |  |  | 233,861
Obligations of Puerto Rico government and public instrumentalities |  | 2,455 |  |  | 362 |  |  | 2,093
Obligations of US government and sponsored agencies |  | 2,927 |  |  | 48 |  |  | 2,879
GNMA certificates |  | 34,804 |  |  | 584 |  |  | 34,220
US Treausury Securities |  | 10,276 |  |  | 113 |  |  | 10,163
| $ | 369,230 |  | $ | 5,943 |  | $ | 363,287
Securities held to maturity |  |  |  |  |  |  |  |
FNMA and FHLMC certificates | $ | 506,064 |  | $ | 8,383 |  | $ | 497,681
Oriental performs valuations of the investment securities on a monthly basis. Moreover, Oriental conducts quarterly reviews to identify and evaluate each investment in an unrealized loss position for other-than-temporary impairment. Any portion of a decline in value associated with credit loss is recognized in the statements of operations with the re maining noncredit-related component recognized in other comprehensive income (loss). A credit loss is determined by assessing whether the amortized cost basis of the security will be recovered by comparing the present value of cash flows expected to be col lected from the security, discounted at the rate equal to the yield used to accrete current and prospective beneficial interest for the security. The shortfall of the present value of the cash flows expected to be collected in relation to the amortized cos t basis is considered to be the “credit loss.” Other-than-temporary impairment analysis is based on estimates that depend on market conditions and are subject to further change over time. In addition, while Oriental believes that the methodology used to va lue these exposures is reasonable, the methodology is subject to continuing improve ment, including those made as a result of market developments. Consequently, it is reasonably possible that changes in estimates or conditions could result in the need to re cognize additional other-than-temporary impairment charges in the future. All of the investments ($1.1 billion, amortized cost) with an unrealized loss position at December 31, 2018 consist of securities issued or guaranteed by the U.S. Treasury or U.S. government-sponsored agencies, all of which are highly liquid securities that have a large and efficient secondary market. Their aggregate losses and their variability from period to period are the result of changes in market conditions, and not due to th e repayment capacity or creditworthiness of the issuers or guarantors of such securitie s. The following table presents a rollforward of credit-related impairment losses recognized in earnings for the years ended December 31, 2018, 2017 and 2016 on available-for-sale securities:
|  | Year Ended December 31,
|  | 2018 |  | 2017 |  | 2016 |
|  | (In thousands) |
Balance at beginning of year |  | $ | - |  | $ | - |  | $ | 1,490 |
Reductions for securities sold during the period (realized) |  |  | - |  |  | - |  |  | (1,490) |
Additions from credit losses recognized on available-for-sale securities that had no previous impairment losses |  |  | - |  |  | - |  |  | - |
Balance at end of year |  | $ | - |  | $ | - |  | $ | - |

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- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2209399 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2324412 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI http://asc.fasb.org/topic&trid=2196928 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 940 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2176304 + Details
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