FDIC Shared-Loss Agreements

12 Months Ended

Dec. 31, 2018

NOTE 8- FDIC SHARED-LOSS AGREEMENTS

On February 6, 2017, the Bank and the FDIC agreed to terminate the single family and commercial shared-loss agreements related to the FDIC assisted acquisition of Eurobank on April 30, 2010. As part of the loss share termination transaction, the Bank made a payment of $10.1 million to the FDIC and recorded a net benefit of $1.4 million. Such termination payment took into account the anticipated reimbursements over the life of the shared-loss agreements and the true-up payment liability of the Bank anticipated at the end of the ten-year term of the single family shared-loss agreement. All rights and obligations of the parties under the shared-loss agreements terminated as of the closing date of the agreement.

The following table presents the activity in the FDIC indemnification asset and true-up payment obligation for the years ended December 31, 2018, 2017, and 2016:

	Year Ended December 31,
	2018		2017		2016
	(In thousands)
FDIC indemnification asset:
Balance at beginning of year	$	-	$	14,411	$	22,599
Shared-loss agreements reimbursements from the FDIC		-		-		(1,573)
Increase in expected credit losses to be covered under shared-loss agreements, net		-		-		3,391
FDIC indemnification asset benefit (expense)		-		1,403		(8,040)
Net expenses incurred under shared-loss agreements		-		-		(1,966)
Shared-loss termination settlement		-		(15,814)		-
Balance at end of year	$	-	$	-	$	14,411

True-up payment obligation:
Balance at beginning of year	$	-	$	26,786	$	24,658
Change in true-up payment obligation		-		-		2,128
Shared-loss termination settlement		-		(26,786)		-
Balance at end of year	$	-	$	-	$	26,786

Oriental recognized an FDIC shared-loss (benefit) expense, net in the consolidated statements of operations, which consists of the following, for the years ended December 31, 2018, 2017 and 2016:

	Year Ended December 31,
	2018		2017		2016
	(In thousands)
FDIC indemnification asset (benefit) expense	$	-	$	(1,403)	$	8,040
Change in true-up payment obligation		-		-		2,128
Reimbursement to FDIC for recoveries		-		-		3,413
Total FDIC shared-loss (benefit) expense, net	$	-	$	(1,403)	$	13,581