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Investment Securities | 6 Months Ended
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Jun. 30, 2019
Investments Securities [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 June 30, 2019 and December 31, 2018, money market instruments included as part of cash and cash equivalents amounted to $7.5 million and $4.9 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 June 30, 2019 and December 31, 2018 were as follows:
| June 30, 2019
|  |  | 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 | $ | 694,431 |  | $ | 1,277 |  | $ | 5,352 |  | $ | 690,356 |  | 2.19%
GNMA certificates |  | 93,126 |  |  | 1,228 |  |  | 7 |  |  | 94,347 |  | 2.84%
CMOs issued by US government-sponsored agencies |  | 59,238 |  |  | - |  |  | 608 |  |  | 58,630 |  | 1.90%
Total mortgage-backed securities |  | 846,795 |  |  | 2,505 |  |  | 5,967 |  |  | 843,333 |  | 2.24%
Investment securities |  |  |  |  |  |  |  |  |  |  |  |  |
US Treasury securities |  | 10,938 |  |  | 1 |  |  | 32 |  |  | 10,907 |  | 1.36%
Obligations of US government-sponsored agencies |  | 2,147 |  |  | - |  |  | 16 |  |  | 2,131 |  | 1.38%
Other debt securities |  | 1,031 |  |  | 31 |  |  | - |  |  | 1,062 |  | 2.97%
Total investment securities |  | 14,116 |  |  | 32 |  |  | 48 |  |  | 14,100 |  | 1.48%
Total securities available for sale | $ | 860,911 |  | $ | 2,537 |  | $ | 6,015 |  | $ | 857,433 |  | 2.23%
| 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%
On January 1, 2019, Oriental adopted the Accounting Standard Update ("ASU") No. 2017-12 and reclassified all of its mortgage backed securities with a carrying value of $424.7 million and unrealized losses of $14.4 million from the held-to-maturity port folio into the available-for-sale portfolio. The amortized cost and fair value of Oriental’s investment securities at June 30, 2019, 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 prepayme nt penalties.
| June 30, 2019
| Available-for-sale
| Amortized Cost |  | Fair Value
| (In thousands)
Mortgage-backed securities |  |  |  |  |
Due from 1 to 5 years |  |  |  |  |
FNMA and FHLMC certificates | $ | 2,509 |  | $ | 2,536
Total due from 1 to 5 years |  | 2,509 |  |  | 2,536
Due after 5 to 10 years |  |  |  |  |
CMOs issued by US government-sponsored agencies | $ | 52,094 |  | $ | 51,538
FNMA and FHLMC certificates |  | 192,744 |  |  | 192,666
Total due after 5 to 10 years |  | 244,838 |  |  | 244,204
Due after 10 years |  |  |  |  |
FNMA and FHLMC certificates | $ | 499,178 |  | $ | 495,154
GNMA certificates |  | 93,126 |  |  | 94,347
CMOs issued by US government-sponsored agencies |  | 7,144 |  |  | 7,092
Total due after 10 years |  | 599,448 |  |  | 596,593
Total mortgage-backed securities |  | 846,795 |  |  | 843,333
Investment securities |  |  |  |  |
Due less than one year |  |  |  |  |
US Treasury securities | $ | 10,938 |  | $ | 10,907
Total due in less than one year |  | 10,938 |  |  | 10,907
Due from 1 to 5 years |  |  |  |  |
Obligations of US government-sponsored agencies | $ | 2,147 |  | $ | 2,131
Other debt securities |  | 100 |  |  | 100
Total due from 1 to 5 years |  | 2,247 |  |  | 2,231
Due from 5 to 10 years |  |  |  |  |
Other debt securities |  | 931 |  |  | 962
Total due after 5 to 10 years |  | 931 |  |  | 962
Total investment securities |  | 14,116 |  |  | 14,100
Total | $ | 860,911 |  | $ | 857,433
During the six-month period ended June 30, 2019, Oriental retained securitized GNMA pools totaling $25.7 million amortized cost, at a yield of 3.69% from its own originations while, during the six-month period ended June 30, 2018 that amount totaled $37.6 million amortized cost, at a yield of 3.45%. During the quarter ended June 30, 2019 Oriental sold $349.7 million available-for-sale mortgage-backed securities and recognized a gain in the sale of $4.8 million. During the quarters ended June 30, 2019 a nd 2018 and the six-month period ended June 30, 2018, Oriental did not sell mortgage-backed securities or investment securities.
| Six-Month Period Ended June 30, 2019
|  |  | 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 | $ | 213,376 |  | $ | 211,549 |  | $ | 1,827 |  | $ | -
GNMA certificates | $ | 141,125 |  | $ | 138,177 |  | $ | 2,949 |  | $ | -
Total | $ | 354,501 |  | $ | 349,726 |  | $ | 4,776 |  | $ | -
The following tables show Oriental’s gross unrealized losses and fair value of investment securities available-for-sale and held-to-maturity at June 30, 2019 and December 31, 2018, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:
| June 30, 2019
| 12 months or more
| Amortized |  | Unrealized |  | Fair
| Cost |  | Loss |  | Value
| (In thousands)
Securities available-for-sale |  |  |  |  |  |  |  |
CMOs issued by US Government-sponsored agencies | $ | 59,238 |  | $ | 608 |  | $ | 58,630
FNMA and FHLMC certificates |  | 480,959 |  |  | 5,352 |  |  | 475,607
Obligations of US Government and sponsored agencies |  | 2,147 |  |  | 16 |  |  | 2,131
GNMA certificates |  | 4,181 |  |  | 6 |  |  | 4,175
US Treasury Securities |  | 9,990 |  |  | 32 |  |  | 9,958
| $ | 556,515 |  | $ | 6,014 |  | $ | 550,501
| Less than 12 months
| Amortized |  | Unrealized |  | Fair
| Cost |  | Loss |  | Value
| (In thousands)
Securities available-for-sale |  |  |  |  |  |  |  |
GNMA certificates |  | 20 |  |  | 1 |  |  | 19
| $ | 20 |  | $ | 1 |  | $ | 19
| Total
| Amortized |  | Unrealized |  | Fair
| Cost |  | Loss |  | Value
| (In thousands)
Securities available-for-sale |  |  |  |  |  |  |  |
CMOs issued by US government-sponsored agencies | $ | 59,238 |  | $ | 608 |  | $ | 58,630
FNMA and FHLMC certificates |  | 480,959 |  |  | 5,352 |  |  | 475,607
Obligations of US government and sponsored agencies |  | 2,147 |  |  | 16 |  |  | 2,131
GNMA certificates |  | 4,201 |  |  | 7 |  |  | 4,194
US Treasury Securities |  | 9,990 |  |  | 32 |  |  | 9,958
| $ | 556,535 |  | $ | 6,015 |  | $ | 550,520
| 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 Treasury 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
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 improvement, 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 ($556.5 million, amortized cost) with an unrealized loss position at June 30, 2019 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 the repayment capacity or creditworthiness of the issuers or guarantors of suc h securitie s.

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