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Investment Securities | 12 Months Ended
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Dec. 31, 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 December 31, 2019 and 2018, money market instruments included as part of cash and cash equi valents amounted to $6.8 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 December 31, 2019 and 2018 were as follows:
| December 31, 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 | $ | 403,227 |  | $ | 846 |  | $ | 1,417 |  | $ | 402,656 |  | 2.00%
GNMA certificates |  | 215,755 |  |  | 718 |  |  | 4 |  |  | 216,469 |  | 2.33%
CMOs issued by US government-sponsored agencies |  | 55,235 |  |  | 16 |  |  | 490 |  |  | 54,761 |  | 1.97%
Total mortgage-backed securities |  | 674,217 |  |  | 1,580 |  |  | 1,911 |  |  | 673,886 |  | 2.11%
Investment securities |  |  |  |  |  |  |  |  |  |  |  |  |
US Treasury securities |  | 397,183 |  |  | - |  |  | - |  |  | 397,183 |  | 1.60%
Obligations of US government-sponsored agencies |  | 1,967 |  |  | - |  |  | 6 |  |  | 1,961 |  | 1.38%
Other debt securities |  | 1,108 |  |  | 31 |  |  | - |  |  | 1,139 |  | 3.00%
Total investment securities |  | 400,258 |  |  | 31 |  |  | 6 |  |  | 400,283 |  | 1.60%
Total securities available for sale | $ | 1,074,475 |  | $ | 1,611 |  | $ | 1,917 |  | $ | 1,074,169 |  | 1.92%
| 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 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 portfoli o into the available-for-sale portfolio. The amortized cost and fair value of Oriental’s investment securities at December 31, 2019, by contractual maturity, are shown in the next table. Securities not due on a single contractual maturity date, such as c ollateralized 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 p enalties.
| December 31, 2019
| Available-for-sale
| Amortized Cost |  | Fair Value
| (In thousands)
Mortgage-backed securities |  |  |  |  |
Due from 1 to 5 years |  |  |  |  |
FNMA and FHLMC certificates | $ | 1,611 |  | $ | 1,640
GNMA certificates |  | 785 |  |  | 785
Total due from 1 to 5 years |  | 2,396 |  |  | 2,425
Due after 5 to 10 years |  |  |  |  |
CMOs issued by US government-sponsored agencies | $ | 45,481 |  | $ | 45,003
FNMA and FHLMC certificates |  | 111,923 |  |  | 111,916
GNMA certificates |  | 80,675 |  |  | 80,676
Total due after 5 to 10 years |  | 238,079 |  |  | 237,595
Due after 10 years |  |  |  |  |
FNMA and FHLMC certificates | $ | 289,693 |  | $ | 289,100
GNMA certificates |  | 134,295 |  |  | 135,008
CMOs issued by US government-sponsored agencies |  | 9,754 |  |  | 9,758
Total due after 10 years |  | 433,742 |  |  | 433,866
Total mortgage-backed securities |  | 674,217 |  |  | 673,886
Investment securities |  |  |  |  |
Due less than one year |  |  |  |  |
US Treasury securities | $ | 377,153 |  | $ | 377,153
Other debt securities |  | 250 |  |  | 250
Total due in less than one year |  | 377,403 |  |  | 377,403
Due from 1 to 5 years |  |  |  |  |
Obligations of US government-sponsored agencies | $ | 1,967 |  | $ | 1,961
US Treasury securities |  | 20,030 |  |  | 20,030
Total due from 1 to 5 years |  | 21,997 |  |  | 21,991
Due from 5 to 10 years |  |  |  |  |
Other debt securities |  | 858 |  |  | 889
Total due after 5 to 10 years |  | 858 |  |  | 889
Total investment securities |  | 400,258 |  |  | 400,283
Total | $ | 1,074,475 |  | $ | 1,074,169
During the year ended December 31, 2019 Oriental sold $680.4 million available-for-sale mortgage-backed securities, at attractive yields and terms and recognized a gain in the sale of $8.3 million, preparing for the Scotiabank PR & USVI A cquisition. During the year ended 2018, Oriental also sold $17.8 million available-for-sale Government National Mortgage Association (“GNMA”) certificates from its recurring mortgage loan origination and securitization activities. These sales did not r ealize any gains or losses during such period. During the year ended 2017 Oriental sold $166.0 million available-for-sale mortgage-backed securities and $84.1 million of US Treasury securities and recorded a net gain o n sale of securities of $6.9 milli on. D uring the year ended December 31, 2019, Oriental retained securitized GNMA pools totaling $62.8 million amortized cost, at a yield of 3.23% from its own originations, while during the year ended 2018 that amount totaled $56.8 million amortized cost, at a yield of 3.93%. During the year ended 2017, that amount totaled $74.9 million amortized cost, at a yield of 3.14% from its own originations. D uring the year ended December 31, 2019, Oriental completed the Scotiabank PR & USVI Acquisition recognizing available-for-sale securities amounting to $574.6 million with an average yield of 1.79% and an average duration of 1.55 years. This portfolio is comprised of US Treasury Notes, a gency mortgage-backed-securities and a gency CMO’s.
| Year Ended December 31, 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 | $ | 451,081 |  | $ | 447,305 |  | $ | 3,776 |  | $ | -
GNMA certificates |  | 229,385 |  |  | 224,887 |  |  | 4,498 |  |  | -
Total | $ | 680,466 |  | $ | 672,192 |  | $ | 8,274 |  | $ | -
| 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 |  | $ | -
The following tables show Oriental’s gross unrealized losses and fair value of investment securities available-for-sale and held-to-maturity at December 31, 2019 and 2018, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:
| December 31, 2019
| 12 months or more
| Amortized |  | Unrealized |  | Fair
| Cost |  | Loss |  | Value
| (In thousands)
Securities available-for-sale |  |  |  |  |  |  |  |
CMOs issued by US Government-sponsored agencies | $ | 35,417 |  | $ | 387 |  | $ | 35,030
FNMA and FHLMC certificates |  | 259,099 |  |  | 1,415 |  |  | 257,684
Obligations of US Government and sponsored agencies |  | 1,967 |  |  | 6 |  |  | 1,961
GNMA certificates |  | 19 |  |  | - |  |  | 19
| $ | 296,502 |  | $ | 1,808 |  | $ | 294,694
| Less than 12 months
| Amortized |  | Unrealized |  | Fair
| Cost |  | Loss |  | Value
| (In thousands)
Securities available-for-sale |  |  |  |  |  |  |  |
CMOs issued by US Government-sponsored agencies |  | 11,503 |  |  | 103 |  |  | 11,400
FNMA and FHLMC certificates |  | 4,919 |  |  | 2 |  |  | 4,917
GNMA certificates |  | 3,549 |  |  | 4 |  |  | 3,545
US Treasury Securities |  | 627 |  |  | - |  |  | 627
| $ | 20,598 |  | $ | 109 |  | $ | 20,489
| Total
| Amortized |  | Unrealized |  | Fair
| Cost |  | Loss |  | Value
| (In thousands)
Securities available-for-sale |  |  |  |  |  |  |  |
CMOs issued by US government-sponsored agencies | $ | 46,920 |  | $ | 490 |  | $ | 46,430
FNMA and FHLMC certificates |  | 264,018 |  |  | 1,417 |  |  | 262,601
Obligations of US government and sponsored agencies |  | 1,967 |  |  | 6 |  |  | 1,961
GNMA certificates |  | 3,568 |  |  | 4 |  |  | 3,564
US Treasury Securities |  | 627 |  |  | - |  |  | 627
| $ | 317,100 |  | $ | 1,917 |  | $ | 315,183
| 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 its 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. 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 collected 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 cost 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 value the se 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 recognize additional other-than-temporary impairment charges in the future. All of the investments ($317.1 million, amortized cost) with an unrealized loss position at December 31, 2019 consist of securities issued or guaranteed by the U.S. Treasury or U.S. gove rnment-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 rep ayment capacity or creditworthiness of the issuers or guarantors of suc h securitie s.

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