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Borrowings and Related Interest

12 Months Ended

Dec. 31, 2019

Borrowings and Related Interest [Abstract]

Borrowings and Related Interest

NOTE 16— BORROWINGS AND RELATED INTEREST

Securities Sold under Agreements to Repurchase

At December 31, 2019, 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 Oriental the same or similar securities at the maturity of these agreements. The purpose of these transactions is to provide financing for Oriental’s securities portfolio.

The following table shows Oriental’s repurchase agreements, excluding accrued interest in the amount of $274 thousand and $785 thousand at December 31, 2019 and 2018, respectively:

	December 31,
	2019			2018
	(In thousands)
Short-term fixed-rate repurchase agreements, interest ranging from 1.85% to 2.70% (December 31, 2018; 2.45% to 2.95%)	$	140,000		$	214,723
Long-term fixed-rate repurchase agreements, interest ranging from 1.85% to 2.86% (December 31, 2018; 1.72% to 2.86%)		50,000			240,000
Total assets sold under agreements to repurchase	$	190,000		$	454,723

Repurchase agreements mature as follows:

	December 31,
	2019			2018
	(In thousands)
Less than 90 days	$	140,000		$	214,723
Over 90-days		50,000			240,000
Total	$	190,000		$	454,723

During the year ended December 31, 2019, Oriental terminated before maturity $191.2 million securities sold under agreements to repurchase as a result of the sale of available-for-sale securities, at a cost of $7 thousand, included in the statement of operations of the financial statements. Also, $73.7 million of repurchase agreements matured and were not renewed.

The following securities were sold under agreements to repurchase:

	December 31, 2019
	Amortized						Approximate			Weighted
	Cost of						Fair Value			Average
	Underlying			Balance of			of Underlying			Interest Rate
Underlying Securities	Securities			Borrowing			Securities			of Security
	(Dollars in thousands)
FNMA and FHLMC Certificates	$	204,225		$	190,000		$	204,068			2.98%
Total	$	204,225		$	190,000		$	204,068			2.98%
	December 31, 2018
	Amortized						Approximate			Weighted
	Cost of						Fair Value			Average
	Underlying			Balance of			of Underlying			Interest Rate
Underlying Securities	Securities			Borrowing			Securities			of Security
	(Dollars in thousands)
FNMA and FHLMC Certificates	$	496,814		$	454,723		$	487,181			3.01%
Total	$	496,814		$	454,723		$	487,181			3.01%

The following summarizes significant data on securities sold under agreements to repurchase as of December 31, 2019, 2018 and 2017, excluding accrued interest:

	December 31,
	2019			2018			2017
	(In thousands)
Average daily aggregate balance outstanding	$	299,842		$	357,086		$	393,133
Maximum outstanding balance at any month-end	$	461,954		$	457,053		$	606,210
Weighted average interest rate during the year		2.48%			2.17%			1.80%
Weighted average interest rate at year end		2.45%			2.49%			1.63%

Advances from the Federal Home Loan Bank of New York

Advances are received from the FHLB-NY under an agreement whereby Oriental is required to maintain a minimum amount of qualifying collateral with a fair value of at least 110% of the outstanding advances. At December 31, 2019 and 2018, these advances were secured by mortgage and commercial loans amounting to $1.060 billion and $847.3 million, respectively. Also, at December 31, 2019 and 2018, Oriental had an additional borrowing capacity with the FHLB-NY of $983 million and $762.0 million, respectively. At December 31, 2019 and 2018, the weighted average remaining maturity of FHLB’s advances was 22.7 months and 26.6 months, respectively. The original terms of these advances range between one day and seven years, and the FHLB-NY does not have the right to exercise put options at par on any advances outstanding as of December 31, 2019.

The following table shows a summary of the advances and their terms, excluding accrued interest in the amount of $160 thousand and $176 thousand, at December 31, 2019 and 2018, respectively:

		December 31,
			2019			2018
			(In thousands)
Short-term fixed-rate advances from FHLB, with a weighted average interest rate of 1.85% (December 31, 2018 - 2.61%)		$	31,955		$	33,572
Long-term fixed-rate advances from FHLB, with a weighted average interest rate of 2.97% (December 31, 2018 - 2.89%)			45,894			43,872
		$	77,849		$	77,444

Advances from FHLB mature as follows:

		December 31,
			2019			2018
		(In thousands)
Under 90 days		$	31,955		$	33,572
Over one to three years			8,517			8,867
Over three to five years			33,018			35,005
Over five years			4,359			-
		$	77,849		$	77,444

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 $36.1 million at December 31, 2019 and 2018, respectively.

In August 2003, the Statutory Trust II, a special purpose entity of the Company, was formed for the purpose of issuing trust redeemable preferred securities. In September 2003, $35.0 million of trust redeemable preferred securities were issued by the Statutory Trust II as part of a pooled underwriting transaction.

The proceeds from this issuance were used by the Statutory Trust II to purchase a like amount of a floating rate junior subordinated deferrable interest debenture issued by Oriental. The subordinated deferrable interest debenture has a par value of $36.1 million, bears interest based on 3-month LIBOR plus 295 basis points (4.85% at December 31, 2019; 5.74.% at 2018), is payable quarterly, and matures on September 17, 2033. It may be called at par after five years and quarterly thereafter (next call date March 2020). The trust redeemable preferred securities have the same maturity and call provisions as the subordinated deferrable interest debenture. The subordinated deferrable interest debenture issued by Oriental is accounted for as a liability denominated as a subordinated capital note on the consolidated statements of financial condition.

The subordinated capital note is treated as Tier 1 capital for regulatory purposes. Under the Dodd-Frank Act and the Basel III capital rules issued by the federal banking regulatory agencies in July 2013, bank holding companies are prohibited from including in their Tier 1 capital hybrid debt and equity securities, including trust preferred securities, issued on or after May 19, 2010. Any such instruments issued before May 19, 2010 by a bank holding company, such as Oriental, with total consolidated assets of less than $15 billion as of December 31, 2009, may continue to be included as Tier 1 capital. Therefore, Oriental is permitted to continue to include its existing trust pre

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- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI http://asc.fasb.org/topic&trid=2208564

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