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Investment Securities

3 Months Ended

Mar. 31, 2020

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 March 31, 2020 and 2019, money market instruments included as part of cash and cash equivalents amounted to $10.2 million and $6.8 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 March 31, 2020 and December 31, 2019 were as follows:

	March 31, 2020
			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	$	155,303	$	2,916	$	-	$	158,219	1.98%
GNMA certificates		142,294		2,994		-		145,288	2.29%
CMOs issued by US government-sponsored agencies		51,214		917		-		52,131	1.97%
Total mortgage-backed securities		348,811		6,827		-		355,638	2.10%
Investment securities
US Treasury securities		296,992		1,995		-		298,987	1.63%
Obligations of US government-sponsored agencies		1,884		33		-		1,917	1.39%
Other debt securities		878		40		-		918	2.98%
Total investment securities		299,754		2,068		-		301,822	1.64%
Total securities available for sale	$	648,565	$	8,895	$	-	$	657,460	1.89%

	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%

The amortized cost and fair value of Oriental’s investment securities at March 31, 2020, 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.

	March 31, 2020
	Available-for-sale
	Amortized Cost		Fair Value
	(In thousands)
Mortgage-backed securities
Due from 1 to 5 years
FNMA and FHLMC certificates	$	1,242	$	1,292
GNMA certificates		694		704
Total due from 1 to 5 years		1,936		1,996
Due after 5 to 10 years
CMOs issued by US government-sponsored agencies	$	42,053	$	42,718
FNMA and FHLMC certificates		104,324		106,488
GNMA certificates		61,219		62,188
Total due after 5 to 10 years		207,596		211,394
Due after 10 years
FNMA and FHLMC certificates	$	49,737	$	50,439
GNMA certificates		80,381		82,396
CMOs issued by US government-sponsored agencies		9,161		9,413
Total due after 10 years		139,279		142,248
Total mortgage-backed securities		348,811		355,638
Investment securities
Due less than one year
US Treasury securities	$	286,985	$	288,658
Other debt securities		100		100
Total due in less than one year		287,085		288,758
Due from 1 to 5 years
Obligations of US government-sponsored agencies	$	1,884	$	1,917
US Treasury securities		10,007		10,329
Total due from 1 to 5 years		11,891		12,246
Due from 5 to 10 years
Other debt securities		778		818
Total due after 5 to 10 years		778		818
Total investment securities		299,754		301,822
Total	$	648,565	$	657,460

During the quarter ended March 31, 2020, Oriental retained securitized GNMA pools totaling $26.8 million amortized cost, at a yield of 2.82% from its own originations, while during the quarter ended 2019 that amount totaled $15.1 million amortized cost, at a yield of 3.84%.

During the quarter ended March 31, 2020, Oriental recorded a net gain on sale of securities of $4.7 million. During the quarter ended March 31, 2019 Oriental did not sell mortgage-backed securities or investment securities.

	Quarter Ended March 31, 2020
			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	$	229,571	$	227,213	$	2,358	$	-
GNMA certificates		91,413		89,043		2,370		-
Total	$	320,984	$	316,256	$	4,728	$	-

At March 31, 2020, Oriental did not have investment securities in unrealized loss position. Effective January 1, 2020, Oriental adopted the new accounting standard for credit losses that requires evaluation of available-for-sale debt securities for any expected losses with recognition of an allowance for credit losses, when applicable. For more information, see Note 1 – Significant Accounting Policies. At March 31, 2020, all securities held by Oriental are issued by U.S. government entities and agencies that have a zero credit loss assumption.

	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