10-Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

       EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number 001-12647

OFG Bancorp

Incorporated in the Commonwealth of Puerto Rico, IRS Employer Identification No. 66-0538893

Principal Executive Offices: 

254 Muñoz Rivera Avenue

San Juan, Puerto Rico 00918

Telephone Number: (787) 771-6800

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No¨ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x  No ¨ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ý               Accelerated Filer o                Non-Accelerated Filer ¨                 Smaller Reporting Company ¨                                                                                            (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨  No x 

Number of shares outstanding of the registrant’s common stock, as of thelatest practicable date:

 45,060,088 common shares ($1.00 par value per share) outstanding as of July 31, 2014

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION			Page
Item 1.	Financial Statements
	Unaudited Consolidated Statements of Financial Condition		1
	Unaudited Consolidated Statements of Operations		2
	Unaudited Consolidated Statements of Comprehensive Income		3
	Unaudited Consolidated Statements of Changes in Stockholders’ Equity		4
	Unaudited Consolidated Statements of Cash Flows		5
	Notes to Unaudited Consolidated Financial Statements
		Note 1 – Organization, Consolidation and Basis of Presentation	7
		Note 2 – Restricted Cash	8
		Note 3 – Investment Securities	8
		Note 4 – Loans	15
		Note 5 – Allowance for Loan and Lease Losses	26
		Note 6 – FDIC Indemnification Asset and True-up Payment Obligation	43
		Note 7 – Derivative Activities	44
		Note 8 – Accrued Interest Receivable and Other Assets	46
		Note 9 – Deposits and Related Interest	47
		Note 10 – Borrowings	49
		Note 11 – Offsetting Arrangements	52
		Note 12 – Related Party Transactions	53
		Note 13 – Income Taxes	54
		Note 14 – Stockholders’ Equity and Earnings per Common Share	54
		Note 15 – Guarantees	59
		Note 16 – Commitments and Contingencies	61
		Note 17 – Fair Value of Financial Instruments	63
		Note 18 – Business Segments	72
		Note 19 – Subsequent Events	75
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		76
		Critical Accounting Policies and  Estimates	77
		Overview of Financial Performance	78
		Selected Financial Data	78
		Analysis of Results of Operations	84
		Analysis of Financial Condition	95
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		118
Item 4.	Control and Procedures		122
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings		123
Item 1A.	Risk Factors		123
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		125
Item 3.	Default upon Senior Securities		125
Item 4.	Mine Safety Disclosures		125
Item 5.	Other Information		125
Item 6.	Exhibits		125
SIGNATURES			126
EXHIBIT INDEX

FORWARD-LOOKING STATEMENTS

The information included in this quarterly report on Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may relate to the financial condition, results of operations, plans, objectives, future performance and business of OFG Bancorp (“we,” “our,” “us” or the “Company”), including, but not limited to, statements with respect to the adequacy of the allowance for loan losses, delinquency trends, market risk and the impact of interest rate changes, capital markets conditions, capital adequacy and liquidity, and the effect of legal proceedings and new accounting standards on the Company’s financial condition and results of operations. All statements contained herein that are not clearly historical in nature are forward-looking, and the words “anticipate,” “believe,” “continues,” “expect,” “estimate,” “intend,” “project” and similar expressions and future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may,” or similar expressions are generally intended to identify forward-looking statements.

These statements are not guarantees of future performance and involve certain risks, uncertainties, estimates and assumptions by management that are difficult to predict. Various factors, some of which by their nature are beyond the Company’s control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. Factors that might cause such a difference include, but are not limited to:

·the rate of growth in the economy and employment levels, as well as general business and economic conditions;

·changes in interest rates, as well as the magnitude of such changes;

·the fiscal and monetary policies of the federal government and its agencies;

·a credit default or potential restructuring by the Commonwealth of Puerto Rico or any of its agencies, municipalities or instrumentalities;

·changes in federal bank regulatory and supervisory policies, including required levels of capital;

·the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) on the

Company’s businesses, business practices and cost of operations;

·the relative strength or weakness of the consumer and commercial credit sectors and of the real estate market in

Puerto Rico;

·the performance of the securities markets;

·competition in the financial services industry;

·additional Federal Deposit Insurance Corporation (“FDIC”) assessments; and

·possible legislative, tax or regulatory changes.

Other possible events or factors that could cause results or performance to differ materially from those expressed in these forward-looking statements include the following: negative economic conditions that adversely affect the general economy, housing prices, the job market, consumer confidence and spending habits which may affect, among other things, the level of non-performing assets, charge-offs and provision expense; changes in interest rates and market liquidity which may reduce interest margins, impact funding sources and affect the ability to originate and distribute financial products in the primary and secondary markets; adverse movements and volatility in debt and equity capital markets; changes in market rates and prices which may adversely impact the value of financial assets and liabilities; liabilities resulting from litigation and regulatory investigations; changes in accounting standards, rules and interpretations; increased competition; the Company’s ability to grow its core businesses; decisions to downsize, sell or close units or otherwise change the Company’s business mix; and management’s ability to identify and manage these and other risks.

All forward-looking statements included in this quarterly report on Form 10-Q are based upon information available to the Company as of the date of this report, and other than as required by law, including the requirements of applicable securities laws, the Company assumes no obligation to update or revise any such forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

ITEM 1.     FINANCIAL STATEMENTS

OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

AS OF JUNE 30, 2014 AND DECEMBER 31, 2013

	June 30,		December 31,
	2014		2013
	(In thousands)
ASSETS
Cash and cash equivalents:
Cash and due from banks	$	588,257	$	614,302
Money market investments		8,228		6,967
Total cash and cash equivalents		596,485		621,269
Restricted cash		15,170		82,199
Securities purchased under agreements to resell		-		60,000
Investments:
Trading securities, at fair value, with amortized cost of $2,419 (December 31, 2013 - $2,448)		1,613		1,869
Investment securities available-for-sale, at fair value, with amortized cost of $1,385,438 (December 31, 2013 - $1,575,043)		1,418,958		1,588,425
Investment securities held-to-maturity, at amortized cost, with fair value of $26,844		26,706		-
Federal Home Loan Bank (FHLB) stock, at cost		24,381		24,450
Other investments		65		65
Total investments		1,471,723		1,614,809
Loans:
Mortgage loans held-for-sale, at lower of cost or fair value		14,792		46,529
Non-covered loans, net of allowance for loan and lease losses of $60,360 (December 31, 2013 - $54,298)		4,586,904		4,615,929
Covered loans, net of allowance for loan and lease losses of $59,515 (December 31, 2013 - $52,729)		334,344		356,961
Total loans, net		4,936,040		5,019,419
Other assets:
FDIC indemnification asset		143,660		189,240
Foreclosed real estate covered under shared-loss agreements with the FDIC		46,609		33,209
Foreclosed real estate not covered under shared-loss agreements with the FDIC		55,626		56,815
Accrued interest receivable		22,508		18,734
Deferred tax asset, net		123,298		137,564
Premises and equipment, net		82,167		82,903
Customers' liability on acceptances		17,581		23,042
Servicing assets		13,655		13,801
Derivative assets		9,558		20,502
Goodwill		86,069		86,069
Other assets		89,996		98,440
Total assets	$	7,710,145	$	8,158,015
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Demand deposits	$	2,135,369		2,138,005
Savings accounts		1,226,749		1,194,567
Time deposits		1,779,115		2,050,693
Total deposits		5,141,233		5,383,265
Borrowings:
Securities sold under agreements to repurchase		1,012,233		1,267,618
Advances from FHLB		360,240		336,143
Subordinated capital notes		100,797		100,010
Other borrowings		3,837		3,663
Total borrowings		1,477,107		1,707,434
Other liabilities:
Derivative liabilities		13,617		14,937
Acceptances executed and outstanding		17,581		23,042
Accrued expenses and other liabilities		135,405		144,424
Total liabilities		6,784,943		7,273,102
Commitments and contingencies (See Note 16)
Stockholders’ equity:
Preferred stock; 10,000,000 shares authorized;
1,340,000 shares of Series A, 1,380,000 shares of Series B, and 960,000 shares of Series D
issued and outstanding, (December 31, 2013 - 1,340,000; 1,380,000; and 960,000) $25 liquidation value		92,000		92,000
84,000 shares of Series C issued and outstanding (December 31, 2013 - 84,000); $1,000 liquidation value		84,000		84,000
Common stock, $1 par value; 100,000,000 shares authorized; 52,729,772 shares issued:
45,022,823 shares outstanding (December 31, 2013 - 52,707,023; 45,676,922)		52,730		52,707
Additional paid-in capital		538,936		538,071
Legal surplus		66,438		61,957
Retained earnings		160,055		133,629
Treasury stock, at cost, 7,706,949 shares (December 31, 2013 - 7,030,101 shares)		(90,712)		(80,642)
Accumulated other comprehensive income, net of tax of $1,134 (December 31, 2013 - -$831)		21,755		3,191
Total stockholders’ equity		925,202		884,913
Total liabilities and stockholders’ equity	$	7,710,145	$	8,158,015
See notes to unaudited consolidated financial statements.

1

OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE QUARTERS AND SIX-MONTH PERIODS ENDED JUNE 30, 2014 AND 2013

	Quarter Ended June 30,
						Six-Month Period Ended June 30,
	2014		2013			2014		2013
	(In thousands, except per share data)
Interest income:
Non-covered loans	$	88,064	$	91,105	$	173,307	$	171,912
Covered loans		24,879		23,999		48,267		44,228
Total interest income from loans		112,943		115,104		221,574		216,140
Mortgage-backed securities		11,984		9,080		24,400		19,898
Investment securities and other		973		2,118		3,000		4,436
Total interest income		125,900		126,302		248,974		240,474
Interest expense:
Deposits		9,165		9,487		18,143		19,423
Securities sold under agreements to repurchase		7,372		7,109		14,784		14,357
Advances from FHLB and other borrowings		2,289		2,241		4,583		3,955
Subordinated capital notes		996		1,170		1,988		2,830
Total interest expense		19,822		20,007		39,498		40,565
Net interest income		106,078		106,295		209,476		199,909
Provision for non-covered loan and lease losses		13,220		37,527		23,282		45,443
Provision for covered loan and lease losses, net		1,595		1,211		3,224		1,883
Total provision for loan and lease losses		14,815		38,738		26,506		47,326
Net interest income after provision for loan and lease losses		91,263		67,557		182,970		152,583
Non-interest income:
Banking service revenue		9,995		12,705		20,552		24,345
Wealth management revenue		7,336		8,030		14,203		15,690
Mortgage banking activities		1,554		3,827		3,249		6,963
Total banking and financial service revenues		18,885		24,562		38,004		46,998
FDIC shared-loss expense, net:
FDIC indemnification asset		(17,499)		(19,225)		(35,121)		(31,425)
True-up payment obligation		(856)		(740)		(1,721)		(1,411)
		(18,355)		(19,965)		(36,842)		(32,836)
Net gain (loss) on:
Sale of securities		-		-		4,366		-
Derivatives		(247)		(164)		(470)		(934)
Early extinguishment of debt		-		-		-		1,061
Other non-interest income		224		2,302		678		2,349
Total non-interest income, net		507		6,735		5,736		16,638
Non-interest expense:
Compensation and employee benefits		20,707		24,089		42,494		47,338
Professional and service fees		3,512		5,375		7,719		11,853
Occupancy and equipment		8,605		8,066		16,914		17,282
Insurance		2,333		2,723		4,407		5,401
Electronic banking charges		4,796		4,065		9,449		7,763
Information technology expenses		1,485		2,335		3,300		4,979
Advertising, business promotion, and strategic initiatives		1,669		1,670		3,450		3,079
Merger and restructuring charges		-		5,273		-		10,808
Foreclosure, repossession and other real estate expenses		6,554		3,717		12,941		6,900
Loan servicing and clearing expenses		1,669		1,884		3,728		3,360
Taxes, other than payroll and income taxes		3,776		5,132		7,511		7,754
Communication		813		835		1,770		1,699
Printing, postage, stationary and supplies		645		851		1,200		2,017
Director and investor relations		293		377		544		613
Other		2,991		2,295		5,825		4,452
Total non-interest expense		59,848		68,687		121,252		135,298
Income before income taxes		31,922		5,605		67,454		33,923
Income tax expense (benefit)		10,613		(31,934)		22,398		(24,808)
Net income		21,309		37,539		45,056		58,731
Less: dividends on preferred stock		(3,466)		(3,466)		(6,931)		(6,931)
Income available to common shareholders	$	17,843	$	34,073	$	38,125	$	51,800
Earnings per common share:
Basic	$	0.40	$	0.75	$	0.84	$	1.14
Diluted	$	0.38	$	0.68	$	0.80	$	1.05
Average common shares outstanding and equivalents		52,352		52,968		52,476		52,929
Cash dividends per share of common stock	$	0.08	$	0.06	$	0.16	$	0.12
See notes to unaudited consolidated financial statements.

2

OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE QUARTERS AND SIX-MONTH PERIODS ENDED JUNE 30, 2014 AND 2013

					Six-Month Period Ended June 30,
	Quarter Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Net income	$	21,309	$	37,539	$	45,056	$	58,731
Other comprehensive income (loss) before tax:
Unrealized gain (loss) on securities available-for-sale		14,941		(35,576)		24,504		(46,568)
Realized gain on investment securities included in net income		-		-		(4,366)		-
Unrealized gain on cash flow hedges		14		3,016		391		4,477
Other comprehensive income (loss) before taxes		14,955		(32,560)		20,529		(42,091)
Income tax effect		(1,221)		1,275		(1,965)		1,977
Other comprehensive income (loss) after taxes		13,734		(31,285)		18,564		(40,114)
Comprehensive income	$	35,043	$	6,254	$	63,620	$	18,617
See notes to unaudited consolidated financial statements.

3

OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2014 AND 2013

	Six-Month Period Ended June 30,
	2014		2013
	(In thousands)
Preferred stock:
Balance at beginning of period	$	176,000	$	176,000
Balance at end of period		176,000		176,000
Common stock:
Balance at beginning of period		52,707		52,671
Exercised stock options		23		18
Balance at end of period		52,730		52,689
Additional paid-in capital:
Balance at beginning of period		538,071		537,453
Stock-based compensation expense		946		888
Exercised stock options		242		167
Lapsed restricted stock units		(323)		(364)
Common stock issuance costs		-		(16)
Preferred stock issuance costs		-		(23)
Balance at end of period		538,936		538,105
Legal surplus:
Balance at beginning of period		61,957		52,143
Transfer from retained earnings		4,481		5,763
Balance at end of period		66,438		57,906
Retained earnings:
Balance at beginning of period		133,629		70,734
Net income		45,056		58,731
Cash dividends declared on common stock		(7,218)		(5,479)
Cash dividends declared on preferred stock		(6,931)		(6,931)
Transfer to legal surplus		(4,481)		(5,763)
Balance at end of period		160,055		111,292
Treasury stock:
Balance at beginning of period		(80,642)		(81,275)
Stock repurchased		(10,393)		-
Lapsed restricted stock units		323		364
Stock used to match defined contribution plan		-		77
Balance at end of period		(90,712)		(80,834)
Accumulated other comprehensive income, net of tax:
Balance at beginning of period		3,191		55,880
Other comprehensive income (loss), net of tax		18,564		(40,114)
Balance at end of period		21,755		15,766
Total stockholders’ equity	$	925,202	$	870,924
See notes to unaudited consolidated financial statements.

4

OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2014 AND 2013

	Six-Month Period Ended June 30,
	2014		2013
	(In thousands)
Cash flows from operating activities:
Net income	$	45,056	$	58,731
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred loan origination fees, net of costs		1,330		486
Amortization of fair value discounts on acquired loans		6,884		3,504
Amortization of investment securities premiums, net of accretion of discounts		203		12,624
Amortization of core deposit and customer relationship intangibles		1,085		1,288
Amortization of fair value premiums on acquired deposits		2,908		9,649
FDIC shared-loss expense, net		36,842		32,836
Depreciation and amortization of premises and equipment		4,826		5,265
Deferred income tax expense (benefit), net		13,211		(30,776)
Provision for covered and non-covered loan and lease losses, net		26,506		47,326
Stock-based compensation		946		888
(Gain) loss on:
Sale of securities		(4,366)		-
Sale of mortgage loans held-for-sale		(2,447)		(1,771)
Derivatives		646		934
Early extinguishment of debt		-		(1,061)
Foreclosed real estate		5,052		3,109
Sale of other repossessed assets		3,305		465
Sale of premises and equipment		(10)		-
Originations of loans held-for-sale		(86,058)		(179,127)
Proceeds from sale of loans held-for-sale		47,834		68,809
Net (increase) decrease in:
Trading securities		256		(1,714)
Accrued interest receivable		(3,774)		46
Servicing assets		146		(2,199)
Other assets		11,651		20,737
Net increase (decrease) in:
Accrued interest on deposits and borrowings		(932)		(995)
Accrued expenses and other liabilities		(16,247)		12,093
Net cash provided by operating activities		94,853		61,147
Cash flows from investing activities:
Purchases of:
Investment securities available-for-sale		(217,974)		(17,802)
Investment securities held-to-maturity		(26,707)		-
FHLB stock		(76,725)		(12,465)
Maturities and redemptions of:
Investment securities available-for-sale		295,013		313,866
FHLB stock		76,794		28,720
Proceeds from sales of:
Investment securities available-for-sale		163,235		75,660
Foreclosed real estate and other repossessed assets		22,991		31,131
Premises and equipment		20		1,667
Origination and purchase of loans, excluding loans held-for-sale		(347,691)		(422,590)
Principal repayment of loans, including covered loans		339,102		528,274
Reimbursements from the FDIC on shared-loss agreements		18,700		18,696
Additions to premises and equipment		(4,100)		(6,237)
Net change in securities purchased under agreements to resell		60,000		80,000
Net change in restricted cash		67,029		8,990
Net cash provided by investing activities		369,687		627,910

5

OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2014 AND 2013 – (Continued)

	Six-Month Period Ended June 30,
	2014		2013
	(In thousands)
Cash flows from financing activities:
Net increase (decrease) in:
Deposits		(235,062)		(36,125)
Short term borrowings		-		(92,210)
Securities sold under agreements to repurchase		(255,000)		(381,358)
FHLB advances, federal funds purchased, and other borrowings		24,279		(231,617)
Subordinated capital notes		787		(46,017)
Exercise of stock options and restricted units lapsed, net		265		185
Purchase of treasury stock		(10,393)		-
Termination of derivative instruments		-		(858)
Dividends paid on preferred stock		(6,931)		(6,931)
Dividends paid on common stock		(7,269)		(5,479)
Other financing activities		-		(39)
Net cash used in financing activities		(489,324)		(800,449)
Net change in cash and cash equivalents		(24,784)		(111,392)
Cash and cash equivalents at beginning of period		621,269		855,235
Cash and cash equivalents at end of period	$	596,485	$	743,843
Supplemental Cash Flow Disclosure and Schedule of Non-cash Activities:
Interest paid	$	42,667	$	40,491
Income taxes paid	$	319	$	378
Mortgage loans securitized into mortgage-backed securities	$	46,505	$	89,590
Transfer from loans to foreclosed real estate and other repossessed assets	$	47,852	$	45,714
Reclassification of loans held-for-investment portfolio to held-for-sale portfolio	$	473	$	40,328
Reclassification of loans held-for-sale portfolio to held-for-investment portfolio	$	26,376	$	-
Securities sold but not yet delivered	$	-	$	16,732
See notes to unaudited consolidated financial statements.

6

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 –  ORGANIZATION, CONSOLIDATION AND BASIS OF PRESENTATION

Nature of Operations

OFG Bancorp (the “Company”) is a publicly-owned financial holding company incorporated under the laws of the Commonwealth of Puerto Rico. The Company operates through various subsidiaries including, a commercial bank, Oriental Bank (or the “Bank”), a securities broker-dealer, Oriental Financial Services Corp. (“Oriental Financial Services”), an insurance agency, Oriental Insurance, Inc. (“Oriental Insurance”) and a retirement plan administrator, Caribbean Pension Consultants, Inc. (“CPC”). Through these subsidiaries and their respective divisions, the Company provides a wide range of banking and financial services such as commercial, consumer and mortgage lending, auto loans, financial planning, insurance sales, money management and investment banking and brokerage services, as well as corporate and individual trust services. On April 25, 2013, the Company changed its corporate name from Oriental Financial Group Inc. to OFG Bancorp.

On April 30, 2010, the Bank acquired certain assets and assumed certain deposits and other liabilities of Eurobank, a Puerto Rico commercial bank, in an FDIC-assisted acquisition. On December 18, 2012, the Company acquired a group of Puerto Rico based entities that included Banco Bilbao Vizcaya Argentaria Puerto Rico (“BBVAPR”), a Puerto Rico commercial bank, as well as a securities broker-dealer and an insurance agency, which is referred to herein as the “BBVAPR Acquisition.” The businesses acquired in the BBVAPR Acquisition were integrated with the Company’s existing business.

Recent Accounting Developments

On March 14, 2014, the FASB issued guidance that amended the Master Glossary of the Accounting Standards Codification (“ASC”), including technical corrections related to glossary links, glossary term deletions, and glossary term name changes. In addition, this guidance included more substantive, limited-scope improvements to reduce instances of the same term appearing multiple times in the Master Glossary with similar, but not entirely identical, definitions. These are items that represent narrow and incremental improvements to U.S. GAAP and are not purely technical corrections and affect a wide variety of Topics in the ASC. The amendments in this guidance apply to all reporting entities within the scope of the affected accounting guidance and are effective upon issuance for both public entities and non-public entities. The Company adopted this guidance upon issuance with no impact on our financial position and results of operations.

On June 19, 2014, the FASB issued updated guidance on the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. This guidance seeks to resolve the diversity in practice that exists when accounting for share-based payments. In particular, this guidance requires a performance target that affects vesting and that could be achieved after the requisite service period to be treated as a performance conditions. For all entities, this guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, with earlier adoption permitted. We are currently evaluating the impact, if any, that the adoption of this guidance will have on our financial position or results of operations.

Other than the accounting pronouncement disclosed above, there were no other new accounting pronouncements issued during the three months and six months ended June 30, 2014 that could have a material impact on the Company’s financial position, operating results or financials statement disclosures.

7

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 2 – RESTRICTED CASH

The following table includes the composition of the Company’s restricted cash:

	June 30,		December 31,
	2014		2013
	(In thousands)
Cash pledged as collateral to other financial institutions to secure:
Securities sold under agreements to repurchase	$	-	$	67,029
Derivatives		2,980		2,980
Obligations under agreement of loans sold with recourse		12,190		12,190
	$	15,170	$	82,199

The Company delivers cash as collateral to meet margin calls for some long term securities sold under agreements to repurchase. At December 31, 2013, the Company had $67.0 million in cash pledged as collateral for securities sold under agreements to repurchase. At June 30, 2014, the Company did not have cash pledged as collateral for securities sold under agreements to repurchase.

As part of its derivative activities, the Company has entered into collateral agreements with certain financial counterparties.  At both June 30, 2014 and December 31, 2013, the Company had delivered $3.0 million of cash as collateral for such derivatives activities.

As part of the BBVAPR Acquisition, the Company assumed various contracts with the Federal National Mortgage Association (“FNMA”) which required collateral to guarantee the repurchase, if necessary, of certain mortgage loans sold with recourse. At June 30, 2014 and December 31, 2013, the Company had $12.2 million of cash pledged as collateral for such recourse obligations.

NOTE 3 – INVESTMENT SECURITIES

Money Market Investments

The Company 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, 2014 and December 31, 2013, money market instruments included as part of cash and cash equivalents amounted to $8.2 million and $7.0 million, respectively.

Securities Purchased Under Agreements to Resell

Securities purchased under agreements to resell consist of short-term investments and are carried at the amounts at which the assets will be subsequently resold as specified in the respective agreements. At December 31, 2013, securities purchased under agreements to resell amounted to $60.0 million. At June 30, 2014, there were no securities purchased under agreements to resell.

The amounts advanced under those agreements are reflected as assets in the consolidated statements of financial condition. It is the Company’s policy to take possession of securities purchased under agreements to resell. Agreements with third parties specify the Company’s right to request additional collateral based on its monitoring of the fair value of the underlying securities on a daily basis. The fair value of the collateral securities held by the Company on these transactions as of December 31, 2013 was approximately $64.6 million.

8

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Investment Securities

The amortized cost, gross unrealized gains and losses, fair value, and weighted average yield of the securities owned by the Company at June 30, 2014 and December 31, 2013 were as follows:

	June 30, 2014
			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	$	1,070,034	$	44,076	$	1,992	$	1,112,118	3.10%
GNMA certificates		5,560		389		21		5,928	4.92%
CMOs issued by US government-sponsored agencies		200,111		306		3,786		196,631	1.79%
Total mortgage-backed securities		1,275,705		44,771		5,799		1,314,677	2.90%
Investment securities
US Treasury securities		9,000		-		-		9,000	0.01%
Obligations of US government-sponsored agencies		74,613		-		38		74,575	0.17%
Obligations of Puerto Rico government and             political subdivisions		22,391		-		5,591		16,800	5.32%
Other debt securities		3,729		177		-		3,906	2.95%
Total investment securities		109,733		177		5,629		104,281	1.30%
Total securities available for sale	$	1,385,438	$	44,948	$	11,428	$	1,418,958	2.77%
Held-to-maturity
Mortgage-backed securities
FNMA and FHLMC certificates		26,706		138		-		26,844	2.52%
Total	$	1,412,144	$	45,086	$	11,428	$	1,445,802	2.77%

	December 31, 2013
			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	$	1,190,910	$	33,089	$	6,669	$	1,217,330	2.93%
GNMA certificates		7,406		433		24		7,815	4.92%
CMOs issued by US government-sponsored agencies		220,801		407		6,814		214,394	1.78%
Total mortgage-backed securities		1,419,117		33,929		13,507		1,439,539	2.76%
Investment securities
Obligations of US government-sponsored agencies		10,691		-		42		10,649	1.21%
Obligations of Puerto Rico government and             political subdivisions		121,035		-		6,845		114,190	4.38%
Other debt securities		24,200		167		320		24,047	3.46%
Total investment securities		155,926		167		7,207		148,886	2.99%
Total securities available-for-sale	$	1,575,043	$	34,096	$	20,714	$	1,588,425	2.89%

9

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The amortized cost and fair value of the Company’s investment securities at June 30, 2014, 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.

	June 30, 2014
	Available-for-sale				Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)				(In thousands)
Mortgage-backed securities
Due after 5 to 10 years
FNMA and FHLMC certificates	$	24,631	$	25,109	$	-	$	-
Total due after 5 to 10 years		24,631		25,109		-		-
Due after 10 years
FNMA and FHLMC certificates		1,045,403		1,087,009		26,706		26,844
GNMA certificates		5,560		5,928		-		-
CMOs issued by US government-sponsored agencies		200,111		196,631		-		-
Total due after 10 years		1,251,074		1,289,568		26,706		26,844
Total  mortgage-backed securities		1,275,705		1,314,677		26,706		26,844
Investment securities
Due in less than one year
US Treasury securities		9,000		9,000		-		-
Obligations of US government and sponsored agencies		66,000		66,000		-		-
Total due in less than one year		75,000		75,000		-		-
Due from 1 to 5 years
Obligations of Puerto Rico government and political subdivisions		11,927		9,543		-		-
Total due from 1 to 5 years		11,927		9,543		-		-
Due after 5 to 10 years
Obligations of US government and sponsored agencies		8,613		8,575		-		-
Total due after 5 to 10 years		8,613		8,575		-		-
Due after 10 years
Obligations of Puerto Rico government and political subdivisions		10,464		7,257		-		-
Other debt securities		3,729		3,906		-		-
Total due after 10 years		14,193		11,163		-		-
Total  investment securities		109,733		104,281		-		-
Total securities available-for-sale	$	1,385,438	$	1,418,958	$	26,706	$	26,844

10

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

At December 31, 2013, obligations of the Puerto Rico government and its political subdivisions included a $98.7 million principal amount, LIBOR floating rate bond with a maturity date of July 1, 2024, that was subject to mandatory tender for purchase by the end of the third year anniversary of the closing date, which was June 1, 2014. The bond was also subject to optional demand tender for purchase upon the occurrence and continuance of certain events, including (among others) the withdrawal, suspension or reduction below investment grade of the credit rating on any general obligation of the Commonwealth by any of the three major rating agencies. This bond was repaid by the issuer on March 17, 2014.

The Company, as part of its asset/liability management, may purchase U.S. Treasury securities and U.S. government-sponsored agency discount notes close to their maturities as alternatives to cash deposits at correspondent banks or as a short term vehicle to reinvest the proceeds of sale transactions until investment securities with attractive yields can be purchased. During the six-month period ended June 30, 2014, the Company sold $48.1 million of available-for-sale Government National Mortgage Association (“GNMA”) certificates that were sold as part of its recurring mortgage loan origination and securitization activities. These sales did not realize any gains or losses during such period. In addition, during the six-month period ended June 30, 2014, certain available-for-sale securities were sold to realize gains and to invest the proceeds in other investment securities with attractive yields and terms that protect the Company’s net interest margin.

For the six-month period ended June 30, 2014 the Company recorded a net gain on sale of securities of $4.4 million. The tables below present the gross realized gains by category for such period. There was no realized gain or loss for the six-month period ended June 30, 2013.

	Six-Month Period Ended June 30, 2014
			Book Value		Gross		Gross
Description	Sale Price		at Sale		Gains		Losses
	(In thousands)
Sale of securities available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates	$	115,158	$	110,792	$	4,366	$	-
GNMA certificates		48,077		48,077		-		-
Total	$	163,235	$	158,869	$	4,366	$	-

11

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following tables show the Company’s gross unrealized losses and fair value of investment securities available-for-sale and held-to-maturity, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position at June 30, 2014 and December 31, 2013:

	June 30, 2014
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies	$	156,542	$	3,734	$	152,808
FNMA and FHLMC certificates		190,630		1,992		188,638
Obligations of Puerto Rico government and political subdivisions		22,391		5,591		16,800
GNMA certificates		199		21		178
	$	369,762	$	11,338	$	358,424
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies	$	16,365	$	52	$	16,313
Obligations of US government and sponsored agencies		8,613		38		8,575
	$	24,978	$	90	$	24,888
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies	$	172,907	$	3,786	$	169,121
FNMA and FHLMC certificates		190,630		1,992		188,638
Obligations of Puerto Rico government and political subdivisions		22,391		5,591		16,800
Obligations of US government and sponsored agencies		8,613		38		8,575
GNMA certificates		199		21		178
	$	394,740	$	11,428	$	383,312

12

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	December 31, 2013
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico government and political subdivisions	$	20,845	$	5,470	$	15,375
CMOs issued by US government-sponsored agencies		2,559		237		2,322
GNMA certificates		81		11		70
	$	23,485	$	5,718	$	17,767
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico government and political subdivisions	$	100,190	$	1,375	$	98,815
CMOs issued by US government-sponsored agencies		182,661		6,577		176,084
GNMA certificates		122		13		109
FNMA and FHLMC certificates		220,913		6,669		214,244
Obligations of US government and sponsored agencies		10,691		42		10,649
Other debt securities		20,000		320		19,680
	$	534,577	$	14,996	$	519,581
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico government and political subdivisions	$	121,035	$	6,845	$	114,190
CMOs issued by US government-sponsored agencies		185,220		6,814		178,406
GNMA certificates		203		24		179
FNMA and FHLMC certificates		220,913		6,669		214,244
Obligations of US government and sponsored agencies		10,691		42		10,649
Other debt securities		20,000		320		19,680
	$	558,062	$	20,714	$	537,348

13

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company performs valuations of the investment securities on a monthly basis. Moreover, the Company 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 income with the remaining 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 the Company believes that the methodology used to value these exposures is reasonable, the methodology is subject to continuing refinement, 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.

Most of the investments in an unrealized loss position at June 30, 2014 ($372.3 million or 94%) 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 such securities.

The remaining investments in an unrealized loss position at June 30, 2014 ($22.4 million or 6%) consist of obligations issued or guaranteed by the government of Puerto Rico and its political subdivisions or instrumentalities. The recent decline in the market value of these securities is mainly attributed to an increase in volatility as a result of changes in market conditions that reflect the significant economic and fiscal challenges that Puerto Rico is facing, including a protracted economic recession, sizable government debt-service obligations and structural budget deficits, high unemployment and a shrinking population.  Moreover, uncertainty in regards to the impact of the recently enacted Public Corporation Debt Enforcement and Recovery Act (the “Recovery Act”) and the related subsequent negative rating decisions taken by the credit rating agencies has affected the market value of these securities. As of June 30, 2014, the Company analyzed these investments and considered several factors that, in the Company’s view, support the ability of the Commonwealth and the particular political subdivisions or instrumentalities to continue servicing their debt obligations. Such factors include (i) the collateralization and sources of repayment for such debt obligations; (ii) the government’s efforts to increase revenues and reduce expenses to tackle its recurrent budget deficits; (iii) the Commonwealth’s constitutional framework that provides that “public debt” constitutes a first claim on available Commonwealth resources; and (iv) the Commonwealth’s compliance and commitment to its contractual debt obligations. In addition, the Company believes it is probable that it will collect all amounts due according to the contractual terms of its Puerto Rico government bonds. Based on these factors, the Company expects that such bonds will be repaid in full when due, and given that the Company does not have the intent to sell any such bonds in an unrealized loss position, the Company does not consider them to be other-than-temporarily impaired as of June 30, 2014.

14

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 4 - LOANS 

The Company’s loan portfolio is composed of covered loans and non-covered loans. Covered loans are subject to loss sharing agreements with the FDIC and non-covered loans are not subject to FDIC loss sharing agreements. The risks of covered loans are different from the risks of non-covered loans because of the loss protection provided by the FDIC to covered loans. Loans acquired in the BBVAPR Acquisition are included as non-covered loans in the unaudited consolidated statements of financial condition. Non-covered loans are further subdivided between originated and other loans, acquired loans accounted for under ASC 310-20 (loans with revolving feature and/or acquired at a premium), and acquired loans accounted for under ASC 310-30 (loans acquired with deteriorated credit quality, including those by analogy).

The composition of the Company’s loan portfolio at June 30, 2014 and December 31, 2013 was as follows:

	June 30,		December 31,
	2014		2013
	(In thousands)
Non-covered loans:
Originated and other loans and leases held for investment:
Mortgage	$	788,001	$	766,265
Commercial		1,183,172		1,127,657
Consumer		161,538		127,744
Auto and leasing		508,034		379,874
		2,640,745		2,401,540
Acquired loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		38,602		77,681
Consumer		49,604		56,174
Auto		238,399		301,584
		326,605		435,439
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Mortgage		692,069		717,904
Commercial		508,530		545,117
Construction		123,743		126,427
Consumer		43,824		63,620
Auto		308,512		379,145
		1,676,678		1,832,213
		4,644,028		4,669,192
Deferred loan cost , net		3,236		1,035
Loans receivable		4,647,264		4,670,227
Allowance for loan and lease losses on non-covered loans		(60,360)		(54,298)
Loans receivable, net		4,586,904		4,615,929
Mortgage loans held-for-sale		14,792		46,529
Total non-covered loans, net		4,601,696		4,662,458
Covered loans:
Loans secured by 1-4 family residential properties		121,416		121,748
Construction and development secured by 1-4 family residential properties		18,566		17,304
Commercial and other construction		248,700		264,249
Consumer		5,177		6,119
Leasing		-		270
Total covered loans		393,859		409,690
Allowance for loan and lease losses on covered loans		(59,515)		(52,729)
Total covered loans, net		334,344		356,961
Total loans, net	$	4,936,040	$	5,019,419

During the six-month period ended June 30, 2014, the Company reclassified $26.4 million in mortgage loans held-for-sale to held-for-investment. 

15

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Non-covered Loans

Originated and Other Loans and Leases Held for Investment

The Company’s originated and other loans held for investment are encompassed within four portfolio segments: mortgage, commercial, consumer, and auto and leasing.

The following tables present the aging of the recorded investment in gross originated and other loans held for investment as of June 30, 2014 and December 31, 2013 by class of loans. Mortgage loans past due included delinquent loans in the GNMA buy-back option program. Servicers of loans underlying GNMA mortgage-backed securities must report as their own assets the defaulted loans that they have the option (but not the obligation) to repurchase, even when they elect not to exercise that option.

	June 30, 2014
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	5,182	$	2,540	$	3,225	$	10,947	$	59,426	$	70,373	$	70
Years 2003 and 2004		5,503		1,905		2,929		10,337		51,945		62,282		-
Year 2005		6,775		2,959		6,783		16,517		69,352		85,869		89
Year 2006		10,562		3,781		5,278		19,621		94,765		114,386		-
Years 2007, 2008             and 2009		3,962		2,051		5,859		11,872		82,471		94,343		-
Years 2010, 2011, 2012, 2013             and 2014		3,345		2,745		5,432		11,522		184,150		195,672		339
		35,329		15,981		29,506		80,816		542,109		622,925		498
Non-traditional		1,997		1,128		2,655		5,780		32,254		38,034		-
Loss mitigation program		8,239		7,779		12,427		28,445		59,519		87,964		4,378
		45,565		24,888		44,588		115,041		633,882		748,923		4,876
Home equity secured personal loans		-		-		138		138		611		749		-
GNMA's buy-back option program		-		-		38,329		38,329		-		38,329		-
		45,565		24,888		83,055		153,508		634,493		788,001		4,876
Commercial
Commercial secured by real estate:
Corporate		-		-		-		-		90,886		90,886		-
Institutional		-		-		-		-		30,701		30,701		-
Middle market		685		-		638		1,323		139,902		141,225		-
Retail		1,634		494		6,198		8,326		148,862		157,188		-
Floor plan		-		-		-		-		1,680		1,680		-
Real estate		-		-		-		-		11,878		11,878		-
		2,319		494		6,836		9,649		423,909		433,558		-
Other commercial and industrial:
Corporate		-		-		-		-		61,329		61,329		-
Institutional		-		-		-		-		487,725		487,725		-
Middle market		-		760		-		760		80,034		80,794		-
Retail		536		149		1,343		2,028		75,728		77,756		-
Floor plan		-		-		-		-		42,010		42,010		-
		536		909		1,343		2,788		746,826		749,614		-
		2,855		1,403		8,179		12,437		1,170,735		1,183,172		-

16

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	June 30, 2014
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Consumer
Credit cards		345		236		271		852		15,034		15,886		-
Overdrafts		19		3		1		23		295		318		-
Personal lines of credit		57		1		129		187		1,789		1,976		-
Personal loans		1,227		535		677		2,439		123,981		126,420		-
Cash collateral personal loans		280		94		48		422		16,516		16,938		-
		1,928		869		1,126		3,923		157,615		161,538		-
Auto and leasing		37,047		13,620		6,953		57,620		450,414		508,034		-
Total	$	87,395	$	40,780	$	99,313	$	227,488	$	2,413,257	$	2,640,745	$	4,876

17

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	December 31, 2013
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	6,697	$	1,635	$	3,408	$	11,740	$	64,772	$	76,512	$	79
Years 2003 and 2004		4,722		2,163		1,845		8,730		56,387		65,117		-
Year 2005		8,527		2,119		4,808		15,454		74,087		89,541		-
Year 2006		12,055		4,312		4,418		20,785		99,537		120,322		-
Years 2007, 2008             and 2009		3,464		1,104		4,663		9,231		91,919		101,150		152
Years 2010, 2011, 2012             and 2013		3,923		1,609		4,453		9,985		139,561		149,546		459
		39,388		12,942		23,595		75,925		526,263		602,188		690
Non-traditional		3,217		1,162		2,311		6,690		35,412		42,102		-
Loss mitigation program		9,759		5,560		13,191		28,510		57,808		86,318		2,185
		52,364		19,664		39,097		111,125		619,483		730,608		2,875
Home equity secured personal loans		-		-		138		138		598		736		-
GNMA's buy-back option program		-		-		34,921		34,921		-		34,921		-
		52,364		19,664		74,156		146,184		620,081		766,265		2,875
Commercial
Commercial secured by real estate:
Corporate		-		-		-		-		54,796		54,796		-
Institutional		-		-		-		-		4,050		4,050		-
Middle market		1,356		-		10,294		11,650		149,933		161,583		-
Retail		4,253		1,015		3,190		8,458		158,184		166,642		-
Floor plan		-		-		-		-		1,835		1,835		-
Real estate		-		-		-		-		11,655		11,655		-
		5,609		1,015		13,484		20,108		380,453		400,561		-
Other commercial and industrial:
Corporate		236		-		-		236		32,362		32,598		-
Institutional		-		-		-		-		536,445		536,445		-
Middle market		-		299		1,134		1,433		57,464		58,897		-
Retail		1,830		552		539		2,921		58,589		61,510		-
Floor plan		39		-		-		39		37,607		37,646		-
		2,105		851		1,673		4,629		722,467		727,096		-
		7,714		1,866		15,157		24,737		1,102,920		1,127,657		-

18

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	December 31, 2013
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Consumer
Credit cards		287		168		232		687		14,554		15,241		-
Overdrafts		46		4		-		50		322		372		-
Personal lines of credit		33		38		66		137		1,844		1,981		-
Personal loans		1,324		399		352		2,075		92,485		94,560		-
Cash collateral personal loans		324		43		-		367		15,223		15,590		-
		2,014		652		650		3,316		124,428		127,744		-
Auto and leasing		25,531		9,437		5,089		40,057		339,817		379,874		-
Total	$	87,623	$	31,619	$	95,052	$	214,294	$	2,187,246	$	2,401,540	$	2,875

At June 30, 2014, the increase in delinquencies in the consumer and the auto and leasing portfolios compared to December 31, 2013 is mainly attributed to the fact that non-performing loans of acquired non-covered loan portfolio were accounted for under ASC 310-30. Such portfolios are increasing as new originations are ramping up the balances outstanding. More than a year from the BBVAPR Acquisition, those portfolios are beginning to reflect normal delinquency levels as seasoned portfolios. At June 30, 2014, the increase in delinquencies in the mortgage portfolio compared to December 31, 2013 is mainly attributed to local economic conditions.

At June 30, 2014 and December 31, 2013, the Company had $476.3 million and $515.4 million, respectively, in loans granted to the Puerto Rico government, including its instrumentalities, public corporations and municipalities as part of the institutional commercial loan segment. This entire amount was current at June 30, 2014.

19

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Acquired Loans Accounted for under ASC 310-20 (Loans with revolving feature and/or acquired at a premium)

Credit cards, retail and commercial revolving lines of credits, floor plans and performing auto loans with FICO scores over 660 acquired at a premium as part of the non-covered portfolio are accounted for under the guidance of ASC 310-20, which requires that any contractually required loan payment receivable in excess of the Company’s initial investment in the loans be accreted into interest income on a level-yield basis over the life of the loan. Loans accounted for under ASC 310-20 are placed on non-accrual status when past due in accordance with the Company’s non-accrual policy, and any accretion of discount or amortization of premium is discontinued. Loans acquired in the non-covered portfolio that were accounted for under the provisions of ASC 310-20 are removed from the acquired loan category at the end of the reporting period upon refinancing, renewal or normal re-underwriting.

The following tables present the aging of the recorded investment in gross acquired loans accounted for under ASC 310-20 as of June 30, 2014 and December 31, 2013, by class of loans:

	June 30, 2014
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Commercial
Commercial secured by real estate
Corporate	$	-	$	-	$	-	$	-	$	2,999	$	2,999	$	-
Retail		-		-		506		506		2,051		2,557		-
Floor plan		-		-		101		101		3,846		3,947		-
		-		-		607		607		8,896		9,503		-
Other commercial and industrial
Corporate		-		-		94		94		2,916		3,010		-
Retail		254		92		556		902		10,518		11,420		-
Floor plan		51		68		119		238		14,431		14,669		-
		305		160		769		1,234		27,865		29,099		-
		305		160		1,376		1,841		36,761		38,602		-
Consumer
Credit cards		1,520		835		1,320		3,675		42,263		45,938		-
Personal loans		218		82		32		332		3,334		3,666		-
		1,738		917		1,352		4,007		45,597		49,604		-
Auto		11,603		4,325		1,566		17,494		220,905		238,399		-
Total	$	13,646	$	5,402	$	4,294	$	23,342	$	303,263	$	326,605	$	-

20

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	December 31, 2013
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Commercial
Commercial secured by real estate
Corporate	$	-	$	-	$	-	$	-	$	10,166	$	10,166	$	-
Retail		431		331		868		1,630		4,140		5,770		-
Floor plan		-		-		101		101		2,576		2,677		-
		431		331		969		1,731		16,882		18,613		-
Other commercial and industrial
Corporate		14		83		-		97		9,696		9,793		-
Retail		1,717		1,418		659		3,794		23,544		27,338		-
Floor plan		35		193		18		246		21,691		21,937		-
		1,766		1,694		677		4,137		54,931		59,068		-
		2,197		2,025		1,646		5,868		71,813		77,681		-
Consumer
Credit cards		2,217		1,200		2,068		5,485		46,714		52,199		-
Personal loans		196		7		91		294		3,681		3,975		-
		2,413		1,207		2,159		5,779		50,395		56,174		-
Auto		12,534		3,616		1,608		17,758		283,826		301,584		-
Total	$	17,144	$	6,848	$	5,413	$	29,405	$	406,034	$	435,439	$	-

21

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Acquired Loans Accounted for under ASC 310-30 (including those accounted for under ASC 310-30 by analogy)

Acquired loans that are part of the non-covered portfolio, except for credit cards, retail and commercial revolving lines of credits, floor plans and performing auto loans with FICO scores over 660 acquired at a premium, are accounted for by the Company in accordance with ASC 310-30.

The carrying amount corresponding to non-covered loans acquired with deteriorated credit quality, including those accounted under ASC 310-30 by analogy, in the statements of financial condition at June 30, 2014 and December 31, 2013 is as follows:

	June 30,	December 31,
	2014	2013
	(In thousands)
Contractual required payments receivable	$ 2,676,008	$ 2,929,353
Less: Non-accretable discount	554,724	579,587
Cash expected to be collected	2,121,284	2,349,766
Less: Accretable yield	444,606	517,553
Carrying amount	$ 1,676,678	$ 1,832,213

At June 30, 2014 and December 31, 2013, the Company had $179.1 million and $180.5 million, respectively, in loans granted to the Puerto Rico government, including its instrumentalities, public corporations and municipalities as part of its non-covered acquired loans accounted for under ASC 310-30. This entire amount was current at June 30, 2014.

The following tables describe the accretable yield and non-accretable discount activity of acquired loans accounted for under ASC 310-30 for the quarters and six-month periods ended June 30, 2014 and 2013, excluding covered loans:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Accretable Yield Activity
Balance at beginning of period	$	482,001	$	542,741	$	517,553	$	590,409
Accretion		(39,714)		(54,427)		(79,983)		(102,095)
Transfer from non-accretable discount		2,319		7,747		7,036		7,747
Balance at end of period	$	444,606	$	496,061	$	444,606	$	496,061
	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Non-Accretable Discount Activity
Balance at beginning of period	$	563,294	$	733,126	$	579,587	$	741,872
Principal losses		(6,251)		(11,738)		(17,827)		(20,484)
Transfer to accretable yield		(2,319)		(7,747)		(7,036)		(7,747)
Balance at end of period	$	554,724	$	713,641	$	554,724	$	713,641

22

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Covered Loans

The carrying amount of covered loans at June 30, 2014 and December 31, 2013 is as follows:

	June 30,		December 31,
	2014		2013
	(In thousands)
Contractual required payments receivable	$	607,144	$	702,126
Less: Non-accretable discount		85,224		129,477
Cash expected to be collected		521,920		572,649
Less: Accretable yield		128,061		162,959
Carrying amount, gross		393,859		409,690
Less: Allowance for covered loan and lease losses		59,515		52,729
Carrying amount, net	$	334,344	$	356,961

The following tables describe the accretable yield and non-accretable discount activity of covered loans for the quarters and six-month periods ended June 30, 2014 and 2013:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Accretable yield activity
Balance at beginning of period	$	147,767	$	174,107	$	162,959	$	188,008
Accretion		(24,880)		(23,999)		(48,268)		(44,228)
Transfer from non-accretable discount		5,174		17,024		13,370		23,352
Balance at end of period	$	128,061	$	167,132	$	128,061	$	167,132
	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2014		2013
	(In thousands)
Non-accretable discount activity
Balance at beginning of period	$	107,323	$	214,236	$	129,477	$	237,555
Principal losses		(16,925)		(4,953)		(30,883)		(21,944)
Transfer to accretable yield		(5,174)		(17,024)		(13,370)		(23,352)
Balance at end of period	$	85,224	$	192,259	$	85,224	$	192,259

23

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Non-accrual Loans

The following table presents the recorded investment in loans in non-accrual status by class of loans as of June 30, 2014 and December 31, 2013:

	June 30,		December 31,
	2014		2013
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year):
Up to the year 2002	$	3,194	$	3,428
Years 2003 and 2004		2,945		1,845
Year 2005		6,905		4,922
Year 2006		5,278		4,418
Years 2007, 2008 and 2009		5,860		4,511
Years 2010, 2011, 2012, 2013 and 2014		9,379		7,818
		33,561		26,942
Non-traditional		2,655		2,311
Loss mitigation program		16,084		18,792
		52,300		48,045
Home equity secured personal loans		138		138
		52,438		48,183
Commercial
Commercial secured by real estate
Middle market		10,345		11,895
Retail		9,823		7,208
		20,168		19,103
Other commercial and industrial
Middle market		760		1,134
Retail		2,578		2,485
Floor plan		-		108
		3,338		3,727
		23,506		22,830
Consumer
Credit cards		271		232
Overdrafts		1		-
Personal lines of credit		139		84
Personal loans		985		485
Cash collateral personal loans		58		4
		1,454		805
Auto and leasing		7,300		5,089
	$	84,698	$	76,907

24

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	June 30,		December 31,
	2014		2013
	(In thousands)
Acquired loans accounted under ASC 310-20
Commercial
Commercial secured by real estate
Retail	$	545	$	956
Floor plan		101		101
		646		1,057
Other commercial and industrial
Corporate		94		97
Retail		588		1,371
Floor plan		120		18
		802		1,486
		1,448		2,543
Consumer
Credit cards		1,318		2,068
Personal loans		34		151
		1,352		2,219
Auto		1,680		1,608
		4,480		6,370
Total non-accrual loans	$	89,178	$	83,277

Loans accounted for under ASC 310-30 are excluded from the above table as they are considered to be performing due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analyses.

Effective April 24, 2013, delinquent residential mortgage loans insured or guaranteed under applicable FHA and VA programs are placed in non-accrual when they become 18 months or more past due, since they are insured loans. Before that date, they were placed in non-accrual when they became 90 days or more past due.

At June 30, 2014 and December 31, 2013, loans whose terms have been extended and which are classified as troubled-debt restructurings that are not included in non-accrual loans amounted to $75.4 million and $66.5 million, respectively, as they are performing under their new terms.

25

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 5 – ALLOWANCE FOR LOAN AND LEASE LOSSES

The composition of the Company’s allowance for loan and lease losses at June 30, 2014 and December 31, 2013 was as follows:

	June 30,		December 31,
	2014		2013
	(In thousands)
Allowance for loans and lease losses on non-covered loans:
Originated and other loans and leases held for investment:
Mortgage	$	19,062	$	19,937
Commercial		12,423		14,897
Consumer		7,887		6,006
Auto and leasing		11,127		7,866
Unallocated		139		375
		50,638		49,081
Acquired loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		464		926
Consumer		338		-
Auto		2,642		1,428
		3,444		2,354
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Commercial		6,216		1,713
Consumer		62		418
Auto		-		732
		6,278		2,863
		60,360		54,298
Allowance for loans and lease losses on covered loans:
Loans secured by 1-4 family residential properties		14,924		12,495
Commercial and other construction		43,976		39,619
Consumer		615		615
		59,515		52,729
Total allowance for loan and lease losses	$	119,875	$	107,027

Non-Covered Loans

The Company maintains an allowance for loan and lease losses at a level that management considers adequate to provide for probable losses based upon an evaluation of known and inherent risks. The Company’s allowance for loan and lease losses policy provides for a detailed quarterly analysis of probable losses. The analysis includes a review of historical loan loss experience, value of underlying collateral, current economic conditions, financial condition of borrowers and other pertinent factors. While management uses available information in estimating probable loan losses, future additions to the allowance may be required based on factors beyond the Company’s control. We also maintain an allowance for loan losses on acquired loans when: (i) for loans accounted for under ASC 310-30, there is deterioration in credit quality subsequent to acquisition, and (ii) for loans accounted for under ASC 310-20, the inherent losses in the loans exceed the remaining credit discount recorded at the time of acquisition. As part of the Company’s continuous enhancement to the allowance for loan and lease losses methodology, during the quarter ended March 31, 2014, an assessment of the look-back period and historical loss factor was performed for auto and leasing and consumer loan portfolios based on the trends observed and their relation with the economic cycle as of the period ended March 31, 2014. Same analysis was performed for the commercial portfolio during the quarter ended June 30, 2014.  As a result, the period was changed to 24 months from the previously determined 12 months for auto and leasing and consumer.  For the commercial portfolio, a look back period of 12 months was maintained.  In addition, during the quarter ended June 30, 2014, an assessment of environmental factors was performed for commercial, auto, and consumer portfolios. As a result, more weight is been given to the environmental factors related to the economy, taking into consideration current evolution of the portfolio and expected impact, due to recent economic developments. These changes in the allowance for loan and lease losses’ look back period for the consumer and auto and leasing portfolios, and

26

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

economic factors for the commercial, auto, and consumer portfolios are considered a change in accounting estimate as per ASC 250-10 provisions, where adjustments should be made prospectively. 

Originated and Other Loans and Leases Held for Investment

The following tables present the activity in our allowance for loan and lease losses and the related recorded investment of the associated loans for our originated and other loans held for investment portfolio by segment for the periods indicated:

	Quarter Ended June 30, 2014
							Auto and
	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Balance at beginning of period	$	19,511	$	13,994	$	7,135	$	8,731	$	136	$	49,507
Charge-offs		(987)		(543)		(1,397)		(5,956)		-		(8,883)
Recoveries		88		115		244		2,136		-		2,583
Provision (recapture) for non-covered             originated and other loan and lease losses		450		(1,143)		1,905		6,216		3		7,431
Balance at end of period	$	19,062	$	12,423	$	7,887	$	11,127	$	139	$	50,638
	Six-Month Period Ended June 30, 2014
							Auto and
	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Balance at beginning of period	$	19,937	$	14,897	$	6,006	$	7,866	$	375	$	49,081
Charge-offs		(2,201)		(962)		(2,235)		(10,601)		-		(15,999)
Recoveries		236		213		391		3,660		-		4,500
Provision (recapture) for non-covered             originated and other loan and lease losses		1,090		(1,725)		3,725		10,202		(236)		13,056
Balance at end of period	$	19,062	$	12,423	$	7,887	$	11,127	$	139	$	50,638

	June 30, 2014
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses on non-covered originated and other loans:
Ending allowance balance attributable       to loans:
Individually evaluated for impairment	$	7,730	$	2,114	$	-	$	-	$	-	$	9,844
Collectively evaluated for impairment		11,332		10,309		7,887		11,127		139		40,794
Total ending allowance balance	$	19,062	$	12,423	$	7,887	$	11,127	$	139	$	50,638
Loans:
Individually evaluated for impairment	$	90,375	$	28,910	$	-	$	-	$	-	$	119,285
Collectively evaluated for impairment		697,626		1,154,262		161,538		508,034		-		2,521,460
Total ending loan balance	$	788,001	$	1,183,172	$	161,538	$	508,034	$	-	$	2,640,745

27

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Quarter Ended June 30, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Balance at beginning of period	$	22,889	$	16,314	$	1,313	$	1,741	$	77	$	42,334
Charge-offs		(29,120)		(2,886)		(323)		(709)		-		(33,038)
Recoveries		-		234		43		209		-		486
Provision for non-covered             originated and other loan and lease losses		27,606		3,961		1,309		2,400		643		35,919
Balance at end of period	$	21,375	$	17,623	$	2,342	$	3,641	$	720	$	45,701
	Six-Month Period Ended June 30, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Balance at beginning of period	$	21,092	$	17,072	$	856	$	533	$	368	$	39,921
Charge-offs		(31,707)		(3,444)		(569)		(800)		-		(36,520)
Recoveries		-		262		107		216		-		585
Provision for  non-covered             originated and other loan and lease losses		31,990		3,733		1,948		3,692		352		41,715
Balance at end of period	$	21,375	$	17,623	$	2,342	$	3,641	$	720	$	45,701

	December 31, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	8,708	$	1,431	$	-	$	-	$	-	$	10,139
Collectively evaluated for impairment		11,229		13,466		6,006		7,866		375		38,942
Total ending allowance balance	$	19,937	$	14,897	$	6,006	$	7,866	$	375	$	49,081
Loans:
Individually evaluated for impairment	$	84,494	$	28,145	$	-	$	-	$	-	$	112,639
Collectively evaluated for impairment		681,771		1,099,512		127,744		379,874		-		2,288,901
Total ending loans balance	$	766,265	$	1,127,657	$	127,744	$	379,874	$	-	$	2,401,540

28

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Acquired Loans accounted for under ASC 310-20 (Loans with revolving feature and/or acquired at a premium)

The following tables present the activity in our allowance for loan losses and related recorded investment of the associated loans in our non-covered acquired loan portfolio, excluding loans accounted for under ASC 310-30, for the periods indicated:

	Quarter Ended June 30, 2014
	Commercial			Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses     for non-covered acquired loans      accounted for under ASC 310-20:
Balance at beginning of period	$	867	1	$	504	$	2,247	$	-	$	3,618
Charge-offs		(110)			(1,952)		(1,370)		-		(3,432)
Recoveries		30			124		535		-		689
Provision (recapture) for non-covered acquired             loan and lease losses accounted for             under ASC 310-20		(323)			1,662		1,230		-		2,569
Balance at end of period	$	464		$	338	$	2,642	$	-	$	3,444
	Six-Month Period  Ended June 30, 2014
	Commercial			Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses     for non-covered acquired loans      accounted for under ASC 310-20:
Balance at beginning of period	$	926	1	$	-	$	1,428	$	-	$	2,354
Charge-offs		(284)			(4,010)		(2,666)		-		(6,960)
Recoveries		30			224		985		-		1,239
Provision (recapture) for non-covered acquired             loan and lease losses accounted for             under ASC 310-20		(208)			4,124		2,895		-		6,811
Balance at end of period	$	464		$	338	$	2,642	$	-	$	3,444

	June 30, 2014
	Commercial		Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses on non-covered acquired loans accounted for under ASC 310-20:
Ending allowance balance attributable       to loans:
Collectively evaluated for impairment		464		338		2,642		-		3,444
Total ending allowance balance	$	464	$	338	$	2,642	$	-	$	3,444
Loans:
Collectively evaluated for impairment		38,602		49,604		238,399		-		326,605
Total ending loan balance	$	38,602	$	49,604	$	238,399	$	-	$	326,605

29

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Quarter Ended June 30, 2013
	Commercial			Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses     for non-covered acquired loans      accounted for under ASC 310-20:
Balance at beginning of period	$	386	$ 1	$	-	$	-	$	-	$	386
Charge-offs		(25)			(1,158)		(1,410)		-		(2,593)
Recoveries		-			637		886		-		1,523
Provision (recapture)for non-covered acquired             loan and lease losses accounted for             under ASC 310-20		563			521		524		-		1,608
Balance at end of period	$	924		$	-	$	-	$	-	$	924
	Six-Month Period Ended June 30, 2013
	Commercial			Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses     for non-covered acquired loans      accounted for under ASC 310-20:
Balance at beginning of period	$	-	$ 1	$	-	$	-	$	-	$	-
Charge-offs		(25)			(2,614)		(3,125)		-		(5,764)
Recoveries		-			844		2,116		-		2,960
Provision (recapture) for non-covered acquired             loan and lease losses accounted for             under ASC 310-20		949			1,770		1,009		-		3,728
Balance at end of period	$	924		$	-	$	-	$	-	$	924

30

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	December 31, 2013
	Commercial		Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses on non-covered acquired loans accounted for under ASC 310-20:
Ending allowance balance attributable       to loans:
Collectively evaluated for impairment		926		-		1428		-		2,354
Total ending allowance balance	$	926	$	-	$	1,428	$	-	$	2,354
Loans:
Collectively evaluated for impairment		77,681		56,174		301,584		-		435,439
Total ending loan balance	$	77,681	$	56,174	$	301,584	$	-	$	435,439

Acquired Loans Accounted for under ASC 310-30 (including those accounted for under ASC 310-30 by analogy)

The following tables present the activity in our allowance for loan losses and related recorded investment of the associated loans in our non-covered acquired loan portfolio accounted for under ASC 310-30, for the periods indicated:

	Quarter Ended June 30, 2014
	Mortgage			Commercial			Construction			Consumer		Auto		Total
	(In thousands)
Allowance for loan and lease losses for non-covered loans accounted for under ASC 310-30:
Balance at beginning of period	$	-	1	$	2,653	1	$	-	$ 1	$	405	$	-	$	3,058
Provision(recapture) for non-covered acquired             loan and lease losses accounted for             under ASC 310-30		-			3,563			-			(343)		-		3,220
Balance at end of period	$	-		$	6,216		$	-		$	62	$	-	$	6,278
	Six-Month Period Ended June 30, 2014
	Mortgage			Commercial			Construction			Consumer		Auto		Total
	(In thousands)
Allowance for loan and lease losses for non-covered loans accounted for under ASC 310-30:
Balance at beginning of period	$	-	1	$	1,713	1	$	-	1	$	418	$	732	$	2,863
Provision (recapture) for non-covered acquired             loan and lease losses accounted for             under ASC 310-30		-			4,503			-			(356)		(732)		3,415
Balance at end of period	$	-		$	6,216		$	-		$	62	$	-	$	6,278

Non-covered acquired loans accounted for under ASC 310-30 were recognized at fair value as of December 18, 2012, which included the impact of expected credit losses, and therefore, no allowance for credit losses was recorded during the six-month period ended June 30, 2013.

31

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Impaired Loans

The Company evaluates all loans, some individually and others as homogeneous groups, for purposes of determining impairment. The total investment in impaired commercial loans was $29.1 million and $28.4 million at June 30, 2014 and December 31, 2013, respectively. The impaired commercial loans were measured based on the fair value of collateral or the present value of cash flows, including those identified as troubled-debt restructurings. The valuation allowance for impaired commercial loans amounted to $2.1 million and $1.4 million at June 30, 2014 and December 31, 2013, respectively. The total investment in impaired mortgage loans was $90.4 million and $84.5 million at June 30, 2014 and December 31, 2013, respectively. Impairment on mortgage loans assessed as troubled-debt restructurings was measured using the present value of cash flows. The valuation allowance for impaired mortgage loans amounted to approximately $7.7 million and $8.7 million at June 30, 2014 and December 31, 2013, respectively.

The Company’s recorded investment in non-covered commercial and mortgage loans categorized as originated and other loans and leases held for investment that were individually evaluated for impairment and the related allowance for loan and lease losses at June 30, 2014 and December 31, 2013 are as follows:

	June 30, 2014
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance:
Commercial	$	4,580	$	4,459	$	2,114	47%
Residential troubled-debt restructuring		95,652		90,375		7,730	9%
Impaired loans with no specific allowance:
Commercial		31,599		24,451		N/A	N/A
Total investment in impaired loans	$	131,831	$	119,285	$	9,844	8%

	December 31, 2013
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance
Commercial	$	6,600	$	5,553	$	1,431	26%
Residential troubled-debt restructuring		89,539		84,494		8,708	10%
Impaired loans with no specific allowance
Commercial		27,914		22,592		N/A	N/A
Total investment in impaired loans	$	124,053	$	112,639	$	10,139	9%

32

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company’s recorded investment in non-covered commercial loans categorized as non-covered acquired loans accounted for under ASC 310-20 that were individually evaluated for impairment and the related allowance for loan and lease losses at June 30, 2014 and December 31, 2013 are as follows:

	June 30, 2014
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial		208		208		N/A	N/A
Total investment in impaired loans	$	208	$	208	$	-	0%
	December 31, 2013
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial		208		208		N/A	N/A
Total investment in impaired loans	$	208	$	208	$	-	0%

The Company’s recorded investment in non-covered acquired loan pools accounted for under ASC 310-30 and their related allowance for non-covered loan and lease losses at June 30, 2014 and December 31, 2013 are as follows:

	June 30, 2014
	Unpaid		Recorded
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired non-covered loan pools:
Mortgage	$	4,793	$	4,277	$	57	1%
Commercial		231,428		208,544		2,867	1%
Construction		45,912		40,550		3,330	8%
Consumer		51,145		43,824		24	0%
Total investment in impaired non-covered loan pools	$	333,278	$	297,195	$	6,278	2%

	December 31, 2013
	Unpaid		Recorded
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired non-covered loan pools:
Mortgage	$	5,183	$	4,718	$	57	1%
Commercial		48,100		40,411		394	1%
Construction		21,526		17,818		1,319	7%
Consumer		73,043		63,606		361	1%
Auto		379,236		377,316		732	0%
Total investment in impaired non-covered loan pools	$	527,088	$	503,869	$	2,863	1%

33

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents the interest recognized in non-covered commercial and mortgage loans that were individually evaluated for impairment, excluding loans accounted for under ASC 310-30, for the quarters and six-month periods ended June 30, 2014 and 2013:

	Quarter Ended June 30,
	2014				2013
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)
Impaired loans with specific allowance
Commercial	$	39	$	7,200	$	255	$	17,049
Residential troubled-debt restructuring		663		90,445		682		83,081
Impaired loans with no specific allowance
Commercial		77		21,951		226		23,304
Total interest income from impaired loans	$	779	$	119,596	$	1,163	$	123,434
	Six-Month Period Ended Ended June 30,
	2014				2013
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)
Impaired loans with specific allowance
Commercial	$	78	$	6,729	$	322	$	17,789
Residential troubled-debt restructuring		1,270		88,749		1,273		80,914
Impaired loans with no specific allowance
Commercial		154		21,790		364		25,304
Total interest income from impaired loans	$	1,502	$	117,268	$	1,959	$	124,007

34

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Modifications

The following tables present the troubled-debt restructurings during the quarters and six-month periods ended June 30, 2014 and 2013:

	Quarter Ended June 30, 2014
	Number of contracts	Pre-Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage	33	$	5,001	6%	353	$	4,965	4.12%	418
Commercial	1		73	7%	55		73	9.25%	36
Consumer	3		24	14%	77		24	13.98%	72
	Six-Month Period Ended June 30, 2014
	Number of contracts	Pre-Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage	88	$	11,813	6%	349	$	11,446	4.26%	390
Commercial	1		73	7%	55		73	9.25%	36
Consumer	8		66	13%	70		68	13.31%	68
	Quarter Ended June 30, 2013
	Number of contracts	Pre- Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage	42	$	5,372	6%	355	$	5,715	4.26%	420
Commercial	2		1,842	9%	87		1,842	4.00%	66
Consumer	2		18	14%	41		18	13.67%	60
	Six-Month Period Ended June 30, 2013
	Number of contracts	Pre- Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage	86	$	10,555	7%	342	$	11,288	4.59%	417
Commercial	2		1,842	9%	87		1,842	4.00%	66
Consumer	2		18	14%	41		18	13.67%	60

35

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents troubled-debt restructurings for which there was a payment default during the twelve-month periods ended June 30, 2014 and 2013:

	Twelve-Month Period Ended June 30,
	2014			2013
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Mortgage	22	$	2,703	48	$	6,414
Consumer	5	$	101	2	$	29

Credit Quality Indicators

The Company categorizes non-covered originated and other loans and acquired loans accounted for under ASC 310-20 into risk categories based on relevant information about the ability of borrowers to service their debt, such as economic conditions, portfolio risk characteristics, prior loss experience, and the results of periodic credit reviews of individual loans.

The Company uses the following definitions for risk ratings:

Pass: Loans classified as “pass” have a well defined primary source of repayment very likely to be sufficient, with no apparent risk, strong financial position, minimal operating risk, profitability, liquidity and capitalization better than industry standards.

Special Mention: Loans classified as “special mention” have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard: Loans classified as “substandard” are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as “doubtful” have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, questionable and improbable.

Loss: Loans classified as “loss” are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this worthless loan even though partial recovery may be effected in the future.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.

36

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

As of June 30, 2014 and December 31, 2013, and based on the most recent analysis performed, the risk category of gross non-covered originated and other loans and acquired loans accounted for under ASC 310-20 subject to risk rating by class of loans is as follows:

	June 30, 2014
	Risk Ratings
											Individually
	Balance				Special						Measured for
	Outstanding		Pass		Mention		Substandard		Doubtful		Impairment
	(In thousands)
Commercial - originated and other loans held for investment
Commercial secured by real estate:
Corporate	$	90,886	$	90,886	$	-	$	-	$	-	$	-
Institutional		30,701		20,581		10,120		-		-		-
Middle market		141,225		121,532		6,726		-		-		12,967
Retail		157,188		142,415		1,382		2,233		-		11,158
Floor plan		1,680		1,579		101		-		-		-
Real estate		11,878		11,878		-		-		-		-
		433,558		388,871		18,329		2,233		-		24,125
Other commercial and industrial:
Corporate		61,329		61,329		-		-		-		-
Institutional		487,725		287,734		199,991		-		-		-
Middle market		80,794		73,967		3,428		389		-		3,010
Retail		77,756		73,753		259		1,969		-		1,775
Floor plan		42,010		40,910		299		801		-		-
		749,614		537,693		203,977		3,159		-		4,785
Total		1,183,172		926,564		222,306		5,392		-		28,910
Commercial - acquired loans       (under ASC 310-20)
Commercial secured by real estate:
Corporate		2,999		2,999		-		-		-		-
Retail		2,557		2,091		-		466		-		-
Floor plan		3,947		3,947		-		-		-		-
		9,503		9,037		-		466		-		-
Other commercial and industrial:
Corporate		3,010		2,916		94		-		-		-
Retail		11,420		10,871		100		449		-		-
Floor plan		14,669		14,669		-		-		-		-
		29,099		28,456		194		449		-		-
Total		38,602		37,493		194		915		-		-
Total	$	1,221,774	$	964,057	$	222,500	$	6,307	$	-	$	28,910

37

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	December 31, 2013
	Risk Ratings
											Individually
	Balance				Special						Measured for
	Outstanding		Pass		Mention		Substandard		Doubtful		Impairment
	(In thousands)
Commercial - originated and other loans held for investment
Commercial secured by real estate:
Corporate	$	54,796	$	54,796	$	-	$	-	$	-	$	-
Institutional		4,050		4,050		-		-		-		-
Middle market		161,583		133,061		16,627		118		-		11,777
Retail		166,642		149,018		2,182		2,258		-		13,184
Floor plan		1,835		1,835		-		-		-		-
Real estate		11,655		11,655		-		-		-		-
		400,561		354,415		18,809		2,376		-		24,961
Other commercial and industrial:
Corporate		32,598		32,598		-		-		-		-
Institutional		536,445		536,445		-		-		-		-
Middle market		58,897		53,868		3,466		198		-		1,365
Retail		61,510		58,742		257		691		-		1,820
Floor plan		37,646		37,350		188		108		-		-
		727,096		719,003		3,911		997		-		3,185
Total		1,127,657		1,073,418		22,720		3,373		-		28,146
Commercial - acquired loans       (under ASC 310-20)
Commercial secured by real estate:
Corporate		10,166		10,166		-		-		-		-
Retail		5,770		4,378		443		949		-		-
Floor plan		2,677		2,576		-		101		-		-
		18,613		17,120		443		1,050		-		-
Other commercial and industrial:
Corporate		9,793		9,696		-		97		-		-
Retail		27,338		26,044		150		1,144		-		-
Floor plan		21,937		21,769		168		-		-		-
		59,068		57,509		318		1,241		-		-
Total		77,681		74,629		761		2,291		-		-
Total	$	1,205,338	$	1,148,047	$	23,481	$	5,664	$	-	$	28,146

38

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

At June 30, 2014 and December 31, 2013, we had approximately $670.9 million and $763.4 million, respectively, of credit facilities granted to the Puerto Rico government, including its instrumentalities, public corporations and municipalities, of which $655.4 million and $696.0, respectively, were outstanding as of such dates. A substantial portion of our credit exposure to the government of Puerto Rico consists of collateralized loans or obligations that have a specific source of income or revenues identified for its repayment. Some of these obligations consist of senior and subordinated loans to public corporations that obtain revenues from rates charged for services, such as water and electric power utilities. Public corporations have varying degrees of independence from the central government and many have received appropriations or are due other payments from it. We also have loans to various municipalities for which the good faith, credit and unlimited taxing power of the applicable municipality has been pledged to their repayment. These municipalities are required by law to levy special property taxes in such amounts as shall be required for the payment of all their general obligation bonds and notes. Another portion of these loans consists of special obligations of various municipalities that are payable from the basic real and personal property taxes collected within such municipalities. The good faith and credit obligations of the municipalities have a first lien on the basic property taxes.

In the second quarter of 2014, the government enacted the Puerto Rico Public Corporation Debt Enforcement and Recovery Act (the “Recovery Act”), which establishes procedures for the adjustment of certain public corporations’ debts.  The Recovery Act states in its preamble that it further promotes the central government’s public policy objectives of no longer providing financial support to public corporations and promoting their economic independence.  The Recovery Act, which is without precedent and is being challenged in federal court on constitutional grounds, has increased the level of uncertainty as to the rights of the affected public corporation’s creditors. As of June 30, 2014, we had approximately $382.9 million of credit facilities granted to public corporations authorized to initiate proceedings under the Recovery Act.

Oriental Bank is part of a four bank syndicate providing a $550 million dollar revolving line of credit to finance the purchase of fuel for the day to day power generation activities of the Puerto Rico Electric Power Authority (“PREPA”), a public corporation authorized to seek relief under the Recovery Act. The Bank’s participation in the line of credit has an unpaid principal balance of $200.0 million as of June 30, 2014, which matures on August 14, 2014 and is currently accruing. The bank syndicate and PREPA have executed a short term forbearance agreement that expires at the maturity of the line of credit pursuant to which the bank syndicate agreed to not exercise remedies in connection with certain defaults under the loan agreement to facilitate a dialogue with PREPA, which is actively ongoing, regarding the future of the line of credit. As of June 30, 2014, this credit facility has a rating of special mention.

39

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For residential and consumer loan classes, the Company evaluates credit quality based on the delinquency status of the loan. As of June 30, 2014 and December 31, 2013, and based on the most recent analysis performed, the risk category of non-covered gross originated and other loans and acquired loans accounted for under ASC 310-20 not subject to risk rating by class of loans is as follows:

	June 30, 2014
	Delinquency
															Individually
	Balance														Measured for
	Outstanding		0-29 days		30-59 days		60-89 days		90-119 days		120-364 days		365+ days		Impairment
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional         (by origination year)
Up to the year 2002	$	70,373	$	59,428	$	5,181	$	2,498	$	693	$	649	$	1,840	$	84
Years 2003 and 2004		62,282		51,929		5,503		1,905		232		1,267		1,126		320
Year 2005		85,869		69,305		6,611		2,959		775		3,029		2,806		384
Year 2006		114,386		94,669		10,562		3,781		1,561		1,813		1,808		192
Years 2007, 2008             and 2009		94,343		82,470		3,962		2,051		1,130		2,186		2,143		401
Years 2010, 2011, 2012             2013 and 2014		195,672		173,113		1,979		1,515		246		1,843		1,344		15,632
		622,925		530,914		33,798		14,709		4,637		10,787		11,067		17,013
Non-traditional		38,034		32,254		1,997		1,128		263		1,270		1,073		49
Loss mitigation program		87,964		8,100		1,255		471		223		932		691		76,292
		748,923		571,268		37,050		16,308		5,123		12,989		12,831		93,354
Home equity secured         personal loans		749		611		-		-		-		126		12		-
GNMA's buy-back         option program		38,329		-		-		-		7,258		16,835		14,236		-
		788,001		571,879		37,050		16,308		12,381		29,950		27,079		93,354
Consumer
Credit cards		15,886		15,034		345		236		61		210		-		-
Overdrafts		318		295		19		3		-		1		-		-
Unsecured personal lines of credit		1,976		1,789		57		1		90		29		10		-
Unsecured personal loans		126,420		123,520		1,206		535		521		123		11		504
Cash collateral personal loans		16,938		16,516		280		94		48		-		-		-
		161,538		157,154		1,907		869		720		363		21		504
Auto and Leasing		508,034		450,414		37,047		13,620		4,588		2,365		-		-
		1,457,573		1,179,447		76,004		30,797		17,689		32,678		27,100		93,858
Acquired loans (accounted for under ASC 310-20)
Consumer
Credit cards		45,938		42,265		1,520		835		465		853		-		-
Personal loans		3,666		3,335		218		82		10		21		-		-
		49,604		45,600		1,738		917		475		874		-		-
Auto		238,399		220,905		11,603		4,325		965		601		-		-
		288,003		266,505		13,341		5,242		1,440		1,475		-		-
Total	$	1,745,576	$	1,445,952	$	89,345	$	36,039	$	19,129	$	34,153	$	27,100	$	93,858

40

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	December 31, 2013
	Delinquency
															Individually
	Balance														Measured for
	Outstanding		0-29 days		30-59 days		60-89 days		90-119 days		120-364 days		365+ days		Impairment
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional         (by origination year)
Up to the year 2002	$	76,512	$	64,743	$	6,594	$	1,634	$	868	$	1,082	$	1,458	$	133
Years 2003 and 2004		65,117		56,283		4,722		1,938		56		1,437		352		329
Year 2005		89,541		74,016		8,414		2,119		1,198		3,037		573		184
Year 2006		120,322		99,243		12,055		4,312		1,148		2,755		515		294
Years 2007, 2008             and 2009		101,150		91,920		3,464		1,104		1,264		2,844		554		-
Years 2010, 2011,             2012 and 2013		149,546		134,577		3,192		1,609		115		974		989		8,090
		602,188		520,782		38,441		12,716		4,649		12,129		4,441		9,030
Non-traditional		42,102		35,168		3,217		1,162		-		1,324		833		398
Loss mitigation program		86,318		7,762		1,376		149		624		312		1,029		75,066
		730,608		563,712		43,034		14,027		5,273		13,765		6,303		84,494
Home equity secured         personal loans		736		598		-		-		-		126		12		-
GNMA's buy-back         option program		34,921		-		-		-		7,670		14,425		12,826		-
		766,265		564,310		43,034		14,027		12,943		28,316		19,141		84,494
Consumer
Credit cards		15,241		14,555		287		168		118		113		-		-
Overdrafts		372		322		46		4		-		-		-		-
Unsecured personal lines of credit		1,981		1,844		33		38		25		34		7		-
Unsecured personal loans		94,560		92,102		1,272		399		300		39		13		435
Cash collateral personal loans		15,590		15,223		324		43		-		-		-		-
		127,744		124,046		1,962		652		443		186		20		435
Auto and Leasing		379,874		339,817		25,532		9,437		3,397		1,691		-		-
		1,273,883		1,028,173		70,528		24,116		16,783		30,193		19,161		84,929
Acquired loans (accounted for under ASC 310-20)
Consumer
Credit cards		52,199		46,713		2,217		1,200		828		1,241		-		-
Personal loans		3,975		3,681		196		7		60		31		-		-
		56,174		50,394		2,413		1,207		888		1,272		-		-
Auto		301,584		283,825		12,534		3,616		1,095		514		-		-
		357,758		334,219		14,947		4,823		1,983		1,786		-		-
Total	$	1,631,641	$	1,362,392	$	85,475	$	28,939	$	18,766	$	31,979	$	19,161	$	84,929

41

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Covered Loans

For covered loans, as part of the evaluation of actual versus expected cash flows, the Company assesses on a quarterly basis the credit quality of these loans based on delinquency, severity factors and risk ratings, among other assumptions. Migration and credit quality trends are assessed at the pool level, by comparing information from the latest evaluation period through the end of the reporting period.

The changes in the allowance for loan and lease losses on covered loans for the quarters and six-month periods ended June 30, 2014 and 2013 were as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Balance at beginning of the period	$	54,398	$	52,974	$	52,729	$	54,124
Provision for covered loan and lease losses, net		1,595		1,211		3,224		1,883
FDIC shared-loss portion of provision for (recapture of)
covered loan and lease losses, net		3,522		(192)		3,562		(2,014)
Balance at end of the period	$	59,515	$	53,993	$	59,515	$	53,993

FDIC shared-loss portion of provision for (recapture of) covered loans and lease losses net, represents the credit impairment losses to be covered under the FDIC loss-share agreement which is increasing (decreasing) the FDIC loss-share indemnification asset.

Net provision for covered loans includes both additional reserves and reserve releases for different pools. The pools for which there were releases are also subject to a reduction to the FDIC shared-loss indemnification asset because of lower expected losses which are recognized as recaptures.

The Company’s recorded investment in covered loan pools that have recorded impairments and their related allowance for covered loan and lease losses as of June 30, 2014 and December 31, 2013 are as follows:

	June 30, 2014
	Unpaid		Recorded
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired covered loan pools:
Loans secured by 1-4 family residential properties	$	141,951	$	108,884	$	14,923	14%
Construction and development secured by 1-4 family             residential properties		63,615		18,566		7,799	42%
Commercial and other construction		124,506		77,980		36,178	46%
Consumer		9,184		4,912		615	13%
Total investment in impaired covered loan pools	$	339,256	$	210,342	$	59,515	28%

	December 31, 2013
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired covered loan pools with specific allowance
Loans secured by 1-4 family residential properties	$	52,142	$	38,179	$	12,495	33%
Construction and development secured by 1-4 family             residential properties		66,037		17,304		6,866	40%
Commercial and other construction		209,566		111,946		32,753	29%
Consumer		10,512		5,857		615	11%
Total investment in impaired covered loan pools	$	338,257	$	173,286	$	52,729	30%

42

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 6- FDIC INDEMNIFICATION ASSET AND TRUE-UP PAYMENT OBLIGATION

In connection with the FDIC assisted acquisition, the Bank and the FDIC entered into shared-loss agreements pursuant which the FDIC covers a substantial portion of any losses on loans (and related unfunded loan commitments), foreclosed real estate and other repossessed properties covered by the agreements.

The acquired loans, foreclosed real estate, and other repossessed properties subject to the shared-loss agreements are collectively referred to as “covered assets.” Under the terms of the shared-loss agreements, the FDIC absorbs 80% of losses and shares in 80% of loss recoveries on covered assets. The term of the shared-loss agreement covering single family residential mortgage loans is ten years with respect to losses and loss recoveries, while the term of the shared-loss agreement covering commercial loans is five years with respect to losses and eight years with respect to loss recoveries, from the April 30, 2010 acquisition date. The shared-loss agreements also provide for certain costs directly related to the collection and preservation of covered assets to be reimbursed at an 80% level. The FDIC indemnification asset represents the portion of estimated losses covered by the shared-loss agreements between the Bank and the FDIC.

The following table presents the activity in the FDIC indemnification asset and true-up payment obligation for the quarters ended June 30, 2014 and 2013:

	Quarter ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
FDIC indemnification asset:
Balance at beginning of period	$	166,194	$	283,124	$	189,240	$	302,295
Shared-loss agreements reimbursements from the FDIC		(10,464)		(12,046)		(18,700)		(18,696)
Increase (decrease) in expected credit losses to be       covered under shared-loss agreements, net		3,522		(193)		3,562		(2,015)
FDIC shared-loss expense		(17,499)		(19,225)		(35,121)		(31,425)
Incurred expenses to be reimbursed under shared-loss agreements		1,907		1,719		4,679		3,220
Balance at end of period	$	143,660	$	253,379	$	143,660	$	253,379
True-up payment obligation:
Balance at beginning of period	$	19,375	$	16,167	$	18,510	$	15,496
FDIC shared-loss expense		856		740		1,721		1,411
Balance at end of period	$	20,231	$	16,907	$	20,231	$	16,907

The FDIC shared-loss expense increased as the Company continues to forecast better performance and cash flows from covered loans than previously expected resulting in a minor increase in the amortization of the FDIC indemnification asset.

The FDIC shared-loss expense of $18.4 million and $36.8 million for the quarter and six-month period ended June 30, 2014 compared to $20.0 million and $32.8 million for the same periods in 2013. These changes were caused by the ongoing evaluation of expected cash flows of the covered loan portfolio, which resulted in reduced projected losses expected to be collected from the FDIC and the improved accretable yield on the covered loans. Forecasted losses show a decreasing trend during the six-month period ended June 30, 2014 as compared to the projections in 2013. The reduction in claimable losses amortizes the FDIC indemnification asset through the shorter of the life of the shared loss agreement or the loan holding period. This amortization is net of the accretion of the discount recorded to reflect the expected claimable loss at its net present value. During the quarter and six-month period ended June 30, 2014, the net amortization included $1.6 million and $5.1 million of additional amortization of the FDIC indemnification asset from stepped up cost recoveries on certain construction, commercial, and leasing loan pools. Additional amortization of the FDIC indemnification asset may be recorded, should the Company continue to experience reduced expected losses. The majority of the FDIC indemnification asset, $98.9 million, is recorded for projected claimable losses on non-single family residential loans whose loss share period ends in the second quarter of 2015, although the period during which recoveries are shared extends for an additional three-years.

43

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Also in connection with the FDIC assisted acquisition, the Bank agreed to make a true-up payment, also known as clawback liability or clawback provision, to the FDIC on the date that is 45 days following the last day (such day, the “True-Up Measurement Date”) of the final shared-loss month, or upon the final disposition of all covered assets under the shared-loss agreements in the event losses thereunder fail to reach expected levels. Under the shared-loss agreements, the Bank will pay to the FDIC 50% of the excess, if any, of: (i) 20% of the Intrinsic Loss Estimate of $906.0 million (or $181.2 million) (as determined by the FDIC) less (ii) the sum of: (A) 25% of the asset discount (per bid) (or $227.5 million); plus (B) 25% of the cumulative shared-loss payments (defined as the aggregate of all of the payments made or payable to the Bank minus the aggregate of all of the payments made or payable to the FDIC); plus (C) the sum of the period servicing amounts for every consecutive twelve-month period prior to and ending on the True-Up Measurement Date in respect of each of the shared-loss agreements during which the shared-loss provisions of the applicable shared-loss agreement is in effect (defined as the product of the simple average of the principal amount of shared-loss loans and shared-loss assets at the beginning and end of such period times 1%). The true-up payment represents an estimated liability of $20.2 million and $18.5 million, net of discount, as of June 30, 2014 and December 31, 2013, respectively. The estimated liability is included within other liabilities in the unaudited consolidated statements of financial condition.

NOTE 7 —  DERIVATIVE ACTIVITIES

During the quarter and six-month period ended June 30, 2014, losses of $247 thousand and $470 thousand, respectively, were recognized and reflected as “Derivative Activities” in the unaudited consolidated statements of operations. During the quarter and six-month period ended June 30, 2013, losses of $164 thousand and $934 thousand, respectively, were recognized.

The following table presents the Company’s derivative assets and liabilities at June 30, 2014 and December 31, 2013:

	June 30,		December 31,
	2014		2013
	(In thousands)
Derivative assets:
Options tied to S&P 500 Index	$	6,580	$	16,430
Interest rate swaps designated as cash flow hedges		-		850
Interest rate swaps not designated as hedges		2,728		2,861
Interest rate caps		249		319
Other		1		42
	$	9,558	$	20,502
Derivative liabilities:
Interest rate swaps designated as cash flow hedges		10,515		11,757
Interest rate swaps not designated as hedges		2,728		2,861
Interest rate caps		249		319
Other		125		-
	$	13,617	$	14,937

Interest Rate Swaps

The Company enters into interest rate swap contracts to hedge the variability of future interest cash flows of forecasted wholesale borrowings attributable to changes in a predetermined variable index rate. The interest rate swaps effectively fix the Company’s interest payments on an amount of forecasted interest expense attributable to the variable index rate corresponding to the swap notional stated rate. These swaps are designated as cash flow hedges for the forecasted wholesale borrowing transactions, are properly documented as such, and therefore, qualify for cash flow hedge accounting. Any gain or loss associated with the effective portion of our cash flow hedges was recognized in other comprehensive income and is subsequently reclassified into earnings in the period during which the hedged forecasted transactions affect earnings. Changes in the fair value of these derivatives are recorded in accumulated other comprehensive income to the extent there is no significant ineffectiveness in the cash flow hedging relationships. Currently, the Company does not expect to reclassify any amount included in other comprehensive income related to these interest rate swaps to earnings in the next twelve months.

44

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table shows a summary of these swaps and their terms at June 30, 2014:

	Notional		Fixed	Variable	Trade	Settlement	Maturity
Type	Amount		Rate	Rate Index	Date	Date	Date
	(In thousands)
Interest Rate Swaps	$	25,000	2.4365%	1-Month LIBOR	05/05/11	05/04/12	05/04/16
		25,000	2.6200%	1-Month LIBOR	05/05/11	07/24/12	07/24/16
		25,000	2.6350%	1-Month LIBOR	05/05/11	07/30/12	07/30/16
		50,000	2.6590%	1-Month LIBOR	05/05/11	08/10/12	08/10/16
		100,000	2.6750%	1-Month LIBOR	05/05/11	08/16/12	08/16/16
		39,961	2.4210%	1-Month LIBOR	07/03/13	07/03/13	08/01/23
	$	264,961

An unrealized loss of $10.5 million was recognized in accumulated other comprehensive income related to the valuation of these swaps at June 30, 2014, and the related asset and liability are being reflected in the accompanying unaudited consolidated statements of financial condition.

At June 30, 2014 and December 31, 2013, interest rate swaps not designated as hedging instruments that were offered to clients represented an asset of $2.7 million and $2.9 million, respectively, and were included as part of derivative assets in the unaudited consolidated statements of financial position. The credit risk to these clients stemming from these derivatives, if any, is not material. At June 30, 2014 and December 31, 2013, interest rate swaps not designated as hedging instruments that are the mirror-images of the derivatives offered to clients represented a liability of $2.7 million and $2.9 million, respectively, and were included as part of derivative liabilities in the unaudited consolidated statements of financial condition.

The following table shows a summary of these interest rate swaps not designated as hedging instruments and their terms at June 30, 2014:

	Notional		Fixed	Variable	Settlement	Maturity
Type	Amount		Rate	Rate Index	Date	Date
	(In thousands)
Interest Rate Swaps - Derivatives Offered to Clients	$	4,049	5.1300%	1-Month LIBOR	07/03/06	07/03/16
		12,500	5.5050%	1-Month LIBOR	04/11/09	04/11/19
	$	16,549
Interest Rate Swaps - Mirror Image Derivatives	$	4,049	5.1300%	1-Month LIBOR	07/03/06	07/03/16
		12,500	5.5050%	1-Month LIBOR	04/11/09	04/11/19
	$	16,549

45

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Options Tied to Standard & Poor’s 500 Stock Market Index

The Company has offered its customers certificates of deposit with an option tied to the performance of the S&P 500 Index. The Company uses option agreements with major broker-dealers to manage its exposure to changes in this index. Under the terms of the option agreements, the Company receives the average increase in the month-end value of the index in exchange for a fixed premium. The changes in fair value of the option agreements used to manage the exposure in the stock market in the certificates of deposit are recorded in earnings. At June 30, 2014 and December 31, 2013, the purchased options used to manage exposure to the S&P 500 Index on stock indexed deposits represented an asset of $6.6 million (notional amount of $14.0 million) and $16.4 million (notional amount of $28.0 million), respectively, and the options sold to customers embedded in the certificates of deposit and recorded as deposits in the unaudited consolidated statements of financial condition, represented a liability of $6.4 million (notional amount of $13.4 million) and $15.7 million (notional amount of $26.9 million), respectively.

Interest rate caps

The Company has entered into interest rate cap transactions with various clients with floating-rate debt who wish to protect their financial results against increases in interest rates. In these cases, the Company simultaneously enters into mirror-image interest rate cap transactions with financial counterparties. None of these cap transactions qualify for hedge accounting, and therefore, they are marked to market through earnings. The outstanding total notional amount of interest rate caps was $110.0 million at both June 30, 2014 and December 31, 2013. At June 30, 2014 and December 31, 2013, the interest rate caps sold to clients represented a liability of $249 thousand and $319 thousand, respectively, and were included as part of derivative liabilities in the unaudited consolidated statements of financial condition. At June 30, 2014 and December 31, 2013, the interest rate caps purchased as mirror-images represented an asset of $249 thousand and $319 thousand, respectively, and were included as part of derivative assets in the unaudited consolidated statements of financial condition.

NOTE 8 — ACCRUED INTEREST RECEIVABLE ANDOTHER ASSETS

Accrued interest receivable at June 30, 2014 and December 31, 2013 consists of the following:

	June 30,		December 31,
	2014		2013
	(In thousands)
Non-covered loans	$	18,098	$	13,378
Investments		4,410		5,356
	$	22,508	$	18,734

Other assets at June 30, 2014 and December 31, 2013 consist of the following:

		June 30,		December 31,
	2014		2013
	(In thousands)
Prepaid expenses	$	17,423	$	15,439
Core deposit and customer relationship intangibles		10,829		11,912
Other repossessed assets		16,875		12,583
Mortgage tax credits		2,621		8,706
Investment in Statutory Trust		1,083		1,083
Accounts receivable and other assets		41,165		48,717
	$	89,996	$	98,440

46

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Prepaid expenses amounting to $19.6 million and $15.4 million at June 30, 2014 and December 31, 2013, respectively, include prepaid municipal, property and income taxes aggregating to $14.2 million and $9.6 million, respectively.

In connection with the FDIC-assisted acquisition and the BBVAPR Acquisition, the Company recorded a core deposit intangible representing the value of checking and savings deposits acquired. At June 30, 2014 and December 31, 2013, this core deposit intangible amounted to $7.1 million and $7.8 million, respectively. In addition, the Company recorded a customer relationship intangible amounting to $5.0 million representing the value of customer relationships acquired with the acquisition of the securities broker-dealer and insurance agency in the BBVAPR Acquisition as of December 31, 2012. At June 30, 2014 and December 31, 2013, this customer relationship intangible amounted to $3.7 million and $4.1million, respectively.

Other repossessed assets totaled $16.9 million and $12.6 million at June 30, 2014 and December 31, 2013, respectively, include repossessed automobiles amounting to $16.8 million and $12.3 million, respectively.

At June 30, 2014 and December 31, 2013, tax credits for the Company totaled $2.6 million and $8.7 million, respectively. These tax credits do not have an expiration date.

NOTE 9 —  DEPOSITS AND RELATED INTEREST

Total deposits as of June 30, 2014 and December 31, 2013 consist of the following:

	June 30,		December 31,
	2014		2013
	(In thousands)
Non-interest bearing demand deposits	$	731,294	$	744,327
Interest-bearing savings and demand deposits		2,540,229		2,489,971
Individual retirement accounts		323,127		347,262
Retail certificates of deposit		519,150		598,367
Institutional certificates of deposit		308,958		375,224
Total core deposits		4,422,758		4,555,151
Brokered deposits		718,475		828,114
Total deposits	$	5,141,233	$	5,383,265

Brokered deposits include $627.9 million in certificates of deposits and $90.6 million in money market accounts at June 30, 2014, and $729.8 million in certificates of deposits and $98.3 million in money market accounts at December 31, 2013.

The weighted average interest rate of the Company’s deposits was 0.70% at June 30, 2014 and 0.73% at December 31, 2013, inclusive of non-interest bearing deposits of $731.3 million and $744.3 million, respectively. Interest expense for the quarters and six-month periods ended June 30, 2014 and 2013 was as follows:

	Quarter Ended June 30,					Six-Month Period Ended June 30,
	2014		2013			2014		2013
	(In thousands)
Demand and savings deposits	$	4,804	$	5,435	$	9,832	$	11,398
Certificates of deposit		4,361		4,052		8,311		8,025
	$	9,165	$	9,487	$	18,143	$	19,423

47

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

At June 30, 2014 and December 31, 2013, demand and interest-bearing deposits and certificates of deposit included deposits of Puerto Rico Cash & Money Market Fund, Inc., which amounted to $101.8 million and $93.1 million, respectively, with a weighted average rate of 0.77% in both years, and were collateralized with investment securities with a fair value of $81.8 million and $67.5 million, respectively.

At June 30, 2014 and December 31, 2013, time deposits in denominations of $100 thousand or higher, excluding accrued interest and unamortized discounts, amounted to $719.2 million and $845.8 million, including public fund time deposits from various Puerto Rico government municipalities, agencies, and corporations of $22.1 million and $26.7 million, respectively, at a weighted average rate of 0.53% at June 30, 2014 and 0.32% at December 31, 2013.

At June 30, 2014 and December 31, 2013, total public fund deposits from various Puerto Rico government municipalities, agencies, and corporations amounted to $362.8 million and $328.6 million, respectively. These public funds were collateralized with commercial loans amounting to $454.5 million at June 30, 2014, and with investment securities with a fair value of $97.8 million and commercial loans amounting to $549.0 million at December 31, 2013.

Excluding equity indexed options in the amount of $5.2 million, which are used by the Company to manage its exposure to the S&P 500 Index, and also excluding accrued interest of $2.1 million and unamortized deposit discount in the amount of $2.5 million, the scheduled maturities of certificates of deposit at June 30, 2014 are as follows:

	June 30, 2014
	(In thousands)
Within one year:
Three (3) months or less	$	372,809
Over 3 months through 1 year		701,493
		1,074,302
Over 1 through 2 years		421,047
Over 2 through 3 years		200,607
Over 3 through 4 years		56,095
Over 4 through 5 years		17,202
	$	1,769,253

The table of scheduled maturities of certificates of deposits above includes brokered deposits.

The aggregate amount of overdrafts in demand deposit accounts that were reclassified to loans amounted to $861 thousand and $1.8 million as of June 30, 2014 and December 31, 2013, respectively.

48

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 10 —  BORROWINGS

Securities Sold under Agreements to Repurchase

At June 30, 2014, 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 the Company the same or similar securities at the maturity of these agreements.

At June 30, 2014 and December 31, 2013, securities sold under agreements to repurchase (classified by counterparty), excluding accrued interest in the amount of $2.2 million and $2.6 million, respectively, were as follows:

	June 30,				December 31,
	2014				2013
			Fair Value of				Fair Value of
	Borrowing		Underlying		Borrowing		Underlying
	Balance		Collateral		Balance		Collateral
	(In thousands)
JP Morgan Chase Bank NA		255,000		274,471		255,000		273,250
Credit Suisse Securities (USA) LLC		755,000		859,061		755,000		864,232
Deutsche Bank		-		-		255,000		272,053
Total	$	1,010,000	$	1,133,532	$	1,265,000	$	1,409,535

The following table shows a summary of the Company’s repurchase agreements and their terms, excluding accrued interest in the amount of $2.2 million, at June 30, 2014: 

			Weighted-
	Borrowing		Average		Maturity
Year of Maturity	Balance		Coupon	Settlement Date	Date
	(In thousands)
2014	$	85,000	0.675%	12/3/2012	12/3/2014
2015		255,000	0.840%	12/10/2012	6/13/2015
2016		170,000	1.500%	12/6/2012	12/8/2016
2017		500,000	4.78%	3/2/2007	3/2/2017
	$	1,010,000	2.89%

49

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents the repurchase liability associated with the repurchase agreement transactions (excluding accrued interest) by maturity. Also, it includes the carrying value and approximate market value of collateral (excluding accrued interest) at June 30, 2014 and December 31, 2013. The information excludes repurchase agreement transactions which were collateralized with securities or cash, or securities purchased under agreements to resell.

	June 30, 2014
					Market Value of Underlying Collateral
									CMOs		Obligations
			Weighted		FNMA and				issued by US		of US
	Repurchase		Average		FHLMC		GNMA		Government		Government
	Liability		Rate		Certificates		Certificates		Sponsored Agencies		Sponsored Agencies		Total
	(Dollars in thousands)
Over 90 days		1,010,000		2.89%		1,062,938		2,194		-		68,400		1,133,532
Total	$	1,010,000		2.89%	$	1,062,938	$	2,194	$	-	$	68,400	$	1,133,532

	December 31, 2013
					Market Value of Underlying Collateral
									CMOs		Obligations
			Weighted		FNMA and				issued by US		of US
	Repurchase		Average		FHLMC		GNMA		Government		Government
	Liability		Rate		Certificates		Certificates		Sponsored Agencies		Sponsored Agencies		Total
	(Dollars in thousands)
Within 30 days	$	255,000		0.50%	$	216,201	$	-	$	48,923	$	6,929	$	272,053
Over 90 days		1,010,000		2.89%		1,018,632		3,000		45,100		3,720		1,070,452
Total	$	1,265,000		2.41%	$	1,234,833	$	3,000	$	94,023	$	10,649	$	1,342,505

Advances from the Federal Home Loan Bank of New York

Advances are received from the Federal Home Loan Bank of New York (the “FHLB-NY”) under an agreement whereby the Company is required to maintain a minimum amount of qualifying collateral with a fair value of at least 110% of the outstanding advances. At June 30, 2014 and December 31, 2013, these advances were secured by mortgage and commercial loans amounting to $1.2 billion and $1.3 billion, respectively. Also, at June 30, 2014 and December 31, 2013 the Company had an additional borrowing capacity with the FHLB-NY of $629.1 million and $674.2 million, respectively. At June 30, 2014 and December 31, 2013, the weighted average remaining maturity of FHLB’s advances was 9.4 months and 11.3 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 June 30, 2014.

50

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table shows a summary of these advances and their terms, excluding accrued interest in the amount of $328 thousand, at June 30, 2014: 

			Weighted-
		Borrowing	Average		Maturity
Year of Maturity		Balance	Coupon	Settlement Date	Date
		(In thousands)
2014	$	25,000	0.42%	6/30/2014	7/1/2014
		25,000	0.35%	6/4/2014	7/7/2014
		50,000	0.37%	6/10/2014	7/10/2014
		100,000	0.38%	6/16/2014	7/16/2014
		25,000	0.37%	6/24/2014	7/24/2014
		25,000	0.38%	6/30/2014	7/30/2014
		39,961	0.35%	6/2/2014	7/1/2014
		289,961
2017		4,615	1.24%	4/3/2012	4/3/2017
2018		30,000	2.19%	1/16/2013	1/16/2018
		25,000	2.18%	1/16/2013	1/16/2018
		55,000
2020		10,336	2.59%	7/19/2013	7/20/2020
	$	359,912	0.73%

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 $100.8 million at June 30, 2014 and $100.0 million at December 31, 2013.

Under the requirements of Puerto Rico Banking Act, the Bank must establish a redemption fund for the subordinated capital notes by transferring from undivided profits pre-established amounts as follows:

	Redemption fund
	(In thousands)
Redemption fund - June 30, 2014	$	51,925
2014		3,350
2015		6,700
2016		5,025
	$	67,000

Other borrowings

Other borrowings, presented in the unaudited consolidated statement of financial condition amounted to $3.8 million and $3.7 million at June 30, 2014 and December 31, 2013, respectively, which mainly consists of unsecured fixed-rate borrowings and term notes tied to the appreciation of the S&P index. For both periods, the unsecured fixed rate borrowings amounted to $1.7 million at a fixed rate of 3.0%. The term notes tied to the S&P index amounted to $1.0 million at both June 30, 2014 and December 31, 2013 with an index appreciation of $1.1 million and $957 thousand, respectively.

51

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 11 – OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES

The Company’s derivatives are subject to agreements which allow a right of set-off with each respective counterparty. In addition, the Company’s securities purchased under agreements to resell and securities sold under agreements to repurchase have a right of set-off with the respective counterparty under the supplemental terms of the master repurchase agreements. In an event of default, each party has a right of set-off against the other party for amounts owed in the related agreements and any other amount or obligation owed in respect of any other agreement or transaction between them. Security collateral posted to open and maintain a master netting agreement with a counterparty, in the form of cash and securities, may from time to time be segregated in an account at a third-party custodian pursuant to a an account control agreement.

The following table presents the potential effect of rights of set-off associated with the Company’s recognized financial assets and liabilities at June 30, 2014 and December 31, 2013:

June 30, 2014
							Gross Amounts Not Offset in the Statement of Financial Condition
			Gross Amounts		Net Amount of
			Offset in the		Assets Presented
	Gross Amount		Statement of		in Statement				Cash
	of Recognized		Financial		of Financial		Financial		Collateral		Net
	Assets		Condition		Condition		Instruments		Received		Amount
	(In thousands)
Derivatives	$	9,558	$	-	$	9,558	$	2,004	$	-	$	7,554
Total	$	9,558	$	-	$	9,558	$	2,004	$	-	$	7,554
December 31, 2013
							Gross Amounts Not Offset in the Statement of Financial Condition
			Gross Amounts		Net amount of
			Offset in the		Assets Presented
	Gross Amount		Statement of		in Statement				Cash
	of Recognized		Financial		of Financial		Financial		Collateral		Net
	Assets		Condition		Condition		Instruments		Received		Amount
	(In thousands)
Derivatives	$	20,502	$	-	$	20,502	$	2,450	$	6,780	$	11,272
Securities purchased under agreements to resell		60,000		-		60,000		64,587		-		(4,587)
Total	$	80,502	$	-	$	80,502	$	67,037	$	6,780	$	6,685

52

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

June 30, 2014
							Gross Amounts Not Offset in the Statement of Financial Condition
					Net Amount of
			Gross Amounts		Liabilities
			Offset in the		Presented
	Gross Amount		Statement of		in Statement				Cash
	of Recognized		Financial		of Financial		Financial		Collateral		Net
	Liabilities		Condition		Condition		Instruments		Provided		Amount
					(In thousands)
Derivatives	$	19,985	$	-	$	19,985	$	-	$	2,980	$	17,005
Securities sold under agreements to repurchase		1,010,000		-		1,010,000		1,133,532		-		(123,532)
Total	$	1,029,985	$	-	$	1,029,985	$	1,133,532	$	2,980	$	(106,527)
December 31, 2013
							Gross Amounts Not Offset in the Statement of Financial Condition
					Net Amount of
			Gross Amounts		Liabilities
			Offset in the		Presented
	Gross Amount		Statement of		in Statement				Cash
	of Recognized		Financial		of Financial		Financial		Collateral		Net
	Liabilities		Condition		Condition		Instruments		Provided		Amount
	(In thousands)
Derivatives	$	30,672	$	-	$	30,672	$	-	$	2,349	$	28,323
Securities sold under agreements to repurchase		1,265,000		-		1,265,000		1,277,919		67,029		(79,948)
Total	$	1,295,672	$	-	$	1,295,672	$	1,277,919	$	69,378	$	(51,625)

NOTE 12 —  RELATED PARTY TRANSACTIONS

The Bank grants loans to its directors, executive officers and to certain related individuals or organizations in the ordinary course of business. These loans are offered at the same terms as loans to unrelated third parties. As of June 30, 2014 and December 31, 2013, these loan balances amounted to $24.2 million and $19.0 million, respectively. The activity and balance of these loans for the quarters ended June 30, 2014 and 2013 were as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Balance at the beginning of year	$	19,267	$	8,688	$	18,963	$	6,055
New loans		13,847		-		13,847		4,234
Repayments and sales		(8,963)		(657)		(8,659)		(2,026)
Credits of persons no longer         considered related parties		-		-		-		(232)
Balance at the end of year	$	24,151	$	8,031	$	24,151	$	8,031

53

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 13 —  INCOME TAXES

At June 30, 2014 and December 31, 2013, the Company’s net deferred tax asset amounted to $123.3 million and $137.6 million, respectively. In assessing the realizability of the deferred tax asset, management considers whether it is more likely than not that some portion or the entire deferred tax asset will not be realized. The ultimate realization of the deferred tax asset is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.  Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.  Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax asset are deductible, management believes it is more likely than not that the Company will realize the entire deferred tax asset, net of the existing valuation allowances recorded at June 30, 2014 and December 31, 2013. The amount of the deferred tax asset that is considered realizable could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

At June 30, 2014 and December 31, 2013, Oriental International Bank Inc. (“OIB”), the Bank’s international banking entity subsidiary, had $209 thousand and $356 thousand, respectively, in income tax effect of unrecognized gain on available-for-sale securities included in other comprehensive income. Following the change in OIB’s applicable tax rate from 5% to 0% as a result of a Puerto Rico law adopted in 2011, this remaining tax balance will flow through income as these securities are repaid or sold in future periods. During the quarters ended June 30, 2014 and 2013, $10 thousand and $43 thousand, respectively, related to this residual tax effect from OIB was reclassified from accumulated other comprehensive income into income tax provision. During the six-month period ended June 30, 2014 and 2013, $147 thousand and $89 thousand, respectively, related to the residual effect from OIB was reclassified from accumulated other comprehensive income to income tax provision.

The Company classifies unrecognized tax benefits in income taxes payable. These gross unrecognized tax benefits would affect the effective tax rate if realized. The balance of unrecognized tax benefits at June 30, 2014 was $3.6 million (December 31, 2013 - $4.0 million). The Company had accrued $1.6 million at June 30, 2014 (December 31, 2013 - $1.2 million) for the payment of interest and penalties relating to unrecognized tax benefits.

Income tax expense was $10.6 million for the quarter ended June 30, 2014, compared to an income tax benefit of $31.9 million for the same periods in 2013. During the quarter ended June 30, 2013, the income tax benefit was the result of the increase in the enacted tax rate from 30% to 39%, which was retroactively implemented to January 1, 2013.

NOTE 14 —  STOCKHOLDERS’ EQUITY AND EARNINGS PER COMMON SHARE

Regulatory  Capital Requirements

The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by federal and Puerto Rico banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Pursuant to the Dodd-Frank Act, federal banking regulators have adopted new capital rules that became effective January 1, 2014 for advanced approaches banking organizations and will become effective January 1, 2015 for all other covered organizations (subject to certain phase-in periods through January 1, 2019) and that will replace their general risk-based capital rules, advanced approaches rule, market risk rule, and leverage rules.

Quantitative measures established by regulation to ensure capital adequacy currently require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined in the regulations) and of Tier 1 capital to average total assets (as defined in the regulations). As of June 30, 2014 and December 31, 2013, the Company and the Bank met all capital adequacy requirements to which they are subject. As of June 30, 2014 and December 31, 2013, the Bank is “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” an institution must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the tables presented below.

54

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company’s and the Bank’s actual capital amounts and ratios as of June 30, 2014 and December 31, 2013 are as follows:

				Minimum Capital			Minimum to be Well
	Actual			Requirement			Capitalized
	Amount		Ratio	Amount		Ratio		Amount	Ratio
	(Dollars in thousands)
Company Ratios
As of June 30, 2014
Total capital to risk-weighted assets	$	863,790	17.30%	$	399,550	8.00%	$	499,438	10.00%
Tier 1 capital to risk-weighted assets	$	773,824	15.49%	$	199,775	4.00%	$	299,663	6.00%
Tier 1 capital to average total assets	$	773,824	10.26%	$	301,829	4.00%	$	377,286	5.00%
As of December 31, 2013
Total capital to risk-weighted assets	$	827,460	16.16%	$	409,514	8.00%	$	511,893	10.00%
Tier 1 capital to risk-weighted assets	$	736,930	14.35%	$	204,757	4.00%	$	307,136	6.00%
Tier 1 capital to average total assets	$	736,930	9.11%	$	324,910	4.00%	$	406,138	5.00%

				Minimum Capital			Minimum to be Well
	Actual			Requirement			Capitalized
	Amount		Ratio	Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
Bank Ratios
As of June 30, 2014
Total capital to risk-weighted assets	$	812,267	16.34%	$	397,593	8.00%	$	496,991	10.00%
Tier 1 capital to risk-weighted assets	$	722,603	14.54%	$	198,796	4.00%	$	298,195	6.00%
Tier 1 capital to average total assets	$	722,603	9.65%	$	299,657	4.00%	$	374,571	5.00%
As of December 31, 2013
Total capital to risk-weighted assets	$	779,413	15.30%	$	407,637	8.00%	$	509,547	10.00%
Tier 1 capital to risk-weighted assets	$	688,350	13.51%	$	203,819	4.00%	$	305,728	6.00%
Tier 1 capital to average total assets	$	688,350	8.54%	$	322,395	4.00%	$	402,993	5.00%

    Additional Paid-in Capital

Additional paid-in capital represents contributed capital in excess of par value of common and preferred stock net of the costs of issuance. As of June 30, 2014, accumulated issuance costs charged against additional paid in capital amounted to $10.1 million and $13.6 million for preferred and common stock, respectively.

55

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Earnings Per Common Share

The calculation of earnings per common share for the quarters and six-month periods ended June 30, 2014 and 2013 is as follows:

	Quarter ended June 30 ,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands, except per share data)
Net income	$	21,309	$	37,539	$	45,056	$	58,731
Less: Dividends on preferred stock
Non-convertible preferred stock (Series A, B, and D)		(1,628)		(1,628)		(3,256)		(3,256)
Convertible preferred stock (Series C)		(1,838)		(1,838)		(3,675)		(3,675)
Income available to common shareholders	$	17,843	$	34,073	$	38,125	$	51,800
Effect of assumed conversionof the convertible                    '     '  preferred stock		1,838		1,838		3,675		3,675
Income available to common shareholders assuming conversion	$	19,681	$	35,911	$	41,800	$	55,475
Weighted average common shares and share equivalents:
Average common shares outstanding		45,014		45,630		45,170		45,613
Effect of dilutive securities:
Average potential common shares-options		200		200		168		178
Average potential common shares-assuming                    '     '  conversion of convertible preferred stock		7,138		7,138		7,138		7,138
Total weighted average common shares                       '  'outstanding and equivalents		52,352		52,968		52,476		52,929
Earnings per common share - basic	$	0.40	$	0.75	$	0.84	$	1.14
Earnings per common share - diluted	$	0.38	$	0.68	$	0.80	$	1.05

In computing diluted earnings per common share, the 84,000 shares of convertible preferred stock, which remain outstanding at June 30, 2014, with a conversion rate, subject to certain conditions, of 84.9798 shares of common stock per share, were included as average potential common shares from the date they were issued and outstanding. Moreover, in computing diluted earnings per common share, the dividends declared during the quarters ended June 30, 2014 and 2013 on the convertible preferred stock were added back as income available to common shareholders.

For the quarters ended June 30, 2014 and 2013, weighted-average stock options with an anti-dilutive effect on earnings per share not included in the calculation amounted to 364,604 and 243,721, respectively. For the six-month periods ended June 30, 2014 and 2013, weighted-average stock options with an anti-dilutive effect on earnings per share not included in the calculation amounted to 304,491 and 578,393, respectively.

Treasury Stock

Under the Company’s current stock repurchase program it is authorized to purchase in the open market up to $70 million of its outstanding shares of common stock, of which approximately $23.1 million of authority remains. The shares of common stock repurchased are to be held by the Company as treasury shares. During the six-month period ended June 30, 2014, the Company purchased 707,400 shares under this program for a total of $10.4 million, at an average price of $14.66 per share. There were no repurchases during 2013.

56

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents the shares repurchased for each month in the six-month period ended June 30, 2014, excluding the months of March, April, May, and June of 2014, during which no shares were purchased as part of the stock repurchase program:

	Total number of				Dollar amount of
	shares purchased as		Average		shares repurchased
		part of stock	price paid		(excluding
	repurchase programs		per share		commissions paid)
						(In thousands)
Period
January 2014		57,700	$	14.73	$	850
February 2014		649,700	$	14.66	$	9,522
Six-Month Period Ended June 30, 2014		707,400		14.66		10,372

The number of shares that may yet be purchased under the $70 million program is estimated at 1,252,136 and was calculated by dividing the remaining balance of $23.1 million by $18.41 (closing price of the Company common stock at June 30, 2014). The Company did not purchase any shares of its common stock other than through its publicly announced stock repurchase program during the six-months ended June 30, 2014.

The activity in connection with common shares held in treasury by the Company for the six-month periods ended June 30, 2014 and 2013 is set forth below:

	Six-Month Period  Ended June 30,
	2014			2013
		Dollar			Dollar
	Shares	Amount		Shares	Amount
	(In thousands, except shares data)
Beginning of period	7,030,101	$	80,642	7,090,597	$	81,275
Common shares used upon lapse of restricted stock units	(30,552)		(323)	(34,800)		(364)
Common shares repurchased as part of the stock repurchase program	707,400		10,393	-		-
Common shares used to match defined contribution plan, net	-		-	(7,318)		(77)
End of period	7,706,949	$	90,712	7,048,479	$	80,834

Accumulated Other Comprehensive Income

Accumulated other comprehensive income, net of income tax, as of June 30, 2014 and December 31, 2013 consisted of:

	June 30,		December 31,
	2014		2013
	(In thousands)
Unrealized gain on securities available-for-sale which are not     other-than-temporarily impaired	$	33,404	$	13,267
Income tax effect of unrealized gain on securities available-for-sale		(3,645)		(1,834)
Net unrealized gain on securities available-for-sale which are not         other-than-temporarily impaired		29,759		11,433
Unrealized loss on cash flow hedges		(10,515)		(10,907)
Income tax effect of unrealized loss on cash flow hedges		2,511		2,665
Net unrealized loss on cash flow hedges		(8,004)		(8,242)
Accumulated other comprehensive income, net of taxes	$	21,755	$	3,191

57

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents changes in accumulated other comprehensive income by component, net of taxes, for the quarters and six-month periods ended June 30, 2014 and 2013:

	Quarter Ended June 30,
	2014						2013
	Net unrealized		Net unrealized		Accumulated		Net unrealized		Net unrealized		Accumulated
	gains on		loss on		other		gains on		loss on		other
	securities		cash flow		comprehensive		securities		cash flow		comprehensive
	available-for-sale		hedges		income		available-for-sale		hedges		income
	(In thousands)
Beginning balance	$	16,035	$	(8,013)	$	8,022	$	58,393	$	(11,342)	$	47,051
Other comprehensive income (loss) before reclassifications		13,714		(1,633)		12,081		(33,036)		292		(32,744)
Amounts reclassified out of accumulated other comprehensive income		10		1,642		1,652		43		1,416		1,459
Other comprehensive income (loss)		13,724		9		13,733		(32,993)		1,708		(31,285)
Ending balance	$	29,759	$	(8,004)	$	21,755	$	25,400	$	(9,634)	$	15,766
	Six-Month Period Ended June 30,
	2014						2013
	Net unrealized		Net unrealized		Accumulated		Net unrealized		Net unrealized		Accumulated
	gains on		loss on		other		gains on		loss on		other
	securities		cash flow		comprehensive		securities		cash flow		comprehensive
	available-for-sale		hedges		income		available-for-sale		hedges		income
	(In thousands)
Beginning balance	$	11,433	$	(8,242)	$	3,191	$	68,245	$	(12,365)	$	55,880
Other comprehensive income before reclassifications		18,179		(3,025)		15,154		(42,934)		(21)		(42,955)
Amounts reclassified out of accumulated other comprehensive income		147		3,263		3,410		89		2,752		2,841
Other comprehensive income (loss)		18,326		238		18,564		(42,845)		2,731		(40,114)
Ending balance	$	29,759	$	(8,004)	$	21,755	$	25,400	$	(9,634)	$	15,766

The following table presents reclassifications out of accumulated other comprehensive income for the quarter and six-month period ended June 30, 2014:

	Amount reclassified out of accumulated
	other comprehensive income
		Quarter Ended		Six-Month Period	Affected Line Item in
		June 30, 2014		Ended June 30, 2014	Consolidated Statement
					of Operations
	(In thousands)
Cash flow hedges:
Interest-rate contracts	$	1,642	$	3,263	Net interest expense
Available-for-sale securities:
Residual tax effect from OIB's change in applicable tax rate		10		147	Income tax expense
	$	1,652	$	3,410

58

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 15 – GUARANTEES

At June 30, 2014, the unamortized balance of the obligations undertaken in issuing the guarantees under standby letters of credit represented a liability of $38.5 million (December 31, 2013 - $38.6 million).

As a result of the BBVAPR Acquisition, the Company assumed a liability for residential mortgage loans sold subject to credit recourse, pursuant to FNMA’s residential mortgage loan sales and securitization programs. At June 30, 2014 and December 31, 2013, the unpaid principal balance of residential mortgage loans sold subject to credit recourse was $113.5 million and $122.3 million, respectively.

The following table shows the changes in the Company’s liability for estimated losses from these credit recourse agreements, included in the unaudited consolidated statements of financial condition during the quarters and six-month periods ended June 30, 2014 and 2013.

	Quarter Ended June 30,					Six-Month Period Ended June 30,
	2014		2013			2014		2013
	(In thousands)
Balance at beginning of period	$	1,549	$	2,460	$	1,955	$	2,460
Net charge-offs/terminations		(239)		-		(645)		-
Balance at end of period	$	1,310	$	2,460	$	1,310	$	2,460

The estimated losses to be absorbed under the credit recourse arrangements were recorded as a liability when the credit recourse was assumed, and are updated on a quarterly basis. The expected loss, which represents the amount expected to be lost on a given loan, considers the probability of default and loss severity. The probability of default represents the probability that a loan in good standing would become 120 days delinquent, in which case the Company is obligated to repurchase the loan. At June 30, 2014, $83.2 million or 73% of the recourse obligation will be extinguished during the next two years.

If a borrower defaults, pursuant to the credit recourse provided, the Company is required to repurchase the loan or reimburse the third party investor for the incurred loss. The maximum potential amount of future payments that the Company would be required to make under the recourse arrangements is equivalent to the total outstanding balance of the residential mortgage loans serviced with recourse and interest, if applicable. During the quarter and six-month period ended June 30, 2014, the Company repurchased approximately $2.1 million and $3.7 million of unpaid principal balance in mortgage loans subject to the credit recourse provisions. If a borrower defaults, the Company has rights to the underlying collateral securing the mortgage loan. The Company suffers losses on these mortgage loans when the proceeds from a foreclosure sale of the collateral property are less than the outstanding principal balance of the loan, any uncollected interest advanced, and the costs of holding and disposing the related property. At June 30, 2014 and December 31, 2013, the Company’s liability for estimated credit losses related to loans sold with credit recourse amounted to $1.3 million (December 31, 2013 – $2.0 million).

59

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

When the Company sells or securitizes mortgage loans, it generally makes customary representations and warranties regarding the characteristics of the loans sold. The Company's mortgage operations division groups conforming mortgage loans into pools which are exchanged for FNMA and GNMA mortgage-backed securities, which are generally sold to private investors, or are sold directly to FNMA or other private investors for cash. As required under such mortgage backed securities programs, quality review procedures are performed by the Company to ensure that asset guideline qualifications are met. To the extent the loans do not meet specified characteristics, the Company may be required to repurchase such loans or indemnify for losses and bear any subsequent loss related to the loans. Repurchases during the six-month period ended June 30, 2014 under the Company’s representation and warranty arrangements, excluding mortgage loans subject to credit recourse provisions referred to above, approximated $5.1 million in unpaid principal balance (December 31, 2013 - $12.5 million). A substantial amount of these loans are reinstated to performing status or have mortgage insurance, and thus the ultimate losses on the loans are not deemed significant.

During the quarter and six-month period ended June 30, 2014, the Company recognized $95 thousand and $145 thousand in losses from the repurchase of residential mortgage loans sold subject to credit recourse, and $494 thousand and $929 thousand in losses from the repurchase of residential mortgage loans as a result of breaches of the customary representations and warranties. During the quarter and six-month period ended June 30, 2013, the Company did not recognized any losses from the repurchase of residential mortgage loans sold subject to credit recourse, but recognized $303 thousand and $477 thousand in losses from the repurchase of residential mortgage loans as a result of breaches of the customary representations and warranties.

Servicing agreements relating to the mortgage-backed securities programs of FNMA and GNMA, and to mortgage loans sold or serviced to certain other investors, including the Federal Home Loan Mortgage Corporation (“FHLMC”), require the Company to advance funds to make scheduled payments of principal, interest, taxes and insurance, if such payments have not been received from the borrowers. At June 30, 2014, the Company serviced $1.1 billion in mortgage loans for third-parties. The Company generally recovers funds advanced pursuant to these arrangements from the mortgage owner, from liquidation proceeds when the mortgage loan is foreclosed or, in the case of FHA/VA loans, under the applicable FHA and VA insurance and guarantees programs. However, in the meantime, the Company must absorb the cost of the funds it advances during the time the advance is outstanding. The Company must also bear the costs of attempting to collect on delinquent and defaulted mortgage loans. In addition, if a defaulted loan is not cured, the mortgage loan would be canceled as part of the foreclosure proceedings and the Company would not receive any future servicing income with respect to that loan. At June 30, 2014, the outstanding balance of funds advanced by the Company under such mortgage loan servicing agreements was approximately $347 thousand (December 31, 2013 - $243 thousand). To the extent the mortgage loans underlying the Company's servicing portfolio experience increased delinquencies, the Company would be required to dedicate additional cash resources to comply with its obligation to advance funds as well as incur additional administrative costs related to increases in collection efforts.

60

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 16 —  COMMITMENTS AND CONTINGENCIES

Loan Commitments

In the normal course of business, the Company becomes a party to credit-related financial instruments with off-balance-sheet risk to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby and commercial letters of credit, and financial guarantees. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated statements of financial condition. The contract or notional amount of those instruments reflects the extent of the Company’s involvement in particular types of financial instruments.

The Company’s exposure to credit losses in the event of nonperformance by the counterparty to the financial instrument for commitments to extend credit, including commitments under credit card arrangements, and commercial letters of credit is represented by the contractual notional amounts of those instruments, which do not necessarily represent the amounts potentially subject to risk. In addition, the measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are identified. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Credit-related financial instruments at June 30, 2014 and December 31, 2013 were as follows:

	June 30,		December 31,
	2014		2013
	(In thousands)
Commitments to extend credit	$	441,793	$	520,269
Commercial letters of credit		1,544		1,096

Commitments to extend credit represent agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Company upon the extension of credit, is based on management’s credit evaluation of the counterparty.

At June 30, 2014 and December 31, 2013, commitments to extend credit consisted mainly of undisbursed available amounts on commercial lines of credit, construction loans, and revolving credit card arrangements. Since many of the unused commitments are expected to expire unused or be only partially used, the total amount of these unused commitments does not necessarily represent future cash requirements. These lines of credit had a reserve of $900 thousand at both June 30, 2014 and December 31, 2013.

Commercial letters of credit are issued or confirmed to guarantee payment of customers’ payables or receivables in short-term international trade transactions. Generally, drafts will be drawn when the underlying transaction is consummated as intended. However, the short-term nature of this instrument serves to mitigate the risk associated with these contracts.

61

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The summary of instruments that are considered financial guarantees in accordance with the authoritative guidance related to guarantor’s accounting and disclosure requirements for guarantees, including indirect guarantees of indebtedness of others, at June 30, 2014 and December 31, 2013, is as follows:

	June 30,		December 31,
	2014		2013
	(In thousands)
Standby letters of credit and financial guarantees	$	38,451	$	38,577
Loans sold with recourse		113,547		122,291
Commitments to sell or securitize mortgage loans		63,558		80,307

Standby letters of credit and financial guarantees are written conditional commitments issued by the Company to guarantee the payment and/or performance of a customer to a third party (“beneficiary”). If the customer fails to comply with the agreement, the beneficiary may draw on the standby letter of credit or financial guarantee as a remedy. The amount of credit risk involved in issuing letters of credit in the event of nonperformance is the face amount of the letter of credit or financial guarantee. These guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. The amount of collateral obtained, if it is deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the customer.

Lease Commitments

The Company has entered into various operating lease agreements for branch facilities and administrative offices. Rent expense for the quarters ended June 30, 2014 and 2013 amounted to $2.4 million and $2.6 million, respectively, and is included in the “occupancy and equipment” caption in the unaudited consolidated statements of operations. For the six-month periods ended June 30, 2014 and 2013, rent expense amounted to $4.9 million and $5.2 million, respectively. Future rental commitments under leases in effect at June 30, 2014, exclusive of taxes, insurance, and maintenance expenses payable by the Company, are summarized as follows:

Year Ending  December 31,	Minimum Rent
	(In thousands)
2014 (July 1 to December 31)	$	4,210
2015		7,980
2016		7,388
2017		6,761
2018		5,881
Thereafter		22,004
	$	54,224

62

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Contingencies

The Company and its subsidiaries are defendants in a number of legal proceedings incidental to their business. In the ordinary course of business, the Company and its subsidiaries are also subject to governmental and regulatory examinations. Certain subsidiaries of the Company, including the Bank (and its subsidiary OIB), Oriental Financial Services, and Oriental Insurance, are subject to regulation by various U.S., Puerto Rico and other regulators.

The Company seeks to resolve all litigation and regulatory matters in the manner management believes is in the best interests of the Company and its shareholders, and contests allegations of liability or wrongdoing and, where applicable, the amount of damages or scope of any penalties or other relief sought as appropriate in each pending matter.

Subject to the accounting and disclosure framework under the provisions of ASC 450, it is the opinion of the Company’s management, based on current knowledge and after taking into account its current legal accruals, that the eventual outcome of all matters would not be likely to have a material adverse effect on the consolidated statements of financial condition of the Company. Nonetheless, given the substantial or indeterminate amounts sought in certain of these matters, and the inherent unpredictability of such matters, an adverse outcome in certain of these matters could, from time to time, have a material adverse effect on the Company’s consolidated results of operations or cash flows in particular quarterly or annual periods. The Company has evaluated all litigation and regulatory matters where the likelihood of a potential loss is deemed reasonably possible. The Company has determined that the estimate of the reasonably possible loss is not significant.

NOTE 17 - FAIR VALUEOF FINANCIAL INSTRUMENTS

The Company follows the fair value measurement framework under GAAP.

Fair Value Measurement

The fair value measurement framework defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This framework also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs previously described that may be used to measure fair value.

Money market investments

The fair value of money market investments is based on the carrying amounts reflected in the consolidated statements of financial condition as these are reasonable estimates of fair value given the short-term nature of the instruments.

Investment securities

The fair value of investment securities is based on quoted market prices, when available, or market prices provided by recognized broker-dealers. Such securities are classified as level 1 or level 2 depending on the basis for determining fair value. If listed prices or quotes are not available, fair value is based upon externally developed models that use both observable and unobservable inputs depending on the market activity of the instrument, and such securities are classified as level 3. At December 31, 2013, the Company held two securities categorized as other debt that are classified as Level 3. The estimated fair value of the other debt securities was determined by using a third-party model to calculate the present value of projected future cash flows. The assumptions are highly uncertain and include primarily market discount rates, current spreads, and an indicative pricing.

63

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Derivative instruments

The fair value of the interest rate swaps is largely a function of the financial market’s expectations regarding the future direction of interest rates. Accordingly, current market values are not necessarily indicative of the future impact of derivative instruments on earnings. This will depend, for the most part, on the shape of the yield curve, the level of interest rates, as well as the expectations for rates in the future. The fair value of most of these derivative instruments is based on observable market parameters, which include discounting the instruments’ cash flows using the U.S. dollar LIBOR-based discount rates, and also applying yield curves that account for the industry sector and the credit rating of the counterparty and/or the Company.

Certain other derivative instruments with limited market activity are valued using externally developed models that consider unobservable market parameters. Based on their valuation methodology, derivative instruments are classified as Level 2 or Level 3. The Company has offered its customers certificates of deposit with an option tied to the performance of the S&P Index and uses equity indexed option agreements with major broker-dealers to manage its exposure to changes in this index. Their fair value is obtained through the use of an external based valuation that was thoroughly evaluated and adopted by management as its measurement tool for these options. The payoff of these options is linked to the average value of the S&P Index on a specific set of dates during the life of the option. The methodology uses an average rate option or a cash-settled option whose payoff is based on the difference between the expected average value of the S&P Index during the remaining life of the option and the strike price at inception. The assumptions, which are uncertain and require a degree of judgment, include primarily S&P Index volatility, forward interest rate projections, estimated index dividend payout, and leverage.

Servicing assets

Servicing assets do not trade in an active market with readily observable prices. Servicing assets are priced using a discounted cash flow model. The valuation model considers servicing fees, portfolio characteristics, prepayment assumptions, delinquency rates, late charges, other ancillary revenues, cost to service and other economic factors. Due to the unobservable nature of certain valuation inputs, the servicing rights are classified as Level 3.

Loans receivable considered impaired that are collateral dependent

The impairment is measured based on the fair value of the collateral, which is derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations, in accordance with the provisions of ASC 310-10-35. Currently, the associated loans considered impaired are classified as Level 3.

Foreclosed real estate

Foreclosed real estate includes real estate properties securing residential mortgage and commercial loans. The fair value of foreclosed real estate may be determined using an external appraisal, broker price option or an internal valuation. These foreclosed assets are classified as Level 3 given certain internal adjustments that may be made to external appraisals

Other repossessed assets

Other repossessed assets include repossessed automobile loans and leases. The fair value of the repossessed automobiles may be determined using internal valuation and an external appraisal. These repossessed assets are classified as Level 3 given certain internal adjustments that may be made to external appraisals.

64

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Assets and liabilities measured at fair value on a recurring and non-recurring basis, including financial liabilities for which the Company has elected the fair value option, are summarized below:

	June 30, 2014
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	1,418,958	$	-	$	1,418,958
Money market investments		8,228		-		-		8,228
Derivative assets		-		2,978		6,580		9,558
Servicing assets		-		-		13,655		13,655
Derivative liabilities		-		(13,617)		(6,368)		(19,985)
	$	8,228	$	1,408,319	$	13,867	$	1,430,414
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	29,118	$	29,118
Foreclosed real estate		-		-		102,235		102,235
Other repossessed assets		-		-		16,875		16,875
	$	-	$	-	$	148,228	$	148,228

	December 31, 2013
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	1,568,745	$	19,680	$	1,588,425
Securities purchased under agreements to resell		-		60,000		-		60,000
Money market investments		6,967		-		-		6,967
Derivative assets		-		4,072		16,430		20,502
Servicing assets		-		-		13,801		13,801
Derivative liabilities		-		(14,937)		(15,736)		(30,673)
	$	6,967	$	1,617,880	$	34,175	$	1,659,022
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	28,353	$	28,353
Foreclosed real estate		-		-		90,024		90,024
Other repossessed assets		-		-		12,583		12,583
	$	-	$	-	$	130,960	$	130,960

65

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The table below presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the quarters and six-month periods ended June 30, 2014 and 2013:

	Quarter Ended June 30, 2014
			Derivative				Derivative
	Other		asset				liability
	debt		(S&P				(S&P
	securities		Purchased		Servicing		Embedded
Level 3 Instruments Only	available-for-sale		Options)		assets		Options)		Total
Balance at beginning of period	$	20,053	$	12,555	$	13,970	$	(12,120)	$	34,458
Gains (losses) included in earnings		-		(5,975)		-		5,591		(384)
Changes in fair value of investment         securities available for sale included         in other comprehensive income		(53)		-		-		-		(53)
New instruments acquired		-		-		490		-		490
Principal repayments		(20,000)		-		(271)		-		(20,271)
Amortization		-		-		-		161		161
Changes in fair value of servicing assets		-		-		(534)		-		(534)
Balance at end of period	$	-	$	6,580	$	13,655	$	(6,368)	$	13,867
	Six-Month Period Ended June 30, 2014
			Derivative				Derivative
	Other		asset				liability
	debt		(S&P				(S&P
	securities		Purchased		Servicing		Embedded
Level 3 Instruments Only	available-for-sale		Options)		assets		Options)		Total
Balance at beginning of period	$	19,680	$	16,430	$	13,801	$	(15,736)	$	34,175
Gains (losses) included in earnings		-		(9,850)		-		8,964		(886)
Changes in fair value of investment         securities available for sale included         in other comprehensive income		320		-		-		-		320
New instruments acquired		-		-		1,053		-		1,053
Principal repayments		(20,000)		-		(465)		-		(20,465)
Amortization		-		-		-		404		404
Changes in fair value of servicing assets		-		-		(734)		-		(734)
Balance at end of period	$	-	$	6,580	$	13,655	$	(6,368)	$	13,867

66

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Quarter Ended June 30, 2013
			Derivative				Derivative
	Other		asset				liability
	debt		(S&P				(S&P
	securities		Purchased			Servicing	Embedded
Level 3 Instruments Only	available-for-sale		Options)			assets	Options)		Total
Balance at beginning of period	$	20,042	$	15,404	$	11,543	$	(14,839)	$	32,150
Gains (losses) included in earnings		-		616		-		(516)		100
Changes in fair value of investment         securities available for sale included         in other comprehensive income		16		-		-		-		16
New instruments acquired		-		-		1,301		-		1,301
Principal repayments		-		-		(489)		-		(489)
Amortization		-		-		-		40		40
Changes in fair value of servicing assets		-		-		639		-		639
Balance at end of period	$	20,058	$	16,020	$	12,994	$	(15,315)	$	33,757
	Six-Month Period Ended June 30, 2013
			Derivative					Derivative
	Other		asset					liability
	debt		(S&P					(S&P
	securities		Purchased			Servicing		Embedded
Level 3 Instruments Only	available-for-sale		Options)			assets		Options)		Total
Balance at beginning of period	$	20,012	$	13,233	$	10,795	$	(12,707)	$	31,333
Gains (losses) included in earnings		-		2,787		-		(2,923)		(136)
Changes in fair value of investment         securities available for sale included         in other comprehensive income		46		-		-		-		46
New instruments acquired		-		-		1,994		-		1,994
Principal repayments		-		-		(557)		-		(557)
Amortization		-		-		-		315		315
Changes in fair value of servicing assets		-		-		762		-		762
Balance at end of period	$	20,058	$	16,020	$	12,994	$	(15,315)	$	33,757

During the quarters and the six-month periods ended June 30, 2014 and 2013, there were purchases and sales of assets and liabilities measured at fair value on a recurring basis. There were no transfers into and out of Level 1 and Level 2 fair value measurements during such periods.

67

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The table below presents quantitative information for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at June 30, 2014:

	June 30, 2014
	Fair Value		Valuation Technique	Unobservable Input	Range
	(In thousands)
Derivative assets (S&P     Purchased Options)	$	6,580	Option pricing model	Implied option volatility	23.23% - 35.94%
				Counterparty credit risk     (based on 5-year credit     default swap ("CDS")     spread)	57.00% - 65.17%
Servicing assets	$	13,655	Cash flow valuation	Constant prepayment rate	5.60% - 11.24%
				Discount rate	10.00% - 12.00%
Derivative liability (S&P     Embedded Options)	$	(6,838)	Option pricing model	Implied option volatility	23.23% - 35.94%
				Counterparty credit risk (based on 5-year CDS spread)	57.00% - 65.17%
Collateral dependant     impaired loans	$	29,118	Fair value of property     or collateral	Appraised value less disposition costs	22.20% - 29.20%

68

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Information about Sensitivity to Changes in Significant Unobservable Inputs

Other debt securities – The significant unobservable inputs used in the fair value measurement of one of the Company’s other debt securities are indicative comparable pricing, option adjusted spread (“OAS”), yield to maturity, and spread to maturity. Significant changes in any of those inputs in isolation would result in a significantly different fair value measurement. Generally, a change in the assumption used for indicative comparable pricing is accompanied by a directionally opposite change in the assumption used for OAS and a directionally, although not equally proportional, opposite change in the assumptions used for yield to maturity and spread to maturity.

Derivative asset (S&P Purchased Options) – The significant unobservable inputs used in the fair value measurement of the Company’s derivative assets related to S&P purchased options are implied option volatility and counterparty credit risk. Significant changes in any of those inputs in isolation would result in a significantly different fair value measurement. Generally, a change in the assumption used for implied option volatility is not necessarily accompanied by directionally similar or opposite changes in the assumption used for counterparty credit risk.

Servicing assets – The significant unobservable inputs used in the fair value measurement of the Company’s servicing assets are constant prepayment rates and discount rates. Changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or offset the sensitivities. Mortgage banking activities, a component of total banking and financial service revenue in the consolidated statements of operations, include the changes from period to period in the fair value of the mortgage loan servicing rights, which may result from changes in the valuation model inputs or assumptions (principally reflecting changes in discount rates and prepayment speed assumptions) and other changes, including changes due to collection/realization of expected cash flows.

Derivative liability (S&P Embedded Options) – The significant unobservable inputs used in the fair value measurement of the Company’s derivative liability related to S&P purchased options are implied option volatility and counterparty credit risk. Significant changes in any of those inputs in isolation would result in a significantly different fair value measurement. Generally, a change in the assumption used for implied option volatility is not necessarily accompanied by directionally similar or opposite changes in the assumption used for counterparty credit risk.

Fair Value of Financial Instruments

The information about the estimated fair value of financial instruments required by GAAP is presented hereunder. The aggregate fair value amounts presented do not necessarily represent management’s estimate of the underlying value of the Company.

The estimated fair value is subjective in nature, involves uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could affect these fair value estimates. The fair value estimates do not take into consideration the value of future business and the value of assets and liabilities that are not financial instruments. Other significant tangible and intangible assets that are not considered financial instruments are the value of long-term customer relationships of retail deposits, and premises and equipment.

69

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The estimated fair value and carrying value of the Company’s financial instruments at June 30, 2014 and December 31, 2013 is as follows:

	June 30,				December 31,
	2014				2013
	Fair		Carrying		Fair		Carrying
	Value		Value		Value		Value
	(In thousands)
Level 1
Financial Assets:
Cash and cash equivalents	$	596,485	$	596,485	$	621,269	$	621,269
Restricted cash		15,170		15,170		82,199		82,199
Level 2
Financial Assets:
Securities purchased under agreements to resell		-		-		60,000		60,000
Trading securities		1,613		1,613		1,869		1,869
Investment securities available-for-sale		1,418,958		1,418,958		1,568,745		1,568,745
Investment securities held-to-maturity		26,844		26,706		-		-
Federal Home Loan Bank (FHLB) stock		24,381		24,381		24,450		24,450
Derivative assets		2,978		2,978		4,072		4,072
Financial Liabilities:
Derivative liabilities		13,617		13,617		14,937		14,937
Level 3
Financial Assets:
Investment securities available-for-sale		-		-		19,680		19,680
Total loans (including loans held-for-sale)
Non-covered loans, net		4,527,811		4,601,696		4,857,505		4,662,458
Covered loans, net		397,262		334,344		459,444		356,961
Derivative assets		6,580		6,580		16,430		16,430
FDIC indemnification asset		94,653		143,660		152,965		189,240
Accrued interest receivable		22,508		22,508		18,734		18,734
Servicing assets		13,655		13,655		13,801		13,801
Financial Liabilities:
Deposits		5,076,996		5,141,233		5,409,540		5,383,265
Securities sold under agreements to repurchase		1,065,181		1,012,233		1,323,903		1,267,618
Advances from FHLB		365,808		360,240		335,324		336,143
Term notes		3,741		3,837		3,638		3,663
Subordinated capital notes		88,243		100,797		99,316		100,010
Accrued expenses and other liabilities		135,406		135,406		144,424		144,424

70

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following methods and assumptions were used to estimate the fair values of significant financial instruments at June 30, 2014 and December 31, 2013:

•     Cash and cash equivalents (including money market investments and time deposits with other banks), restricted cash, accrued interest receivable, securities purchased under agreements to resell, accrued expenses and other liabilities have been valued at the carrying amounts reflected in the consolidated statements of financial condition as these are reasonable estimates of fair value given the short-term nature of the instruments.

•     Investments in FHLB-NY stock are valued at their redemption value.

•     The fair value of investment securities, including trading securities, is based on quoted market prices, when available, or market prices provided by recognized broker-dealers. If listed prices or quotes are not available, fair value is based upon externally developed models that use both observable and unobservable inputs depending on the market activity of the instrument. The estimated fair value of the structured credit investments is determined by using a third-party cash flow valuation model to calculate the present value of projected future cash flows. The assumptions used which are highly uncertain and require a high degree of judgment, include primarily market discount rates, current spreads, duration, leverage, default, home price depreciation, and loss rates. The assumptions used are drawn from a wide array of data sources, including the performance of the collateral underlying each deal. The external-based valuation, which is obtained at least on a quarterly basis, is analyzed and its assumptions are evaluated and incorporated in either an internal-based valuation model when deemed necessary, or compared to counterparties’ prices and agreed by management.

•     The fair value of the FDIC indemnification asset represents the present value of the net estimated cash payments expected to be received from the FDIC for future losses on covered assets based on the credit assumptions on estimated cash flows for each covered asset pool and the loss sharing percentages. The ultimate collectability of the FDIC indemnification asset is dependent upon the performance of the underlying covered loans, the passage of time and claims paid by the FDIC which are impacted by the Bank’s adherence to certain guidelines established by the FDIC.

•     The fair value of servicing assets is estimated by using a cash flow valuation model which calculates the present value of estimated future net servicing cash flows, taking into consideration actual and expected loan prepayment rates, discount rates, servicing costs, and other economic factors, which are determined based on current market conditions.

•     The fair values of the derivative instruments are provided by valuation experts and counterparties. Certain derivatives with limited market activity are valued using externally developed models that consider unobservable market parameters. The Company has offered its customers certificates of deposit with an option tied to the performance of the S&P Index, and uses equity indexed option agreements with major broker-dealers to manage its exposure to changes in this index. Their fair value is obtained through the use of an external based valuation that was thoroughly evaluated and adopted by management as its measurement tool for these options. The payoff of these options is linked to the average value of the S&P Index on a specific set of dates during the life of the option. The methodology uses an average rate option or a cash-settled option whose payoff is based on the difference between the expected average value of the S&P Index during the remaining life of the option and the strike price at inception. The assumptions, which are uncertain and require a degree of judgment, include primarily S&P Index volatility, forward interest rate projections, estimated index dividend payout, and leverage.

•     Fair value of derivative liabilities, which include interest rate swaps and forward-settlement swaps, are based on the net discounted value of the contractual projected cash flows of both the pay-fixed receive-variable legs of the contracts. The projected cash flows are based on the forward yield curve, and discounted using current estimated market rates.

•     The fair value of the covered and non-covered loan portfolio (including loans held-for-sale) is estimated by segregating by type, such as mortgage, commercial, consumer, auto and leasing. Each loan segment is further segmented into fixed and adjustable interest rates and by performing and non-performing categories. The fair value of performing loans is calculated by discounting contractual cash flows, adjusted for prepayment estimates (voluntary and involuntary), if any, using estimated current market discount rates that reflect the credit and interest rate risk inherent in the loan. This fair value is not currently an indication of an exit price as that type of assumption could result in a different fair value estimate.

•     The fair value of demand deposits and savings accounts is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is based on the discounted value of the contractual cash flows, using estimated current market discount rates for deposits of similar remaining maturities.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

•    The fair value of long-term borrowings, which include securities sold under agreements to repurchase, advances from FHLB-NY, and subordinated capital notes, is based on the discounted value of the contractual cash flows using current estimated market discount rates for borrowings with similar terms, remaining maturities and put dates.

•     The fair value of commitments to extend credit and unused lines of credit is based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standings.

NOTE 18 –  BUSINESSSEGMENTS 

The Company segregates its businesses into the following major reportable segments of business: Banking, Wealth Management, and Treasury. Management established the reportable segments based on the internal reporting used to evaluate performance and to assess where to allocate resources. Other factors such as the Company’s organization, nature of its products, distribution channels and economic characteristics of the products were also considered in the determination of the reportable segments. The Company measures the performance of these reportable segments based on pre-established goals of different financial parameters such as net income, net interest income, loan production, and fees generated. The Company’s methodology for allocating non-interest expenses among segments is based on several factors such as revenue, employee headcount, occupied space, dedicated services or time, among others. These factors are reviewed on a periodical basis and may change if the conditions warrant. 

Banking includes the Bank’s branches and traditional banking products such as deposits and commercial, consumer and mortgage loans. Mortgage banking activities are carried out by the Bank’s mortgage banking division, whose principal activity is to originate mortgage loans for the Company’s own portfolio. As part of its mortgage banking activities, the Company may sell loans directly into the secondary market or securitize conforming loans into mortgage-backed securities.

Wealth Management is comprised of the Bank’s trust division, Oriental Financial Services, Oriental Insurance, and CPC. The core operations of this segment are financial planning, money management and investment banking, brokerage services, insurance sales activity, corporate and individual trust and retirement services, as well as pension plan administration services.

The Treasury segment encompasses all of the Company’s asset/liability management activities, such as purchases and sales of investment securities, interest rate risk management, derivatives, and borrowings. Intersegment sales and transfers, if any, are accounted for as if the sales or transfers were to third parties, that is, at current market prices.

72

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Following are the results of operations and the selected financial information by operating segment for the quarters and six-month periods ended June 30, 2014 and 2013:

	Quarter Ended June 30, 2014
			Wealth				Total Major				Consolidated
	Banking		Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	112,971	$	46	$	12,883	$	125,900	$	-	$	125,900
Interest expense		(10,828)		-		(8,994)		(19,822)		-		(19,822)
Net interest income		102,143		46		3,889		106,078		-		106,078
Provision for non-covered    loan and lease losses		(13,220)		-		-		(13,220)		-		(13,220)
Provision for covered    loan and lease losses		(1,595)		-		-		(1,595)		-		(1,595)
Non-interest income (loss)		(6,507)		7,502		(488)		507		-		507
Non-interest expenses		(49,651)		(6,367)		(3,830)		(59,848)		-		(59,848)
Intersegment revenue		435		-		-		435		(435)		-
Intersegment expenses		-		(327)		(108)		(435)		435		-
Income before income taxes	$	31,605	$	854	$	(537)	$	31,922	$	-	$	31,922
Total assets	$	6,508,432	$	25,345	$	2,089,516	$	8,623,293	$	(913,148)	$	7,710,145
	Quarter Ended June 30, 2013
			Wealth				Total Major				Consolidated
	Banking		Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	115,541	$	96	$	10,665	$	126,302	$	-	$	126,302
Interest expense		(9,840)		-		(10,167)		(20,007)		-		(20,007)
Net interest income		105,701		96		498		106,295		-		106,295
Provision for non-covered    loan and lease losses		(37,527)		-		-		(37,527)		-		(37,527)
Provision for covered    loan and lease losses		(1,211)		-		-		(1,211)		-		(1,211)
Non-interest income (loss)		(5,258)		8,100		3,893		6,735		-		6,735
Non-interest expenses		(57,783)		(6,650)		(4,254)		(68,687)		-		(68,687)
Intersegment revenue		579		-		-		579		(579)		-
Intersegment expenses		-		(485)		(94)		(579)		579		-
Income before income taxes	$	4,501	$	1,061	$	43	$	5,605	$	-	$	5,605
Total assets	$	6,746,902	$	39,960	$	2,527,039	$	9,313,901	$	(877,967)	$	8,435,934

73

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Six-Month Period Ended June 30, 2014
			Wealth				Total Major				Consolidated
	Banking		Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	221,602	$	86	$	27,286	$	248,974	$	-	$	248,974
Interest expense		(18,344)		-		(21,154)		(39,498)		-		(39,498)
Net interest income		203,258		86		6,132		209,476		-		209,476
Provision for non-covered loan and lease losses		(23,282)		-		-		(23,282)		-		(23,282)
Provision for covered loan and lease losses, net		(3,224)		-		-		(3,224)		-		(3,224)
Non-interest income(loss)		(11,603)		14,024		3,315		5,736		-		5,736
Non-interest expenses		(103,198)		(11,146)		(6,908)		(121,252)		-		(121,252)
Intersegment revenue		979		-		-		979		(979)		-
Intersegment expenses		-		(759)		(220)		(979)		979		-
Income before income taxes	$	62,930	$	2,205	$	2,319	$	67,454	$	-	$	67,454
	Six-Month Period Ended June 30, 2013
			Wealth				Total Major				Consolidated
	Banking		Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	217,609	$	182	$	22,683	$	240,474	$	-	$	240,474
Interest expense		(20,497)		-		(20,068)		(40,565)		-		(40,565)
Net interest income		197,112		182		2,615		199,909		-		199,909
Provision for non-covered loan and lease losses		(45,443)		-		-		(45,443)		-		(45,443)
Provision for covered loan and lease losses, net		(1,883)		-		-		(1,883)		-		(1,883)
Non-interest income(loss)		(3,193)		15,801		4,030		16,638		-		16,638
Non-interest expenses		(115,501)		(12,777)		(7,020)		(135,298)		-		(135,298)
Intersegment revenue		(624)		-		-		(624)		624		-
Intersegment expenses		-		(786)		1,410		624		(624)		-
Income before income taxes	$	30,468	$	2,420	$	1,035	$	33,923	$	-	$	33,923

74

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 19 – SUBSEQUENT EVENTS

On July 1, 2014, the Governor of the Commonwealth of Puerto Rico signed House Bill 1919 into law, which became Act 77-2014 (the Act). The Act, which amends the Puerto Rico Internal Revenue Code of 2011 and Act 73-2008, also known as the “Economic Incentives for the Development of Puerto Rico Act”, includes several new tax measures applicable to financial and non financial entities. The main provisions of the Act include:

·A mechanism to impose a 10% tax on a deemed dividend amount resulting from the holding of certain foreign assets, as defined.

·The exclusion of loans or credit transactions between affiliates, with some limited exceptions for purposes of determining the Puerto Rico net assets as part of the computation of the dividend equivalent amount of foreign corporations subject to the branch profits tax.

·Elimination of the former Gross Income Tax as a component of the alternative minimum tax (AMT) for non financial institutions for taxable years commencing on January 1, 2014. Effective for taxable years commencing after December 31, 2013, a tax on gross income is imposed in addition to the regular income tax, the AMT or the alternative basic tax at graduated rates ranging from .20% to .85%. This gross income tax is deductible in arriving at taxable income.

·Limitation of the amount of the tax credit to be claimed against the current year regular tax with respect to the AMT paid in prior years (AMT Credit) to 25% of the current net regular tax over the AMT for such taxable year.

·Increase in tax rates on: (a) net long term capital gains for corporations from 15% to 20%, and (b) dividends from certain corporations from 10% to 15%.

·The holding period to determine whether a gain or loss from the sale of capital assets is considered long-term is increased from six-months to one year. 

The Company has made an evaluation of the impact of these amendments and considered the impact immaterial.

75

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

The following discussion of the Company’s financial condition and results of operations should be read in conjunction with the “Selected Financial Data” and the Company’s unaudited consolidated financial statements and related notes. This discussion and analysis contains forward-looking statements. Please see “Forward-Looking Statements” and the risk factors set forth in our 2013 Form 10-K for the year ended December 31, 2013 (the “2013 Form 10-K”), for discussion of the uncertainties, risks and assumptions associated with these statements.

The Company is a publicly-owned financial holding company that provides a full range of banking and financial services through its subsidiaries, including commercial, consumer, auto and mortgage lending; checking and savings accounts; financial planning, insurance and securities brokerage services; and corporate and individual trust and retirement services. The Company operates through three major business segments: Banking, Wealth Management, and Treasury, and distinguishes itself based on quality service. The Company has 55 branches in Puerto Rico and a subsidiary in Boca Raton, Florida. The Company’s long-term goal is to strengthen its banking and financial services franchise by expanding its lending businesses, increasing the level of integration in the marketing and delivery of banking and financial services, maintaining effective asset-liability management, growing non-interest revenue from banking and financial services, and improving operating efficiencies.

The Company’s diversified mix of businesses and products generates both the interest income traditionally associated with a banking institution and non-interest income traditionally associated with a financial services institution (generated by such businesses as securities brokerage, fiduciary services, investment banking, insurance agency, and retirement plan administration). Although all of these businesses, to varying degrees, are affected by interest rate and financial market fluctuations and other external factors, the Company’s commitment is to continue producing a balanced and growing revenue stream.

76

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make a number of judgments, estimates and assumptions that affect the reported amount of assets, liabilities, income and expenses in the consolidated financial statements. Understanding our accounting policies and the extent to which we use management judgment and estimates in applying these policies is integral to understanding our financial statements. We provide a summary of our significant accounting policies in “Note 1—Summary of Significant Accounting Policies” of our annual report on the 2013 Form 10-K.

In the “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” section of our 2013 Form 10-K, we identified the following accounting policies as critical because they require significant judgments and assumptions about highly complex and inherently uncertain matters and the use of reasonably different estimates and assumptions could have a material impact on our reported results of operations or financial condition:

• Business combination

• Allowance for loan and lease losses

• Financial instruments

We evaluate our critical accounting estimates and judgments on an ongoing basis and update them as necessary based on changing conditions. Management has reviewed and approved these critical accounting policies and has discussed its judgments and assumptions with the Audit and Compliance Committee of our Board of Directors. As part of the Company’s continuous enhancement to the allowance for loan and lease losses methodology, during the quarter ended March 31, 2014, an assessment of the look-back period and historical loss factor was performed for auto and leasing and consumer loan portfolios based on the trends observed and their relation with the economic cycle as of the period ended March 31, 2014. Same analysis was performed for the commercial portfolio during the quarter ended June 30, 2014.  As a result, the period was changed to 24 months from the previously determined 12 months for auto and leasing and consumer.  For the commercial portfolio, a look back period of 12 months was maintained.  In addition, during the quarter ended June 30, 2014, an assessment of environmental factors was performed for commercial, auto, and consumer portfolios. As a result, more weight is been given to the environmental factors related to the economy, taking into consideration current evolution of the portfolio and expected impact, due to recent economic developments. These changes in the allowance for loan and lease losses’ look back period for the consumer and auto and leasing portfolios, and economic factors for the commercial, auto, and consumer portfolios are considered a change in accounting estimate as per ASC 250-10 provisions, where adjustments should be made prospectively. Apart from these changes, there have been no other material changes in the methods used to formulate these critical accounting estimates from those discussed in our 2013 Form 10-K.

77

OVERVIEW OF FINANCIAL PERFORMANCE

SELECTED FINANCIAL DATA
	Quarter Ended June 30,					Six-Month Period Ended June 30,
					Variance					Variance
	2014		2013		%	2014		2013		%
EARNINGS DATA:	(In thousands, except per share data)
Interest income	$	125,900	$	126,302	-0.3%	$	248,974	$	240,474	3.5%
Interest expense		19,822		20,007	-0.9%		39,498		40,565	-2.6%
Net interest income		106,078		106,295	-0.2%		209,476		199,909	4.8%
Provision for non-covered loan and lease losses		13,220		37,527	-64.8%		23,282		45,443	-48.8%
Provision for covered loan and lease losses, net		1,595		1,211	31.7%		3,224		1,883	71.2%
Total provision for loan and lease losses, net		14,815		38,738	-61.8%		26,506		47,326	-44.0%
Net interest income after provision for loan             and lease losses		91,263		67,557	35.1%		182,970		152,583	19.9%
Non-interest income		507		6,735	-92.5%		5,736		16,638	-65.5%
Non-interest expenses		59,848		68,687	-12.9%		121,252		135,298	-10.4%
Income before taxes		31,922		5,605	469.5%		67,454		33,923	98.8%
Income tax expense (benefit)		10,613		(31,934)	133.2%		22,398		(24,808)	190.3%
Net income		21,309		37,539	-43.2%		45,056		58,731	-23.3%
Less: dividends on preferred stock		(3,466)		(3,466)	153.0%		(6,931)		(6,931)	153.0%
Income available to common shareholders	$	17,843	$	34,073	-47.6%	$	38,125	$	51,800	-26.4%
PER SHARE DATA:
Basic	$	0.40	$	0.75	-46.7%	$	0.84	$	1.14	-26.3%
Diluted	$	0.38	$	0.68	-44.1%	$	0.80	$	1.05	-23.8%
Average common shares outstanding		45,014		45,638	-1.4%		45,170		45,613	-1.0%
Average common shares outstanding and equivalents		52,352		52,968	-1.2%		52,476		52,929	-0.9%
Cash dividends declared per common share	$	0.08	$	0.06	33.3%	$	0.16	$	0.12	33.3%
Cash dividends declared on common shares	$	3,560	$	2,742	29.8%	$	7,217	$	5,479	31.7%
PERFORMANCE RATIOS:
Return on average assets (ROA)		1.10%		1.76%	-37.5%		1.14%		1.35%	-15.6%
Return on average tangible common equity		10.96%		22.75%	-51.8%		11.89%		17.35%	-31.5%
Return on average common equity (ROE)		9.54%		19.50%	-51.1%		10.32%		14.86%	-30.6%
Equity-to-assets ratio		12.00%		10.32%	16.2%		12.00%		10.32%	16.2%
Efficiency ratio		47.89%		52.49%	-8.8%		48.99%		54.80%	-10.6%
Interest rate spread		6.05%		5.65%	7.1%		5.91%		5.26%	12.4%
Interest rate margin		6.10%		5.66%	7.8%		5.96%		5.26%	13.3%

78

SELECTED FINANCIAL DATA - (Continued)
	June 30,		December 31,		Variance
	2014		2013		%
PERIOD END BALANCES AND CAPITAL RATIOS:	(In thousands, except per share data)
Investments and loans
Investment securities	$	1,471,723	$	1,614,809	-8.9%
Loans and leases not covered under shared-loss         agreements with the FDIC, net		4,601,696		4,662,458	-1.3%
Loans and leases covered under shared-loss         agreements with the FDIC, net		334,344		356,961	-6.3%
Total investments and loans	$	6,407,763	$	6,634,228	-3.4%
Deposits and borrowings
Deposits	$	5,141,233	$	5,383,265	-4.5%
Securities sold under agreements to repurchase		1,012,233		1,267,618	-20.1%
Other borrowings		464,874		439,816	5.7%
Total deposits and borrowings	$	6,618,340	$	7,090,699	-6.7%
Stockholders’ equity
Preferred stock	$	176,000	$	176,000	0.0%
Common stock		52,730		52,707	0.0%
Additional paid-in capital		538,936		538,071	0.2%
Legal surplus		66,438		61,957	7.2%
Retained earnings		160,055		133,629	19.8%
Treasury stock, at cost		(90,712)		(80,642)	-12.5%
Accumulated other comprehensive income		21,755		3,191	581.8%
Total stockholders' equity	$	925,202	$	884,913	4.6%
Per share data
Book value per common share	$	16.87	$	15.45	9.2%
Tangible book value per common share	$	14.71	$	13.27	10.9%
Market price at end of period	$	18.41	$	17.34	6.2%
Capital ratios
Leverage capital		10.26%		9.11%	12.6%
Tier 1 risk-based capital		15.49%		14.35%	7.9%
Total risk-based capital		17.30%		16.14%	7.2%
Tier 1 common equity to risk-weighted assets		11.47%		10.44%	9.9%
Financial assets managed
Trust assets managed	$	2,866,576	$	2,796,923	2.5%
Broker-dealer assets gathered	$	2,651,291	$	2,493,324	6.3%

79

FINANCIAL HIGHLIGHTS OF THE SECOND QUARTER OF 2014

Income available to common shareholders for the quarter ended June 30, 2014 was $17.8 million, or $0.38 per diluted share. In the quarter ended June 30, 2013, the Company earned $34.1 million or $0.68 per diluted share, which included a net positive impact of $16.3 million from non-recurring items. Such non-recurring items included a $37.0 million deferred income tax benefit as result of the change in tax rate from 30% to 39%, $13.6 million of additional provision for non-performing mortgage loans transferred to held for sale, $8.5 million for the catch up of the first quarter of 2013 income tax expense as a result of the increase in effective income tax rate from 25% to 35%, and a $1.4 million net gain on the sale of a claim on insolvency proceeding.

Net interest margin expanded to 6.10% from 5.66% primarily as a result of an increase in the yield of the Company’s interest earning assets.

The Company’s return on assets was 1.10%, and its return on equity was 9.54%, each of which were decreases from 1.76% and 19.50%, respectively, from the second quarter of 2013. The Company improved its efficiency ratio, which decreased to 47.89% from 52.49% when compared with the same quarter in 2013, primarily as a result of a decrease in the Company’s non-interest expenses.

Interest Income

Total interest income slightly decreased 0.3% to $125.9 million. This was mainly related to the decrease in interest income from loans of $2.2 million, or 1.9%, in the second quarter of 2014. The yield on non-covered loans decreased from 7.80% to 7.55% when compared to the same period in 2013 as a result of a decrease in the yield of acquired loans accounted for under ASC 310-20 from 6.29% to 6.20%, as this portfolio continues to decrease due to scheduled repayments and maturities. Nevertheless, the yield on covered loans increased from 25.70% to 29.06%. This increase in yield is the result of higher projected cash flows on certain pools of covered loans, as credit losses have been lower than initially estimated for these pools. The covered portfolio is having cost recoveries on pools with lower carrying amounts, and these have the effect of increasing net interest income and results mainly from favorable workout resolutions with borrowers.

Interest income from investments reflects a 15.7% increase. The increase is mainly due to the increase in the investments’ yield to 2.66% as compared to 1.81%, driven by lower premium amortization.

Interest Expense

Total interest expense slightly decreased 0.9% to $19.8 million, as compared to the same period in 2013. Such decrease reflects the lower cost of deposits before purchase accounting adjustments (0.76% vs. 0.96%). Such lower cost reflects continuing progress in the repricing of the Company’s core retail deposits and other reductions in its cost of funds.

Net Interest Income

Net interest income remained level at $106.1 million for the second quarter of 2014. Net interest margin of 6.10% increased 45 basis points when compared to the second quarter of 2013.

80

Provision for Loan and Lease Losses

Provision for non-covered loans losses decreased $24.3 million when compared to $37.5 million for the second quarter of 2013, which included the impact of a $21.0 million additional provision due to the reclassification to held-for-sale of $59 million non-performing residential mortgage loans. Excluding this effect, the provision would have been $16.5 million, compared to $13.2 for the second quarter of 2014. Provision for covered loans losses increased $384 thousand when compared to the same period in 2013.

Non-Interest Income

Core banking and financial services revenues decreased 23.2% to $18.9 million as compared to the same period in 2013, primarily reflecting a decrease of $2.7 million in banking services revenue to $10.0 million, and a decrease of $2.3 million in the mortgage banking activities to $1.6 million. Decrease in banking services revenues is mostly due to the reclassification of loan late charges into interest income during the last quarter of 2013. For the quarter and six-month period ended June 30, 2013 these revenues were included as part of banking activities, since the reclassification was not reflected until late 2013. Decrease in mortgage banking activities is mainly due to higher losses in repurchased loans and decrease in sales, when compared to same period in 2013.

The FDIC shared-loss expense of $18.4 million, compared to $20.0 million for the same period in 2013, resulted from the ongoing evaluation of expected cash flows of the covered loan portfolio, which resulted in reduced projected losses expected to be collected from the FDIC and the improved accretable yield on the covered loans.

Losses from derivative activities were $247 thousand, compared to $164 thousand for the same period in 2013.

Non-Interest Expense

Non-interest expense, decreased to $59.8 million, compared to $68.7 million for the same period in 2013, mainly because during the second quarter of 2014, there were no merger and restructuring charges compared to $5.3 million for the same period in 2013. As a result of such decrease, the Company’s efficiency ratio improved to 47.89%, compared to 52.49% for the same period in 2013.

Income Tax Expense

Income tax expense was $10.6 million, compared to an income tax benefit of $31.9 million for the same period in 2013. The income tax benefit for the quarter ended June 30, 2013 included a $36.9 million benefit from the effect in deferred taxes due to the increase in tax rates from 30.0% to 39.0%.

Income Available to Common Shareholders

The Company’s income available to common shareholders amounted to $17.8 million, compared to $34.1 million for the same period in 2013. Income per basic common share and fully diluted common share was $0.40 and $0.38, respectively, compared to income per basic common share and fully diluted common share of $0.75 and $0.68, respectively, for the second quarter of 2013.

Interest Earning Assets

The loan portfolio declined to $4.936 billion at June 30, 2014, compared to $5.003 billion at March 31, 2014, primarily due to the pay down of some commercial loans. The investment portfolio of $1.472 billion at June 30, 2014 decreased slightly 0.7% compared to $1.482 billion at March 31, 2014.

Interest Bearing Liabilities

Total deposits amounted to $5.141 billion at June 30, 2014, a decrease of 3.1% compared to $5.301 billion at March 31, 2014. Securities sold under agreements to repurchase remained at $1.012 billion.

81

Stockholders’ Equity

Stockholders’ equity at June 30, 2014 was $925.2 million compared to $896.5 million at March 31, 2014, an increase of 3.2%. This increase reflects the net income for the quarter and an increase in other comprehensive income. Book value per share was $16.87 at June 30, 2014 compared to $16.23 at March 31, 2014.

The Company maintains capital ratios in excess of regulatory requirements. At June 30, 2014, Tier 1 Leverage Capital Ratio was 10.26% (March 31, 2014 – 9.51%), Tier 1 Risk-Based Capital Ratio was 15.49% (March 31, 2014 – 14.76%), and Total Risk-Based Capital Ratio was 17.30% (March 31, 2014 – 16.56%).

Return on Average Assets and Common Equity

Return on average common equity (“ROE”) was 9.54% compared to 19.50% for the quarter ended June 30, 2013. Return on average assets (“ROA”) was 1.10% compared to 1.76% for the same period in 2013. The decreases in ROE and ROA are mostly due to a 43.2% decrease in net income from $37.5 million to $21.3 million in the second quarter of 2014.

Assets under Management

At June 30, 2014, total assets managed by the Company’s trust division and CPC increased 2.5% to $2.867 billion compared to $2.798 billion at March 31, 2014. At June 30, 2014, total assets gathered by the securities broker-dealer subsidiary from its customer investment accounts increased 2.9% to $2.651 billion, compared to $2.577 billion at March 31, 2014. Changes in trust and broker-dealer related assets primarily reflect a slight increase in portfolio and differences in market values.

Lending

Total loan production of $221.6 million decreased 32.3% from the second quarter of 2013. Total commercial loan production of $45.4 million decreased 56.6% from $104.5 million for the same period in 2013.

Mortgage loan production of $52.0 million decreased 48.7% from the same period in 2013. The Company sells most of its conforming mortgage loans in the secondary market and retains the servicing rights.

In the aggregate, consumer loan and auto and leasing production totaled $124.2 million, a slight increase of 2.3% from the same period in 2013.

Total loan portfolio declined by $66.6 million from $5.003 billion at March 31, 2014 to $4.936 billion at June 30, 2014, mostly as the result of scheduled pay downs and maturities in both the non-covered and covered loan portfolios.

Credit Quality on Non-Covered Loans

Net credit losses, excluding acquired loans, decreased $26.3 million to $6.3 million, representing 0.96% of average non-covered loans outstanding versus 8.89% in the same period in 2013.The credit losses for the quarter ended June 30, 2013, included a $27 million charge-off from nonperforming mortgage loans reclassified as held-for-sale. The allowance for loan and lease losses on non-covered loans at June 30, 2014, increased to $60.4 million compared to $56.2 million at March 31, 2014. The allowances for loan and lease losses, excluding acquired loans, increased to $50.6 million (1.92% of total non-covered loans, excluding acquired loans) at June 30, 2014, compared to $49.5 million (1.95% of total non-covered loans, excluding acquired loans) at March 31, 2014. The allowance for loan and lease losses on acquired loans accounted for under ASC 310-20 decreased to $3.4 million at June 30, 2014, compared to $3.6 million at March 31, 2014.

Non-performing loans (“NPLs”), which exclude loans covered under shared-loss agreements with the FDIC and loans acquired in the BBVAPR Acquisition accounted under ASC 310-30, increased to $94.1 million at June 30, 2014 compared to $88.2 million at March 31, 2014. The increase is due mainly to increase in non-performing mortgage and auto loans.

82

Non-GAAP Measures

The Company uses certain non-GAAP measures of financial performance to supplement the unaudited consolidated financial statements presented in accordance with GAAP. The Company presents non-GAAP measures that management believes are useful and meaningful to investors. Non-GAAP measures do not have any standardized meaning, are not required to be uniformly applied, and are not audited. Therefore, they are unlikely to be comparable to similar measures presented by other companies. The presentation of non-GAAP measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP.

The Company’s management has reported and discussed the results of operations herein both on a GAAP basis and on a pre-tax pre-provision operating income basis (defined as net interest income, plus banking and financial services revenue, less non-interest expenses, as calculated on the table below). The Company’s management believes that, given the nature of the items excluded from the definition of pre-tax pre-provision operating income, it is useful to state what the results of operations would have been without them so that investors can see the financial trends from the Company’s continuing business.

During the quarter ended June 30, 2014, the Company’s pre-tax pre-provision operating income decreased 3.5% to $65.1 million as compared to $67.4 million for the same period in 2013. Pre-tax pre-provision operating income is calculated as follows:

	Quarter Ended June 30,					Six-Month Period Ended June 30,
	2014		2013			2014		2013
	(In thousands)					(In thousands)
PRE-TAX PRE-PROVISION OPERATING INCOME
Net interest income	$	106,078	$	106,295	$	209,476	$	199,909
Core non-interest income:
Banking service revenue		9,995		12,705		20,552		24,345
Financial service revenue		7,336		8,030		14,203		15,690
Mortgage banking activities		1,554		3,827		3,249		6,963
Total core non-interest income		18,885		24,562		38,004		46,998
Non-interest expenses		59,848		68,687		121,252		135,298
Less merger and restructuring charges		-		(5,273)		-		(10,808)
		59,848		63,414		121,252		124,490
Total pre-tax pre-provision operating income	$	65,115	$	67,443	$	126,228	$	122,417

Tangible common equity consists of common equity less goodwill, core deposit intangibles and customer relationship intangible. Tier 1 common equity consists of common equity less goodwill, core deposit intangibles, net unrealized gains on available for sale securities, net unrealized losses on cash flow hedges, and disallowed deferred tax asset and servicing assets. Tangible book value per common share consists of tangible common equity divided by common stock outstanding at the end of the period. Ratios of tangible common equity to total assets, tangible common equity to risk-weighted assets, total equity to risk-weighted assets, and Tier 1 common equity to risk-weighted assets and tangible book value per common share are non-GAAP measures.

At June 30, 2014, tangible common equity to total assets and tangible common equity to risk-weighted assets increased to 8.59% and 13.26%, respectively, from 8.06% and 12.54%, respectively, at March 31, 2014. Total equity to risk-weighted assets and Tier 1 common equity to risk-weighted assets at June 30, 2014 increased to 18.52% and 11.47%, respectively, from 17.75% and 10.79%, respectively, at March 31, 2014.

Ratios calculated based upon Tier 1 common equity have become a focus of regulators and investors, and management believes ratios based on Tier 1 common equity assist investors in analyzing the Company’s capital position. Furthermore, management and many stock analysts use tangible common equity in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations. Neither Tier 1 common equity nor tangible common equity or related measures should be considered in isolation or as a substitute for stockholders’ equity, total assets or any other measure calculated in accordance with GAAP.

83

ANALYSIS OF RESULTS OF OPERATIONS

The following tables show major categories of interest-earning assets and interest-bearing liabilities, their respective interest income, expenses, yields and costs, and their impact on net interest income due to changes in volume and rates for the quarters and six-month periods ended June 30, 2014 and 2013:

TABLE 1 - QUARTERLY ANALYSIS OF NET INTEREST INCOME AND CHANGES DUE TO VOLUME/RATE
FOR THE QUARTERS ENDED JUNE 30, 2014 AND 2013
	Interest				Average rate		Average balance
	June		June		June	June	June		June
	2014		2013		2014	2013	2014		2013
	(Dollars in thousands)
A - TAX EQUIVALENT SPREAD
Interest-earning assets	$	125,900	$	126,302	7.24%	6.72%	$	6,972,133	$	7,542,763
Tax equivalent adjustment		9,926		1,717	0.57%	0.09%		-		-
Interest-earning assets - tax equivalent		135,826		128,019	7.82%	6.81%		6,972,133		7,542,763
Interest-bearing liabilities		19,822		20,007	1.19%	1.07%		6,689,332		7,476,194
Tax equivalent net interest income / spread		116,004		108,012	6.64%	5.74%		282,801		66,569
Tax equivalent interest rate margin					6.67%	5.74%
B - NORMAL SPREAD
Interest-earning assets:
Investments:
Investment securities		12,569		10,925	3.62%	2.26%		1,391,655		1,936,467
Trading securities		37		31	7.94%	7.84%		1,868		1,585
Interest bearing cash and money market investments		351		242	0.25%	0.18%		559,230		547,443
Total investments		12,957		11,198	2.66%	1.81%		1,952,753		2,485,495
Loans not covered under shared-loss agreements     with the FDIC:
Originated
Mortgage		10,341		10,495	5.36%	5.24%		773,425		803,272
Commercial		16,451		6,046	5.46%	6.18%		1,209,346		392,261
Consumer		3,641		1,746	9.92%	8.98%		147,230		77,948
Auto and leasing		12,650		5,075	10.47%	10.63%		484,536		191,438
Total originated non-covered loans		43,083		23,362	6.61%	6.40%		2,614,537		1,464,918
Acquired
Mortgage		9,363		11,138	5.37%	5.76%		698,720		775,711
Commercial		18,959		35,645	11.35%	10.30%		669,983		1,387,963
Consumer		3,992		5,431	13.84%	12.40%		115,676		175,678
Auto		12,667		15,529	8.80%	7.09%		577,114		878,387
Total acquired non-covered loans		44,981		67,743	8.75%	8.44%		2,061,493		3,217,739
Total non-covered loans		88,064		91,105	7.55%	7.80%		4,676,030		4,682,657
Loans covered under shared loss agreements with the FDIC		24,879		23,999	29.06%	25.70%		343,350		374,611
Total loans		112,943		115,104	9.03%	9.13%		5,019,380		5,057,268
Total interest earning assets		125,900		126,302	7.24%	6.72%		6,972,133		7,542,763

84

	Interest					Average rate		Average balance
	June		June			June	June	June		June
	2014		2013			2014	2013	2014		2013
	(Dollars in thousands)
Interest-bearing liabilities:
Deposits:
Non-interest bearing deposits		-		-		0.00%	0.00%		704,107		769,830
Now Accounts		2,208		1,964		0.61%	0.57%		1,443,824		1,390,030
Savings and money market		2,192		3,015		0.75%	1.35%		1,168,911		893,804
Individual retirement accounts		940		1,169		1.14%	1.29%		329,584		363,209
Retail certificates of deposits		1,742		2,851		1.31%	1.66%		535,203		690,246
Total core deposits		7,082		8,999		0.68%	0.88%		4,181,629		4,107,119
Institutional deposits		1,290		2,665		1.58%	1.65%		327,660		647,493
Brokered deposits		1,468		1,790		0.83%	0.84%		709,374		858,199
Total wholesale deposits		2,758		4,455		1.07%	1.19%		1,037,034		1,505,692
Deposits fair value premium amortization		(1,010)		(4,382)		0.00%	0.00%		-		-
Core deposit intangible amortization		335		415		0.00%	0.00%		-		-
Total deposits		9,165		9,487		0.70%	0.68%		5,218,663		5,612,811
Borrowings:
Securities sold under agreements to repurchase		7,372		7,109		2.93%	2.10%		1,010,000		1,356,716
Advances from FHLB and other borrowings		2,289		2,241		2.55%	2.20%		360,130		408,019
Subordinated capital notes		996		1,170		3.97%	4.76%		100,539		98,648
Total borrowings		10,657		10,520		2.91%	2.26%		1,470,669		1,863,383
Total interest bearing liabilities		19,822		20,007		1.19%	1.07%		6,689,332		7,476,194
Net interest income / spread	$	106,078	$	106,295		6.05%	5.65%
Interest rate margin						6.10%	5.65%
Excess of average interest-earning assets     over average interest-bearing liabilities								$	282,801	$	66,569
Average interest-earning assets to average     interest-bearing liabilities ratio									104.23%		100.89%
C - CHANGES IN NET INTEREST INCOME DUE TO:
	Volume		Rate		Total
	(In thousands)
Interest Income:
Investments	$	(2,400)	$	4,159	$	1,759
Loans		(2,132)		(29)		(2,161)
Total interest income		(4,532)		4,130		(402)
Interest Expense:
Deposits		(666)		344		(322)
Repurchase agreements		(1,817)		2,080		263
Other borrowings		(310)		184		(126)
Total interest  expense		(2,793)		2,608		(185)
Net Interest Income	$	(1,739)	$	1,522	$	(217)

85

TABLE 1/A - YEAR-TO-DATE ANALYSIS OF NET INTEREST INCOME AND CHANGES DUE TO VOLUME/RATE
FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2014 AND 2013
	Interest				Average rate		Average balance
	June		June		June	June	June		June
	2014		2013		2014	2013	2014		2013
	(Dollars in thousands)
A - TAX EQUIVALENT SPREAD
Interest-earning assets	$	248,974	$	240,474	7.08%	6.33%	$	7,093,560	$	7,662,088
Tax equivalent adjustment		20,059		3,676	0.57%	0.10%		-		-
Interest-earning assets - tax equivalent		269,033		244,150	7.65%	6.43%		7,093,560		7,662,088
Interest-bearing liabilities		39,498		40,565	1.17%	1.07%		6,827,571		7,633,386
Tax equivalent net interest income / spread		229,535		203,585	6.48%	5.36%		265,989		28,702
Tax equivalent interest rate margin					6.53%	5.36%
B - NORMAL SPREAD
Interest-earning assets:
Investments:
Investment securities		26,690		23,734	3.58%	2.37%		1,503,772		2,021,442
Trading securities		75		50	8.06%	8.47%		1,876		1,190
Interest bearing cash and money market investments		635		550	0.22%	0.20%		574,509		556,054
Total investments		27,400		24,334	2.66%	1.90%		2,080,157		2,578,686
Loans not covered under shared-loss agreements     with the FDIC:
Originated
Mortgage		20,799		21,938	5.49%	5.65%		763,400		783,172
Commercial		30,797		10,937	5.33%	5.76%		1,165,891		382,654
Consumer		6,780		2,943	9.92%	8.67%		137,787		68,480
Auto and leasing		23,639		7,920	10.56%	11.02%		451,488		144,995
Total originated non-covered loans		82,015		43,738	6.57%	6.39%		2,518,566		1,379,302
Acquired
Mortgage		18,732		22,308	5.35%	5.73%		705,992		784,445
Commercial		37,671		62,241	10.79%	8.77%		704,082		1,430,953
Consumer		8,209		11,302	13.48%	12.47%		122,806		182,806
Auto		26,680		32,323	8.78%	7.06%		612,551		923,135
Total acquired non-covered loans		91,292		128,174	8.58%	7.78%		2,145,431		3,321,338
Total non-covered loans		173,307		171,912	7.49%	7.38%		4,663,997		4,700,641
Loans covered under shared loss agreements with the FDIC		48,267		44,228	27.86%	23.30%		349,406		382,761
Total loans		221,574		216,140	8.91%	8.57%		5,013,403		5,083,402
Total interest earning assets		248,974		240,474	7.08%	6.33%		7,093,560		7,662,088

86

	Interest					Average rate		Average balance
	June		June			June	June	June		June
	2014		2013			2014	2013	2014		2013
	(Dollars in thousands)
Interest-bearing liabilities:
Deposits:
Non-interest bearing deposits		-		-		0.00%	0.00%		702,862		768,041
Now Accounts		4,531		5,707		0.63%	0.81%		1,451,547		1,421,650
Savings and money market		4,488		4,822		0.79%	1.11%		1,148,918		876,624
Individual retirement accounts		1,998		2,536		1.20%	1.39%		336,634		368,042
Retail certificates of deposits		3,681		6,040		1.34%	1.76%		553,527		691,565
Total core deposits		14,698		19,105		0.71%	0.93%		4,193,488		4,125,922
Institutional deposits		2,699		5,359		1.54%	1.74%		352,456		620,069
Brokered deposits		2,984		3,779		0.82%	0.89%		730,349		857,330
		5,683		9,138		1.06%	1.25%		1,082,805		1,477,399
Deposits fair value premium amortization		(2,908)		(9,649)		0.00%	0.00%		-		-
Core deposit intangible amortization		670		829		0.00%	0.00%		-		-
Total deposits		18,143		19,423		0.69%	0.70%		5,276,293		5,603,321
Borrowings:
Securities sold under agreements to repurchase		14,784		14,357		2.75%	2.01%		1,082,968		1,440,679
Advances from FHLB and other borrowings		4,583		3,046		2.51%	1.38%		367,953		446,482
FDIC-guaranteed term notes		-		909		0.00%	8.38%		-		21,875
Subordinated capital notes		1,988		2,830		3.99%	4.72%		100,357		121,029
Total borrowings		21,355		21,142		2.78%	2.10%		1,551,278		2,030,065
Total interest bearing liabilities		39,498		40,565		1.17%	1.07%		6,827,571		7,633,386
Net interest income / spread	$	209,476	$	199,909		5.91%	5.26%
Interest rate margin						5.96%	5.26%
Excess of average interest-earning assets over     average interest-bearing liabilities								$	265,989	$	28,702
Average interest-earning assets to average     interest-bearing liabilities ratio									103.90%		100.38%
C - CHANGES IN NET INTEREST INCOME DUE TO:
	Volume		Rate		Total
	(In thousands)
Interest Income:
Investments	$	(4,704)	$	7,770	$	3,066
Loans		(5,194)		10,628		5,434
Total interest income		(9,898)		18,398		8,500
Interest Expense:
Deposits		(1,134)		(146)		(1,280)
Repurchase agreements		(3,565)		3,992		427
Other borrowings		(1,394)		1,180		(214)
Total interest  expense		(6,093)		5,026		(1,067)
Net Interest Income	$	(3,805)	$	13,372	$	9,567

87

Net Interest Income

Comparison of quarters ended June 30, 2014 and 2013

Net interest income of $106.1 million remained level as compared to $106.3 million in the second quarter of 2013, reflecting a decrease of 1.9% in interest income from loans partially offset by a 15.7% increase in interest income from investment securities and a 1.0% decrease in interest expense.

Interest rate spread increased 40 basis points to 6.05% from 5.65%. This increase is mainly due to the net effect of a 52 basis point increase in the average yield of interest-earning assets from 6.72% to 7.24%, and 12 basis point increases in the average cost of funds from 1.07% to 1.19%.

Interest income slightly decreased to $125.9 million from $126.3 million in the same quarter in 2013. Such decrease reflects a $4.5 million decrease in the volume of interest-earning assets partially offset by an increase of $4.1 million in interest rate. Interest income from loans decreased 1.9% to $112.9 million, primarily reflecting a decrease in volume of $2.1 million. Interest income from investments increased 15.7% to $13.0 million, reflecting a lower premium amortization in the investment securities portfolio as conditional prepayment rates (“CPRs”) on mortgage-backed securities fell.  

Interest expense decreased 1.0% to $19.8 million, primarily because of a $2.8 million decrease in the volume of interest-bearing liabilities, partially offset by a $2.6 million increase in interest rate. The decrease in interest-bearing liabilities is mostly due to the decrease in deposits volume of $666 thousand, partially offset by an increase in rate of $344 thousand. The cost of deposits before purchase accounting adjustments decreased 20 basis points to 0.76% for the second quarter of 2014, compared to 0.96% for the second quarter of 2013. The decrease in the cost of deposits was partially offset by an increase in the cost of borrowings, which increased 65 basis points to 2.91% from 2.26%.

The average balance of total interest-earning assets was $6.972 billion, a decrease of 7.6% from the same period in 2013. The decrease in average balance of interest-earning assets was mainly attributable to a decrease of 21.4% in average investments, resulting from redemptions and maturities during the current quarter. The average yield on interest-earning assets was 7.24% compared to 6.72% for the same quarter in 2013. This was mainly due to higher average yields in the investment portfolio, which increased to 2.66% from 1.81%, and in the covered loan portfolio, which increased to 29.06% from 25.70%.

Comparison of six-month periods ended June 30, 2014 and 2013

Net interest income increased 4.8% to $209.5 million as compared to $199.9 million for the same period in 2013. The change reflects a decrease of 2.6% in interest expense and increases of 2.5% in interest income from loans and 12.6% in interest income from investment securities.

Interest rate spread increased 65 basis points to 5.91% from 5.26% in the same period for 2013. This increase is mainly due to the net effect of a 75 basis point increase in the average yield of interest-earning assets from 6.33% to 7.08% and a 10 basis point increase in the average cost of funds from 1.07% to 1.17%.

Interest income increased 3.5% to $249.0 million when compared to $240.5 million for the same period in 2013. Results reflect an increase of $18.4 million in interest-earning asset interest rate partially offset by a $9.9 million decrease in volume. Interest income from loans increased 2.5% to $221.6 million, reflecting an increase in interest rate of $10.6 million, partially offset by a $5.2 million decrease in volume. Interest income from investments increased 12.6% to $27.4 million, reflecting a lower premium amortization in the investment securities portfolio as CPRs on mortgage-backed securities fell. 

Interest expense decreased 2.6% to $39.5 million, primarily the result of a $6.1 million decrease in the volume of interest-bearing liabilities, partially offset by a $5.0 million increase in interest rate. The decrease in interest-bearing liabilities is mostly due to the decrease in the repurchase agreement volume of $3.6 million, as the company repaid $510 million of repurchase agreements at maturity. The increase in interest rate is due to an increase in the cost of borrowings, which increased 68 basis points to 2.78%, compared to 2.10%. The cost of deposits before purchase accounting adjustments decreased 24 basis points to 0.78%, compared to 1.01% for the same period in 2013.

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Average balance of total interest-earning assets was $7.094 billion, a decrease of 7.5% from the same period in 2013. The decrease in average balance of interest-earning assets was mainly attributable to a decrease of 19.3% in average investments, resulting from redemptions and maturities, to the sale of available for sale securities during the current quarter amounting to $110.8 million, and to a reduction of 1.4% in the average loan portfolio primarily due to the early pay down of some commercial loans. The average yield on interest-earning assets was 7.08% compared to 6.33% for the same period in 2013. This was mainly due to higher average yields in the investment portfolio, which increased to 2.66% from 1.90%, and in the loan portfolio, which increased to 8.91% from 8.57%.

TABLE 2 - NON-INTEREST INCOME SUMMARY
	Quarter Ended June 30,					Six-Month Period Ended June 30,
	2014		2013		Variance		2014		2013	Variance
	(Dollars in thousands)
Banking service revenue	$	9,995	$	12,705	-21.3%	$	20,552	$	24,345	-15.6%
Wealth management revenue		7,336		8,030	-8.6%		14,203		15,690	-9.5%
Mortgage banking activities		1,554		3,827	-59.4%		3,249		6,963	-53.3%
Total banking and financial service revenue		18,885		24,562	-23.1%		38,004		46,998	-19.1%
FDIC shared-loss expense, net		(18,355)		(19,965)	8.1%		(36,842)		(32,836)	-12.2%
Sale of securities available for sale		-		-	0.0%		4,366		-	100.0%
Derivatives		(247)		(164)	-50.6%		(470)		(934)	49.7%
Early extinguishment of debt		-		-	0.0%		-		1,061	-100.0%
Other non-interest income		224		2,302	-90.3%		678		2,349	-71.1%
		(18,378)		(17,827)	-3.1%		(32,268)		(30,360)	-6.3%
Total non-interest income, net	$	507	$	6,735	-92.5%		5,736		16,638	-65.5%

Non-Interest Income

Non-interest income is affected by the level of trust assets under management, transactions generated by clients’ financial assets serviced by the securities broker-dealer and insurance agency subsidiaries, the level of mortgage banking activities, and the fees generated from loans and deposit accounts. It is also affected by the FDIC shared-loss expense, which varies depending on the results of the on-going evaluation of expected cash flows of the loan portfolio acquired in the FDIC-assisted acquisition. In addition, it is affected by the amount of securities, derivatives and trading transactions.

Comparison of quarters ended June 30, 2014 and 2013

As shown in Table 2 above, the Company recorded non-interest income in the amount of $507 thousand, compared to $6.7 million for the same period in 2013, a decrease of $6.2 million.

The FDIC shared-loss expense decreased to $18.4 million as compared to $20.0 million for the same period in 2013, which resulted from the ongoing evaluation of expected cash flows of the covered loan portfolio. The majority of the FDIC indemnification asset is recorded for projected claimable losses on non-single family residential loans whose loss share period ends by the second quarter of 2015, although the recovery share period extends for an additional three-year period.

Banking service revenue, which consists primarily of fees generated by deposit accounts, electronic banking services, and customer services, decreased 21.3% to $10.0 million, from $12.7 million for the same period in 2013. The decrease in banking services revenues is mostly due to the reclassification of auto loan late charges into interest income during the last quarter of 2013 amounting to $1.8 million. For the quarter ended June 30, 2013, these revenues were included as part of banking activities, since the reclassification was not reflected until late 2013.

Wealth management revenue, which consists of commissions and fees from fiduciary activities, and securities brokerage and insurance activities, decreased 8.6% to $7.3 million, compared to $8.0 million for the same period in 2013. This decrease is mainly due to local market conditions.

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Income generated from mortgage banking activities decreased 59.4% to $1.6 million, compared to $3.8 million for the same period in 2013. The decrease in mortgage banking activities is mainly due to higher losses in repurchased loans and a decrease in sales when compared to same period in 2013.

Losses from derivative activities were $247 thousand, as compared to $164 thousand for the same period in 2013.

Comparison of six-month periods ended June 30, 2014 and 2013

Non-interest income decreased $10.9 million to $5.7 million from $16.6 million in the six-month period ended June 30, 2013.

The FDIC shared-loss expense increased to $36.8 million, as compared to $32.8 million for the same period in 2013, as a result of the ongoing evaluation of expected cash flows of the covered loan portfolio, which resulted in reduced projected losses expected to be collected from the FDIC and improved the accretable yield on the covered loans. The reduction in claimable losses amortizes the FDIC indemnification asset through the life of the shared loss agreements. This amortization is net of the accretion of the discount recorded to reflect the expected claimable loss at its net present value. During the six-month period ended June 30, 2014, the net amortization included $5.1 million of additional amortization of the FDIC indemnification asset from stepped up cost recoveries on certain construction and leasing loan pools. Additional amortization of the FDIC indemnification asset may be recorded, should the Company continue to experience reduced expected losses.

Banking service revenue decreased 15.6% to $20.6 million from $24.3 million for the same period in 2013. The decrease in banking services revenues is mostly due to the reclassification of auto loan late charges into interest income during the last quarter of 2013 amounting to $1.8 million. For the six-month period ended June 30, 2013, these revenues were included as part of banking activities, since the reclassification was not reflected until late 2013. In addition, a non-recurring prepayment penalty was received during the first quarter of 2013 of approximately $1 million.

Wealth management revenue decreased 9.5% to $14.2 million, compared to $15.7 million for the same period in 2013. This decrease is mainly due to local market conditions.

Income generated from mortgage banking activities decreased 53.4% to $3.2 million, compared to $7.0 million for the same period in 2013. The decrease in mortgage banking activities is mainly due to higher losses in repurchased loans and a decrease in sales when compared to same period in 2013.

Gains from the sale of securities increased to $4.4 million from the same period in 2013, in which no gain or loss from the sale of securities was recorded. Losses from derivative activities were $470 thousand, as compared to $934 thousand for the same period in 2013. During the six-month period ended June 30, 2014, the Company did not have a gain or loss on extinguishment of debt, as compared to the same period in 2013 in which the Company had a gain of $1.1 million.

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TABLE 3 - NON-INTEREST EXPENSES SUMMARY
	Quarter Ended June 30,					Six-Month Period Ended June 30,
	2014		2013		Variance %		2014		2013	Variance %
	(Dollars in thousands)
Compensation and employee benefits	$	20,707	$	24,089	-14.0%	$	42,494	$	47,338	-10.2%
Professional and service fees		3,512		5,375	-34.7%		7,719		11,853	-34.9%
Occupancy and equipment		8,605		8,066	6.7%		16,914		17,282	-2.1%
Merger and restructuring charges		-		5,273	-100.0%		-		10,808	-100.0%
Taxes, other than payroll and income taxes		3,776		5,132	-26.4%		7,511		7,754	-3.1%
Electronic banking charges		4,796		4,065	18.0%		9,449		7,763	21.7%
Information technology expenses		1,485		2,335	-36.4%		3,300		4,979	-33.7%
Insurance		2,333		2,723	-14.3%		4,407		5,401	-18.4%
Foreclosure, repossession and other real estate expenses		6,554		3,717	76.3%		12,941		6,900	87.6%
Loan servicing and clearing expenses		1,669		1,884	-11.4%		3,728		3,360	11.0%
Advertising, business promotion, and strategic initiatives		1,669		1,670	-0.1%		3,450		3,079	12.0%
Printing, postage, stationery and supplies		645		851	-24.2%		1,200		2,017	-40.5%
Communication		813		835	-2.6%		1,770		1,699	4.2%
Director and investor relations		293		377	-22.3%		544		613	-11.3%
Other operating expenses		2,991		2,295	30.3%		5,825		4,452	30.8%
Total non-interest expenses	$	59,848	$	68,687	-12.9%	$	121,252	$	135,298	-10.4%
Relevant ratios and data:
Efficiency ratio		47.89%		52.49%			48.99%		54.80%
Compensation and benefits to         non-interest expense		34.60%		35.07%			35.05%		34.99%
Compensation to average total assets owned		0.54%		0.57%			0.54%		0.55%
Average number of employees		1,566		1,559			1,559		1,573
Average compensation per employee	$	13.2	$	15.5		$	27.3	$	30.1
Average loans per average employee	$	3,205	$	3,244		$	3,216	$	3,232

Non-Interest Expenses

Comparison of quarters ended June 30, 2014 and 2013

Non-interest expense reached $59.8 million, representing a decrease of 12.9% compared to $68.7 million. The decrease is due mainly to the non-recurring merger and restructuring charges of $5.3 million incurred during the quarter ended June 30, 2013 for the BBVAPR Acquisition and to the decrease of $3.4 million in compensation and employee benefits.

Compensation and employee benefits decreased 14.0% to $20.7 million from $24.1 million for the same periods in 2013. The decrease is due mainly to the impact in the second quarter of 2013 of the assessment of employee bonuses required pursuant to the BBVAPR Acquisition of $1.9 million and a decrease in commissions paid by the securities broker-dealer of $541 thousand.

Professional and service fees decreased 34.7% to $3.5 million, as compared to $5.4 million for the same period in 2013. Professional and service fees primarily comprise expenses and consulting and outsourcing expenses. For the quarter ended June 30, 2014, legal expenses amounted to $1.1 million compared to $1.3 million for the same period in 2013. Consulting and outsourcing expenses amounted to $714 thousand, compared to $1.3 million. The decrease in professional and service fees is mainly related to loan servicing fees amounting to $1.1 million for a third party loan servicer whose contract was terminated during the quarter ended June 30, 2013.

Taxes, other than payroll and income taxes decreased to $3.8 million, as compared to $5.1 million for the same period in 2013. The decrease primarily reflects the cumulative impact in the second quarter of 2013 from the application of the 1.0% tax on gross revenues enacted on June 30, 2013.

Information technology expenses decreased 36.4% to $1.5 million, as compared to $2.3 million, mostly due to a decrease in data processing expenses.

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The decreases in the foregoing non-interest expenses were partially offset by increases in electronic banking charges and foreclosure, repossession and other real estate expenses.

Electronic banking charges increased 18.0% to $4.8 million, mostly due to the increase in expenses related to merchant business and card interchange transactions resulting from the continued growth of our banking business.

Foreclosure, repossession and other real estate expenses increased 76.3% to $6.6 million, as compared to $3.7 million, principally due to an increase in foreclosures and a decrease in the fair value of real estate as a result of current local economic conditions.

The decrease in non-interest expenses resulted in an improved efficiency ratio of 47.89%, from 52.49% for the same period in 2013. The efficiency ratio measures how much of the Company’s revenue is used to pay operating expenses. The Company computes its efficiency ratio by dividing non-interest expenses by the sum of its net interest income and non-interest income, but excluding gains on the sale of investment securities, derivatives gains or losses, credit-related other-than-temporary impairment losses, FDIC shared-loss expense, losses on the early extinguishment of debt, other gains and losses, and other income that may be considered volatile in nature. Management believes that the exclusion of those items permits consistent comparability. Amounts presented as part of non-interest income that are excluded from the efficiency ratio computation amounted to losses of $18.4 million, compared to $17.8 million for the same period in 2013. Revenue for purposes of the efficiency ratio amounted to $125.0 million, compared to $130.9 million for the same period in 2013.

Comparison of six-month periods ended June 30, 2014 and 2013

Non-interest expense decreased 10.4% to $121.3 million, compared to $135.3. The decrease is due mainly to the non-recurring merger and restructuring charges of $10.8 million incurred during the six-month period ended June 30, 2013 for the BBVAPR Acquisition and the implementation of expense reduction measures.

Compensation and employee benefits decreased 10.2% to $42.5 million from $47.3 million for the same period in 2013. The decrease is due mainly to a decrease in average total employees during the six-month period ended June 30, 2014, compared to the same period in 2013, and a decrease in commissions paid by the securities broker-dealer of $1.1 million.

Professional and service fees decreased 34.9% to $7.7 million, as compared to $11.9 million for the same period in 2013. Legal expenses amounted to $2.2 million, compared to $2.5 million for the same period in 2013. Consulting and outsourcing expenses amounted to $1.9 million, compared to $2.8 million for the same period in 2013. Decrease in professional and service fees is mainly related to loan servicing fees amounting to $2.8 million for a third party loan servicer whose contract was terminated during the quarter ended June 30, 2013.

Information technology expenses decreased 33.7% to $3.3 million, as compared to $5.0 million, mostly due to decrease in data processing expenses.

The decreases in the foregoing non-interest expenses were partially offset by increases in electronic banking charges and foreclosure, repossession and other real estate expenses.

Electronic banking charges increased 21.7% to $9.4 million, as compared to $7.8 million, mostly due to the increase in expenses related to merchant business and card interchange transactions resulting from the continued growth of our banking business.

Foreclosure, repossession and other real estate expenses increased 87.6% to $12.9 million, as compared to $6.9 million for the same period in 2013, principally due to an increase in foreclosures and a decrease in the fair value of real estate as a result of current local economic conditions.

The decrease in non-interest expenses resulted in an improved efficiency ratio of 48.99% from 54.80%. Amounts presented as part of non-interest income that are excluded from the efficiency ratio computation amounted to losses of $32.3 million, compared to $30.4 million for the same period in 2013. Revenue for purposes of the efficiency ratio amounted to $247.5 million, compared to $246.9 million for the same period in 2013.

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Provision for Loan and Lease Losses

Comparison of quarters ended June 30, 2014 and 2013

Provision for non-covered loan and lease losses decreased $24.3 million to $13.2 million when compared to $37.5 million, which included the impact of a $21.0 million additional provision due to the reclassification to held-for-sale of non-performing residential mortgage loans during the second quarter of 2013. Provision for covered loan and lease losses increased $384 thousand to $1.6 million when compared to the same period in 2013. Based on an analysis of the credit quality and the composition of the Company’s loan portfolio, management determined that the provision for the quarter ended June 30, 2014 was adequate in order to maintain the allowance for loan and lease losses at an adequate level to provide for probable losses based upon an evaluation of known and inherent risks.

Total charge-offs on non-covered loans, excluding acquired loans, decreased 73.1% to $8.9 million, as compared to $33.0 million for the same period in 2013, and total recoveries increased from $486 thousand to $2.6 million. As a result, the recoveries to charge-offs ratio increased from 1.47% to 29.08%. Net credit losses, excluding acquired loans, decreased $26.3 million to $6.3 million, representing 0.96% of average non-covered loans outstanding versus 8.89% in the same period in 2013, annualized. The credit losses for the quarter ended June 30, 2013, included a $27 million charge-off from nonperforming mortgage loans transferred into the loan held-for-sale category. Isolating this credit charge-off, the net credit losses for the quarter ended June 30, 2013 would have been $5.6 million, representing 1.52% of average non-covered loans outstanding, annualized.

The non-covered acquired loans accounted for under ASC 310-20 required a provision for loan and lease losses of $2.6 million, as compared to $1.6 million for the same period in 2013. Non-covered acquired loans accounted for under ASC 310-30 required a provision for loan and lease losses of $3.2 million. This portfolio did not require a provision for loan and leases losses for the same period in 2013. The provision for the quarter ended June 30, 2014, reflects the Company’s revision of the expected cash flows in the non-covered acquired loan portfolio considering actual experiences and changes in the Company’s expectations for the remaining term of the loan pools. Provision for covered loan and lease losses was $1.6 million, compared to $1.2 million for the same period in 2013, reflecting the Company’s revision of the expected cash flows in the covered loan portfolio considering actual experiences and changes in the Company’s expectations for the remaining terms of the loan pools.

Comparison of six-month periods ended June 30, 2014 and 2013

Provision for non-covered loan and lease losses decreased $22.2 million to $23.3 million when compared to $45.4 million, which included the impact of a $21.0 million additional provision due to the reclassification to held-for-sale of non-performing residential mortgage loans. Provision for covered loan and lease losses increased $1.3 million, when compared to the same period in 2013. Based on an analysis of the credit quality and the composition of the Company’s loan portfolio, management determined that the provision for the six-month period ended June 30, 2014, was adequate in order to maintain the allowance for loan and lease losses at an adequate level to provide for probable losses based upon an evaluation of known and inherent risks.

Total charge-offs on non-covered loans, excluding acquired loans, decreased 56.2% to $16.0 million, as compared to $36.5 million for the same period in 2013, and total recoveries increased from $586 thousand to $4.5 million. As a result, the recoveries to charge-offs ratio increased from 1.60% to 28.13%. Net credit losses, excluding acquired loans, decreased $24.4 million to $11.5 million, representing 0.91% of average non-covered loans outstanding versus 5.22% in the same period in 2013, annualized. The credit losses for the six-month period ended June 30, 2013 included a $27 million charge-off from nonperforming mortgage loans transferred into the loan held-for-sale category. Isolating this credit charge-off, the net credit losses for the quarter ended June 30, 2013 would have been $8.9 million, representing 1.30% of average non-covered loans outstanding, annualized.

The non-covered acquired loans accounted for under ASC 310-20 required a provision for loan and lease losses of $6.8 million, as compared to $3.7 million for the same period in 2013. Non-covered acquired loans accounted for under ASC 310-30 required a provision for loan and lease losses of $3.4 million for the six-month period ended June 30, 2014. This portfolio did not require provision for loan and leases losses for the same period in 2013. The provision for the six-month period ended June 30, 2014 reflects the Company’s revision of the expected cash flows in the non-covered acquired loan portfolio considering actual experiences and changes in the Company’s expectations for the remaining term of the loan pools. Provision for covered loan and lease losses was $3.2 million, compared to $1.9 million, reflecting the Company’s revision of the expected cash flows in the covered loan portfolio considering actual experiences and changes in the Company’s expectations for the remaining terms of the loan pools.

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Please refer to the “Allowance for Loan and Lease Losses and Non-Performing Assets” section in this MD&A and Table 8 through Table 13 below for more detailed information concerning the allowances for the loan and lease losses, net credit losses and credit quality statistics.

Income Taxes

Comparison of quarters ended June 30, 2014 and 2013

Income tax expense increased to $10.6 million, compared to an income tax benefit of $31.9 million for the same period in 2013. The income tax benefit for the quarter ended June 30, 2013 included a $36.9 million benefit from the effect in deferred taxes due to the increase in tax rates from 30.0% to 39.0%, partially offset by an increase in the effective income tax rate the for first quarter of 2013 from 25% to 35%.

Comparison of six-month periods ended June 30, 2014 and 2013

Income tax expense increased to $22.4 million, compared to an income tax benefit of $24.8 million for the same period in 2013. The income tax benefit for the six-month period ended June 30, 2013 included a $36.9 million benefit from the effect in deferred taxes due to the increase in tax rates from 30.0% to 39.0%.

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ANALYSIS OF FINANCIAL CONDITION

Assets Owned

At June 30, 2014, the Company’s total assets amounted to $7.710 billion, a decrease of 5.5% when compared to $8.158 billion at December 31, 2013, and interest-earning assets decreased 4.3% from $6.694 billion at December 31, 2013 to $6.408 billion at June 30, 2014.

At June 30, 2014, loans represented 77% of total interest-earning assets while investments represented 23%, compared to 75% and 25%, respectively, at December 31, 2013.

The Company’s loan portfolio is comprised of residential mortgage loans, commercial loans collateralized by mortgages on real estate located in Puerto Rico, other commercial and industrial loans, consumer loans, leases, and auto loans. At June 30, 2014, the Company’s loan portfolio decreased by 1.7% to $4.936 billion compared to $5.019 billion at December 31, 2013. At June 30, 2014, the covered loan portfolio decreased $22.6 million, or 6.3%, from December 31, 2013 as the loans continue to pay down. At June 30, 2014, the non-covered loan portfolio decreased $60.8 million, or 1.3%, primarily due to the early pay down of some commercial loans.

The FDIC indemnification asset amounted to $143.7 million at June 30, 2014 and $189.2 million as of December 31, 2013, representing a 24.1% reduction. The decrease in the FDIC indemnification asset is mainly related to reimbursements of $18.7 million received from the FDIC, and the amortization of the FDIC indemnification asset by $35.1 million during the six-month period ended June 30, 2014.

Investments principally consist of U.S. government and agency bonds, mortgage-backed securities, U.S. treasury securities, and Puerto Rico government and agency bonds. At June 30, 2014, the investment portfolio decreased 8.9% to $1.472 billion from $1.615 billion at December 31, 2013. This decrease is mostly due to net effect of a reduction of $78.5 million in FNMA and FHLMC certificates and $97.4 million in Puerto Rico government obligations due to redemptions and maturities. In addition, during the six-month period  ended June 30, 2014, the Company sold $110.8 million of mortgage-backed available for sale securities taking advantage of market opportunities to realize gains and reduce some interest rate sensitivity. During the six-month period ended June 30, 2014, the Company also experienced a normal prepayment of mortgage-backed securities of approximately $106 million. The decrease in investments was partially offset by the increase of $63.9 million in obligations of U.S. government-sponsored agencies.

Financial Assets Managed

The Company’s financial assets managed include those managed by the Company’s trust division, retirement plan administration subsidiary, and assets gathered by its broker-dealer subsidiary. The Company’s trust division offers various types of IRAs and manages 401(k) and Keogh retirement plans and custodian and corporate trust accounts, while the retirement plan administration subsidiary, CPC, manages private retirement plans. At June 30, 2014, total assets managed by the Company’s trust division and CPC amounted to $2.867 billion, compared to $2.797 billion at December 31, 2013. Oriental Financial Services offers a wide array of investment alternatives to its client base, such as tax-advantaged fixed income securities, mutual funds, stocks, bonds and money management wrap-fee programs. At June 30, 2014, total assets gathered by Oriental Financial Services from its customer investment accounts increased to $2.651 billion, compared to $2.493 billion at December 31, 2013. Changes in trust and broker-dealer related assets primarily reflect an increase in portfolio and differences in market values.

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TABLE 4 - ASSETS SUMMARY AND COMPOSITION
	June 30,		December 31,
	2014		2013		Variance %
	(Dollars in thousands)
Investments:
FNMA and FHLMC certificates	$	1,138,824	$	1,217,330	-6.4%
Obligations of US government-sponsored agencies		74,574		10,649	600.3%
US Treasury securities		9,000		-	100.0%
CMOs issued by US government-sponsored agencies		196,631		214,394	-8.3%
GNMA certificates		5,928		7,816	-24.2%
Puerto Rico government and political subdivisions		16,800		114,190	-85.3%
FHLB stock		24,381		24,450	-0.3%
Other debt securities		3,907		24,047	-83.8%
Other investments		1,678		1,933	-13.2%
Total investments		1,471,723		1,614,809	-8.9%
Loans:
Non-covered loans		4,647,264		4,670,227	-0.5%
Allowance for loan and lease losses on non-covered loans		(60,360)		(54,298)	-11.2%
Non-covered loans receivable, net		4,586,904		4,615,929	-0.6%
Mortgage loans held for sale		14,792		46,529	-68.2%
Total non-covered loans, net		4,601,696		4,662,458	-1.3%
Covered loans		393,859		409,690	-3.9%
Allowance for loan and lease losses on covered loans		(59,515)		(52,729)	-12.9%
Total covered loans, net		334,344		356,961	-6.3%
Total loans, net		4,936,040		5,019,419	-1.7%
Securities purchased under agreements to resell		-		60,000	-100.0%
Total securities and loans		6,407,763		6,694,228	-4.3%
Other assets:
Cash and due from banks		603,427		696,501	-13.4%
Money market investments		8,228		6,967	18.1%
FDIC indemnification asset		143,660		189,240	-24.1%
Foreclosed real estate		102,235		90,024	13.6%
Accrued interest receivable		22,508		18,734	20.1%
Deferred tax asset, net		123,298		137,564	-10.4%
Premises and equipment, net		82,167		82,903	-0.9%
Servicing assets		13,655		13,801	-1.1%
Derivative assets		9,558		20,502	-53.4%
Goodwill		86,069		86,069	0.0%
Other assets		107,577		121,482	-11.4%
Total other assets		1,302,382		1,463,787	-11.0%
Total assets	$	7,710,145	$	8,158,015	-5.5%
Investments portfolio composition:
FNMA and FHLMC certificates		77.4%		75.4%
Obligations of US government-sponsored agencies		5.1%		0.7%
US Treasury securities		0.6%		0.0%
CMOs issued by US government-sponsored agencies		13.4%		13.3%
GNMA certificates		0.4%		0.5%
Puerto Rico government and political subdivisions		1.1%		7.1%
FHLB stock		1.7%		1.5%
Other debt securities and other investments		0.3%		1.5%
		100.0%		100.0%

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TABLE 5 — LOANS RECEIVABLE COMPOSITION
	June 30,		December 31,		Variance
	2014		2013		%
	(Dollars in thousands)
Non-covered loans:
Originated and other loans and leases held for investment:
Mortgage	$	788,001	$	766,265	2.8%
Commercial		1,183,172		1,127,657	4.9%
Consumer		161,538		127,744	26.5%
Auto and leasing		508,034		379,874	33.7%
Total originated and other loans and leases held for investment		2,640,745		2,401,540	10.0%
Acquired loans:
Accounted for under ASC 310-20
Commercial		38,602		77,681	-50.3%
Consumer		49,604		56,174	-11.7%
Auto		238,399		301,584	-21.0%
		326,605		435,439	-25.0%
Accounted for under ASC 310-30
Mortgage		692,069		717,904	-3.6%
Commercial		632,273		671,544	-5.8%
Consumer		43,824		63,620	-31.1%
Auto		308,512		379,145	-18.6%
		1,676,678		1,832,213	-8.5%
		2,003,283		2,267,652	-11.7%
		4,644,028		4,669,192	-0.5%
Deferred loans fees, net		3,236		1,035	212.7%
Loans receivable		4,647,264		4,670,227	-0.5%
Allowance for loan and lease losses on non-covered loans		(60,360)		(54,298)	-11.2%
Loans receivable, net		4,586,904		4,615,929	-0.6%
Mortgage loans held-for-sale		14,792		46,529	-68.2%
Total non-covered loans, net		4,601,696		4,662,458	-1.3%
Covered loans:
Loans secured by 1-4 family residential properties		121,416		121,748	-0.3%
Construction and development secured by 1-4 family residential properties		18,566		17,304	7.3%
Commercial and other construction		248,700		264,249	-5.9%
Consumer		5,177		6,119	-15.4%
Leasing		-		270	-100.0%
Total covered loans		393,859		409,690	-3.9%
Allowance for loan and lease losses on covered loans		(59,515)		(52,729)	-12.9%
Total covered loans, net		334,344		356,961	-6.3%
Total loans receivable, net	$	4,936,040	$	5,019,419	-1.7%

97

As shown in Table 5 above, total loans, net, amounted to $4.936 billion at June 30, 2014 and $5.019 billion at December 31, 2013.

The Company’s originated and other loans held-for-investment portfolio composition and trends were as follows:

·Mortgage loan portfolio amounted to $788.0 million (29.9% of the gross originated loan portfolio) compared to $766.3 million (31.9% of the gross originated loan portfolio) at December 31, 2013. Mortgage loan production totaled $52.0 million and $102.8 million for the quarter and six-month period ended June 30, 2014, respectively, which represents a decrease of 48.7% and 42.4 % from $101.3 million and $178.4 million for the same periods in 2013. Mortgage loans included delinquent loans in the GNMA buy-back option program amounting to $38.3 million and $34.9 million for the periods ended June 30, 2014, and December 31, 2013, respectively. Servicers of loans underlying GNMA mortgage-backed securities must report as their own assets the defaulted loans that they have the option (but not the obligation) to repurchase, even when they elect not to exercise that option.

·Commercial loan portfolio amounted to $1.183 billion (44.8% of the gross originated loan portfolio) compared to $1.128 billion (47.0% of the gross originated loan portfolio) at December 31, 2013. Commercial loan production decreased 56.5% to $45.4 million for the second quarter of 2014, and 52.3% to $85.2 million for the six-month period ended June 30, 2014, from $104.3 million and $178.5 million for the same periods in 2013, respectively.

·Consumer loan portfolio amounted to $161.5 million (6.1% of the gross originated loan portfolio) compared to $127.7 million (5.3% of the gross originated loan portfolio) at December 31, 2013. Consumer loan production increased 33.4% to $34.5 million for the quarter ended June 30, 2014, and 26.6 % to $62.3 million for the six-month period ended June 30, 2014 from $26.6 million and $49.2 million for the same periods in 2013, respectively.

·Auto loans and leasing portfolio amounted to $508.0 million (19.2% of the gross originated loan portfolio) compared to $379.9 million (15.8% of the gross originated loan portfolio) at December 31, 2013. Auto production was $89.6 million for the quarter ended June 30, 2014 and $183.4 million for the six-month period ended June 30, 2014, compared to $94.7 million and $195.7 million for the same periods in 2013, respectively.

At June 30, 2014 and December 31, 2013, the Company's non-covered acquired loan portfolio composition was as follows:
	June 30, 2014			December 31, 2013
Portfolio Type		Carrying Amounts	% of Gross Non-Covered Acquired Loan Portfolio		Carrying Amounts	% of Gross Non-Covered Acquired Loan Portfolio
	(Dollars in thousands)
Mortgage	$	692,068	34.5%	$	717,904	31.7%
Commercial		670,874	33.5%		749,225	33.0%
Consumer		93,428	4.7%		119,794	5.3%
Auto		546,910	27.3%		680,729	30.0%
	$	2,003,280	100.00%	$	2,267,652	100.00%

98

TABLE 6 — HIGHER RISK RESIDENTIAL MORTGAGE LOANS
	June 30, 2014
	Higher-Risk Residential Mortgage Loans*
											High Loan-to-Value Ratio Mortgages
	Junior Lien Mortgages					Interest Only Loans					LTV 90% and over
	Carrying					Carrying					Carrying
	Value		Allowance		Coverage	Value		Allowance		Coverage	Value		Allowance		Coverage
	(In thousands)
Delinquency:
0 - 89 days	$	13,218	$	239	1.81%	$	22,726	$	925	4.07%	$	90,317	$	2,014	2.23%
90 - 119 days		245		8	3.27%		115		5	0.00%		511		22	4.31%
120 - 179 days		91		3	0.00%		-		-	0.00%		1,438		61	4.24%
180 - 364 days		163		9	5.52%		658		84	12.77%		763		45	5.90%
365+ days		400		43	10.75%		423		192	45.39%		1,822		285	15.64%
Total	$	14,117	$	302	2.14%	$	23,922	$	1,206	5.04%	$	94,851	$	2,427	2.56%
Percentage of total loans excluding     acquired loans accounted for under ASC 310-30		0.47%					0.80%					3.18%
Refinanced or Modified Loans:
Amount	$	2,270	$	175	7.71%	$	-	$	-	0.00%	$	14,825	$	1,185	7.99%
Percentage of Higher-Risk Loan     Category		16.08%					0.00%					15.63%
Loan-to-Value Ratio:
Under 70%	$	9,307	$	205	2.20%	$	2,459	$	212	8.62%	$	-	$	-	-
70% - 79%		2,874		54	1.88%		3,238		145	4.48%		-		-	-
80% - 89%		826		21	2.54%		7,118		334	4.69%		-		-	-
90% and over		1,110		22	1.98%		11,107		515	4.64%		94,851		2,427	2.56%
	$	14,117	$	302	2.14%	$	23,922	$	1,206	5.04%	$	94,851	$	2,427	2.56%
* Loans may be included in more than one higher-risk loan category and excludes acquired residential mortgage loans.

99

The following table includes the Company's lending and investment exposure to the Puerto Rico government, including its agencies, instrumentalities, municipalities and public corporations:
TABLE 7 - PUERTO RICO GOVERNMENT RELATED LOANS AND SECURITIES
June 30, 2014
						Maturity
Loans and Securities:		Carrying Value		Less than 1 Year		1 to 3 Years		More than 3 Years	Comments
	(In thousands)
Central government	$	49,660	$	20,750	$	-	$	28,910		Repayment sources include all available revenues of the Commonwealth
Public corporations		382,888		299,991		1,422		81,475		$81.5 million which mature in more than 3 years, with pledged securities (rating > A)
Municipalities		222,881		-		507		222,374		Repayment from property taxes
Investment securities		22,391		-		-		22,391
Total	$	677,820	$	320,741	$	1,929	$	355,150

Some highlights follow on the data included above:

·Loans to Puerto Rico central government and public corporations are collateralized or have specific repayment sources.

·Loans to municipalities are backed by their unlimited taxing power or real and personal property taxes.

·49% of loans and securities balances mature in 12-months or less.

·Deposits from municipalities, central government and other government entities totaled $362.8 million at June 30, 2014. However, this amount may decline as a result of recently enacted legislation to improve the liquidity of the Government Development Bank for Puerto Rico (“GDB”) by requiring the Commonwealth’s agencies, instrumentalities and public corporations to maintain certain deposits at GDB.

·The Puerto Rico Public Corporation Debt Enforcement and Recovery Act (the “Recovery Act”) enacted in the second quarter of 2014 establishes procedures for the adjustment of debts of certain public corporations. Significantly all of the Company’s public corporation debtors are authorized to seek relief under the Recovery Act.

·Oriental Bank is part of a four bank syndicate providing a $550 million dollar revolving line of credit to finance the purchase of fuel for the day to day power generation activities of the Puerto Rico Electric Power Authority (“PREPA”), a public corporation authorized to seek relief under the Recovery Act. The Bank’s participation in the line of credit has an unpaid principal balance of $200.0 million as of June 30, 2014, which matures on August 14, 2014 and is currently accruing. The bank syndicate and PREPA have executed a short term forbearance agreement that expires at the maturity of the line of credit pursuant to which the bank syndicate agreed to not exercise remedies in connection with certain defaults under the loan agreement to facilitate a dialogue with PREPA, which is actively ongoing, regarding the future of the line of credit. As of June 30, 2014, this credit facility has a rating of special mention.

100

Credit Risk Management

Allowance for Loan and Lease Losses

The Company maintains an allowance for loan and lease losses at a level that management considers adequate to provide for probable losses based upon an evaluation of known and inherent risks. The Company’s allowance for loan and lease losses policy provides for a detailed quarterly analysis of probable losses. Tables 8 through 12 set forth an analysis of activity in the allowance for loan and lease losses and present selected loan loss statistics. In addition, Table 5 sets forth the composition of the loan portfolio. As part of the Company’s continuous enhancement to the allowance for loan and lease losses methodology, during the quarter ended March 31, 2014, an assessment of the look-back period and historical loss factor was performed for auto and leasing and consumer loan portfolios based on the trends observed and their relation with the economic cycle as of the period ended March 31, 2014. As a result, the period was changed to 24 months from the previously determined 12 months. In addition, during the quarter ended June 30, 2014, an assessment of environmental factors was performed for commercial, auto, and consumer portfolios. As a result, more weight is been given to the environmental factors related to the economy, taking into consideration current evolution of the portfolio and expected impact, due to recent economic developments. These changes in the allowance for loan and lease losses’ look back period for the consumer and auto and leasing portfolios, and economic factors for the commercial, auto, and consumer portfolios are considered a change in accounting estimate as per ASC 250-10 provisions, where adjustments should be made prospectively.

At June 30, 2014, the Company’s allowance for non-covered loan and lease losses amounted to $60.4 million, an increase from $54.3 million at December 31, 2013. At June 30, 2014, $50.6 million of the allowance corresponded to originated and other loans held for investment, or 1.92% of total non-covered originated and other loans held for investment, compared to $49.1 million or 2.04% of total non-covered originated and other loans held for investment at December 31, 2013. The allowance increase as a result of a $13.1 million provision for loan and lease losses and $4.5 million of recoveries, which were partially offset by charge-offs of $16.0 million during the six-month period ended June 30, 2014. The allowance for residential mortgage loans and commercial loans decreased by 4.4% (or $875 thousand), and 16.6% (or $2.5 million), respectively, when compared with the balances recorded at December 31, 2013. The allowance for consumer loans and auto and leases increased by 31.4% (or $1.9 million) and 41.5% (or $3.3 million), respectively, when compared with the balances recorded at December 31, 2013. The unallocated allowance at June 30, 2014 decreased by 63.0%, or $236 thousand, when compared with the balance recorded at December 31, 2013.

Allowance for loan and lease losses recorded for acquired non-covered loans accounted for under the provisions of ASC 310-20 at June 30, 2014 was $3.4 million compared to $2.4 million at December 31, 2013, a 46.3% increase. The allowance increased as a result of a $6.8 million provision for loan and lease losses and $1.2 million of recoveries, which were partially offset by $7.0 million in charge-offs during the six-month period ended June 30, 2014. The allowance for commercial loans decreased by 49.9% (or $462 thousand), when compared with the balance recorded at December 31, 2013. The allowance for consumer and auto loans increased by 100% (or $338 thousand) and 85.1% (or $1.2 million), respectively, when compared with the balances recorded at December 31, 2013.

Allowance for loan and lease losses recorded for acquired non-covered loans accounted for under ASC-310-30 at June 30, 2014 was $6.3 million as compared to $2.9 million at December 31, 2013. The allowance increased as a result of a $3.4 million provision for loan and lease losses during the six-month period ended June 30, 2014. The allowance for commercial loans increased by 262.9% (or $4.5 million), when compared with the balance recorded at December 31, 2013. The allowance for consumer and auto loans decreased by 85.2% (or $356 thousand) and 100% (or $732 thousand), respectively, when compared with the balances recorded at December 31, 2013.

Allowance for loan and lease losses recorded for covered loans at June 30, 2014 was $59.5 million as compared to $52.7 million at December 31, 2013. The allowance increased as a result of a $3.2 million provision for loan and lease losses and $3.6 million of FDIC shared-loss portion of provision for covered loan and lease losses during the six-month period ended June 30, 2014. The allowance for loan and lease losses on covered loans is accounted under the provisions of ASC 310-30. Under this accounting guidance, the allowance for loan and lease losses on covered loans is evaluated at each financial reporting period, based on forecasted cash flows. Credit related decreases in expected cash flows, compared to those previously forecasted, are recognized by recording a provision for credit losses on covered loans when it is probable that all cash flows expected at acquisition will not be collected. The portion of the loss on covered loans reimbursable from the FDIC is recorded as an offset to the provision for credit losses and increases the FDIC indemnification asset.

Please refer to the “Provision for Loan and Lease Losses” section in this MD&A for a more detailed analysis of provisions for loan and lease losses.

101

Non-performing Assets

The Company’s non-performing assets include non-performing loans and foreclosed real estate (see Tables 11 and 12). At June 30, 2014 and December 31, 2013, the Company had $94.1 million and $86.2 million, respectively, of non-accrual loans, including acquired loans accounted under ASC 310-20 (loans with revolving feature and/or acquired at a premium). At June 30, 2014 and December 31 2013, loans whose terms have been extended and which are classified as troubled-debt restructuring that are not included in non-performing assets amounted to $75.4 million and $66.5 million, respectively.

Covered loans and loans acquired in the BBVAPR Acquisition with credit deterioration are considered to be performing due to the application of the accretion method under ASC 310-30, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analyses. Credit related decreases in expected cash flows, compared to those previously forecasted are recognized by recording a provision for credit losses on non-covered loans when it is probable that all cash flows expected at acquisition will not be collected.

At June 30, 2014, the Company’s non-performing assets increased by 7.1% to $166.3 million (2.90% of total assets, excluding covered assets and acquired loans with deteriorated credit quality) from $155.3 million (2.61% of total assets, excluding covered assets and acquired loans with deteriorated credit quality) at December 31, 2013. The Company does not expect non-performing loans to result in significantly higher losses as most are well-collateralized with adequate loan-to-value ratios. At June 30, 2014, the allowance for non-covered originated loan and lease losses to non-performing loans coverage ratio was 56.53% (61.52% at December 31, 2013).

The Company follows a conservative residential mortgage lending policy, with more than 90% of its residential mortgage portfolio consisting of fixed-rate, fully amortizing, fully documented loans that do not have the level of risk associated with subprime loans offered by certain major U.S. mortgage loan originators. Furthermore, the Company has never been active in negative amortization loans or adjustable rate mortgage loans, including those with teaser rates.

The following items comprise non-performing assets:

·Originated and other loans held for investment:

Mortgage loans — are placed on non-accrual status when they become 90 days or more past due and are written-down, if necessary, based on the specific evaluation of the collateral underlying the loan, except for FHA and VA insured mortgage loans which are placed in non-accrual when they become 18 months or more past due. At June 30, 2014, the Company’s originated non-performing mortgage loans totaled $57.3 million (60.9% of the Company’s non-performing loans), a 12.3% increase from $51.1 million (59.4% of the Company’s non-performing loans) at December 31, 2013. Non-performing loans in this category are primarily residential mortgage loans.

Commercial loans — are placed on non-accrual status when they become 90 days or more past due and are written-down, if necessary, based on the specific evaluation of the underlying collateral, if any. At June 30, 2014, the Company’s originated non-performing commercial loans amounted to $23.5 million (25.0% of the Company’s non-performing loans), a 3.0% increase from $22.8 million at December 31, 2013 (26.5% of the Company’s non-performing loans). Most of this portfolio is collateralized by commercial real estate properties.

Consumer loans — are placed on non-accrual status when they become 90 days past due and written-off when payments are delinquent 120 days in personal loans and 180 days in credit cards and personal lines of credit. At June 30, 2014, the Company’s originated non-performing consumer loans amounted to $1.5 million (1.5% of the Company’s total non-performing loans), an 80.6% increase from $805 thousand at December 31, 2013 (0.9% of the Company’s total non-performing loans).

Auto loans and leases — are placed on non-accrual status when they become 90 days past due, partially written-off to collateral value when payments are delinquent 120 days, and fully written-off when payments are delinquent 180 days. At June 30, 2014, the Company’s originated non-performing auto loans and leases amounted to $7.3 million (7.8% of the Company’s total non-performing loans), an increase of 43.4% from $5.1 million at December 31, 2013 (5.9% of the Company’s total non-performing loans).

102

·Acquired loans accounted for under ASC 310-20 (loans with revolving features and/or acquired at premium):

Commercial revolving lines of credit and credit cards — are placed on non-accrual status when they become 90 days or more past due and are written-down, if necessary, based on the specific evaluation of the underlying collateral, if any. At June 30, 2014, the Company’s acquired non-performing commercial lines of credit accounted for under ASC 310-20 amounted to $1.4 million (1.5% of the Company’s non-performing loans), a 43.1% decrease from $2.5 million at December 31, 2013 (3.0% of the Company’s non-performing loans).

Consumer revolving lines of credit and credit cards — are placed on non-accrual status when they become 90 days past due and written-off when payments are delinquent 180 days. At June 30, 2014, the Company’s acquired non-performing consumer lines of credit and credit cards accounted for under ASC 310-20 totaled $1.4 million (1.4% of the Company’s non-performing loans), a 39.1% decrease from $2.2 million at December 31, 2013 (2.6% of the Company’s non-performing loans).

Auto loans acquired at premium - are placed on non-accrual status when they become 90 days past due, partially written-off to collateral value when payments are delinquent 120 days, and fully written-off when payments are delinquent 180 days. At June 30, 2014, the Company’s acquired non-performing auto loans accounted for under ASC 310-20 totaled $1.7 million (1.8% of the Company’s non-performing loans), a 4.5% increase from $1.6 million at December 31, 2013 (1.9% of the Company’s non-performing loans).

·Foreclosed real estate is initially recorded at the lower of the related loan balance or fair value less the estimated cost to sell as of the date of foreclosure. Any excess of the loan balance over the fair value of the property is charged against the allowance for loan and lease losses. Subsequently, any excess of the carrying value over the estimated fair value less disposition cost is charged to operations. Net losses on foreclosed real estate and other repossessed assets for the quarter and six month period ended June 30, 2014, amounted to $4.9 million and $8.4 million, respectively, compared to $1.7 million and $3.6 million for the same periods in 2013.

The Company has two mortgage loan modification programs. These are the Loss Mitigation Program and the Non-traditional Mortgage Loan Program. Both programs are intended to help responsible homeowners to remain in their homes and avoid foreclosure, while also reducing the Company’s losses on non-performing mortgage loans.

The Loss Mitigation Program helps mortgage borrowers who are or will become financially unable to meet the current or scheduled mortgage payments. Loans that qualify under this program are those guaranteed by FHA, VA, RHS, “Banco de la Vivienda de Puerto Rico,” conventional loans guaranteed by Mortgage Guaranty Insurance Corporation (MGIC), conventional loans sold to FNMA and FHLMC, and conventional loans retained by the Company. The program offers diversified alternatives such as regular or reduced payment plans, payment moratorium, mortgage loan modification, partial claims (only FHA), short sale, and payment in lieu of foreclosure.

The Non-traditional Mortgage Loan Program is for non-traditional mortgages, including balloon payment, interest only / interest first, variable interest rate, adjustable interest rate and other qualified loans. Non-traditional mortgage loan portfolios are segregated into the following categories: performing loans that meet secondary market requirement and are refinanced under the credit underwriting guidelines of FHA/VA/FNMA/ FHLMC, and performing loans not meeting secondary market guidelines processed by the Company’s current credit and underwriting guidelines. The Company achieved an affordable and sustainable monthly payment by taking specific, sequential, and necessary steps such as reducing the interest rate, extending the loan term, capitalizing arrearages, deferring the payment of principal or, if the borrower qualifies, refinancing the loan.

There may not be a foreclosure sale scheduled within 60 days prior to a loan modification under any such programs. This requirement does not apply to loans where the foreclosure process has been stopped by the Company. In order to apply for any of the loan modification programs, the borrower may not be in active bankruptcy or have been discharged from Chapter 7 bankruptcy since the loan was originated. Loans in these programs are to be evaluated by management for troubled-debt restructuring classification if the Company grants a concession for legal or economic reasons due to the debtor’s financial difficulties.

103

TABLE 8 — ALLOWANCE FOR LOAN AND LEASE LOSSES SUMMARY
	Quarter Ended June 30,				Variance	Six-Month Period Ended June 30,				Variance
	2014		2013		%	2014		2013		%
	(Dollars in thousands)
Non-covered loans
Originated and other loans:
Balance at beginning of period	$	49,507	$	42,334	16.9%	$	49,081	$	39,921	22.9%
Provision for non-covered         loan and lease losses		7,431		35,919	-79.3%		13,056		41,715	-68.7%
Charge-offs		(8,883)		(33,038)	-73.1%		(15,999)		(36,521)	-56.2%
Recoveries		2,583		486	431.5%		4,500		586	667.9%
		50,638		45,701	10.8%		50,638		45,701	10.8%
Acquired loans accounted for under ASC 310-20:
Balance at beginning of period	$	3,618	$	386	100.0%	$	2,354	$	-	100.0%
Provision for non-covered         loan and lease losses		2,569		1,608	59.8%		6,811		3,728	82.7%
Charge-offs		(3,432)		(2,593)	32.4%		(6,960)		(5,764)	20.7%
Recoveries		689		1,523	-54.8%		1,239		2,960	-58.1%
		3,444		924	272.7%		3,444		924	272.7%
Acquired loans accounted for under ASC 310-30:
Balance at beginning of period	$	3,058	$	-	100.0%	$	2,863	$	-	100.0%
Provision for non-covered         loan and lease losses		3,220		-	100.0%		3,415		-	100.0%
		6,278		-	100.0%		6,278		-	100.0%
Total non-covered loans balance   at end of period	$	60,360	$	46,625	29.5%	$	60,360	$	46,625	29.5%
Allowance for loans and lease       losses on originated and other       loans to:
Total originated loans		1.92%		2.91%	-34.1%		1.92%		2.91%	-34.1%
Non-performing originated loans		56.53%		32.45%	74.2%		56.53%		32.45%	74.2%
Allowance for loans and lease       losses on acquired loans       accounted for under       ASC 310-20 to:
Total acquired loans accounted         for under ASC 310-20		1.05%		0.05	100.0%		1.05%		0.05	100.0%
Non-performing acquired loans         accounted for under ASC 310-20		76.88%		21.94	-96.5%		76.88%		21.94	-96.5%
Covered loans
Balance at beginning of period	$	54,398	$	54,124	0.5%	$	52,729	$	54,124	-2.6%
Provision for covered         loan and lease losses, net		1,595		672	137.4%		3,223		672	379.6%
FDIC shared-loss portion on        (provision for) recapture of loan        and lease losses		3,522		(1,822)	-293.3%		3,562		(1,822)	-295.5%
Balance at end of period	$	59,515	$	52,974	12.3%	$	59,514	$	52,974	12.3%

104

TABLE 9 — ALLOWANCE FOR NON-COVERED LOAN AND LEASE LOSSES BREAKDOWN
		June 30, 2014	December 31, 2013		Variance %
	(Dollars in thousands)
Originated and other loans held for investment
Allowance balance:
Mortgage	$	19,062	$	19,937	-4.4%
Commercial		12,423		14,897	-16.6%
Consumer		7,887		6,006	31.3%
Auto and leasing		11,127		7,866	41.5%
Unallocated allowance		139		375	-62.9%
Total allowance balance	$	50,638	$	49,081	3.2%
Allowance composition:
Mortgage		37.64%		40.62%	-7.3%
Commercial		24.53%		30.35%	-19.2%
Consumer		15.58%		12.24%	27.3%
Auto and leasing		21.97%		16.03%	37.1%
Unallocated allowance		0.27%		0.76%	-64.5%
		100.00%		100.00%
Allowance coverage ratio at end of period applicable to:
Mortgage		2.42%		2.60%	-7.0%
Commercial		1.05%		1.32%	-20.5%
Consumer		4.88%		4.70%	3.8%
Auto and leasing		2.19%		2.07%	5.8%
Unallocated allowance to total originated loans		0.01%		0.02%	-66.3%
Total allowance to total originated loans		1.92%		2.04%	-6.2%
Allowance coverage ratio to non-performing loans:
Mortgage		33.26%		39.05%	-14.8%
Commercial		52.85%		65.25%	-19.0%
Consumer		542.43%		746.09%	-27.3%
Auto and leasing		152.42%		154.57%	-1.4%
Total		56.53%		61.52%	-8.1%
Acquired loans accounted for under ASC 310-20
Allowance balance:
Commercial	$	464	$	926	-49.9%
Consumer		338		-	100.0%
Auto		2,642		1,428	85.0%
Total allowance balance	$	3,444	$	2,354	46.3%
Allowance composition:
Commercial		13.48%		39.34%	-65.7%
Consumer		9.81%		0.00%	100.0%
Auto		76.71%		60.66%	26.5%
		100.00%		100.00%
Allowance coverage ratio at end of period applicable to:
Commercial		1.20%		1.19%	0.8%
Consumer		0.68%		0.00%	100.0%
Auto		1.11%		0.47%	134.0%
Total allowance to total acquired loans		1.05%		0.54%	95.1%
Allowance coverage ratio to non-performing loans:
Commercial		32.04%		36.41%	-12.0%
Consumer		25.00%		0.00%	100.0%
Auto		157.26%		88.81%	77.1%
Total		76.88%		36.95%	108.0%

105

TABLE 9 — ALLOWANCE FOR NON-COVERED LOAN AND LEASE LOSSES BREAKDOWN (CONTINUED)
		June 30, 2014	December 31, 2013		Variance %
	(Dollars in thousands)
Acquired loans accounted for under ASC 310-30
Allowance balance:
Commercial	$	6,216	$	1,713	262.9%
Consumer		62		418	100.0%
Auto		-		732	-100.0%
Total allowance balance	$	6,278	$	2,863	119.3%
Allowance composition:
Commercial		99.01%		59.83%	65.5%
Consumer		0.99%		14.60%	100.0%
Auto		0.00%		25.57%	-100.0%
		100.00%		100.00%

106

TABLE 10 — NET CREDIT LOSSES STATISTICS ON LOAN AND LEASES, EXCLUDING LOANS ACCOUNTED FOR UNDER ASC 310-30
	Quarter Ended June 30,				Variance		Six-Month Period Ended June 30,			Variance
	2014		2013		%		2014		2013	%
	(Dollar in thousands)
Originated and other loans and leases:
Mortgage
Charge-offs	$	(987)	$	(29,119)	-96.6%	$	(2,201)	$	(31,708)	-93.1%
Recoveries		88		-	100.0%		236		-	100.0%
Total		(899)		(29,119)	-96.9%		(1,965)		(31,708)	-93.8%
Commercial
Charge-offs		(543)		(2,887)	-81.2%		(962)		(3,444)	-72.1%
Recoveries		115		234	-50.9%		213		262	-18.7%
Total		(428)		(2,653)	-83.9%		(749)		(3,182)	-76.5%
Consumer
Charge-offs		(1,397)		(323)	332.5%		(2,235)		(569)	292.8%
Recoveries		244		43	467.4%		391		108	262.0%
Total		(1,153)		(280)	311.8%		(1,844)		(461)	300.0%
Auto
Charge-offs		(5,956)		(709)	740.1%		(10,601)		(800)	1225.1%
Recoveries		2,136		209	922.0%		3,660		216	1594.4%
Total		(3,820)		(500)	664%		(6,941)		(584)	1088.5%
Net credit losses
Total charge-offs		(8,883)		(33,038)	-73.1%		(15,999)		(36,521)	-56.2%
Total recoveries		2,583		486	431.5%		4,500		586	667.9%
Total	$	(6,300)	$	(32,552)	-80.6%	$	(11,499)	$	(35,935)	-68.0%
Net credit losses to average     loans outstanding:
Mortgage		0.46%		14.50%	-96.8%		0.51%		8.10%	-93.7%
Commercial		0.14%		2.71%	-94.8%		0.13%		1.66%	-92.2%
Consumer		3.13%		1.44%	117.4%		2.68%		1.35%	98.5%
Auto		3.15%		1.04%	202.9%		3.07%		0.81%	279.0%
Total		0.96%		8.89%	-89.2%		0.91%		5.21%	-82.5%
Recoveries to charge-offs		29.08%		1.47%	1876.7%		28.13%		1.60%	1652.9%
Average originated loans:
Mortgage	$	773,425	$	803,272	-3.7%	$	763,400	$	783,172	-2.5%
Commercial		1,209,346		392,261	208.3%		1,165,891		382,654	204.7%
Consumer		147,230		77,948	88.9%		137,787		68,480	101.2%
Auto		484,536		191,438	153.1%		451,488		144,995	211.4%
Total	$	2,614,537	$	1,464,919	78.5%	$	$ 2,518,566	$	1,379,302	82.6%

107

TABLE 10 — NET CREDIT LOSSES STATISTICS ON LOAN AND LEASES, EXCLUDING LOANS ACCOUNTED FOR UNDER ASC 310-30 (CONTINUED)
	Quarter  Ended June 30,				Variance		Six-Month Period Ended June 30,			Variance
	2014		2013		%		2013		2014	%
	(Dollars in thousands)
Acquired loans accounted for under ASC 310-20:
Commercial
Charge-offs	$	(110)	$	(25)	340.0%	$	(284)	$	(25)	1036.0%
Recoveries		30		-	100.0%		30		-	100.0%
Total		(80)		(25)	220.0%		(254)		(25)	916.0%
Consumer
Charge-offs		(1,952)		(1,158)	68.6%		(4,010)		(2,614)	53.4%
Recoveries		124		637	-80.5%		224		844	-73.5%
Total		(1,828)		(521)	250.9%		(3,786)		(1,770)	113.9%
Auto
Charge-offs		(1,370)		(1,410)	-2.8%		(2,666)		(3,125)	-14.7%
Recoveries		535		886	-39.6%		985		2,116	-53.4%
Total		(835)		(524)	59.4%		(1,681)		(1,009)	66.6%
Net credit losses
Total charge-offs		(3,432)		(2,593)	32.4%		(6,960)		(5,764)	20.7%
Total recoveries		689		1,523	-54.8%		1,239		2,960	-58.1%
Total	$	(2,743)	$	(1,070)	156.4%	$	(5,721)	$	(2,804)	104.0%
Net credit losses to average     loans outstanding:
Commercial		1.29%		0.03%	4914.2%		1.04%		0.01%	7778.2%
Consumer		10.96%		2.92%	275.3%		11.09%		4.97%	123.3%
Auto		1.34%		0.54%	148.2%		1.27%		0.49%	157.2%
Total		3.22%		0.50%	538.6%		2.99%		0.65%	358.6%
Recoveries to charge-offs		20.08%		58.74%	-65.8%		17.80%		51.35%	-65.3%
Average loans accounted for under ASC 310-20:
Commercial	$	24,855	$	389,461	-93.6%	$	48,868	$	378,929	-87.1%
Consumer		66,690		71,334	-6.5%		68,294		71,290	-4.2%
Auto		249,395		388,486	-35.8%		265,459		409,798	-35.2%
Total	$	340,940	$	849,281	-59.9%	$	382,621	$	860,016	-55.5%

108

TABLE 11 — NON-PERFORMING ASSETS
	June 30,		December 31,		Variance
	2014		2013		(%)
	(Dollars in thousands)
Non-performing assets:
Non-accruing loans
Troubled-Debt Restructuring loans	$	26,435	$	26,847	-1.5%
Other loans		62,746		56,430	11.2%
Accruing loans
Troubled-Debt Restructuring loans		3,731		1,898	100.0%
Other loans		1,142		977	100.0%
Total non-performing loans	$	94,054	$	86,152	9.2%
Foreclosed real estate not covered under the         shared-loss agreements with the FDIC		55,523		56,815	-2.3%
Other repossessed assets		16,765		12,314	36.1%
Mortgage loans held for sale		-		-	100.0%
	$	166,342	$	155,281	7.1%
Non-performing assets to total assets, excluding covered assets and acquired loans with deteriorated credit quality (including those by analogy)		2.90%		2.61%	11.1%
Non-performing assets to total capital		17.98%		17.55%	2.5%

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Interest that would have been recorded in the period if the     loans had not been classified as non-accruing loans	$	723	$	530	$	1,213	$	991

109

TABLE 12 — NON-PERFORMING LOANS
	June 30,		December 31,		Variance
	2014		2013		%
	(Dollars in thousands)
Non-performing loans:
Originated and other loans held for investment
Mortgage	$	57,314	$	51,058	12.3%
Commercial		23,506		22,830	3.0%
Consumer		1,454		805	80.6%
Auto and leasing		7,300		5,089	43.4%
		89,574		79,782	12.3%
Acquired loans accounted for under ASC 310-20 (Loans with         revolving feature and/or acquired at a premium)
Commercial		1,448		2,543	-43.1%
Consumer		1,352		2,219	-39.1%
Auto		1,680		1,608	4.5%
		4,480		6,370	-29.7%
Total	$	94,054	$	86,152	9.2%
Non-performing loans composition percentages:
Originated loans
Mortgage		60.9%		59.4%
Commercial		25.0%		26.5%
Consumer		1.5%		0.9%
Auto and leasing		7.8%		5.9%
Acquired loans accounted for under ASC 310-20 (Loans with         revolving feature and/or acquired at a premium)
Commercial		1.5%		3.0%
Consumer		1.4%		2.6%
Auto		1.8%		1.9%
Total		100.0%		100.0%
Non-performing loans to:
Total loans, excluding covered loans and loans accounted for         under ASC 310-30 (including those by analogy)		3.17%		3.04%	4.2%
Total assets, excluding covered assets and loans accounted for         under ASC 310-30 (including those by analogy)		1.64%		1.45%	13.0%
Total capital		10.17%		9.74%	4.4%
Non-performing loans with partial charge-offs to:
Total loans, excluding covered loans and loans accounted for         under ASC 310-30 (including those by analogy)		0.89%		0.83%	7.2%
Non-performing loans		27.92%		27.35%	2.1%
Other non-performing loans ratios:
Charge-off rate on non-performing loans to non-performing loans         on which charge-offs have been taken		53.99%		56.05%	-3.7%
Allowance for loan and lease losses to non-performing         loans on which no charge-offs have been taken		79.78%		82.18%	-2.9%

110

TABLE 13 - LIABILITIES SUMMARY AND COMPOSITION
		June 30,		December 31,
	2014		2013		Variance %
	(Dollars in thousands)
Deposits:
Non-interest bearing deposits	$	731,295	$	744,328	-1.8%
NOW accounts		1,404,042		1,393,645	0.7%
Savings and money market accounts		1,226,747		1,194,566	2.7%
Certificates of deposit		1,776,971		2,048,040	-13.2%
Total deposits		5,139,055		5,380,579	-4.5%
Accrued interest payable		2,178		2,686	-18.9%
Total deposits and accrued interest payable		5,141,233		5,383,265	-4.5%
Borrowings:
Securities sold under agreements to repurchase		1,012,233		1,267,618	-20.1%
Advances from FHLB		360,240		336,143	7.2%
Other term notes		3,837		3,663	4.8%
Subordinated capital notes		100,797		100,010	0.8%
Total borrowings		1,477,107		1,707,434	-13.5%
Total deposits and borrowings		6,618,340		7,090,699	-6.7%
Derivative liabilities		13,617		14,937	-8.8%
Acceptances outstanding		17,581		23,042	-23.7%
Other liabilities		135,405		144,424	-6.2%
Total liabilities	$	6,784,943	$	7,273,102	-6.7%
Deposits portfolio composition percentages:
Non-interest bearing deposits		14.2%		13.8%
NOW accounts		27.3%		25.9%
Savings and money market accounts		23.9%		22.2%
Certificates of deposit		34.6%		38.1%
		100.0%		100.0%
Borrowings portfolio composition percentages:
Securities sold under agreements to repurchase		68.5%		74.2%
Advances from FHLB		24.4%		19.7%
Other term notes		0.3%		0.2%
Subordinated capital notes		6.8%		5.9%
		100.0%		100.0%
Securities sold under agreements to repurchase (excluding accrued interest)
Amount outstanding at period-end	$	1,010,000	$	1,265,000
Daily average outstanding balance	$	1,082,968	$	1,353,011
Maximum outstanding balance at any month-end	$	1,149,167	$	1,552,269

111

Liabilities and Funding Sources

As shown in Table 13 above, at June 30, 2014, the Company’s total liabilities were $6.785 billion, 6.7% less than the $7.273 billion reported at December 31, 2013. Deposits and borrowings, the Company’s funding sources, amounted to $6.618 billion at June 30, 2014 versus $7.091 billion at December 31, 2013, a 6.7% decrease.

At June 30, 2014, deposits represented 78% and borrowings represented 22% of interest-bearing liabilities, compared to 76% and 24%, respectively, at December 31, 2013. At June 30, 2014, deposits, the largest category of the Company’s interest-bearing liabilities, were $5.141 billion, down 4.5% from $5.383 billion at December 31, 2013. Non-maturing deposit balances increased 0.89%, to $3.362 billion, while higher-priced time deposits declined 13.2% as part of efforts to reduce the cost of deposits, which averaged 0.69% as of June 30, 2014 compared to 0.72% at December 31, 2013.

Borrowings consist mainly of repurchase agreements, FHLB-NY advances, subordinated capital notes, and short-term borrowings. At June 30, 2014, borrowings amounted to $1.477 billion, 13.5% lower than the $1.707 billion reported at December 31, 2013. Repurchase agreements as of June 30, 2014 decreased $255.4 million to $1.012 billion from $1.268 billion at December 31, 2013, as the Company used available cash to pay off repurchase agreements at maturity.

As a member of the FHLB-NY, the Bank can obtain advances from the FHLB-NY secured by the FHLB-NY stock owned by the Bank as well as by certain of the Bank’s mortgage loans and investment securities. Advances from the FHLB-NY amounted to $360.2 million as of June 30, 2014 and $336.1 million as of December 31, 2013. These advances mature from July 2014 through July 2020.

Stockholders’ Equity

At June 30, 2014, the Company’s total stockholders’ equity was $925.2 million, a 4.6% increase when compared to $884.9 million at December 31, 2013. Increase in stockholders’ equity was mainly driven by the income for the six-month period ended June 30, 2014, partially offset by an increase in treasury stock, as a result of the 707,400 repurchased shares of outstanding common stock during the first quarter of 2014.

From December 31, 2013 to June 30, 2014, tangible common equity to total assets increased to 8.59% from 7.61%, Tier 1 Leverage Capital Ratio increased to 10.26% from 9.11%, Tier 1 Risk-Based Capital Ratio increased to 15.49% from 14.35%, and Total Risk-Based Capital Ratio increased to 17.30% from 16.14%.

Taking into consideration the strong capital position, in the fourth quarter of 2013, the Company increased the cash dividend per common share to $0.08 from the dividend of $0.06 paid in previous quarters in 2013.

112

The following are the consolidated capital ratios of the Company at June 30, 2014 and December 31, 2013:

TABLE 14 — CAPITAL, DIVIDENDS AND STOCK DATA
	June 30,		December 31,		Variance
	2014		2013		%
	(Dollars in thousands, except per share data)
Capital data:
Stockholders’ equity	$	925,202	$	884,913	4.6%
Regulatory Capital Ratios data:
Leverage capital ratio		10.26%		9.11%	12.6%
Minimum leverage capital ratio required		4.00%		4.00%
Actual tier 1 capital	$	773,824	$	736,930	5.0%
Minimum tier 1 capital required	$	301,829	$	323,476	-6.7%
Excess over regulatory requirement	$	471,995	$	413,455	14.2%
Tier 1 risk-based capital ratio		15.49%		14.35%	7.9%
Minimum tier 1 risk-based capital ratio required		4.00%		4.00%
Actual tier 1 risk-based capital	$	773,824	$	736,930	5.0%
Minimum tier 1 risk-based capital required	$	199,775	$	205,382	-2.7%
Excess over regulatory requirement	$	574,049	$	531,548	8.0%
Risk-weighted assets	$	4,994,378	$	5,134,538	-2.7%
Total risk-based capital ratio		17.30%		16.14%	7.2%
Minimum total risk-based capital ratio required		8.00%		8.00%
Actual total risk-based capital	$	863,790	$	828,476	4.3%
Minimum total risk-based capital required	$	399,550	$	410,763	-2.7%
Excess over regulatory requirement	$	464,240	$	417,713	11.1%
Risk-weighted assets	$	4,994,378	$	5,134,538	-2.7%
Tangible common equity to total assets		8.59%		7.61%	12.9%
Tangible common equity to risk-weighted assets		13.26%		12.10%	9.6%
Total equity to total assets		12.00%		10.85%	10.6%
Total equity to risk-weighted assets		18.52%		17.23%	7.5%
Tier 1 common equity to risk-weighted assets		11.47%		10.44%	9.9%
Tier 1 common equity capital	$	572,954	$	536,062	6.9%
Stock data:
Outstanding common shares		45,022,823		45,676,922	-1.4%
Book value per common share	$	16.87	$	15.74	7.2%
Tangible book value per common share	$	14.71	$	13.60	8.2%
Market price at end of period	$	18.41	$	17.34	6.2%
Market capitalization at end of period	$	828,870	$	792,038	4.7%

	Six-Month Period Ended June 30,				Variance
	2014		2013		%
Common dividend data:
Cash dividends declared	$	7,218	$	5,749	25.6%
Cash dividends declared per share	$	0.16	$	0.12	33.3%
Payout ratio		19.05%		11.54%	65.1%
Dividend yield		1.74%		1.33%	30.7%

113

The following table presents a reconciliation of the Company’s total stockholders’ equity to tangible common equity and total assets to tangible assets at June 30, 2014 and December 31, 2013:

	June 30,		December 31,
	2014		2013
		(In thousands, except share or per share information)
Total stockholders' equity	$	925,202	$	884,913
Preferred stock		(176,000)		(176,000)
Preferred stock issuance costs		10,130		10,130
Goodwill		(86,069)		(86,069)
Core deposit intangible		(7,133)		(7,804)
Customer relationship intangible		(3,694)		(4,108)
Total tangible common equity	$	662,436	$	621,062
Total assets		7,710,145		8,158,015
Goodwill		(86,069)		(86,069)
Core deposit intangible		(7,133)		(7,804)
Customer relationship intangible		(3,694)		(4,108)
Total tangible assets	$	7,613,249	$	8,060,034
Tangible common equity to tangible assets		8.70%		7.71%
Common shares outstanding at end of period		45,022,823		45,676,922
Tangible book value per common share	$	14.71	$	13.60

The tangible common equity ratio and tangible book value per common share are non-GAAP measures. Management and many stock analysts use the tangible common equity ratio and tangible book value per common share in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations. Neither tangible common equity nor tangible assets or related measures should be considered in isolation or as a substitute for stockholders’ equity, total assets or any other measure calculated in accordance with GAAP. Moreover, the manner in which the Company calculates its tangible common equity, tangible assets and any other related measures may differ from that of other companies reporting measures with similar names.

The Tier 1 common equity to risk-weighted assets ratio is another non-GAAP measure. Ratios calculated based upon Tier 1 common equity have become a focus of regulators and investors, and management believes ratios based on Tier 1 common equity assist investors in analyzing the Company’s capital position. In connection with the 2009 Supervisory Capital Assessment Program, the Federal Reserve Board supplemented its assessment of the capital adequacy of certain large bank holding companies based on a variation of Tier 1 capital, known as Tier 1 common equity.

Because Tier 1 common equity is not formally defined by GAAP or, unlike Tier 1 capital, codified in the federal banking regulations, this measure is considered to be a non-GAAP financial measure. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. To mitigate these limitations, the Company has procedures in place to calculate these measures using the appropriate GAAP or regulatory components. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP.

114

The table below presents a reconciliation of the Company’s total common equity (GAAP) at June 30, 2014 and December 31, 2013 to Tier 1 common equity (non-GAAP):

	June 30,		December 31,
	2014		2013
	(Dollars in thousands)
Common stockholders' equity	$	759,332	$	719,043
Unrealized gains on available-for-sale securities, net of income tax		(29,759)		(11,434)
Unrealized losses on cash flow hedges, net of income tax		8,004		8,243
Disallowed deferred tax assets		(66,362)		(80,430)
Disallowed servicing assets		(1,365)		(1,380)
Intangible assets:
Goodwill		(86,069)		(86,069)
Other intangible assets		(10,827)		(11,912)
Total Tier 1 common equity	$	572,954	$	536,062
Tier 1 common equity to risk-weighted assets		11.47%		10.44%

The following table presents the Company’s capital adequacy information at June 30, 2014 and December 31, 2013:

	June 30,		December 31,
	2014		2013
	(Dollars in thousands)
Risk-based capital:
Tier 1 capital	$	773,824	$	736,930
Supplementary (Tier 2) capital		89,966		91,546
Total risk-based capital	$	863,790	$	828,476
Risk-weighted assets:
Balance sheet items	$	4,829,755	$	4,969,531
Off-balance sheet items		164,623		165,007
Total risk-weighted assets	$	4,994,378	$	5,134,538
Ratios:
Tier 1 capital (minimum required - 4%)		15.49%		14.35%
Total capital (minimum required - 8%)		17.30%		16.14%
Leverage ratio		10.26%		9.11%
Equity to assets		12.00%		10.85%
Tangible common equity to assets		8.59%		7.61%

The Federal Reserve Board has risk-based capital guidelines for bank holding companies. Under the guidelines, the minimum ratio of qualifying total capital to risk-weighted assets is 8%. At least half of the total capital is to be comprised of qualifying common stockholders’ equity, qualifying noncumulative perpetual preferred stock (including related surplus), minority interests related to qualifying common or noncumulative perpetual preferred stock directly issued by a consolidated U.S. depository institution or foreign bank subsidiary, and restricted core capital elements (collectively, “Tier 1 Capital”). Banking organizations are expected to maintain at least 50% of their Tier 1 Capital as common equity. Except for certain debt or equity instruments issued on or after May 19, 2010, which are excluded from Tier 1 Capital , not more than 25% of qualifying Tier 1 Capital may consist of qualifying cumulative perpetual preferred stock, trust preferred securities or other so-called restricted core capital elements. “Tier 2 Capital” may consist, subject to certain limitations, of allowance for loan and lease losses; perpetual preferred stock and related surplus; hybrid capital instruments, perpetual debt, and mandatory convertible debt securities; term subordinated debt and intermediate-term preferred stock, including related surplus; and unrealized holding gains on equity securities. “Tier 3 Capital” consists of qualifying unsecured subordinated debt. The sum of Tier 2 and Tier 3 Capital may not exceed the amount of Tier 1 Capital.

115

Pursuant to the Dodd-Frank Act, federal banking agencies have adopted new capital rules that became effective January 1, 2014 for advanced approaches banking organizations (i.e., those with consolidated assets greater than $250 billion or consolidated on-balance sheet foreign exposures of at least $10 billion) and will become effective on January 1, 2015 for all other covered organizations (subject to certain phase-in periods through January 1, 2019) and that will replace their general risk-based capital rules, advanced approaches rule, market risk rule, and leverage rules.

The new capital rules provide certain changes to the prompt corrective action regulations adopted by the agencies under Section 38 of the FDIA, as amended by FDICIA. These regulations are designed to place restrictions on U.S. insured depository institutions if their capital levels begin to show signs of weakness. The five capital categories established by the agencies under their prompt corrective action framework are: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” As of June 30, 2014 and December 31, 2013, the Company is “well capitalized” for regulatory purposes.

The new capital rules expand such categories by introducing a common equity tier 1 capital requirement for all depository institutions, revising the minimum risk-based capital ratios and, beginning in 2018, the proposed supplementary leverage requirement for advanced approaches banking organizations. The common equity tier 1 capital ratio is a new minimum requirement designed to ensure that banking organizations hold sufficient high-quality regulatory capital that is available to absorb losses on a going-concern basis. The Company believes that it will continue to meet the “well capitalized” category after the implementation of new capital rules on January 1, 2015.

The Bank is considered “well capitalized” under the regulatory framework for prompt corrective action. The table below shows the Bank’s regulatory capital ratios at June 30, 2014, and December 31, 2013:

	June 30 ,		December 31,		Variance
	2014		2013		%
	(Dollars in thousands)
Oriental Bank Regulatory Capital Ratios:
Total Tier 1 Capital to Total Assets		9.65%		8.57%	12.6%
Actual tier 1 capital	$	722,603	$	689,174	4.9%
Minimum capital requirement (4%)	$	299,657	$	321,551	-6.8%
Minimum to be well capitalized (5%)	$	374,571	$	401,939	-6.8%
Tier 1 Capital to Risk-Weighted Assets		14.54%		13.47%	7.9%
Actual tier 1 risk-based capital	$	722,603	$	689,174	4.9%
Minimum capital requirement (4%)	$	198,796	$	204,627	-2.8%
Minimum to be well capitalized (6%)	$	298,195	$	306,940	-2.8%
Total Capital to Risk-Weighted Assets		16.34%		15.26%	7.1%
Actual total risk-based capital	$	812,267	$	780,487	4.1%
Minimum capital requirement (8%)	$	397,593	$	409,253	-2.8%
Minimum to be well capitalized (10%)	$	496,991	$	511,567	-2.8%

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The Company’s common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “OFG.” At June 30, 2014 and December 31, 2013, the Company’s market capitalization for its outstanding common stock was $828.9 million ($18.41 per share) and $792.0 million ($17.34 per share), respectively.

The following table provides the high and low prices and dividends per share of the Company’s common stock for each quarter of the last two calendar years:

					Cash
	Price				Dividend
	High		Low		Per share
2014
June 30, 2014	$	18.88	$	16.38	$	0.08
March 31, 2014	$	17.54	$	14.30	$	0.08
2013
December 31, 2013	$	17.34	$	14.74	$	0.08
September 30, 2013	$	18.97	$	16.13	$	0.06
June 30, 2013	$	18.11	$	14.26	$	0.06
March 31, 2013	$	15.83	$	13.85	$	0.06
2012
December 31, 2012	$	13.35	$	9.98	$	0.06
September 30, 2012	$	11.49	$	10.02	$	0.06
June 30, 2012	$	12.37	$	9.87	$	0.06
March 31, 2012	$	12.69	$	11.25	$	0.06

Under the Company’s current stock repurchase program it is authorized to purchase in the open market up to $70 million of its outstanding shares of common stock. The shares of common stock repurchased are to be held by the Company as treasury shares. During the six-month period ended June 30, 2014, the Company purchased 707,400 shares under this program for a total of $10.4 million, at an average price of $14.66 per share. There were no repurchases during 2013. The number of shares that may yet be purchased under the $70 million program is estimated at 1,252,136 and was calculated by dividing the remaining balance of $23.1 million the closing price of the Company’s common stock at June 30, 2014 ($18.41).

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Background

The Company’s risk management policies are established by its Board of Directors (the “Board”) with the assistance of the Board Risk and Compliance Committee formed during the second quarter of 2014. Such policies are implemented by management through the adoption of a risk management program, which is overseen and monitored by the Chief Risk Officer and the Executive Risk and Compliance Committee and the Board Risk and Compliance Committee. The Company has continued to refine and enhance its risk management program by strengthening policies, processes and procedures necessary to maintain effective risk management.

All aspects of the Company’s business activities are susceptible to risk. Consequently, risk identification and monitoring are essential to risk management. As more fully discussed below, the Company’s primary risk exposures include, market, interest rate, credit, liquidity, operational and concentration risks.

Market Risk

Market risk is the risk to earnings or capital arising from adverse movements in market rates or prices, such as interest rates or prices. The Company evaluates market risk together with interest rate risk. The Company’s financial results and capital levels are constantly exposed to market risk. The Board and management are primarily responsible for ensuring that the market risk assumed by the Company complies with the guidelines established by policies approved by the Board. The Board has delegated the management of this riskto the Asset/Liability Management Committee (“ALCO”) which is composed of certain executive officers from the business, treasury and finance areas. One of ALCO’s primary goals is to ensure that the market risk assumed by the Company is within the parameters established in such policies.

Interest Rate Risk

Interest rate risk is the exposure of the Company’s earnings or capital to adverse movements in interest rates. It is a predominant market risk in terms of its potential impact on earnings. The Company manages its asset/liability position in order to limit the effects of changes in interest rates on net interest income. ALCO oversees interest rate risk, liquidity management and other related matters.

In discharging its responsibilities, ALCO examines current and expected conditions in global financial markets, competition and prevailing rates in the local deposit market, liquidity, unrealized gains and losses in securities, recent or proposed changes to the investment portfolio, alternative funding sources and their costs, hedging and the possible purchase of derivatives such as swaps, and any tax or regulatory issues which may be pertinent to these areas.

On a monthly basis, the Company performs a net interest income simulation analysis on a consolidated basis to estimate the potential change in future earnings from projected changes in interest rates. These simulations are carried out over a one-year time horizon, assuming certain gradual upward and downward interest rate movements, achieved during a twelve-month period. Simulations are carried out in two ways:

(i)using a static balance sheet as the Company had on the simulation date, and

(ii)using a dynamic balance sheet based on recent growth patterns and business strategies.

The balance sheet is divided into groups of assets and liabilities detailed by maturity or re-pricing and their corresponding interest yields and costs. As interest rates rise or fall, these simulations incorporate expected future lending rates, current and expected future funding sources and costs, the possible exercise of options, changes in prepayment rates, deposits decay and other factors which may be important in projecting the future growth of net interest income.

The Company uses a software application to project future movements in the Company’s balance sheet and income statement. The starting point of the projections generally corresponds to the actual values of the balance sheet on the date of the simulations.

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These simulations are complex, and use many assumptions that are intended to reflect the general behavior of the Company over the period in question. There can be no assurance that actual events will match these assumptions in all cases. For this reason, the results of these simulations are only approximations of the true sensitivity of net interest income to changes in market interest rates. The following table presents the results of the simulations at June 30, 2014 for the most likely scenario, assuming a one-year time horizon:

	Net Interest Income Risk (one year projection)
	Static Balance Sheet			Growing Simulation
	Amount		Percent	Amount		Percent
	Change		Change	Change		Change
Change in interest rate	(Dollars in thousands)
+ 200 Basis points	$	6,491	1.79%	$	6,720	1.85%
+ 100 Basis points	$	3,202	0.88%	$	3,317	0.91%
- 50 Basis points	$	(1,100)	-0.30%	$	(1,098)	-0.30%

The impact of -100 and -200 basis point reductions in interest rates is not presented in view of current level of the federal funds rate and other short-term interest rates.

Future net interest income could be affected by the Company’s investments in callable securities, prepayment risk related to mortgage loans and mortgage-backed securities, and any structured repurchase agreements and advances from the FHLB-NY in which it may enter into from time to time. As part of the strategy to limit the interest rate risk and reduce the re-pricing gaps of the Company’s assets and liabilities, the Company has executed certain transactions which include extending the maturity and the re-pricing frequency of the liabilities to longer terms reducing the amounts of its structured repurchase agreements and entering into hedge-designated swaps to hedge the variability of future interest cash flows of forecasted wholesale borrowings that only consist of advances from the FHLB-NY as of June 30, 2014.

The Company maintains an overall interest rate risk management strategy that incorporates the use of derivative instruments to minimize significant unplanned fluctuations in earnings that are caused by interest rate volatility. The Company’s goal is to manage interest rate sensitivity by modifying the repricing or maturity characteristics of certain balance sheet assets and liabilities so that the net interest margin is not, on a material basis, adversely affected by movements in interest rates. As a result of interest rate fluctuations, hedged fixed-rate assets and liabilities will appreciate or depreciate in market value. Also, for some fixed-rate assets or liabilities, the effect of this variability in earnings is expected to be substantially offset by the Company’s gains and losses on the derivative instruments that are linked to the forecasted cash flows of these hedged assets and liabilities. The Company considers its strategic use of derivatives to be a prudent method of managing interest-rate sensitivity as it reduces the exposure of earnings and the market value of its equity to undue risk posed by changes in interest rates. The effect of this unrealized appreciation or depreciation is expected to be substantially offset by the Company’s gains or losses on the derivative instruments that are linked to these hedged assets and liabilities. Another result of interest rate fluctuations is that the contractual interest income and interest expense of hedged variable-rate assets and liabilities, respectively, will increase or decrease.

Derivative instruments that are used as part of the Company’s interest risk management strategy include interest rate swaps, forward-settlement swaps, futures contracts, and option contracts that have indices related to the pricing of specific balance sheet assets and liabilities. Interest rate swaps generally involve the exchange of fixed and variable-rate interest payments between two parties based on a common notional principal amount and maturity date. Interest rate futures generally involve exchanged-traded contracts to buy or sell U.S. Treasury bonds and notes in the future at specified prices. Interest rate options represent contracts that allow the holder of the option to (i) receive cash or (ii) purchase, sell, or enter into a financial instrument at a specified price within a specified period. Some purchased option contracts give the Company the right to enter into interest rate swaps and cap and floor agreements with the writer of the option. In addition, the Company enters into certain transactions that contain embedded derivatives. When the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, it is bifurcated and carried at fair value. Please refer to Note 7 to the accompanying unaudited consolidated financial statements for further information concerning the Company’s derivative activities.

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Following is a summary of certain strategies, including derivative activities, currently used by the Company to manage interest rate risk:

Interest rate swaps — The Company entered into hedge-designated swaps to hedge the variability of future interest cash flows of forecasted wholesale borrowings attributable to changes in the one-month LIBOR rate. Once the forecasted wholesaleborrowings transactions occurred, the interest rate swap effectively fixes the Company’s interest payments on an amount of forecasted interest expense attributable to the one-month LIBOR rate corresponding to the swap notional stated rate. A derivative liability of $10.5 million (notional amount of $264.5 million) was recognized at June 30, 2014 related to the valuation of these swaps.

In addition, the Company has certain derivative contracts, including interest rate swaps not designated as hedging instruments, which are utilized to convert certain variable rate loans to fixed-rate loans, and the mirror-images of these interest rate swaps in which the Company enters into to minimize its interest rate risk exposure that results from offering the derivatives to clients. These interest rate swaps are marked to market through earnings. At June 30, 2014, interest rate swaps offered to clients not designated as hedging instruments represented a derivative asset of $2.7 million (notional amounts of $16.5 million), and the mirror-image interest rate swaps in which BBVAPR entered into represented a derivative liability of $2.7 million (notional amounts of $16.5 million).

S&P options — The Company has offered its customers certificates of deposit with an option tied to the performance of the S&P 500 Index. At the end of five years, the depositor receives a minimum return or a specified percentage of the average increase of the month-end value of the S&P 500 Index. The Company uses option agreements with major money center banks and major broker-dealer companies to manage its exposure to changes in that index. Under the terms of the option agreements, the Company receives the average increase in the month-end value of the S&P 500 Index in exchange for a fixed premium. The changes in fair value of the options purchased and the options embedded in the certificates of deposit are recorded in earnings.

At June 30, 2014, the fair value of the purchased options used to manage the exposure to the S&P 500 Index on stock-indexed certificates of deposit represented an asset of $6.6 million (notional amounts of $14.0 million) and the options sold to customers embedded in the certificates of deposit represented a liability of $6.4 million (notional amount of $13.4 million).

Wholesale borrowings — The Company uses interest rate swaps to hedge the variability of interest cash flows of certain advances from the FHLB-NY that are tied to a variable rate index. The interest rate swaps effectively fix the Company’s interest payments on these borrowings. As of June 30, 2014, the Company had $265 million in interest rate swaps at an average rate of 2.6% designated as cash flow hedges for $265 million in advances from the FHLB-NY that reprice or are being rolled over on a monthly basis.

Credit Risk

Credit risk is the possibility of loss arising from a borrower or counterparty in a credit-related contract failing to perform in accordance with its terms. The principal source of credit risk for the Company is its lending activities. In Puerto Rico, the Company’s principal market, economic conditions are challenging, as they have been for the last eight years, due to a shrinking population, a protracted economic recession, a housing sector that remains under pressure, the Puerto Rico government’s large indebtedness and structural budget deficit, and the recent rating downgrades of Puerto Rico general obligations and other government bonds to levels that are below investment grade.

The Company manages its credit risk through a comprehensive credit policy which establishes sound underwriting standards by monitoring and evaluating loan portfolio quality, and by the constant assessment of reserves and loan concentrations. The Company also employs proactive collection and loss mitigation practices.

The Company may also encounter risk of default in relation to its securities portfolio. The securities held by the Company are principally agency mortgage-backed securities. Thus, a substantial portion of these instruments are guaranteed by mortgages, a U.S. government-sponsored entity, or the full faith and credit of the U.S. government.

The Company’s Executive Credit Committee, composed of its Chief Executive Officer, Chief Credit Risk Officer and other senior executives, has primary responsibility for setting strategies to achieve the Company’s credit risk goals and objectives. Those goals and objectives are set forth in the Company’s Credit Policy as approved by the Board.

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Liquidity Risk

Liquidity risk is the risk of the Company not being able to generate sufficient cash from either assets or liabilities to meet obligations as they become due without incurring substantial losses. The Board has established a policy tomanage this risk. The Company’s cash requirements principally consist of deposit withdrawals, contractual loan funding, repayment of borrowings as these mature, and funding of new and existing investments as required.

The Company’s business requires continuous access to various funding sources. While the Company is able to fund its operations through deposits as well as through advances from the FHLB-NY and other alternative sources, the Company’s business is dependent upon other wholesale funding sources. Although the Company has selectively reduced its use of wholesale funding sources, such as repurchase agreements and brokered deposits, it is still dependent on wholesale funding sources. As of June 30, 2014, the Company had $1.010 billion in repurchase agreements and $718.5 million in brokered deposits.  

Brokered deposits are typically offered through an intermediary to small retail investors. The Company’s ability to continue to attract brokered deposits is subject to variability based upon a number of factors, including volume and volatility in the global securities markets, the Company’s credit rating, and the relative interest rates that it is prepared to pay for these liabilities. Brokered deposits are generally considered a less stable source of funding than core deposits obtained through retail bank branches. Investors in brokered deposits are generally more sensitive to interest rates and will generally move funds from one depository institution to another based on small differences in interest rates offered on deposits.

The Company participates in the Federal Reserve Bank’s Borrower-In Custody Program which allows it to pledge certain type of loans while keeping physical control of the collateral.

Although the Company expects to have continued access to credit from the foregoing sources of funds, there can be no assurance that such financing sources will continue to be available or will be available on favorable terms. In a period of financial disruption or if negative developments occur with respect to the Company, the availability and cost of the Company’s funding sources could be adversely affected. In that event, the Company’s cost of funds may increase, thereby reducing its net interest income, or the Company may need to dispose of a portion of its investment portfolio, which depending upon market conditions, could result in realizing a loss or experiencing other adverse accounting consequences upon any such dispositions. The Company’s efforts to monitor and manage liquidity risk may not be successful to deal with dramatic or unanticipated changes in the global securities markets or other reductions in liquidity driven by the Company or market-related events. In the event that such sources of funds are reduced or eliminated and the Company is not able to replace these on a cost-effective basis, the Company may be forced to curtail or cease its loan origination business and treasury activities, which would have a material adverse effect on its operations and financial condition.

As of June 30, 2014, the Company had approximately $611.7 million in unrestricted cash and cash equivalents, $222.7 million in investment securities that are not pledged as collateral, $629.1 million in borrowing capacity at the FHLB-NY and  $881.4 million in borrowing capacity at the Federal Reserve’s discount window available to cover liquidity needs.

     Operational Risk

Operational risk is the risk of loss from inadequate or failed internal processes, personnel and systems or from external events. All functions, products and services of the Company are susceptible to operational risk.

The Company faces ongoing and emerging risk and regulatory pressure related to the activities that surround the delivery of banking and financial products and services. Coupled with external influences such as market conditions, security risks, and legal risk, the potential for operational and reputational loss has increased. In order to mitigate and control operational risk, the Company has developed, and continues to enhance, specific internal controls, policies and procedures that are designed to identify and manage operational risk at appropriate levels throughout the organization. The purpose of these policies and procedures is to provide reasonable assurance that the Company’s business operations are functioning within established limits.

The Company classifies operational risk into two major categories: business specific and corporate-wide affecting all business lines. For business specific risks, a risk assessment group works with the various business units to ensure consistency in policies, processes and assessments. With respect to corporate-wide risks, such as information security, business recovery, legal and compliance, the Company has specialized groups, such as Information Security, Enterprise Risk Management, Corporate Compliance, Information

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Technology, Legal and Operations. These groups assist the lines of business in the development and implementation of risk management practices specific to the needs of the business groups. All these matters are reviewed and discussed in the Information Technology Steering Committee, and the Executive Risk and Compliance Committee.

The Company is subject to extensive United States federal and Puerto Rico regulations, and this regulatory scrutiny has been significantly increasing over the last several years. The Company has established and continues to enhance procedures based on legal and regulatory requirements that are reasonably designed to ensure compliance with all applicable statutory and regulatory requirements. The Company has a corporate compliance function headed by a Compliance Director who reports to the Chief Risk Officer and is responsible for the oversight of regulatory compliance and implementation of a company-wide compliance program.

Concentration Risk

Substantially all of the Company’s business activities and a significant portion of its credit exposure are concentrated in Puerto Rico. As a consequence, the Company’s profitability and financial condition may be adversely affected by an extended economic slowdown, adverse political or economic developments in Puerto Rico or the effects of a natural disaster, all of which could result in a reduction in loan originations, an increase in non-performing assets, an increase in foreclosure losses on mortgage loans, and a reduction in the value of its loans and loan servicing portfolio.

ITEM 4.   CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report on Form 10-Q, an evaluation was carried out under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon such evaluation, the CEO and the CFO have concluded that, as of the end of such period, the Company’s disclosure controls and procedures provided reasonable assurance of effectiveness in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports.

Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2014, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART - II OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

The Company and its subsidiaries are defendants in a number of legal proceedings incidental to their business. The Company is vigorously contesting such claims. Based upon a review by legal counsel and the development of these matters to date, management is of the opinion that the ultimate aggregate liability, if any, resulting from these claims will not have a material adverse effect on the Company’s financial condition or results of operations.

ITEM 1A.  RISK FACTORS

Except as set forth below, there have been no material changes to the risk factors previously disclosed in the Company’s annual report on Form 10-K for the year ended December 31, 2013. In addition to other information set forth in this report, you should carefully consider the risk factors included in the Company’s annual report on Form 10-K, as updated by this report or other filings the Company makes with the SEC under the Exchange Act. Additional risks and uncertainties not presently known to the Company at this time or that the Company currently deems immaterial may also adversely affect the Company’s business, financial condition or results of operations.

We rely on the services of third parties for our banking, information technology, telecommunications, and mortgage loan servicing infrastructure, and any failure, interruption or termination of such services or systems could have a material adverse affect on our financial condition and results of operations.

Our business relies on the secure, successful and uninterrupted functioning of our banking, information technology, telecommunications, and mortgage loan servicing infrastructure. We outsource some of our major systems, such as customer data and deposit processing, mortgage loan servicing, Internet and mobile banking, and electronic fund transfer systems. The failure or interruption of such systems, or the termination of a third-party software license or mortgage servicing, or any service agreement on which any of these systems or services is based, could interrupt our operations.  Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such systems fail or experience interruptions. 

We periodically sell or securitize our mortgage loans while retaining the obligation to perform the servicing of such loans.  Although we are the master servicer of our mortgage loan portfolios, we outsource our servicing functions pursuant to a subservicing arrangement with a third party in Puerto Rico. The termination or interruption of such subservicing arrangement, without a feasible substitute or successor, could adversely affect our financial condition and results of operations. In addition, because the FDIC has the right to refuse or delay payment for loan and lease losses if the shared-loss agreements are not performed by us in accordance with their terms, any such termination or interruption of the subservicing of the covered loans that we acquired in the FDIC-assisted acquisition could adversely affect our ability to comply with such terms.

If sustained or repeated, a failure, denial or termination of such systems or services could result in a deterioration of our ability to process new loans, service existing loans, gather deposits and/or provide customer service.  It could also compromise our ability to operate effectively, damage our reputation, result in a loss of customer business and/or subject us to additional regulatory scrutiny and possible financial liability. Any of the foregoing could have a material adverse effect on our financial condition and results of operations.

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A credit default or ratings downgrade on the Puerto Rico government’s debt obligations could adversely affect the value of our loans to the government of Puerto Rico and our investment portfolio of Puerto Rico government bonds.

Even though the economy of Puerto Rico is closely related to the economy of the rest of the United States, prevailing economic conditions, the fiscal situation of the Puerto Rico government and legislation it has recently enacted have led Standard & Poor’s, Moody’s and Fitch to further downgrade all obligations of the Puerto Rico government to levels below investment grade.

In the second quarter of 2014, the government enacted the Puerto Rico Public Corporation Debt Enforcement and Recovery Act (the “Recovery Act”), which establishes procedures for the adjustment of certain public corporations’ debts.  The Recovery Act states in its preamble that it further promotes the central government’s public policy objectives of no longer providing financial support to public corporations and promoting their economic independence.  The Recovery Act, which is without precedent and is being challenged in federal court on constitutional grounds, has increased the level of uncertainty as to the rights of the affected public corporation’s creditors.

Despite the Commonwealth’s progress in addressing its persistent budget deficits and underfunded government retirement plans, Puerto Rico continues to face significant economic and fiscal challenges, including a protracted economic recession, sizable debt-service obligations, high unemployment and a shrinking population. The recent Commonwealth credit downgrades by three leading rating agencies reflect only the views of such agencies, an explanation of which may be obtained from each such rating agency. Generally, below-investment-grade securities present greater risks and can be less liquid than investment-grade securities.

The reduction in the credit ratings of Puerto Rico government debt obligations could severely weaken the demand for such securities and the Commonwealth’s access to capital markets, which may affect its ability to obtain the financing that it needs. This may in turn increase the Commonwealth’s risk of default.

It is uncertain how capital markets may react to any future ratings downgrade in Puerto Rico government debt obligations. However, a further deterioration of economic or fiscal conditions in Puerto Rico, with possible negative ratings implications, could adversely affect the value of our loans to the government of Puerto Rico and the value of our investment portfolio of Puerto Rico government bonds.

At June 30, 2014, we had approximately $666.6 million of credit facilities granted to the Puerto Rico government, including its instrumentalities, public corporations and municipalities, of which $655.3 million was outstanding as of such date. A substantial portion of our credit exposure to the government of Puerto Rico consists of collateralized loans or obligations that have a specific source of income or revenues identified for its repayment. Some of these obligations consist of senior and subordinated loans to public corporations that obtain revenues from rates charged for services or products, such as the Puerto Rico Electric Power Authority (“PREPA”) and the Puerto Rico Aqueducts and Sewer Authority. Public corporations have varying degrees of independence from the central government and many have received appropriations or are due other payments from it. At June 30, 2014, we had approximately $382.9 million of credit facilities granted to public corporations, and significantly all such debtors are authorized to seek relief under the Recovery Act. The Company’s banking subsidiary is part of a four bank syndicate providing a $550 million dollar revolving line of credit to finance the purchase of fuel for the day to day power generation activities of the PREPA. The Bank’s participation in the line of credit has an unpaid principal balance of $200.0 million as of June 30, 2014, which matures on August 14, 2014 and is currently accruing. The bank syndicate and PREPA have executed a short term forbearance agreement that expires at the maturity of the line of credit pursuant to which the bank syndicate agreed to not exercise remedies in connection with certain defaults under the loan agreement to facilitate a dialogue with PREPA, which is actively ongoing, regarding the future of the line of credit. This credit facility was rated Special Mention as of June 30, 2014.

We also have loans to various municipalities for which the good faith, credit and unlimited taxing power of the applicable municipality has been pledged to their repayment. These municipalities are required by law to levy special property taxes in such amounts as required for the payment of all of its general obligation bonds and notes. Another portion of these loans consists of special obligations of various municipalities that are payable from the basic real and personal property taxes collected within such municipalities. The good faith and credit obligations of the municipalities have a first lien on the basic property taxes.

Furthermore, as of June 30, 2014, we had approximately $22.4 million in obligations issued and guaranteed by the Puerto Rico government, including certain instrumentalities or public corporations, as part of our investment securities portfolio. We continue to closely monitor the economic and fiscal situation of Puerto Rico and evaluate the portfolio for any declines in value that management may consider being other-than-temporary.

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Approximately 49% of our Puerto Rico government loans and obligations mature in the next 12 months or less. At June 30, 2014, we also had deposits of approximately $362.8 million from the government of Puerto Rico.

If the Company’s public corporation debtors seek relief under the Recovery Act or are otherwise unable to pay their obligations as they become due, or under certain other circumstances, the Company and its banking subsidiary may be required to adversely classify such loans and provision for losses in connection therewith. Such provision may significantly impact the Company’s financial condition and its regulatory capital ratios.

ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITES AND USE OF PROCEEDS

None.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.     MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.     OTHER INFORMATION

None.

ITEM 6.     EXHIBITS 

Exhibit No.Description of Document:

3.1     Bylaws, as amended effective May 28, 2014.

 31.1   Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1    Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101     The following materials from OFG Bancorp’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) Unaudited Consolidated Statements of Financial Condition, (ii) Unaudited Consolidated Statements of Operations, (iii) Unaudited Consolidated Statements of Comprehensive Income, (iv) Unaudited Consolidated Statements of Changes in Stockholders’ Equity, (v) Unaudited Consolidated Statements of Cash Flows, and (vi) Notes to Unaudited Consolidated Financial Statements.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

OFG Bancorp

(Registrant)

By:	/s/ José Rafael Fernández	Date: August 8, 2014
	José Rafael Fernández
	President and Chief Executive Officer
By:	/s/ Ganesh Kumar	Date: August 8, 2014
	Ganesh Kumar
	Executive Vice President and Chief Financial Officer
By:	/s/ Maritza Arizmendi	Date: August 8, 2014
	Maritza Arizmendi
	Senior Vice President and Chief Accounting Officer

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EX-3.1

 

EXHIBIT 3.1

BY-LAWS OF

OFG BANCORP

ARTICLE I

STOCKHOLDERS

SECTION 1.  Place of Meetings.  All annual and special meetings of stockholders shall be held at the principal office of the Corporation or at such other place as the Board of Directors may determine.

SECTION 2.  Annual Meeting.  A meeting of the stockholders of the Corporation for the election of directors and for the transaction of any other business of the Corporation shall be held annually after the end of the Corporation’s fiscal year at such date and time as the Board of Directors may determine in accordance with applicable laws and regulations.

SECTION 3.  Special Meeting.  Special meetings of stockholders, for any purpose(s), may be called at any time by the Chairman, the Vice Chairman, the President or by the Board of Directors, and shall be called by the Chairman or the Vice Chairman of the Board, the President or the Secretary upon the written request of the holders of not less than twenty percent (20%) of the paid-in capital of the Corporation entitled to vote at the meeting.  The written request specified above shall state the purpose(s) of the meeting and shall be delivered at the principal office of the Corporation addressed to the Chairman or the Vice Chairman of the Board, the President or the Secretary.

SECTION 4.  Conduct of Meetings.  The Board of Directors shall designate, when present, the Chairman of the Board or, if he or she is not present, the Vice Chairman of the Board, to preside at any and all stockholders’ meetings.  The Secretary, or, in the absence of the Secretary, an Assistant Secretary, shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary the chairperson of the meeting may appoint any person to act as secretary of the meeting.  The chairperson shall conduct such proceedings as are customary in this kind of meeting, procuring at all times order and impartiality in the debates.  The order of business at each such meeting shall be as determined by the chairperson of the meeting.  The chairperson shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts and things as are necessary or desirable for the proper conduct of the meeting, including, without limitation, the establishment of procedures for the maintenance of order and safety, limitations on the time allotted to questions or comments on the affairs of the Corporation, restrictions on entry to such meeting after the time prescribed for the commencement thereof, and the opening and closing of the voting polls for each item on which a vote is to be taken.

SECTION 5.  Notice of Meetings.  Notice of all meetings of stockholders shall be mailed to each stockholder of the Corporation at least ten (10) days, but not more than sixty (60) days, prior to the date for each such meeting.

SECTION 6.  Fixing of Record Date.  For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or stockholders entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the Board of

Directors shall fix in advance a date as the record date for any such determination of stockholders.  Such record date in any case shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date: (i) in the case of determination of stockholders entitled to vote at any meeting of stockholders shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting; and (ii) in the case of the payment of dividends shall not be more than sixty (60) days prior to the date for the payment of such dividends.  When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this Section 6, such determination shall apply to any adjournment thereof; provided, however, that the Board of Directors may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting.

SECTION 7.  Voting Lists.  At least ten (10) days before each meeting of the stockholders, the officer or agent having charge of the stock transfer books for shares of the Corporation shall make a complete list of the stockholders entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each. This list of stockholders shall be kept on file at the principal office of the Corporation and shall be subject to inspection by any stockholder at any time during normal business hours for a period of ten (10) days prior to such meeting.  Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any stockholder during the entire time of the meeting.  The original stock transfer book shall constitute prima facie evidence of the stockholders entitled to examine such list or transfer books or to vote at any meeting of stockholders.

SECTION 8.  Quorum; Manner of Acting.  A majority of the outstanding shares of the Corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders.  If less than a majority of the outstanding shares is represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice; provided that the date of the adjourned meeting shall not be more than thirty (30) days after the date for which the first meeting was called.  At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been at the meeting as originally notified.  The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

Except as otherwise provided in the Corporation’s Certificate of Incorporation or under applicable law, in all matters other than the election of directors, the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders.  Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors (which number shall take into account the cumulation of votes as provided in the Corporation s Certificate of Incorporation and Article I, Section 11 of these By-laws).  If, at any meeting of the stockholders, due to a vacancy or vacancies or otherwise, directors of more than one class of the Board of Directors are to be elected, each class of directors to be elected at the meeting shall be elected in a separate election by a plurality vote.

SECTION 9.  Proxies.  At all meetings of stockholders, a stockholder may vote by proxy executed in writing by the stockholder or by its duly authorized attorney in fact.  Proxies solicited on behalf of the management shall be voted as directed by the stockholder or, in the absence of such direction, as determined by a majority of the Board of Directors.  Proxies must be filed with the Secretary of the Corporation.

SECTION 10.  Voting of Shares by Certain Holders.  Shares standing in the name of another corporation may be voted by any officer, agent or proxy as the by-laws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation may determine.  Shares held by an administrator, executor, guardian or conservator may be voted by it, either in person or by proxy, without a transfer of such shares into its name.  Shares standing in the name of a trustee may be voted by it, either in person or by proxy, but no trustee shall be entitled to vote shares held by it without a transfer of such shares into its name.  Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into its name if authority to do so is contained in an appropriate order of the court or other public authority by which such receiver was appointed.

A stockholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.

SECTION 11.  Cumulative Voting.  At each annual meeting of stockholders in which more than one director is being elected, every stockholder entitled to vote at such election shall have the right to vote, in person or by proxy, the number of shares owned by the stockholder for as many persons as there are directors to be elected and for whose election the stockholder has a right to vote, or to cumulate the votes by giving one candidate as many votes as the number of such directors to be elected multiplied by the number of its shares shall equal, or by distributing such votes on the same principle among any number of candidates.

SECTION 12.  Inspector of Election.  In advance of any meeting of stockholders, the Chairman of the Board of Directors may appoint any person(s) other than nominees for office as inspectors of election to act at such meeting or any adjournment thereof.  Any such appointment shall not be altered at the meeting.  If the inspector(s) of election is (are) not so appointed, the Chairman of the Board or, if he or she is not present at the meeting, the Vice Chairman of the Board, may, and at the request of not fewer than ten percent (10%) of the votes represented at the meeting shall, make such appointment at the meeting.  In case any person(s) appointed as inspector(s) fail(s) to appear or fail(s) or refuse(s) to act, the vacancy may be filled by appointment by the Chairman of the Board in advance of the meeting or at the meeting, or, if he or she is not present at the meeting, by the Vice Chairman of the Board.

The duties of such inspectors shall include: determining the number of shares of stock and the voting power of each share, the shares of stock represented at the meeting, the existence of a quorum, the authenticity, validity and effect of proxies; receiving votes, ballots or consents; hearing and determining all challenges and questions in any way arising in connection with the right to vote; counting and tabulating all votes or consents; determining the result; and such acts as may be proper to conduct the election or vote with fairness to all stockholders.

SECTION 13.  Nominations for Directors.  Nominations of persons for election to the Board of Directors of the Corporation may be made at an annual meeting of stockholders pursuant to the Corporation’s notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors.  The Corporate Governance and Nominating Committee (the “Nominating Committee”) of the Board of Directors shall recommend to the Board of Directors the selection of nominees for election as directors.  Except in the case of a nominee substituted as a result of his or her death, incapacity or withdrawal, the Board of Directors, upon the recommendation of the Nominating Committee, shall deliver written nominations to the Secretary of the

Corporation at least thirty (30) days prior to the date of the annual meeting.  No nominations for directors, except those made by the Board of Directors upon the recommendation of the Nominating Committee, shall be voted upon at the annual meeting unless other nominations by stockholders are made in writing to the Secretary of the Corporation, as set forth below, and delivered to, or mailed and received at, the principal executive offices of the Corporation at least one hundred and twenty (120) days prior to the anniversary date of the mailing of proxy materials by the Corporation in connection with the immediately preceding annual meeting of stockholders of the Corporation; provided, however, that in the event that the annual meeting is not to be held within sixty (60) days before or after such anniversary date, notice by the stockholder must be so delivered not later than the ninetieth (90^th) day prior to the date of such annual meeting.  Ballots bearing the names of all the persons nominated by the Board of Directors and by stockholders shall be provided for use at the annual meeting.  However, if the Board of Directors or the Nominating Committee shall fail or refuse to act at least thirty (30) days prior to the annual meeting, nominations for directors may be made at the annual meeting by any stockholder entitled to vote and shall be voted upon.

Any nomination by a stockholder pursuant to this Section 13 shall set forth or include the following information: (a) the name and address, as they appear on the Corporation’s books, of the stockholder who intends to make the nomination; (b) a representation that the stockholder is a holder of the Corporation’s shares of stock entitled to vote (indicating the class and number of shares owned) and intends to appear in person or by proxy at the meeting to make the nomination; (c) a description of all arrangements or understandings among the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission; and (e) the written consent of each such nominee to serve as director of the Corporation if elected. 

SECTION 14.  Proposals.  At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting.  To be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors of the Corporation, or (b) otherwise properly brought before the meeting by a stockholder.  For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation.  To be timely a stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not later than one hundred twenty days (120) prior to the anniversary date of the mailing of proxy materials by the Corporation in connection with the immediately preceding annual meeting of stockholders of the Corporation; provided, however, that in the event that the annual meeting is not to be held within sixty (60) days before or after such anniversary date, notice by the stockholder must be so delivered not later than the ninetieth (90^th) day prior to the date of such annual meeting. 

Any stockholder’s notice to the Secretary shall set forth the following information as to each matter the stockholder proposes to bring before the annual meeting: (a) a brief description of the matter or proposal desired to be brought before the annual meeting; (b) the name and address, as they appear on the Corporation’s books, of the stockholder proposing such matter, (c) a representation that the stockholder is a holder of the Corporation’s shares of stock entitled to vote (indicating the class and number of shares owned) and intends to appear in person or by proxy at the annual meeting to bring up the matter or proposal specified in the notice; and (d) any material interest of the stockholder in such matter or proposal.  The chairperson of the annual

meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 14, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.  This provision is not a limitation on any applicable laws and regulations.

ARTICLE II

BOARD OF DIRECTORS

SECTION 1.  General Powers.  The business and affairs of the Corporation shall be under the direction of the Board of Directors which shall annually elect a Chairman and a Vice Chairman from among its members and shall designate, when present, the Chairman or, if he or she is not present, the Vice Chairman to preside at its meetings.  The Chairman of the Board shall have such other duties as set forth in these By-laws or as may from time to time be assigned by the Board of Directors.  The Vice Chairman of the Board shall assist the Chairman of the Board in the performance of his or her duties and shall have such other duties as set forth in these By-laws or as may from time to time be assigned by the Board of Directors or the Chairman of the Board. 

SECTION 2.  Classification and Term.  The Board of Directors shall be divided into three classes as nearly equal in number as possible.  The term of office of the initial directors shall be as follows:  the term of directors of the first class shall expire at the first annual meeting of stockholders after the effective date of the Corporation’s Certificate of Incorporation; the term of office of the directors of the second class shall expire at the second annual meeting of stockholders after the effective date of the Corporation’s Certificate of Incorporation; and the term of office of the third class shall expire at the third annual meeting of stockholders after the effective date of the Corporation’s Certificate of Incorporation; and as to directors of each class, when their respective successors are elected and qualified.  At each annual meeting of stockholders, directors elected to succeed those whose terms are expiring shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders and when their respective successors are elected and qualified.  No director shall be elected, re-elected or nominated for election or re-election, as the case may be, after attaining the age of seventy-one (71).  Also, the term of a director shall end at the earliest of (i) the annual meeting of stockholders following the date such director attains the age of seventy-one (71) or (ii) the end of the term for which he or she was elected to the Board of Directors.

SECTION 3.  Number of Directors.  The Board of Directors shall consist of such number of directors as established from time to time by a vote of a majority of the Board of Directors, provided that no decrease in the number of directors shall have the effect of shortening the term of any incumbent director.

SECTION 4.  Meetings.  All meetings of the Board of Directors may be held in or outside Puerto Rico.

SECTION 5.  Special Meetings.  Special meetings of the Board of Directors may be called by or at the request of the Chairman or the Vice Chairman of the Board, the President, or one-third of the members of the Board.  Such meetings shall be held at such place as the person(s) calling the meeting shall designate.

SECTION 6.  Notice.  Written notice of any special meeting shall be given to each director at least two (2) days prior thereto if delivered personally or by fax or electronic mail, or at least five (5) days prior thereto if delivered by postal mail at the address at which the director is most likely to be reached.  Such notice shall be

deemed to be delivered when deposited in the U.S. postal mail so addressed, with postage thereon prepaid if mailed or when delivered if sent by fax or electronic mail.  Any director may waive notice of any meeting by a writing filed with the Secretary.  The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened.  Neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

SECTION 7.  Quorum.  A majority of the directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time.  Notice of any adjourned meeting shall be given in the same manner as prescribed by Section 6 of this Article II.

SECTION 8.  Manner of Acting.  The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless a greater number is prescribed by applicable laws or regulations or by these By-laws.

SECTION 9.  Resignation.  Any director may resign at any time by sending a written notice of such resignation to the principal executive offices of the Corporation addressed to the Chairman or the Vice Chairman of the Board.  Unless otherwise specified therein, such resignation shall take effect upon receipt thereof by the Chairman or the Vice Chairman of the Board.

SECTION 10.  Vacancies.  All vacancies in the Board of Directors shall be filled in the manner provided in the Corporation’s Certificate of Incorporation.

SECTION 11.  Removal of Directors.  Directors may be removed in the manner provided in the Corporation’s Certificate of Incorporation.

SECTION 12.  Action by Directors Without a Meeting.  Any action required or which may be taken at a meeting of the Board of Directors, or of a committee thereof, may be taken without a meeting if a all members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing(s) or electronic transmission(s) are filed with the minutes of proceedings of the Board of Directors or committee, as the case may be.  Such consent shall have the same effect as a unanimous vote.

SECTION 13.  Action by Directors by Communications Equipment.  Any action required or which may be taken at a meeting of the Board of Directors, or of a committee thereof, may be taken by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time.

SECTION 14.  Compensation.  The Board of Directors may fix, from time to time, a reasonable fee to be paid to each director for his or her services in attending meetings of the Board of Directors or of any committee thereof.  The Board of Directors may also provide that such compensation, as it deems reasonable, shall be paid to any or all of its members for services rendered to the Corporation other than attendance at meetings of the Board of Directors or its committees.

ARTICLE III

EXECUTIVE AND OTHER COMMITTEES

SECTION 1.  Appointment.  The Board of Directors, by resolution adopted by a majority of the full Board, may, from time to time appoint, any number of committees, composed of one (1) or more directors as the Board may determine.

SECTION 2.  Authority.  These committees shall and may exercise those powers that the Board of Directors may so delegate and shall have the name or names that from time to time the Board of Directors may determine by resolution.

SECTION 3.  Minutes, Reports.  Minutes shall be kept of all meetings of the committees.  The minutes of each meeting, together with such reports in writing as may be required to fully explain any business or transaction, shall be submitted for information purposes to the Board of Directors at the next regular meeting of the Board of Directors.  The Board of Directors shall record such action in the minutes of such meeting.

SECTION 4.  Appointment, Term of Office.  Members of the committees shall be appointed by the Board for such term as the Board may determine, and all members of the committees shall serve at the pleasure of the Board.

SECTION 5.  Quorum.  A majority of the members of any committee shall constitute a quorum.  A majority of the votes cast shall decide every question or matter submitted to a committee.

ARTICLE IV

OFFICERS

SECTION 1.  Positions.  The officers of the Corporation shall be a President, one or more Vice Presidents, a Secretary, an Assistant Secretary, and a Treasurer, each of whom shall be elected by the Board of Directors.  The Board of Directors may designate one or more Vice Presidents as Executive Vice President or Senior Vice President.  The Board of Directors may also elect or authorize the appointment of such other officers as the business of the Corporation may require.  The officers shall have such authority and perform such duties as the Board of Directors may from time to time authorize or determine.  In the absence of action by the Board of Directors, the officers shall have such powers and duties as generally pertain to their respective offices.

SECTION 2.  Election and Term of Office.  The officers of the Corporation shall be elected annually at the first meeting of the Board of Directors held after the annual meeting of the stockholders.

If the election of officers is not held at such meeting, such election shall be held as soon thereafter as possible.  Each officer shall hold office until a successor has been duly elected and qualified or until the officer’s death, resignation or removal in the manner hereinafter provided.  Election or appointment of an officer, employee or agent shall not of itself create contractual rights.  The Board of Directors may authorize the Corporation to enter into an employment contract with any officer in accordance with regulations of the Board, but no such contract

shall impair the right of the Board of Directors to remove any officer at any time in accordance with Section 3 of this Article IV.

SECTION 3.  Removal.  Any officer may be removed by the Board of Directors whenever, in its judgment, the best interests of the Corporation will be served thereby, but such removal, other than for cause, shall be without prejudice to the contractual rights, if any, of the person so removed.

SECTION 4.  Vacancies.  A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term.

SECTION 5.  Remuneration.  The remuneration of the officers shall be fixed from time to time by the Board of Directors.

ARTICLE V

CONTRACTS, LOANS, CHECKS AND DEPOSITS

SECTION 1.  Contracts.  To the extent permitted by applicable laws and regulations, and except as otherwise prescribed by these By-laws with respect to stock certificates, the Board of Directors may authorize any officer, employee or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation.  Such authority may be general or confined to specific instances.

SECTION 2.  Loans.  No loans shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued unless authorized by the Board of Directors.  Such authority may be general or confined to specific instances.

SECTION 3.  Checks, Drafts.  All checks, drafts or other orders for the payment of money, notes and other evidences of indebtedness issued in the name of the Corporation shall be signed by one or more officers, employees or agents of the Corporation in such manner as shall from time to time be determined by the Board of Directors.

SECTION 4.  Deposits.  All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in any one of its authorized depositories as the Board of Directors selects.

ARTICLE VI

STOCK AND STOCK CERTIFICATES

SECTION 1.  Transfer.  Shares of stock shall be transferable on the books of the Corporation, and a transfer book shall be kept in which all transfer of stock shall be recorded.  Every person becoming a stockholder by such transfer shall, in proportion to its shares, succeed to all rights and liabilities of the prior holder of such shares.

SECTION 2.  Stock Certificates.  Stock certificates shall bear the signature of the Chairman or the Vice Chairman of the Board, the President or any Vice President (which may be engraved, printed or impressed), and

shall be signed manually or by facsimile process by the Secretary or an Assistant Secretary, or any other officer appointed by the Board of Directors for that purpose, to be known as an Authorized Officer, and the seal of the Corporation shall be engraved thereon.

SECTION 3.  Owner of Record, Attachment, Pledge.  Shares of stock are transferable by all means recognized by law, if there is no attachment levied against them under competent authority, but as long as the transfer is not signed and recorded in the transfer books the Corporation shall be entitled to consider as owner thereof the party who appears as such in said books.

SECTION 4.  Lost or Destroyed Stock Certificates.  In the event any stock certificate shall be lost or destroyed, the Board of Directors may order a new certificate to be issued in its place upon receiving such proof of loss and such bond of indemnity therefore as may be satisfactory to the Board. New certificates may be issued without requiring any bond when in the judgment of the Board it is proper to do so.

SECTION 5.  Transfer Agent.  The Board of Directors may designate any person, whether or not an officer of the Corporation, as stock transfer agent or registrar of the Corporation with respect to stock certificates or other securities issued by the Corporation.

ARTICLE VII

INDEMNIFICATION, ETC., OF DIRECTORS,

OFFICERS, EMPLOYEES AND AGENTS

SECTION 1.  Indemnification. 

     (a)     The Corporation shall indemnify, to the fullest extent authorized by the General Corporation Law of the Commonwealth of Puerto Rico, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the written request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a matter he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful, provided that the Corporation shall not be liable for any amounts which may be due to any person in connection with a settlement of any action, suit or proceeding effected without its prior written consent or any action, suit or proceeding initiated by any person seeking indemnification hereunder without its prior written consent.  The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.

     (b)     The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the written request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his or her duty to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expense which such court shall deem proper.

     (c)     To the extent that a director, officer, employee, or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 1(a) or Section 1(b) of this Article VII, or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith.

     (d)     Any indemnification under Section 1(a) or Section 1(b) of this Article VII (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth therein.  Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (c) by the stockholders.

     (e)     The Corporation shall not be liable for any amounts which may be due to any person in connection with a settlement of any action, suit or proceeding initiated by any person seeking indemnification under this Article VII without its prior written consent.

SECTION 2.  Advancement of Expenses.  Reasonable expenses (including attorneys’ fees) incurred in defending a civil or criminal action, suit or proceeding described in Section 1 of this Article VII may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of the director or officer to repay such amount unless it shall ultimately be determined that he or she is entitled to be indemnified by the Corporation as authorized in this Article VII.

SECTION 3.  Other Rights and Remedies.  The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any statute, by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to actions in their official capacity and as to actions in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

SECTION 4.  Insurance.  By action of its Board of Directors, notwithstanding any interest of the directors in the action, the Corporation may purchase and maintain insurance, in such amounts as the Board of Directors deems appropriate, on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the written request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power or would be required to indemnify him or her against such liability under the provisions of this Article VII or of the General Corporation Law of the Commonwealth of Puerto Rico, or of the laws of any state or political dependency of the United States or foreign country as may be applicable.

SECTION 5.  Modification.  The duties of the Corporation to indemnify and to advance expenses to a director, officer, employee or agent provided in this Article VII shall be in the nature of a contract between the Corporation and each such person, and no amendment or repeal of any provision of this Article VII shall alter, to the detriment of such person, the right of such person to the advance of expenses or indemnification related to a claim based on an act or failure to act which took place prior to such amendment or repeal.

ARTICLE VIII

CORPORATE SEAL

The corporate seal of the Corporation shall be in such form and bear such inscription as may be adopted by resolution of the Board of Directors, or by usage of the officers on behalf of the Corporation.

ARTICLE IX

MISCELLANEOUS PROVISIONS

SECTION 1.  Fiscal Year.  The fiscal year of the Corporation shall be from January 1 to December 31 of each year.

SECTION 2.  Dividends.  The Board of Directors may from time to time declare, and the Corporation may pay dividends in cash or in shares of the capital stock of the Corporation, in the manner and upon the terms and conditions provided by applicable laws and regulations.

SECTION 3.  Conflict with Laws.  The provisions of these By-laws in conflict with any applicable law shall be superseded by any such law without affecting the validity of the remaining provisions hereof.

SECTION 4.  Books and Records.  The Corporation shall keep correct and complete books and records of account and shall keep minutes and proceedings of its stockholders and Board of Directors (including committees thereof).  Any books, records and minutes may be in written form or any other form capable of being converted to written form within a reasonable time.

EX-31.1

 

EXHIBIT 31.1

MANAGEMENT CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, José Rafael Fernández, President and Chief Executive Officer of OFG Bancorp, certify that:

1.      I have reviewed this quarterly report on Form 10-Q of OFG Bancorp;

2.      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f ) and 15d-15(f )) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U. S. generally accepted accounting principles;

c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2014

By:        /s/ José Rafael Fernández

José Rafael Fernández

President and Chief Executive Officer

EX-31.2

 

EXHIBIT 31.2

MANAGEMENT CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ganesh Kumar, Executive Vice President and Chief Financial Officer of OFG Bancorp, certify that:

1 .      I have reviewed this quarterly report on Form 10-Q of OFG Bancorp;

2 .      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3 .      Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.       The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f ) and 15d-15(f )) for the registrant and have:

a)       Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)       Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles;

c)        Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)       Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and

5.       The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a)       All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)       Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2014

By:         /s/ Ganesh Kumar

                Ganesh Kumar

Executive Vice President and Chief Financial Officer

EX-32.1

 

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. §1350)

In connection with OFG Bancorp’s quarterly report on Form 10-Q for the period ended June 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, José Rafael Fernández, President and Chief Executive Officer of OFG Bancorp, hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §1350), that:

(1)      The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)      The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of OFG Bancorp.

In witness whereof, I execute this certification in San Juan, Puerto Rico, this 8th day of August, 2014.

                                                                                                                                By:         /s/ José Rafael Fernández

                                                                                                                                                José Rafael Fernández

                                                                                                                                                President and Chief Executive Officer

EX-32.2

 

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. §1350)

In connection with OFG Bancorp’s quarterly report on Form 10-Q for the period ended June 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ganesh Kumar, Executive Vice President and Chief Financial Officer of OFG Bancorp, hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §1350), that:

(1)      The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)      The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of OFG Bancorp.

In witness whereof, I execute this certification in San Juan, Puerto Rico, this 8th day of August, 2014.

By:         /s/ Ganesh Kumar

                Ganesh Kumar

Executive Vice President and Chief Financial Officer

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Guarantees (Tables)

6 Months Ended

Jun. 30, 2014

Guarantees [Abstract]

Schedule Of Guarantee Obligations Text Block

The following table shows the changes in the Company's liability for estimated losses from these credit recourse agreements, included in the unaudited consolidated statements of financial condition during the quarters and six-month periods ended June 30, 2014 and 2013

	Quarter Ended June 30,					Six-Month Period Ended June 30,
	2014		2013			2014		2013
	(In thousands)
Balance at beginning of period	$	1,549	$	2,460	$	1,955	$	2,460
Net charge-offs/terminations		(239)		-		(645)		-
Balance at end of period	$	1,310	$	2,460	$	1,310	$	2,460

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Subsequent Events (Narrative) (Details)	6 Months Ended
	Jun. 30, 2014
Subsequent Events [Abstract]
Amendments to Internal Revenue Code	On July 1, 2014, the Governor of the Commonwealth of Puerto Rico signed House Bill 1919 into law, which became Act 77-2014 (the Act). The Act, which amends the Puerto Rico Internal Revenue Code of 2011 and Act 73-2008, also known as the “Economic Incentives for the Development of Puerto Rico Act”, includes several new tax measures applicable to financial and non financial entities. The main provisions of the Act include: A mechanism to impose a 10% tax on a deemed dividend amount resulting from the holding of certain foreign assets, as defined. The exclusion of loans or credit transactions between affiliates, with some limited exceptions for purposes of determining the Puerto Rico net assets as part of the computation of the dividend equivalent amount of foreign corporations subject to the branch profits tax. Elimination of the former Gross Income Tax as a component of the alternative minimum tax (AMT) for non financial institutions for taxable years commencing on January 1, 2014. Effective for taxable years commencing after December 31, 2013, a tax on gross income is imposed in addition to the regular income tax, the AMT or the alternative basic tax at graduated rates ranging from .20% to .85%. This gross income tax is deductible in arriving at taxable income. Limitation of the amount of the tax credit to be claimed against the current year regular tax with respect to the AMT paid in prior years (AMT Credit) to 25% of the current net regular tax over the AMT for such taxable year. Increase in tax rates on: (a) net long term capital gains for corporations from 15% to 20%, and (b) dividends from certain corporations from 10% to 15%. The holding period to determine whether a gain or loss from the sale of capital assets is considered long-term is increased from six-months to one year. The Company has made an evaluation of the impact of these amendments and considered the impact immaterial.

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Loans Receivable (Covered Loan carrying amounts) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Accounts Notes And Loans Receivable Line Items
Financing Receivable Acquired With Deteriorated Credit Quality	$ 2,676,008	$ 2,929,353
Non-acretable discount	554,724	579,587
Cash expected to be collected	2,121,284	2,349,766
Accretable Yield	444,606	517,553
Carrying amount, gross	1,676,678	1,832,213
Acquired Loans In An F D I C Assisted Transaction [Member]
Accounts Notes And Loans Receivable Line Items
Financing Receivable Acquired With Deteriorated Credit Quality	607,144	702,126
Non-acretable discount	85,224	129,477
Cash expected to be collected	521,920	572,649
Accretable Yield	128,061	162,959
Carrying amount, gross	393,859	409,690
Allowance for loan and lease losses	59,515	52,729
Carrying amount, net	$ 334,344	$ 356,961

XML

Investment Securities (Gains and losses by category) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale - amortized cost	$ 394,740	$ 558,062
Available for sale - unrealized loss	11,428	20,714
Total Fair Value	383,312	537,348
12 months or more
Available for sale - Amortized cost	369,762	23,485
Available for sale - Unrealized Loss	11,338	5,718
Available-for-sale, Fair Value	358,424	17,767
Less than 12 months
Available for sale - Amortized cost	24,978	534,577
Available for sale - Unrealized Loss	90	14,996
Available for sale - Fair Value	24,888	519,581
CMO's issued by us government sponsored agenciesat loss
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale - amortized cost	172,907	185,220
Available for sale - unrealized loss	3,786	6,814
Total Fair Value	169,121	178,406
12 months or more
Available for sale - Amortized cost	156,542	2,559
Available for sale - Unrealized Loss	3,734	237
Available-for-sale, Fair Value	152,808	2,322
Less than 12 months
Available for sale - Amortized cost	16,365	182,661
Available for sale - Unrealized Loss	52	6,577
Available for sale - Fair Value	16,313	176,084
FNMA and FHLMC [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale - amortized cost	190,630	220,913
Available for sale - unrealized loss	1,992	6,669
Total Fair Value	188,638	214,244
Less than 12 months
Available for sale - Amortized cost		220,913
Available for sale - Unrealized Loss		6,669
Available for sale - Fair Value		214,244
Obligation of Puerto Rico Government and political subdivisions [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale - amortized cost	22,391	121,035
Available for sale - unrealized loss	5,591	6,845
Total Fair Value	16,800	114,190
12 months or more
Available for sale - Amortized cost	22,391	20,845
Available for sale - Unrealized Loss	5,591	5,470
Available-for-sale, Fair Value	16,800	15,375
Less than 12 months
Available for sale - Amortized cost		100,190
Available for sale - Unrealized Loss		1,375
Available for sale - Fair Value		98,815
Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale - amortized cost	199	203
Available for sale - unrealized loss	21	24
Total Fair Value	178	179
12 months or more
Available for sale - Amortized cost	199	81
Available for sale - Unrealized Loss	21	11
Available-for-sale, Fair Value	178	70
Less than 12 months
Available for sale - Amortized cost	0	122
Available for sale - Unrealized Loss	0	13
Available for sale - Fair Value	0	109
Obligation of US Government sponsored agencies at loss [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale - amortized cost	8,613	10,691
Available for sale - unrealized loss	38	42
Total Fair Value	8,575	10,649
Less than 12 months
Available for sale - Amortized cost	8,613	10,691
Available for sale - Unrealized Loss	38	42
Available for sale - Fair Value	8,575	10,649
Other Debt Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale - amortized cost		20,000
Available for sale - unrealized loss		320
Total Fair Value		19,680
Less than 12 months
Available for sale - Amortized cost		20,000
Available for sale - Unrealized Loss		320
Available for sale - Fair Value		$ 19,680

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FDIC Asset and True-up Payment Obligation (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014
FDIC-Assisted Acquisition and FDIC Indemnification Asset [Abstract]
Percent Of Losses Fdic Absorbs	80.00%	80.00%
Percent Of Losses Recoveries Fdic Shares	80.00%	80.00%
Acquisition Date		Apr. 30, 2010
True-Up Payment Description		Also in connection with the FDIC assisted acquisition, the Bank agreed to make a true-up payment, also known as clawback liability or clawback provision, to the FDIC on the date that is 45 days following the last day (such day, the “True-Up Measurement Date”) of the final shared-loss month, or upon the final disposition of all covered assets under the shared-loss agreements in the event losses thereunder fail to reach expected levels. Under the shared-loss agreements, the Bank will pay to the FDIC 50% of the excess, if any, of: (i) 20% of the Intrinsic Loss Estimate of $906.0 million (or $181.2 million) (as determined by the FDIC) less (ii) the sum of: (A) 25% of the asset discount (per bid) (or $227.5 million); plus (B) 25% of the cumulative shared-loss payments (defined as the aggregate of all of the payments made or payable to the Bank minus the aggregate of all of the payments made or payable to the FDIC); plus (C) the sum of the period servicing amounts for every consecutive twelve-month period prior to and ending on the True-Up Measurement Date in respect of each of the shared-loss agreements during which the shared-loss provisions of the applicable shared-loss agreement is in effect (defined as the product of the simple average of the principal amount of shared-loss loans and shared-loss assets at the beginning and end of such period times 1%)
Additional amortization of the FDIC indemnification asset	$ 1.6	$ 5.1
Claimable losses on non-single family residential loans	$ 98.9	$ 98.9

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Loans Receivable (Accretable yield and non-accretable discount activity) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Dec. 31, 2012
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period			$ 517,553	$ 590,409
Additions accretable	0	0
Accretion Accretable	(79,983)	(102,095)
Transfer from (to) non-accretable discount	7,036	7,747
Balance at end of period	444,606	496,061	517,553	590,409
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Balance at beginning of period			579,587	741,872
Additions non-accretable	0	0
Principal Losses	(17,827)	(20,484)
Transfer (to) from accretable yield	(7,036)	(7,747)
Balance at end of period	554,724	713,641	579,587	741,872
Acquired under ASC 310-30 Non-Covered Loans [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period	482,001	542,741
Accretion Accretable	(39,714)	(54,427)
Transfer from (to) non-accretable discount	2,319	7,747
Balance at end of period	444,606	496,061
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Balance at beginning of period	563,294	733,126
Principal Losses	(6,251)	(11,738)
Transfer (to) from accretable yield	(2,319)	(7,747)
Balance at end of period	$ 554,724	$ 713,641

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Accrued Interest and Other Assets (Other assets) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Other asset
Other prepaid expenses	$ 17,423	$ 15,439
Core deposit intangible and customer relationship intangibles	10,829	11,912
Other repossessed assets	16,875	12,583
Mortgage tax credits	2,621	8,706
Investment in Statutory Trust	1,083	1,083
Accounts receivable and other assets	41,165	48,717
Other assets	$ 89,996	$ 98,440

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Commitments (Summarized credit-related financial instruments) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Commitments and Contingencies [Abstract]
Commitments To Extend Credit	$ 441,793	$ 520,269
Commercial letters credit	1,544	1,096
Standby letters of credit and financial guarantees	38,451	38,577
Loans sold with recourse	113,547	122,291
Commitments To Sell Or Securitize Mortgage Loans	$ 63,558	$ 80,307

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Investment Securities (Investment securities by contractual maturity) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Schedule of Investments [Line Items]
Available for sale Amortized Cost	$ 1,385,438	$ 1,575,043
Available-for-sale Securities	1,418,958	1,588,425
Held-to-maturity, Amortized cost	26,706
Held to maturity Fair Value	26,844	0
Collateralized Mortgage Backed Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	1,275,705	1,419,117
Available-for-sale Securities	1,314,677	1,439,539
Held-to-maturity, Amortized cost	26,706
Held to maturity Fair Value	26,844
Collateralized Mortgage Backed Securities [Member] | FNMA and FHLMC [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	1,070,034	1,190,910
Available-for-sale Securities	1,112,118	1,217,330
Held-to-maturity, Amortized cost	26,706
Held to maturity Fair Value	26,844
Collateralized Mortgage Backed Securities [Member] | GNMA [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	5,560	7,406
Available-for-sale Securities	5,928	7,815
Collateralized Mortgage Backed Securities [Member] | CMO's [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	200,111	220,801
Available-for-sale Securities	196,631	214,394
Collateralized Mortgage Backed Securities [Member] | Maturities Due From Five To Ten Years [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	24,631
Available-for-sale Securities	25,109
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	0
Collateralized Mortgage Backed Securities [Member] | Maturities Due From Five To Ten Years [Member] | FNMA and FHLMC [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	24,631
Available-for-sale Securities	25,109
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	0
Collateralized Mortgage Backed Securities [Member] | Maturities Due After Ten Years [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	1,251,074
Available-for-sale Securities	1,289,568
Held-to-maturity, Amortized cost	26,706
Held to maturity Fair Value	26,844
Collateralized Mortgage Backed Securities [Member] | Maturities Due After Ten Years [Member] | FNMA and FHLMC [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	1,045,403
Available-for-sale Securities	1,087,009
Held-to-maturity, Amortized cost	26,706
Held to maturity Fair Value	26,844
Collateralized Mortgage Backed Securities [Member] | Maturities Due After Ten Years [Member] | GNMA [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	5,560
Available-for-sale Securities	5,928
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	0
Collateralized Mortgage Backed Securities [Member] | Maturities Due After Ten Years [Member] | CMO's [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	200,111
Available-for-sale Securities	196,631
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	0
Investment Securities
Schedule of Investments [Line Items]
Available for sale Amortized Cost	109,733	155,926
Available-for-sale Securities	104,281	148,886
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	0
Investment Securities | US Treasury Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	9,000
Available-for-sale Securities	9,000
Investment Securities | Obligation of US Government sponsored agencies at loss [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	74,613	10,691
Available-for-sale Securities	74,575	10,649
Investment Securities | Obligation of Puerto Rico Government and political subdivisions [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	22,391	121,035
Available-for-sale Securities	16,800	114,190
Investment Securities | Other Debt Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	3,729	24,200
Available-for-sale Securities	3,906	24,047
Investment Securities | Maturities Due In Less Than One Year [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	75,000
Available-for-sale Securities	75,000
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	0
Investment Securities | Maturities Due In Less Than One Year [Member] | US Treasury Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	9,000
Available-for-sale Securities	9,000
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	0
Investment Securities | Maturities Due In Less Than One Year [Member] | Obligation of US Government sponsored agencies at loss [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	66,000
Available-for-sale Securities	66,000
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	0
Investment Securities | Maturities Due From One To Five Years [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	11,927
Available-for-sale Securities	9,543
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	0
Investment Securities | Maturities Due From One To Five Years [Member] | Obligation of Puerto Rico Government and political subdivisions [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	11,927
Available-for-sale Securities	9,543
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	0
Investment Securities | Maturities Due From Five To Ten Years [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	8,613
Available-for-sale Securities	8,575
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	0
Investment Securities | Maturities Due From Five To Ten Years [Member] | Obligation of US Government sponsored agencies at loss [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	8,613
Available-for-sale Securities	8,575
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	0
Investment Securities | Maturities Due After Ten Years [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	14,193
Available-for-sale Securities	11,163
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	0
Investment Securities | Maturities Due After Ten Years [Member] | Obligation of Puerto Rico Government and political subdivisions [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	10,464
Available-for-sale Securities	7,257
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	0
Investment Securities | Maturities Due After Ten Years [Member] | Other Debt Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	3,729
Available-for-sale Securities	3,906
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	$ 0

XML

Accrued Interest Receivable and Other Assets (Tables)

6 Months Ended

Jun. 30, 2014

Other asset

Schedule of Accrued interest receivable [Table Text Block]

	June 30,		December 31,
	2014		2013
	(In thousands)
Non-covered loans	$	18,098	$	13,378
Investments		4,410		5,356
	$	22,508	$	18,734

Schedule of Other Assets [Table Text Block]

Other assets at June 30, 2014 and December 31, 2013 consist of the following

		June 30,		December 31,
	2014		2013
	(In thousands)
Prepaid expenses	$	17,423	$	15,439
Core deposit and customer relationship intangibles		10,829		11,912
Other repossessed assets		16,875		12,583
Mortgage tax credits		2,621		8,706
Investment in Statutory Trust		1,083		1,083
Accounts receivable and other assets		41,165		48,717
	$	89,996	$	98,440

XML

Deposits and Related Interest (Narratives) (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Deposits [Abstract]
Weighted Average Rate Domestic Deposit	0.70%	0.73%
Puerto Rico Cash & Money Market Fund Deposits	$ 101,800,000	$ 93,100,000
Puerto Rico Cash & Money Market Fund Deposits Weighted Average Rate	0.77%	0.77%
Puerto Rico Cash & Money Market Fund Deposits Collateral	81,800,000	67,500,000
Time Deposits, $100,000 or More	719,200,000	845,800,000
Public Fund Time Deposits, $100,000 or more	22,100,000	26,700,000
Public Fund Time Deposits Weighted Average Rate, $100,000 or more	0.53%	0.32%
Public funds deposit	362,800,000	328,600,000
Public Fund Collateral Investments		97,800,000
Public Fund Time Deposits Collateral Commercial Loans	454,500,000	549,000,000
Accrued Interest, Time Deposits	2,100,000
Unamortized deposit discounts	2,500,000
Bank Overdrafts	861,000	1,800,000
Brokered Certificates of Deposits	627,900,000	729,800,000
Brokered Money Market Deposit	90,600,000	98,300,000
Equity indexed option	$ 5,200,000

XML

Derivative Activities (Derivative Assets and Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Assets	$ 9,558	$ 20,502
Derivative Liabilities	13,617	14,937
Options tied to Standard & Poor 500 Stock Market Index [Member]
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Assets	6,580	16,430
Designated as Hedging Instrument [Member]
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Assets	0	850
Derivative Liabilities	10,515	11,757
Not Designated as Hedging Instrument [Member]
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Assets	2,728	2,861
Derivative Liabilities	2,728	2,861
Interest Rate Cap [Member]
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Assets	249	319
Derivative Liabilities	249	319
Other derivative
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Assets	1	42
Derivative Liabilities	$ 125	$ 0

XML

Offsetting Arrangements (Assets Offsetting) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Offsetting Assets [Line Items]
Gross Amount of Recognized Assets	$ 9,558	$ 80,502
Gross amounts Offset in the Statement of Financial Condition	0	0
Net Amount of Assets in Statement of Financial Condition	9,558	80,502
Financial Instruments	2,004	67,037
Cash Collateral Received	0	6,780
Net Amount	7,554	6,685
Derivative
Offsetting Assets [Line Items]
Gross Amount of Recognized Assets	9,558	20,502
Gross amounts Offset in the Statement of Financial Condition	0	0
Net Amount of Assets in Statement of Financial Condition	9,558	20,502
Financial Instruments	2,004	2,450
Cash Collateral Received	0	6,780
Net Amount	7,554	11,272
Federal Funds Sold and Securities Borrowed or Purchased under Agreements to Resell
Offsetting Assets [Line Items]
Gross Amount of Recognized Assets		60,000
Gross amounts Offset in the Statement of Financial Condition		0
Net Amount of Assets in Statement of Financial Condition		60,000
Financial Instruments		64,587
Cash Collateral Received		0
Net Amount		$ (4,587)

XML

Loans Receivable (Investment in non-covered loans on non-accrual status) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Non Covered Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 89,178	$ 83,277
Non-covered originated loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	84,698	76,907
Non-covered originated loans [Member] | Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	52,438	48,183
Non-covered originated loans [Member] | Traditional loan
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	33,561	26,942
Non-covered originated loans [Member] | Originated Up To The Year 2002 [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	3,194	3,428
Non-covered originated loans [Member] | Originated In The Years 2003 And 2004 [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	2,945	1,845
Non-covered originated loans [Member] | Originated In The Year 2005 [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	6,905	4,922
Non-covered originated loans [Member] | Originated In The Year 2006 [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	5,278	4,418
Non-covered originated loans [Member] | Originated In The Years 2007 2008 And 2009 [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	5,860	4,511
Non-covered originated loans [Member] | Originated In The Years 2010 2011 2012 2013 And 2014 [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	9,379	7,818
Non-covered originated loans [Member] | NonTraditional Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	2,655	2,311
Non-covered originated loans [Member] | Loss Mitigation Program [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	16,084	18,792
Non-covered originated loans [Member] | Home equity secured personal loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	138	138
Non-covered originated loans [Member] | Commercial Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	23,506	22,830
Non-covered originated loans [Member] | Commercial Secured [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	20,168	19,103
Non-covered originated loans [Member] | Middle Market Commercial Secured [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	10,345	11,895
Non-covered originated loans [Member] | Retail Commercial Secured [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	9,823	7,208
Non-covered originated loans [Member] | Other Commercial and Industrial[Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	3,338	3,727
Non-covered originated loans [Member] | Middle Market Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	760	1,134
Non-covered originated loans [Member] | Retail Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	2,578	2,485
Non-covered originated loans [Member] | Floor Plan Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	108
Non-covered originated loans [Member] | Consumer Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	1,454	805
Non-covered originated loans [Member] | Credit Cards [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	271	232
Non-covered originated loans [Member] | Overdrafts [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	1	0
Non-covered originated loans [Member] | Unsecured personal lines of credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	139	84
Non-covered originated loans [Member] | Unsecured personal loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	985	485
Non-covered originated loans [Member] | Cash collateral personal loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	58	4
Non-covered originated loans [Member] | Auto and Leasing loans receivable
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	7,300	5,089
Accounted for under ASC 310-20 [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	4,480	6,370
Accounted for under ASC 310-20 [Member] | Commercial Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	1,448	2,543
Accounted for under ASC 310-20 [Member] | Commercial Secured [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	646	1,057
Accounted for under ASC 310-20 [Member] | Retail Commercial Secured [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	545	956
Accounted for under ASC 310-20 [Member] | Floor Plan Commercial Secured [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	101	101
Accounted for under ASC 310-20 [Member] | Other Commercial and Industrial[Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	802	1,486
Accounted for under ASC 310-20 [Member] | Corporate Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	94	97
Accounted for under ASC 310-20 [Member] | Retail Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	588	1,371
Accounted for under ASC 310-20 [Member] | Floor Plan Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	120	18
Accounted for under ASC 310-20 [Member] | Consumer Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	1,352	2,219
Accounted for under ASC 310-20 [Member] | Credit Cards [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	1,318	2,068
Accounted for under ASC 310-20 [Member] | Unsecured personal loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	34	151
Accounted for under ASC 310-20 [Member] | Auto and Leasing loans receivable
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 1,680	$ 1,608

XML

Fair Value (Investment securities available-for-sale classified as level 3) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Amortized cost of investment securities available-for-sale	$ 1,385,438	$ 1,575,043
Investment securities available-for-sale, at fair value	1,418,958	1,588,425
Available for sale - Weighted Average Yield	2.77%	2.89%
Fair Value, Inputs, Level 3 [Member]
Schedule of Available-for-sale Securities [Line Items]
Investment securities available-for-sale, at fair value	$ 0	$ 19,680

XML

Accrued Interest and Other Assets (Narratives) (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013	Dec. 18, 2012
Other assets [Line Items]
Prepaid Taxes	$ 14,200,000	$ 9,600,000
Mortgage tax credits	2,621,000	8,706,000
Repossessed auto	16,800,000	12,300,000
CoreDepositsMember | Eurobank [Member]
Other assets [Line Items]
Other Intangible Assets	7,100,000	7,800,000
Customer Relationships [Member] | BBVAPR
Other assets [Line Items]
Other Intangible Assets	$ 3,700,000	$ 4,100,000	$ 5,000,000

XML

Borrowings (Repurchase Transaction Liability and Market Value of its Underlying Collateral) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Assets Sold Under Agreements To Repurchase Line Items
Assets Sold Under Agreements To Repurchase Repurchase Liability	$ 1,010,000	$ 1,265,000
Assets Sold Under Agreements To Repurchase Interest Rate	2.89%
Market value of underlying collateral of a repurchase agreement	1,133,532	1,342,505
FNMA and FHLMC [Member]
Assets Sold Under Agreements To Repurchase Line Items
Market value of underlying collateral of a repurchase agreement	1,062,938	1,234,833
Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Assets Sold Under Agreements To Repurchase Line Items
Market value of underlying collateral of a repurchase agreement	2,194	3,000
Collateralized Mortgage Obligations [Member]
Assets Sold Under Agreements To Repurchase Line Items
Market value of underlying collateral of a repurchase agreement	0	94,023
US Government-sponsored Enterprises Debt Securities [Member]
Assets Sold Under Agreements To Repurchase Line Items
Market value of underlying collateral of a repurchase agreement	68,400	10,649
Securities Sold under Agreements to Repurchase [Member]
Assets Sold Under Agreements To Repurchase Line Items
Assets Sold Under Agreements To Repurchase Interest Rate		2.41%
Securities Sold under Agreements to Repurchase [Member] | Maturity up to 30 days
Assets Sold Under Agreements To Repurchase Line Items
Assets Sold Under Agreements To Repurchase Repurchase Liability		255,000
Assets Sold Under Agreements To Repurchase Interest Rate		0.50%
Market value of underlying collateral of a repurchase agreement		272,053
Securities Sold under Agreements to Repurchase [Member] | Maturity up to 30 days | FNMA and FHLMC [Member]
Assets Sold Under Agreements To Repurchase Line Items
Market value of underlying collateral of a repurchase agreement		216,201
Securities Sold under Agreements to Repurchase [Member] | Maturity up to 30 days | Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Assets Sold Under Agreements To Repurchase Line Items
Market value of underlying collateral of a repurchase agreement		0
Securities Sold under Agreements to Repurchase [Member] | Maturity up to 30 days | Collateralized Mortgage Obligations [Member]
Assets Sold Under Agreements To Repurchase Line Items
Market value of underlying collateral of a repurchase agreement		48,923
Securities Sold under Agreements to Repurchase [Member] | Maturity up to 30 days | US Government-sponsored Enterprises Debt Securities [Member]
Assets Sold Under Agreements To Repurchase Line Items
Market value of underlying collateral of a repurchase agreement		6,929
Securities Sold under Agreements to Repurchase [Member] | Maturity over 90 days
Assets Sold Under Agreements To Repurchase Line Items
Assets Sold Under Agreements To Repurchase Repurchase Liability	1,010,000	1,010,000
Assets Sold Under Agreements To Repurchase Interest Rate	2.89%	2.89%
Market value of underlying collateral of a repurchase agreement	1,133,532	1,070,452
Securities Sold under Agreements to Repurchase [Member] | Maturity over 90 days | FNMA and FHLMC [Member]
Assets Sold Under Agreements To Repurchase Line Items
Market value of underlying collateral of a repurchase agreement	1,062,938	1,018,632
Securities Sold under Agreements to Repurchase [Member] | Maturity over 90 days | Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Assets Sold Under Agreements To Repurchase Line Items
Market value of underlying collateral of a repurchase agreement	2,194	3,000
Securities Sold under Agreements to Repurchase [Member] | Maturity over 90 days | Collateralized Mortgage Obligations [Member]
Assets Sold Under Agreements To Repurchase Line Items
Market value of underlying collateral of a repurchase agreement	0	45,100
Securities Sold under Agreements to Repurchase [Member] | Maturity over 90 days | US Government-sponsored Enterprises Debt Securities [Member]
Assets Sold Under Agreements To Repurchase Line Items
Market value of underlying collateral of a repurchase agreement	$ 68,400	$ 3,720

XML

Deposits and Related Interest (Interest expense) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Interest Expense Domestic Deposit Liabilities [Abstract]
Demand and saving deposits	$ 4,804	$ 5,435	$ 9,832	$ 11,398
Certificates of Deposits	4,361	4,052	8,311	8,025
Total	$ 9,165	$ 9,487	$ 18,143	$ 19,423

XML

Borrowings (Advances from the Federal Home Loan Bank) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2014
Advances From Federal Home Loan Banks [Line Items]
FHLB, Weighted Average Interest Rate	0.73%
Federal Home Loan Bank Advances [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowed fund	$ 359,912
Federal Home Loan Bank Advances [Member] | April 3 2017 [Member] | Four Million [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowed fund	4,615
FHLB, Weighted Average Interest Rate	1.24%
Settlement Date	Apr. 03, 2012
Maturity Date	Apr. 03, 2017
Federal Home Loan Bank Advances [Member] | January 16, 2018 [Member] | Twenty Five Millions [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowed fund	25,000
FHLB, Weighted Average Interest Rate	2.18%
Settlement Date	Jan. 16, 2013
Maturity Date	Jan. 16, 2018
Federal Home Loan Bank Advances [Member] | January 16, 2018 [Member] | Thirty Million [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowed fund	30,000
FHLB, Weighted Average Interest Rate	2.19%
Settlement Date	Jan. 16, 2013
Maturity Date	Jan. 16, 2018
Federal Home Loan Bank Advances [Member] | July 20, 2020 [Member] | Ten Million [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowed fund	10,336
FHLB, Weighted Average Interest Rate	2.59%
Settlement Date	Jul. 19, 2013
Maturity Date	Jul. 20, 2020
Federal Loan Home Bank Advances Short Term Period Matured [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowed fund	289,961,000
Federal Loan Home Bank Advances Short Term Period Matured [Member] | Julyl 4, 2014 [Member] | Twenty Five Millions [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowed fund	25,000
FHLB, Weighted Average Interest Rate	0.42%
Settlement Date	Jun. 30, 2014
Maturity Date	Jul. 01, 2014
Federal Loan Home Bank Advances Short Term Period Matured [Member] | July 7, 2014 [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowed fund	25,000,000
FHLB, Weighted Average Interest Rate	0.35%
Settlement Date	Jun. 04, 2014
Maturity Date	Jul. 07, 2014
Federal Loan Home Bank Advances Short Term Period Matured [Member] | July 10, 2014 [Member] | Fifty Millions [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowed fund	50,000
FHLB, Weighted Average Interest Rate	0.37%
Settlement Date	Jun. 10, 2014
Maturity Date	Jul. 10, 2014
Federal Loan Home Bank Advances Short Term Period Matured [Member] | July 16, 2014 [Member] | One Hundred Millions [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowed fund	100,000
FHLB, Weighted Average Interest Rate	0.38%
Settlement Date	Jun. 16, 2014
Maturity Date	Jul. 16, 2014
Federal Loan Home Bank Advances Short Term Period Matured [Member] | July 24, 2014 [Member] | Twenty Five Millions [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowed fund	25,000
FHLB, Weighted Average Interest Rate	0.37%
Settlement Date	Jun. 24, 2014
Maturity Date	Jul. 24, 2014
Federal Loan Home Bank Advances Short Term Period Matured [Member] | July 30, 2014 [Member] | Twenty Five Millions [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowed fund	25,000
FHLB, Weighted Average Interest Rate	0.38%
Settlement Date	Jun. 30, 2014
Maturity Date	Jul. 30, 2014
Federal Loan Home Bank Advances Short Term Period Matured [Member] | July 1, 2014 [Member] | Fourty Million [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowed fund	$ 39,961
FHLB, Weighted Average Interest Rate	0.35%
Settlement Date	Jun. 02, 2014
Maturity Date	Jul. 01, 2014

XML

Accrued Interest Receivable and Other Assets (Accrued Interest)(Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Accounts Receivable Net Abstract
Accrued Interest Receivable On Non Covered Loans	$ 18,098	$ 13,378
Accrued Investment Income Receivable	4,410	5,356
Total Interest Receivable	$ 22,508	$ 18,734

XML

FDIC Asset and True-up Payment Obligation (FDIC Indemnification Asset Roll Forward) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
FDIC Indemnification Asset [Roll Forward]
Balance	$ 166,194	$ 283,124	$ 189,240	$ 302,295
Indemnification agreements reimbursements from the FDIC	(10,464)	(12,046)	(18,700)	(18,696)
Increase (decrease) in expected credit losses to be covered under shared-loss agreements, net	3,522	(193)	3,562	(2,015)
FDIC indemnification asset, expense	(17,499)	(19,225)	(35,121)	(31,425)
Incurred expenses to be reimbursed under shared-loss agreements	1,907	1,719	4,679	3,220
Balance	143,660	253,379	143,660	253,379
True-up payment obligation [Roll Forward]
Balance	19,375	16,167	18,510	15,496
FDIC idemnification expense	856	740	1,721	1,411
Balance	$ 20,231	$ 16,907	$ 20,231	$ 16,907

XML

Business Segments

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE 18–BUSINESSSEGMENTS

The Company segregates its businesses into the following major reportable segments of business: Banking, Wealth Management, and Treasury. Management established the reportable segments based on the internal reporting used to evaluate performance and to assess where to allocate resources. Other factors such as the Company's organization, nature of its products, distribution channels and economic characteristics of the products were also considered in the determination of the reportable segments. The Company measures the performance of these reportable segments based on pre-established goals of different financial parameters such as net income, net interest income, loan production, and fees generated. The Company's methodology for allocating non-interest expenses among segments is based on several factors such as revenue, employee headcount, occupied space, dedicated services or time, among others. These factors are reviewed on a periodical basis and may change if the conditions warrant.

Banking includes the Bank's branches and traditional banking products such as deposits and commercial, consumer and mortgage loans. Mortgage banking activities are carried out by the Bank's mortgage banking division, whose principal activity is to originate mortgage loans for the Company's own portfolio. As part of its mortgage banking activities, the Company may sell loans directly into the secondary market or securitize conforming loans into mortgage-backed securities.

Wealth Managementis comprised of the Bank's trust division, Oriental Financial Services, Oriental Insurance, and CPC. The core operations of this segment are financial planning, money management and investment banking, brokerage services, insurance sales activity, corporate and individual trust and retirement services, as well as pension plan administration services.

The Treasury segment encompasses all of the Company's asset/liability management activities, such as purchases and sales of investment securities, interest rate risk management, derivatives, and borrowings. Intersegment sales and transfers, if any, are accounted for as if the sales or transfers were to third parties, that is, at current market prices.

Following are the results of operations and the selected financial information by operating segment for the quartersand six-month periodsendedJune 30, 2014and 2013:

	Quarter Ended June 30, 2014
			Wealth				Total Major				Consolidated
	Banking		Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	112,971	$	46	$	12,883	$	125,900	$	-	$	125,900
Interest expense		(10,828)		-		(8,994)		(19,822)		-		(19,822)
Net interest income		102,143		46		3,889		106,078		-		106,078
Provision for non-covered loan and lease losses		(13,220)		-		-		(13,220)		-		(13,220)
Provision for covered loan and lease losses		(1,595)		-		-		(1,595)		-		(1,595)
Non-interest income (loss)		(6,507)		7,502		(488)		507		-		507
Non-interest expenses		(49,651)		(6,367)		(3,830)		(59,848)		-		(59,848)
Intersegment revenue		435		-		-		435		(435)		-
Intersegment expenses		-		(327)		(108)		(435)		435		-
Income before income taxes	$	31,605	$	854	$	(537)	$	31,922	$	-	$	31,922
Total assets	$	6,508,432	$	25,345	$	2,089,516	$	8,623,293	$	(913,148)	$	7,710,145
	Quarter Ended June 30, 2013
			Wealth				Total Major				Consolidated
	Banking		Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	115,541	$	96	$	10,665	$	126,302	$	-	$	126,302
Interest expense		(9,840)		-		(10,167)		(20,007)		-		(20,007)
Net interest income		105,701		96		498		106,295		-		106,295
Provision for non-covered loan and lease losses		(37,527)		-		-		(37,527)		-		(37,527)
Provision for covered loan and lease losses		(1,211)		-		-		(1,211)		-		(1,211)
Non-interest income (loss)		(5,258)		8,100		3,893		6,735		-		6,735
Non-interest expenses		(57,783)		(6,650)		(4,254)		(68,687)		-		(68,687)
Intersegment revenue		579		-		-		579		(579)		-
Intersegment expenses		-		(485)		(94)		(579)		579		-
Income before income taxes	$	4,501	$	1,061	$	43	$	5,605	$	-	$	5,605
Total assets	$	6,746,902	$	39,960	$	2,527,039	$	9,313,901	$	(877,967)	$	8,435,934

	Six-Month Period Ended June 30, 2014
			Wealth				Total Major				Consolidated
	Banking		Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	221,602	$	86	$	27,286	$	248,974	$	-	$	248,974
Interest expense		(18,344)		-		(21,154)		(39,498)		-		(39,498)
Net interest income		203,258		86		6,132		209,476		-		209,476
Provision for non-covered loan and lease losses		(23,282)		-		-		(23,282)		-		(23,282)
Provision for covered loan and lease losses, net		(3,224)		-		-		(3,224)		-		(3,224)
Non-interest income(loss)		(11,603)		14,024		3,315		5,736		-		5,736
Non-interest expenses		(103,198)		(11,146)		(6,908)		(121,252)		-		(121,252)
Intersegment revenue		979		-		-		979		(979)		-
Intersegment expenses		-		(759)		(220)		(979)		979		-
Income before income taxes	$	62,930	$	2,205	$	2,319	$	67,454	$	-	$	67,454
	Six-Month Period Ended June 30, 2013
			Wealth				Total Major				Consolidated
	Banking		Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	217,609	$	182	$	22,683	$	240,474	$	-	$	240,474
Interest expense		(20,497)		-		(20,068)		(40,565)		-		(40,565)
Net interest income		197,112		182		2,615		199,909		-		199,909
Provision for non-covered loan and lease losses		(45,443)		-		-		(45,443)		-		(45,443)
Provision for covered loan and lease losses, net		(1,883)		-		-		(1,883)		-		(1,883)
Non-interest income(loss)		(3,193)		15,801		4,030		16,638		-		16,638
Non-interest expenses		(115,501)		(12,777)		(7,020)		(135,298)		-		(135,298)
Intersegment revenue		(624)		-		-		(624)		624		-
Intersegment expenses		-		(786)		1,410		624		(624)		-
Income before income taxes	$	30,468	$	2,420	$	1,035	$	33,923	$	-	$	33,923

XML

Loans Receivable (Composition of loan portfolio) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	$ 4,644,028		$ 4,669,192
Deferred loan cost (fees), net	3,236		1,035
Loans Receivable Net Of Deferred Income	4,647,264		4,670,227
Allowance for loan and lease losses on non-covered loans	(60,360)		(54,298)
Loans not covered under shared-loss agreements with the FDIC, net of allowance for loan and lease losses, excluding loans held-for-sale.	4,586,904		4,615,929
Mortgage loans held-for-sale	14,792		46,529
Loans not covered under shared-loss agreements with the FDIC, net of allowance for loan and lease losses, including loans held-for-sale.	4,601,696		4,662,458
Loans And Leases Receivable Net Reported Amount Covered [Abstract]
Loans And Leases Receivable Gross Carrying Amount Covered	393,859		409,690
Allowance for Covered Loan and Lease Losses, net	(59,515)	(54,398)	(52,729)	(53,993)	(52,974)	(54,124)
Loans covered under shared-loss agreements with the FDIC, net of allowance for loan and lease losses	334,344		356,961
Loans And Leases Receivable Net Reported Amount Covered And Not Covered	4,936,040		5,019,419
Non Covered Loan [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Allowance for loan and lease losses on non-covered loans	(60,360)		(54,298)
Originated Loans [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	2,640,745		2,401,540
Allowance for loan and lease losses on non-covered loans	(50,638)		(49,081)
Originated Loans [Member] | Mortgages [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	788,001		766,265
Originated Loans [Member] | Commercial Loan [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	1,183,172		1,127,657
Originated Loans [Member] | Consumer Loan [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	161,538		127,744
Originated Loans [Member] | Auto and Leasing loans receivable
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	508,034		379,874
Non-covered acquired loans accounted for under ASC 310-20
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	326,605		435,439
Allowance for loan and lease losses on non-covered loans	(3,444)		(2,354)
Non-covered acquired loans accounted for under ASC 310-20 | Commercial Loan [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	38,602		77,681
Non-covered acquired loans accounted for under ASC 310-20 | Consumer Loan [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	49,604		56,174
Non-covered acquired loans accounted for under ASC 310-20 | Auto
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	238,399		301,584
Non-covered loans accounted under ASC 310-30
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	1,676,678		1,832,213
Allowance for loan and lease losses on non-covered loans	(6,278)		(2,863)
Non-covered loans accounted under ASC 310-30 | Mortgages [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	692,069		717,904
Non-covered loans accounted under ASC 310-30 | Commercial Loan [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	508,530		545,117
Non-covered loans accounted under ASC 310-30 | Consumer Loan [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	43,824		63,620
Non-covered loans accounted under ASC 310-30 | Auto
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	308,512		379,145
Non-covered loans accounted under ASC 310-30 | Construction
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	123,743		126,427
Acquired Loans In An F D I C Assisted Transaction [Member]
Loans And Leases Receivable Net Reported Amount Covered [Abstract]
Loans And Leases Receivable Gross Carrying Amount Covered	393,859		409,690
Allowance for Covered Loan and Lease Losses, net	(59,515)		(52,729)
Acquired Loans In An F D I C Assisted Transaction [Member] | Consumer Loan [Member]
Loans And Leases Receivable Net Reported Amount Covered [Abstract]
Loans And Leases Receivable Gross Carrying Amount Covered	5,177		6,119
Acquired Loans In An F D I C Assisted Transaction [Member] | Loans Secured by 1-4 properties
Loans And Leases Receivable Net Reported Amount Covered [Abstract]
Loans And Leases Receivable Gross Carrying Amount Covered	121,416		121,748
Allowance for Covered Loan and Lease Losses, net	(14,924)		(12,495)
Acquired Loans In An F D I C Assisted Transaction [Member] | Construction and development secured by multi-family properties [Member]
Loans And Leases Receivable Net Reported Amount Covered [Abstract]
Loans And Leases Receivable Gross Carrying Amount Covered	18,566		17,304
Acquired Loans In An F D I C Assisted Transaction [Member] | Commercial and Other Construction [Member]
Loans And Leases Receivable Net Reported Amount Covered [Abstract]
Loans And Leases Receivable Gross Carrying Amount Covered	248,700		264,249
Allowance for Covered Loan and Lease Losses, net	(43,976)		(39,619)
Acquired Loans In An F D I C Assisted Transaction [Member] | Lease Agreements [Member]
Loans And Leases Receivable Net Reported Amount Covered [Abstract]
Loans And Leases Receivable Gross Carrying Amount Covered	$ 0		$ 270

XML

Business Segments (Tables)

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

Following are the results of operations and the selected financial information by operating segment for the quartersand six-month periodsendedJune 30, 2014and 2013:

	Quarter Ended June 30, 2014
			Wealth				Total Major				Consolidated
	Banking		Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	112,971	$	46	$	12,883	$	125,900	$	-	$	125,900
Interest expense		(10,828)		-		(8,994)		(19,822)		-		(19,822)
Net interest income		102,143		46		3,889		106,078		-		106,078
Provision for non-covered loan and lease losses		(13,220)		-		-		(13,220)		-		(13,220)
Provision for covered loan and lease losses		(1,595)		-		-		(1,595)		-		(1,595)
Non-interest income (loss)		(6,507)		7,502		(488)		507		-		507
Non-interest expenses		(49,651)		(6,367)		(3,830)		(59,848)		-		(59,848)
Intersegment revenue		435		-		-		435		(435)		-
Intersegment expenses		-		(327)		(108)		(435)		435		-
Income before income taxes	$	31,605	$	854	$	(537)	$	31,922	$	-	$	31,922
Total assets	$	6,508,432	$	25,345	$	2,089,516	$	8,623,293	$	(913,148)	$	7,710,145
	Quarter Ended June 30, 2013
			Wealth				Total Major				Consolidated
	Banking		Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	115,541	$	96	$	10,665	$	126,302	$	-	$	126,302
Interest expense		(9,840)		-		(10,167)		(20,007)		-		(20,007)
Net interest income		105,701		96		498		106,295		-		106,295
Provision for non-covered loan and lease losses		(37,527)		-		-		(37,527)		-		(37,527)
Provision for covered loan and lease losses		(1,211)		-		-		(1,211)		-		(1,211)
Non-interest income (loss)		(5,258)		8,100		3,893		6,735		-		6,735
Non-interest expenses		(57,783)		(6,650)		(4,254)		(68,687)		-		(68,687)
Intersegment revenue		579		-		-		579		(579)		-
Intersegment expenses		-		(485)		(94)		(579)		579		-
Income before income taxes	$	4,501	$	1,061	$	43	$	5,605	$	-	$	5,605
Total assets	$	6,746,902	$	39,960	$	2,527,039	$	9,313,901	$	(877,967)	$	8,435,934

	Six-Month Period Ended June 30, 2014
			Wealth				Total Major				Consolidated
	Banking		Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	221,602	$	86	$	27,286	$	248,974	$	-	$	248,974
Interest expense		(18,344)		-		(21,154)		(39,498)		-		(39,498)
Net interest income		203,258		86		6,132		209,476		-		209,476
Provision for non-covered loan and lease losses		(23,282)		-		-		(23,282)		-		(23,282)
Provision for covered loan and lease losses, net		(3,224)		-		-		(3,224)		-		(3,224)
Non-interest income(loss)		(11,603)		14,024		3,315		5,736		-		5,736
Non-interest expenses		(103,198)		(11,146)		(6,908)		(121,252)		-		(121,252)
Intersegment revenue		979		-		-		979		(979)		-
Intersegment expenses		-		(759)		(220)		(979)		979		-
Income before income taxes	$	62,930	$	2,205	$	2,319	$	67,454	$	-	$	67,454
	Six-Month Period Ended June 30, 2013
			Wealth				Total Major				Consolidated
	Banking		Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	217,609	$	182	$	22,683	$	240,474	$	-	$	240,474
Interest expense		(20,497)		-		(20,068)		(40,565)		-		(40,565)
Net interest income		197,112		182		2,615		199,909		-		199,909
Provision for non-covered loan and lease losses		(45,443)		-		-		(45,443)		-		(45,443)
Provision for covered loan and lease losses, net		(1,883)		-		-		(1,883)		-		(1,883)
Non-interest income(loss)		(3,193)		15,801		4,030		16,638		-		16,638
Non-interest expenses		(115,501)		(12,777)		(7,020)		(135,298)		-		(135,298)
Intersegment revenue		(624)		-		-		(624)		624		-
Intersegment expenses		-		(786)		1,410		624		(624)		-
Income before income taxes	$	30,468	$	2,420	$	1,035	$	33,923	$	-	$	33,923

XML

Derivative Activities (Interest rate swap not designated as hedging instruments and their term) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2014
Derivatives Offered to Clients [Member]
Derivative [Line Items]
Amount	$ 16,549
Derivatives Offered to Clients [Member] | Rate 5.13% [Member]
Derivative [Line Items]
Amount	4,049
Fixed rate	5.13%
Settlement Date	Jul. 03, 2006
Maturity Date	Jul. 03, 2016
Derivatives Offered to Clients [Member] | Rate 5.51% [Member]
Derivative [Line Items]
Amount	12,500
Fixed rate	5.505%
Settlement Date	Apr. 11, 2009
Maturity Date	Apr. 11, 2019
Mirror Image Derivatives [Member]
Derivative [Line Items]
Amount	16,549
Mirror Image Derivatives [Member] | Rate 5.13% [Member]
Derivative [Line Items]
Amount	4,049
Fixed rate	5.13%
Settlement Date	Jul. 03, 2006
Maturity Date	Jul. 03, 2016
Mirror Image Derivatives [Member] | Rate 5.51% [Member]
Derivative [Line Items]
Amount	$ 12,500
Fixed rate	5.505%
Settlement Date	Apr. 11, 2009
Maturity Date	Apr. 11, 2019

XML

Stockholders' Equity (Shares repurchased under the stock repurchase program) (Details) (USD $) In Thousands, except Share data, unless otherwise specified			3 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 First Quarter [Member]	Jun. 30, 2014 January 2014 [Member]	Jun. 30, 2014 February 2014 [Member]
Equity, Class of Treasury Stock [Line Items]
Stock Repurchase Program, Number of Shares Authorized to be Repurchased			707,400	57,700	649,700
Treasury Stock Acquired, Average Cost Per Share			$ 14.66	$ 14.73	$ 14.66
Treasury Stock, Value	$ 90,712	$ 80,642	$ 10,372	$ 850	$ 9,522

XML

Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2014

Related Party Transactions [Abstract]

Schedule of Related Party Transactions [Table Text Block]

The activity and balance of these loans for the quarters endedJune 30, 2014and 2013were as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Balance at the beginning of year	$	19,267	$	8,688	$	18,963	$	6,055
New loans		13,847		-		13,847		4,234
Repayments and sales		(8,963)		(657)		(8,659)		(2,026)
Credits of persons no longer considered related parties		-		-		-		(232)
Balance at the end of year	$	24,151	$	8,031	$	24,151	$	8,031

XML

Loans Receivable (Non-Covered BBVA Loan carrying amounts) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Accounts Notes And Loans Receivable Line Items
Financing Receivable Acquired With Deteriorated Credit Quality	$ 2,676,008	$ 2,929,353
Non-acretable discount	554,724	579,587
Cash expected to be collected	2,121,284	2,349,766
Accretable Yield	444,606	517,553
Carrying amount, gross	$ 1,676,678	$ 1,832,213

XML

Allowance for Loan and Lease Losses (Risk category of gross non-covered loans not subject to risk rating ) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	$ 4,644,028	$ 4,669,192
Non Covered Loan, Not Subject To Risk Ratings [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,745,576	1,631,641
0 - 29 Days Past Due	1,445,952	1,362,392
30 - 59 Days Past Due	89,345	85,475
60 - 89 Days Past Due	36,039	28,939
90-119 Days Past Due	19,129	18,766
120 - 364 Days Past Due	34,153	31,979
365+ Days Past Due	27,100	19,161
Financing Receivable, Individually Evaluated for Impairment	93,858	84,929
Originated loans, not subject to risk rating [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,457,573	1,273,883
0 - 29 Days Past Due	1,179,447	1,028,173
30 - 59 Days Past Due	76,004	70,528
60 - 89 Days Past Due	30,797	24,116
90-119 Days Past Due	17,689	16,783
120 - 364 Days Past Due	32,678	30,193
365+ Days Past Due	27,100	19,161
Financing Receivable, Individually Evaluated for Impairment	93,858	84,929
Originated loans, not subject to risk rating [Member] | Mortgages [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	788,001	766,265
0 - 29 Days Past Due	571,879	564,310
30 - 59 Days Past Due	37,050	43,034
60 - 89 Days Past Due	16,308	14,027
90-119 Days Past Due	12,381	12,943
120 - 364 Days Past Due	29,950	28,316
365+ Days Past Due	27,079	19,141
Financing Receivable, Individually Evaluated for Impairment	93,354	84,494
Originated loans, not subject to risk rating [Member] | Conventional Loan [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	622,925	602,188
0 - 29 Days Past Due	530,914	520,782
30 - 59 Days Past Due	33,798	38,441
60 - 89 Days Past Due	14,709	12,716
90-119 Days Past Due	4,637	4,649
120 - 364 Days Past Due	10,787	12,129
365+ Days Past Due	11,067	4,441
Financing Receivable, Individually Evaluated for Impairment	17,013	9,030
Originated loans, not subject to risk rating [Member] | Originated Up To The Year 2002 [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	70,373	76,512
0 - 29 Days Past Due	59,428	64,743
30 - 59 Days Past Due	5,181	6,594
60 - 89 Days Past Due	2,498	1,634
90-119 Days Past Due	693	868
120 - 364 Days Past Due	649	1,082
365+ Days Past Due	1,840	1,458
Financing Receivable, Individually Evaluated for Impairment	84	133
Originated loans, not subject to risk rating [Member] | Originated In The Years 2003 And 2004 [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	62,282	65,117
0 - 29 Days Past Due	51,929	56,283
30 - 59 Days Past Due	5,503	4,722
60 - 89 Days Past Due	1,905	1,938
90-119 Days Past Due	232	56
120 - 364 Days Past Due	1,267	1,437
365+ Days Past Due	1,126	352
Financing Receivable, Individually Evaluated for Impairment	320	329
Originated loans, not subject to risk rating [Member] | Originated In The Year 2005 [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	85,869	89,541
0 - 29 Days Past Due	69,305	74,016
30 - 59 Days Past Due	6,611	8,414
60 - 89 Days Past Due	2,959	2,119
90-119 Days Past Due	775	1,198
120 - 364 Days Past Due	3,029	3,037
365+ Days Past Due	2,806	573
Financing Receivable, Individually Evaluated for Impairment	384	184
Originated loans, not subject to risk rating [Member] | Originated In The Year 2006 [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	114,386	120,322
0 - 29 Days Past Due	94,669	99,243
30 - 59 Days Past Due	10,562	12,055
60 - 89 Days Past Due	3,781	4,312
90-119 Days Past Due	1,561	1,148
120 - 364 Days Past Due	1,813	2,755
365+ Days Past Due	1,808	515
Financing Receivable, Individually Evaluated for Impairment	192	294
Originated loans, not subject to risk rating [Member] | Originated In The Years 2007 2008 And 2009 [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	94,343	101,150
0 - 29 Days Past Due	82,470	91,920
30 - 59 Days Past Due	3,962	3,464
60 - 89 Days Past Due	2,051	1,104
90-119 Days Past Due	1,130	1,264
120 - 364 Days Past Due	2,186	2,844
365+ Days Past Due	2,143	554
Financing Receivable, Individually Evaluated for Impairment	401	0
Originated loans, not subject to risk rating [Member] | Originated In The Years 2010 2011 2012 2013 And 2014 [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	195,672	149,546
0 - 29 Days Past Due	173,113	134,577
30 - 59 Days Past Due	1,979	3,192
60 - 89 Days Past Due	1,515	1,609
90-119 Days Past Due	246	115
120 - 364 Days Past Due	1,843	974
365+ Days Past Due	1,344	989
Financing Receivable, Individually Evaluated for Impairment	15,632	8,090
Originated loans, not subject to risk rating [Member] | NonTraditional Mortgage [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	38,034	42,102
0 - 29 Days Past Due	32,254	35,168
30 - 59 Days Past Due	1,997	3,217
60 - 89 Days Past Due	1,128	1,162
90-119 Days Past Due	263	0
120 - 364 Days Past Due	1,270	1,324
365+ Days Past Due	1,073	833
Financing Receivable, Individually Evaluated for Impairment	49	398
Originated loans, not subject to risk rating [Member] | Loss Mitigation Program Loan Exclude Individually Impairment Measure [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	87,964	86,318
0 - 29 Days Past Due	8,100	7,762
30 - 59 Days Past Due	1,255	1,376
60 - 89 Days Past Due	471	149
90-119 Days Past Due	223	624
120 - 364 Days Past Due	932	312
365+ Days Past Due	691	1,029
Financing Receivable, Individually Evaluated for Impairment	76,292	75,066
Originated loans, not subject to risk rating [Member] | Home equity secured personal loans [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	749	736
0 - 29 Days Past Due	611	598
30 - 59 Days Past Due	0	0
60 - 89 Days Past Due	0	0
90-119 Days Past Due	0	0
120 - 364 Days Past Due	126	126
365+ Days Past Due	12	12
Financing Receivable, Individually Evaluated for Impairment	0	0
Originated loans, not subject to risk rating [Member] | GNMA's Buy Back Option related
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	38,329	34,921
0 - 29 Days Past Due	0	0
30 - 59 Days Past Due	0	0
60 - 89 Days Past Due	0	0
90-119 Days Past Due	7,258	7,670
120 - 364 Days Past Due	16,835	14,425
365+ Days Past Due	14,236	12,826
Financing Receivable, Individually Evaluated for Impairment	0	0
Originated loans, not subject to risk rating [Member] | Consumer Loan [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	161,538	127,744
0 - 29 Days Past Due	157,154	124,046
30 - 59 Days Past Due	1,907	1,962
60 - 89 Days Past Due	869	652
90-119 Days Past Due	720	443
120 - 364 Days Past Due	363	186
365+ Days Past Due	21	20
Financing Receivable, Individually Evaluated for Impairment	504	435
Originated loans, not subject to risk rating [Member] | Credit Cards [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	15,886	15,241
0 - 29 Days Past Due	15,034	14,555
30 - 59 Days Past Due	345	287
60 - 89 Days Past Due	236	168
90-119 Days Past Due	61	118
120 - 364 Days Past Due	210	113
365+ Days Past Due	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Originated loans, not subject to risk rating [Member] | Overdrafts [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	318	372
0 - 29 Days Past Due	295	322
30 - 59 Days Past Due	19	46
60 - 89 Days Past Due	3	4
90-119 Days Past Due	0	0
120 - 364 Days Past Due	1	0
365+ Days Past Due	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Originated loans, not subject to risk rating [Member] | Unsecured personal lines of credit [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,976	1,981
0 - 29 Days Past Due	1,789	1,844
30 - 59 Days Past Due	57	33
60 - 89 Days Past Due	1	38
90-119 Days Past Due	90	25
120 - 364 Days Past Due	29	34
365+ Days Past Due	10	7
Financing Receivable, Individually Evaluated for Impairment	0	0
Originated loans, not subject to risk rating [Member] | Unsecured personal loans [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	126,420	94,560
0 - 29 Days Past Due	123,520	92,102
30 - 59 Days Past Due	1,206	1,272
60 - 89 Days Past Due	535	399
90-119 Days Past Due	521	300
120 - 364 Days Past Due	123	39
365+ Days Past Due	11	13
Financing Receivable, Individually Evaluated for Impairment	504	435
Originated loans, not subject to risk rating [Member] | Cash collateral personal loans [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	16,938	15,590
0 - 29 Days Past Due	16,516	15,223
30 - 59 Days Past Due	280	324
60 - 89 Days Past Due	94	43
90-119 Days Past Due	48	0
120 - 364 Days Past Due	0	0
365+ Days Past Due	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Originated loans, not subject to risk rating [Member] | Auto and Leasing loans receivable
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	508,034	379,874
0 - 29 Days Past Due	450,414	339,817
30 - 59 Days Past Due	37,047	25,532
60 - 89 Days Past Due	13,620	9,437
90-119 Days Past Due	4,588	3,397
120 - 364 Days Past Due	2,365	1,691
365+ Days Past Due	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Accounted For Under ASC 310-20, not subject to risk rating [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	288,003	357,758
0 - 29 Days Past Due	266,505	334,219
30 - 59 Days Past Due	13,341	14,947
60 - 89 Days Past Due	5,242	4,823
90-119 Days Past Due	1,440	1,983
120 - 364 Days Past Due	1,475	1,786
365+ Days Past Due	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Accounted For Under ASC 310-20, not subject to risk rating [Member] | Consumer Loan [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	49,604	56,174
0 - 29 Days Past Due	45,600	50,394
30 - 59 Days Past Due	1,738	2,413
60 - 89 Days Past Due	917	1,207
90-119 Days Past Due	475	888
120 - 364 Days Past Due	874	1,272
365+ Days Past Due	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Accounted For Under ASC 310-20, not subject to risk rating [Member] | Credit Cards [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	45,938	52,199
0 - 29 Days Past Due	42,265	46,713
30 - 59 Days Past Due	1,520	2,217
60 - 89 Days Past Due	835	1,200
90-119 Days Past Due	465	828
120 - 364 Days Past Due	853	1,241
365+ Days Past Due	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Accounted For Under ASC 310-20, not subject to risk rating [Member] | Unsecured personal loans [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	3,666	3,975
0 - 29 Days Past Due	3,335	3,681
30 - 59 Days Past Due	218	196
60 - 89 Days Past Due	82	7
90-119 Days Past Due	10	60
120 - 364 Days Past Due	21	31
365+ Days Past Due	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Accounted For Under ASC 310-20, not subject to risk rating [Member] | Automobile Loan [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	238,399	301,584
0 - 29 Days Past Due	220,905	283,825
30 - 59 Days Past Due	11,603	12,534
60 - 89 Days Past Due	4,325	3,616
90-119 Days Past Due	965	1,095
120 - 364 Days Past Due	601	514
365+ Days Past Due	0	0
Financing Receivable, Individually Evaluated for Impairment	$ 0	$ 0

XML

Segment Reporting (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Segment Reporting Information [Line Items]
Total interest income	$ 125,900	$ 126,302	$ 248,974	$ 240,474
Interest expense	(19,822)	(20,007)	(39,498)	(40,565)
Net interest income	106,078	106,295	209,476	199,909
Provision For Non Covered Loan And Lease Losses.	(13,220)	(37,527)	(23,282)	(45,443)
Provision for Covered Loan and Lease Losses, net	(1,595)	(1,211)	(3,224)	(1,883)
Total non-interest income (loss), net	507	6,735	5,736	16,638
Non-interest expenses	(59,848)	(68,687)	(121,252)	(135,298)
Total assets	7,710,145		7,710,145		8,158,015
Banking [Member]
Segment Reporting Information [Line Items]
Total interest income	112,971	115,541	221,602	217,609
Interest expense	(10,828)	(9,840)	(18,344)	(20,497)
Net interest income	102,143	105,701	203,258	197,112
Provision For Non Covered Loan And Lease Losses.	(13,220)	(37,527)	(23,282)	(45,443)
Provision for Covered Loan and Lease Losses, net	(1,595)	(1,211)	(3,224)	(1,883)
Total non-interest income (loss), net	(6,507)	(5,258)	(11,603)	(3,193)
Non-interest expenses	(49,651)	(57,783)	(103,198)	(115,501)
Intersegment revenues	435	579	979	(624)
Intersegment expenses	0	0	0	0
Income (loss) before Income Taxes, Parent	31,605	4,501	62,930	30,468
Total assets	6,508,432	6,746,902	6,508,432	6,746,902
Financial Services
Segment Reporting Information [Line Items]
Total interest income	46	96	86	182
Interest expense	0	0	0	0
Net interest income	46	96	86	182
Provision For Non Covered Loan And Lease Losses.	0	0	0	0
Provision for Covered Loan and Lease Losses, net	0	0	0	0
Total non-interest income (loss), net	7,502	8,100	14,024	15,801
Non-interest expenses	(6,367)	(6,650)	(11,146)	(12,777)
Intersegment revenues	0	0	0	0
Intersegment expenses	(327)	(485)	(759)	(786)
Income (loss) before Income Taxes, Parent	854	1,061	2,205	2,420
Total assets	25,345	39,960	25,345	39,960
Treasury [Member]
Segment Reporting Information [Line Items]
Total interest income	12,883	10,665	27,286	22,683
Interest expense	(8,994)	(10,167)	(21,154)	(20,068)
Net interest income	3,889	498	6,132	2,615
Provision For Non Covered Loan And Lease Losses.	0	0	0	0
Provision for Covered Loan and Lease Losses, net	0	0	0	0
Total non-interest income (loss), net	(488)	3,893	3,315	4,030
Non-interest expenses	(3,830)	(4,254)	(6,908)	(7,020)
Intersegment revenues	0	0	0	0
Intersegment expenses	(108)	(94)	(220)	1,410
Income (loss) before Income Taxes, Parent	(537)	43	2,319	1,035
Total assets	2,089,516	2,527,039	2,089,516	2,527,039
Major Segment [Member]
Segment Reporting Information [Line Items]
Total interest income	125,900	126,302	248,974	240,474
Interest expense	(19,822)	(20,007)	(39,498)	(40,565)
Net interest income	106,078	106,295	209,476	199,909
Provision For Non Covered Loan And Lease Losses.	(13,220)	(37,527)	(23,282)	(45,443)
Provision for Covered Loan and Lease Losses, net	(1,595)	(1,211)	(3,224)	(1,883)
Total non-interest income (loss), net	507	6,735	5,736	16,638
Non-interest expenses	(59,848)	(68,687)	(121,252)	(135,298)
Intersegment revenues	435	579	979	(624)
Intersegment expenses	(435)	(579)	(979)	624
Income (loss) before Income Taxes, Parent	31,922	5,605	67,454	33,923
Total assets	8,623,293	9,313,901	8,623,293	9,313,901
Intersegment Elimination [Member]
Segment Reporting Information [Line Items]
Total interest income	0	0	0	0
Interest expense	0	0	0	0
Net interest income	0	0	0	0
Provision For Non Covered Loan And Lease Losses.	0	0	0	0
Provision for Covered Loan and Lease Losses, net	0	0	0	0
Total non-interest income (loss), net	0	0	0	0
Non-interest expenses	0	0	0	0
Intersegment revenues	(435)	(579)	(979)	624
Intersegment expenses	435	579	979	(624)
Income (loss) before Income Taxes, Parent	0	0	0	0
Total assets	(913,148)	(877,967)	(913,148)	(877,967)
Consolidated Total [Member]
Segment Reporting Information [Line Items]
Total assets		$ 8,435,934		$ 8,435,934

XML

Allowance for Loan and Lease Losses (Gross Loan and Allowance for loan and lease losses) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	$ 4,644,028		$ 4,669,192
Non-covered acquired loans accounted under ASC 310-20
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	0		0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	3,444		2,354
Financing Receivable, Allowance for Credit Losses	3,444	3,618	2,354	924	386	0
Financing Receivable, Individually Evaluated for Impairment	0		0
Financing Receivable, Collectively Evaluated for Impairment	326,605		435,439
Loans and Leases Receivable, Gross, Carrying Amount	326,605		435,439
Most recent acquired loans accounted under ASC 310-30
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses	6,278	3,058	2,863
Non-covered originated loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	9,844		10,139
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	40,794		38,942
Financing Receivable, Allowance for Credit Losses	50,638	49,507	49,081	45,701	42,334	39,921
Financing Receivable, Individually Evaluated for Impairment	119,285		112,639
Financing Receivable, Collectively Evaluated for Impairment	2,521,460		2,288,901
Loans and Leases Receivable, Gross, Carrying Amount	2,640,745		2,401,540
Residential Portfolio Segment | Non-covered acquired loans accounted under ASC 310-20
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses				0
Residential Portfolio Segment | Most recent acquired loans accounted under ASC 310-30
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses	0	0	0
Residential Portfolio Segment | Non-covered originated loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	7,730		8,708
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	11,332		11,229
Financing Receivable, Allowance for Credit Losses	19,062	19,511	19,937	21,375	22,889	21,092
Financing Receivable, Individually Evaluated for Impairment	90,375		84,494
Financing Receivable, Collectively Evaluated for Impairment	697,626		681,771
Loans and Leases Receivable, Gross, Carrying Amount	788,001		766,265
Commercial Portfolio Segment
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses	464		926	924		0
Commercial Portfolio Segment | Non-covered acquired loans accounted under ASC 310-20
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	0		0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	464		926
Financing Receivable, Allowance for Credit Losses	464	867	926	924	386
Financing Receivable, Individually Evaluated for Impairment	0		0
Financing Receivable, Collectively Evaluated for Impairment	38,602		77,681
Loans and Leases Receivable, Gross, Carrying Amount	38,602		77,681
Commercial Portfolio Segment | Most recent acquired loans accounted under ASC 310-30
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses	6,216	2,653	1,713
Commercial Portfolio Segment | Non-covered originated loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	2,114		1,431
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	10,309		13,466
Financing Receivable, Allowance for Credit Losses	12,423	13,994	14,897	17,623	16,314	17,072
Financing Receivable, Individually Evaluated for Impairment	28,910		28,145
Financing Receivable, Collectively Evaluated for Impairment	1,154,262		1,099,512
Loans and Leases Receivable, Gross, Carrying Amount	1,183,172		1,127,657
Consumer Portfolio Segment
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses	338		0	0		0
Consumer Portfolio Segment | Non-covered acquired loans accounted under ASC 310-20
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	0		0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	338		0
Financing Receivable, Allowance for Credit Losses	338	504	0	0	0
Financing Receivable, Individually Evaluated for Impairment	0		0
Financing Receivable, Collectively Evaluated for Impairment	49,604		56,174
Loans and Leases Receivable, Gross, Carrying Amount	49,604		56,174
Consumer Portfolio Segment | Most recent acquired loans accounted under ASC 310-30
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses	62	405	418
Consumer Portfolio Segment | Non-covered originated loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	0		0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	7,887		6,006
Financing Receivable, Allowance for Credit Losses	7,887	7,135	6,006	2,342	1,313	856
Financing Receivable, Individually Evaluated for Impairment	0		0
Financing Receivable, Collectively Evaluated for Impairment	161,538		127,744
Loans and Leases Receivable, Gross, Carrying Amount	161,538		127,744
Auotomobile Loans Portfolio Segment | Non-covered acquired loans accounted under ASC 310-20
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	0		0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	2,642		1,428
Financing Receivable, Allowance for Credit Losses	2,642		1,428
Financing Receivable, Individually Evaluated for Impairment	0		0
Financing Receivable, Collectively Evaluated for Impairment	238,399		301,584
Loans and Leases Receivable, Gross, Carrying Amount	238,399		301,584
Auto and Leasing loans receivable
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses	11,127
Auto and Leasing loans receivable | Non-covered originated loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	0		0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	11,127		7,866
Financing Receivable, Allowance for Credit Losses	11,127	8,731	7,866	3,641	1,741	533
Financing Receivable, Individually Evaluated for Impairment	0		0
Financing Receivable, Collectively Evaluated for Impairment	508,034		379,874
Loans and Leases Receivable, Gross, Carrying Amount	508,034		379,874
Unallocated Financing Receivables
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses	0		0	0		0
Unallocated Financing Receivables | Non-covered acquired loans accounted under ASC 310-20
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	0		0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	0		0
Financing Receivable, Allowance for Credit Losses	0	0	0	0	0
Financing Receivable, Individually Evaluated for Impairment	0		0
Financing Receivable, Collectively Evaluated for Impairment	0		0
Loans and Leases Receivable, Gross, Carrying Amount	0		0
Unallocated Financing Receivables | Non-covered originated loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	0		0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	139		375
Financing Receivable, Allowance for Credit Losses	139	136	375	720	77	368
Financing Receivable, Individually Evaluated for Impairment	0		0
Financing Receivable, Collectively Evaluated for Impairment	0		0
Loans and Leases Receivable, Gross, Carrying Amount	$ 0		$ 0

XML

Investment Securities (Gross realize gains and losses by category) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Schedule of Available-for-sale Securities [Line Items]
Sale Price	$ 163,235
Book Value	158,869
Available-for-sale Securities, Gross Realized Gains	4,366
Available-for-sale Securities, Gross Realized Losses	0
Collateralized Mortgage Backed Securities [Member] | FNMA and FHLMC [Member]
Schedule of Available-for-sale Securities [Line Items]
Sale Price	115,158
Book Value	110,792
Available-for-sale Securities, Gross Realized Gains	4,366
Available-for-sale Securities, Gross Realized Losses	0
Collateralized Mortgage Backed Securities [Member] | GNMA [Member]
Schedule of Available-for-sale Securities [Line Items]
Sale Price	48,077
Book Value	48,077
Available-for-sale Securities, Gross Realized Gains	0
Available-for-sale Securities, Gross Realized Losses	$ 0

XML

Resticted Cash

6 Months Ended

Jun. 30, 2014

Restricted Cash And Investments Abstract

Resticted Cash Disclosure

NOTE 2–RESTRICTED CASH

The following table includes the composition of the Company's restricted cash:

	June 30,		December 31,
	2014		2013
	(In thousands)
Cash pledged as collateral to other financial institutions to secure:
Securities sold under agreements to repurchase	$	-	$	67,029
Derivatives		2,980		2,980
Obligations under agreement of loans sold with recourse		12,190		12,190
	$	15,170	$	82,199

The Company delivers cash as collateral to meet margin calls for some long term securities sold under agreements to repurchase. At December 31, 2013, the Company had $67.0 million in cash pledged as collateral for securities sold under agreements to repurchase. At June 30, 2014, the Company did not have cash pledged as collateral for securities sold under agreements to repurchase.

As part of its derivative activities, the Company has entered into collateral agreements with certain financial counterparties. At both June 30, 2014 and December 31, 2013, the Company had delivered $3.0 million of cash as collateral for such derivatives activities.

As part of the BBVAPR Acquisition, the Company assumed various contracts with the Federal National Mortgage Association (“FNMA”)which required collateral to guarantee the repurchase, if necessary, of certain mortgageloans sold with recourse. At June 30, 2014 and December 31, 2013, the Company had $12.2 million of cash pledged as collateral for such recourse obligations.

XML

Allowance for Loan and Lease Losses (Recorded Investment in loans individually evaluated for impairment) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
Allowance for loan and lease losses, non covered	$ 60,360	$ 54,298
Non-covered originated loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal	131,831	124,053
Recorded Investment	119,285	112,639
Allowance for loan and lease losses, non covered	9,844	10,139
Coverage	8.00%	9.00%
Non-covered acquired loans accounted under ASC 310-20
Financing Receivable, Impaired [Line Items]
Unpaid Principal	208	208
Recorded Investment	208	208
Allowance for loan and lease losses, non covered	0	0
Coverage	0.00%	0.00%
Non-covered acquired loans accounted under ASC 310-30
Financing Receivable, Impaired [Line Items]
Unpaid Principal	333,278	527,088
Recorded Investment	297,195	503,869
Allowance for loan and lease losses, non covered	6,278	2,863
Coverage	2.00%	1.00%
Commercial impaired loans with specific allowance [Member] | Non-covered originated loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal	4,580	6,600
Recorded Investment	4,459	5,553
Allowance for loan and lease losses, non covered	2,114	1,431
Coverage	47.00%	26.00%
Residential troubled-debt restructuring impaired loans with specific allowance [Member] | Non-covered originated loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal	95,652	89,539
Recorded Investment	90,375	84,494
Allowance for loan and lease losses, non covered	7,730	8,708
Coverage	9.00%	10.00%
Commercial impaired loans with no specific allowance [Member] | Non-covered originated loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal	31,599	27,914
Recorded Investment	24,451	22,592
Commercial impaired loans with no specific allowance [Member] | Non-covered acquired loans accounted under ASC 310-20
Financing Receivable, Impaired [Line Items]
Unpaid Principal	208	208
Recorded Investment	208	208
Mortgage impaired non-covered loan pool [Member] | Non-covered acquired loans accounted under ASC 310-30
Financing Receivable, Impaired [Line Items]
Unpaid Principal	4,793	5,183
Recorded Investment	4,277	4,718
Allowance for loan and lease losses, non covered	57	57
Coverage	1.00%	1.00%
Commercial impaired non-covered loan pool [Member] | Non-covered acquired loans accounted under ASC 310-30
Financing Receivable, Impaired [Line Items]
Unpaid Principal	231,428	48,100
Recorded Investment	208,544	40,411
Allowance for loan and lease losses, non covered	2,867	394
Coverage	1.00%	1.00%
Construction impaired non-covered loan pool [Member] | Non-covered acquired loans accounted under ASC 310-30
Financing Receivable, Impaired [Line Items]
Unpaid Principal	45,912	21,526
Recorded Investment	40,550	17,818
Allowance for loan and lease losses, non covered	3,330	1,319
Coverage	8.00%	7.00%
Consumer impaired non-covered loan pool [Member] | Non-covered acquired loans accounted under ASC 310-30
Financing Receivable, Impaired [Line Items]
Unpaid Principal	51,145	73,043
Recorded Investment	43,824	63,606
Allowance for loan and lease losses, non covered	24	361
Coverage	0.00%	1.00%
Auto impaired non-covered loan pool [Member] | Non-covered acquired loans accounted under ASC 310-30
Financing Receivable, Impaired [Line Items]
Unpaid Principal		379,236
Recorded Investment		377,316
Allowance for loan and lease losses, non covered		$ 732
Coverage		0.00%

XML

Restricted Cash (Composition) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Restricted cash components by secured investment type
Deposit pledged as collateral	$ 15,170	$ 82,199
Securities sold under agreements to repurchase secured with cash or equivalents [Member]
Restricted cash components by secured investment type
Deposit pledged as collateral	0	67,029
Derivatives
Restricted cash components by secured investment type
Deposit pledged as collateral	2,980	2,980
Obligations under agreements of loans sold with recourse
Restricted cash components by secured investment type
Deposit pledged as collateral	$ 12,190	$ 12,190

XML

Loans (Tables)

6 Months Ended

Jun. 30, 2014

Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]

Schedule Of Accounts Notes Loans And Financing Receivable Text Block

The composition of the Company's loan portfolio at June 30, 2014 and December 31,2013 was as follows

	June 30,		December 31,
	2014		2013
	(In thousands)
Non-covered loans:
Originated and other loans and leases held for investment:
Mortgage	$	788,001	$	766,265
Commercial		1,183,172		1,127,657
Consumer		161,538		127,744
Auto and leasing		508,034		379,874
		2,640,745		2,401,540
Acquired loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		38,602		77,681
Consumer		49,604		56,174
Auto		238,399		301,584
		326,605		435,439
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Mortgage		692,069		717,904
Commercial		508,530		545,117
Construction		123,743		126,427
Consumer		43,824		63,620
Auto		308,512		379,145
		1,676,678		1,832,213
		4,644,028		4,669,192
Deferred loan cost , net		3,236		1,035
Loans receivable		4,647,264		4,670,227
Allowance for loan and lease losses on non-covered loans		(60,360)		(54,298)
Loans receivable, net		4,586,904		4,615,929
Mortgage loans held-for-sale		14,792		46,529
Total non-covered loans, net		4,601,696		4,662,458
Covered loans:
Loans secured by 1-4 family residential properties		121,416		121,748
Construction and development secured by 1-4 family residential properties		18,566		17,304
Commercial and other construction		248,700		264,249
Consumer		5,177		6,119
Leasing		-		270
Total covered loans		393,859		409,690
Allowance for loan and lease losses on covered loans		(59,515)		(52,729)
Total covered loans, net		334,344		356,961
Total loans, net	$	4,936,040	$	5,019,419

Past Due Financing Receivables [Table Text Block]

The following tables present the aging of the recorded investment in gross originated and other loans held for investment as of June 30,2014 and December 31, 2013 by class ofloans. Mortgage loans past due included delinquent loans in the GNMA buy-back option program. Servicers of loans underlying GNMA mortgage-backed securities must report as their own assets the defaulted loans that they have the option (but not the obligation) to repurchase, even when they elect not to exercise that option

	June 30, 2014
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	5,182	$	2,540	$	3,225	$	10,947	$	59,426	$	70,373	$	70
Years 2003 and 2004		5,503		1,905		2,929		10,337		51,945		62,282		-
Year 2005		6,775		2,959		6,783		16,517		69,352		85,869		89
Year 2006		10,562		3,781		5,278		19,621		94,765		114,386		-
Years 2007, 2008 and 2009		3,962		2,051		5,859		11,872		82,471		94,343		-
Years 2010, 2011, 2012, 2013 and 2014		3,345		2,745		5,432		11,522		184,150		195,672		339
		35,329		15,981		29,506		80,816		542,109		622,925		498
Non-traditional		1,997		1,128		2,655		5,780		32,254		38,034		-
Loss mitigation program		8,239		7,779		12,427		28,445		59,519		87,964		4,378
		45,565		24,888		44,588		115,041		633,882		748,923		4,876
Home equity secured personal loans		-		-		138		138		611		749		-
GNMA's buy-back option program		-		-		38,329		38,329		-		38,329		-
		45,565		24,888		83,055		153,508		634,493		788,001		4,876
Commercial
Commercial secured by real estate:
Corporate		-		-		-		-		90,886		90,886		-
Institutional		-		-		-		-		30,701		30,701		-
Middle market		685		-		638		1,323		139,902		141,225		-
Retail		1,634		494		6,198		8,326		148,862		157,188		-
Floor plan		-		-		-		-		1,680		1,680		-
Real estate		-		-		-		-		11,878		11,878		-
		2,319		494		6,836		9,649		423,909		433,558		-
Other commercial and industrial:
Corporate		-		-		-		-		61,329		61,329		-
Institutional		-		-		-		-		487,725		487,725		-
Middle market		-		760		-		760		80,034		80,794		-
Retail		536		149		1,343		2,028		75,728		77,756		-
Floor plan		-		-		-		-		42,010		42,010		-
		536		909		1,343		2,788		746,826		749,614		-
		2,855		1,403		8,179		12,437		1,170,735		1,183,172		-

	June 30, 2014
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Consumer
Credit cards		345		236		271		852		15,034		15,886		-
Overdrafts		19		3		1		23		295		318		-
Personal lines of credit		57		1		129		187		1,789		1,976		-
Personal loans		1,227		535		677		2,439		123,981		126,420		-
Cash collateral personal loans		280		94		48		422		16,516		16,938		-
		1,928		869		1,126		3,923		157,615		161,538		-
Auto and leasing		37,047		13,620		6,953		57,620		450,414		508,034		-
Total	$	87,395	$	40,780	$	99,313	$	227,488	$	2,413,257	$	2,640,745	$	4,876

	December 31, 2013
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	6,697	$	1,635	$	3,408	$	11,740	$	64,772	$	76,512	$	79
Years 2003 and 2004		4,722		2,163		1,845		8,730		56,387		65,117		-
Year 2005		8,527		2,119		4,808		15,454		74,087		89,541		-
Year 2006		12,055		4,312		4,418		20,785		99,537		120,322		-
Years 2007, 2008 and 2009		3,464		1,104		4,663		9,231		91,919		101,150		152
Years 2010, 2011, 2012 and 2013		3,923		1,609		4,453		9,985		139,561		149,546		459
		39,388		12,942		23,595		75,925		526,263		602,188		690
Non-traditional		3,217		1,162		2,311		6,690		35,412		42,102		-
Loss mitigation program		9,759		5,560		13,191		28,510		57,808		86,318		2,185
		52,364		19,664		39,097		111,125		619,483		730,608		2,875
Home equity secured personal loans		-		-		138		138		598		736		-
GNMA's buy-back option program		-		-		34,921		34,921		-		34,921		-
		52,364		19,664		74,156		146,184		620,081		766,265		2,875
Commercial
Commercial secured by real estate:
Corporate		-		-		-		-		54,796		54,796		-
Institutional		-		-		-		-		4,050		4,050		-
Middle market		1,356		-		10,294		11,650		149,933		161,583		-
Retail		4,253		1,015		3,190		8,458		158,184		166,642		-
Floor plan		-		-		-		-		1,835		1,835		-
Real estate		-		-		-		-		11,655		11,655		-
		5,609		1,015		13,484		20,108		380,453		400,561		-
Other commercial and industrial:
Corporate		236		-		-		236		32,362		32,598		-
Institutional		-		-		-		-		536,445		536,445		-
Middle market		-		299		1,134		1,433		57,464		58,897		-
Retail		1,830		552		539		2,921		58,589		61,510		-
Floor plan		39		-		-		39		37,607		37,646		-
		2,105		851		1,673		4,629		722,467		727,096		-
		7,714		1,866		15,157		24,737		1,102,920		1,127,657		-

	December 31, 2013
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Consumer
Credit cards		287		168		232		687		14,554		15,241		-
Overdrafts		46		4		-		50		322		372		-
Personal lines of credit		33		38		66		137		1,844		1,981		-
Personal loans		1,324		399		352		2,075		92,485		94,560		-
Cash collateral personal loans		324		43		-		367		15,223		15,590		-
		2,014		652		650		3,316		124,428		127,744		-
Auto and leasing		25,531		9,437		5,089		40,057		339,817		379,874		-
Total	$	87,623	$	31,619	$	95,052	$	214,294	$	2,187,246	$	2,401,540	$	2,875

The following tables present the aging of the recorded investment in gross acquired loans accounted for under ASC 310-20 as of June 30,2014 and December 31, 2013, by class ofloans:

	June 30, 2014
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Commercial
Commercial secured by real estate
Corporate	$	-	$	-	$	-	$	-	$	2,999	$	2,999	$	-
Retail		-		-		506		506		2,051		2,557		-
Floor plan		-		-		101		101		3,846		3,947		-
		-		-		607		607		8,896		9,503		-
Other commercial and industrial
Corporate		-		-		94		94		2,916		3,010		-
Retail		254		92		556		902		10,518		11,420		-
Floor plan		51		68		119		238		14,431		14,669		-
		305		160		769		1,234		27,865		29,099		-
		305		160		1,376		1,841		36,761		38,602		-
Consumer
Credit cards		1,520		835		1,320		3,675		42,263		45,938		-
Personal loans		218		82		32		332		3,334		3,666		-
		1,738		917		1,352		4,007		45,597		49,604		-
Auto		11,603		4,325		1,566		17,494		220,905		238,399		-
Total	$	13,646	$	5,402	$	4,294	$	23,342	$	303,263	$	326,605	$	-

	December 31, 2013
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Commercial
Commercial secured by real estate
Corporate	$	-	$	-	$	-	$	-	$	10,166	$	10,166	$	-
Retail		431		331		868		1,630		4,140		5,770		-
Floor plan		-		-		101		101		2,576		2,677		-
		431		331		969		1,731		16,882		18,613		-
Other commercial and industrial
Corporate		14		83		-		97		9,696		9,793		-
Retail		1,717		1,418		659		3,794		23,544		27,338		-
Floor plan		35		193		18		246		21,691		21,937		-
		1,766		1,694		677		4,137		54,931		59,068		-
		2,197		2,025		1,646		5,868		71,813		77,681		-
Consumer
Credit cards		2,217		1,200		2,068		5,485		46,714		52,199		-
Personal loans		196		7		91		294		3,681		3,975		-
		2,413		1,207		2,159		5,779		50,395		56,174		-
Auto		12,534		3,616		1,608		17,758		283,826		301,584		-
Total	$	17,144	$	6,848	$	5,413	$	29,405	$	406,034	$	435,439	$	-

Carrying Amounts Of Acquired Non Covered Loans Tabular Disclosure [Table Text Block]

	June 30,	December 31,
	2014	2013
	(In thousands)
Contractual required payments receivable	$ 2,676,008	$ 2,929,353
Less: Non-accretable discount	554,724	579,587
Cash expected to be collected	2,121,284	2,349,766
Less: Accretable yield	444,606	517,553
Carrying amount	$ 1,676,678	$ 1,832,213

Accretable Yield for Acquired Loans Non-covered [Table Text Block]

The following tables describe the accretable yield and non-accretable discount activity of acquired loans accounted for under ASC 310-30 for the quartersand six-month periods ended June 30, 2014 and 2013, excluding covered loans

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Accretable Yield Activity
Balance at beginning of period	$	482,001	$	542,741	$	517,553	$	590,409
Accretion		(39,714)		(54,427)		(79,983)		(102,095)
Transfer from non-accretable discount		2,319		7,747		7,036		7,747
Balance at end of period	$	444,606	$	496,061	$	444,606	$	496,061
	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Non-Accretable Discount Activity
Balance at beginning of period	$	563,294	$	733,126	$	579,587	$	741,872
Principal losses		(6,251)		(11,738)		(17,827)		(20,484)
Transfer to accretable yield		(2,319)		(7,747)		(7,036)		(7,747)
Balance at end of period	$	554,724	$	713,641	$	554,724	$	713,641

Covered loans carrying amount [Table Text Block]

Covered Loans

The carrying amount of covered loans at June 30, 2014 and December 31, 2013is as follows:

	June 30,		December 31,
	2014		2013
	(In thousands)
Contractual required payments receivable	$	607,144	$	702,126
Less: Non-accretable discount		85,224		129,477
Cash expected to be collected		521,920		572,649
Less: Accretable yield		128,061		162,959
Carrying amount, gross		393,859		409,690
Less: Allowance for covered loan and lease losses		59,515		52,729
Carrying amount, net	$	334,344	$	356,961

The following tables describe the accretable yield and non-accretable discount activity of covered loans for the quartersand six-month periods ended June 30, 2014 and2013:

Accretable Yield for Acquired Loans Covered [Table Text Block]

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Accretable yield activity
Balance at beginning of period	$	147,767	$	174,107	$	162,959	$	188,008
Accretion		(24,880)		(23,999)		(48,268)		(44,228)
Transfer from non-accretable discount		5,174		17,024		13,370		23,352
Balance at end of period	$	128,061	$	167,132	$	128,061	$	167,132
	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2014		2013
	(In thousands)
Non-accretable discount activity
Balance at beginning of period	$	107,323	$	214,236	$	129,477	$	237,555
Principal losses		(16,925)		(4,953)		(30,883)		(21,944)
Transfer to accretable yield		(5,174)		(17,024)		(13,370)		(23,352)
Balance at end of period	$	85,224	$	192,259	$	85,224	$	192,259

Financing Receivable Recorded Investment Nonaccrual Status By Class Of Loans [Table Text Block]

Non-accrual Loans

The following table presents the recorded investment in loansin non-accrual status by class ofloans as of June 30, 2014 and December 31, 2013:

	June 30,		December 31,
	2014		2013
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year):
Up to the year 2002	$	3,194	$	3,428
Years 2003 and 2004		2,945		1,845
Year 2005		6,905		4,922
Year 2006		5,278		4,418
Years 2007, 2008 and 2009		5,860		4,511
Years 2010, 2011, 2012, 2013 and 2014		9,379		7,818
		33,561		26,942
Non-traditional		2,655		2,311
Loss mitigation program		16,084		18,792
		52,300		48,045
Home equity secured personal loans		138		138
		52,438		48,183
Commercial
Commercial secured by real estate
Middle market		10,345		11,895
Retail		9,823		7,208
		20,168		19,103
Other commercial and industrial
Middle market		760		1,134
Retail		2,578		2,485
Floor plan		-		108
		3,338		3,727
		23,506		22,830
Consumer
Credit cards		271		232
Overdrafts		1		-
Personal lines of credit		139		84
Personal loans		985		485
Cash collateral personal loans		58		4
		1,454		805
Auto and leasing		7,300		5,089
	$	84,698	$	76,907

	June 30,		December 31,
	2014		2013
	(In thousands)
Acquired loans accounted under ASC 310-20
Commercial
Commercial secured by real estate
Retail	$	545	$	956
Floor plan		101		101
		646		1,057
Other commercial and industrial
Corporate		94		97
Retail		588		1,371
Floor plan		120		18
		802		1,486
		1,448		2,543
Consumer
Credit cards		1,318		2,068
Personal loans		34		151
		1,352		2,219
Auto		1,680		1,608
		4,480		6,370
Total non-accrual loans	$	89,178	$	83,277

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Securities Purchased Under Agreements and Investments (Tables)

6 Months Ended

Jun. 30, 2014

Investments [Abstract]

Available for sale securities

	June 30, 2014
			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	$	1,070,034	$	44,076	$	1,992	$	1,112,118	3.10%
GNMA certificates		5,560		389		21		5,928	4.92%
CMOs issued by US government-sponsored agencies		200,111		306		3,786		196,631	1.79%
Total mortgage-backed securities		1,275,705		44,771		5,799		1,314,677	2.90%
Investment securities
US Treasury securities		9,000		-		-		9,000	0.01%
Obligations of US government-sponsored agencies		74,613		-		38		74,575	0.17%
Obligations of Puerto Rico government and political subdivisions		22,391		-		5,591		16,800	5.32%
Other debt securities		3,729		177		-		3,906	2.95%
Total investment securities		109,733		177		5,629		104,281	1.30%
Total securities available for sale	$	1,385,438	$	44,948	$	11,428	$	1,418,958	2.77%
Held-to-maturity
Mortgage-backed securities
FNMA and FHLMC certificates		26,706		138		-		26,844	2.52%
Total	$	1,412,144	$	45,086	$	11,428	$	1,445,802	2.77%

	December 31, 2013
			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	$	1,190,910	$	33,089	$	6,669	$	1,217,330	2.93%
GNMA certificates		7,406		433		24		7,815	4.92%
CMOs issued by US government-sponsored agencies		220,801		407		6,814		214,394	1.78%
Total mortgage-backed securities		1,419,117		33,929		13,507		1,439,539	2.76%
Investment securities
Obligations of US government-sponsored agencies		10,691		-		42		10,649	1.21%
Obligations of Puerto Rico government and political subdivisions		121,035		-		6,845		114,190	4.38%
Other debt securities		24,200		167		320		24,047	3.46%
Total investment securities		155,926		167		7,207		148,886	2.99%
Total securities available-for-sale	$	1,575,043	$	34,096	$	20,714	$	1,588,425	2.89%

	June 30, 2014
	Available-for-sale				Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)				(In thousands)
Mortgage-backed securities
Due after 5 to 10 years
FNMA and FHLMC certificates	$	24,631	$	25,109	$	-	$	-
Total due after 5 to 10 years		24,631		25,109		-		-
Due after 10 years
FNMA and FHLMC certificates		1,045,403		1,087,009		26,706		26,844
GNMA certificates		5,560		5,928		-		-
CMOs issued by US government-sponsored agencies		200,111		196,631		-		-
Total due after 10 years		1,251,074		1,289,568		26,706		26,844
Total mortgage-backed securities		1,275,705		1,314,677		26,706		26,844
Investment securities
Due in less than one year
US Treasury securities		9,000		9,000		-		-
Obligations of US government and sponsored agencies		66,000		66,000		-		-
Total due in less than one year		75,000		75,000		-		-
Due from 1 to 5 years
Obligations of Puerto Rico government and political subdivisions		11,927		9,543		-		-
Total due from 1 to 5 years		11,927		9,543		-		-
Due after 5 to 10 years
Obligations of US government and sponsored agencies		8,613		8,575		-		-
Total due after 5 to 10 years		8,613		8,575		-		-
Due after 10 years
Obligations of Puerto Rico government and political subdivisions		10,464		7,257		-		-
Other debt securities		3,729		3,906		-		-
Total due after 10 years		14,193		11,163		-		-
Total investment securities		109,733		104,281		-		-
Total securities available-for-sale	$	1,385,438	$	1,418,958	$	26,706	$	26,844

Gross Realized Gains and Losses by Category

For the six-month period ended June 30, 2014 the Company recorded a net gain on sale of securities of $4.4 million. The tables below present the gross realized gains by category for such period.There was no realized gain or loss for the six-month period ended June 30, 2013.

	Six-Month Period Ended June 30, 2014
			Book Value		Gross		Gross
Description	Sale Price		at Sale		Gains		Losses
	(In thousands)
Sale of securities available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates	$	115,158	$	110,792	$	4,366	$	-
GNMA certificates		48,077		48,077		-		-
Total	$	163,235	$	158,869	$	4,366	$	-

Available For Sale Securities Continuous Unrealized Loss Position Fair Value

The following tables show the Company's gross unrealized losses and fair value of investment securities available-for-sale and held-to-maturity, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position at June 30, 2014 and December 31, 2013

	June 30, 2014
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies	$	156,542	$	3,734	$	152,808
FNMA and FHLMC certificates		190,630		1,992		188,638
Obligations of Puerto Rico government and political subdivisions		22,391		5,591		16,800
GNMA certificates		199		21		178
	$	369,762	$	11,338	$	358,424
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies	$	16,365	$	52	$	16,313
Obligations of US government and sponsored agencies		8,613		38		8,575
	$	24,978	$	90	$	24,888
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies	$	172,907	$	3,786	$	169,121
FNMA and FHLMC certificates		190,630		1,992		188,638
Obligations of Puerto Rico government and political subdivisions		22,391		5,591		16,800
Obligations of US government and sponsored agencies		8,613		38		8,575
GNMA certificates		199		21		178
	$	394,740	$	11,428	$	383,312

	December 31, 2013
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico government and political subdivisions	$	20,845	$	5,470	$	15,375
CMOs issued by US government-sponsored agencies		2,559		237		2,322
GNMA certificates		81		11		70
	$	23,485	$	5,718	$	17,767
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico government and political subdivisions	$	100,190	$	1,375	$	98,815
CMOs issued by US government-sponsored agencies		182,661		6,577		176,084
GNMA certificates		122		13		109
FNMA and FHLMC certificates		220,913		6,669		214,244
Obligations of US government and sponsored agencies		10,691		42		10,649
Other debt securities		20,000		320		19,680
	$	534,577	$	14,996	$	519,581
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico government and political subdivisions	$	121,035	$	6,845	$	114,190
CMOs issued by US government-sponsored agencies		185,220		6,814		178,406
GNMA certificates		203		24		179
FNMA and FHLMC certificates		220,913		6,669		214,244
Obligations of US government and sponsored agencies		10,691		42		10,649
Other debt securities		20,000		320		19,680
	$	558,062	$	20,714	$	537,348

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Stockholders' Equity (Reclassifications out of other comprehensive income) (Details) (Reclassification out of Accumulated Other Comprehensive Income [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014
Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Interest Rate Contract	$ 1,642	$ 3,263
Tax Effect Reclassified From Accumulated OCI Into Income Tax Provision	10	147
Total	$ 1,652	$ 3,410

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Loans Receivable (Accretable yield and non-accretable discount activity of covered loans) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Dec. 31, 2012	Jun. 30, 2014 Acquired Loans In An F D I C Assisted Transaction [Member]	Jun. 30, 2013 Acquired Loans In An F D I C Assisted Transaction [Member]	Jun. 30, 2014 Acquired Loans In An F D I C Assisted Transaction [Member]	Jun. 30, 2013 Acquired Loans In An F D I C Assisted Transaction [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period			$ 517,553	$ 590,409	$ 147,767	$ 174,107	$ 162,959	$ 188,008
Accretion Accretable	(79,983)	(102,095)			(24,880)	(23,999)	(48,268)	(44,228)
Transfer from (to) non-accretable discount	7,036	7,747			5,174	17,024	13,370	23,352
Balance at end of period	444,606	496,061	517,553	590,409	128,061	167,132	128,061	167,132
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Balance at beginning of period			579,587	741,872	107,323	214,236	129,477	237,555
Principal Losses	(17,827)	(20,484)			(16,925)	(4,953)	(30,883)	(21,944)
Transfer (to) from accretable yield	(7,036)	(7,747)			(5,174)	(17,024)	(13,370)	(23,352)
Balance at end of period	$ 554,724	$ 713,641	$ 579,587	$ 741,872	$ 85,224	$ 192,259	$ 85,224	$ 192,259

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Investment Securities (Narrative) (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013
Investments, Debt and Equity Securities [Abstract]
Fair value of securities held as collateral			$ 64.6
Puerto Rico Government obligation with mandatory tender offer repaid by user		98.7
Investments Guaranteed by US Treasury and Sponsored Agencies in Unrealized Loss on Position	372.3
Investments Guaranteed by Puerto Rico Government and its Political Subdivisions in Unrealized Loss On Position	$ 22.4
Investments Guaranteed By Us Treasury And Sponsored Agencies in Unrealized Loss Position Percentage To Total Investment in Unrealized Loss Position	94.00%
Investments Guaranteed By Puerto Rico Government and Its Political Subdivisions in Unrealized Loss Position Percentage To Total Investment in Unrealized Loss Position	6.00%

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Allowance for Loan and Lease Losses (Tables)

6 Months Ended

Jun. 30, 2014

Loans Receivable [Abstract]

Allowance for Credit Losses on Financing Receivables [Table Text Block]

The composition of the Company's allowance for loan and lease losses at June 30, 2014 and December 31, 2013 was as follows:

	June 30,		December 31,
	2014		2013
	(In thousands)
Allowance for loans and lease losses on non-covered loans:
Originated and other loans and leases held for investment:
Mortgage	$	19,062	$	19,937
Commercial		12,423		14,897
Consumer		7,887		6,006
Auto and leasing		11,127		7,866
Unallocated		139		375
		50,638		49,081
Acquired loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		464		926
Consumer		338		-
Auto		2,642		1,428
		3,444		2,354
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Commercial		6,216		1,713
Consumer		62		418
Auto		-		732
		6,278		2,863
		60,360		54,298
Allowance for loans and lease losses on covered loans:
Loans secured by 1-4 family residential properties		14,924		12,495
Commercial and other construction		43,976		39,619
Consumer		615		615
		59,515		52,729
Total allowance for loan and lease losses	$	119,875	$	107,027

Originated and Other Loans and Leases Held for Investment

The following tables present the activity in our allowance for loan and lease losses and the related recorded investment of the associated loans for our originated and other loans held for investment portfolio by segment for the periods indicated:

	Quarter Ended June 30, 2014
							Auto and
	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Balance at beginning of period	$	19,511	$	13,994	$	7,135	$	8,731	$	136	$	49,507
Charge-offs		(987)		(543)		(1,397)		(5,956)		-		(8,883)
Recoveries		88		115		244		2,136		-		2,583
Provision (recapture) for non-covered originated and other loan and lease losses		450		(1,143)		1,905		6,216		3		7,431
Balance at end of period	$	19,062	$	12,423	$	7,887	$	11,127	$	139	$	50,638
	Six-Month Period Ended June 30, 2014
							Auto and
	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Balance at beginning of period	$	19,937	$	14,897	$	6,006	$	7,866	$	375	$	49,081
Charge-offs		(2,201)		(962)		(2,235)		(10,601)		-		(15,999)
Recoveries		236		213		391		3,660		-		4,500
Provision (recapture) for non-covered originated and other loan and lease losses		1,090		(1,725)		3,725		10,202		(236)		13,056
Balance at end of period	$	19,062	$	12,423	$	7,887	$	11,127	$	139	$	50,638

	June 30, 2014
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses on non-covered originated and other loans:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	7,730	$	2,114	$	-	$	-	$	-	$	9,844
Collectively evaluated for impairment		11,332		10,309		7,887		11,127		139		40,794
Total ending allowance balance	$	19,062	$	12,423	$	7,887	$	11,127	$	139	$	50,638
Loans:
Individually evaluated for impairment	$	90,375	$	28,910	$	-	$	-	$	-	$	119,285
Collectively evaluated for impairment		697,626		1,154,262		161,538		508,034		-		2,521,460
Total ending loan balance	$	788,001	$	1,183,172	$	161,538	$	508,034	$	-	$	2,640,745

	Quarter Ended June 30, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Balance at beginning of period	$	22,889	$	16,314	$	1,313	$	1,741	$	77	$	42,334
Charge-offs		(29,120)		(2,886)		(323)		(709)		-		(33,038)
Recoveries		-		234		43		209		-		486
Provision for non-covered originated and other loan and lease losses		27,606		3,961		1,309		2,400		643		35,919
Balance at end of period	$	21,375	$	17,623	$	2,342	$	3,641	$	720	$	45,701
	Six-Month Period Ended June 30, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Balance at beginning of period	$	21,092	$	17,072	$	856	$	533	$	368	$	39,921
Charge-offs		(31,707)		(3,444)		(569)		(800)		-		(36,520)
Recoveries		-		262		107		216		-		585
Provision for non-covered originated and other loan and lease losses		31,990		3,733		1,948		3,692		352		41,715
Balance at end of period	$	21,375	$	17,623	$	2,342	$	3,641	$	720	$	45,701

	December 31, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	8,708	$	1,431	$	-	$	-	$	-	$	10,139
Collectively evaluated for impairment		11,229		13,466		6,006		7,866		375		38,942
Total ending allowance balance	$	19,937	$	14,897	$	6,006	$	7,866	$	375	$	49,081
Loans:
Individually evaluated for impairment	$	84,494	$	28,145	$	-	$	-	$	-	$	112,639
Collectively evaluated for impairment		681,771		1,099,512		127,744		379,874		-		2,288,901
Total ending loans balance	$	766,265	$	1,127,657	$	127,744	$	379,874	$	-	$	2,401,540

Acquired Loans accounted for under ASC 310-20 (Loans with revolving feature and/or acquired at a premium)

The following tables present the activity in our allowance for loan losses and related recorded investment of the associated loans in our non-covered acquiredloan portfolio, excluding loans accounted for under ASC 310-30, for the periods indicated

	Quarter Ended June 30, 2014
	Commercial			Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered acquired loans accounted for under ASC 310-20:
Balance at beginning of period	$	867	1	$	504	$	2,247	$	-	$	3,618
Charge-offs		(110)			(1,952)		(1,370)		-		(3,432)
Recoveries		30			124		535		-		689
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-20		(323)			1,662		1,230		-		2,569
Balance at end of period	$	464		$	338	$	2,642	$	-	$	3,444
	Six-Month Period Ended June 30, 2014
	Commercial			Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered acquired loans accounted for under ASC 310-20:
Balance at beginning of period	$	926	1	$	-	$	1,428	$	-	$	2,354
Charge-offs		(284)			(4,010)		(2,666)		-		(6,960)
Recoveries		30			224		985		-		1,239
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-20		(208)			4,124		2,895		-		6,811
Balance at end of period	$	464		$	338	$	2,642	$	-	$	3,444

	June 30, 2014
	Commercial		Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses on non-covered acquired loans accounted for under ASC 310-20:
Ending allowance balance attributable to loans:
Collectively evaluated for impairment		464		338		2,642		-		3,444
Total ending allowance balance	$	464	$	338	$	2,642	$	-	$	3,444
Loans:
Collectively evaluated for impairment		38,602		49,604		238,399		-		326,605
Total ending loan balance	$	38,602	$	49,604	$	238,399	$	-	$	326,605

	Quarter Ended June 30, 2013
	Commercial			Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered acquired loans accounted for under ASC 310-20:
Balance at beginning of period	$	386	$ 1	$	-	$	-	$	-	$	386
Charge-offs		(25)			(1,158)		(1,410)		-		(2,593)
Recoveries		-			637		886		-		1,523
Provision (recapture)for non-covered acquired loan and lease losses accounted for under ASC 310-20		563			521		524		-		1,608
Balance at end of period	$	924		$	-	$	-	$	-	$	924
	Six-Month Period Ended June 30, 2013
	Commercial			Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered acquired loans accounted for under ASC 310-20:
Balance at beginning of period	$	-	$ 1	$	-	$	-	$	-	$	-
Charge-offs		(25)			(2,614)		(3,125)		-		(5,764)
Recoveries		-			844		2,116		-		2,960
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-20		949			1,770		1,009		-		3,728
Balance at end of period	$	924		$	-	$	-	$	-	$	924

	December 31, 2013
	Commercial		Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses on non-covered acquired loans accounted for under ASC 310-20:
Ending allowance balance attributable to loans:
Collectively evaluated for impairment		926		-		1428		-		2,354
Total ending allowance balance	$	926	$	-	$	1,428	$	-	$	2,354
Loans:
Collectively evaluated for impairment		77,681		56,174		301,584		-		435,439
Total ending loan balance	$	77,681	$	56,174	$	301,584	$	-	$	435,439

The following tables present the activity in our allowance for loan losses and related recorded investment of the associated loans in our non-covered acquiredloan portfolio accounted for under ASC 310-30, for the periods indicated:

	Quarter Ended June 30, 2014
	Mortgage			Commercial			Construction			Consumer		Auto		Total
	(In thousands)
Allowance for loan and lease losses for non-covered loans accounted for under ASC 310-30:
Balance at beginning of period	$	-	1	$	2,653	1	$	-	$ 1	$	405	$	-	$	3,058
Provision(recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-30		-			3,563			-			(343)		-		3,220
Balance at end of period	$	-		$	6,216		$	-		$	62	$	-	$	6,278
	Six-Month Period Ended June 30, 2014
	Mortgage			Commercial			Construction			Consumer		Auto		Total
	(In thousands)
Allowance for loan and lease losses for non-covered loans accounted for under ASC 310-30:
Balance at beginning of period	$	-	1	$	1,713	1	$	-	1	$	418	$	732	$	2,863
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-30		-			4,503			-			(356)		(732)		3,415
Balance at end of period	$	-		$	6,216		$	-		$	62	$	-	$	6,278

Impaired Financing Receivables [Table Text Block]

The Company's recorded investment in non-covered commercial and mortgage loans categorized as originated and other loans and leases held for investment that were individually evaluated forimpairment and the related allowance for loan and lease losses at June 30, 2014 and December 31, 2013are as follows:

	June 30, 2014
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance:
Commercial	$	4,580	$	4,459	$	2,114	47%
Residential troubled-debt restructuring		95,652		90,375		7,730	9%
Impaired loans with no specific allowance:
Commercial		31,599		24,451		N/A	N/A
Total investment in impaired loans	$	131,831	$	119,285	$	9,844	8%

	December 31, 2013
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance
Commercial	$	6,600	$	5,553	$	1,431	26%
Residential troubled-debt restructuring		89,539		84,494		8,708	10%
Impaired loans with no specific allowance
Commercial		27,914		22,592		N/A	N/A
Total investment in impaired loans	$	124,053	$	112,639	$	10,139	9%

The Company's recorded investment in non-covered commercial loans categorized as non-covered acquired loans accounted for under ASC 310-20 that were individually evaluated for impairment and the related allowance for loan and lease losses at June 30, 2014 and December 31, 2013 are as follows:

	June 30, 2014
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial		208		208		N/A	N/A
Total investment in impaired loans	$	208	$	208	$	-	0%
	December 31, 2013
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial		208		208		N/A	N/A
Total investment in impaired loans	$	208	$	208	$	-	0%

The Company's recorded investment in non-covered acquired loan pools accounted for under ASC 310-30 and their related allowance for non-covered loan and lease losses at June 30, 2014 and December 31, 2013are as follows

	June 30, 2014
	Unpaid		Recorded
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired non-covered loan pools:
Mortgage	$	4,793	$	4,277	$	57	1%
Commercial		231,428		208,544		2,867	1%
Construction		45,912		40,550		3,330	8%
Consumer		51,145		43,824		24	0%
Total investment in impaired non-covered loan pools	$	333,278	$	297,195	$	6,278	2%

	December 31, 2013
	Unpaid		Recorded
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired non-covered loan pools:
Mortgage	$	5,183	$	4,718	$	57	1%
Commercial		48,100		40,411		394	1%
Construction		21,526		17,818		1,319	7%
Consumer		73,043		63,606		361	1%
Auto		379,236		377,316		732	0%
Total investment in impaired non-covered loan pools	$	527,088	$	503,869	$	2,863	1%

The following table presents the interest recognized in non-covered commercial and mortgage loans that were individuallyevaluated for impairment, excluding loans accounted for under ASC 310-30, for the quartersand six-month periodsended June 30, 2014 and 2013

	Quarter Ended June 30,
	2014				2013
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)
Impaired loans with specific allowance
Commercial	$	39	$	7,200	$	255	$	17,049
Residential troubled-debt restructuring		663		90,445		682		83,081
Impaired loans with no specific allowance
Commercial		77		21,951		226		23,304
Total interest income from impaired loans	$	779	$	119,596	$	1,163	$	123,434
	Six-Month Period Ended Ended June 30,
	2014				2013
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)
Impaired loans with specific allowance
Commercial	$	78	$	6,729	$	322	$	17,789
Residential troubled-debt restructuring		1,270		88,749		1,273		80,914
Impaired loans with no specific allowance
Commercial		154		21,790		364		25,304
Total interest income from impaired loans	$	1,502	$	117,268	$	1,959	$	124,007

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

Modifications

The following tables present the troubled-debt restructurings during the quarters and six-month periods ended June 30, 2014 and 2013:

	Quarter Ended June 30, 2014
	Number of contracts	Pre-Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage	33	$	5,001	6%	353	$	4,965	4.12%	418
Commercial	1		73	7%	55		73	9.25%	36
Consumer	3		24	14%	77		24	13.98%	72
	Six-Month Period Ended June 30, 2014
	Number of contracts	Pre-Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage	88	$	11,813	6%	349	$	11,446	4.26%	390
Commercial	1		73	7%	55		73	9.25%	36
Consumer	8		66	13%	70		68	13.31%	68
	Quarter Ended June 30, 2013
	Number of contracts	Pre- Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage	42	$	5,372	6%	355	$	5,715	4.26%	420
Commercial	2		1,842	9%	87		1,842	4.00%	66
Consumer	2		18	14%	41		18	13.67%	60
	Six-Month Period Ended June 30, 2013
	Number of contracts	Pre- Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage	86	$	10,555	7%	342	$	11,288	4.59%	417
Commercial	2		1,842	9%	87		1,842	4.00%	66
Consumer	2		18	14%	41		18	13.67%	60

The following table presents troubled-debt restructurings for which there was a payment default during the twelve-month periods endedJune 30, 2014 and 2013:

	Twelve-Month Period Ended June 30,
	2014			2013
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Mortgage	22	$	2,703	48	$	6,414
Consumer	5	$	101	2	$	29

Financing Receivable Credit Quality Indicators [Table Text Block]

As of June 30,2014 and December 31, 2013, and based on the most recent analysis performed, the risk category of gross non-covered originated and other loans and acquiredloans accounted for under ASC 310-20 subject to risk rating by class of loans is as follows:

	June 30, 2014
	Risk Ratings
											Individually
	Balance				Special						Measured for
	Outstanding		Pass		Mention		Substandard		Doubtful		Impairment
	(In thousands)
Commercial - originated and other loans held for investment
Commercial secured by real estate:
Corporate	$	90,886	$	90,886	$	-	$	-	$	-	$	-
Institutional		30,701		20,581		10,120		-		-		-
Middle market		141,225		121,532		6,726		-		-		12,967
Retail		157,188		142,415		1,382		2,233		-		11,158
Floor plan		1,680		1,579		101		-		-		-
Real estate		11,878		11,878		-		-		-		-
		433,558		388,871		18,329		2,233		-		24,125
Other commercial and industrial:
Corporate		61,329		61,329		-		-		-		-
Institutional		487,725		287,734		199,991		-		-		-
Middle market		80,794		73,967		3,428		389		-		3,010
Retail		77,756		73,753		259		1,969		-		1,775
Floor plan		42,010		40,910		299		801		-		-
		749,614		537,693		203,977		3,159		-		4,785
Total		1,183,172		926,564		222,306		5,392		-		28,910
Commercial - acquired loans (under ASC 310-20)
Commercial secured by real estate:
Corporate		2,999		2,999		-		-		-		-
Retail		2,557		2,091		-		466		-		-
Floor plan		3,947		3,947		-		-		-		-
		9,503		9,037		-		466		-		-
Other commercial and industrial:
Corporate		3,010		2,916		94		-		-		-
Retail		11,420		10,871		100		449		-		-
Floor plan		14,669		14,669		-		-		-		-
		29,099		28,456		194		449		-		-
Total		38,602		37,493		194		915		-		-
Total	$	1,221,774	$	964,057	$	222,500	$	6,307	$	-	$	28,910

	December 31, 2013
	Risk Ratings
											Individually
	Balance				Special						Measured for
	Outstanding		Pass		Mention		Substandard		Doubtful		Impairment
	(In thousands)
Commercial - originated and other loans held for investment
Commercial secured by real estate:
Corporate	$	54,796	$	54,796	$	-	$	-	$	-	$	-
Institutional		4,050		4,050		-		-		-		-
Middle market		161,583		133,061		16,627		118		-		11,777
Retail		166,642		149,018		2,182		2,258		-		13,184
Floor plan		1,835		1,835		-		-		-		-
Real estate		11,655		11,655		-		-		-		-
		400,561		354,415		18,809		2,376		-		24,961
Other commercial and industrial:
Corporate		32,598		32,598		-		-		-		-
Institutional		536,445		536,445		-		-		-		-
Middle market		58,897		53,868		3,466		198		-		1,365
Retail		61,510		58,742		257		691		-		1,820
Floor plan		37,646		37,350		188		108		-		-
		727,096		719,003		3,911		997		-		3,185
Total		1,127,657		1,073,418		22,720		3,373		-		28,146
Commercial - acquired loans (under ASC 310-20)
Commercial secured by real estate:
Corporate		10,166		10,166		-		-		-		-
Retail		5,770		4,378		443		949		-		-
Floor plan		2,677		2,576		-		101		-		-
		18,613		17,120		443		1,050		-		-
Other commercial and industrial:
Corporate		9,793		9,696		-		97		-		-
Retail		27,338		26,044		150		1,144		-		-
Floor plan		21,937		21,769		168		-		-		-
		59,068		57,509		318		1,241		-		-
Total		77,681		74,629		761		2,291		-		-
Total	$	1,205,338	$	1,148,047	$	23,481	$	5,664	$	-	$	28,146

	June 30, 2014
	Delinquency
															Individually
	Balance														Measured for
	Outstanding		0-29 days		30-59 days		60-89 days		90-119 days		120-364 days		365+ days		Impairment
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year)
Up to the year 2002	$	70,373	$	59,428	$	5,181	$	2,498	$	693	$	649	$	1,840	$	84
Years 2003 and 2004		62,282		51,929		5,503		1,905		232		1,267		1,126		320
Year 2005		85,869		69,305		6,611		2,959		775		3,029		2,806		384
Year 2006		114,386		94,669		10,562		3,781		1,561		1,813		1,808		192
Years 2007, 2008 and 2009		94,343		82,470		3,962		2,051		1,130		2,186		2,143		401
Years 2010, 2011, 2012 2013 and 2014		195,672		173,113		1,979		1,515		246		1,843		1,344		15,632
		622,925		530,914		33,798		14,709		4,637		10,787		11,067		17,013
Non-traditional		38,034		32,254		1,997		1,128		263		1,270		1,073		49
Loss mitigation program		87,964		8,100		1,255		471		223		932		691		76,292
		748,923		571,268		37,050		16,308		5,123		12,989		12,831		93,354
Home equity secured personal loans		749		611		-		-		-		126		12		-
GNMA's buy-back option program		38,329		-		-		-		7,258		16,835		14,236		-
		788,001		571,879		37,050		16,308		12,381		29,950		27,079		93,354
Consumer
Credit cards		15,886		15,034		345		236		61		210		-		-
Overdrafts		318		295		19		3		-		1		-		-
Unsecured personal lines of credit		1,976		1,789		57		1		90		29		10		-
Unsecured personal loans		126,420		123,520		1,206		535		521		123		11		504
Cash collateral personal loans		16,938		16,516		280		94		48		-		-		-
		161,538		157,154		1,907		869		720		363		21		504
Auto and Leasing		508,034		450,414		37,047		13,620		4,588		2,365		-		-
		1,457,573		1,179,447		76,004		30,797		17,689		32,678		27,100		93,858
Acquired loans (accounted for under ASC 310-20)
Consumer
Credit cards		45,938		42,265		1,520		835		465		853		-		-
Personal loans		3,666		3,335		218		82		10		21		-		-
		49,604		45,600		1,738		917		475		874		-		-
Auto		238,399		220,905		11,603		4,325		965		601		-		-
		288,003		266,505		13,341		5,242		1,440		1,475		-		-
Total	$	1,745,576	$	1,445,952	$	89,345	$	36,039	$	19,129	$	34,153	$	27,100	$	93,858

	December 31, 2013
	Delinquency
															Individually
	Balance														Measured for
	Outstanding		0-29 days		30-59 days		60-89 days		90-119 days		120-364 days		365+ days		Impairment
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year)
Up to the year 2002	$	76,512	$	64,743	$	6,594	$	1,634	$	868	$	1,082	$	1,458	$	133
Years 2003 and 2004		65,117		56,283		4,722		1,938		56		1,437		352		329
Year 2005		89,541		74,016		8,414		2,119		1,198		3,037		573		184
Year 2006		120,322		99,243		12,055		4,312		1,148		2,755		515		294
Years 2007, 2008 and 2009		101,150		91,920		3,464		1,104		1,264		2,844		554		-
Years 2010, 2011, 2012 and 2013		149,546		134,577		3,192		1,609		115		974		989		8,090
		602,188		520,782		38,441		12,716		4,649		12,129		4,441		9,030
Non-traditional		42,102		35,168		3,217		1,162		-		1,324		833		398
Loss mitigation program		86,318		7,762		1,376		149		624		312		1,029		75,066
		730,608		563,712		43,034		14,027		5,273		13,765		6,303		84,494
Home equity secured personal loans		736		598		-		-		-		126		12		-
GNMA's buy-back option program		34,921		-		-		-		7,670		14,425		12,826		-
		766,265		564,310		43,034		14,027		12,943		28,316		19,141		84,494
Consumer
Credit cards		15,241		14,555		287		168		118		113		-		-
Overdrafts		372		322		46		4		-		-		-		-
Unsecured personal lines of credit		1,981		1,844		33		38		25		34		7		-
Unsecured personal loans		94,560		92,102		1,272		399		300		39		13		435
Cash collateral personal loans		15,590		15,223		324		43		-		-		-		-
		127,744		124,046		1,962		652		443		186		20		435
Auto and Leasing		379,874		339,817		25,532		9,437		3,397		1,691		-		-
		1,273,883		1,028,173		70,528		24,116		16,783		30,193		19,161		84,929
Acquired loans (accounted for under ASC 310-20)
Consumer
Credit cards		52,199		46,713		2,217		1,200		828		1,241		-		-
Personal loans		3,975		3,681		196		7		60		31		-		-
		56,174		50,394		2,413		1,207		888		1,272		-		-
Auto		301,584		283,825		12,534		3,616		1,095		514		-		-
		357,758		334,219		14,947		4,823		1,983		1,786		-		-
Total	$	1,631,641	$	1,362,392	$	85,475	$	28,939	$	18,766	$	31,979	$	19,161	$	84,929

Allowance For Credit Losses On Financing Receivables Covered Loans [Table Text Block]

The changes in the allowance for loan and lease losses on covered loans for the quarters and six-month periodsended June 30, 2014and 2013 were as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Balance at beginning of the period	$	54,398	$	52,974	$	52,729	$	54,124
Provision for covered loan and lease losses, net		1,595		1,211		3,224		1,883
FDIC shared-loss portion of provision for (recapture of)
covered loan and lease losses, net		3,522		(192)		3,562		(2,014)
Balance at end of the period	$	59,515	$	53,993	$	59,515	$	53,993

Impaired Financing Receivables Covered Loans[Table Text Block]

The Company's recorded investment in covered loan pools that have recorded impairments and their relatedallowance for covered loan and lease losses as of June 30, 2014 and December 31, 2013 are as follows

	June 30, 2014
	Unpaid		Recorded
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired covered loan pools:
Loans secured by 1-4 family residential properties	$	141,951	$	108,884	$	14,923	14%
Construction and development secured by 1-4 family residential properties		63,615		18,566		7,799	42%
Commercial and other construction		124,506		77,980		36,178	46%
Consumer		9,184		4,912		615	13%
Total investment in impaired covered loan pools	$	339,256	$	210,342	$	59,515	28%

	December 31, 2013
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired covered loan pools with specific allowance
Loans secured by 1-4 family residential properties	$	52,142	$	38,179	$	12,495	33%
Construction and development secured by 1-4 family residential properties		66,037		17,304		6,866	40%
Commercial and other construction		209,566		111,946		32,753	29%
Consumer		10,512		5,857		615	11%
Total investment in impaired covered loan pools	$	338,257	$	173,286	$	52,729	30%

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FDIC Asset and True-up Payment Obligation (Tables)

6 Months Ended

Jun. 30, 2014

Banking and Thrift [Abstract]

FDIC Indemnification Asset Roll Forward [Table Text Block]

The following table presents the activity in the FDIC indemnification assetand true-up payment obligation for the quarters ended June 30, 2014 and 2013:

	Quarter ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
FDIC indemnification asset:
Balance at beginning of period	$	166,194	$	283,124	$	189,240	$	302,295
Shared-loss agreements reimbursements from the FDIC		(10,464)		(12,046)		(18,700)		(18,696)
Increase (decrease) in expected credit losses to be covered under shared-loss agreements, net		3,522		(193)		3,562		(2,015)
FDIC shared-loss expense		(17,499)		(19,225)		(35,121)		(31,425)
Incurred expenses to be reimbursed under shared-loss agreements		1,907		1,719		4,679		3,220
Balance at end of period	$	143,660	$	253,379	$	143,660	$	253,379
True-up payment obligation:
Balance at beginning of period	$	19,375	$	16,167	$	18,510	$	15,496
FDIC shared-loss expense		856		740		1,721		1,411
Balance at end of period	$	20,231	$	16,907	$	20,231	$	16,907

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Basis of Presentation

6 Months Ended

Jun. 30, 2014

Nature of Operations and Summary of Significanrt Accounting Policies

Nature Of Operations

NOTE 1 –ORGANIZATION, CONSOLIDATION AND BASIS OF PRESENTATION

Nature of Operations

OFG Bancorp (the “Company”) is a publicly-owned financial holding company incorporated under the laws of the Commonwealth of Puerto Rico. The Companyoperates through various subsidiaries including, a commercial bank, Oriental Bank (or the “Bank”), a securities broker-dealer, Oriental Financial Services Corp. (“Oriental Financial Services”), an insurance agency, Oriental Insurance, Inc. (“Oriental Insurance”) and a retirement plan administrator, Caribbean Pension Consultants, Inc. (“CPC”).Through these subsidiaries and their respective divisions, the Company provides a wide range of banking and financial services such as commercial, consumer and mortgage lending,auto loans,financial planning, insurance sales, money management and investment banking and brokerage services, as well as corporate and individual trust services.On April 25, 2013, the Company changed its corporate name from Oriental Financial Group Inc. to OFG Bancorp.

On April 30, 2010, the Bank acquired certain assets and assumed certain deposits and other liabilities ofEurobank, a Puerto Rico commercial bank, in an FDIC-assisted acquisition.On December 18, 2012, the Company acquired a group of Puerto Rico based entities that includedBanco Bilbao VizcayaArgentaria Puerto Rico (“BBVAPR”), a Puerto Rico commercial bank, as well as a securities broker-dealer and an insurance agency, which is referred toherein as the “BBVAPR Acquisition.” The businesses acquired in the BBVAPR Acquisition were integrated with the Company's existing business.

Significant Accounting Policies

Recent Accounting Developments

On March 14, 2014, the FASB issued guidance that amended the Master Glossary of the Accounting Standards Codification (“ASC”), including technical corrections related to glossary links, glossary term deletions, and glossary term name changes. In addition, this guidance included more substantive, limited-scope improvements to reduce instances of the same term appearing multiple times in the Master Glossary with similar, but not entirely identical, definitions. These are items that represent narrow and incremental improvements to U.S. GAAP and are not purely technical corrections and affect a wide variety of Topics in the ASC. The amendments in this guidance apply to all reporting entities within the scope of the affected accounting guidance and are effective upon issuance for both public entities and non-public entities. The Company adopted this guidance upon issuance with no impact on our financial position and results of operations.

On June 19, 2014, the FASB issued updated guidance on the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. This guidance seeks to resolve the diversity in practice that exists when accounting for share-based payments. In particular, this guidance requires a performance target that affects vesting and that could be achieved after the requisite service period to be treated as a performance conditions. For all entities, this guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, with earlier adoption permitted. We are currently evaluating the impact, if any, that the adoption of this guidance will have on our financial position or results of operations.

Other than the accounting pronouncement disclosed above, there were no other new accounting pronouncements issued during the three months and six months ended June 30, 2014 that could have a material impact on the Company's financial position, operating results or financials statement disclosures.

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Derivative Activities (Tables)

6 Months Ended

Jun. 30, 2014

Derivative Instrument Detail [Abstract]

Schedule Of Derivative Instruments Text Block

The following table presents the Company's derivative assets and liabilities at June 30, 2014 and December 31, 2013:

	June 30,		December 31,
	2014		2013
	(In thousands)
Derivative assets:
Options tied to S&P 500 Index	$	6,580	$	16,430
Interest rate swaps designated as cash flow hedges		-		850
Interest rate swaps not designated as hedges		2,728		2,861
Interest rate caps		249		319
Other		1		42
	$	9,558	$	20,502
Derivative liabilities:
Interest rate swaps designated as cash flow hedges		10,515		11,757
Interest rate swaps not designated as hedges		2,728		2,861
Interest rate caps		249		319
Other		125		-
	$	13,617	$	14,937

The following table shows a summary of these swaps and their terms at June 30, 2014:

	Notional		Fixed	Variable	Trade	Settlement	Maturity
Type	Amount		Rate	Rate Index	Date	Date	Date
	(In thousands)
Interest Rate Swaps	$	25,000	2.4365%	1-Month LIBOR	05/05/11	05/04/12	05/04/16
		25,000	2.6200%	1-Month LIBOR	05/05/11	07/24/12	07/24/16
		25,000	2.6350%	1-Month LIBOR	05/05/11	07/30/12	07/30/16
		50,000	2.6590%	1-Month LIBOR	05/05/11	08/10/12	08/10/16
		100,000	2.6750%	1-Month LIBOR	05/05/11	08/16/12	08/16/16
		39,961	2.4210%	1-Month LIBOR	07/03/13	07/03/13	08/01/23
	$	264,961

	Notional		Fixed	Variable	Settlement	Maturity
Type	Amount		Rate	Rate Index	Date	Date
	(In thousands)
Interest Rate Swaps - Derivatives Offered to Clients	$	4,049	5.1300%	1-Month LIBOR	07/03/06	07/03/16
		12,500	5.5050%	1-Month LIBOR	04/11/09	04/11/19
	$	16,549
Interest Rate Swaps - Mirror Image Derivatives	$	4,049	5.1300%	1-Month LIBOR	07/03/06	07/03/16
		12,500	5.5050%	1-Month LIBOR	04/11/09	04/11/19
	$	16,549

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Borrowings (Narrative) (Details) (USD $)	3 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Other borrowings	$ 3,837,000	$ 3,663,000
Federal Home Loan Bank Advances [Member]
Debt Instrument [Line Items]
Loans Receivable, Gross, Commercial, Mortgage	1,200,000,000	1,300,000,000
Additional Borrowing Capacity	629,100,000	674,200,000
Weighted average period remaining maturity of FHLB advances	9.4 months	11.3 months
Interest Payable	328,000
Unsecured Debt [Member]
Debt Instrument [Line Items]
Debt, Weighted Average Interest Rate	3.00%	3.00%
Other borrowings	1,700,000	1,700,000
Index Appreciation	1,100,000	957,000
Term Notes
Debt Instrument [Line Items]
Other borrowings	1,000,000	1,000,000
Repurchase agreement
Debt Instrument [Line Items]
Interest Payable	$ 2,200,000	$ 2,600,000

XML

Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2014

Commitments and Contingencies [Abstract]

Schedule Of Fair Value Off Balance Sheet Risks Text Block

Credit-related financial instruments at June 30, 2014 and December 31, 2013were as follows

	June 30,		December 31,
	2014		2013
	(In thousands)
Commitments to extend credit	$	441,793	$	520,269
Commercial letters of credit		1,544		1,096

	June 30,		December 31,
	2014		2013
	(In thousands)
Standby letters of credit and financial guarantees	$	38,451	$	38,577
Loans sold with recourse		113,547		122,291
Commitments to sell or securitize mortgage loans		63,558		80,307

Operating Leases, Future Minimum Payments Due [Abstract]

Contractual Obligation Fiscal Year Maturity Schedule [Table Text Block]

Year Ending December 31,	Minimum Rent
	(In thousands)
2014 (July 1 to December 31)	$	4,210
2015		7,980
2016		7,388
2017		6,761
2018		5,881
Thereafter		22,004
	$	54,224

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Loans Receivable (Accretable yield and non-accretable discount activity for BBVA acquired loans) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Dec. 31, 2012
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period			$ 517,553	$ 590,409
Accretion Accretable	(79,983)	(102,095)
Transfer from (to) non-accretable discount	7,036	7,747
Balance at end of period	444,606	496,061	517,553	590,409
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Balance at beginning of period			579,587	741,872
Principal Losses	(17,827)	(20,484)
Transfer (to) from accretable yield	(7,036)	(7,747)
Balance at end of period	$ 554,724	$ 713,641	$ 579,587	$ 741,872

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Derivative Activities (Narratives) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Derivative Instruments, Gain (Loss) [Line Items]
Unrealized Gain (Loss) on Interest Rate Cash Flow Hedges, Pretax, Accumulated Other Comprehensive Income (Loss)	$ 14,000	$ 3,016,000	$ 391,000	$ 4,477,000
Notional Amount Purchased Option	14,000,000		14,000,000		28,000,000
Embedded Derivative, Fair Value of Embedded Derivative Liability	6,400,000		6,400,000		15,700,000
Notional Amount Embedded Option	13,400,000		13,400,000		26,900,000
Interest Rate Cap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, Notional Amount	110,000,000		110,000,000		110,000,000
Unrealized Gain (Loss) on Interest Rate Cash Flow Hedges, Pretax, Accumulated Other Comprehensive Income (Loss)	$ 10,500,000

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Consolidated Statements of Financial Condition (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Cash and cash equivalents
Cash and Due from Banks	$ 588,257	$ 614,302
Money market investments	8,228	6,967
Total cash and cash equivalents	596,485	621,269
Restricted Cash	15,170	82,199
Securities purchased under agreements to resell	0	60,000
Investments:
Trading Securities	1,613	1,869
Investment securities available-for-sale, at fair value	1,418,958	1,588,425
Investment securities held-to-maturity, at amortized cost	26,706	0
Federal Home Loan Bank (FHLB) stock, at cost	24,381	24,450
Other investments	65	65
Total investments	1,471,723	1,614,809
Loans:
Mortgage loans held-for-sale, at lower of cost or fair value	14,792	46,529
Non-covered loans	4,586,904	4,615,929
Covered loans	334,344	356,961
Total loans, net	4,936,040	5,019,419
Other asset
FDIC indemnification asset	143,660	189,240
Foreclosed real estate covered under shared-loss agreements with the FDIC	46,609	33,209
Foreclosed real estate not covered under shared-loss agreements with the FDIC	55,626	56,815
Accrued interest receivable	22,508	18,734
Deferred tax asset, net	123,298	137,564
Premises and equipment, net	82,167	82,903
Customers' liability on acceptances	17,581	23,042
Servicing Assets	13,655	13,801
Derivative assets	9,558	20,502
Goodwill	86,069	86,069
Other assets	89,996	98,440
Total assets	7,710,145	8,158,015
Deposits:
Demand deposits	2,135,369	2,138,005
Savings accounts	1,226,749	1,194,567
Tme Deposits	1,779,115	2,050,693
Total deposits	5,141,233	5,383,265
Borrowings:
Securities sold under agreements to repurchase	1,012,233	1,267,618
Advances from FHLB	360,240	336,143
Subordinated capital notes	100,797	100,010
Other borrowings	3,837	3,663
Total borrowings	1,477,107	1,707,434
Derivative liabilities	13,617	14,937
Acceptances executed and outstanding	17,581	23,042
Accrued expenses and other liabilities	135,405	144,424
Total liabilities	6,784,943	7,273,102
Stockholders' equity:
Preferred Stock	92,000	92,000
Convertible Preferred Stock	84,000	84,000
Common stock	52,730	52,707
Additional paid-in capital	538,936	538,071
Legal surplus	66,438	61,957
Retained earnings	160,055	133,629
Treasury stock, at cost	(90,712)	(80,642)
Accumulated other comprehensive income, net of tax, Total	21,755	3,191
Total stockholders' equity	925,202	884,913
Total liabilities and stockholders' equity	$ 7,710,145	$ 8,158,015

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Investment Securities (Investment securities) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Schedule of Investments [Line Items]
Available for sale Amortized Cost	$ 1,385,438	$ 1,575,043
Available-for-sale Securities, Gross Unrealized Gains	44,948	34,096
Available-for-sale Securities, Gross Unrealized Losses	11,428	20,714
Available-for-sale Securities	1,418,958	1,588,425
Available for sale - Weighted Average Yield	2.77%	2.89%
Held-to-maturity, Amortized cost	26,706
Held to maturity Fair Value	26,844	0
Total Securities - Amortized Cost	1,412,144
Total Securities Gross Unrealized Gains	45,086
Total Securities Gross Unrealized Losses	11,428
Total Securities Fair Value	1,445,802
Marketable Securities Weighted Average Yield	2.77%
Collateralized Mortgage Backed Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	1,275,705	1,419,117
Available-for-sale Securities, Gross Unrealized Gains	44,771	33,929
Available-for-sale Securities, Gross Unrealized Losses	5,799	13,507
Available-for-sale Securities	1,314,677	1,439,539
Available for sale - Weighted Average Yield	2.90%	2.76%
Held-to-maturity, Amortized cost	26,706
Held to maturity Fair Value	26,844
Collateralized Mortgage Backed Securities [Member] | FNMA and FHLMC [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	1,070,034	1,190,910
Available-for-sale Securities, Gross Unrealized Gains	44,076	33,089
Available-for-sale Securities, Gross Unrealized Losses	1,992	6,669
Available-for-sale Securities	1,112,118	1,217,330
Available for sale - Weighted Average Yield	3.10%	2.93%
Held-to-maturity, Amortized cost	26,706
Held to maturity Securities Unrecognized Gains	138
Held-to-maturity Securities, Unrecognized Loss	0
Held to maturity Fair Value	26,844
Held to maturity - Weighted Average Yield	2.52%
Collateralized Mortgage Backed Securities [Member] | GNMA [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	5,560	7,406
Available-for-sale Securities, Gross Unrealized Gains	389	433
Available-for-sale Securities, Gross Unrealized Losses	21	24
Available-for-sale Securities	5,928	7,815
Available for sale - Weighted Average Yield	4.92%	4.92%
Collateralized Mortgage Backed Securities [Member] | CMO's [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	200,111	220,801
Available-for-sale Securities, Gross Unrealized Gains	306	407
Available-for-sale Securities, Gross Unrealized Losses	3,786	6,814
Available-for-sale Securities	196,631	214,394
Available for sale - Weighted Average Yield	1.79%	1.78%
Securities Investment [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	109,733	155,926
Available-for-sale Securities, Gross Unrealized Gains	177	167
Available-for-sale Securities, Gross Unrealized Losses	5,629	7,207
Available-for-sale Securities	104,281	148,886
Available for sale - Weighted Average Yield	1.30%	2.99%
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	0
Securities Investment [Member] | US Treasury Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	9,000
Available-for-sale Securities, Gross Unrealized Gains	0
Available-for-sale Securities, Gross Unrealized Losses	0
Available-for-sale Securities	9,000
Available for sale - Weighted Average Yield	0.01%
Securities Investment [Member] | Obligation of US Government sponsored agencies at loss [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	74,613	10,691
Available-for-sale Securities, Gross Unrealized Gains	0	0
Available-for-sale Securities, Gross Unrealized Losses	38	42
Available-for-sale Securities	74,575	10,649
Available for sale - Weighted Average Yield	0.17%	1.21%
Securities Investment [Member] | Obligation of Puerto Rico Government and political subdivisions [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	22,391	121,035
Available-for-sale Securities, Gross Unrealized Gains	0	0
Available-for-sale Securities, Gross Unrealized Losses	5,591	6,845
Available-for-sale Securities	16,800	114,190
Available for sale - Weighted Average Yield	5.32%	4.38%
Securities Investment [Member] | Other Debt Obligations [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	3,729	24,200
Available-for-sale Securities, Gross Unrealized Gains	177	167
Available-for-sale Securities, Gross Unrealized Losses	0	320
Available-for-sale Securities	$ 3,906	$ 24,047
Available for sale - Weighted Average Yield	2.95%	3.46%

XML

Stockholders' Equity (Earnings per common share) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Earnings Per Share [Abstract]
Net income	$ 21,309	$ 37,539	$ 45,056	$ 58,731
Non-Convertible Preferred Stock Dividend (Series A,B and D)	(1,628)	(1,628)	(3,256)	(3,256)
Convertible Preferred Stock Dividend (Series C)	(1,838)	(1,838)	(3,675)	(3,675)
Income available to common shareholders	17,843	34,073	38,125	51,800
Effect of assumed conversion of convertible preferred stock	1,838	1,838	3,675	3,675
Income available to common sharesholders assuming conversion	$ 19,681	$ 35,911	$ 41,800	$ 55,475
Average common shares outstanding	45,014	45,630	45,170	45,613
Average potential common shares options	200	200	168	178
Average potential common shares convertible preferred stock	7,138	7,138	7,138	7,138
Average common shares outstanding and equivalents	52,352	52,968	52,476	52,929
Earnings per common share - basic	$ 0.40	$ 0.75	$ 0.84	$ 1.14
Earnings per common share - diluted	$ 0.38	$ 0.68	$ 0.80	$ 1.05

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Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (USD $) In Thousands	Total	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Preferred Stock Issuance Cost [Member]	Common Stock Issuance Cost [Member]	Legal Surplus [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning Balance at Dec. 31, 2012		$ 176,000	$ 52,671	$ 537,453			$ 52,143	$ 70,734	$ (81,275)	$ 55,880
Stock-based compensation expense				888
Exercised Stock Options				167		18
Lapsed restricted stock units				(364)					364
Stock Issuance Cost					(16)	(23)
Transfer from/to legal surplus							5,763	(5,763)
Net income	58,731							58,731
Cash dividends declared on common stock								(5,479)
Cash dividends declared on preferred stock								(6,931)
Stock purchased	0								0
Stock used to match defined contribution plan									77
Other comprehensive loss, net of tax	(40,114)									(40,114)
Ending Balance at Jun. 30, 2013	870,924	176,000	52,689	538,105			57,906	111,292	(80,834)	15,766
Beginning Balance at Dec. 31, 2013	884,913	176,000	52,707	538,071			61,957	133,629	(80,642)	3,191
Stock-based compensation expense				946
Exercised Stock Options			23	242
Lapsed restricted stock units				(323)					323
Stock Issuance Cost					0	0
Transfer from/to legal surplus							4,481	(4,481)
Net income	45,056							45,056
Cash dividends declared on common stock								(7,218)
Cash dividends declared on preferred stock								(6,931)
Stock purchased	10,393								(10,393)
Stock used to match defined contribution plan									0
Other comprehensive loss, net of tax	18,564									18,564
Ending Balance at Jun. 30, 2014	925,202	176,000	52,730	538,936			66,438	160,055	(90,712)	21,755
Beginning Balance at Mar. 31, 2014
Exercised Stock Options			23
Net income	21,309
Other comprehensive loss, net of tax	13,734
Ending Balance at Jun. 30, 2014	$ 925,202	$ 176,000	$ 52,730

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Stockholders' Equity (Group's and the Bank's actual capital amounts and ratios) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Capital [Abstract]
Minimum to be well capitalized - Total Capital	$ 499,438	$ 511,893
Minimum to be well capitalized - Tier 1 capital	299,663	307,136
Minimum to be well capitalized - Tier 1 leverage	377,286	406,138
Risk Based Ratios [Abstract]
Capital Required to be Well Capitalized to Risk Weighted Assets	10.00%	10.00%
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	6.00%	6.00%
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	5.00%	5.00%
Group [Member]
Capital [Abstract]
Actual - Total capital	863,790	827,460
Actual - Tier 1 capital	773,824	736,930
Actual - Tier 1 leverage capital	773,824	736,930
Minimum Capital - Total Capital	399,550	409,514
Minimum capital - Tier 1 capital	199,775	204,757
Minimum capital - Tier 1 leverage capital	301,829	324,910
Risk Based Ratios [Abstract]
Capital to Risk Weighted Assets	17.30%	16.16%
Tier One Risk Based Capital to Risk Weighted Assets	15.49%	14.35%
Tier One Leverage Capital to Average Assets	10.26%	9.11%
Capital Required for Capital Adequacy to Risk Weighted Assets	8.00%	8.00%
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	4.00%	4.00%
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	4.00%	4.00%
Bank [Member]
Capital [Abstract]
Actual - Total capital	812,267	779,413
Actual - Tier 1 capital	722,603	688,350
Actual - Tier 1 leverage capital	722,603	688,350
Minimum Capital - Total Capital	397,593	407,637
Minimum capital - Tier 1 capital	198,796	203,819
Minimum capital - Tier 1 leverage capital	299,657	322,395
Minimum to be well capitalized - Total Capital	496,991	509,547
Minimum to be well capitalized - Tier 1 capital	298,195	305,728
Minimum to be well capitalized - Tier 1 leverage	$ 374,571	$ 402,993
Risk Based Ratios [Abstract]
Capital to Risk Weighted Assets	16.34%	15.30%
Tier One Risk Based Capital to Risk Weighted Assets	14.54%	13.51%
Tier One Leverage Capital to Average Assets	9.65%	8.54%
Capital Required for Capital Adequacy to Risk Weighted Assets	8.00%	8.00%
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	4.00%	4.00%
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	4.00%	4.00%
Capital Required to be Well Capitalized to Risk Weighted Assets	10.00%	10.00%
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	6.00%	6.00%
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	5.00%	5.00%

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Allowance for Loan and Lease Losses (Composition of the Company's allowance for loan and lease losses) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	$ 60,360		$ 54,298
Loans And Leases Receivable Allowance, Covered	59,515	54,398	52,729	53,993	52,974	54,124
Loans And Leases Receivable Allowance Covered and Not Covered	119,875		107,027
Non Covered Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	60,360		54,298
Originated Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	50,638		49,081
Originated Loans [Member] | Residential Portfolio Segment
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	19,062		19,937
Originated Loans [Member] | Commercial Portfolio Segment
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	12,423		14,897
Originated Loans [Member] | Consumer Portfolio Segment
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	7,887		6,006
Originated Loans [Member] | Auto and Leasing Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	11,127		7,866
Originated Loans [Member] | Unallocated Financing Receivables
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	139		375
Non-covered acquired loans accounted for under ASC 310-20
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	3,444		2,354
Non-covered acquired loans accounted for under ASC 310-20 | Commercial Portfolio Segment
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	464		926
Non-covered acquired loans accounted for under ASC 310-20 | Consumer Portfolio Segment
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	338		0
Non-covered acquired loans accounted for under ASC 310-20 | Auto and Leasing Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	2,642		1,428
Accounted for under ASC 310-30 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	6,278		2,863
Accounted for under ASC 310-30 [Member] | Commercial Portfolio Segment
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	6,216		1,713
Accounted for under ASC 310-30 [Member] | Consumer Portfolio Segment
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	62		418
Accounted for under ASC 310-30 [Member] | Automobile Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	0		732
Acquired Loans In An F D I C Assisted Transaction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans And Leases Receivable Allowance, Covered	59,515		52,729
Acquired Loans In An F D I C Assisted Transaction [Member] | Consumer Portfolio Segment
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans And Leases Receivable Allowance, Covered	615		615
Acquired Loans In An F D I C Assisted Transaction [Member] | Loans Secured by multi-family properties [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans And Leases Receivable Allowance, Covered	14,924		12,495
Acquired Loans In An F D I C Assisted Transaction [Member] | Commercial and Other Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans And Leases Receivable Allowance, Covered	$ 43,976		$ 39,619

XML

Stockholders' Equity (Changes in Other Comprehensive Income by Components) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net unrealized gains on securities available for sale
Changes in components of Accumulated Other comprehensive Income
Beginning balance	$ 16,035	$ 58,393	$ 11,433	$ 68,245
Other Comprehensive Income Loss Before Reclassifications Net Of Tax	13,714	(33,036)	18,179	(42,934)
Reclassification Out Of Accumulated Other Comprehensive Income	10	43	147	89
Other Comprehensive Income Other Net Of Tax	13,724	(32,993)	18,326	(42,845)
Ending balance	29,759	25,400	29,759	25,400
Net unrealized loss on cash flow hedges
Changes in components of Accumulated Other comprehensive Income
Beginning balance	(8,013)	(11,342)	(8,242)	(12,365)
Other Comprehensive Income Loss Before Reclassifications Net Of Tax	(1,633)	292	(3,025)	(21)
Reclassification Out Of Accumulated Other Comprehensive Income	1,642	1,416	3,263	2,752
Other Comprehensive Income Other Net Of Tax	9	1,708	238	2,731
Ending balance	(8,004)	(9,634)	(8,004)	(9,634)
Accumulated Other Comprehensive Income (Loss) [Member]
Changes in components of Accumulated Other comprehensive Income
Beginning balance	8,022	47,051	3,191	55,880
Other Comprehensive Income Loss Before Reclassifications Net Of Tax	12,081	(32,744)	15,154	(42,955)
Reclassification Out Of Accumulated Other Comprehensive Income	1,652	1,459	3,410	2,841
Other Comprehensive Income Other Net Of Tax	13,733	(31,285)	18,564	(40,114)
Ending balance	$ 21,755	$ 15,766	$ 21,755	$ 15,766

XML

Borrowings (Tables)

6 Months Ended

Jun. 30, 2014

Debt Instruments [Abstract]

Schedule Of Repurchase Agreement Counterparty [Table Text Block]

	June 30,				December 31,
	2014				2013
			Fair Value of				Fair Value of
	Borrowing		Underlying		Borrowing		Underlying
	Balance		Collateral		Balance		Collateral
	(In thousands)
JP Morgan Chase Bank NA		255,000		274,471		255,000		273,250
Credit Suisse Securities (USA) LLC		755,000		859,061		755,000		864,232
Deutsche Bank		-		-		255,000		272,053
Total	$	1,010,000	$	1,133,532	$	1,265,000	$	1,409,535

Schedule of Repurchase Agreement by Maturity [Table text Block]

The following table shows a summary of the Company's repurchase agreements and their terms, excluding accrued interest in the amount of $2.2 million, at June 30, 2014:

			Weighted-
	Borrowing		Average		Maturity
Year of Maturity	Balance		Coupon	Settlement Date	Date
	(In thousands)
2014	$	85,000	0.675%	12/3/2012	12/3/2014
2015		255,000	0.840%	12/10/2012	6/13/2015
2016		170,000	1.500%	12/6/2012	12/8/2016
2017		500,000	4.78%	3/2/2007	3/2/2017
	$	1,010,000	2.89%

Schedule of Repurchase Agreements [Table]

At June 30, 2014and December 31, 2013, securities sold under agreements to repurchase (classified by counterparty), excluding accrued interest in the amount of $2.2millionand $2.6million, respectively,were as follows

	June 30, 2014
					Market Value of Underlying Collateral
									CMOs		Obligations
			Weighted		FNMA and				issued by US		of US
	Repurchase		Average		FHLMC		GNMA		Government		Government
	Liability		Rate		Certificates		Certificates		Sponsored Agencies		Sponsored Agencies		Total
	(Dollars in thousands)
Over 90 days		1,010,000		2.89%		1,062,938		2,194		-		68,400		1,133,532
Total	$	1,010,000		2.89%	$	1,062,938	$	2,194	$	-	$	68,400	$	1,133,532

	December 31, 2013
					Market Value of Underlying Collateral
									CMOs		Obligations
			Weighted		FNMA and				issued by US		of US
	Repurchase		Average		FHLMC		GNMA		Government		Government
	Liability		Rate		Certificates		Certificates		Sponsored Agencies		Sponsored Agencies		Total
	(Dollars in thousands)
Within 30 days	$	255,000		0.50%	$	216,201	$	-	$	48,923	$	6,929	$	272,053
Over 90 days		1,010,000		2.89%		1,018,632		3,000		45,100		3,720		1,070,452
Total	$	1,265,000		2.41%	$	1,234,833	$	3,000	$	94,023	$	10,649	$	1,342,505

Federal Home Loan Bank Advances Maturities Summary [Table Text Block]

The following table shows a summary of these advances and their terms, excluding accrued interest in the amount of $328thousand,at June 30, 2014:

			Weighted-
		Borrowing	Average		Maturity
Year of Maturity		Balance	Coupon	Settlement Date	Date
		(In thousands)
2014	$	25,000	0.42%	6/30/2014	7/1/2014
		25,000	0.35%	6/4/2014	7/7/2014
		50,000	0.37%	6/10/2014	7/10/2014
		100,000	0.38%	6/16/2014	7/16/2014
		25,000	0.37%	6/24/2014	7/24/2014
		25,000	0.38%	6/30/2014	7/30/2014
		39,961	0.35%	6/2/2014	7/1/2014
		289,961
2017		4,615	1.24%	4/3/2012	4/3/2017
2018		30,000	2.19%	1/16/2013	1/16/2018
		25,000	2.18%	1/16/2013	1/16/2018
		55,000
2020		10,336	2.59%	7/19/2013	7/20/2020
	$	359,912	0.73%

Redemtion Funds [Table Text Block]

	Redemption fund
	(In thousands)
Redemption fund - June 30, 2014	$	51,925
2014		3,350
2015		6,700
2016		5,025
	$	67,000

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Allowance for Loan and Lease Losses (Troubled debt restructurings, Rolling Twelve Months) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2014 number	Jun. 30, 2013 number
Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	22	48
Recored Investment	$ 2,703	$ 6,414
Commercial Loan [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	0	0
Recored Investment	0	0
Consumer Loan [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	5	2
Recored Investment	$ 101	$ 29

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Guarantees

6 Months Ended

Jun. 30, 2014

Guarantees [Abstract]

Guarantees [Text Block]

NOTE 15 – GUARANTEES

At June 30, 2014, the unamortized balance of the obligations undertaken in issuing the guarantees under standby letters of credit represented a liability of $38.5 million (December 31, 2013 - $38.6 million).

As a result of the BBVAPR Acquisition, the Company assumed a liability for residential mortgage loans sold subject to credit recourse, pursuant to FNMA's residential mortgage loan sales and securitization programs. At June 30, 2014 and December 31, 2013, the unpaid principal balance of residential mortgage loans sold subject to credit recourse was $113.5 million and $122.3million, respectively.

The following table shows the changes in the Company's liability for estimated losses from these credit recourse agreements, included in the unaudited consolidated statements of financial condition during the quarters and six-month periods ended June 30, 2014 and 2013.

	Quarter Ended June 30,					Six-Month Period Ended June 30,
	2014		2013			2014		2013
	(In thousands)
Balance at beginning of period	$	1,549	$	2,460	$	1,955	$	2,460
Net charge-offs/terminations		(239)		-		(645)		-
Balance at end of period	$	1,310	$	2,460	$	1,310	$	2,460

The estimated losses to be absorbed under the credit recourse arrangements were recorded as a liability when the credit recoursewas assumed, and are updated on a quarterly basis. The expected loss, which represents the amount expected to be lost on a given loan, considers the probability of default and loss severity. The probability of default represents the probability that a loan in good standing would become 120 days delinquent, in which case the Company is obligated to repurchase the loan. At June 30,2014, $83.2million or 73% of the recourse obligation will be extinguished during the next two years.

If a borrower defaults, pursuant to the credit recourse provided, the Company is required to repurchase the loan or reimburse the third party investor for the incurred loss. The maximum potential amount of future payments that the Company would be required to make under the recourse arrangements is equivalent to the total outstanding balance of the residential mortgage loans serviced with recourse and interest, if applicable. During the quarter andsix-month period ended June 30, 2014, the Company repurchased approximately $2.1millionand $3.7 million of unpaid principal balance in mortgage loans subject to the credit recourse provisions. If a borrower defaults, the Company has rights to the underlying collateral securing the mortgage loan. The Company suffers losses on these mortgage loans when the proceeds from a foreclosure sale of the collateral property are less than the outstanding principal balance of the loan, any uncollected interest advanced, and the costs of holding and disposing the related property. At June 30, 2014 and December 31, 2013, the Company's liability for estimated credit losses related to loans sold with credit recourse amounted to $1.3 million (December 31, 2013 – $2.0 million).

When the Company sells or securitizes mortgage loans, it generally makes customary representations and warranties regarding the characteristics of the loans sold. The Company's mortgage operations division groups conforming mortgage loans into pools which are exchanged for FNMA and GNMA mortgage-backed securities, which are generally sold to private investors, or are sold directly to FNMA or other private investors for cash. As required under such mortgage backed securities programs, quality review procedures are performed by the Company to ensure that asset guideline qualifications are met. To the extent the loans do not meet specified characteristics, the Company may be required to repurchase such loans or indemnify for losses and bear any subsequent loss related to the loans. Repurchases during the six-month period ended June 30, 2014 under the Company's representation and warranty arrangements, excluding mortgage loans subject to credit recourse provisions referred to above, approximated $5.1million in unpaid principal balance(December 31, 2013 - $12.5million). A substantial amount of these loans are reinstated to performing status or have mortgage insurance, and thus the ultimate losses on the loans are not deemed significant.

During the quarterand six-month period ended June 30, 2014, the Company recognized $95thousandand $145thousandin losses from the repurchase of residential mortgage loans sold subject to credit recourse,and $494 thousandand $929 thousand in losses from the repurchase of residential mortgage loans as a result of breaches of the customary representations and warranties. During the quarter and six-month period ended June 30, 2013, the Company did not recognized any losses from the repurchase of residential mortgage loans sold subject to credit recourse, but recognized $303 thousand and $477 thousand in losses from the repurchase of residential mortgage loans as a result of breaches of the customary representations and warranties.

Servicing agreements relating to the mortgage-backed securities programs of FNMA and GNMA, and to mortgage loans sold or serviced to certain other investors, including the Federal Home Loan Mortgage Corporation (“FHLMC”), require the Company to advance funds to make scheduled payments of principal, interest, taxes and insurance, if such payments have not been received from the borrowers. At June 30, 2014, the Companyserviced $1.1billion in mortgage loans for third-parties. The Company generally recovers funds advanced pursuant to these arrangements from the mortgage owner, from liquidation proceeds when the mortgage loan is foreclosed or, in the case of FHA/VA loans, under the applicable FHA and VA insurance and guarantees programs. However, in the meantime, the Company must absorb the cost of the funds it advances during the time the advance is outstanding. The Company must also bear the costs of attempting to collect on delinquent and defaulted mortgage loans. In addition, if a defaulted loan is not cured, the mortgage loan would be canceled as part of the foreclosure proceedings and the Company would not receive any future servicing income with respect to that loan. At June 30, 2014, the outstanding balance of funds advanced by the Company under such mortgage loan servicing agreements was approximately $347thousand (December 31, 2013 - $243thousand). To the extent the mortgage loans underlying the Company's servicing portfolio experience increased delinquencies, the Company would be required to dedicate additional cash resources to comply with its obligation to advance funds as well as incur additional administrative costs related to increases in collection efforts.

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Offsetting of Financial Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2014

Offsetting [Abstract]

Offsetting Assets [Table Text Block]

June 30, 2014
							Gross Amounts Not Offset in the Statement of Financial Condition
			Gross Amounts		Net Amount of
			Offset in the		Assets Presented
	Gross Amount		Statement of		in Statement				Cash
	of Recognized		Financial		of Financial		Financial		Collateral		Net
	Assets		Condition		Condition		Instruments		Received		Amount
	(In thousands)
Derivatives	$	9,558	$	-	$	9,558	$	2,004	$	-	$	7,554
Total	$	9,558	$	-	$	9,558	$	2,004	$	-	$	7,554
December 31, 2013
							Gross Amounts Not Offset in the Statement of Financial Condition
			Gross Amounts		Net amount of
			Offset in the		Assets Presented
	Gross Amount		Statement of		in Statement				Cash
	of Recognized		Financial		of Financial		Financial		Collateral		Net
	Assets		Condition		Condition		Instruments		Received		Amount
	(In thousands)
Derivatives	$	20,502	$	-	$	20,502	$	2,450	$	6,780	$	11,272
Securities purchased under agreements to resell		60,000		-		60,000		64,587		-		(4,587)
Total	$	80,502	$	-	$	80,502	$	67,037	$	6,780	$	6,685

Offsetting Liabilities [Table Text Block]

June 30, 2014
							Gross Amounts Not Offset in the Statement of Financial Condition
					Net Amount of
			Gross Amounts		Liabilities
			Offset in the		Presented
	Gross Amount		Statement of		in Statement				Cash
	of Recognized		Financial		of Financial		Financial		Collateral		Net
	Liabilities		Condition		Condition		Instruments		Provided		Amount
					(In thousands)
Derivatives	$	19,985	$	-	$	19,985	$	-	$	2,980	$	17,005
Securities sold under agreements to repurchase		1,010,000		-		1,010,000		1,133,532		-		(123,532)
Total	$	1,029,985	$	-	$	1,029,985	$	1,133,532	$	2,980	$	(106,527)
December 31, 2013
							Gross Amounts Not Offset in the Statement of Financial Condition
					Net Amount of
			Gross Amounts		Liabilities
			Offset in the		Presented
	Gross Amount		Statement of		in Statement				Cash
	of Recognized		Financial		of Financial		Financial		Collateral		Net
	Liabilities		Condition		Condition		Instruments		Provided		Amount
	(In thousands)
Derivatives	$	30,672	$	-	$	30,672	$	-	$	2,349	$	28,323
Securities sold under agreements to repurchase		1,265,000		-		1,265,000		1,277,919		67,029		(79,948)
Total	$	1,295,672	$	-	$	1,295,672	$	1,277,919	$	69,378	$	(51,625)

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Stockholders' Equity (Accumulated Comprehensive Income, net of income tax) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Accumulated Other Comprehensive Income [Line Items]
Accumulated other comprehensive income, net of tax, Total	$ 21,755	$ 3,191
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income [Line Items]
Accumulated other comprehensive income, net of tax, Total	21,755	3,191
AccumulatedOtherThanTemporaryImpairmentMember
Accumulated Other Comprehensive Income [Line Items]
Unrealized gain on securities available-for-sale which are not other-than-temporarily impaired	33,404	13,267
Income tax effect of unrealized gain on securities available-for-sale	(3,645)	(1,834)
Net unrealized gain on securities available for sale wich are not other than temporarily impaired	29,759	11,433
Accumulated Net Gain Loss From Designated Or Qualifying Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income [Line Items]
Unrealized loss on cash flow hedges	(10,515)	(10,907)
Income tax effect of unrealized loss on cash flow hedges	2,511	2,665
Net unrealized (loss) income on cash flow hedges	$ (8,004)	$ (8,242)

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

FAIR VALUE

NOTE 17- FAIR VALUEOF FINANCIAL INSTRUMENTS

The Company follows the fair value measurement framework under GAAP.

Fair Value Measurement

The fair value measurement framework defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This framework also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs previously described that may be used to measure fair value.

Money market investments

The fair value of money market investments is based on the carrying amounts reflected in the consolidated statements of financial condition as these are reasonable estimates of fair value given the short-term nature of the instruments.

Investment securities

The fair value of investment securities is based on quoted market prices, when available, or market prices provided by recognized broker-dealers. Such securities are classified as level 1 or level 2 depending on the basis for determining fair value. If listed prices or quotes are not available, fair value is based upon externally developed models that use both observable and unobservable inputs depending on the market activity of the instrument, and such securities are classified as level 3. At December 31, 2013, the Company held two securities categorized as other debt that are classified as Level 3. The estimated fair value of the other debt securities was determined by using a third-party model to calculate the present value of projected future cash flows. The assumptions are highly uncertain and include primarily market discount rates, current spreads, and an indicative pricing.

Derivative instruments

The fair value of the interest rate swapsis largely a function of the financial market's expectations regarding the future direction of interest rates. Accordingly, current market values are not necessarily indicative of the future impact of derivative instruments on earnings. This will depend, for the most part, on the shape of the yield curve, the level of interest rates, as well as the expectations for rates in the future. The fair value of most of these derivative instruments is based on observable market parameters, which include discounting the instruments' cash flows using the U.S. dollar LIBOR-based discount rates, and also applying yield curves that account for the industry sector and the credit rating of the counterparty and/or the Company.

Certain other derivative instruments with limited market activity are valued using externally developed models that consider unobservable market parameters. Based on their valuation methodology, derivative instruments are classified as Level 2 or Level 3. The Company has offered its customers certificates of deposit with an option tied to the performance of the S&P Index and uses equity indexed option agreements with major broker-dealers to manage its exposure to changes in this index. Their fair value is obtained through the use of an external based valuation that was thoroughly evaluated and adopted by management as its measurement tool for these options. The payoff of these options is linked to the average value of the S&P Index on a specific set of dates during the life of the option. The methodology uses an average rate option or a cash-settled option whose payoff is based on the difference between the expected average value of the S&P Index during the remaining life of the option and the strike price at inception. The assumptions, which are uncertain and require a degree of judgment, include primarily S&P Index volatility, forward interest rate projections, estimated index dividend payout, and leverage.

Servicing assets

Servicing assets do not trade in an active market with readily observable prices. Servicing assets are priced using a discounted cash flow model. The valuation model considers servicing fees, portfolio characteristics, prepayment assumptions, delinquency rates, late charges, other ancillary revenues, cost to service and other economic factors. Due to the unobservable nature of certain valuation inputs, the servicing rights are classified as Level 3.

Loans receivable considered impaired that are collateral dependent

The impairment is measured based on the fair value of the collateral, which is derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations, in accordance with the provisions of ASC 310-10-35. Currently, the associated loans considered impaired are classified as Level 3.

Foreclosed real estate

Foreclosed real estate includes real estate properties securing residential mortgage and commercial loans. The fair value of foreclosed real estate may be determined using an external appraisal, broker price option or an internal valuation. These foreclosed assets are classified as Level 3 given certain internal adjustments that may be made to external appraisals

Other repossessedassets

Other repossessed assets include repossessed automobile loans and leases. The fair value of the repossessed automobiles may be determined using internal valuation and an external appraisal. These repossessed assets are classified as Level 3 given certain internal adjustments that may be made to external appraisals.

Assets and liabilities measured at fair value on a recurring and non-recurring basis, including financial liabilitiesfor which the Company has elected the fair value option, are summarized below:

	June 30, 2014
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	1,418,958	$	-	$	1,418,958
Money market investments		8,228		-		-		8,228
Derivative assets		-		2,978		6,580		9,558
Servicing assets		-		-		13,655		13,655
Derivative liabilities		-		(13,617)		(6,368)		(19,985)
	$	8,228	$	1,408,319	$	13,867	$	1,430,414
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	29,118	$	29,118
Foreclosed real estate		-		-		102,235		102,235
Other repossessed assets		-		-		16,875		16,875
	$	-	$	-	$	148,228	$	148,228

	December 31, 2013
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	1,568,745	$	19,680	$	1,588,425
Securities purchased under agreements to resell		-		60,000		-		60,000
Money market investments		6,967		-		-		6,967
Derivative assets		-		4,072		16,430		20,502
Servicing assets		-		-		13,801		13,801
Derivative liabilities		-		(14,937)		(15,736)		(30,673)
	$	6,967	$	1,617,880	$	34,175	$	1,659,022
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	28,353	$	28,353
Foreclosed real estate		-		-		90,024		90,024
Other repossessed assets		-		-		12,583		12,583
	$	-	$	-	$	130,960	$	130,960

The table below presents a reconciliation of all assets and liabilities measured at fair value on a recurring basisusing significant unobservable inputs (Level 3) for the quarters and six-month periods ended June30, 2014 and 2013:

		Quarter Ended June 30, 2014
				Derivative				Derivative
		Other		asset				liability
		debt		(S&P				(S&P
		securities		Purchased		Servicing		Embedded
Level 3 Instruments Only		available-for-sale		Options)		assets		Options)		Total
	(In thousands)
Balance at beginning of period		$	20,053	$	12,555	$	13,970	$	(12,120)	$	34,458
Gains (losses) included in earnings			-		(5,975)		-		5,591		(384)
Changes in fair value of investment securities available for sale included in other comprehensive income			(53)		-		-		-		(53)
New instruments acquired			-		-		490		-		490
Principal repayments			(20,000)		-		(271)		-		(20,271)
Amortization			-		-		-		161		161
Changes in fair value of servicing assets			-		-		(534)		-		(534)
Balance at end of period		$	-	$	6,580	$	13,655	$	(6,368)	$	13,867
		Six-Month Period Ended June 30, 2014
				Derivative				Derivative
		Other		asset				liability
		debt		(S&P				(S&P
		securities		Purchased		Servicing		Embedded
Level 3 Instruments Only		available-for-sale		Options)		assets		Options)		Total
	(In thousands)
Balance at beginning of period		$	19,680	$	16,430	$	13,801	$	(15,736)	$	34,175
Gains (losses) included in earnings			-		(9,850)		-		8,964		(886)
Changes in fair value of investment securities available for sale included in other comprehensive income			320		-		-		-		320
New instruments acquired			-		-		1,053		-		1,053
Principal repayments			(20,000)		-		(465)		-		(20,465)
Amortization			-		-		-		404		404
Changes in fair value of servicing assets			-		-		(734)		-		(734)
Balance at end of period		$	-	$	6,580	$	13,655	$	(6,368)	$	13,867

	Quarter Ended June 30, 2013
			Derivative				Derivative
	Other		asset				liability
	debt		(S&P				(S&P
	securities		Purchased			Servicing	Embedded
Level 3 Instruments Only	available-for-sale		Options)			assets	Options)		Total
Balance at beginning of period	$	20,042	$	15,404	$	11,543	$	(14,839)	$	32,150
Gains (losses) included in earnings		-		616		-		(516)		100
Changes in fair value of investment securities available for sale included in other comprehensive income		16		-		-		-		16
New instruments acquired		-		-		1,301		-		1,301
Principal repayments		-		-		(489)		-		(489)
Amortization		-		-		-		40		40
Changes in fair value of servicing assets		-		-		639		-		639
Balance at end of period	$	20,058	$	16,020	$	12,994	$	(15,315)	$	33,757
	Six-Month Period Ended June 30, 2013
			Derivative					Derivative
	Other		asset					liability
	debt		(S&P					(S&P
	securities		Purchased			Servicing		Embedded
Level 3 Instruments Only	available-for-sale		Options)			assets		Options)		Total
Balance at beginning of period	$	20,012	$	13,233	$	10,795	$	(12,707)	$	31,333
Gains (losses) included in earnings		-		2,787		-		(2,923)		(136)
Changes in fair value of investment securities available for sale included in other comprehensive income		46		-		-		-		46
New instruments acquired		-		-		1,994		-		1,994
Principal repayments		-		-		(557)		-		(557)
Amortization		-		-		-		315		315
Changes in fair value of servicing assets		-		-		762		-		762
Balance at end of period	$	20,058	$	16,020	$	12,994	$	(15,315)	$	33,757

During the quartersand the six-month periods ended June 30, 2014 and 2013, there were purchases and sales of assets and liabilities measured at fair value on a recurring basis. There were no transfers into and out of Level 1 and Level 2 fair value measurements during such periods.

The table below presents quantitative information for all assets and liabilities measured at fair value on a recurring basisusing significant unobservable inputs (Level 3) at June 30, 2014:

	June 30, 2014
	Fair Value		Valuation Technique	Unobservable Input	Range
	(In thousands)
Derivative assets (S&P Purchased Options)	$	6,580	Option pricing model	Implied option volatility	23.23% - 35.94%
				Counterparty credit risk (based on 5-year credit default swap ("CDS") spread)	57.00% - 65.17%
Servicing assets	$	13,655	Cash flow valuation	Constant prepayment rate	5.60% - 11.24%
				Discount rate	10.00% - 12.00%
Derivative liability (S&P Embedded Options)	$	(6,838)	Option pricing model	Implied option volatility	23.23% - 35.94%
				Counterparty credit risk (based on 5-year CDS spread)	57.00% - 65.17%
Collateral dependant impaired loans	$	29,118	Fair value of property or collateral	Appraised value less disposition costs	22.20% - 29.20%

Information about Sensitivity to Changes in Significant Unobservable Inputs

Other debt securities – The significant unobservable inputs used in the fair value measurement of one of the Company's other debt securities are indicative comparable pricing, option adjusted spread (“OAS”), yield to maturity, and spread to maturity. Significant changes in any of those inputs in isolation would result in a significantly different fair value measurement. Generally, a change in the assumption used for indicative comparable pricing is accompanied by a directionally opposite change in the assumption used for OAS and a directionally, although not equally proportional, opposite change in the assumptions used for yield to maturity and spread to maturity.

Derivative asset (S&P Purchased Options) – The significant unobservable inputs used in the fair value measurement of the Company's derivative assets related to S&P purchased options are implied option volatility and counterparty credit risk. Significant changes in any of those inputs in isolation would result in a significantly different fair value measurement. Generally, a change in the assumption used for implied option volatility is not necessarily accompanied by directionally similar or opposite changes in the assumption used for counterparty credit risk.

Servicing assets – The significant unobservable inputs used in the fair value measurement of the Company's servicing assets are constant prepayment rates and discount rates. Changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or offset the sensitivities. Mortgage banking activities, a component of total banking and financial servicerevenue in the consolidated statements of operations, include the changes from period to period in the fair value of the mortgage loan servicing rights, which may result from changes in the valuation model inputs or assumptions (principally reflecting changes in discount rates and prepayment speed assumptions) and other changes, including changes due to collection/realization of expected cash flows.

Derivative liability (S&P Embedded Options) – The significant unobservable inputs used in the fair value measurement of theCompany's derivative liability related to S&P purchased options are implied option volatility and counterparty credit risk. Significant changes in any of those inputs in isolation would result in a significantly different fair value measurement. Generally, a change in the assumption used for implied option volatility is not necessarily accompanied by directionally similar or opposite changes in the assumption used for counterparty credit risk.

Fair Value of Financial Instruments

The information about the estimated fair value of financial instruments required by GAAP is presented hereunder. The aggregate fair value amounts presented do not necessarily represent management's estimate of the underlying value of the Company.

The estimated fair value is subjective in nature, involves uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could affect these fair value estimates. The fair value estimates do not take into consideration the value of future business and the value of assets and liabilities that are not financial instruments. Other significant tangible and intangible assets that are not considered financial instruments are the value of long-term customer relationships of retail deposits, and premises and equipment.

The estimated fair value and carrying value of the Company's financial instruments at June 30, 2014 and December 31, 2013 is as follows:

	June 30,				December 31,
	2014				2013
	Fair		Carrying		Fair		Carrying
	Value		Value		Value		Value
	(In thousands)
Level 1
Financial Assets:
Cash and cash equivalents	$	596,485	$	596,485	$	621,269	$	621,269
Restricted cash		15,170		15,170		82,199		82,199
Level 2
Financial Assets:
Securities purchased under agreements to resell		-		-		60,000		60,000
Trading securities		1,613		1,613		1,869		1,869
Investment securities available-for-sale		1,418,958		1,418,958		1,568,745		1,568,745
Investment securities held-to-maturity		26,844		26,706		-		-
Federal Home Loan Bank (FHLB) stock		24,381		24,381		24,450		24,450
Derivative assets		2,978		2,978		4,072		4,072
Financial Liabilities:
Derivative liabilities		13,617		13,617		14,937		14,937
Level 3
Financial Assets:
Investment securities available-for-sale		-		-		19,680		19,680
Total loans (including loans held-for-sale)
Non-covered loans, net		4,527,811		4,601,696		4,857,505		4,662,458
Covered loans, net		397,262		334,344		459,444		356,961
Derivative assets		6,580		6,580		16,430		16,430
FDIC indemnification asset		94,653		143,660		152,965		189,240
Accrued interest receivable		22,508		22,508		18,734		18,734
Servicing assets		13,655		13,655		13,801		13,801
Financial Liabilities:
Deposits		5,076,996		5,141,233		5,409,540		5,383,265
Securities sold under agreements to repurchase		1,065,181		1,012,233		1,323,903		1,267,618
Advances from FHLB		365,808		360,240		335,324		336,143
Term notes		3,741		3,837		3,638		3,663
Subordinated capital notes		88,243		100,797		99,316		100,010
Accrued expenses and other liabilities		135,406		135,406		144,424		144,424

The following methods and assumptions were used to estimate the fair values of significant financial instruments at June 30, 2014 and December 31, 2013:

•Cash and cash equivalents (including money market investments and time deposits with other banks), restricted cash, accrued interest receivable, securities purchased under agreements to resell, accrued expenses and other liabilities have been valued at the carrying amounts reflected in the consolidated statements of financial condition as these are reasonable estimates of fair value given the short-term nature of the instruments.

•Investments in FHLB-NY stock are valued at their redemption value.

•The fair value of investment securities, including trading securities, is based on quoted market prices, when available, or market prices provided by recognized broker-dealers. If listed prices or quotes are not available, fair value is based upon externally developed models that use both observable and unobservable inputs depending on the market activity of the instrument. The estimated fair value of the structured credit investments is determined by using a third-party cash flow valuation model to calculate the present value of projected future cash flows. The assumptions used which are highly uncertain and require a high degree of judgment, include primarily market discount rates, current spreads, duration, leverage, default, home price depreciation, and loss rates. The assumptions used are drawn from a wide array of data sources, including the performance of the collateral underlying each deal. The external-based valuation, which is obtained at least on a quarterly basis, is analyzed and its assumptions are evaluated and incorporated in either an internal-based valuation model when deemed necessary, or compared to counterparties' prices and agreed by management.

•The fair value of the FDIC indemnification asset represents the present value of the net estimated cash payments expected to be received from the FDIC for future losses on covered assets based on the credit assumptions on estimated cash flows for each covered asset pool and the loss sharing percentages. The ultimate collectability of the FDIC indemnification asset is dependent upon the performance of the underlying covered loans, the passage of time and claims paid by the FDIC which are impacted by the Bank's adherence to certain guidelines established by the FDIC.

•The fair value of servicing assets is estimated by using a cash flow valuation model which calculates the present value of estimated future net servicing cash flows, taking into consideration actual and expected loan prepayment rates, discount rates, servicing costs, and other economic factors, which are determined based on current market conditions.

•The fair values of the derivative instruments are provided by valuation experts and counterparties. Certain derivatives with limited market activity are valued using externally developed models that consider unobservable market parameters. The Company has offered its customers certificates of deposit with an option tied to the performance of the S&P Index, and uses equity indexed option agreements with major broker-dealers to manage its exposure to changes in this index. Their fair value is obtained through the use of an external based valuation that was thoroughly evaluated and adopted by management as its measurement tool for these options. The payoff of these options is linked to the average value of the S&P Index on a specific set of dates during the life of the option. The methodology uses an average rate option or a cash-settled option whose payoff is based on the difference between the expected average value of the S&P Index during the remaining life of the option and the strike price at inception. The assumptions, which are uncertain and require a degree of judgment, include primarily S&P Index volatility, forward interest rate projections, estimated index dividend payout, and leverage.

•Fair value of derivative liabilities, which include interest rate swaps and forward-settlement swaps, are based on the net discounted value of the contractual projected cash flows of both the pay-fixed receive-variable legs of the contracts. The projected cash flows are based on the forward yield curve, and discounted using current estimated market rates.

•The fair value of the covered and non-covered loan portfolio (including loans held-for-sale) is estimated by segregating by type, such as mortgage, commercial, consumer, auto andleasing. Each loan segment is further segmented into fixed and adjustable interest rates and by performing and non-performing categories. The fair value of performing loans is calculated by discounting contractual cash flows, adjusted for prepayment estimates (voluntary and involuntary), if any, using estimated current market discount rates that reflect the credit and interest rate risk inherent in the loan. This fair value is not currently an indication of an exit price as that type of assumption could result in a different fair value estimate.

•The fair value of demand deposits and savings accounts is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is based on the discounted value of the contractual cash flows, using estimated current market discount rates for deposits of similar remaining maturities.

•The fair value of long-term borrowings, which include securities sold under agreements to repurchase, advances from FHLB-NY, and subordinated capital notes, is based on the discounted value of the contractual cash flows using current estimated market discount rates for borrowings with similar terms, remaining maturities and put dates.

•The fair value of commitments to extend credit and unused lines of credit is based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standings.

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Allowance for Loan and Lease Losses (Allowance for Covered Loan and Lease Losses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of the period	$ 54,398	$ 52,974	$ 52,729	$ 54,124
Provision for covered loan and lease losses, net	1,595	1,211	3,224	1,883
FDIC shared-loss portion of provision for (recapture of) covered loan and lease losses, net	3,522	(192)	3,562	(2,014)
Balance at end of the period	$ 59,515	$ 53,993	$ 59,515	$ 53,993

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Fair Value (Qualitative information for assets and liabilities) (Details) (USD $) In Thousands, unless otherwise specified					3 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Fair Value, Inputs, Level 3 [Member]	Dec. 31, 2013 Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2014 Fair Value, Inputs, Level 3 [Member] Derivative asset (S&P Purchased Options) [Member] Option Pricing Model Technique [Member]	Jun. 30, 2014 Fair Value, Inputs, Level 3 [Member] Derivative asset (S&P Purchased Options) [Member] Option Pricing Model Technique [Member] Minimum [Member]	Jun. 30, 2014 Fair Value, Inputs, Level 3 [Member] Derivative asset (S&P Purchased Options) [Member] Option Pricing Model Technique [Member] Maximum [Member]	Jun. 30, 2014 Fair Value, Inputs, Level 3 [Member] Servicing Assets [Member] Cash Flow Valuation Technique [Member]	Jun. 30, 2014 Fair Value, Inputs, Level 3 [Member] Servicing Assets [Member] Cash Flow Valuation Technique [Member] Minimum [Member]	Jun. 30, 2014 Fair Value, Inputs, Level 3 [Member] Servicing Assets [Member] Cash Flow Valuation Technique [Member] Maximum [Member]	Jun. 30, 2014 Fair Value, Inputs, Level 3 [Member] Derivative liability (S&P Embedded Options) [Member] Option Pricing Model Technique [Member]	Jun. 30, 2014 Fair Value, Inputs, Level 3 [Member] Derivative liability (S&P Embedded Options) [Member] Option Pricing Model Technique [Member] Minimum [Member]	Jun. 30, 2014 Fair Value, Inputs, Level 3 [Member] Derivative liability (S&P Embedded Options) [Member] Option Pricing Model Technique [Member] Maximum [Member]	Jun. 30, 2014 Fair Value, Inputs, Level 3 [Member] Collateral dependant impaired loan Fair value of property or collateral [Member]	Jun. 30, 2014 Fair Value, Inputs, Level 3 [Member] Collateral dependant impaired loan Fair value of property or collateral [Member] Minimum [Member]	Jun. 30, 2014 Fair Value, Inputs, Level 3 [Member] Collateral dependant impaired loan Fair value of property or collateral [Member] Maximum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Fair Value assets and liabilities measured on reccurring basis	$ 1,418,958	$ 1,588,425	$ 0	$ 19,680	$ 6,580			$ 13,655			$ (6,838)			$ 29,118
Valuation Technique					Option pricing model			Cash flow valuation			Option pricing model			Fair value of property or collateral
Unobservable Input					Implied option volatility Counterparty credit risk (based on 5-year credit default swap ("CDS") spread)			Constant prepayment rate Discount rate			Implied option volatility Counterparty credit risk (based on 5-year CDS spread)			Appraised value less disposition costs
Implied option volatility						23.23%	35.94%					23.23%	35.94%
Counterparty credit risk (based on 5-year CDS spread)						57.00%	65.17%					57.00%	65.17%
Constant prepayment rate									5.60%	11.24%
Discount rate									10.00%	12.00%
Appraised value															22.20%	29.20%

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities:
Net income	$ 45,056	$ 58,731
Adjustments to reconcile net income to net cash provied by (used in) operating activities:
Amortization of deferred loan origination fees, net of costs	1,330	486
Amortization of discount to fair value of acquired loan	6,884	3,504
Amortization of investment securities premiums, net of accretion of discounts	203	12,624
Amortization of core deposit and customer relationship intangibles	1,085	1,288
Amortization of fair value premium of acquired deposits	2,908	9,649
FDIC Loss Share (Expense) Income	36,842	32,836
Depreciation and amortization of premises and equipment	4,826	5,265
Deferred income taxes, net	13,211	(30,776)
Provision for covered and non-covered loan and lease losses, net	26,506	47,326
Stock-based compensation	946	888
(Gain) loss on:
Sale of securities	(4,366)	0
Sale of mortgage loans held for sale	(2,447)	(1,771)
Gain on sale of derivatives and on sale of TBA	646	934
Early extinguishment of debt	0	(1,061)
Foreclosed real estate	5,052	3,109
Sale of other repossessed asset	3,305	465
Sale of premises and equipment	(10)	0
Originations of loans held-for-sale	(86,058)	(179,127)
Proceeds from sale of loans held-for-sale	47,834	68,809
Net (increase) decrease in:
Trading securities	256	(1,714)
Accrued interest receivable	(3,774)	46
Servicing Assets	146	(2,199)
Other assets	11,651	20,737
Net increase (decrease) in:
Accrued interest on deposits and borrowings	(932)	(995)
Accrued expenses and other liabilities	(16,247)	12,093
Net cash used in operating activities	94,853	61,147
Purchases of:
Investment securities available-for-sale	(217,974)	(17,802)
Investment securities held-to-maturity	(26,707)
FHLB stock	(76,725)	(12,465)
Maturities and Redemptions of [Abstract]
Investment securities available-for-sale	295,013	313,866
FHLB Stock	76,794	28,720
Proceeds from sale of:
Investment securities available for sale	163,235	75,660
Foreclosed real estate and other repossessed assets	22,991	31,131
Premises and equipment	20	1,667
Origination and purchase of loans, excluding loans held-for-sale	(347,691)	(422,590)
Principal repayment of loans, including covered loans	339,102	528,274
Reimbursements from the FDIC on shared-loss agreements	18,700	18,696
Additions to premises and equipment	(4,100)	(6,237)
Net change in securities purchased under agreements to resell	60,000	80,000
Net change in restricted cash	67,029	8,990
Net cash provided by investing activities	369,687	627,910
Net increase (decrease) in:
Deposits	(235,062)	(36,125)
Short Term Borrowings	0	(92,210)
Securities sold under agreements to repurchase	(255,000)	(381,358)
FHLB advances, federal funds purchased, and other borrowings	24,279	(231,617)
Subordinated capital notes	787	(46,017)
Exercise of stock options and restricted units lapsed, net	265	185
Purchase of treasury stock	(10,393)	0
Termination of derivative instruments	0	(858)
Dividends paid on preferred stock	(6,931)	(6,931)
Dividends paid on common stock	(7,269)	(5,479)
Other financing activities	0	(39)
Net cash used in financing activities	(489,324)	(800,449)
Net change in cash and cash equivalents	(24,784)	(111,392)
Cash and cash equivalents at beginning of period	621,269	855,235
Cash and cash equivalents at end of period	596,485	743,843
Supplemental Cash Flow Disclosure and Schedule of Non-cash Activities:
Interest paid	42,667	40,491
Income Taxes Paid	319	378
Mortgage loans securitized into mortgage-backed securities	46,505	89,590
Transfer from loans to foreclosed real estate and other repossessed assets	47,852	45,714
Reclassification of loans held-for-investment portfolio to held-for-sale portfolio	473	40,328
Reclassification of loans held-for-sale portfolio to investment portfolio	26,376	0
Securities sold but not yet delivered	$ 0	$ 16,732

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Consolidated Statements of Financial Condition (Unaudited) (Parenthetical) (USD $)	3 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Amortized cost of trading securities	$ 2,419,000	$ 2,448,000
Amortized cost of investment securities available-for-sale	1,385,438,000	1,575,043,000
Fair value of held to maturity securities	26,844,000	0
Allowance for loan and lease losses, non-covered	60,360,000	54,298,000
Allowance for loan and lease losses, covered	59,515,000	52,729,000
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, liquidation value	25	25
Common stock, par value	$ 1	$ 1
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	52,729,772	52,707,023
Common stock, shares outstanding	45,022,823	45,676,922
Treasury stock, at cost, shares	7,706,949	7,030,101
Tax effect on accumulated other comprehensive income (loss)	1,134,000	(831,000)
Series A Preferred Stock
Preferred stock, shares outstanding	1,340,000	1,340,000
Series B Preferred Stock
Preferred stock, shares outstanding	1,380,000	1,380,000
Series C Convertible Preferred Stock
Preferred stock, shares outstanding	84,000	84,000
Preferred stock, liquidation value	$ 1,000	$ 1,000
Series D Preferred Stock Member
Preferred stock, shares outstanding	960,000	960,000

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Borrowings

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

BORROWINGS

NOTE 10— BORROWINGS

Securities Sold under Agreements to Repurchase

At June 30, 2014, 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 the Company the same or similar securities at the maturity of these agreements.

At June 30, 2014and December 31, 2013, securities sold under agreements to repurchase (classified by counterparty), excluding accrued interest in the amount of $2.2millionand $2.6million, respectively,were as follows:

	June 30,				December 31,
	2014				2013
			Fair Value of				Fair Value of
	Borrowing		Underlying		Borrowing		Underlying
	Balance		Collateral		Balance		Collateral
	(In thousands)
JP Morgan Chase Bank NA		255,000		274,471		255,000		273,250
Credit Suisse Securities (USA) LLC		755,000		859,061		755,000		864,232
Deutsche Bank		-		-		255,000		272,053
Total	$	1,010,000	$	1,133,532	$	1,265,000	$	1,409,535

The following table shows a summary of the Company's repurchase agreements and their terms, excluding accrued interest in the amount of $2.2 million, at June 30, 2014:

			Weighted-
	Borrowing		Average		Maturity
Year of Maturity	Balance		Coupon	Settlement Date	Date
	(In thousands)
2014	$	85,000	0.675%	12/3/2012	12/3/2014
2015		255,000	0.840%	12/10/2012	6/13/2015
2016		170,000	1.500%	12/6/2012	12/8/2016
2017		500,000	4.78%	3/2/2007	3/2/2017
	$	1,010,000	2.89%

The following table presents therepurchase liabilityassociated with the repurchase agreement transactions (excluding accrued interest)by maturity. Also, it includes the carrying value and approximate market value of collateral (excluding accrued interest) at June 30, 2014 and December 31, 2013. The information excludes repurchase agreement transactions which were collateralized with securities or cash, or securities purchased under agreements to resell.

	June 30, 2014
					Market Value of Underlying Collateral
									CMOs		Obligations
			Weighted		FNMA and				issued by US		of US
	Repurchase		Average		FHLMC		GNMA		Government		Government
	Liability		Rate		Certificates		Certificates		Sponsored Agencies		Sponsored Agencies		Total
	(Dollars in thousands)
Over 90 days		1,010,000		2.89%		1,062,938		2,194		-		68,400		1,133,532
Total	$	1,010,000		2.89%	$	1,062,938	$	2,194	$	-	$	68,400	$	1,133,532

	December 31, 2013
					Market Value of Underlying Collateral
									CMOs		Obligations
			Weighted		FNMA and				issued by US		of US
	Repurchase		Average		FHLMC		GNMA		Government		Government
	Liability		Rate		Certificates		Certificates		Sponsored Agencies		Sponsored Agencies		Total
	(Dollars in thousands)
Within 30 days	$	255,000		0.50%	$	216,201	$	-	$	48,923	$	6,929	$	272,053
Over 90 days		1,010,000		2.89%		1,018,632		3,000		45,100		3,720		1,070,452
Total	$	1,265,000		2.41%	$	1,234,833	$	3,000	$	94,023	$	10,649	$	1,342,505

Advances from the Federal Home Loan Bank of New York

Advances are received from the Federal Home Loan Bank of New York (the “FHLB-NY”) under an agreement whereby the Company is required to maintain a minimum amount of qualifying collateral with a fair value of at least 110% of the outstanding advances. At June 30, 2014 and December 31, 2013, these advances were secured by mortgage and commercial loans amounting to $1.2billion and $1.3billion, respectively. Also, at June 30, 2014 and December 31, 2013 the Company had an additional borrowing capacity with the FHLB-NY of $629.1million and $674.2 million, respectively. At June 30, 2014 and December 31, 2013, the weighted average remaining maturity of FHLB's advances was 9.4months and11.3months, respectively.The original terms of these advances range between one dayand seven years, and the FHLB-NY does not have the right to exercise put options at par on any advances outstanding as of June 30, 2014.

The following table shows a summary of these advances and their terms, excluding accrued interest in the amount of $328thousand,at June 30, 2014:

			Weighted-
		Borrowing	Average		Maturity
Year of Maturity		Balance	Coupon	Settlement Date	Date
		(In thousands)
2014	$	25,000	0.42%	6/30/2014	7/1/2014
		25,000	0.35%	6/4/2014	7/7/2014
		50,000	0.37%	6/10/2014	7/10/2014
		100,000	0.38%	6/16/2014	7/16/2014
		25,000	0.37%	6/24/2014	7/24/2014
		25,000	0.38%	6/30/2014	7/30/2014
		39,961	0.35%	6/2/2014	7/1/2014
		289,961
2017		4,615	1.24%	4/3/2012	4/3/2017
2018		30,000	2.19%	1/16/2013	1/16/2018
		25,000	2.18%	1/16/2013	1/16/2018
		55,000
2020		10,336	2.59%	7/19/2013	7/20/2020
	$	359,912	0.73%

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 $100.8 million at June 30, 2014 and $100.0 million at December 31, 2013.

Under the requirements of Puerto Rico Banking Act, the Bank must establish a redemption fund for the subordinated capital notes by transferring from undivided profits pre-established amounts as follows:

	Redemption fund
	(In thousands)
Redemption fund - June 30, 2014	$	51,925
2014		3,350
2015		6,700
2016		5,025
	$	67,000

Other borrowings

Other borrowings, presented in the unaudited consolidated statement of financial condition amounted to $3.8 million and $3.7 millionat June 30,2014and December 31, 2013, respectively, which mainly consists of unsecured fixed-rate borrowings and term notes tied to the appreciation of theS&P index. For both periods, the unsecured fixed rate borrowings amounted to $1.7 million at a fixed rate of 3.0%. The term notes tied to the S&P index amounted to $1.0million at both June 30,2014 and December 31, 2013with an index appreciation of $1.1 millionand$957 thousand, respectively.

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Commitments (Narratives) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Commitments and Contingencies [Abstract]
Rent Expenses	$ 2,400,000	$ 2,600,000	$ 4,900,000	$ 5,200,000
Line of credit reserve	$ 900,000		$ 900,000		$ 900,000

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Stockholders Equity (Narratives) (Details) (USD $)	3 Months Ended			6 Months Ended
	Jun. 30, 2014	Mar. 31, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Weighted average stock anti dilutive effect excluded from calculation of earnings per share	364,604		243,721	304,491	578,393
Stock Repurchase Program, Authorized Amount		$ 70,000,000
Treasury Stock, Value, Acquired, Cost Method				10,393,000	0
Stock Repurchase Program Remaining Authorized Repurchase Amount	23,100,000
Stock repurchase program remaining number of shares authorized to be repurchased	1,252,136			1,252,136
SharePrice	$ 18.41			$ 18.41
Preferred Stock [Member]
Issuance Costs Stock	10,100,000			10,100,000
Common Stock [Member]
Issuance Costs Stock	$ 13,600,000			$ 13,600,000

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Related Party Transactions (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Loans and Leases Receivable, Related Parties [Roll Forward]
Balance	$ 19,267	$ 8,688	$ 18,963	$ 6,055
New loans	13,847	0	13,847	4,234
Repayments and sales	(8,963)	(657)	(8,659)	(2,026)
Credits of persons no longer considered related parties	0	0	0	(232)
Balance	$ 24,151	$ 8,031	$ 24,151	$ 8,031

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Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Jul. 31, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	OFG BANCORP
Entity Central Index Key	0001030469
Document Type	10-Q
Document Period End Date	Jun. 30, 2014
Amendment Flag	false
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		45,060,088

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Offsetting Arrangements

6 Months Ended

Jun. 30, 2014

Offsetting [Abstract]

Balance sheet Offsetting [Text Block]

NOTE 11 – OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES

The Company's derivatives are subject to agreements which allow a right of set-off with each respective counterparty. In addition, the Company's securities purchased under agreements to resell and securities sold under agreements to repurchase have a right of set-off with the respective counterparty under the supplemental terms of the master repurchase agreements. In an event of default, each party has a right of set-off against the other party for amounts owed in the related agreements and any other amount or obligation owed in respect of any other agreement or transaction between them. Security collateral posted to open and maintain a master netting agreement with a counterparty, in the form of cash and securities, may from time to time be segregated in an account at a third-party custodian pursuant to a an account control agreement.

The following table presents the potential effect of rights of set-off associated with the Company's recognized financial assets and liabilities at June 30, 2014 and December 31, 2013:

June 30, 2014
							Gross Amounts Not Offset in the Statement of Financial Condition
			Gross Amounts		Net Amount of
			Offset in the		Assets Presented
	Gross Amount		Statement of		in Statement				Cash
	of Recognized		Financial		of Financial		Financial		Collateral		Net
	Assets		Condition		Condition		Instruments		Received		Amount
	(In thousands)
Derivatives	$	9,558	$	-	$	9,558	$	2,004	$	-	$	7,554
Total	$	9,558	$	-	$	9,558	$	2,004	$	-	$	7,554
December 31, 2013
							Gross Amounts Not Offset in the Statement of Financial Condition
			Gross Amounts		Net amount of
			Offset in the		Assets Presented
	Gross Amount		Statement of		in Statement				Cash
	of Recognized		Financial		of Financial		Financial		Collateral		Net
	Assets		Condition		Condition		Instruments		Received		Amount
	(In thousands)
Derivatives	$	20,502	$	-	$	20,502	$	2,450	$	6,780	$	11,272
Securities purchased under agreements to resell		60,000		-		60,000		64,587		-		(4,587)
Total	$	80,502	$	-	$	80,502	$	67,037	$	6,780	$	6,685

June 30, 2014
							Gross Amounts Not Offset in the Statement of Financial Condition
					Net Amount of
			Gross Amounts		Liabilities
			Offset in the		Presented
	Gross Amount		Statement of		in Statement				Cash
	of Recognized		Financial		of Financial		Financial		Collateral		Net
	Liabilities		Condition		Condition		Instruments		Provided		Amount
					(In thousands)
Derivatives	$	19,985	$	-	$	19,985	$	-	$	2,980	$	17,005
Securities sold under agreements to repurchase		1,010,000		-		1,010,000		1,133,532		-		(123,532)
Total	$	1,029,985	$	-	$	1,029,985	$	1,133,532	$	2,980	$	(106,527)
December 31, 2013
							Gross Amounts Not Offset in the Statement of Financial Condition
					Net Amount of
			Gross Amounts		Liabilities
			Offset in the		Presented
	Gross Amount		Statement of		in Statement				Cash
	of Recognized		Financial		of Financial		Financial		Collateral		Net
	Liabilities		Condition		Condition		Instruments		Provided		Amount
	(In thousands)
Derivatives	$	30,672	$	-	$	30,672	$	-	$	2,349	$	28,323
Securities sold under agreements to repurchase		1,265,000		-		1,265,000		1,277,919		67,029		(79,948)
Total	$	1,295,672	$	-	$	1,295,672	$	1,277,919	$	69,378	$	(51,625)

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Deposits and Related Interest (Deposits by Components) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Deposits, by Component, Alternative [Abstract]
Noninterest-bearing demand deposit	$ 731,294	$ 744,327
Interest-bearing saving and demand deposits	2,540,229	2,489,971
Individual Retirement Account	323,127	347,262
Retail certificates of deposists	519,150	598,367
Institutional certificates of deposits	308,958	375,224
Total Core Deposits	4,422,758	4,555,151
Brokered Deposists	718,475	828,114
Deposits, Total	$ 5,141,233	$ 5,383,265

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Offsetting Arrangement (Liabilities Offsetting) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Offsetting Liabilities [Line Items]
Gross amount of Recognized Liabilities	$ 1,029,985	$ 1,295,672
Gross amount Offset in the Statement of Financial Condition	0	0
Net Amount of Liabilities Presented in the Statement of Financial Condition	1,029,985	1,295,672
Financial Instruments	1,133,532	1,277,919
Cash Collateral Provided	2,980	69,378
Net Amount	(106,527)	(51,625)
Derivative Financial Instruments, Liabilities [Member]
Offsetting Liabilities [Line Items]
Gross amount of Recognized Liabilities	19,985	30,672
Gross amount Offset in the Statement of Financial Condition	0	0
Net Amount of Liabilities Presented in the Statement of Financial Condition	19,985	30,672
Financial Instruments	0	0
Cash Collateral Provided	2,980	2,349
Net Amount	17,005	28,323
Securities Loaned or Sold under Agreements to Repurchase
Offsetting Liabilities [Line Items]
Gross amount of Recognized Liabilities	1,010,000	1,265,000
Gross amount Offset in the Statement of Financial Condition	0	0
Net Amount of Liabilities Presented in the Statement of Financial Condition	1,010,000	1,265,000
Financial Instruments	1,133,532	1,277,919
Cash Collateral Provided	0	67,029
Net Amount	$ (123,532)	$ (79,948)

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Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Interest income:
Non-covered loans	$ 88,064	$ 91,105	$ 173,307	$ 171,912
Covered loans	24,879	23,999	48,267	44,228
Total interest income from loans	112,943	115,104	221,574	216,140
Mortgage-backed securities	11,984	9,080	24,400	19,898
Investment securities and other	973	2,118	3,000	4,436
Total interest income	125,900	126,302	248,974	240,474
Interest expense:
Deposits	9,165	9,487	18,143	19,423
Securities sold under agreements to repurchase	7,372	7,109	14,784	14,357
Advances from FHLB and other borrowings	2,289	2,241	4,583	3,955
Subordinated capital notes	996	1,170	1,988	2,830
Total interest expense	19,822	20,007	39,498	40,565
Net interest income	106,078	106,295	209,476	199,909
Provision for Non Covered Loan and Lease Losses	13,220	37,527	23,282	45,443
Provision for Covered Loan and Lease Losses	1,595	1,211	3,224	1,883
Total provision for loan and lease losses	14,815	38,738	26,506	47,326
Net interest income after provision for loan and lease losses	91,263	67,557	182,970	152,583
Non-interest income:
Banking service revenues	9,995	12,705	20,552	24,345
Financial Service Revenues	7,336	8,030	14,203	15,690
Mortgage banking activities	1,554	3,827	3,249	6,963
Total Banking and Financial Service Revenues	18,885	24,562	38,004	46,998
FDIC shared-loss expense, net [Abstract]
FDIC indemnification asset expense	(17,499)	(19,225)	(35,121)	(31,425)
FDIC true-up payment obligation expense	(856)	(740)	(1,721)	(1,411)
FDIC shared-loss expense, net	(18,355)	(19,965)	(36,842)	(32,836)
Net gain (loss) on:
Sale of securities	0	0	4,366	0
Derivatives	(247)	(164)	(470)	(934)
Loss on early extinguishment of repurchase agreements	0	0	0	1,061
Other	224	2,302	678	2,349
Total non-interest income, net	507	6,735	5,736	16,638
Non-interest expense:
Compensation and employee benefits	20,707	24,089	42,494	47,338
Professional and service fees	3,512	5,375	7,719	11,853
Occupancy and equipment	8,605	8,066	16,914	17,282
Insurance	2,333	2,723	4,407	5,401
Electronic banking charges	4,796	4,065	9,449	7,763
Information technology related expenses	1,485	2,335	3,300	4,979
Advertising, business promotion, and strategic initiatives	1,669	1,670	3,450	3,079
Merger and restructuring charges	0	5,273	0	10,808
Foreclosure, repossession and other real estate expenses	6,554	3,717	12,941	6,900
Loan servicing and clearing expenses	1,669	1,884	3,728	3,360
Taxes, other than payroll and income taxes	3,776	5,132	7,511	7,754
Communication	813	835	1,770	1,699
Printing, postage, stationary and supplies	645	851	1,200	2,017
Director and investors relations	293	377	544	613
Other	2,991	2,295	5,825	4,452
Total non-interest expense	59,848	68,687	121,252	135,298
Income before income taxes	31,922	5,605	67,454	33,923
Income tax expense (benefit)	10,613	(31,934)	22,398	(24,808)
Net income	21,309	37,539	45,056	58,731
Dividends on preferred stock	(3,466)	(3,466)	(6,931)	(6,931)
Income available to common shareholders	$ 17,843	$ 34,073	$ 38,125	$ 51,800
Earnings per common share:
Basic	$ 0.40	$ 0.75	$ 0.84	$ 1.14
Diluted	$ 0.38	$ 0.68	$ 0.80	$ 1.05
Average common shares outstanding and equivalents	52,352	52,968	52,476	52,929
Cash dividends per share of common stock	$ 0.08	$ 0.06	$ 0.16	$ 0.12

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Allowance for Loan and Lease Losses

6 Months Ended

Jun. 30, 2014

Loans Receivable [Abstract]

Allowance For Credit Losses Text Block

NOTE 5 – ALLOWANCE FOR LOAN AND LEASE LOSSES

The composition of the Company's allowance for loan and lease losses at June 30, 2014 and December 31, 2013 was as follows:

	June 30,		December 31,
	2014		2013
	(In thousands)
Allowance for loans and lease losses on non-covered loans:
Originated and other loans and leases held for investment:
Mortgage	$	19,062	$	19,937
Commercial		12,423		14,897
Consumer		7,887		6,006
Auto and leasing		11,127		7,866
Unallocated		139		375
		50,638		49,081
Acquired loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		464		926
Consumer		338		-
Auto		2,642		1,428
		3,444		2,354
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Commercial		6,216		1,713
Consumer		62		418
Auto		-		732
		6,278		2,863
		60,360		54,298
Allowance for loans and lease losses on covered loans:
Loans secured by 1-4 family residential properties		14,924		12,495
Commercial and other construction		43,976		39,619
Consumer		615		615
		59,515		52,729
Total allowance for loan and lease losses	$	119,875	$	107,027

Non-Covered Loans

The Company maintains an allowance for loan and lease losses at a level that management considers adequate to provide for probable losses based upon an evaluation of known and inherent risks. The Company's allowance for loan and lease losses policy provides for a detailed quarterly analysis of probable losses. The analysis includes a review of historical loan loss experience, value of underlying collateral, current economic conditions, financial condition of borrowers and other pertinent factors. While management uses available information in estimating probable loan losses, future additions to the allowance may be required based on factors beyond the Company's control. We also maintain an allowance for loan losses on acquired loans when: (i) for loans accounted for under ASC 310-30, there is deterioration in credit quality subsequent to acquisition, and (ii) for loans accounted for under ASC 310-20, the inherent losses in the loans exceed the remaining credit discount recorded at the time of acquisition. As part of the Company's continuous enhancement to the allowance for loan and lease losses methodology, during the quarter ended March 31, 2014, an assessment of the look-back period and historical loss factor was performed for auto and leasing and consumer loan portfolios based on the trends observed and their relation with the economic cycle as of the period ended March 31, 2014. Same analysis was performed for the commercial portfolio during the quarter ended June 30, 2014.  As a result, the period was changed to 24 months from the previously determined 12 months for auto and leasing and consumer.  For the commercial portfolio, a look back period of 12 months was maintained.  In addition, during the quarter ended June 30, 2014, an assessment of environmental factors was performed for commercial, auto, and consumer portfolios. As a result, more weight is been given to the environmental factors related to the economy, taking into consideration current evolution of the portfolio and expected impact, due to recent economic developments. These changes in the allowance for loan and lease losses' look back period for the consumer and auto and leasing portfolios, and economic factors for the commercial, auto, and consumer portfolios are considered a change in accounting estimate as per ASC 250-10 provisions, where adjustments should be made prospectively.

Originated and Other Loans and Leases Held for Investment

The following tables present the activity in our allowance for loan and lease losses and the related recorded investment of the associated loans for our originated and other loans held for investment portfolio by segment for the periods indicated:

	Quarter Ended June 30, 2014
							Auto and
	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Balance at beginning of period	$	19,511	$	13,994	$	7,135	$	8,731	$	136	$	49,507
Charge-offs		(987)		(543)		(1,397)		(5,956)		-		(8,883)
Recoveries		88		115		244		2,136		-		2,583
Provision (recapture) for non-covered originated and other loan and lease losses		450		(1,143)		1,905		6,216		3		7,431
Balance at end of period	$	19,062	$	12,423	$	7,887	$	11,127	$	139	$	50,638
	Six-Month Period Ended June 30, 2014
							Auto and
	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Balance at beginning of period	$	19,937	$	14,897	$	6,006	$	7,866	$	375	$	49,081
Charge-offs		(2,201)		(962)		(2,235)		(10,601)		-		(15,999)
Recoveries		236		213		391		3,660		-		4,500
Provision (recapture) for non-covered originated and other loan and lease losses		1,090		(1,725)		3,725		10,202		(236)		13,056
Balance at end of period	$	19,062	$	12,423	$	7,887	$	11,127	$	139	$	50,638

	June 30, 2014
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses on non-covered originated and other loans:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	7,730	$	2,114	$	-	$	-	$	-	$	9,844
Collectively evaluated for impairment		11,332		10,309		7,887		11,127		139		40,794
Total ending allowance balance	$	19,062	$	12,423	$	7,887	$	11,127	$	139	$	50,638
Loans:
Individually evaluated for impairment	$	90,375	$	28,910	$	-	$	-	$	-	$	119,285
Collectively evaluated for impairment		697,626		1,154,262		161,538		508,034		-		2,521,460
Total ending loan balance	$	788,001	$	1,183,172	$	161,538	$	508,034	$	-	$	2,640,745

	Quarter Ended June 30, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Balance at beginning of period	$	22,889	$	16,314	$	1,313	$	1,741	$	77	$	42,334
Charge-offs		(29,120)		(2,886)		(323)		(709)		-		(33,038)
Recoveries		-		234		43		209		-		486
Provision for non-covered originated and other loan and lease losses		27,606		3,961		1,309		2,400		643		35,919
Balance at end of period	$	21,375	$	17,623	$	2,342	$	3,641	$	720	$	45,701
	Six-Month Period Ended June 30, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Balance at beginning of period	$	21,092	$	17,072	$	856	$	533	$	368	$	39,921
Charge-offs		(31,707)		(3,444)		(569)		(800)		-		(36,520)
Recoveries		-		262		107		216		-		585
Provision for non-covered originated and other loan and lease losses		31,990		3,733		1,948		3,692		352		41,715
Balance at end of period	$	21,375	$	17,623	$	2,342	$	3,641	$	720	$	45,701

	December 31, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	8,708	$	1,431	$	-	$	-	$	-	$	10,139
Collectively evaluated for impairment		11,229		13,466		6,006		7,866		375		38,942
Total ending allowance balance	$	19,937	$	14,897	$	6,006	$	7,866	$	375	$	49,081
Loans:
Individually evaluated for impairment	$	84,494	$	28,145	$	-	$	-	$	-	$	112,639
Collectively evaluated for impairment		681,771		1,099,512		127,744		379,874		-		2,288,901
Total ending loans balance	$	766,265	$	1,127,657	$	127,744	$	379,874	$	-	$	2,401,540

Acquired Loans accounted for under ASC 310-20 (Loans with revolving feature and/or acquired at a premium)

The following tables present the activity in our allowance for loan losses and related recorded investment of the associated loans in our non-covered acquiredloan portfolio, excluding loans accounted for under ASC 310-30, for the periods indicated:

	Quarter Ended June 30, 2014
	Commercial			Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered acquired loans accounted for under ASC 310-20:
Balance at beginning of period	$	867	1	$	504	$	2,247	$	-	$	3,618
Charge-offs		(110)			(1,952)		(1,370)		-		(3,432)
Recoveries		30			124		535		-		689
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-20		(323)			1,662		1,230		-		2,569
Balance at end of period	$	464		$	338	$	2,642	$	-	$	3,444
	Six-Month Period Ended June 30, 2014
	Commercial			Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered acquired loans accounted for under ASC 310-20:
Balance at beginning of period	$	926	1	$	-	$	1,428	$	-	$	2,354
Charge-offs		(284)			(4,010)		(2,666)		-		(6,960)
Recoveries		30			224		985		-		1,239
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-20		(208)			4,124		2,895		-		6,811
Balance at end of period	$	464		$	338	$	2,642	$	-	$	3,444

	June 30, 2014
	Commercial		Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses on non-covered acquired loans accounted for under ASC 310-20:
Ending allowance balance attributable to loans:
Collectively evaluated for impairment		464		338		2,642		-		3,444
Total ending allowance balance	$	464	$	338	$	2,642	$	-	$	3,444
Loans:
Collectively evaluated for impairment		38,602		49,604		238,399		-		326,605
Total ending loan balance	$	38,602	$	49,604	$	238,399	$	-	$	326,605

	Quarter Ended June 30, 2013
	Commercial			Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered acquired loans accounted for under ASC 310-20:
Balance at beginning of period	$	386	$ 1	$	-	$	-	$	-	$	386
Charge-offs		(25)			(1,158)		(1,410)		-		(2,593)
Recoveries		-			637		886		-		1,523
Provision (recapture)for non-covered acquired loan and lease losses accounted for under ASC 310-20		563			521		524		-		1,608
Balance at end of period	$	924		$	-	$	-	$	-	$	924
	Six-Month Period Ended June 30, 2013
	Commercial			Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered acquired loans accounted for under ASC 310-20:
Balance at beginning of period	$	-	$ 1	$	-	$	-	$	-	$	-
Charge-offs		(25)			(2,614)		(3,125)		-		(5,764)
Recoveries		-			844		2,116		-		2,960
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-20		949			1,770		1,009		-		3,728
Balance at end of period	$	924		$	-	$	-	$	-	$	924

	December 31, 2013
	Commercial		Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses on non-covered acquired loans accounted for under ASC 310-20:
Ending allowance balance attributable to loans:
Collectively evaluated for impairment		926		-		1428		-		2,354
Total ending allowance balance	$	926	$	-	$	1,428	$	-	$	2,354
Loans:
Collectively evaluated for impairment		77,681		56,174		301,584		-		435,439
Total ending loan balance	$	77,681	$	56,174	$	301,584	$	-	$	435,439

Acquired Loans Accounted for under ASC 310-30 (including those accounted for under ASC 310-30 by analogy)

The following tables present the activity in our allowance for loan losses and related recorded investment of the associated loans in our non-covered acquiredloan portfolio accounted for under ASC 310-30, for the periods indicated:

	Quarter Ended June 30, 2014
	Mortgage			Commercial			Construction			Consumer		Auto		Total
	(In thousands)
Allowance for loan and lease losses for non-covered loans accounted for under ASC 310-30:
Balance at beginning of period	$	-	1	$	2,653	1	$	-	$ 1	$	405	$	-	$	3,058
Provision(recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-30		-			3,563			-			(343)		-		3,220
Balance at end of period	$	-		$	6,216		$	-		$	62	$	-	$	6,278
	Six-Month Period Ended June 30, 2014
	Mortgage			Commercial			Construction			Consumer		Auto		Total
	(In thousands)
Allowance for loan and lease losses for non-covered loans accounted for under ASC 310-30:
Balance at beginning of period	$	-	1	$	1,713	1	$	-	1	$	418	$	732	$	2,863
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-30		-			4,503			-			(356)		(732)		3,415
Balance at end of period	$	-		$	6,216		$	-		$	62	$	-	$	6,278

Non-covered acquired loans accounted for under ASC 310-30 were recognized at fair value as of December 18, 2012, which included the impact of expected credit losses, and therefore, no allowance for credit losses was recorded during the six-month period ended June 30, 2013.

Impaired Loans

The Company evaluates all loans, some individually and others as homogeneous groups, for purposes of determining impairment. The total investment in impaired commercial loans was $29.1million and $28.4million at June 30, 2014 and December 31, 2013,respectively. The impaired commercial loans were measured based on the fair value of collateral or the present value of cash flows, including those identified as troubled-debt restructurings. The valuation allowance for impaired commercial loans amounted to$2.1million and $1.4 millionatJune 30, 2014 and December 31, 2013, respectively. The total investment in impaired mortgage loans was $90.4 millionand $84.5 million at June 30, 2014 and December 31, 2013, respectively. Impairment on mortgage loans assessed as troubled-debt restructurings was measured using the present value of cash flows. The valuation allowance for impaired mortgage loans amounted to approximately $7.7 million and $8.7 million at June30, 2014 and December 31,2013, respectively.

The Company's recorded investment in non-covered commercial and mortgage loans categorized as originated and other loans and leases held for investment that were individually evaluated forimpairment and the related allowance for loan and lease losses at June 30, 2014 and December 31, 2013are as follows:

	June 30, 2014
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance:
Commercial	$	4,580	$	4,459	$	2,114	47%
Residential troubled-debt restructuring		95,652		90,375		7,730	9%
Impaired loans with no specific allowance:
Commercial		31,599		24,451		N/A	N/A
Total investment in impaired loans	$	131,831	$	119,285	$	9,844	8%

	December 31, 2013
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance
Commercial	$	6,600	$	5,553	$	1,431	26%
Residential troubled-debt restructuring		89,539		84,494		8,708	10%
Impaired loans with no specific allowance
Commercial		27,914		22,592		N/A	N/A
Total investment in impaired loans	$	124,053	$	112,639	$	10,139	9%

The Company's recorded investment in non-covered commercial loans categorized as non-covered acquired loans accounted for under ASC 310-20 that were individually evaluated for impairment and the related allowance for loan and lease losses at June 30, 2014 and December 31, 2013 are as follows:

	June 30, 2014
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial		208		208		N/A	N/A
Total investment in impaired loans	$	208	$	208	$	-	0%
	December 31, 2013
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial		208		208		N/A	N/A
Total investment in impaired loans	$	208	$	208	$	-	0%

The Company's recorded investment in non-covered acquired loan pools accounted for under ASC 310-30 and their related allowance for non-covered loan and lease losses at June 30, 2014 and December 31, 2013are as follows:

	June 30, 2014
	Unpaid		Recorded
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired non-covered loan pools:
Mortgage	$	4,793	$	4,277	$	57	1%
Commercial		231,428		208,544		2,867	1%
Construction		45,912		40,550		3,330	8%
Consumer		51,145		43,824		24	0%
Total investment in impaired non-covered loan pools	$	333,278	$	297,195	$	6,278	2%

	December 31, 2013
	Unpaid		Recorded
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired non-covered loan pools:
Mortgage	$	5,183	$	4,718	$	57	1%
Commercial		48,100		40,411		394	1%
Construction		21,526		17,818		1,319	7%
Consumer		73,043		63,606		361	1%
Auto		379,236		377,316		732	0%
Total investment in impaired non-covered loan pools	$	527,088	$	503,869	$	2,863	1%

The following table presents the interest recognized in non-covered commercial and mortgage loans that were individuallyevaluated for impairment, excluding loans accounted for under ASC 310-30, for the quartersand six-month periodsended June 30, 2014 and 2013:

	Quarter Ended June 30,
	2014				2013
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)
Impaired loans with specific allowance
Commercial	$	39	$	7,200	$	255	$	17,049
Residential troubled-debt restructuring		663		90,445		682		83,081
Impaired loans with no specific allowance
Commercial		77		21,951		226		23,304
Total interest income from impaired loans	$	779	$	119,596	$	1,163	$	123,434
	Six-Month Period Ended Ended June 30,
	2014				2013
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)
Impaired loans with specific allowance
Commercial	$	78	$	6,729	$	322	$	17,789
Residential troubled-debt restructuring		1,270		88,749		1,273		80,914
Impaired loans with no specific allowance
Commercial		154		21,790		364		25,304
Total interest income from impaired loans	$	1,502	$	117,268	$	1,959	$	124,007

Modifications

The following tables present the troubled-debt restructurings during the quarters and six-month periods ended June 30, 2014 and 2013:

	Quarter Ended June 30, 2014
	Number of contracts	Pre-Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage	33	$	5,001	6%	353	$	4,965	4.12%	418
Commercial	1		73	7%	55		73	9.25%	36
Consumer	3		24	14%	77		24	13.98%	72
	Six-Month Period Ended June 30, 2014
	Number of contracts	Pre-Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage	88	$	11,813	6%	349	$	11,446	4.26%	390
Commercial	1		73	7%	55		73	9.25%	36
Consumer	8		66	13%	70		68	13.31%	68
	Quarter Ended June 30, 2013
	Number of contracts	Pre- Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage	42	$	5,372	6%	355	$	5,715	4.26%	420
Commercial	2		1,842	9%	87		1,842	4.00%	66
Consumer	2		18	14%	41		18	13.67%	60
	Six-Month Period Ended June 30, 2013
	Number of contracts	Pre- Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage	86	$	10,555	7%	342	$	11,288	4.59%	417
Commercial	2		1,842	9%	87		1,842	4.00%	66
Consumer	2		18	14%	41		18	13.67%	60

The following table presents troubled-debt restructurings for which there was a payment default during the twelve-month periods endedJune 30, 2014 and 2013:

	Twelve-Month Period Ended June 30,
	2014			2013
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Mortgage	22	$	2,703	48	$	6,414
Consumer	5	$	101	2	$	29

Credit Quality Indicators

The Company categorizes non-covered originated and other loans and acquired loans accounted for under ASC 310-20 into risk categories based on relevant information about the ability ofborrowers to service their debt, such as economic conditions, portfolio risk characteristics, prior lossexperience,and the results of periodic credit reviews of individual loans.

The Company uses the following definitions for risk ratings:

Pass: Loans classified as “pass”have a well defined primary source of repayment very likely to be sufficient, with no apparent risk, strong financialposition, minimal operating risk, profitability, liquidity and capitalization better than industry standards.

Special Mention: Loans classified as “special mention” have a potential weakness that deservesmanagement's close attention. If left uncorrected, these potential weaknesses may result in deterioration ofthe repayment prospects for the loan or of the institution's credit position at some future date.

Substandard: Loans classified as “substandard” are inadequately protected by the current net worthand paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a welldefinedweakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by thedistinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as “doubtful” have all the weaknesses inherent in those classified assubstandard, with the added characteristic that the weaknesses make collection or liquidation in full, on thebasis of currently existing facts, conditions, and values, questionable and improbable.

Loss: Loans classified as “loss” are considered uncollectible and of such little value that their continuanceas bankable assets is not warranted. This classification does not mean that the asset has absolutely norecovery or salvage value, but rather that it is not practical or desirable to defer writing off this worthlessloan even though partial recovery may be effected in the future.

Loans not meeting the criteria above that are analyzed individually as part of the above described process areconsidered to be pass rated loans.

As of June 30,2014 and December 31, 2013, and based on the most recent analysis performed, the risk category of gross non-covered originated and other loans and acquiredloans accounted for under ASC 310-20 subject to risk rating by class of loans is as follows:

	June 30, 2014
	Risk Ratings
											Individually
	Balance				Special						Measured for
	Outstanding		Pass		Mention		Substandard		Doubtful		Impairment
	(In thousands)
Commercial - originated and other loans held for investment
Commercial secured by real estate:
Corporate	$	90,886	$	90,886	$	-	$	-	$	-	$	-
Institutional		30,701		20,581		10,120		-		-		-
Middle market		141,225		121,532		6,726		-		-		12,967
Retail		157,188		142,415		1,382		2,233		-		11,158
Floor plan		1,680		1,579		101		-		-		-
Real estate		11,878		11,878		-		-		-		-
		433,558		388,871		18,329		2,233		-		24,125
Other commercial and industrial:
Corporate		61,329		61,329		-		-		-		-
Institutional		487,725		287,734		199,991		-		-		-
Middle market		80,794		73,967		3,428		389		-		3,010
Retail		77,756		73,753		259		1,969		-		1,775
Floor plan		42,010		40,910		299		801		-		-
		749,614		537,693		203,977		3,159		-		4,785
Total		1,183,172		926,564		222,306		5,392		-		28,910
Commercial - acquired loans (under ASC 310-20)
Commercial secured by real estate:
Corporate		2,999		2,999		-		-		-		-
Retail		2,557		2,091		-		466		-		-
Floor plan		3,947		3,947		-		-		-		-
		9,503		9,037		-		466		-		-
Other commercial and industrial:
Corporate		3,010		2,916		94		-		-		-
Retail		11,420		10,871		100		449		-		-
Floor plan		14,669		14,669		-		-		-		-
		29,099		28,456		194		449		-		-
Total		38,602		37,493		194		915		-		-
Total	$	1,221,774	$	964,057	$	222,500	$	6,307	$	-	$	28,910

	December 31, 2013
	Risk Ratings
											Individually
	Balance				Special						Measured for
	Outstanding		Pass		Mention		Substandard		Doubtful		Impairment
	(In thousands)
Commercial - originated and other loans held for investment
Commercial secured by real estate:
Corporate	$	54,796	$	54,796	$	-	$	-	$	-	$	-
Institutional		4,050		4,050		-		-		-		-
Middle market		161,583		133,061		16,627		118		-		11,777
Retail		166,642		149,018		2,182		2,258		-		13,184
Floor plan		1,835		1,835		-		-		-		-
Real estate		11,655		11,655		-		-		-		-
		400,561		354,415		18,809		2,376		-		24,961
Other commercial and industrial:
Corporate		32,598		32,598		-		-		-		-
Institutional		536,445		536,445		-		-		-		-
Middle market		58,897		53,868		3,466		198		-		1,365
Retail		61,510		58,742		257		691		-		1,820
Floor plan		37,646		37,350		188		108		-		-
		727,096		719,003		3,911		997		-		3,185
Total		1,127,657		1,073,418		22,720		3,373		-		28,146
Commercial - acquired loans (under ASC 310-20)
Commercial secured by real estate:
Corporate		10,166		10,166		-		-		-		-
Retail		5,770		4,378		443		949		-		-
Floor plan		2,677		2,576		-		101		-		-
		18,613		17,120		443		1,050		-		-
Other commercial and industrial:
Corporate		9,793		9,696		-		97		-		-
Retail		27,338		26,044		150		1,144		-		-
Floor plan		21,937		21,769		168		-		-		-
		59,068		57,509		318		1,241		-		-
Total		77,681		74,629		761		2,291		-		-
Total	$	1,205,338	$	1,148,047	$	23,481	$	5,664	$	-	$	28,146

At June 30, 2014 and December 31, 2013, we had approximately $670.9millionand $763.4 million, respectively,of credit facilities granted to the Puerto Rico government, including its instrumentalities, public corporations and municipalities, of which $655.4millionand $696.0, respectively, were outstanding as of such dates.A substantial portion of our credit exposure to the government of Puerto Rico consists of collateralized loans or obligations that have a specific source of income or revenues identified for its repayment. Some of these obligations consist of senior and subordinated loans to public corporations that obtain revenues from rates charged for services,such as water and electric power utilities. Public corporations have varying degrees of independence from the central government and many have received appropriations or are due other payments from it. We also have loans to various municipalities for which the good faith, credit and unlimited taxing power of the applicable municipality has been pledged to their repayment.These municipalities are required by law to levy special property taxes in such amounts as shall be required for the payment of all their general obligation bonds and notes. Another portion of these loans consists of special obligations of various municipalities that are payable from the basic real and personal property taxes collected within such municipalities.The good faith and credit obligations of the municipalities have a first lien on the basic property taxes.

In the second quarter of 2014, the government enacted the Puerto Rico Public Corporation Debt Enforcement and Recovery Act (the “Recovery Act”), which establishes procedures for the adjustment of certain public corporations' debts. The Recovery Act states in its preamble that it further promotes the central government's public policy objectives of no longer providing financial support to public corporations and promoting their economic independence. The Recovery Act, which is without precedent and is being challenged in federal court on constitutional grounds, has increased the level of uncertainty as to the rights of the affected public corporation's creditors.As of June 30, 2014, we had approximately $382.9 million of credit facilities granted to public corporations authorized to initiate proceedings under the Recovery Act.

Oriental Bank is part of a four bank syndicate providing a $550 million dollar revolving line of credit to finance the purchase of fuel for the day to day power generation activities of the Puerto Rico Electric Power Authority (“PREPA”), a public corporation authorized to seek relief under the Recovery Act. The Bank's participation in the line of credit has an unpaid principal balance of $200.0 million as of June 30, 2014, which matures on August 14, 2014 and is currently accruing. The bank syndicate and PREPA have executed a short term forbearance agreement that expires at the maturity of the line of credit pursuant to which the bank syndicate agreed to not exercise remedies in connection with certain defaults under the loan agreement to facilitate a dialogue with PREPA, which is actively ongoing, regarding the future of the line of credit. As of June 30, 2014, this credit facility has a rating of special mention.

For residential and consumer loan classes, the Company evaluates credit quality based on the delinquency status of the loan. As of June 30, 2014 and December 31, 2013, and based on the most recent analysis performed, the risk category of non-covered gross originated and other loans and acquired loans accounted for under ASC 310-20 not subject to risk rating by class of loans is as follows:

	June 30, 2014
	Delinquency
															Individually
	Balance														Measured for
	Outstanding		0-29 days		30-59 days		60-89 days		90-119 days		120-364 days		365+ days		Impairment
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year)
Up to the year 2002	$	70,373	$	59,428	$	5,181	$	2,498	$	693	$	649	$	1,840	$	84
Years 2003 and 2004		62,282		51,929		5,503		1,905		232		1,267		1,126		320
Year 2005		85,869		69,305		6,611		2,959		775		3,029		2,806		384
Year 2006		114,386		94,669		10,562		3,781		1,561		1,813		1,808		192
Years 2007, 2008 and 2009		94,343		82,470		3,962		2,051		1,130		2,186		2,143		401
Years 2010, 2011, 2012 2013 and 2014		195,672		173,113		1,979		1,515		246		1,843		1,344		15,632
		622,925		530,914		33,798		14,709		4,637		10,787		11,067		17,013
Non-traditional		38,034		32,254		1,997		1,128		263		1,270		1,073		49
Loss mitigation program		87,964		8,100		1,255		471		223		932		691		76,292
		748,923		571,268		37,050		16,308		5,123		12,989		12,831		93,354
Home equity secured personal loans		749		611		-		-		-		126		12		-
GNMA's buy-back option program		38,329		-		-		-		7,258		16,835		14,236		-
		788,001		571,879		37,050		16,308		12,381		29,950		27,079		93,354
Consumer
Credit cards		15,886		15,034		345		236		61		210		-		-
Overdrafts		318		295		19		3		-		1		-		-
Unsecured personal lines of credit		1,976		1,789		57		1		90		29		10		-
Unsecured personal loans		126,420		123,520		1,206		535		521		123		11		504
Cash collateral personal loans		16,938		16,516		280		94		48		-		-		-
		161,538		157,154		1,907		869		720		363		21		504
Auto and Leasing		508,034		450,414		37,047		13,620		4,588		2,365		-		-
		1,457,573		1,179,447		76,004		30,797		17,689		32,678		27,100		93,858
Acquired loans (accounted for under ASC 310-20)
Consumer
Credit cards		45,938		42,265		1,520		835		465		853		-		-
Personal loans		3,666		3,335		218		82		10		21		-		-
		49,604		45,600		1,738		917		475		874		-		-
Auto		238,399		220,905		11,603		4,325		965		601		-		-
		288,003		266,505		13,341		5,242		1,440		1,475		-		-
Total	$	1,745,576	$	1,445,952	$	89,345	$	36,039	$	19,129	$	34,153	$	27,100	$	93,858

	December 31, 2013
	Delinquency
															Individually
	Balance														Measured for
	Outstanding		0-29 days		30-59 days		60-89 days		90-119 days		120-364 days		365+ days		Impairment
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year)
Up to the year 2002	$	76,512	$	64,743	$	6,594	$	1,634	$	868	$	1,082	$	1,458	$	133
Years 2003 and 2004		65,117		56,283		4,722		1,938		56		1,437		352		329
Year 2005		89,541		74,016		8,414		2,119		1,198		3,037		573		184
Year 2006		120,322		99,243		12,055		4,312		1,148		2,755		515		294
Years 2007, 2008 and 2009		101,150		91,920		3,464		1,104		1,264		2,844		554		-
Years 2010, 2011, 2012 and 2013		149,546		134,577		3,192		1,609		115		974		989		8,090
		602,188		520,782		38,441		12,716		4,649		12,129		4,441		9,030
Non-traditional		42,102		35,168		3,217		1,162		-		1,324		833		398
Loss mitigation program		86,318		7,762		1,376		149		624		312		1,029		75,066
		730,608		563,712		43,034		14,027		5,273		13,765		6,303		84,494
Home equity secured personal loans		736		598		-		-		-		126		12		-
GNMA's buy-back option program		34,921		-		-		-		7,670		14,425		12,826		-
		766,265		564,310		43,034		14,027		12,943		28,316		19,141		84,494
Consumer
Credit cards		15,241		14,555		287		168		118		113		-		-
Overdrafts		372		322		46		4		-		-		-		-
Unsecured personal lines of credit		1,981		1,844		33		38		25		34		7		-
Unsecured personal loans		94,560		92,102		1,272		399		300		39		13		435
Cash collateral personal loans		15,590		15,223		324		43		-		-		-		-
		127,744		124,046		1,962		652		443		186		20		435
Auto and Leasing		379,874		339,817		25,532		9,437		3,397		1,691		-		-
		1,273,883		1,028,173		70,528		24,116		16,783		30,193		19,161		84,929
Acquired loans (accounted for under ASC 310-20)
Consumer
Credit cards		52,199		46,713		2,217		1,200		828		1,241		-		-
Personal loans		3,975		3,681		196		7		60		31		-		-
		56,174		50,394		2,413		1,207		888		1,272		-		-
Auto		301,584		283,825		12,534		3,616		1,095		514		-		-
		357,758		334,219		14,947		4,823		1,983		1,786		-		-
Total	$	1,631,641	$	1,362,392	$	85,475	$	28,939	$	18,766	$	31,979	$	19,161	$	84,929

Covered Loans

For covered loans, as part of the evaluation of actual versus expected cash flows, the Company assesses on a quarterly basis the credit quality of these loans based on delinquency, severity factors and risk ratings, among other assumptions. Migration and credit quality trends are assessed at the pool level, by comparing information from the latest evaluation period through the end of the reporting period.

The changes in the allowance for loan and lease losses on covered loans for the quarters and six-month periodsended June 30, 2014and 2013 were as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Balance at beginning of the period	$	54,398	$	52,974	$	52,729	$	54,124
Provision for covered loan and lease losses, net		1,595		1,211		3,224		1,883
FDIC shared-loss portion of provision for (recapture of)
covered loan and lease losses, net		3,522		(192)		3,562		(2,014)
Balance at end of the period	$	59,515	$	53,993	$	59,515	$	53,993

FDIC shared-loss portion of provision for (recapture of) covered loans and lease losses net,represents the credit impairment losses to be covered under the FDIC loss-share agreement which is increasing (decreasing) the FDIC loss-share indemnification asset.

Net provision for covered loans includes both additional reserves and reserve releases for different pools. The pools for which there were releases are also subject to a reduction to the FDIC shared-loss indemnification asset because of lower expected losses which are recognized as recaptures.

The Company's recorded investment in covered loan pools that have recorded impairments and their relatedallowance for covered loan and lease losses as of June 30, 2014 and December 31, 2013 are as follows:

	June 30, 2014
	Unpaid		Recorded
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired covered loan pools:
Loans secured by 1-4 family residential properties	$	141,951	$	108,884	$	14,923	14%
Construction and development secured by 1-4 family residential properties		63,615		18,566		7,799	42%
Commercial and other construction		124,506		77,980		36,178	46%
Consumer		9,184		4,912		615	13%
Total investment in impaired covered loan pools	$	339,256	$	210,342	$	59,515	28%

	December 31, 2013
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired covered loan pools with specific allowance
Loans secured by 1-4 family residential properties	$	52,142	$	38,179	$	12,495	33%
Construction and development secured by 1-4 family residential properties		66,037		17,304		6,866	40%
Commercial and other construction		209,566		111,946		32,753	29%
Consumer		10,512		5,857		615	11%
Total investment in impaired covered loan pools	$	338,257	$	173,286	$	52,729	30%

XML

Loans

6 Months Ended

Jun. 30, 2014

Loans Receivable [Abstract]

LOANS RECEIVABLE

NOTE 4- LOANS

The Company's loan portfolio is composed of covered loans and non-covered loans. Covered loans are subject to loss sharing agreements with the FDIC and non-covered loans are not subject to FDIC loss sharing agreements.The risks of covered loans are different from the risks of non-covered loans because of the loss protection provided by the FDIC to covered loans. Loans acquired in the BBVAPR Acquisition are included as non-covered loans in theunaudited consolidated statements of financial condition. Non-covered loans are further subdivided between originated and other loans, acquired loans accounted for under ASC 310-20 (loans with revolving feature and/or acquired at a premium),and acquired loans accounted for under ASC 310-30 (loans acquired with deteriorated credit quality, including those by analogy).

The composition of the Company's loan portfolio at June 30, 2014 and December 31,2013 was as follows:

	June 30,		December 31,
	2014		2013
	(In thousands)
Non-covered loans:
Originated and other loans and leases held for investment:
Mortgage	$	788,001	$	766,265
Commercial		1,183,172		1,127,657
Consumer		161,538		127,744
Auto and leasing		508,034		379,874
		2,640,745		2,401,540
Acquired loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		38,602		77,681
Consumer		49,604		56,174
Auto		238,399		301,584
		326,605		435,439
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Mortgage		692,069		717,904
Commercial		508,530		545,117
Construction		123,743		126,427
Consumer		43,824		63,620
Auto		308,512		379,145
		1,676,678		1,832,213
		4,644,028		4,669,192
Deferred loan cost , net		3,236		1,035
Loans receivable		4,647,264		4,670,227
Allowance for loan and lease losses on non-covered loans		(60,360)		(54,298)
Loans receivable, net		4,586,904		4,615,929
Mortgage loans held-for-sale		14,792		46,529
Total non-covered loans, net		4,601,696		4,662,458
Covered loans:
Loans secured by 1-4 family residential properties		121,416		121,748
Construction and development secured by 1-4 family residential properties		18,566		17,304
Commercial and other construction		248,700		264,249
Consumer		5,177		6,119
Leasing		-		270
Total covered loans		393,859		409,690
Allowance for loan and lease losses on covered loans		(59,515)		(52,729)
Total covered loans, net		334,344		356,961
Total loans, net	$	4,936,040	$	5,019,419

During the six-month period ended June 30, 2014, the Company reclassified $26.4millionin mortgage loans held-for-sale to held-for-investment

Non-covered Loans

Originated and Other Loans and Leases Held for Investment

The Company's originated and other loans held for investment areencompassed within four portfolio segments: mortgage, commercial, consumer, andauto and leasing.

The following tables present the aging of the recorded investment in gross originated and other loans held for investment as of June 30,2014 and December 31, 2013 by class ofloans. Mortgage loans past due included delinquent loans in the GNMA buy-back option program. Servicers of loans underlying GNMA mortgage-backed securities must report as their own assets the defaulted loans that they have the option (but not the obligation) to repurchase, even when they elect not to exercise that option.

	June 30, 2014
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	5,182	$	2,540	$	3,225	$	10,947	$	59,426	$	70,373	$	70
Years 2003 and 2004		5,503		1,905		2,929		10,337		51,945		62,282		-
Year 2005		6,775		2,959		6,783		16,517		69,352		85,869		89
Year 2006		10,562		3,781		5,278		19,621		94,765		114,386		-
Years 2007, 2008 and 2009		3,962		2,051		5,859		11,872		82,471		94,343		-
Years 2010, 2011, 2012, 2013 and 2014		3,345		2,745		5,432		11,522		184,150		195,672		339
		35,329		15,981		29,506		80,816		542,109		622,925		498
Non-traditional		1,997		1,128		2,655		5,780		32,254		38,034		-
Loss mitigation program		8,239		7,779		12,427		28,445		59,519		87,964		4,378
		45,565		24,888		44,588		115,041		633,882		748,923		4,876
Home equity secured personal loans		-		-		138		138		611		749		-
GNMA's buy-back option program		-		-		38,329		38,329		-		38,329		-
		45,565		24,888		83,055		153,508		634,493		788,001		4,876
Commercial
Commercial secured by real estate:
Corporate		-		-		-		-		90,886		90,886		-
Institutional		-		-		-		-		30,701		30,701		-
Middle market		685		-		638		1,323		139,902		141,225		-
Retail		1,634		494		6,198		8,326		148,862		157,188		-
Floor plan		-		-		-		-		1,680		1,680		-
Real estate		-		-		-		-		11,878		11,878		-
		2,319		494		6,836		9,649		423,909		433,558		-
Other commercial and industrial:
Corporate		-		-		-		-		61,329		61,329		-
Institutional		-		-		-		-		487,725		487,725		-
Middle market		-		760		-		760		80,034		80,794		-
Retail		536		149		1,343		2,028		75,728		77,756		-
Floor plan		-		-		-		-		42,010		42,010		-
		536		909		1,343		2,788		746,826		749,614		-
		2,855		1,403		8,179		12,437		1,170,735		1,183,172		-

	June 30, 2014
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Consumer
Credit cards		345		236		271		852		15,034		15,886		-
Overdrafts		19		3		1		23		295		318		-
Personal lines of credit		57		1		129		187		1,789		1,976		-
Personal loans		1,227		535		677		2,439		123,981		126,420		-
Cash collateral personal loans		280		94		48		422		16,516		16,938		-
		1,928		869		1,126		3,923		157,615		161,538		-
Auto and leasing		37,047		13,620		6,953		57,620		450,414		508,034		-
Total	$	87,395	$	40,780	$	99,313	$	227,488	$	2,413,257	$	2,640,745	$	4,876

	December 31, 2013
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	6,697	$	1,635	$	3,408	$	11,740	$	64,772	$	76,512	$	79
Years 2003 and 2004		4,722		2,163		1,845		8,730		56,387		65,117		-
Year 2005		8,527		2,119		4,808		15,454		74,087		89,541		-
Year 2006		12,055		4,312		4,418		20,785		99,537		120,322		-
Years 2007, 2008 and 2009		3,464		1,104		4,663		9,231		91,919		101,150		152
Years 2010, 2011, 2012 and 2013		3,923		1,609		4,453		9,985		139,561		149,546		459
		39,388		12,942		23,595		75,925		526,263		602,188		690
Non-traditional		3,217		1,162		2,311		6,690		35,412		42,102		-
Loss mitigation program		9,759		5,560		13,191		28,510		57,808		86,318		2,185
		52,364		19,664		39,097		111,125		619,483		730,608		2,875
Home equity secured personal loans		-		-		138		138		598		736		-
GNMA's buy-back option program		-		-		34,921		34,921		-		34,921		-
		52,364		19,664		74,156		146,184		620,081		766,265		2,875
Commercial
Commercial secured by real estate:
Corporate		-		-		-		-		54,796		54,796		-
Institutional		-		-		-		-		4,050		4,050		-
Middle market		1,356		-		10,294		11,650		149,933		161,583		-
Retail		4,253		1,015		3,190		8,458		158,184		166,642		-
Floor plan		-		-		-		-		1,835		1,835		-
Real estate		-		-		-		-		11,655		11,655		-
		5,609		1,015		13,484		20,108		380,453		400,561		-
Other commercial and industrial:
Corporate		236		-		-		236		32,362		32,598		-
Institutional		-		-		-		-		536,445		536,445		-
Middle market		-		299		1,134		1,433		57,464		58,897		-
Retail		1,830		552		539		2,921		58,589		61,510		-
Floor plan		39		-		-		39		37,607		37,646		-
		2,105		851		1,673		4,629		722,467		727,096		-
		7,714		1,866		15,157		24,737		1,102,920		1,127,657		-

	December 31, 2013
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Consumer
Credit cards		287		168		232		687		14,554		15,241		-
Overdrafts		46		4		-		50		322		372		-
Personal lines of credit		33		38		66		137		1,844		1,981		-
Personal loans		1,324		399		352		2,075		92,485		94,560		-
Cash collateral personal loans		324		43		-		367		15,223		15,590		-
		2,014		652		650		3,316		124,428		127,744		-
Auto and leasing		25,531		9,437		5,089		40,057		339,817		379,874		-
Total	$	87,623	$	31,619	$	95,052	$	214,294	$	2,187,246	$	2,401,540	$	2,875

At June 30, 2014, the increase in delinquencies in the consumer and the auto and leasing portfolios compared to December 31, 2013 is mainly attributed to the fact that non-performing loans of acquired non-covered loan portfolio were accounted for under ASC 310-30. Such portfolios are increasing as new originations are ramping up the balances outstanding.More than a year from the BBVAPR Acquisition, those portfolios are beginning to reflect normal delinquency levels as seasoned portfolios.At June 30, 2014, the increase in delinquencies in the mortgage portfolio compared to December 31, 2013 is mainly attributed to local economic conditions.

At June 30, 2014 and December 31, 2013, the Company had $476.3 million and $515.4 million, respectively, in loans granted to the Puerto Rico government, including its instrumentalities, public corporations and municipalities as part of the institutional commercial loan segment. This entire amount wascurrent at June 30, 2014.

Acquired Loans Accounted for under ASC 310-20 (Loans with revolving feature and/or acquired at a premium)

Credit cards, retail and commercial revolving lines of credits, floor plans and performing auto loans with FICO scores over 660 acquired at a premiumas part of the non-covered portfolio are accounted for under the guidance of ASC 310-20, which requires that any contractually required loan payment receivable in excess of the Company's initial investment in the loans be accreted into interest income on a level-yield basis over the life of the loan. Loans accounted for under ASC 310-20 are placed on non-accrual status when past due in accordance with the Company's non-accrual policy,and any accretion of discount or amortization of premium is discontinued. Loans acquired in the non-covered portfolio that were accounted for under the provisions of ASC 310-20 are removed from the acquired loan categoryat the end of the reporting periodupon refinancing, renewal or normal re-underwriting.

The following tables present the aging of the recorded investment in gross acquired loans accounted for under ASC 310-20 as of June 30,2014 and December 31, 2013, by class ofloans:

	June 30, 2014
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Commercial
Commercial secured by real estate
Corporate	$	-	$	-	$	-	$	-	$	2,999	$	2,999	$	-
Retail		-		-		506		506		2,051		2,557		-
Floor plan		-		-		101		101		3,846		3,947		-
		-		-		607		607		8,896		9,503		-
Other commercial and industrial
Corporate		-		-		94		94		2,916		3,010		-
Retail		254		92		556		902		10,518		11,420		-
Floor plan		51		68		119		238		14,431		14,669		-
		305		160		769		1,234		27,865		29,099		-
		305		160		1,376		1,841		36,761		38,602		-
Consumer
Credit cards		1,520		835		1,320		3,675		42,263		45,938		-
Personal loans		218		82		32		332		3,334		3,666		-
		1,738		917		1,352		4,007		45,597		49,604		-
Auto		11,603		4,325		1,566		17,494		220,905		238,399		-
Total	$	13,646	$	5,402	$	4,294	$	23,342	$	303,263	$	326,605	$	-

	December 31, 2013
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Commercial
Commercial secured by real estate
Corporate	$	-	$	-	$	-	$	-	$	10,166	$	10,166	$	-
Retail		431		331		868		1,630		4,140		5,770		-
Floor plan		-		-		101		101		2,576		2,677		-
		431		331		969		1,731		16,882		18,613		-
Other commercial and industrial
Corporate		14		83		-		97		9,696		9,793		-
Retail		1,717		1,418		659		3,794		23,544		27,338		-
Floor plan		35		193		18		246		21,691		21,937		-
		1,766		1,694		677		4,137		54,931		59,068		-
		2,197		2,025		1,646		5,868		71,813		77,681		-
Consumer
Credit cards		2,217		1,200		2,068		5,485		46,714		52,199		-
Personal loans		196		7		91		294		3,681		3,975		-
		2,413		1,207		2,159		5,779		50,395		56,174		-
Auto		12,534		3,616		1,608		17,758		283,826		301,584		-
Total	$	17,144	$	6,848	$	5,413	$	29,405	$	406,034	$	435,439	$	-

Acquired Loans Accounted for under ASC 310-30 (including those accounted for under ASC 310-30 by analogy)

Acquired loans that are part of the non-covered portfolio, except for credit cards, retail and commercial revolving lines of credits, floor plans and performing auto loans with FICO scores over 660 acquired at a premium,are accounted for by the Company in accordance with ASC 310-30.

The carrying amount corresponding to non-covered loans acquired with deteriorated credit quality, including those accounted under ASC 310-30 by analogy, in the statements of financial condition at June 30,2014 and December 31, 2013 is as follows:

	June 30,	December 31,
	2014	2013
	(In thousands)
Contractual required payments receivable	$ 2,676,008	$ 2,929,353
Less: Non-accretable discount	554,724	579,587
Cash expected to be collected	2,121,284	2,349,766
Less: Accretable yield	444,606	517,553
Carrying amount	$ 1,676,678	$ 1,832,213

At June 30, 2014 and December 31, 2013, the Company had $179.1million and $180.5 million, respectively, in loans granted to the Puerto Rico government, including its instrumentalities, public corporations and municipalities as part of its non-covered acquired loans accounted for under ASC 310-30.This entire amount wascurrent at June 30, 2014.

The following tables describe the accretable yield and non-accretable discount activity of acquired loans accounted for under ASC 310-30 for the quartersand six-month periods ended June 30, 2014 and 2013

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Accretable Yield Activity
Balance at beginning of period	$	482,001	$	542,741	$	517,553	$	590,409
Accretion		(39,714)		(54,427)		(79,983)		(102,095)
Transfer from non-accretable discount		2,319		7,747		7,036		7,747
Balance at end of period	$	444,606	$	496,061	$	444,606	$	496,061
	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Non-Accretable Discount Activity
Balance at beginning of period	$	563,294	$	733,126	$	579,587	$	741,872
Principal losses		(6,251)		(11,738)		(17,827)		(20,484)
Transfer to accretable yield		(2,319)		(7,747)		(7,036)		(7,747)
Balance at end of period	$	554,724	$	713,641	$	554,724	$	713,641

Covered Loans

The carrying amount of covered loans at June 30, 2014 and December 31, 2013is as follows:

	June 30,		December 31,
	2014		2013
	(In thousands)
Contractual required payments receivable	$	607,144	$	702,126
Less: Non-accretable discount		85,224		129,477
Cash expected to be collected		521,920		572,649
Less: Accretable yield		128,061		162,959
Carrying amount, gross		393,859		409,690
Less: Allowance for covered loan and lease losses		59,515		52,729
Carrying amount, net	$	334,344	$	356,961

The following tables describe the accretable yield and non-accretable discount activity of covered loans for the quartersand six-month periods ended June 30, 2014 and2013:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Accretable yield activity
Balance at beginning of period	$	147,767	$	174,107	$	162,959	$	188,008
Accretion		(24,880)		(23,999)		(48,268)		(44,228)
Transfer from non-accretable discount		5,174		17,024		13,370		23,352
Balance at end of period	$	128,061	$	167,132	$	128,061	$	167,132
	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2014		2013
	(In thousands)
Non-accretable discount activity
Balance at beginning of period	$	107,323	$	214,236	$	129,477	$	237,555
Principal losses		(16,925)		(4,953)		(30,883)		(21,944)
Transfer to accretable yield		(5,174)		(17,024)		(13,370)		(23,352)
Balance at end of period	$	85,224	$	192,259	$	85,224	$	192,259

Non-accrual Loans

The following table presents the recorded investment in loansin non-accrual status by class ofloans as of June 30, 2014 and December 31, 2013:

	June 30,		December 31,
	2014		2013
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year):
Up to the year 2002	$	3,194	$	3,428
Years 2003 and 2004		2,945		1,845
Year 2005		6,905		4,922
Year 2006		5,278		4,418
Years 2007, 2008 and 2009		5,860		4,511
Years 2010, 2011, 2012, 2013 and 2014		9,379		7,818
		33,561		26,942
Non-traditional		2,655		2,311
Loss mitigation program		16,084		18,792
		52,300		48,045
Home equity secured personal loans		138		138
		52,438		48,183
Commercial
Commercial secured by real estate
Middle market		10,345		11,895
Retail		9,823		7,208
		20,168		19,103
Other commercial and industrial
Middle market		760		1,134
Retail		2,578		2,485
Floor plan		-		108
		3,338		3,727
		23,506		22,830
Consumer
Credit cards		271		232
Overdrafts		1		-
Personal lines of credit		139		84
Personal loans		985		485
Cash collateral personal loans		58		4
		1,454		805
Auto and leasing		7,300		5,089
	$	84,698	$	76,907

	June 30,		December 31,
	2014		2013
	(In thousands)
Acquired loans accounted under ASC 310-20
Commercial
Commercial secured by real estate
Retail	$	545	$	956
Floor plan		101		101
		646		1,057
Other commercial and industrial
Corporate		94		97
Retail		588		1,371
Floor plan		120		18
		802		1,486
		1,448		2,543
Consumer
Credit cards		1,318		2,068
Personal loans		34		151
		1,352		2,219
Auto		1,680		1,608
		4,480		6,370
Total non-accrual loans	$	89,178	$	83,277

Loans accounted for under ASC 310-30 are excluded from the above table as they are considered to be performing due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analyses.

Effective April 24, 2013, delinquent residential mortgage loans insured or guaranteed under applicable FHA and VA programs are placed in non-accrual when they become18 months or more past due, since they are insured loans. Before that date, they were placed in non-accrual when they became 90 days or more past due.

At June30, 2014 and December 31, 2013, loanswhose terms have been extended and which are classified as troubled-debt restructurings that are not included in non-accrual loans amounted to $75.4 million and $66.5 million,respectively, as they are performing under their new terms.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2014

Commitments and Contingencies [Abstract]

COMMITMENTS

NOTE 16—COMMITMENTS AND CONTINGENCIES

Loan Commitments

In the normal course of business, the Company becomes a party to credit-related financial instruments with off-balance-sheet risk to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby and commercial letters of credit, and financial guarantees. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidatedstatements of financial condition. The contract or notional amount of those instruments reflects the extent of the Company's involvement in particular types of financial instruments.

The Company's exposure to credit losses in the event of nonperformance by the counterparty to the financial instrument for commitments to extend credit, including commitments under credit card arrangements, and commercial letters of credit is represented by the contractual notional amounts of those instruments, which do not necessarily represent the amounts potentially subject to risk. In addition, the measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are identified. The Companyuses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Credit-related financial instruments at June 30, 2014 and December 31, 2013were as follows:

	June 30,		December 31,
	2014		2013
	(In thousands)
Commitments to extend credit	$	441,793	$	520,269
Commercial letters of credit		1,544		1,096

Commitments to extend credit represent agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Company upon the extension of credit, is based on management's credit evaluation of the counterparty.

At June 30, 2014 and December 31, 2013, commitments to extend credit consisted mainly of undisbursed available amounts on commercial lines of credit, construction loans, and revolving credit card arrangements. Since many of the unused commitments are expected to expire unused or be only partially used, the total amount of these unused commitments does not necessarily represent future cash requirements. These lines of credit had a reserve of $900 thousand at both June 30, 2014 and December 31, 2013.

Commercial letters of credit are issued or confirmed to guarantee payment of customers' payables or receivables in short-term international trade transactions. Generally, drafts will be drawn when the underlying transaction is consummated as intended. However, the short-term nature of this instrument serves to mitigate the risk associated with these contracts.

The summary of instruments that are considered financial guarantees in accordance with the authoritative guidance related to guarantor's accounting and disclosure requirements for guarantees, including indirect guarantees of indebtedness of others, at June 30, 2014 and December 31, 2013, is as follows:

	June 30,		December 31,
	2014		2013
	(In thousands)
Standby letters of credit and financial guarantees	$	38,451	$	38,577
Loans sold with recourse		113,547		122,291
Commitments to sell or securitize mortgage loans		63,558		80,307

Standby letters of credit and financial guarantees are written conditional commitments issued by the Company to guarantee the payment and/or performance of a customer to a third party (“beneficiary”). If the customer fails to comply with the agreement, the beneficiary may draw on the standby letter of credit or financial guarantee as a remedy. The amount of credit risk involved in issuing letters of credit in the event of nonperformance is the face amount of the letter of credit or financial guarantee. These guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. The amount of collateral obtained, if it is deemed necessary by the Company upon extension of credit, is based on management's credit evaluation of the customer.

Lease Commitments

The Company has entered into various operating lease agreements for branch facilities and administrative offices. Rent expense for the quarters ended June 30, 2014 and 2013amounted to $2.4millionand $2.6million,respectively, and is included in the “occupancy and equipment” caption in the unaudited consolidated statements of operations. For the six-month periods ended June 30, 2014 and 2013, rent expense amounted to $4.9millionand $5.2million, respectively.Future rental commitments under leases in effect at June 30, 2014, exclusive of taxes, insurance, and maintenance expenses payable by the Company, are summarized as follows:

Year Ending December 31,	Minimum Rent
	(In thousands)
2014 (July 1 to December 31)	$	4,210
2015		7,980
2016		7,388
2017		6,761
2018		5,881
Thereafter		22,004
	$	54,224

CONTINGENCIES

Contingencies

The Company and its subsidiaries are defendants in a number of legal proceedings incidental to their business. In the ordinary course of business, the Company and its subsidiaries are also subject to governmental and regulatory examinations. Certain subsidiaries of the Company, including the Bank (and its subsidiary OIB), Oriental Financial Services, and Oriental Insurance, are subject to regulation by various U.S., Puerto Rico and other regulators.

The Company seeks to resolve all litigation and regulatory matters in the manner management believes is in the best interests of the Company and its shareholders, and contests allegations of liability or wrongdoing and, where applicable, the amount of damages or scope of any penalties or other relief sought as appropriate in each pending matter.

Subject to the accounting and disclosure framework under the provisions of ASC 450, it is the opinion of the Company's management, based on current knowledge and after taking into account its current legal accruals, that the eventual outcome of all matters would not be likely to have a material adverse effect on the consolidated statements of financial condition of the Company. Nonetheless, given the substantial or indeterminate amounts sought in certain of these matters, and the inherent unpredictability of such matters, an adverse outcome in certain of these matters could, from time to time, have a material adverse effect on the Company's consolidated results of operations or cash flows in particular quarterly or annual periods. The Company has evaluated all litigation and regulatory matters where the likelihood of a potential loss is deemed reasonably possible. The Company has determined that the estimate of the reasonably possible loss is not significant.

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Related Party Transactions

6 Months Ended

Jun. 30, 2014

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 12—RELATED PARTY TRANSACTIONS

The Bank grants loans to its directors, executive officers and to certain related individuals or organizations in the ordinary course of business. These loans are offered at the same terms as loans to unrelated third parties. As of June30, 2014 and December 31,2013, these loanbalances amounted to $24.2 million and $19.0 million, respectively.The activity and balance of these loans for the quarters endedJune 30, 2014and 2013were as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Balance at the beginning of year	$	19,267	$	8,688	$	18,963	$	6,055
New loans		13,847		-		13,847		4,234
Repayments and sales		(8,963)		(657)		(8,659)		(2,026)
Credits of persons no longer considered related parties		-		-		-		(232)
Balance at the end of year	$	24,151	$	8,031	$	24,151	$	8,031

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Borrowings (Securities Sold Under Agreement to Repurchase by Counterparties) (Details) (Securities Sold under Agreements to Repurchase [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Borrowed fund	$ 1,010,000	$ 1,265,000
Fair Value of Underlying Collateral	1,133,532	1,409,535
Jp Morgan Chase Bank Na [Member]
Debt Instrument [Line Items]
Borrowed fund	255,000	255,000
Fair Value of Underlying Collateral	274,471	273,250
Credit Suisse Securities LLC [Member]
Debt Instrument [Line Items]
Borrowed fund	755,000	755,000
Fair Value of Underlying Collateral	859,061	864,232
Deutsche Bank [Member]
Debt Instrument [Line Items]
Borrowed fund	0	255,000
Fair Value of Underlying Collateral	$ 0	$ 272,053

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Accrued Interest Receivable and Other Assets

6 Months Ended

Jun. 30, 2014

Accrued Interest Receivable And Other Assets [Abstract]

Other Assets Disclosure [Text Block]

NOTE 8—ACCRUED INTEREST RECEIVABLE ANDOTHER ASSETS

Accrued interest receivable at June 30, 2014 and December 31, 2013 consists of the following:

	June 30,		December 31,
	2014		2013
	(In thousands)
Non-covered loans	$	18,098	$	13,378
Investments		4,410		5,356
	$	22,508	$	18,734

Other assets at June 30, 2014 and December 31, 2013 consist of the following:

		June 30,		December 31,
	2014		2013
	(In thousands)
Prepaid expenses	$	17,423	$	15,439
Core deposit and customer relationship intangibles		10,829		11,912
Other repossessed assets		16,875		12,583
Mortgage tax credits		2,621		8,706
Investment in Statutory Trust		1,083		1,083
Accounts receivable and other assets		41,165		48,717
	$	89,996	$	98,440

Prepaid expenses amounting to $19.6 million and $15.4 million at June 30, 2014 and December 31, 2013, respectively, include prepaid municipal, property and income taxes aggregating to $14.2million and $9.6million, respectively.

In connection with the FDIC-assisted acquisition and the BBVAPR Acquisition, the Company recorded a core deposit intangible representing the value of checking and savings deposits acquired. At June 30, 2014 and December 31, 2013, this core deposit intangible amounted to $7.1million and $7.8million, respectively. In addition, the Company recorded a customer relationship intangible amounting to $5.0 million representing the value of customer relationships acquired with the acquisition of the securities broker-dealer and insurance agency in the BBVAPR Acquisition as of December 31, 2012. At June 30, 2014 and December 31, 2013, this customer relationship intangible amounted to $3.7million and $4.1million, respectively.

Other repossessed assets totaled $16.9 million and $12.6 million atJune 30, 2014 and December 31, 2013, respectively, include repossessed automobilesamounting to $16.8millionand $12.3million, respectively.

At June 30, 2014 and December 31, 2013, tax credits for the Companytotaled$2.6 million and $8.7 million, respectively.These tax credits do not have an expiration date.

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Allowance for Loan and Lease Losses (Allowance for loan and lease losses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended	3 Months Ended		6 Months Ended			3 Months Ended	6 Months Ended	3 Months Ended		6 Months Ended				3 Months Ended			3 Months Ended	6 Months Ended	3 Months Ended		6 Months Ended				3 Months Ended			3 Months Ended	6 Months Ended	3 Months Ended		6 Months Ended				3 Months Ended			6 Months Ended		3 Months Ended		6 Months Ended				3 Months Ended			3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 Non-covered acquired loans accounted under ASC 310-20	Jun. 30, 2013 Non-covered acquired loans accounted under ASC 310-20	Jun. 30, 2014 Non-covered acquired loans accounted under ASC 310-20	Jun. 30, 2013 Non-covered acquired loans accounted under ASC 310-20	Jun. 30, 2014 Most recent acquired loans accounted under ASC 310-30	Jun. 30, 2014 Most recent acquired loans accounted under ASC 310-30	Jun. 30, 2014 Non-covered originated loans [Member]	Jun. 30, 2013 Non-covered originated loans [Member]	Jun. 30, 2014 Non-covered originated loans [Member]	Jun. 30, 2013 Non-covered originated loans [Member]	Jun. 30, 2013 Residential Portfolio Segment Non-covered acquired loans accounted under ASC 310-20	Jun. 30, 2014 Residential Portfolio Segment Most recent acquired loans accounted under ASC 310-30	Jun. 30, 2014 Residential Portfolio Segment Most recent acquired loans accounted under ASC 310-30	Jun. 30, 2014 Residential Portfolio Segment Non-covered originated loans [Member]	Jun. 30, 2013 Residential Portfolio Segment Non-covered originated loans [Member]	Jun. 30, 2014 Residential Portfolio Segment Non-covered originated loans [Member]	Jun. 30, 2013 Residential Portfolio Segment Non-covered originated loans [Member]	Jun. 30, 2014 Commercial Portfolio Segment	Jun. 30, 2013 Commercial Portfolio Segment	Jun. 30, 2014 Commercial Portfolio Segment Non-covered acquired loans accounted under ASC 310-20	Jun. 30, 2013 Commercial Portfolio Segment Non-covered acquired loans accounted under ASC 310-20	Dec. 31, 2013 Commercial Portfolio Segment Non-covered acquired loans accounted under ASC 310-20	Jun. 30, 2014 Commercial Portfolio Segment Most recent acquired loans accounted under ASC 310-30	Jun. 30, 2014 Commercial Portfolio Segment Most recent acquired loans accounted under ASC 310-30	Jun. 30, 2014 Commercial Portfolio Segment Non-covered originated loans [Member]	Jun. 30, 2013 Commercial Portfolio Segment Non-covered originated loans [Member]	Jun. 30, 2014 Commercial Portfolio Segment Non-covered originated loans [Member]	Jun. 30, 2013 Commercial Portfolio Segment Non-covered originated loans [Member]	Jun. 30, 2014 Consumer Portfolio Segment	Jun. 30, 2013 Consumer Portfolio Segment	Jun. 30, 2014 Consumer Portfolio Segment Non-covered acquired loans accounted under ASC 310-20	Jun. 30, 2013 Consumer Portfolio Segment Non-covered acquired loans accounted under ASC 310-20	Dec. 31, 2013 Consumer Portfolio Segment Non-covered acquired loans accounted under ASC 310-20	Jun. 30, 2014 Consumer Portfolio Segment Most recent acquired loans accounted under ASC 310-30	Jun. 30, 2014 Consumer Portfolio Segment Most recent acquired loans accounted under ASC 310-30	Jun. 30, 2014 Consumer Portfolio Segment Non-covered originated loans [Member]	Jun. 30, 2013 Consumer Portfolio Segment Non-covered originated loans [Member]	Jun. 30, 2014 Consumer Portfolio Segment Non-covered originated loans [Member]	Jun. 30, 2013 Consumer Portfolio Segment Non-covered originated loans [Member]	Jun. 30, 2014 Auto Portfolio Segment	Jun. 30, 2013 Auto Portfolio Segment	Jun. 30, 2014 Auto Portfolio Segment Non-covered acquired loans accounted under ASC 310-20	Jun. 30, 2013 Auto Portfolio Segment Non-covered acquired loans accounted under ASC 310-20	Jun. 30, 2014 Auto Portfolio Segment Most recent acquired loans accounted under ASC 310-30	Jun. 30, 2014 Auto Portfolio Segment Most recent acquired loans accounted under ASC 310-30	Jun. 30, 2014 Auto and Leasing Portfolio Segment	Jun. 30, 2014 Auto and Leasing Portfolio Segment Non-covered originated loans [Member]	Jun. 30, 2013 Auto and Leasing Portfolio Segment Non-covered originated loans [Member]	Jun. 30, 2014 Auto and Leasing Portfolio Segment Non-covered originated loans [Member]	Jun. 30, 2013 Auto and Leasing Portfolio Segment Non-covered originated loans [Member]	Jun. 30, 2014 Unallocated Financing Receivables	Jun. 30, 2013 Unallocated Financing Receivables	Jun. 30, 2014 Unallocated Financing Receivables Non-covered acquired loans accounted under ASC 310-20	Jun. 30, 2013 Unallocated Financing Receivables Non-covered acquired loans accounted under ASC 310-20	Dec. 31, 2013 Unallocated Financing Receivables Non-covered acquired loans accounted under ASC 310-20	Jun. 30, 2014 Unallocated Financing Receivables Non-covered originated loans [Member]	Jun. 30, 2013 Unallocated Financing Receivables Non-covered originated loans [Member]	Jun. 30, 2014 Unallocated Financing Receivables Non-covered originated loans [Member]	Jun. 30, 2013 Unallocated Financing Receivables Non-covered originated loans [Member]	Jun. 30, 2014 Construction Portfolio Segment Most recent acquired loans accounted under ASC 310-30	Jun. 30, 2014 Construction Portfolio Segment Most recent acquired loans accounted under ASC 310-30
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period					$ 3,618	$ 386	$ 2,354	$ 0	$ 3,058	$ 2,863	$ 49,507	$ 42,334	$ 49,081	$ 39,921	$ 0	$ 0	$ 0	$ 19,511	$ 22,889	$ 19,937	$ 21,092	$ 926	$ 0	$ 867	$ 386	$ 926	$ 2,653	$ 1,713	$ 13,994	$ 16,314	$ 14,897	$ 17,072	$ 0	$ 0	$ 504	$ 0	$ 0	$ 405	$ 418	$ 7,135	$ 1,313	$ 6,006	$ 856	$ 1,428	$ 0	$ 2,247	$ 0	$ 0	$ 732	$ 11,127	$ 8,731	$ 1,741	$ 7,866	$ 533	$ 0	$ 0	$ 0	$ 0	$ 0	$ 136	$ 77	$ 375	$ 368	$ 0	$ 0
Charge-offs					(3,432)	(2,593)	(6,960)	(5,764)			(8,883)	(33,038)	(15,999)	(36,520)				(987)	(29,120)	(2,201)	(31,990)	(284)	(25)	(110)	(25)				(543)	(2,886)	(962)	(3,444)	(4,010)	(2,614)	(1,952)	(1,158)				(1,397)	(323)	(2,235)	(569)	(2,666)	(3,125)	(1,370)	(1,410)				(5,956)	(709)	(10,601)	(800)	0	0	0	0		0	0	0	0
Recoveries					689	1,523	1,239	2,960			2,583	486	4,500	585				88	0	236		30	0	30	0				115	234	213	262	224	844	124	637				244	43	391	107	985	2,116	535	886				2,136	209	3,660	216	0	0	0	0		0	0	0	0
Provision for Non Covered Loan and Lease Losses	13,220	37,527	23,282	45,443	2,569	1,608	6,811	3,728	3,220	3,415	7,431	35,919	13,056	41,715		0	0	450	27,606	1,090		(208)	949	(323)	563		3,563	4,503	(1,143)	3,961	(1,725)	3,733	4,124	1,770	1,662	521		(343)	(356)	1,905	1,309	3,725	1,948	2,895	1,009	1,230	524	0	(732)		6,216	2,400	10,202	3,692	0	0	0	0		3	643	(236)	352	0	0
Balance at end of period					$ 3,444	$ 924	$ 3,444	$ 924	$ 6,278	$ 6,278	$ 50,638	$ 45,701	$ 50,638	$ 45,701	$ 0	$ 0	$ 0	$ 19,062	$ 21,375	$ 19,062	$ 21,375	$ 464	$ 924	$ 464	$ 924	$ 926	$ 6,216	$ 6,216	$ 12,423	$ 17,623	$ 12,423	$ 17,623	$ 338	$ 0	$ 338	$ 0	$ 0	$ 62	$ 62	$ 7,887	$ 2,342	$ 7,887	$ 2,342	$ 2,642	$ 0	$ 2,642		$ 0	$ 0	$ 11,127	$ 11,127	$ 3,641	$ 11,127	$ 3,641	$ 0	$ 0	$ 0	$ 0	$ 0	$ 139	$ 720	$ 139	$ 720	$ 0	$ 0

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Fair value (Estimated fair value and carrying value) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012
Assets, Fair Value Disclosure [Abstract]
Available-for-sale Securities	$ 1,418,958		$ 1,588,425
Held to maturity Fair Value	26,844		0
Federal Home Loan Bank (FHLB) stock	24,381		24,450
Derivative Assets	9,558		20,502
Servicing Assets	13,655		13,801
Liabilities, Fair Value Disclosure [Abstract]
Derivative liabilities	13,617		14,937
Assets,Carrying Value [Abstract]
Total cash and cash equivalents	596,485		621,269	743,843		855,235
Restricted Cash And Cash Equivalents	15,170		82,199
Securities Purchased under Agreements to Resell	0		60,000
Trading Securities	1,613		1,869
Non-covered loans	4,586,904		4,615,929
Covered, net	334,344		356,961
FDIC Indemnification Asset	143,660	166,194	189,240	253,379	283,124	302,295
Accrued interest receivable	22,508		18,734
Liabilities,Carrying Value Disclosure [Abstract]
Deposits, Total	5,141,233		5,383,265
Securities Sold under Agreements to Repurchase	1,012,233		1,267,618
Subordinated capital notes	100,797		100,010
Accrued expenses and other liabilities	135,405		144,424
Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Cash and Cash Equivalents, Fair Value Disclosure	596,485		621,269
Restricted Cash, at Fair Value	15,170		82,199
Assets,Carrying Value [Abstract]
Total cash and cash equivalents	596,485		621,269
Restricted Cash And Cash Equivalents	15,170		82,199
Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Federal Funds Sold and Securities Borrowed or Purchased under Agreements to Resell, Fair Value Disclosure	0		60,000
Available-for-sale Securities	1,418,958		1,568,745
Federal Home Loan Bank (FHLB) stock	24,381		24,450
Derivative Assets	2,978		4,072
Receivables, Fair Value Disclosure	13,617		14,937
Assets,Carrying Value [Abstract]
Securities Purchased under Agreements to Resell	0		60,000
Trading Securities	1,613		1,869
Investment securities AFS , carrying value	1,418,958		1,568,745
Federal Home Loan Bank Stock at carrying value	24,381		24,450
Derivative Assets, carrying value	2,978		4,072
Liabilities,Carrying Value Disclosure [Abstract]
Derivative liabilities at carrying value	13,617		14,937
Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure [Abstract]
Available-for-sale Securities	0		19,680
Non-covered loans, net	4,527,811		4,857,505
Covered loans, net	397,262		459,444
Derivative Assets	6,580		16,430
FDIC Indemnification Asset Fair Value Disclosure	94,653		152,965
Receivables, Fair Value Disclosure	22,508		18,734
Servicing Assets	13,655		13,801
Liabilities, Fair Value Disclosure [Abstract]
Deposits, Fair Value Disclosure	5,076,996		5,409,540
Securities sold under agreements to repurchase	1,065,181		1,323,903
Advances from FHLB	365,808		335,324
Notes Payable Fair Value Disclosure	3,741		3,638
Subordinated capital notes	88,243		99,316
Accrued expenses and other liabilities	135,406		144,424
Assets,Carrying Value [Abstract]
Investment securities AFS , carrying value	0		19,680
Non-covered loans	4,601,696		4,662,458
Covered, net	334,344		356,961
Derivative Assets, carrying value	6,580		16,430
FDIC Indemnification Asset	143,660		189,240
Accrued interest receivable	22,508		18,734
Servicing assets, carrying value	13,655		13,801
Liabilities,Carrying Value Disclosure [Abstract]
Deposits, Total	5,141,233		5,383,265
Securities Sold under Agreements to Repurchase	1,012,233		1,267,618
Advances from FHLB	360,240		336,143
Term Notes	3,837		3,663
Subordinated capital notes	100,797		100,010
Accrued expenses and other liabilities	$ 135,406		$ 144,424

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FDIC Asset and True-up Payment Obligation

6 Months Ended

Jun. 30, 2014

Banking and Thrift [Abstract]

FDIC Indemnification Asset and True-up Payment Obligation [Text Block]

NOTE 6- FDIC INDEMNIFICATION ASSET AND TRUE-UP PAYMENT OBLIGATION

In connection with the FDIC assisted acquisition, the Bank and the FDIC entered into shared-loss agreements pursuant which the FDICcovers a substantial portion of any losses on loans (and related unfunded loan commitments), foreclosed real estate and other repossessed properties covered by the agreements.

The acquired loans, foreclosed real estate, and other repossessed properties subject to the shared-loss agreements are collectively referred to as “covered assets.” Under the terms of the shared-loss agreements, the FDIC absorbs80% of losses and shares in 80% of loss recoveries on covered assets. The term of the shared-loss agreementcovering single family residential mortgage loans is ten years with respect to losses and loss recoveries, while theterm of the shared-loss agreement covering commercial loans is five years with respect to losses and eight yearswith respect to loss recoveries, from the April 30, 2010 acquisition date. The shared-loss agreements also provide for certain costs directly related to the collection and preservation of covered assets to be reimbursed at an 80% level. The FDIC indemnification asset represents the portion of estimated losses covered by the shared-loss agreements between the Bank and the FDIC.

The following table presents the activity in the FDIC indemnification assetand true-up payment obligation for the quarters ended June 30, 2014 and 2013:

	Quarter ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
FDIC indemnification asset:
Balance at beginning of period	$	166,194	$	283,124	$	189,240	$	302,295
Shared-loss agreements reimbursements from the FDIC		(10,464)		(12,046)		(18,700)		(18,696)
Increase (decrease) in expected credit losses to be covered under shared-loss agreements, net		3,522		(193)		3,562		(2,015)
FDIC shared-loss expense		(17,499)		(19,225)		(35,121)		(31,425)
Incurred expenses to be reimbursed under shared-loss agreements		1,907		1,719		4,679		3,220
Balance at end of period	$	143,660	$	253,379	$	143,660	$	253,379
True-up payment obligation:
Balance at beginning of period	$	19,375	$	16,167	$	18,510	$	15,496
FDIC shared-loss expense		856		740		1,721		1,411
Balance at end of period	$	20,231	$	16,907	$	20,231	$	16,907

The FDIC shared-loss expense increased as the Company continues to forecast better performance and cash flows from covered loans than previously expected resulting in a minor increase in the amortization of the FDIC indemnification asset.

The FDIC shared-loss expense of $18.4 million and $36.8 millionfor the quarter and six-month periodended June 30, 2014 comparedto $20.0 millionand $32.8millionfor the same periods in 2013. These changes were caused by the ongoing evaluation of expected cash flows of the covered loan portfolio, which resulted in reduced projected losses expected to be collected from the FDIC and the improved accretable yield on the covered loans. Forecasted losses show a decreasing trend during the six-month period endedJune 30, 2014 as compared to the projections in 2013.The reduction in claimable losses amortizes the FDIC indemnification asset through theshorter of the life of the shared loss agreement or the loan holding period. This amortization is net of the accretion of the discount recorded to reflect the expected claimable loss at its net present value. During the quarterand six-month period ended June 30, 2014, the net amortization included $1.6 million and $5.1million of additional amortization of the FDIC indemnification asset from stepped up cost recoveries on certain construction, commercial, and leasing loan pools. Additional amortization of the FDIC indemnification asset may be recorded, should the Company continue to experience reduced expected losses. The majority of the FDIC indemnification asset, $98.9million, is recorded for projected claimable losses on non-single family residential loans whose loss share period ends in the second quarter of 2015, although the period during which recoveries are shared extends for an additional three-years.

Also in connection with the FDIC assisted acquisition, the Bank agreed to make a true-up payment, also known as clawback liability or clawback provision, to the FDIC on the date that is 45 days following the last day (such day, the “True-Up Measurement Date”) of the final shared-loss month, or upon the final disposition of all covered assets under the shared-loss agreements in the event losses thereunder fail to reach expected levels. Under the shared-loss agreements, the Bank will pay to the FDIC 50% of the excess, if any, of: (i) 20% of the Intrinsic Loss Estimate of $906.0 million (or $181.2 million) (as determined by the FDIC) less (ii) the sum of: (A) 25% of the asset discount (per bid) (or $227.5 million); plus (B) 25% of the cumulative shared-loss payments (defined as the aggregate of all of the payments made or payable to the Bank minus the aggregate of all of the payments made or payable to the FDIC); plus (C) the sum of the period servicing amounts for every consecutive twelve-month period prior to and ending on the True-Up Measurement Date in respect of each of the shared-loss agreements during which the shared-loss provisions of the applicable shared-loss agreement is in effect (defined as the product of the simple average of the principal amount of shared-loss loans and shared-loss assets at the beginning and end of such period times 1%). The true-up payment represents an estimated liability of $20.2million and $18.5million, net of discount, as of June 30, 2014 and December 31, 2013, respectively. The estimated liability is included withinother liabilities in the unaudited consolidated statements of financial condition.

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Derivative Activities

6 Months Ended

Jun. 30, 2014

Derivative Activities [Abstract]

DERIVATIVE ACTIVITIES

NOTE 7— DERIVATIVE ACTIVITIES

During the quarter and six-month periodended June 30, 2014, losses of$247 thousand and $470 thousand, respectively, were recognized and reflected as “Derivative Activities” in the unaudited consolidated statements of operations.During the quarterand six-month period ended June 30, 2013, losses of $164 thousand and $934thousand, respectively, were recognized

The following table presents the Company's derivative assets and liabilities at June 30, 2014 and December 31, 2013:

	June 30,		December 31,
	2014		2013
	(In thousands)
Derivative assets:
Options tied to S&P 500 Index	$	6,580	$	16,430
Interest rate swaps designated as cash flow hedges		-		850
Interest rate swaps not designated as hedges		2,728		2,861
Interest rate caps		249		319
Other		1		42
	$	9,558	$	20,502
Derivative liabilities:
Interest rate swaps designated as cash flow hedges		10,515		11,757
Interest rate swaps not designated as hedges		2,728		2,861
Interest rate caps		249		319
Other		125		-
	$	13,617	$	14,937

Interest Rate Swaps

The Company enters into interest rate swap contracts to hedge the variability of future interest cash flows offorecasted wholesale borrowings attributable to changes in a predetermined variable index rate. The interest rate swaps effectively fix the Company's interest paymentson an amount of forecasted interest expense attributable to the variable index rate corresponding to the swapnotional stated rate. These swaps are designated as cash flow hedges for the forecastedwholesale borrowing transactions,are properly documented as such, and therefore, qualify for cash flow hedgeaccounting. Any gain or loss associated with the effective portion of our cash flow hedges was recognized in other comprehensive income and is subsequently reclassified into earnings in the period during which the hedged forecasted transactions affect earnings. Changes in the fair value of these derivatives are recorded in accumulated other comprehensive income to the extent there is no significant ineffectiveness in the cash flow hedging relationships. Currently, the Company does not expect to reclassify any amount included in other comprehensive income related to these interest rate swaps to earnings in the next twelve months.

The following table shows a summary of these swaps and their terms at June 30, 2014:

	Notional		Fixed	Variable	Trade	Settlement	Maturity
Type	Amount		Rate	Rate Index	Date	Date	Date
	(In thousands)
Interest Rate Swaps	$	25,000	2.4365%	1-Month LIBOR	05/05/11	05/04/12	05/04/16
		25,000	2.6200%	1-Month LIBOR	05/05/11	07/24/12	07/24/16
		25,000	2.6350%	1-Month LIBOR	05/05/11	07/30/12	07/30/16
		50,000	2.6590%	1-Month LIBOR	05/05/11	08/10/12	08/10/16
		100,000	2.6750%	1-Month LIBOR	05/05/11	08/16/12	08/16/16
		39,961	2.4210%	1-Month LIBOR	07/03/13	07/03/13	08/01/23
	$	264,961

An unrealized loss of $10.5million was recognized in accumulated other comprehensive income related to the valuation of these swaps at June 30, 2014, and the related asset and liability are being reflected in the accompanying unaudited consolidated statements of financial condition.

At June 30, 2014 and December 31, 2013, interest rate swaps not designated as hedging instruments that were offered to clients represented an asset of $2.7million and $2.9 million, respectively,and were included as part of derivative assets in the unaudited consolidated statements of financial position.The credit risk to these clients stemming from these derivatives, if any, is not material. At June30, 2014 and December 31, 2013, interest rate swaps not designated as hedging instruments that are the mirror-images of the derivatives offered to clients represented a liability of $2.7 million and $2.9 million, respectively, and were included as part of derivative liabilities in the unaudited consolidated statements of financial condition.

The following table shows a summary of these interest rate swaps not designated as hedging instruments and their terms at June30, 2014:

	Notional		Fixed	Variable	Settlement	Maturity
Type	Amount		Rate	Rate Index	Date	Date
	(In thousands)
Interest Rate Swaps - Derivatives Offered to Clients	$	4,049	5.1300%	1-Month LIBOR	07/03/06	07/03/16
		12,500	5.5050%	1-Month LIBOR	04/11/09	04/11/19
	$	16,549
Interest Rate Swaps - Mirror Image Derivatives	$	4,049	5.1300%	1-Month LIBOR	07/03/06	07/03/16
		12,500	5.5050%	1-Month LIBOR	04/11/09	04/11/19
	$	16,549

Options Tied to Standard & Poor's 500 Stock Market Index

The Companyhas offered its customers certificates of deposit with an option tied to the performance of the S&P 500 Index. The Company uses option agreements with major broker-dealers to manage its exposure to changes in this index. Under the terms of the option agreements, the Company receives the average increase in the month-end value of the index in exchange for a fixed premium. The changes in fair value of the option agreements used to manage the exposure in the stock market in the certificates of deposit are recorded in earnings. At June 30, 2014 andDecember 31, 2013, the purchased options used to manage exposure to the S&P 500 Index on stock indexed deposits represented an asset of $6.6 million (notional amount of $14.0million) and $16.4 million (notional amount of $28.0million), respectively, and the options sold to customers embedded in the certificates of deposit and recorded as deposits in the unauditedconsolidated statements of financial condition, represented a liability of $6.4million (notional amount of $13.4million) and $15.7million (notional amount of $26.9million), respectively.

Interest rate caps

The Companyhas entered into interest rate cap transactionswith various clients with floating-rate debt who wish to protect their financial results against increases in interest rates. In these cases, theCompanysimultaneously enters into mirror-image interest rate cap transactions with financial counterparties. None of these cap transactions qualify for hedge accounting, and therefore, they are marked to market through earnings.The outstanding total notional amount of interest rate caps was $110.0million at both June 30, 2014 andDecember 31, 2013. At June 30, 2014 and December 31, 2013, the interest rate caps sold to clients represented a liability of $249thousand and $319 thousand, respectively, and were included as part of derivative liabilities in the unaudited consolidated statements of financial condition. At June 30, 2014 and December 31, 2013, the interest rate caps purchased as mirror-images represented an asset of $249 thousand and $319 thousand, respectively, and were included as part of derivative assets in the unaudited consolidated statements of financial condition.

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Deposits and Related Interest

6 Months Ended

Jun. 30, 2014

Deposits and Related Interest [Abstract]

DEPOSITS AND RELATED INTEREST

NOTE 9— DEPOSITS AND RELATED INTEREST

Total deposits as of June 30, 2014 and December 31, 2013consist of the following:

	June 30,		December 31,
	2014		2013
	(In thousands)
Non-interest bearing demand deposits	$	731,294	$	744,327
Interest-bearing savings and demand deposits		2,540,229		2,489,971
Individual retirement accounts		323,127		347,262
Retail certificates of deposit		519,150		598,367
Institutional certificates of deposit		308,958		375,224
Total core deposits		4,422,758		4,555,151
Brokered deposits		718,475		828,114
Total deposits	$	5,141,233	$	5,383,265

Brokered deposits include $627.9million in certificates of deposits and $90.6million in money market accounts at June 30, 2014, and $729.8 millionin certificates of deposits and $98.3 million in money market accounts at December 31, 2013.

The weighted average interest rate of the Company's deposits was 0.70%atJune 30, 2014and 0.73% at December 31, 2013, inclusive of non-interest bearing deposits of$731.3million and $744.3 million, respectively.Interest expense for the quartersand six-month periodsended June 30, 2014 and2013 was as follows:

	Quarter Ended June 30,					Six-Month Period Ended June 30,
	2014		2013			2014		2013
	(In thousands)
Demand and savings deposits	$	4,804	$	5,435	$	9,832	$	11,398
Certificates of deposit		4,361		4,052		8,311		8,025
	$	9,165	$	9,487	$	18,143	$	19,423

At June 30, 2014 and December 31,2013, demand and interest-bearing deposits and certificates of depositincluded deposits of Puerto Rico Cash & Money Market Fund, Inc.,which amounted to $101.8 million and $93.1 million, respectively, with a weighted average rate of 0.77% in both years,and were collateralized with investment securities with a fair value of $81.8million and$67.5 million, respectively.

At June 30, 2014 and December 31, 2013, time deposits in denominations of $100 thousand or higher, excluding accrued interest and unamortized discounts, amounted to $719.2million and $845.8 million, including public fund time deposits from various Puerto Rico government municipalities, agencies, and corporations of $22.1million and $26.7million, respectively, at a weighted average rate of 0.53% at June 30, 2014 and0.32% atDecember 31, 2013.

At June 30, 2014 and December 31, 2013, total public fund deposits from various Puerto Rico government municipalities, agencies, and corporationsamounted to $362.8 million and $328.6 million, respectively. These public fundswere collateralized with commercial loans amounting to $454.5million at June 30, 2014, and with investment securities with a fair value of$97.8 million and commercial loans amounting to $549.0million at December 31, 2013.

Excluding equity indexed options in the amount of $5.2million, which are used by the Company to manage its exposure to the S&P 500 Index, and also excluding accrued interest of $2.1million and unamortized deposit discount in the amount of $2.5million, the scheduled maturities of certificates of deposit at June 30, 2014are as follows:

	June 30, 2014
	(In thousands)
Within one year:
Three (3) months or less	$	372,809
Over 3 months through 1 year		701,493
		1,074,302
Over 1 through 2 years		421,047
Over 2 through 3 years		200,607
Over 3 through 4 years		56,095
Over 4 through 5 years		17,202
	$	1,769,253

The table of scheduled maturities of certificates of depositsabove includes brokered deposits.

The aggregate amount of overdrafts in demand deposit accounts that were reclassified to loans amounted to $861thousand and $1.8million as of June 30, 2014 and December 31, 2013, respectively.

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Allowance for Loan and Lease Losses (TDR Pre/Post Modifications) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013 number	Jun. 30, 2014 number	Jun. 30, 2013 number	Dec. 31, 2012 number
Financing Receivable, Modifications [Line Items]
Number of contracts	33
Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Number of contracts		42	88	86	187
Financing Receivable Modifications Pre Modification Recorded Investment	$ 5,001	$ 5,372	$ 11,813	$ 10,555	$ 24,722
Pre Modification Weighted Average Rate	6.29%	6.47%	6.16%	6.56%	6.74%
Pre Modification Weighted Average Term	353 months	355 months	349 months	342 months	319 months
Financing Receivable Modifications Post Modification Recorded Investment	4,965	5,715	11,446	11,288	26,620
Post Modification Weighted Average Rate	4.12%	4.26%	4.26%	4.59%	5.52%
Post Modification Weighted Average Term	418 months	420 months	390 months	417 months	385 months
Commercial Loan [Member]
Financing Receivable, Modifications [Line Items]
Number of contracts	1	2	1	2	17
Financing Receivable Modifications Pre Modification Recorded Investment	73	1,842	73	1,842	15,642
Pre Modification Weighted Average Rate	7.25%	8.99%	7.25%	8.99%	4.03%
Pre Modification Weighted Average Term	55 months	87 months	55 months	87 months	68 months
Financing Receivable Modifications Post Modification Recorded Investment	73	1,842	73	1,842	12,413
Post Modification Weighted Average Rate	9.25%	4.00%	9.25%	4.00%	3.59%
Post Modification Weighted Average Term	36 months	66 months	36 months	66 months	75 months
Consumer Loan [Member]
Financing Receivable, Modifications [Line Items]
Number of contracts	3	2	8	2
Financing Receivable Modifications Pre Modification Recorded Investment	24	18	66	18
Pre Modification Weighted Average Rate	13.97%	13.67%	13.33%	13.67%
Pre Modification Weighted Average Term	77 months	41 months	70 months	41 months
Financing Receivable Modifications Post Modification Recorded Investment	$ 24	$ 18	$ 68	$ 18
Post Modification Weighted Average Rate	13.98%	13.67%	13.31%	13.67%
Post Modification Weighted Average Term	72 months	60 months	68 months	60 months

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Borrowings (Repurchase Agreements) (Details) (Securities Sold under Agreements to Repurchase [Member], USD $) In Thousands, unless otherwise specified			3 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Due date: 12 3 2014 [Member]	Jun. 30, 2014 Due date: 6 13 2015 [Member]	Jun. 30, 2014 Due date: 12 8 2016 [Member]	Jun. 30, 2014 Due date: 3 2 2017 [Member]
Debt Instrument [Line Items]
Borrowing Balance	$ 1,010,000	$ 1,265,000	$ 85,000	$ 255,000	$ 170,000	$ 500,000
Weighted Average Coupon	2.89%		0.675%	0.84%	1.50%	4.78%
Settlement Date			Dec. 03, 2012	Dec. 10, 2012	Dec. 06, 2012	Mar. 02, 2007
Investment Repurchase Agreement, Repurchase Date			Dec. 03, 2014	Jun. 13, 2015	Dec. 08, 2016	Mar. 02, 2017

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Allowance for Loan and Lease Losses (Credit Quality Indicator of non-covered loans) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	$ 4,644,028	$ 4,669,192
Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	2,640,745	2,401,540
Doubtful	0
Financing Receivable, Individually Evaluated for Impairment	119,285	112,639
Commercial Secured [Member] | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	433,558	400,561
Pass	388,871	354,415
Special Mention	18,329	18,809
Substandard	2,233	2,376
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	24,125	24,961
Commercial Secured [Member] | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	9,503	18,613
Pass	9,037	17,120
Special Mention	0	443
Substandard	466	1,050
Doubtful		0
Financing Receivable, Individually Evaluated for Impairment	0	0
Corporate | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	90,886	54,796
Pass	90,886	54,796
Special Mention	0	0
Substandard	0	0
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Corporate | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	2,999	10,166
Pass	2,999	10,166
Special Mention	0	0
Substandard	0	0
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Institutional | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	30,701	4,050
Pass	20,581	4,050
Special Mention	10,120	0
Substandard	0	0
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Institutional | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0
Pass	0
Special Mention	0
Substandard	0
Doubtful	0
Financing Receivable, Individually Evaluated for Impairment	0
Middle Market | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	141,225	161,583
Pass	121,532	133,061
Special Mention	6,726	16,627
Substandard	0	118
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	12,967	11,777
Middle Market | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0
Pass	0
Special Mention	0
Substandard	0
Doubtful	0
Financing Receivable, Individually Evaluated for Impairment	0
Retail | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	157,188	166,642
Pass	142,415	149,018
Special Mention	1,382	2,182
Substandard	2,233	2,258
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	11,158	13,184
Retail | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	2,557	5,770
Pass	2,091	4,378
Special Mention	0	443
Substandard	466	949
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Floor Plan | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,680	1,835
Pass	1,579	1,835
Special Mention	101	0
Substandard	0	0
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Floor Plan | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	3,947	2,677
Pass	3,947	2,576
Special Mention	0	0
Substandard	0	101
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Real Estate | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	11,878	11,655
Pass	11,878	11,655
Special Mention	0	0
Substandard	0	0
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Real Estate | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0
Pass	0
Special Mention	0
Substandard	0
Doubtful	0
Financing Receivable, Individually Evaluated for Impairment	0
Other commercial and industrial [Member] | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	749,614	727,096
Pass	537,693	719,003
Special Mention	203,977	3,911
Substandard	3,159	997
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	4,785	3,185
Other commercial and industrial [Member] | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	29,099	59,068
Pass	28,456	57,509
Special Mention	194	318
Substandard	449	1,241
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Corporate | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	61,329	32,598
Pass	61,329	32,598
Special Mention	0	0
Substandard	0	0
Doubtful		0
Financing Receivable, Individually Evaluated for Impairment	0	0
Corporate | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	3,010	9,793
Pass	2,916	9,696
Special Mention	94	0
Substandard	0	97
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Institutional | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	487,725	536,445
Pass	287,734	536,445
Special Mention	199,991	0
Substandard	0	0
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Institutional | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0
Pass	0
Special Mention	0
Substandard	0
Doubtful	0
Financing Receivable, Individually Evaluated for Impairment	0
Middle Market | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	80,794	58,897
Pass	73,967	53,868
Special Mention	3,428	3,466
Substandard	389	198
Doubtful		0
Financing Receivable, Individually Evaluated for Impairment	3,010	1,365
Middle Market | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0
Pass	0
Special Mention	0
Substandard	0
Doubtful	0
Financing Receivable, Individually Evaluated for Impairment	0
Retail | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	77,756	61,510
Pass	73,753	58,742
Special Mention	259	257
Substandard	1,969	691
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	1,775	1,820
Retail | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	11,420	27,338
Pass	10,871	26,044
Special Mention	100	150
Substandard	449	1,144
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Floor Plan | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	42,010	37,646
Pass	40,910	37,350
Special Mention	299	188
Substandard	801	108
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Floor Plan | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	14,669	21,937
Pass	14,669	21,769
Special Mention	0	168
Substandard	0	0
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Commercial and Industrial | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Doubtful	0
Total Commercial subject to risk rating [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,221,774	1,205,338
Pass	964,057	1,148,047
Special Mention	222,500	23,481
Substandard	6,307	5,664
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	28,910	28,146
Total Commercial subject to risk rating [Member] | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,183,172	1,127,657
Pass	926,564	1,073,418
Special Mention	222,306	22,720
Substandard	5,392	3,373
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	28,910	28,146
Total Commercial subject to risk rating [Member] | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	38,602	77,681
Pass	37,493	74,629
Special Mention	194	761
Substandard	915	2,291
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	$ 0	$ 0

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Guarantees (Changes in liabilty of estimated loss from credit recourse agreement) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Movement In Guaranteed Benefit Liability Gross Roll Forward
Balance at beginning of the period	$ 1,549	$ 2,460	$ 1,955	$ 2,460
Additions from acquisition	0	0	0	0
Net charge-off/terminations	(239)	0	(645)	0
Balance at the end of the period	$ 1,310	$ 2,460	$ 1,310	$ 2,460

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Allowance for Loan and Lease Losses (Interest Income Recognized in loans individually evaluated for impairment) (Details) (Originated Loans [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Impaired Financing Receivable Interest Income Accrual Method [Abstract]
Total Interest Income	$ 779	$ 1,163	$ 1,502	$ 1,959
Impaired Financing Receivable Average Recorded Investment [Abstract]
Total Average Recorded Investment	119,596	123,434	117,268	124,007
Commercial Loan [Member]
Impaired Financing Receivable Interest Income Accrual Method [Abstract]
Impaired Financing Receivable With Related Allowance Interest Income Accrual Method	39	255	78	322
Impaired Financing Receivable With No Related Allowance Interest Income Accrual Method	77	226	154	364
Impaired Financing Receivable Average Recorded Investment [Abstract]
Impaired Financing Receivable With Related Allowance Average Recorded Investment	7,200	17,049	6,729	17,789
Impaired Financing Receivable With No Related Allowance Average Recorded Investment	21,951	23,304	21,790	25,304
Troubled Debt Restructuring [Member]
Impaired Financing Receivable Interest Income Accrual Method [Abstract]
Impaired Financing Receivable With Related Allowance Interest Income Accrual Method	663	682	1,270	1,273
Impaired Financing Receivable Average Recorded Investment [Abstract]
Impaired Financing Receivable With Related Allowance Average Recorded Investment	$ 90,445	$ 83,081	$ 88,749	$ 80,914

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Income Taxes (Narratives) (Details) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Income Taxes [Abstract]
Unrecognized Tax Benefits, Interest on Income Taxes Accrued	$ 3,600,000		$ 3,600,000		$ 4,000,000
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued	1,600,000		1,600,000		1,200,000
Statement [Line Items]
OtherComprehensiveIncomeLossTax	1,134,000				(831,000)
International Banking Entity [Member]
Statement [Line Items]
OtherComprehensiveIncomeLossTax	209,000				356,000
Other Comprehensive Income Loss Reclassification Adjustment From AOCIF or Sale Of Securities Tax	$ 10,000	$ 43,000	$ 147,000	$ 89,000
IBE Tax Rate			0.00%

XML

Deposits and Related Interest (Tables)

6 Months Ended

Jun. 30, 2014

Deposits, by Component, Alternative [Abstract]

Deposits By Component [Table Text Block]

Total deposits as of June 30, 2014 and December 31, 2013consist of the following:

	June 30,		December 31,
	2014		2013
	(In thousands)
Non-interest bearing demand deposits	$	731,294	$	744,327
Interest-bearing savings and demand deposits		2,540,229		2,489,971
Individual retirement accounts		323,127		347,262
Retail certificates of deposit		519,150		598,367
Institutional certificates of deposit		308,958		375,224
Total core deposits		4,422,758		4,555,151
Brokered deposits		718,475		828,114
Total deposits	$	5,141,233	$	5,383,265

Interest Expense Domestic Deposit Liabilities [Table Text Block]

Interest expense for the quartersand six-month periodsended June 30, 2014 and2013 was as follows:

	Quarter Ended June 30,					Six-Month Period Ended June 30,
	2014		2013			2014		2013
	(In thousands)
Demand and savings deposits	$	4,804	$	5,435	$	9,832	$	11,398
Certificates of deposit		4,361		4,052		8,311		8,025
	$	9,165	$	9,487	$	18,143	$	19,423

Maturities Of Time Deposits [Table Text Block]

Excluding equity indexed options in the amount of $5.2million, which are used by the Company to manage its exposure to the S&P 500 Index, and also excluding accrued interest of $2.1million and unamortized deposit discount in the amount of $2.5million, the scheduled maturities of certificates of deposit at June 30, 2014are as follows:

	June 30, 2014
	(In thousands)
Within one year:
Three (3) months or less	$	372,809
Over 3 months through 1 year		701,493
		1,074,302
Over 1 through 2 years		421,047
Over 2 through 3 years		200,607
Over 3 through 4 years		56,095
Over 4 through 5 years		17,202
	$	1,769,253

XML

Loans Receivable (Aging of recorded investment in gross loans) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	$ 4,644,028	$ 4,669,192
Commercial Secured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing		0
Originated Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	87,395	87,623
60 - 89 Days Past Due	40,780	31,619
90+ Days Past Due	99,313	95,052
Total Past Due	227,488	214,294
Current	2,413,257	2,187,246
Total Loans	2,640,745	2,401,540
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	4,876	2,875
Originated Loans [Member] | Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	45,565	52,364
60 - 89 Days Past Due	24,888	19,664
90+ Days Past Due	83,055	74,156
Total Past Due	153,508	146,184
Current	634,493	620,081
Total Loans	788,001	766,265
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	4,876	2,875
Originated Loans [Member] | Traditional loan
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	35,329	39,388
60 - 89 Days Past Due	15,981	12,942
90+ Days Past Due	29,506	23,595
Total Past Due	80,816	75,925
Current	542,109	526,263
Total Loans	622,925	602,188
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	498	690
Originated Loans [Member] | Originated Up To The Year 2002 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	5,182	6,697
60 - 89 Days Past Due	2,540	1,635
90+ Days Past Due	3,225	3,408
Total Past Due	10,947	11,740
Current	59,426	64,772
Total Loans	70,373	76,512
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	70	79
Originated Loans [Member] | Originated In The Years 2003 And 2004 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	5,503	4,722
60 - 89 Days Past Due	1,905	2,163
90+ Days Past Due	2,929	1,845
Total Past Due	10,337	8,730
Current	51,945	56,387
Total Loans	62,282	65,117
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Originated In The Year 2005 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	6,775	8,527
60 - 89 Days Past Due	2,959	2,119
90+ Days Past Due	6,783	4,808
Total Past Due	16,517	15,454
Current	69,352	74,087
Total Loans	85,869	89,541
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	89	0
Originated Loans [Member] | Originated In The Year 2006 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	10,562	12,055
60 - 89 Days Past Due	3,781	4,312
90+ Days Past Due	5,278	4,418
Total Past Due	19,621	20,785
Current	94,765	99,537
Total Loans	114,386	120,322
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Originated In The Years 2007 2008 And 2009 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	3,962	3,464
60 - 89 Days Past Due	2,051	1,104
90+ Days Past Due	5,859	4,663
Total Past Due	11,872	9,231
Current	82,471	91,919
Total Loans	94,343	101,150
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	152
Originated Loans [Member] | Originated In The Years 2010 2011 2012 2013 And 2014 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	3,345	3,923
60 - 89 Days Past Due	2,745	1,609
90+ Days Past Due	5,432	4,453
Total Past Due	11,522	9,985
Current	184,150	139,561
Total Loans	195,672	149,546
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	339	459
Originated Loans [Member] | NonTraditional Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	1,997	3,217
60 - 89 Days Past Due	1,128	1,162
90+ Days Past Due	2,655	2,311
Total Past Due	5,780	6,690
Current	32,254	35,412
Total Loans	38,034	42,102
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Loss Mitigation Program [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	8,239	9,759
60 - 89 Days Past Due	7,779	5,560
90+ Days Past Due	12,427	13,191
Total Past Due	28,445	28,510
Current	59,519	57,808
Total Loans	87,964	86,318
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	4,378	2,185
Originated Loans [Member] | Home equity secured personal loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	0
60 - 89 Days Past Due	0	0
90+ Days Past Due	138	138
Total Past Due	138	138
Current	611	598
Total Loans	749	736
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | GNMA's Buy Back Option related
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	0
60 - 89 Days Past Due	0	0
90+ Days Past Due	38,329	34,921
Total Past Due	38,329	34,921
Current	0	0
Total Loans	38,329	34,921
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Commercial Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	1,183,172	1,127,657
Originated Loans [Member] | Commercial Secured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	2,319	5,609
60 - 89 Days Past Due	494	1,015
90+ Days Past Due	6,836	13,484
Total Past Due	9,649	20,108
Current	423,909	380,453
Total Loans	433,558	400,561
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0
Originated Loans [Member] | Corporate Commercial Secured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	0
60 - 89 Days Past Due	0	0
90+ Days Past Due	0	0
Total Past Due	0	0
Current	90,886	54,796
Total Loans	90,886	54,796
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Institutional Commercial Secured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	0
60 - 89 Days Past Due	0	0
90+ Days Past Due	0	0
Total Past Due	0	0
Current	30,701	4,050
Total Loans	30,701	4,050
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Middle Market Commercial Secured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	685	1,356
60 - 89 Days Past Due	0	0
90+ Days Past Due	638	10,294
Total Past Due	1,323	11,650
Current	139,902	149,933
Total Loans	141,225	161,583
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Retail Commercial Secured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	1,634	4,253
60 - 89 Days Past Due	494	1,015
90+ Days Past Due	6,198	3,190
Total Past Due	8,326	8,458
Current	148,862	158,184
Total Loans	157,188	166,642
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Floor Plan Commercial Secured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	0
60 - 89 Days Past Due	0	0
90+ Days Past Due	0	0
Total Past Due	0	0
Current	1,680	1,835
Total Loans	1,680	1,835
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Real Estate Commercial Secured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	0
60 - 89 Days Past Due	0	0
90+ Days Past Due	0	0
Total Past Due	0	0
Current	11,878	11,655
Total Loans	11,878	11,655
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Other Commercial and Industrial[Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	536	2,105
60 - 89 Days Past Due	909	851
90+ Days Past Due	1,343	1,673
Total Past Due	2,788	4,629
Current	746,826	722,467
Total Loans	749,614	727,096
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Corporate Other Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	236
60 - 89 Days Past Due	0	0
90+ Days Past Due	0
Total Past Due	0	236
Current	61,329	32,362
Total Loans	61,329	32,598
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Institutional Other Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0
60 - 89 Days Past Due	0
90+ Days Past Due	0	0
Total Past Due	0	0
Current	487,725	536,445
Total Loans	487,725	536,445
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Middle Market Other Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	0
60 - 89 Days Past Due	760	299
90+ Days Past Due	0	1,134
Total Past Due	760	1,433
Current	80,034	57,464
Total Loans	80,794	58,897
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Retail Other Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	536	1,830
60 - 89 Days Past Due	149	552
90+ Days Past Due	1,343	539
Total Past Due	2,028	2,921
Current	75,728	58,589
Total Loans	77,756	61,510
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Floor Plan Other Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	39
60 - 89 Days Past Due	0	0
90+ Days Past Due	0	0
Total Past Due	0	39
Current	42,010	37,607
Total Loans	42,010	37,646
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Consumer Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	1,928	2,014
60 - 89 Days Past Due	869	652
90+ Days Past Due	1,126	650
Total Past Due	3,923	3,316
Current	157,615	124,428
Total Loans	161,538	127,744
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Credit Cards [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	345	287
60 - 89 Days Past Due	236	168
90+ Days Past Due	271	232
Total Past Due	852	687
Current	15,034	14,554
Total Loans	15,886	15,241
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Overdrafts [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	19	46
60 - 89 Days Past Due	3	4
90+ Days Past Due	1	0
Total Past Due	23	50
Current	295	322
Total Loans	318	372
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Unsecured personal lines of credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	57	33
60 - 89 Days Past Due	1	38
90+ Days Past Due	129	66
Total Past Due	187	137
Current	1,789	1,844
Total Loans	1,976	1,981
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Unsecured personal loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	1,227	1,324
60 - 89 Days Past Due	535	399
90+ Days Past Due	677	352
Total Past Due	2,439	2,075
Current	123,981	92,485
Total Loans	126,420	94,560
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Cash collateral personal loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	280	324
60 - 89 Days Past Due	94	43
90+ Days Past Due	48	0
Total Past Due	422	367
Current	16,516	15,223
Total Loans	16,938	15,590
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Auto and Leasing loans receivable
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	37,047	25,531
60 - 89 Days Past Due	13,620	9,437
90+ Days Past Due	6,953	5,089
Total Past Due	57,620	40,057
Current	450,414	339,817
Total Loans	508,034	379,874
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Non-covered acquired loans accounted for under ASC 310-20
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	13,646	17,144
60 - 89 Days Past Due	5,402	6,848
90+ Days Past Due	4,294	5,413
Total Past Due	23,342	29,405
Current	303,263	406,034
Total Loans	326,605	435,439
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Non-covered acquired loans accounted for under ASC 310-20 | Commercial Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	305	2,197
60 - 89 Days Past Due	160	2,025
90+ Days Past Due	1,376	1,646
Total Past Due	1,841	5,868
Current	36,761	71,813
Total Loans	38,602	77,681
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Non-covered acquired loans accounted for under ASC 310-20 | Commercial Secured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	431
60 - 89 Days Past Due	0	331
90+ Days Past Due	607	969
Total Past Due	607	1,731
Current	8,896	16,882
Total Loans	9,503	18,613
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Non-covered acquired loans accounted for under ASC 310-20 | Corporate Commercial Secured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	0
60 - 89 Days Past Due	0	0
90+ Days Past Due	0	0
Total Past Due	0	0
Current	2,999	10,166
Total Loans	2,999	10,166
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Non-covered acquired loans accounted for under ASC 310-20 | Retail Commercial Secured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	431
60 - 89 Days Past Due	0	331
90+ Days Past Due	506	868
Total Past Due	506	1,630
Current	2,051	4,140
Total Loans	2,557	5,770
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Non-covered acquired loans accounted for under ASC 310-20 | Floor Plan Commercial Secured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	0
60 - 89 Days Past Due	0	0
90+ Days Past Due	101	101
Total Past Due	101	101
Current	3,846	2,576
Total Loans	3,947	2,677
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Non-covered acquired loans accounted for under ASC 310-20 | Other Commercial and Industrial[Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	305	1,766
60 - 89 Days Past Due	160	1,694
90+ Days Past Due	769	677
Total Past Due	1,234	4,137
Current	27,865	54,931
Total Loans	29,099	59,068
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Non-covered acquired loans accounted for under ASC 310-20 | Corporate Other Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	14
60 - 89 Days Past Due	0	83
90+ Days Past Due	94	0
Total Past Due	94	97
Current	2,916	9,696
Total Loans	3,010	9,793
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Non-covered acquired loans accounted for under ASC 310-20 | Institutional Other Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0
60 - 89 Days Past Due	0
90+ Days Past Due	0
Total Past Due	0
Current	0
Total Loans	0
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0
Non-covered acquired loans accounted for under ASC 310-20 | Retail Other Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	254	1,717
60 - 89 Days Past Due	92	1,418
90+ Days Past Due	556	659
Total Past Due	902	3,794
Current	10,518	23,544
Total Loans	11,420	27,338
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Non-covered acquired loans accounted for under ASC 310-20 | Floor Plan Other Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	51	35
60 - 89 Days Past Due	68	193
90+ Days Past Due	119	18
Total Past Due	238	246
Current	14,431	21,691
Total Loans	14,669	21,937
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Non-covered acquired loans accounted for under ASC 310-20 | Consumer Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	1,738	2,413
60 - 89 Days Past Due	917	1,207
90+ Days Past Due	1,352	2,159
Total Past Due	4,007	5,779
Current	45,597	50,395
Total Loans	49,604	56,174
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Non-covered acquired loans accounted for under ASC 310-20 | Credit Cards [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	1,520	2,217
60 - 89 Days Past Due	835	1,200
90+ Days Past Due	1,320	2,068
Total Past Due	3,675	5,485
Current	42,263	46,714
Total Loans	45,938	52,199
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Non-covered acquired loans accounted for under ASC 310-20 | Unsecured personal loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	218	196
60 - 89 Days Past Due	82	7
90+ Days Past Due	32	91
Total Past Due	332	294
Current	3,334	3,681
Total Loans	3,666	3,975
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Non-covered acquired loans accounted for under ASC 310-20 | Automobile Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	11,603	12,534
60 - 89 Days Past Due	4,325	3,616
90+ Days Past Due	1,566	1,608
Total Past Due	17,494	17,758
Current	220,905	283,826
Total Loans	238,399	301,584
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	$ 0	$ 0

XML

Stockholders' Equity and Earnings Per Common Share

6 Months Ended

Jun. 30, 2014

Stockholders' Equity [Abstract]

STOCKHOLDERS' EQUITY

NOTE 14— STOCKHOLDERS' EQUITY AND EARNINGS PER COMMON SHARE

Regulatory Capital Requirements

The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirementsadministered by federal and Puerto Rico banking agencies. Failure to meet minimum capital requirements can initiate certainmandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a directmaterial effect on the Company's financial statements. Under capital adequacy guidelines and theregulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Pursuant to the Dodd-Frank Act, federal banking regulatorshave adopted new capital rules thatbecame effective January 1, 2014 for advanced approaches banking organizations and will become effective January 1,2015 for all other covered organizations (subject to certain phase-in periods through January 1, 2019) and that will replace their general risk-based capital rules, advanced approaches rule, market risk rule, and leverage rules.

Quantitative measures established by regulation to ensure capital adequacy currently require the Company and the Bank tomaintain minimum amounts and ratios (set forth in the following table) of total and Tier 1 capital (as defined inthe regulations) to risk-weighted assets (as defined in the regulations) and of Tier 1 capital to average total assets (asdefined in the regulations). As of June 30, 2014 and December 31, 2013, the Company and the Bank met all capital adequacy requirements to which they are subject. As of June 30, 2014 and December 31, 2013, the Bank is“well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “wellcapitalized,” an institution must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratiosas set forth in the tables presented below.

The Company's and the Bank's actual capital amounts and ratios as of June 30, 2014 and December 31, 2013 are as follows

				Minimum Capital			Minimum to be Well
	Actual			Requirement			Capitalized
	Amount		Ratio	Amount		Ratio		Amount	Ratio
	(Dollars in thousands)
Company Ratios
As of June 30, 2014
Total capital to risk-weighted assets	$	863,790	17.30%	$	399,550	8.00%	$	499,438	10.00%
Tier 1 capital to risk-weighted assets	$	773,824	15.49%	$	199,775	4.00%	$	299,663	6.00%
Tier 1 capital to average total assets	$	773,824	10.26%	$	301,829	4.00%	$	377,286	5.00%
As of December 31, 2013
Total capital to risk-weighted assets	$	827,460	16.16%	$	409,514	8.00%	$	511,893	10.00%
Tier 1 capital to risk-weighted assets	$	736,930	14.35%	$	204,757	4.00%	$	307,136	6.00%
Tier 1 capital to average total assets	$	736,930	9.11%	$	324,910	4.00%	$	406,138	5.00%

				Minimum Capital			Minimum to be Well
	Actual			Requirement			Capitalized
	Amount		Ratio	Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
Bank Ratios
As of June 30, 2014
Total capital to risk-weighted assets	$	812,267	16.34%	$	397,593	8.00%	$	496,991	10.00%
Tier 1 capital to risk-weighted assets	$	722,603	14.54%	$	198,796	4.00%	$	298,195	6.00%
Tier 1 capital to average total assets	$	722,603	9.65%	$	299,657	4.00%	$	374,571	5.00%
As of December 31, 2013
Total capital to risk-weighted assets	$	779,413	15.30%	$	407,637	8.00%	$	509,547	10.00%
Tier 1 capital to risk-weighted assets	$	688,350	13.51%	$	203,819	4.00%	$	305,728	6.00%
Tier 1 capital to average total assets	$	688,350	8.54%	$	322,395	4.00%	$	402,993	5.00%

Additional Paid-in Capital

Additional paid-in capital represents contributed capital in excess of par value of common and preferred stock net of the costs ofissuance. As of June 30, 2014, accumulated issuance costs charged against additional paid in capital amounted to $10.1million and $13.6 million for preferred and common stock, respectively.

Earnings Per Common Share

The calculation of earnings per common share for the quartersand six-month periods ended June 30, 2014and 2013 is as follows:

	Quarter ended June 30 ,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands, except per share data)
Net income	$	21,309	$	37,539	$	45,056	$	58,731
Less: Dividends on preferred stock
Non-convertible preferred stock (Series A, B, and D)		(1,628)		(1,628)		(3,256)		(3,256)
Convertible preferred stock (Series C)		(1,838)		(1,838)		(3,675)		(3,675)
Income available to common shareholders	$	17,843	$	34,073	$	38,125	$	51,800
Effect of assumed conversionof the convertible ' ' preferred stock		1,838		1,838		3,675		3,675
Income available to common shareholders assuming conversion	$	19,681	$	35,911	$	41,800	$	55,475
Weighted average common shares and share equivalents:
Average common shares outstanding		45,014		45,630		45,170		45,613
Effect of dilutive securities:
Average potential common shares-options		200		200		168		178
Average potential common shares-assuming ' ' conversion of convertible preferred stock		7,138		7,138		7,138		7,138
Total weighted average common shares ' 'outstanding and equivalents		52,352		52,968		52,476		52,929
Earnings per common share - basic	$	0.40	$	0.75	$	0.84	$	1.14
Earnings per common share - diluted	$	0.38	$	0.68	$	0.80	$	1.05

In computing diluted earnings per common share, the 84,000 shares of convertible preferred stock, which remain outstanding at June30, 2014, with a conversion rate, subject to certain conditions,of 84.9798 shares of common stock per share, were included as average potential common shares from the date they were issued and outstanding. Moreover, in computing diluted earnings per common share, the dividends declared during the quarters ended June 30, 2014 and 2013 on the convertible preferred stock were added back as income available to common shareholders.

For the quartersended June 30, 2014 and 2013, weighted-average stock options with an anti-dilutive effect on earnings per share not included in the calculation amounted to 364,604 and243,721, respectively. For the six-month periods ended June 30, 2014 and 2013, weighted-average stock options with an anti-dilutive effect on earnings per share not included in the calculation amounted to 304,491 and 578,393, respectively.

Treasury Stock

Under the Company's current stock repurchase program it is authorized to purchase in the open market up to $70 million of its outstanding shares of common stock, of which approximately $23.1 million of authority remains. The shares of common stock repurchased are to be held by the Company as treasury shares. During the six-month period ended June 30, 2014, the Company purchased 707,400 shares under this program for a total of $10.4 million, at an average price of $14.66 per share. There were no repurchases during 2013.

The following table presents the shares repurchased for each month in the six-month period ended June 30, 2014, excluding the months of March, April, May, and June of 2014, during which no shares were purchased as part of the stock repurchase program:

	Total number of				Dollar amount of
	shares purchased as		Average		shares repurchased
		part of stock	price paid		(excluding
	repurchase programs		per share		commissions paid)
						(In thousands)
Period
January 2014		57,700	$	14.73	$	850
February 2014		649,700	$	14.66	$	9,522
Six-Month Period Ended June 30, 2014		707,400		14.66		10,372

The number of shares that may yet be purchased under the $70 million program is estimated at 1,252,136and was calculated by dividing the remaining balance of $23.1million by $18.41(closing price of the Company common stock at June 30, 2014). The Company did not purchase any shares of its common stock other than through its publicly announced stock repurchase program during the six-months ended June 30, 2014.

The activity in connection with common shares held in treasury by the Company for the six-month periods ended June 30, 2014 and 2013 is set forth below:

	Six-Month Period Ended June 30,
	2014			2013
		Dollar			Dollar
	Shares	Amount		Shares	Amount
	(In thousands, except shares data)
Beginning of period	7,030,101	$	80,642	7,090,597	$	81,275
Common shares used upon lapse of restricted stock units	(30,552)		(323)	(34,800)		(364)
Common shares repurchased as part of the stock repurchase program	707,400		10,393	-		-
Common shares used to match defined contribution plan, net	-		-	(7,318)		(77)
End of period	7,706,949	$	90,712	7,048,479	$	80,834

Accumulated Other Comprehensive Income

Accumulated other comprehensive income, net of income tax, as of June 30, 2014 and December 31, 2013 consisted of:

	June 30,		December 31,
	2014		2013
	(In thousands)
Unrealized gain on securities available-for-sale which are not other-than-temporarily impaired	$	33,404	$	13,267
Income tax effect of unrealized gain on securities available-for-sale		(3,645)		(1,834)
Net unrealized gain on securities available-for-sale which are not other-than-temporarily impaired		29,759		11,433
Unrealized loss on cash flow hedges		(10,515)		(10,907)
Income tax effect of unrealized loss on cash flow hedges		2,511		2,665
Net unrealized loss on cash flow hedges		(8,004)		(8,242)
Accumulated other comprehensive income, net of taxes	$	21,755	$	3,191

The following table presents changes in accumulated other comprehensive income by component, net of taxes, for the quartersand six-month periods endedJune 30, 2014 and 2013:

	Quarter Ended June 30,
	2014						2013
	Net unrealized		Net unrealized		Accumulated		Net unrealized		Net unrealized		Accumulated
	gains on		loss on		other		gains on		loss on		other
	securities		cash flow		comprehensive		securities		cash flow		comprehensive
	available-for-sale		hedges		income		available-for-sale		hedges		income
	(In thousands)
Beginning balance	$	16,035	$	(8,013)	$	8,022	$	58,393	$	(11,342)	$	47,051
Other comprehensive income (loss) before reclassifications		13,714		(1,633)		12,081		(33,036)		292		(32,744)
Amounts reclassified out of accumulated other comprehensive income		10		1,642		1,652		43		1,416		1,459
Other comprehensive income (loss)		13,724		9		13,733		(32,993)		1,708		(31,285)
Ending balance	$	29,759	$	(8,004)	$	21,755	$	25,400	$	(9,634)	$	15,766
	Six-Month Period Ended June 30,
	2014						2013
	Net unrealized		Net unrealized		Accumulated		Net unrealized		Net unrealized		Accumulated
	gains on		loss on		other		gains on		loss on		other
	securities		cash flow		comprehensive		securities		cash flow		comprehensive
	available-for-sale		hedges		income		available-for-sale		hedges		income
	(In thousands)
Beginning balance	$	11,433	$	(8,242)	$	3,191	$	68,245	$	(12,365)	$	55,880
Other comprehensive income before reclassifications		18,179		(3,025)		15,154		(42,934)		(21)		(42,955)
Amounts reclassified out of accumulated other comprehensive income		147		3,263		3,410		89		2,752		2,841
Other comprehensive income (loss)		18,326		238		18,564		(42,845)		2,731		(40,114)
Ending balance	$	29,759	$	(8,004)	$	21,755	$	25,400	$	(9,634)	$	15,766

The following table presents reclassifications out of accumulated other comprehensive income forthe quarter and six-month period ended June 30, 2014:

	Amount reclassified out of accumulated
	other comprehensive income
		Quarter Ended		Six-Month Period	Affected Line Item in
		June 30, 2014		Ended June 30, 2014	Consolidated Statement
					of Operations
	(In thousands)
Cash flow hedges:
Interest-rate contracts	$	1,642	$	3,263	Net interest expense
Available-for-sale securities:
Residual tax effect from OIB's change in applicable tax rate		10		147	Income tax expense
	$	1,652	$	3,410

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Subsequent Event

6 Months Ended

Jun. 30, 2014

Subsequent Events [Abstract]

SubsequentEventsTextBlock

NOTE 19– SUBSEQUENT EVENTS

On July 1, 2014, the Governor of the Commonwealth of Puerto Rico signed House Bill 1919 into law, which became Act 77-2014 (the Act). The Act, which amends the Puerto Rico Internal Revenue Code of 2011 and Act 73-2008, also known as the “Economic Incentives for the Development of Puerto Rico Act”, includes several new tax measures applicable to financial and non financial entities. The main provisions of the Act include:

• A mechanism to impose a 10% tax on a deemed dividend amount resulting from the holding of certain foreign assets, as defined.
• The exclusion of loans or credit transactions between affiliates, with some limited exceptions for purposes of determining the Puerto Rico net assets as part of the computation of the dividend equivalent amount of foreign corporations subject to the branch profits tax.
• Elimination of the former Gross Income Tax as a component of the alternative minimum tax (AMT) for non financial institutions for taxable years commencing on January 1, 2014. Effective for taxable years commencing after December 31, 2013, a tax on gross income is imposed in addition to the regular income tax, the AMT or the alternative basic tax at graduated rates ranging from .20% to .85%. This gross income tax is deductible in arriving at taxable income.
• Limitation of the amount of the tax credit to be claimed against the current year regular tax with respect to the AMT paid in prior years (AMT Credit) to 25% of the current net regular tax over the AMT for such taxable year.
• Increase in tax rates on: (a) net long term capital gains for corporations from 15% to 20%, and (b) dividends from certain corporations from 10% to 15%.
• The holding period to determine whether a gain or loss from the sale of capital assets is considered long-term is increased from six-months to one year.

The Company has made an evaluation of the impact of these amendments and considered the impact immaterial.

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Stockholders' Equity (Common shares held in treasury, activity) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Stockholders' Equity Note [Abstract]
Beginning of period	7,030,101	7,090,597
Common shares used for exercise of restricted stock units (Shares)	(30,552)	(34,800)
Common shares repurchased as part of the stock repurchase program (Shares)	707,400	0
Common shares used to match defined contribution plan, net	0	(7,318)
End of period	7,706,949	7,048,479
Beginning of period	$ 80,642	$ 81,275
Common shares used for exercise of restricted stock units (Value)	(323)	(364)
Stock purchased under the repurchase program	10,393	0
Common shares used to match defined contribution plan, net (Value)	0	(77)
End of period	$ 90,712	$ 80,834

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Loans Receivable (Narratives) (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Accounts Notes And Loans Receivable Line Items
Financing Receivable Modifications Recorded Investment Not Included In Non Accrual	$ 75.4	$ 66.5
Loans Granted To Puerto Rico Government	476.3
Acquired Loans Under ASC 310-30 granted to the Puerto Rico Government	179.1	180.5
Mortgage held for sale reclassified to mortgage held for investment	$ 26.4

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Commitments (Future rental commitments under leases) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014
Operating Leases, Future Minimum Payments Due [Abstract]
2014	$ 4,210
2015	7,980
2016	7,388
2017	6,761
2018	5,881
Thereafter	22,004
Total	$ 54,224

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis 1 [Table Text Block]

Assets and liabilities measured at fair value on a recurring and non-recurring basis, including financial liabilitiesfor which the Company has elected the fair value option, are summarized below:

	June 30, 2014
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	1,418,958	$	-	$	1,418,958
Money market investments		8,228		-		-		8,228
Derivative assets		-		2,978		6,580		9,558
Servicing assets		-		-		13,655		13,655
Derivative liabilities		-		(13,617)		(6,368)		(19,985)
	$	8,228	$	1,408,319	$	13,867	$	1,430,414
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	29,118	$	29,118
Foreclosed real estate		-		-		102,235		102,235
Other repossessed assets		-		-		16,875		16,875
	$	-	$	-	$	148,228	$	148,228

	December 31, 2013
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	1,568,745	$	19,680	$	1,588,425
Securities purchased under agreements to resell		-		60,000		-		60,000
Money market investments		6,967		-		-		6,967
Derivative assets		-		4,072		16,430		20,502
Servicing assets		-		-		13,801		13,801
Derivative liabilities		-		(14,937)		(15,736)		(30,673)
	$	6,967	$	1,617,880	$	34,175	$	1,659,022
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	28,353	$	28,353
Foreclosed real estate		-		-		90,024		90,024
Other repossessed assets		-		-		12,583		12,583
	$	-	$	-	$	130,960	$	130,960

		Quarter Ended June 30, 2014
				Derivative				Derivative
		Other		asset				liability
		debt		(S&P				(S&P
		securities		Purchased		Servicing		Embedded
Level 3 Instruments Only		available-for-sale		Options)		assets		Options)		Total
	(In thousands)
Balance at beginning of period		$	20,053	$	12,555	$	13,970	$	(12,120)	$	34,458
Gains (losses) included in earnings			-		(5,975)		-		5,591		(384)
Changes in fair value of investment securities available for sale included in other comprehensive income			(53)		-		-		-		(53)
New instruments acquired			-		-		490		-		490
Principal repayments			(20,000)		-		(271)		-		(20,271)
Amortization			-		-		-		161		161
Changes in fair value of servicing assets			-		-		(534)		-		(534)
Balance at end of period		$	-	$	6,580	$	13,655	$	(6,368)	$	13,867
		Six-Month Period Ended June 30, 2014
				Derivative				Derivative
		Other		asset				liability
		debt		(S&P				(S&P
		securities		Purchased		Servicing		Embedded
Level 3 Instruments Only		available-for-sale		Options)		assets		Options)		Total
	(In thousands)
Balance at beginning of period		$	19,680	$	16,430	$	13,801	$	(15,736)	$	34,175
Gains (losses) included in earnings			-		(9,850)		-		8,964		(886)
Changes in fair value of investment securities available for sale included in other comprehensive income			320		-		-		-		320
New instruments acquired			-		-		1,053		-		1,053
Principal repayments			(20,000)		-		(465)		-		(20,465)
Amortization			-		-		-		404		404
Changes in fair value of servicing assets			-		-		(734)		-		(734)
Balance at end of period		$	-	$	6,580	$	13,655	$	(6,368)	$	13,867

	Quarter Ended June 30, 2013
			Derivative				Derivative
	Other		asset				liability
	debt		(S&P				(S&P
	securities		Purchased			Servicing	Embedded
Level 3 Instruments Only	available-for-sale		Options)			assets	Options)		Total
Balance at beginning of period	$	20,042	$	15,404	$	11,543	$	(14,839)	$	32,150
Gains (losses) included in earnings		-		616		-		(516)		100
Changes in fair value of investment securities available for sale included in other comprehensive income		16		-		-		-		16
New instruments acquired		-		-		1,301		-		1,301
Principal repayments		-		-		(489)		-		(489)
Amortization		-		-		-		40		40
Changes in fair value of servicing assets		-		-		639		-		639
Balance at end of period	$	20,058	$	16,020	$	12,994	$	(15,315)	$	33,757
	Six-Month Period Ended June 30, 2013
			Derivative					Derivative
	Other		asset					liability
	debt		(S&P					(S&P
	securities		Purchased			Servicing		Embedded
Level 3 Instruments Only	available-for-sale		Options)			assets		Options)		Total
Balance at beginning of period	$	20,012	$	13,233	$	10,795	$	(12,707)	$	31,333
Gains (losses) included in earnings		-		2,787		-		(2,923)		(136)
Changes in fair value of investment securities available for sale included in other comprehensive income		46		-		-		-		46
New instruments acquired		-		-		1,994		-		1,994
Principal repayments		-		-		(557)		-		(557)
Amortization		-		-		-		315		315
Changes in fair value of servicing assets		-		-		762		-		762
Balance at end of period	$	20,058	$	16,020	$	12,994	$	(15,315)	$	33,757

Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Table Text Block]

The table below presents a reconciliation of all assets and liabilities measured at fair value on a recurring basisusing significant unobservable inputs (Level 3) for the quarters and six-month periods ended June30, 2014 and 2013:

	June 30, 2014
	Fair Value		Valuation Technique	Unobservable Input	Range
	(In thousands)
Derivative assets (S&P Purchased Options)	$	6,580	Option pricing model	Implied option volatility	23.23% - 35.94%
				Counterparty credit risk (based on 5-year credit default swap ("CDS") spread)	57.00% - 65.17%
Servicing assets	$	13,655	Cash flow valuation	Constant prepayment rate	5.60% - 11.24%
				Discount rate	10.00% - 12.00%
Derivative liability (S&P Embedded Options)	$	(6,838)	Option pricing model	Implied option volatility	23.23% - 35.94%
				Counterparty credit risk (based on 5-year CDS spread)	57.00% - 65.17%
Collateral dependant impaired loans	$	29,118	Fair value of property or collateral	Appraised value less disposition costs	22.20% - 29.20%

Fair Value By Balance Sheet Grouping [Text Block]

The estimated fair value and carrying value of the Company's financial instruments at June 30, 2014 and December 31, 2013 is as follows:

	June 30,				December 31,
	2014				2013
	Fair		Carrying		Fair		Carrying
	Value		Value		Value		Value
	(In thousands)
Level 1
Financial Assets:
Cash and cash equivalents	$	596,485	$	596,485	$	621,269	$	621,269
Restricted cash		15,170		15,170		82,199		82,199
Level 2
Financial Assets:
Securities purchased under agreements to resell		-		-		60,000		60,000
Trading securities		1,613		1,613		1,869		1,869
Investment securities available-for-sale		1,418,958		1,418,958		1,568,745		1,568,745
Investment securities held-to-maturity		26,844		26,706		-		-
Federal Home Loan Bank (FHLB) stock		24,381		24,381		24,450		24,450
Derivative assets		2,978		2,978		4,072		4,072
Financial Liabilities:
Derivative liabilities		13,617		13,617		14,937		14,937
Level 3
Financial Assets:
Investment securities available-for-sale		-		-		19,680		19,680
Total loans (including loans held-for-sale)
Non-covered loans, net		4,527,811		4,601,696		4,857,505		4,662,458
Covered loans, net		397,262		334,344		459,444		356,961
Derivative assets		6,580		6,580		16,430		16,430
FDIC indemnification asset		94,653		143,660		152,965		189,240
Accrued interest receivable		22,508		22,508		18,734		18,734
Servicing assets		13,655		13,655		13,801		13,801
Financial Liabilities:
Deposits		5,076,996		5,141,233		5,409,540		5,383,265
Securities sold under agreements to repurchase		1,065,181		1,012,233		1,323,903		1,267,618
Advances from FHLB		365,808		360,240		335,324		336,143
Term notes		3,741		3,837		3,638		3,663
Subordinated capital notes		88,243		100,797		99,316		100,010
Accrued expenses and other liabilities		135,406		135,406		144,424		144,424

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Fair Value (Reconciliation of assets and liabilities using significant unobservable inputs (Level 3)) (Details) (Fair Value, Measurements, Recurring [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance	$ 34,458	$ 32,150	$ 34,175	$ 31,333
Gains (losses) included in earnings	(384)	100	(886)	(136)
Changes in fair value of investment securities available for sale included in other comprehensive income	(53)	16	320	46
New instruments acquired	490	1,301	1,053	1,994
Principal repayments	(20,271)	(489)	(20,465)	(557)
Amortization	161	40	404	315
Changes in fair value of servicing assets	(534)	639	(734)	762
Balance	13,867	33,757	13,867	33,757
Other Debt Obligations [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance	20,053	20,042	19,680	20,012
Gains (losses) included in earnings	0	0	0	0
Changes in fair value of investment securities available for sale included in other comprehensive income	(53)	16	320	46
New instruments acquired	0		0	0
Principal repayments	(20,000)	0	(20,000)	0
Amortization	0	0	0	0
Changes in fair value of servicing assets	0	0	0	0
Balance	0	20,058	0	20,058
Derivative Financial Instruments, Assets [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance	12,555	15,404	16,430	13,233
Gains (losses) included in earnings	(5,975)	616	(9,850)	2,787
Changes in fair value of investment securities available for sale included in other comprehensive income	0	0	0	0
New instruments acquired	0	0	0	0
Principal repayments	0	0	0	0
Amortization	0	0	0	0
Changes in fair value of servicing assets	0	0	0	0
Balance	6,580	16,020	6,580	16,020
Servicing Assets [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance	13,970	11,543	13,801	10,795
Gains (losses) included in earnings	0	0	0	0
Changes in fair value of investment securities available for sale included in other comprehensive income	0	0	0	0
New instruments acquired	490	1,301	1,053	1,994
Principal repayments	(271)	(489)	(465)	(557)
Amortization	0	0	0	0
Changes in fair value of servicing assets	(534)	639	(734)	762
Balance	13,655	12,994	13,655	12,994
Derivative Financial Instruments, Liabilities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance	(12,120)	(14,839)	(15,736)	(12,707)
Gains (losses) included in earnings	5,591	(516)	8,964	(2,923)
Changes in fair value of investment securities available for sale included in other comprehensive income	0	0	0	0
New instruments acquired	0	0	0	0
Principal repayments	0	0	0	0
Amortization	161	40	404	315
Changes in fair value of servicing assets	0	0	0	0
Balance	$ (6,368)	$ (15,315)	$ (6,368)	$ (15,315)

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Consolidated Statements of Comprehensive Income (Loss) [Abstract]
Net income	$ 21,309	$ 37,539	$ 45,056	$ 58,731
Other comprehensive income (loss) before tax:
Unrealized gain (loss) on securities available-for-sale	14,941	(35,576)	24,504	(46,568)
Realized gain on investment securities included in net income	0	0	(4,366)	0
Unrealized gain (loss) on cash flow hedges	14	3,016	391	4,477
Other comprehensive income (loss) before taxes	14,955	(32,560)	20,529	(42,091)
Income tax effect	(1,221)	1,275	(1,965)	1,977
Other Comprehensive Income (Loss) After taxes	13,734	(31,285)	18,564	(40,114)
Comprehensive income	$ 35,043	$ 6,254	$ 63,620	$ 18,617

XML

Borrowings (Redemption Fund) (Details) (Redemption Fund [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2014
Redemption Fund [Member]
Debt Instrument [Line Items]
Redemption fund - March 31, 2014	$ 51,925
2014	3,350
2015	6,700
2016	5,025
Total	$ 67,000

XML

Securities Purchased Under Agreements And Investments

6 Months Ended

Jun. 30, 2014

Investments [Abstract]

Securities purchased under agreement to resell and investments

NOTE 3–INVESTMENT SECURITIES

Money Market Investments

The Company considers as cash equivalents all money market instruments that are not pledged and that havematurities of three months or less at the date of acquisition. At June 30, 2014 and December 31, 2013, money market instruments included as part of cash and cash equivalents amounted to $8.2million and $7.0 million,respectively.

Securities Purchased Under Agreements to Resell

Securities purchased under agreements to resell consist of short-term investmentsand are carried at the amounts at which the assets will be subsequently resold as specified in the respective agreements. AtDecember 31, 2013, securities purchased under agreements to resell amounted to $60.0 million.At June 30, 2014, there were no securities purchased under agreements to resell.

The amounts advanced under those agreements are reflected as assets in the consolidated statements of financial condition. It is the Company's policy to take possession of securities purchased under agreements to resell. Agreements with third parties specify the Company's right to request additional collateral based on its monitoring of the fair value of the underlying securities on a daily basis.The fair value of the collateral securities held by the Company on these transactions as ofDecember 31, 2013was approximately $64.6million.

Investment Securities

The amortized cost, gross unrealized gains and losses, fair value, and weighted average yield of the securitiesowned by the Company at June 30, 2014 and December 31, 2013 were as follows:

	June 30, 2014
			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	$	1,070,034	$	44,076	$	1,992	$	1,112,118	3.10%
GNMA certificates		5,560		389		21		5,928	4.92%
CMOs issued by US government-sponsored agencies		200,111		306		3,786		196,631	1.79%
Total mortgage-backed securities		1,275,705		44,771		5,799		1,314,677	2.90%
Investment securities
US Treasury securities		9,000		-		-		9,000	0.01%
Obligations of US government-sponsored agencies		74,613		-		38		74,575	0.17%
Obligations of Puerto Rico government and political subdivisions		22,391		-		5,591		16,800	5.32%
Other debt securities		3,729		177		-		3,906	2.95%
Total investment securities		109,733		177		5,629		104,281	1.30%
Total securities available for sale	$	1,385,438	$	44,948	$	11,428	$	1,418,958	2.77%
Held-to-maturity
Mortgage-backed securities
FNMA and FHLMC certificates		26,706		138		-		26,844	2.52%
Total	$	1,412,144	$	45,086	$	11,428	$	1,445,802	2.77%

	December 31, 2013
			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	$	1,190,910	$	33,089	$	6,669	$	1,217,330	2.93%
GNMA certificates		7,406		433		24		7,815	4.92%
CMOs issued by US government-sponsored agencies		220,801		407		6,814		214,394	1.78%
Total mortgage-backed securities		1,419,117		33,929		13,507		1,439,539	2.76%
Investment securities
Obligations of US government-sponsored agencies		10,691		-		42		10,649	1.21%
Obligations of Puerto Rico government and political subdivisions		121,035		-		6,845		114,190	4.38%
Other debt securities		24,200		167		320		24,047	3.46%
Total investment securities		155,926		167		7,207		148,886	2.99%
Total securities available-for-sale	$	1,575,043	$	34,096	$	20,714	$	1,588,425	2.89%

The amortized cost and fair value of the Company's investment securities at June 30, 2014, 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.

	June 30, 2014
	Available-for-sale				Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)				(In thousands)
Mortgage-backed securities
Due after 5 to 10 years
FNMA and FHLMC certificates	$	24,631	$	25,109	$	-	$	-
Total due after 5 to 10 years		24,631		25,109		-		-
Due after 10 years
FNMA and FHLMC certificates		1,045,403		1,087,009		26,706		26,844
GNMA certificates		5,560		5,928		-		-
CMOs issued by US government-sponsored agencies		200,111		196,631		-		-
Total due after 10 years		1,251,074		1,289,568		26,706		26,844
Total mortgage-backed securities		1,275,705		1,314,677		26,706		26,844
Investment securities
Due in less than one year
US Treasury securities		9,000		9,000		-		-
Obligations of US government and sponsored agencies		66,000		66,000		-		-
Total due in less than one year		75,000		75,000		-		-
Due from 1 to 5 years
Obligations of Puerto Rico government and political subdivisions		11,927		9,543		-		-
Total due from 1 to 5 years		11,927		9,543		-		-
Due after 5 to 10 years
Obligations of US government and sponsored agencies		8,613		8,575		-		-
Total due after 5 to 10 years		8,613		8,575		-		-
Due after 10 years
Obligations of Puerto Rico government and political subdivisions		10,464		7,257		-		-
Other debt securities		3,729		3,906		-		-
Total due after 10 years		14,193		11,163		-		-
Total investment securities		109,733		104,281		-		-
Total securities available-for-sale	$	1,385,438	$	1,418,958	$	26,706	$	26,844

At December 31, 2013, obligations of the Puerto Rico government and its political subdivisions includeda $98.7 millionprincipal amount, LIBORfloating ratebond with a maturity date of July 1, 2024, that was subject to mandatory tender for purchase by the end of the third year anniversary of the closing date, which was June 1, 2014. The bond was also subject to optional demand tender for purchase upon the occurrence and continuance of certain events, including (among others) the withdrawal, suspension or reduction below investment grade of the credit rating on any general obligation of the Commonwealth by any of the three major rating agencies. This bond was repaid by the issuer on March 17, 2014.

The Company, as part of its asset/liability management, may purchase U.S. Treasury securities and U.S. government-sponsored agency discount notes close to their maturities as alternatives to cash deposits at correspondent banks or as a short term vehicle to reinvest the proceeds of sale transactions until investment securities with attractive yields can be purchased.During the six-month period ended June 30, 2014, the Company sold $48.1 million of available-for-sale Government National Mortgage Association (“GNMA”) certificates that were sold as part of its recurring mortgage loan origination and securitization activities. These sales did not realize any gains or losses during such period. In addition, during the six-month period ended June 30, 2014, certain available-for-sale securities were sold to realize gains andto invest the proceeds in other investment securities with attractive yields and terms that protect the Company's net interest margin.

For the six-month period ended June 30, 2014 the Company recorded a net gain on sale of securities of $4.4 million. The tables below present the gross realized gains by category for such period.There was no realized gain or loss for the six-month period ended June 30, 2013.

	Six-Month Period Ended June 30, 2014
			Book Value		Gross		Gross
Description	Sale Price		at Sale		Gains		Losses
	(In thousands)
Sale of securities available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates	$	115,158	$	110,792	$	4,366	$	-
GNMA certificates		48,077		48,077		-		-
Total	$	163,235	$	158,869	$	4,366	$	-

The following tables show the Company's gross unrealized losses and fair value of investment securities available-for-sale and held-to-maturity, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position at June 30, 2014 and December 31, 2013:

	June 30, 2014
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies	$	156,542	$	3,734	$	152,808
FNMA and FHLMC certificates		190,630		1,992		188,638
Obligations of Puerto Rico government and political subdivisions		22,391		5,591		16,800
GNMA certificates		199		21		178
	$	369,762	$	11,338	$	358,424
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies	$	16,365	$	52	$	16,313
Obligations of US government and sponsored agencies		8,613		38		8,575
	$	24,978	$	90	$	24,888
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies	$	172,907	$	3,786	$	169,121
FNMA and FHLMC certificates		190,630		1,992		188,638
Obligations of Puerto Rico government and political subdivisions		22,391		5,591		16,800
Obligations of US government and sponsored agencies		8,613		38		8,575
GNMA certificates		199		21		178
	$	394,740	$	11,428	$	383,312

	December 31, 2013
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico government and political subdivisions	$	20,845	$	5,470	$	15,375
CMOs issued by US government-sponsored agencies		2,559		237		2,322
GNMA certificates		81		11		70
	$	23,485	$	5,718	$	17,767
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico government and political subdivisions	$	100,190	$	1,375	$	98,815
CMOs issued by US government-sponsored agencies		182,661		6,577		176,084
GNMA certificates		122		13		109
FNMA and FHLMC certificates		220,913		6,669		214,244
Obligations of US government and sponsored agencies		10,691		42		10,649
Other debt securities		20,000		320		19,680
	$	534,577	$	14,996	$	519,581
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico government and political subdivisions	$	121,035	$	6,845	$	114,190
CMOs issued by US government-sponsored agencies		185,220		6,814		178,406
GNMA certificates		203		24		179
FNMA and FHLMC certificates		220,913		6,669		214,244
Obligations of US government and sponsored agencies		10,691		42		10,649
Other debt securities		20,000		320		19,680
	$	558,062	$	20,714	$	537,348

The Company performs valuations of the investment securities on a monthly basis. Moreover, the Company 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 income with the remaining 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 conditionsand are subject to further change over time. In addition, while the Company believes that the methodology used to value these exposures is reasonable, the methodology is subject to continuing refinement, 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.

Most of the investments in an unrealized loss position at June 30, 2014($372.3million or 94%) 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 such securities.

The remaining investments in an unrealized loss position at June 30, 2014 ($22.4 million or 6%) consist of obligations issued or guaranteed by the government of Puerto Rico and its political subdivisions or instrumentalities. The recent decline in the market value of these securities is mainly attributed to an increase in volatility as a result of changes in market conditions that reflect the significant economic and fiscal challenges that Puerto Rico is facing, including a protracted economic recession, sizable government debt-service obligations and structural budget deficits, high unemployment and a shrinking population. Moreover, uncertainty in regards to the impact of the recently enacted Public Corporation Debt Enforcement and Recovery Act (the “Recovery Act”) and the related subsequent negative rating decisions taken by the credit rating agencies has affected the market value of these securities. As of June 30, 2014, the Company analyzed these investments and consideredseveral factors that, in the Company's view, support the ability of the Commonwealthand the particular political subdivisions or instrumentalities to continue servicing their debt obligations. Such factors include (i) the collateralization and sources of repayment for such debt obligations; (ii) the government's efforts to increase revenues and reduce expenses to tackle its recurrent budget deficits; (iii) the Commonwealth's constitutional framework that provides that “public debt” constitutes a first claim on available Commonwealth resources; and (iv)the Commonwealth's compliance and commitment to its contractual debt obligations. In addition, the Company believes it is probable that it will collect all amounts due according to the contractual terms of its Puerto Rico government bonds. Based on these factors, the Company expects that such bonds will be repaid in full when due, and given that the Company does not have the intent to sell any such bonds in an unrealized loss position, the Company does not consider them to be other-than-temporarily impaired as of June 30, 2014.

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Allowance for Loan and Lease Losses (Narrative) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Line Of Credit Facility Maximum Borrowing Capacity to Puerto Rico Government	$ 670.9	$ 763.4
Line Of Credit Facility Amount Outstanding to Puerto Rico Government	655.4	696.0
Total revolving line of credit granted to the Government of Puerto Rico	550
Unpaid principal balance of the revolving line of credit granted to the Government of Puerto Rico	$ 200.0
Government credit line maturity date	Aug. 14, 2014

XML

Deposits and Related Interest (Maturities of Time Deposits) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014
Maturities of Time Deposits [Abstract]
Time Deposit Maturities Less Than Three Month	$ 372,809
Time Deposit Maturities Three To Twelve Month	701,493
Total Time deposits	1,074,302
Time Deposit Maturities, Year Two	421,047
Time Deposit Maturities, Year Three	200,607
Time Deposit Maturities, Year Four	56,095
Time Deposit Maturities, Year Five	17,202
Certificates of deposit	$ 1,769,253

XML

Fair Value (Assets and liabilities on recurring and non-recurring basis) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	$ 1,418,958	$ 1,588,425
Money Market Funds, at Carrying Value	8,228	6,967
Derivative Assets	9,558	20,502
Servicing Assets	13,655	13,801
Derivative liabilities	(13,617)	(14,937)
Other repossessed assets	16,875	12,583
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	1,418,958	1,568,745
Securities purchased under agreements to resell	0	60,000
Derivative Assets	2,978	4,072
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	19,680
Derivative Assets	6,580	16,430
Servicing Assets	13,655	13,801
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	1,418,958	1,588,425
Securities purchased under agreements to resell	0	60,000
Money Market Funds, at Carrying Value	8,228	6,967
Derivative Assets	9,558	20,502
Servicing Assets	13,655	13,801
Derivative liabilities	(19,985)	(30,673)
Total	1,430,414	1,659,022
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Securities purchased under agreements to resell	0	0
Money Market Funds, at Carrying Value	8,228	6,967
Derivative Assets	0	0
Servicing Assets	0	0
Derivative liabilities	0	0
Total	8,228	6,967
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	1,418,958	1,568,745
Securities purchased under agreements to resell	0	60,000
Money Market Funds, at Carrying Value	0	0
Derivative Assets	2,978	4,072
Servicing Assets	0	0
Derivative liabilities	(13,617)	(14,937)
Total	1,408,319	1,617,880
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	19,680
Securities purchased under agreements to resell	0	0
Money Market Funds, at Carrying Value	0	0
Derivative Assets	6,580	16,430
Servicing Assets	13,655	13,801
Derivative liabilities	(6,368)	(15,736)
Total	13,867	34,175
Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Commercial Loan	29,118	28,353
Foreclosed real estate	102,235	90,024
Other repossessed assets	16,875	12,583
Total	148,228	130,960
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Commercial Loan	0	0
Foreclosed real estate	0	0
Other repossessed assets	0	0
Total	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Commercial Loan	0	0
Foreclosed real estate	0	0
Other repossessed assets	0	0
Total	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Commercial Loan	29,118	28,353
Foreclosed real estate	102,235	90,024
Other repossessed assets	16,875	12,583
Total	$ 148,228	$ 130,960

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Allowance for Loan and Lease Losses (Recorded Investment in Covered Loan Pools) (Details) (USD $) In Thousands, unless otherwise specified							3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended
	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2014 Covered Loan [Member]	Dec. 31, 2013 Covered Loan [Member]	Jun. 30, 2014 Loans Secured by 1-4 properties Covered Loan [Member]	Dec. 31, 2013 Loans Secured by 1-4 properties Covered Loan [Member]	Jun. 30, 2014 Construction and development secured by multi-family properties [Member] Covered Loan [Member]	Dec. 31, 2013 Construction and development secured by multi-family properties [Member] Covered Loan [Member]	Jun. 30, 2014 Other Commercial and Industrial[Member] Covered Loan [Member]	Dec. 31, 2013 Other Commercial and Industrial[Member] Covered Loan [Member]	Jun. 30, 2014 Consumer Loan [Member] Covered Loan [Member]	Dec. 31, 2013 Consumer Loan [Member] Covered Loan [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal							$ 339,256	$ 338,257	$ 141,951	$ 52,142	$ 63,615	$ 66,037	$ 124,506	$ 209,566	$ 9,184	$ 10,512
Recorded Investment							210,342	173,286	108,884	38,179	18,566	17,304	77,980	111,946	4,912	5,857
Allowance for loan and lease losses, covered	$ 59,515	$ 54,398	$ 52,729	$ 53,993	$ 52,974	$ 54,124	$ 59,515	$ 52,729	$ 14,923	$ 12,495	$ 7,799	$ 6,866	$ 36,178	$ 32,753	$ 615	$ 615
Coverage							28.00%	30.00%	14.00%	33.00%	42.00%	40.00%	46.00%	29.00%	13.00%	11.00%

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Restricted Cash (Tables)

6 Months Ended

Jun. 30, 2014

Restricted Cash And Investments Abstract

Restricted Cash Components and Its Secured Investments

The following table includes the composition of the Company's restricted cash

	June 30,		December 31,
	2014		2013
	(In thousands)
Cash pledged as collateral to other financial institutions to secure:
Securities sold under agreements to repurchase	$	-	$	67,029
Derivatives		2,980		2,980
Obligations under agreement of loans sold with recourse		12,190		12,190
	$	15,170	$	82,199

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Derivative Activities (Interest rate swap and their term) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2014
Interest rate swap designated as cash flow hedges
Derivative [Line Items]
Amount	$ 264,961
Interest rate swap designated as cash flow hedges | Rate 2.4365% [Member]
Derivative [Line Items]
Amount	25,000
Fixed rate	2.4365%
Trade Date	May 05, 2011
Settlement Date	May 04, 2012
Maturity Date	May 04, 2016
Interest rate swap designated as cash flow hedges | Rate 2.6200% [Member]
Derivative [Line Items]
Amount	25,000
Fixed rate	2.62%
Trade Date	May 05, 2011
Settlement Date	Jul. 24, 2012
Maturity Date	Jul. 24, 2016
Interest rate swap designated as cash flow hedges | Rate 2.6350% [Member]
Derivative [Line Items]
Amount	25,000
Fixed rate	2.635%
Trade Date	May 05, 2011
Settlement Date	Jul. 30, 2012
Maturity Date	Jul. 30, 2016
Interest rate swap designated as cash flow hedges | Rate 2.6590% [Member]
Derivative [Line Items]
Amount	50,000
Fixed rate	2.659%
Trade Date	May 05, 2011
Settlement Date	Aug. 10, 2012
Maturity Date	Aug. 10, 2016
Interest rate swap designated as cash flow hedges | Rate 2.6750% [Member]
Derivative [Line Items]
Amount	100,000
Fixed rate	2.675%
Trade Date	May 05, 2011
Settlement Date	Aug. 16, 2012
Maturity Date	Aug. 16, 2016
Interest rate swap designated as cash flow hedges | Rate 2.4210% [Member]
Derivative [Line Items]
Amount	39,961
Fixed rate	2.421%
Trade Date	Jul. 03, 2013
Settlement Date	Jul. 03, 2013
Maturity Date	Aug. 01, 2023
Interest rate swaps not designated as hedges - offered to clients
Derivative [Line Items]
Amount	16,549
Interest rate swaps not designated as hedges - offered to clients
Derivative [Line Items]
Amount	$ 16,549

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Stockholders' Equity and Earnings per Common Share (Tables)

3 Months Ended

6 Months Ended

Mar. 31, 2014

Jun. 30, 2014

Stockholders' Equity [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

The Company's and the Bank's actual capital amounts and ratios as of June 30, 2014 and December 31, 2013 are as follows:

				Minimum Capital			Minimum to be Well
	Actual			Requirement			Capitalized
	Amount		Ratio	Amount		Ratio		Amount	Ratio
	(Dollars in thousands)
Company Ratios
As of June 30, 2014
Total capital to risk-weighted assets	$	863,790	17.30%	$	399,550	8.00%	$	499,438	10.00%
Tier 1 capital to risk-weighted assets	$	773,824	15.49%	$	199,775	4.00%	$	299,663	6.00%
Tier 1 capital to average total assets	$	773,824	10.26%	$	301,829	4.00%	$	377,286	5.00%
As of December 31, 2013
Total capital to risk-weighted assets	$	827,460	16.16%	$	409,514	8.00%	$	511,893	10.00%
Tier 1 capital to risk-weighted assets	$	736,930	14.35%	$	204,757	4.00%	$	307,136	6.00%
Tier 1 capital to average total assets	$	736,930	9.11%	$	324,910	4.00%	$	406,138	5.00%

				Minimum Capital			Minimum to be Well
	Actual			Requirement			Capitalized
	Amount		Ratio	Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
Bank Ratios
As of June 30, 2014
Total capital to risk-weighted assets	$	812,267	16.34%	$	397,593	8.00%	$	496,991	10.00%
Tier 1 capital to risk-weighted assets	$	722,603	14.54%	$	198,796	4.00%	$	298,195	6.00%
Tier 1 capital to average total assets	$	722,603	9.65%	$	299,657	4.00%	$	374,571	5.00%
As of December 31, 2013
Total capital to risk-weighted assets	$	779,413	15.30%	$	407,637	8.00%	$	509,547	10.00%
Tier 1 capital to risk-weighted assets	$	688,350	13.51%	$	203,819	4.00%	$	305,728	6.00%
Tier 1 capital to average total assets	$	688,350	8.54%	$	322,395	4.00%	$	402,993	5.00%

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The calculation of earnings per common share for the quartersand six-month periods ended June 30, 2014and 2013 is as follows:

	Quarter ended June 30 ,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands, except per share data)
Net income	$	21,309	$	37,539	$	45,056	$	58,731
Less: Dividends on preferred stock
Non-convertible preferred stock (Series A, B, and D)		(1,628)		(1,628)		(3,256)		(3,256)
Convertible preferred stock (Series C)		(1,838)		(1,838)		(3,675)		(3,675)
Income available to common shareholders	$	17,843	$	34,073	$	38,125	$	51,800
Effect of assumed conversionof the convertible ' ' preferred stock		1,838		1,838		3,675		3,675
Income available to common shareholders assuming conversion	$	19,681	$	35,911	$	41,800	$	55,475
Weighted average common shares and share equivalents:
Average common shares outstanding		45,014		45,630		45,170		45,613
Effect of dilutive securities:
Average potential common shares-options		200		200		168		178
Average potential common shares-assuming ' ' conversion of convertible preferred stock		7,138		7,138		7,138		7,138
Total weighted average common shares ' 'outstanding and equivalents		52,352		52,968		52,476		52,929
Earnings per common share - basic	$	0.40	$	0.75	$	0.84	$	1.14
Earnings per common share - diluted	$	0.38	$	0.68	$	0.80	$	1.05

Schedule of Treasury Stock by Class [Table Text Block]

The following table presents the shares repurchased for each month in the six-month period ended June 30, 2014, excluding the months of March, April, May, and June of 2014, during which no shares were purchased as part of the stock repurchase program:

	Total number of				Dollar amount of
	shares purchased as		Average		shares repurchased
		part of stock	price paid		(excluding
	repurchase programs		per share		commissions paid)
						(In thousands)
Period
January 2014		57,700	$	14.73	$	850
February 2014		649,700	$	14.66	$	9,522
Six-Month Period Ended June 30, 2014		707,400		14.66		10,372

The activity in connection with common shares held in treasury by the Company for the six-month periods ended June 30, 2014 and 2013 is set forth below

	Six-Month Period Ended June 30,
	2014			2013
		Dollar			Dollar
	Shares	Amount		Shares	Amount
	(In thousands, except shares data)
Beginning of period	7,030,101	$	80,642	7,090,597	$	81,275
Common shares used upon lapse of restricted stock units	(30,552)		(323)	(34,800)		(364)
Common shares repurchased as part of the stock repurchase program	707,400		10,393	-		-
Common shares used to match defined contribution plan, net	-		-	(7,318)		(77)
End of period	7,706,949	$	90,712	7,048,479	$	80,834

Schedule of Accumulated Other Comprehensive Income (Loss)

	June 30,		December 31,
	2014		2013
	(In thousands)
Unrealized gain on securities available-for-sale which are not other-than-temporarily impaired	$	33,404	$	13,267
Income tax effect of unrealized gain on securities available-for-sale		(3,645)		(1,834)
Net unrealized gain on securities available-for-sale which are not other-than-temporarily impaired		29,759		11,433
Unrealized loss on cash flow hedges		(10,515)		(10,907)
Income tax effect of unrealized loss on cash flow hedges		2,511		2,665
Net unrealized loss on cash flow hedges		(8,004)		(8,242)
Accumulated other comprehensive income, net of taxes	$	21,755	$	3,191

The following table presents changes in accumulated other comprehensive income by component, net of taxes, for the quartersand six-month periods endedJune 30, 2014 and 2013:

	Quarter Ended June 30,
	2014						2013
	Net unrealized		Net unrealized		Accumulated		Net unrealized		Net unrealized		Accumulated
	gains on		loss on		other		gains on		loss on		other
	securities		cash flow		comprehensive		securities		cash flow		comprehensive
	available-for-sale		hedges		income		available-for-sale		hedges		income
	(In thousands)
Beginning balance	$	16,035	$	(8,013)	$	8,022	$	58,393	$	(11,342)	$	47,051
Other comprehensive income (loss) before reclassifications		13,714		(1,633)		12,081		(33,036)		292		(32,744)
Amounts reclassified out of accumulated other comprehensive income		10		1,642		1,652		43		1,416		1,459
Other comprehensive income (loss)		13,724		9		13,733		(32,993)		1,708		(31,285)
Ending balance	$	29,759	$	(8,004)	$	21,755	$	25,400	$	(9,634)	$	15,766
	Six-Month Period Ended June 30,
	2014						2013
	Net unrealized		Net unrealized		Accumulated		Net unrealized		Net unrealized		Accumulated
	gains on		loss on		other		gains on		loss on		other
	securities		cash flow		comprehensive		securities		cash flow		comprehensive
	available-for-sale		hedges		income		available-for-sale		hedges		income
	(In thousands)
Beginning balance	$	11,433	$	(8,242)	$	3,191	$	68,245	$	(12,365)	$	55,880
Other comprehensive income before reclassifications		18,179		(3,025)		15,154		(42,934)		(21)		(42,955)
Amounts reclassified out of accumulated other comprehensive income		147		3,263		3,410		89		2,752		2,841
Other comprehensive income (loss)		18,326		238		18,564		(42,845)		2,731		(40,114)
Ending balance	$	29,759	$	(8,004)	$	21,755	$	25,400	$	(9,634)	$	15,766

Reclassification out of Accumulated Other Comprehensive Income [Table text block]

	Amount reclassified out of accumulated
	other comprehensive income
		Quarter Ended		Six-Month Period	Affected Line Item in
		June 30, 2014		Ended June 30, 2014	Consolidated Statement
					of Operations
	(In thousands)
Cash flow hedges:
Interest-rate contracts	$	1,642	$	3,263	Net interest expense
Available-for-sale securities:
Residual tax effect from OIB's change in applicable tax rate		10		147	Income tax expense
	$	1,652	$	3,410

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Income Taxes

6 Months Ended

Jun. 30, 2014

Income Taxes [Abstract]

INCOME TAXES

NOTE 13— INCOME TAXES

At June 30, 2014 and December 31, 2013, the Company's net deferred tax asset amounted to $123.3 million and $137.6 million, respectively. In assessing the realizability of the deferred tax asset, management considers whether it is more likely than not that some portion or the entire deferred tax asset will not be realized. The ultimate realization of the deferred tax asset is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.  Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.  Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax asset are deductible, management believes it is more likely than not that the Company will realize the entire deferred tax asset, net of the existing valuation allowances recorded at June 30, 2014 and December 31, 2013. The amount of the deferred tax asset that is considered realizable could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

At June 30, 2014 and December 31, 2013, Oriental International Bank Inc. (“OIB”), the Bank's international banking entity subsidiary, had $209 thousand and $356 thousand, respectively, in income tax effect of unrecognized gain on available-for-sale securities included in other comprehensive income. Following the change in OIB's applicable tax rate from 5% to 0% as a result of a Puerto Rico law adopted in 2011, this remaining tax balance will flow through income as these securities are repaid or sold in future periods. During the quarters ended June 30, 2014 and 2013, $10 thousand and $43 thousand, respectively, related to this residual tax effect from OIB was reclassified from accumulated other comprehensive income into income tax provision. During the six-month period ended June 30, 2014 and 2013, $147 thousand and $89 thousand, respectively, related to the residual effect from OIB was reclassified from accumulated other comprehensive income to income tax provision.

The Company classifies unrecognized tax benefits in income taxes payable. These gross unrecognized tax benefits would affect the effective tax rate if realized. The balance of unrecognized tax benefits at June 30, 2014was $3.6 million (December 31, 2013 - $4.0 million). The Company had accrued $1.6 million at June 30, 2014 (December 31, 2013 - $1.2million) for the payment of interest and penalties relating to unrecognized tax benefits.

Income tax expense was $10.6 million for the quarter ended June 30, 2014, compared to an income tax benefit of $31.9 million for the same periodsin 2013.During the quarter ended June 30, 2013, the income tax benefit was the result of the increase in the enacted tax rate from 30% to 39%, which was retroactively implemented to January 1, 2013.

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Guarantees (Narrative) (Details) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Guarantee Obligations [Line Items]
Qualitative And Quantitative Information Assets Or Liabilities For Transferors Continuing Involvement In Securitization Or Asset backed Financing Arrangement Principal Amounts Outstanding	$ 113,500,000		$ 113,500,000		$ 122,300,000
Repurchased Loan	2,100,000		3,700,000		12,500,000
Valuation Allowances And Reserves Balance	347,000,000		347,000,000		12,500,000
Repurchase loan subject to credit recourse	95,000		145,000
Gain (Loss) On Repurchase Loan Not Subject To Credit Recourse	494,000	303,000	929,000	477,000
Funds Advanced To Investors Under Servicing Agreements	347,000		347,000		243,000
Serviced mortgage loans for third parties	1,100,000,000		1,100,000,000
Loan serviced under representation warranties [Member]
Guarantee Obligations [Line Items]
Repurchased Loan	$ 5,100,000