10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

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:

 43,867,909  common shares ($1.00 par value per share) outstanding as of July 31, 2015

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 (Loss) 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	39
		Note 6 – FDIC Indemnification Asset and True-Up Payment Obligation	48
		Note 7 – Servicing Assets	50
		Note 8 – Derivatives	52
		Note 9 – Accrued Interest Receivable and Other Assets	54
		Note 10 – Deposits and Related Interest	55
		Note 11 – Borrowings and Related Interest	57
		Note 12 – Offsetting of  Financial Assets and Liabilities	60
		Note 13 – Related Party Transactions	61
		Note 14 – Income Taxes	62
		Note 15 – Regulatory Capital Requirements	63
		Note 16 – Stockholders’ Equity	65
		Note 17 – Accumulated Other Comprehensive Income	66
		Note 18 – (Loss) Earnings per Common Share	68
		Note 19 – Guarantees	69
	Note 20 – Commitments and Contingencies		71
	Note 21 – Fair Value of Financial Instruments		73
	Note 22 – Business Segments		82
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		85
		Critical Accounting Policies and  Estimates	85
		Overview of Financial Performance:	86
		Selected Financial Data	86
		Financial Highlights of the Second Quarter of 2015	88
		Analysis of Results of Operations	93
		Analysis of Financial Condition	107
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		132
Item 4.	Controls and Procedures		136
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings		137
Item 1A.	Risk Factors		137
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		140
Item 3.	Default upon Senior Securities		140
Item 4.	Mine Safety Disclosures		140
Item 5.	Other Information		140
Item 6.	Exhibits		141
SIGNATURES			142
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, 2015 AND DECEMBER 31, 2014

	June 30,		December 31,
	2015		2014
	(In thousands)
ASSETS
Cash and cash equivalents:
Cash and due from banks	$	547,740	$	568,752
Money market investments		5,795		4,675
Total cash and cash equivalents		553,535		573,427
Restricted cash		6,086		8,407
Investments:
Trading securities, at fair value, with amortized cost of $1,327 (December 31, 2014 - $2,419)		786		1,594
Investment securities available-for-sale, at fair value, with amortized cost of $1,023,573 (December 31, 2014 - $1,187,679)		1,044,319		1,216,538
Investment securities held-to-maturity, at amortized cost, with fair value of $547,776 (December 31, 2014 - $164,154)		550,553		162,752
Federal Home Loan Bank (FHLB) stock, at cost		20,826		21,169
Other investments		3		3
Total investments		1,616,487		1,402,056
Loans:
Mortgage loans held-for-sale, at lower of cost or fair value		20,768		14,539
Non-covered loans, net of allowance for loan and lease losses of $102,877 (December 31, 2014 - $69,517)		4,396,665		4,513,196
Covered loans, net of allowance for loan and lease losses of $71,452 (December 31, 2014 - $64,245)		222,034		298,911
Total loans, net		4,639,467		4,826,646
Other assets:
FDIC indemnification asset		22,704		97,378
Foreclosed real estate covered under shared-loss agreements with the FDIC		38,941		47,514
Foreclosed real estate not covered under shared-loss agreements with the FDIC		42,392		48,147
Accrued interest receivable		19,254		21,345
Deferred tax asset, net		138,406		108,708
Premises and equipment, net		76,486		80,599
Customers' liability on acceptances		16,040		17,989
Servicing assets		5,791		13,992
Derivative assets		4,376		8,107
Goodwill		86,069		86,069
Other assets		132,291		108,725
Total assets	$	7,398,325	$	7,449,109
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Demand deposits	$	1,936,617		1,997,108
Savings accounts		1,333,202		1,385,824
Time deposits		1,479,865		1,541,474
Total deposits		4,749,684		4,924,406
Borrowings:
Securities sold under agreements to repurchase		1,161,136		980,087
Advances from FHLB		333,391		334,331
Subordinated capital notes		102,109		101,584
Other borrowings		2,090		4,004
Total borrowings		1,598,726		1,420,006
Other liabilities:
Derivative liabilities		8,739		11,221
Acceptances executed and outstanding		16,040		17,989
Accrued expenses and other liabilities		113,537		133,290
Total liabilities		6,486,726		6,506,912
Commitments and contingencies (See Note 20)
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, 2014 - 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, 2014 - 84,000); $1,000 liquidation value		84,000		84,000
Common stock, $1 par value; 100,000,000 shares authorized; 52,625,869 shares issued:
44,367,909 shares outstanding (December 31, 2014 - 52,625,869; 44,613,615)		52,626		52,626
Additional paid-in capital		539,669		539,311
Legal surplus		69,934		70,467
Retained earnings		159,737		181,152
Treasury stock, at cost, 8,257,960 shares (December 31, 2014 - 8,012,254 shares)		(100,668)		(97,070)
Accumulated other comprehensive income, net of tax of -$185 (December 31, 2014  $447)		14,301		19,711
Total stockholders’ equity		911,599		942,197
Total liabilities and stockholders’ equity	$	7,398,325	$	7,449,109
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, 2015 AND 2014

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2015		2014		2015		2014
	(In thousands, except per share data)				(In thousands, except per share data)
Interest income:
Non-covered loans	$	77,746	$	88,064	$	159,725	$	173,307
Covered loans		12,758		24,879		28,262		48,267
Total interest income from loans		90,504		112,943		187,987		221,574
Mortgage-backed securities		7,998		11,984		16,587		24,400
Investment securities and other		911		973		1,840		3,000
Total interest income		99,413		125,900		206,414		248,974
Interest expense:
Deposits		6,604		9,165		13,708		18,143
Securities sold under agreements to repurchase		7,394		7,372		14,558		14,784
Advances from FHLB and other borrowings		2,248		2,289		4,483		4,583
Subordinated capital notes		875		996		1,738		1,988
Total interest expense		17,121		19,822		34,487		39,498
Net interest income		82,292		106,078		171,927		209,476
Provision for non-covered loan and lease losses		15,644		13,220		53,027		23,282
(Recovery) Provision for covered loan and lease losses		(105)		1,595		4,705		3,224
Total provision for loan and lease losses		15,539		14,815		57,732		26,506
Net interest income after provision for loan and lease losses		66,753		91,263		114,195		182,970
Non-interest income:
Banking service revenue		10,212		9,995		20,417		20,552
Wealth management revenue		7,285		7,336		14,440		14,203
Mortgage banking activities		1,862		1,554		3,725		3,249
Total banking and financial service revenues		19,359		18,885		38,582		38,004
FDIC shared-loss expense, net:
FDIC indemnification asset expense		(22,512)		(17,499)		(34,733)		(35,121)
Change in true-up payment obligation		(733)		(856)		(1,596)		(1,721)
		(23,245)		(18,355)		(36,329)		(36,842)
Net gain (loss) on:
Sale of securities		-		-		2,572		4,366
Derivatives		77		(247)		(13)		(470)
Other non-interest (loss) income		(847)		224		(2,587)		678
Total non-interest (loss) income, net		(4,656)		507		2,225		5,736
Non-interest expense:
Compensation and employee benefits		19,260		20,707		39,440		42,494
Professional and service fees		4,143		3,512		8,324		7,719
Occupancy and equipment		8,883		8,605		17,519		16,914
Insurance		2,251		2,333		4,204		4,407
Electronic banking charges		5,851		4,796		11,218		9,449
Information technology expenses		1,543		1,485		2,997		3,300
Advertising, business promotion, and strategic initiatives		1,558		1,669		3,186		3,450
Foreclosure, repossession and other real estate expenses		10,337		6,656		15,783		13,043
Loan servicing and clearing expenses		2,594		1,669		4,947		3,728
Taxes, other than payroll and income taxes		2,703		3,776		4,182		7,511
Communication		770		813		1,460		1,770
Printing, postage, stationary and supplies		582		645		1,219		1,200
Director and investor relations		289		293		583		544
Other		3,673		2,889		5,707		5,723
Total non-interest expense		64,437		59,848		120,769		121,252
(Loss) income before income taxes		(2,340)		31,922		(4,349)		67,454
Income tax expense		769		10,613		1,748		22,398
Net (loss) income		(3,109)		21,309		(6,097)		45,056
Less: dividends on preferred stock		(3,466)		(3,466)		(6,931)		(6,931)
Net (loss) income available to common shareholders	$	(6,575)	$	17,843	$	(13,028)	$	38,125
(Loss) earnings per common share:
Basic	$	(0.15)	$	0.40	$	(0.29)	$	0.84
Diluted	$	(0.15)	$	0.38	$	(0.29)	$	0.80
Average common shares outstanding and equivalents		51,774		52,352		51,876		52,476
Cash dividends per share of common stock	$	0.10	$	0.08	$	0.20	$	0.16
See notes to unaudited consolidated financial statements.

2

OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

FOR THE QUARTERS AND SIX-MONTH PERIODS ENDED JUNE 30, 2015 AND 2014

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2015		2014		2015		2014
	(In thousands)				(In thousands)
Net (loss) income	$	(3,109)	$	21,309	$	(6,097)	$	45,056
Other comprehensive (loss) income before tax:
Unrealized (loss) gain on securities available-for-sale		(12,916)		14,941		(5,541)		24,504
Realized (loss) gain on investment securities included in net income		-		-		(2,572)		(4,366)
Unrealized (loss) gain on cash flow hedges		2,016		14		2,071		391
Other comprehensive (loss) income before taxes		(10,900)		14,955		(6,042)		20,529
Income tax effect		877		(1,221)		632		(1,965)
Other comprehensive (loss) income after taxes		(10,023)		13,734		(5,410)		18,564
Comprehensive (loss) income	$	(13,132)	$	35,043	$	(11,507)	$	63,620
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, 2015 AND 2014

	Six-Month Period Ended June 30,
	2015		2014
	(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		52,626		52,707
Exercised stock options		-		23
Balance at end of period		52,626		52,730
Additional paid-in capital:
Balance at beginning of period		539,311		538,071
Stock-based compensation expense		794		946
Exercised stock options		-		242
Lapsed restricted stock units		(436)		(323)
Balance at end of period		539,669		538,936
Legal surplus:
Balance at beginning of period		70,467		61,957
Transfer (to) from retained earnings		(533)		4,481
Balance at end of period		69,934		66,438
Retained earnings:
Balance at beginning of period		181,152		133,629
Net (loss) income		(6,097)		45,056
Cash dividends declared on common stock		(8,920)		(7,218)
Cash dividends declared on preferred stock		(6,931)		(6,931)
Transfer from (to) legal surplus		533		(4,481)
Balance at end of period		159,737		160,055
Treasury stock:
Balance at beginning of period		(97,070)		(80,642)
Stock repurchased		(4,238)		(10,393)
Lapsed restricted stock units		640		323
Balance at end of period		(100,668)		(90,712)
Accumulated other comprehensive income, net of tax:
Balance at beginning of period		19,711		3,191
Other comprehensive (loss) income, net of tax		(5,410)		18,564
Balance at end of period		14,301		21,755
Total stockholders’ equity	$	911,599	$	925,202
See notes to unaudited consolidated financial statements.

4

OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2015 AND 2014

	Six-Month Period Ended June 30,
	2015		2014
	(In thousands)
Cash flows from operating activities:
Net (loss) income	$	(6,097)	$	45,056
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Amortization of deferred loan origination fees, net of costs		1,813		1,330
Amortization of fair value premiums, net of discounts, on acquired loans		2,766		6,884
Amortization of investment securities premiums, net of accretion of discounts		5,931		203
Amortization of core deposit and customer relationship intangibles		953		1,085
Amortization of fair value premiums on acquired deposits		478		2,908
FDIC shared-loss expense, net		36,329		36,842
Depreciation and amortization of premises and equipment		5,930		4,826
Deferred income tax (benefit) expense, net		(1,316)		13,211
Provision for covered and non-covered loan and lease losses, net		57,732		26,506
Stock-based compensation		794		946
(Gain) loss on:
Sale of securities		(2,572)		(4,366)
Sale of mortgage loans held-for-sale		(2,010)		(2,447)
Derivatives		(113)		646
Foreclosed real estate		(706)		5,052
Sale of other repossessed assets		3,427		3,305
Sale of premises and equipment		10		(10)
Originations of loans held-for-sale		(111,433)		(86,058)
Proceeds from sale of loans held-for-sale		46,678		47,834
Net (increase) decrease in:
Trading securities		808		256
Accrued interest receivable		2,091		(3,774)
Servicing assets		1,216		146
Other assets		(19,813)		11,651
Net increase (decrease) in:
Accrued interest on deposits and borrowings		(608)		(932)
Accrued expenses and other liabilities		24,219		(16,247)
Net cash provided by operating activities		46,507		94,853
Cash flows from investing activities:
Purchases of:
Investment securities available-for-sale		(1,671)		(217,974)
Investment securities held-to-maturity		(399,206)		(26,707)
FHLB stock		-		(76,725)
Maturities and redemptions of:
Investment securities available-for-sale		121,121		295,013
Investment securities held-to-maturity		10,725		-
FHLB stock		343		76,794
Proceeds from sales of:
Investment securities available-for-sale		103,831		163,235
Foreclosed real estate and other repossessed assets		34,136		22,991
Premises and equipment		10		20
Mortgage servicing rights		5,927		-
Origination and purchase of loans, excluding loans held-for-sale		(414,725)		(347,691)
Principal repayment of loans, including covered loans		491,330		339,102
Reimbursements from the FDIC on shared-loss agreements		31,657		18,700
Additions to premises and equipment		(1,838)		(4,100)
Net change in securities purchased under agreements to resell		-		60,000
Net change in restricted cash		2,321		67,029
Net cash (used) provided by investing activities		(16,039)		369,687

5

OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2015 AND 2014 – (CONTINUED)

	Six-Month Period Ended June 30,
	2015		2014
	(In thousands)
Cash flows from financing activities:
Net increase (decrease) in:
Deposits		(209,272)		(235,062)
Securities sold under agreements to repurchase		181,129		(255,000)
FHLB advances, federal funds purchased, and other borrowings		(2,845)		24,279
Subordinated capital notes		525		787
Exercise of stock options and restricted units lapsed, net		204		265
Purchase of treasury stock		(4,238)		(10,393)
Dividends paid on preferred stock		(6,931)		(6,931)
Dividends paid on common stock		(8,932)		(7,269)
Net cash used in financing activities		(50,360)		(489,324)
Net change in cash and cash equivalents		(19,892)		(24,784)
Cash and cash equivalents at beginning of period		573,427		621,269
Cash and cash equivalents at end of period	$	553,535	$	596,485
Supplemental Cash Flow Disclosure and Schedule of Non-cash Activities:
Interest paid	$	34,403	$	42,667
Income taxes paid		6,730	$	319
Mortgage loans securitized into mortgage-backed securities	$	61,854	$	46,505
Transfer from loans to foreclosed real estate and other repossessed assets	$	15,390	$	47,852
Reclassification of loans held-for-investment portfolio to held-for-sale portfolio	$	1,473	$	473
Reclassification of loans held-for-sale portfolio to held-for-investment portfolio	$	156	$	26,376
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 (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, Oriental Pension Consultants, Inc. (“OPC”), formerly known as Caribbean Pension Consultants, Inc. 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 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 these acquisitions have been integrated with the Company’s existing business.

Recent Accounting Developments

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability rather than as an asset. The standard does not affect the recognition and measurement of debt issuance costs; therefore, the amortization of such costs shall continue to be reported as interest expense. ASU 2015-03 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permissible for financial statements that have not been previously issued. The new guidance is to be applied on a retrospective basis to all prior periods. The Company does not expect the adoption of ASU 2015-03 to have a material impact on its consolidated financial statements.

Other than the accounting pronouncement disclosed above, there were no other new accounting pronouncements issued during the second quarter of 2015 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,
	2015		2014
	(In thousands)
Cash pledged as collateral to other financial institutions to secure:
Derivatives	$	2,980	$	2,980
Obligations under agreement of loans sold with recourse		3,106		5,427
	$	6,086	$	8,407

At June 30, 2015 and December 31, 2014, the Bank’s international banking entities, Oriental International Bank Inc. (“OIB”) and Oriental Overseas, each held unencumbered certificates of deposit in the amount of $300 thousand as the legal reserve required for international banking entities under Puerto Rico law. Each certificate of deposit cannot be withdrawn by OIB or Oriental Overseas without prior written approval of the Office of the Commissioner of Financial Institutions (“OCFI”).

As part of its derivative activities, the Company has entered into collateral agreements with certain financial counterparties.  At June 30, 2015 and December 31, 2014, the Company had delivered $3.0 million of cash as collateral for such derivatives activities.

As part of the BBVA Acquisition, the Company assumed a contract with FNMA which required collateral to guarantee the repurchase, if necessary, of loans sold with recourse. At June 30, 2015 and December 31, 2014, the Company delivered as collateral cash amounting to $3.1 million and $5.4 million, respectively.

The Bank is required by Puerto Rico law to maintain average weekly reserve balances to cover government demand deposits. The amount of those minimum average reserve balances for the week that covered June 30, 2015 was $152.7 million (December 31, 2014 - $141.5 million). At June 30, 2015 and December 31, 2014, the Bank complied with the requirement. Cash and due from bank as well as other short-term, highly liquid securities are used to cover the required average reserve balances.

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, 2015 and December 31, 2014, money market instruments included as part of cash and cash equivalents amounted to $5.8 million and $4.7 million, respectively.

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, 2015 and December 31, 2014 were as follows:

	June 30, 2015
			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	$	832,127	$	30,638	$	1,192	$	861,573	3.01%
GNMA certificates		3,625		249		-		3,874	5.03%
CMOs issued by US government-sponsored agencies		157,884		83		2,921		155,046	1.83%
Total mortgage-backed securities		993,636		30,970		4,113		1,020,493	2.83%
Investment securities
Obligations of US government-sponsored agencies		6,114		14		-		6,128	1.36%
Obligations of Puerto Rico government and             political subdivisions		20,988		-		6,259		14,729	5.41%
Other debt securities		2,835		134		-		2,969	2.99%
Total investment securities		29,937		148		6,259		23,826	4.35%
Total securities available for sale	$	1,023,573	$	31,118	$	10,372	$	1,044,319	2.87%
Held-to-maturity
Mortgage-backed securities
FNMA and FHLMC certificates		525,504		978		3,757		522,725	2.28%
Investment securities
US Treasury securities		25,049		6		4		25,051	0.49%
Total securities held to maturity		550,553		984		3,761		547,776	2.20%
Total	$	1,574,126	$	32,102	$	14,133	$	1,592,095	2.64%

	December 31, 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	$	972,836	$	37,876	$	1,203	$	1,009,509	3.12%
GNMA certificates		4,473		288		8		4,753	4.94%
CMOs issued by US government-sponsored agencies		179,146		136		3,153		176,129	1.81%
Total mortgage-backed securities		1,156,455		38,300		4,364		1,190,391	2.92%
Investment securities
Obligations of US government-sponsored agencies		7,148		33		-		7,181	1.34%
Obligations of Puerto Rico government and             public instrumentalities		20,939		-		5,267		15,672	5.41%
Other debt securities		3,137		157		-		3,294	2.95%
Total investment securities		31,224		190		5,267		26,147	4.23%
Total securities available-for-sale	$	1,187,679	$	38,490	$	9,631	$	1,216,538	2.96%
Held-to-maturity
Mortgage-backed securities
FNMA and FHLMC certificates		162,752		1,402		-		164,154	2.48%
Total	$	1,350,431	$	39,892	$	9,631	$	1,380,692	2.90%

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, 2015, 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, 2015
	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	$	18,125	$	18,401	$	-	$	-
Total due after 5 to 10 years		18,125		18,401		-		-
Due after 10 years
FNMA and FHLMC certificates		814,002		843,172		525,504		522,725
GNMA certificates		3,625		3,874		-		-
CMOs issued by US government-sponsored agencies		157,884		155,046		-		-
Total due after 10 years		975,511		1,002,092		525,504		522,725
Total  mortgage-backed securities		993,636		1,020,493		525,504		522,725
Investment securities
Due from 1 to 5 years
US Treasury securities		-		-		25,049		25,051
Obligations of Puerto Rico government and political subdivisions		10,521		8,444		-		-
Total due from 1 to 5 years		10,521		8,444		25,049		25,051
Due after 5 to 10 years
Obligations of US government and sponsored agencies		6,114		6,128		-		-
Total due after 5 to 10 years		6,114		6,128		-		-
Due after 10 years
Obligations of Puerto Rico government and political subdivisions		10,467		6,285		-		-
Other debt securities		2,835		2,969		-		-
Total due after 10 years		13,302		9,254		-		-
Total  investment securities		29,937		23,826		25,049		25,051
Total securities available-for-sale	$	1,023,573	$	1,044,319	$	550,553	$	547,776

10

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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, 2015 and 2014, the Company sold $63.5 million and $48.1 million, respectively, 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 periods.

For the six-month periods ended June 30, 2015 and 2014, the Company recorded a net gain on sale of securities of $2.6 million and $4.4 million, respectively. The table below presents the gross realized gains by category for such periods:

	Six-Month Period Ended June 30,2015
			Book Value
Description	Sale Price		at Sale		Gross Gains		Gross Losses
	(In thousands)
Sale of securities available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates	$	40,307	$	37,735	$	2,571	$	-
GNMA certificates		63,524		63,523		1		-
Total	$	103,831	$	101,258	$	2,572	$	-

	Six-Month Period Ended June 30,2014
			Book Value
Description	Sale Price		at Sale		Gross Gains		Gross Losses
	(In thousands)
Sale of securities available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates	$	115,158	$	110,792	$	4,366	$	-
GNMA certificates		48,077		48,077		-		-
Total mortgage-backed securities	$	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, 2015 and December 31, 2014:

	June 30, 2015
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies	$	115,483	$	2,807	$	112,676
Obligations of Puerto Rico government and political subdivisions		20,988		6,259		14,729
	$	136,471	$	9,066	$	127,405
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US Government-sponsored agencies	$	28,596	$	114	$	28,482
FNMA and FHLMC certificates		163,733		1,192		162,541
		192,329		1,306		191,023
Securities held-to-maturity
FNMA and FHLMC Certificates		358,591		3,757		354,834
US Treausury Securities		10,024		4		10,020
		368,615		3,761		364,854
	$	560,944	$	5,067	$	555,877
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies	$	144,079	$	2,921	$	141,158
FNMA and FHLMC certificates		163,733		1,192		162,541
Obligations of Puerto Rico government and political subdivisions		20,988		6,259		14,729
		328,800		10,372		318,428
Securities held-to-maturity
FNMA and FHLMC Certificates		358,591		3,757		354,834
US Treasury Securities		10,024		4		10,020
		368,615		3,761		364,854
	$	697,415	$	14,133	$	683,282

12

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	December 31, 2014
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico government and political subdivisions	$	20,939	$	5,267	$	15,672
CMOs issued by US government-sponsored agencies		143,928		3,086		140,842
FNMA and FHLMC certificates		113,376		1,172		112,204
GNMA certificates		77		8		69
	$	278,320	$	9,533	$	268,787
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies		15,172		67		15,105
FNMA and FHLMC certificates		63,736		31		63,705
	$	78,908	$	98	$	78,810
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies		159,100		3,153		155,947
FNMA and FHLMC certificates		177,112		1,203		175,909
Obligations of Puerto Rico government and political subdivisions		20,939		5,267		15,672
GNMA certificates		77		8		69
	$	357,228	$	9,631	$	347,597

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 the statements of operations with the remaining noncredit-related component recognized in other comprehensive income (loss). A credit loss is determined by assessing whether the amortized cost basis of the security will be recovered by comparing the present value of cash flows expected to be 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 ($676.4 million, amortized cost, or 97%) with an unrealized loss position at June 30, 2015 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 ($21.0 million, amortized cost, or 3%) with an unrealized loss position at June 30, 2015 consist of obligations issued or guaranteed by the government of Puerto Rico and its political subdivisions or instrumentalities. The 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, the negative rating decisions taken by the credit rating agencies have affected the market value and liquidity of these securities.

As of June 30, 2015, the Company applied a discounted cash flow analysis to the Puerto Rico government bonds to calculate the cash flows expected to be collected and determine if any portion of the decline in market value of these investments was considered an other-than-temporary impairment. The analysis derives an estimate of value based on the present value of risk-adjusted future cash flows of the underlying investments, and included the following components:

·The contractual future cash flows of the bonds are projected based on the key terms as set forth in the official statements for each investment. Such key terms include among others the interest rate, amortization schedule, if any, and maturity date.

·The risk-adjusted cash flows are calculated based on a monthly default probability and recovery rate assumptions based on the credit rating of each investment. Constant monthly default rates are assumed throughout the life of the bonds which are based on the respective security’s credit rating as of the date of the analysis.

·The adjusted future cash flows are then discounted at the original effective yield of each investment based on the purchase price and expected risk-adjusted future cash flows as of the purchase date of each investment.

The discounted cash flow analysis for the investments showed a cumulative default probability at maturity in the range of 5.953% to 38.650%, thus reflecting that it is more likely than not that the bonds will not default at all during their remaining terms (range between 61.349% and 94.046%). Based on this analysis, the Company determined that it is more likely than not that it will recover all interest and principal invested in the Puerto Rico government bonds and is therefore not required to recognize a credit loss as of June 30, 2015.

Also, the Bank’s conclusion is based on the assessment of the specific source of repayment of each outstanding bond, and the bonds continue to perform.  No principal is due on the bonds until July 1^st, 2017, except for PRHTA that started the principal repayments on July 1^st 2014 and was paid as scheduled.  All scheduled interest payments are being collected from the three different issuers.  The Bank has cash flow capacity, sufficient liquidity and a strong capital position to maintain the bonds and does not need to sell them in a loss position.

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, 2015 and December 31, 2014 was as follows:

	June 30,		December 31,
	2015		2014
	(In thousands)
Non-covered loans:
Originated and other loans and leases held for investment:
Mortgage	$	757,187	$	791,751
Commercial		1,363,851		1,289,732
Consumer		212,629		186,760
Auto and leasing		623,198		575,582
		2,956,865		2,843,825
Acquired loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		8,448		12,675
Consumer		41,505		45,344
Auto		142,570		184,782
		192,523		242,801
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Mortgage		631,807		656,122
Commercial		406,447		452,201
Construction		93,263		106,361
Consumer		18,869		29,888
Auto		195,891		247,233
		1,346,277		1,491,805
		4,495,665		4,578,431
Deferred loan cost , net		3,877		4,282
Loans receivable		4,499,542		4,582,713
Allowance for loan and lease losses on loans not accounted for under ASC 310-30		(102,877)		(69,517)
Loans receivable, net		4,396,665		4,513,196
Mortgage loans held-for-sale		20,768		14,539
Total non-covered loans, net		4,417,433		4,527,735
Covered loans:
Loans secured by 1-4 family residential properties		117,840		117,171
Construction and development secured by 1-4 family residential properties		19,152		19,562
Commercial and other construction		153,199		221,917
Consumer		3,295		4,506
Total covered loans		293,486		363,156
Allowance for loan and lease losses on covered loans		(71,452)		(64,245)
Total covered loans, net		222,034		298,911
Total loans, net	$	4,639,467	$	4,826,646

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, 2015 and December 31, 2014 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, 2015
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	4,342	$	2,258	$	3,076	$	9,676	$	-	$	51,533	$	61,209	$	42
Years 2003 and 2004		8,460		4,616		6,260		19,336		-		84,968		104,304		-
Year 2005		5,338		2,012		3,926		11,276		-		45,881		57,157		-
Year 2006		6,496		3,315		7,601		17,412		170		64,292		81,874		-
Years 2007, 2008             and 2009		4,781		2,359		10,757		17,897		-		75,309		93,206		1,025
Years 2010, 2011, 2012, 2013             2014 and 2015		3,399		1,528		9,063		13,990		-		205,934		219,924		168
		32,816		16,088		40,683		89,587		170		527,917		617,674		1,235
Non-traditional		1,450		543		3,784		5,777		-		27,705		33,482		-
Loss mitigation program		11,542		6,076		14,627		32,245		5,016		61,389		98,650		3,547
		45,808		22,707		59,094		127,609		5,186		617,011		749,806		4,782
Home equity secured personal loans		-		-		-		-		-		420		420		-
GNMA's buy-back option program		-		-		6,961		6,961		-		-		6,961		-
		45,808		22,707		66,055		134,570		5,186		617,431		757,187		4,782
Commercial
Commercial secured by real estate:
Corporate		-		-		-		-		-		201,251		201,251		-
Institutional		-		-		-		-		-		35,113		35,113		-
Middle market		3,929		-		2,180		6,109		8,216		183,736		198,061		-
Retail		611		153		7,280		8,044		2,048		193,319		203,411		-
Floor plan		-		-		50		50		-		3,047		3,097		-
Real estate		-		-		-		-		-		16,646		16,646		-
		4,540		153		9,510		14,203		10,264		633,112		657,579		-
Other commercial and industrial:
Corporate		-		-		-		-		-		65,344		65,344		-
Institutional		-		-		-		-		197,559		207,661		405,220		-
Middle market		-		-		225		225		479		102,281		102,985		-
Retail		325		284		772		1,381		930		92,935		95,246		-
Floor plan		153		77		23		253		-		37,224		37,477		-
		478		361		1,020		1,859		198,968		505,445		706,272		-
		5,018		514		10,530		16,062		209,232		1,138,557		1,363,851		-

16

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	June 30, 2015
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Consumer
Credit cards		303		120		319		742		-		19,381		20,123		-
Overdrafts		22		2		-		24		-		293		317		-
Personal lines of credit		97		17		63		177		22		2,083		2,282		-
Personal loans		1,532		858		716		3,106		320		170,202		173,628		-
Cash collateral personal loans		87		51		-		138		-		16,141		16,279		-
		2,041		1,048		1,098		4,187		342		208,100		212,629		-
Auto and leasing		47,451		18,593		7,420		73,464		365		549,369		623,198		-
Total	$	100,318	$	42,862	$	85,103	$	228,283	$	215,125	$	2,513,457	$	2,956,865	$	4,782

17

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	December 31, 2014
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	4,128	$	3,157	$	4,395	$	11,680	$	-	$	54,064	$	65,744	$	134
Years 2003 and 2004		10,484		4,735		6,489		21,708		455		87,506		109,669		-
Year 2005		3,824		2,205		4,454		10,483		131		49,858		60,472		-
Year 2006		5,706		3,298		8,667		17,671		548		67,331		85,550		89
Years 2007, 2008             and 2009		5,283		1,809		7,646		14,738		761		77,990		93,489		-
Years 2010, 2011, 2012, 2013             and 2014		3,684		2,992		6,900		13,576		-		190,848		204,424		365
		33,109		18,196		38,551		89,856		1,895		527,597		619,348		588
Non-traditional		1,477		584		3,223		5,284		-		30,916		36,200		-
Loss mitigation program		8,199		7,106		14,114		29,419		6,358		57,666		93,443		2,766
		42,785		25,886		55,888		124,559		8,253		616,179		748,991		3,354
Home equity secured personal loans		-		-		-		-		-		517		517		-
GNMA's buy-back option program		-		-		42,243		42,243		-		-		42,243		-
		42,785		25,886		98,131		166,802		8,253		616,696		791,751		3,354
Commercial
Commercial secured by real estate:
Corporate		-		-		-		-		-		133,076		133,076		-
Institutional		-		-		-		-		-		36,611		36,611		-
Middle market		-		645		396		1,041		8,494		154,515		164,050		-
Retail		330		561		7,275		8,166		1,445		166,017		175,628		-
Floor plan		-		-		-		-		-		1,650		1,650		-
Real estate		-		-		-		-		-		12,628		12,628		-
		330		1,206		7,671		9,207		9,939		504,497		523,643		-
Other commercial and industrial:
Corporate		-		-		-		-		-		63,746		63,746		-
Institutional		-		-		-		-		-		478,935		478,935		-
Middle market		-		-		618		618		-		91,716		92,334		-
Retail		866		412		1,061		2,339		1,047		86,785		90,171		-
Floor plan		-		-		-		-		-		40,903		40,903		-
		866		412		1,679		2,957		1,047		762,085		766,089		-
		1,196		1,618		9,350		12,164		10,986		1,266,582		1,289,732		-

18

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	December 31, 2014
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Consumer
Credit cards		360		139		375		874		-		18,197		19,071		-
Overdrafts		20		-		-		20		-		287		307		-
Personal lines of credit		102		25		102		229		9		1,962		2,200		-
Personal loans		1,822		743		678		3,243		337		144,359		147,939		-
Cash collateral personal loans		275		39		9		323		-		16,920		17,243		-
		2,579		946		1,164		4,689		346		181,725		186,760		-
Auto and leasing		47,658		16,916		7,420		71,994		145		503,443		575,582		-
Total	$	94,218	$	45,366	$	116,065	$	255,649	$	19,730	$	2,568,446	$	2,843,825	$	3,354

At June 30, 2015 and December 31, 2014, the Company had $347.5 million and $450.2 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. All loans granted to Puerto Rico government were current at June 30, 2015 and December 31, 2014. We, as part of the bank syndicate, agreed in August 2014 to extend our credit facilities with PREPA to March 31, 2015, and are currently extended to September 15, 2015. After the first extension, the Company classified the credit as substandard and a troubled-debt restructuring. The Company conducted an impairment analysis considering the probability of collection of principal and interest, which included a financial model to project the future liquidity status of PREPA under various scenarios and its capacity to service its financial obligations, and concluded that the PREPA had sufficient cash flows for the repayment of the line of credit. Despite the Company’s analysis showing PREPA’s capacity to repay the line of credit, the Company placed its participation in non-accrual and recorded a $24 million provision during the first quarter of 2015. The impairment analysis was updated for the second quarter with no change in provision. For the quarter ended June 30, 2015, interest payments are being applied to principal

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 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 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, 2015 and December 31, 2014, by class of loans:

	June 30, 2015
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Commercial
Commercial secured by real estate
Retail	$	-	$	-	$	344	$	344	$	-	$	-	$	344	$	-
Floor plan		-		-		496		496		-		2,267		2,763		-
		-		-		840		840		-		2,267		3,107		-
Other commercial and industrial
Retail		145		32		173		350		2		3,608		3,960		-
Floor plan		87		130		26		243		4		1,134		1,381		-
		232		162		199		593		6		4,742		5,341		-
		232		162		1,039		1,433		6		7,009		8,448		-
Consumer
Credit cards		1,005		361		1,023		2,389		-		35,870		38,259		-
Personal loans		104		19		52		175		-		3,071		3,246		-
		1,109		380		1,075		2,564		-		38,941		41,505		-
Auto		9,364		3,209		1,075		13,648		65		128,857		142,570		-
Total	$	10,705	$	3,751	$	3,189	$	17,645	$	71	$	174,807	$	192,523	$	-

20

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	December 31, 2014
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Commercial
Commercial secured by real estate
Retail	$	-	$	-	$	351	$	351	$	-	$	-	$	351	$	-
Floor plan		-		62		345		407		-		3,724		4,131		-
		-		62		696		758		-		3,724		4,482		-
Other commercial and industrial
Retail		155		67		192		414		2		3,705		4,121		-
Floor plan		202		134		223		559		10		3,503		4,072		-
		357		201		415		973		12		7,208		8,193		-
		357		263		1,111		1,731		12		10,932		12,675		-
Consumer
Credit cards		1,376		654		1,399		3,429		-		38,419		41,848		-
Personal loans		151		47		77		275		-		3,221		3,496		-
		1,527		701		1,476		3,704		-		41,640		45,344		-
Auto		11,003		3,453		1,262		15,718		76		168,988		184,782		-
Total	$	12,887	$	4,417	$	3,849	$	21,153	$	88	$	221,560	$	242,801	$	-

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, 2015 and December 31, 2014 is as follows:

	June 30,	December 31,
	2015	2014
	(In thousands)
Contractual required payments receivable	$2,208,242	$2,394,378
Less: Non-accretable discount	$449,917	$456,627
Cash expected to be collected	1,758,325	1,937,751
Less: Accretable yield	412,048	445,946
Carrying amount, gross	1,346,277	1,491,805
Less: allowance for loan and lease losses	18,359	13,481
Carrying amount, net	$1,327,918	$1,478,324

At June 30, 2015 and December 31, 2014, the Company had $167.8 million and $168.8 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, 2015 and December 31, 2014.

21

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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, 2015 and 2014, excluding covered loans:

	Quarter Ended June 30, 2015
	Mortgage		Commercial		Construction		Auto		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	284,612	$	57,330	$	19,390	$	47,097	$	5,601	$	414,030
Accretion		(8,813)		(9,597)		(2,143)		(6,163)		(1,287)		(28,003)
Change in Expected Cash Flows		-		23,695		9,867		-		-		33,562
Transfer (to) from non-accretable discount		81		135		(2,501)		(9,403)		4,147		(7,541)
Balance at end of period	$	275,880	$	71,563	$	24,613	$	31,531	$	8,461	$	412,048
Non-Accretable Discount Activity:
Balance at beginning of period	$	392,609	$	15,826	$	3,957	$	14,543	$	23,576	$	450,511
Change in actual and expected losses		(3,421)		(4,921)		536		(256)		(73)		(8,135)
Transfer from (to) accretable yield		(81)		(135)		2,501		9,403		(4,147)		7,541
Balance at end of period	$	389,107	$	10,770	$	6,994	$	23,690	$	19,356	$	449,917

	Six- Month Period Ended June 30, 2015
	Mortgage		Commercial		Construction		Auto		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	298,364	$	61,196	$	25,829	$	53,998	$	6,559	$	445,946
Accretion		(17,800)		(20,356)		(5,953)		(13,151)		(2,213)		(59,473)
Change in Expected Cash Flows		-		23,695		9,867		-		-		33,562
Transfer (to) from non-accretable discount		(4,684)		7,028		(5,130)		(9,316)		4,115		(7,987)
Balance at end of period	$	275,880	$	71,563	$	24,613	$	31,531	$	8,461	$	412,048
Non-Accretable Discount Activity:
Balance at beginning of period	$	389,839	$	23,069	$	3,486	$	16,215	$	24,018	$	456,627
Change in actual and expected losses		(5,416)		(5,271)		(1,622)		(1,841)		(547)		(14,697)
Transfer from (to) accretable yield		4,684		(7,028)		5,130		9,316		(4,115)		7,987
Balance at end of period	$	389,107	$	10,770	$	6,994	$	23,690	$	19,356	$	449,917

22

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Quarter Ended June 30, 2014
	Mortgage		Commercial		Construction		Auto		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	278,468	$	82,637	$	35,005	$	74,635	$	11,256	$	482,001
Accretion		(9,363)		(12,217)		(5,973)		(10,593)		(1,568)		(39,714)
Transfer (to) from non-accretable discount		-		71		1,640		578		30		2,319
Balance at end of period	$	269,105	$	70,491	$	30,672	$	64,620	$	9,718	$	444,606
Non-Accretable Discount Activity:
Balance at beginning of period	$	458,648	$	41,551	$	7,248	$	29,328	$	26,519	$	563,294
Change in actual and expected losses		(2,859)		(430)		(220)		(1,471)		(1,271)		(6,251)
Transfer from (to) accretable yield		-		(71)		(1,640)		(578)		(30)		(2,319)
Balance at end of period	$	455,789	$	41,050	$	5,388	$	27,279	$	25,218	$	554,724

	Six- Month Period Ended June 30 , 2014
	Mortgage		Commercial		Construction		Auto		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	287,841		96,139		42,993		77,845		12,735		517,553
Accretion		(18,732)		(24,934)		(10,459)		(22,418)		(3,440)		(79,983)
Transfer (to) from non-accretable discount		(4)		(714)		(1,862)		9,193		423		7,036
Balance at end of period	$	269,105		70,491		30,672		64,620		9,718		444,606
Non-Accretable Discount Activity:
Balance at beginning of period	$	463,166		42,515		5,851		39,645		28,410		579,587
Change in actual and expected losses		(7,381)		(2,179)		(2,325)		(3,173)		(2,769)		(17,827)
Transfer from (to) accretable yield		4		714		1,862		(9,193)		(423)		(7,036)
Balance at end of period	$	455,789		41,050		5,388		27,279		25,218		554,724

Covered Loans

The carrying amount of covered loans at June 30, 2015 and December 31, 2014 is as follows:

	June 30		December 31
	2015		2014
	(In thousands)
Contractual required payments receivable	$	419,259	$	535,425
Less: Non-accretable discount		21,132		62,410
Cash expected to be collected		398,127		473,015
Less: Accretable yield		104,641		109,859
Carrying amount, gross		293,486		363,156
Less: Allowance for covered loan and lease losses		71,452		64,245
Carrying amount, net	$	222,034	$	298,911

23

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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, 2015 and 2014:

	Quarter Ended June 30, 2015
	Loans Secured by   1-4 Family Residential Properties		Commercial and Other Construction		Construction & Development Secured by 1-4 Family Residential Properties		Leasing		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	58,332	$	33,481	$	20,806	$	1,665	$	2,004	$	116,288
Accretion		(3,276)		(8,047)		(405)		(937)		(93)		(12,758)
Transfer from (to) non-accretable discount		750		2,039		(2,052)		375		(1)		1,111
Balance at end of period	$	55,806	$	27,473	$	18,349	$	1,103	$	1,910	$	104,641
Non-Accretable Discount Activity:
Balance at beginning of period	$	12,557	$	10,493	$	-	$	-	$	9,662	$	32,712
Change in actual and expected losses		(405)		(8,454)		(2,052)		375		67		(10,469)
Transfer from (to) accretable yield		(750)		(2,039)		2,052		(375)		1		(1,111)
Balance at end of period	$	11,402	$	-	$	-	$	-	$	9,730	$	21,132

	Six- Month Period Ended June 30, 2015
	Loans Secured by   1-4 Family Residential Properties		Commercial and Other Construction		Construction & Development Secured by 1-4 Family Residential Properties		Leasing		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	47,636	$	37,919	$	20,753	$	2,479	$	1,072	$	109,859
Accretion		(6,794)		(17,902)		(1,024)		(2,329)		(213)		(28,262)
Transfer from (to) non-accretable discount		14,964		7,456		(1,380)		953		1,051		23,044
Balance at end of period	$	55,806	$	27,473	$	18,349	$	1,103	$	1,910	$	104,641
Non-Accretable Discount Activity:
Balance at beginning of period	$	27,348	$	24,464	$	-	$	-	$	10,598	$	62,410
Change in actual and expected losses		(982)		(17,008)		(1,380)		953		183		(18,234)
Transfer from (to) accretable yield		(14,964)		(7,456)		1,380		(953)		(1,051)		(23,044)
Balance at end of period	$	11,402	$	-	$	-	$	-	$	9,730	$	21,132

24

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Quarter Ended June 30, 2014
	Loans Secured by   1-4 Family Residential Properties		Commercial and Other Construction		Construction & Development Secured by 1-4 Family Residential Properties		Leasing		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	54,619	$	83,200	$	209	$	7,332	$	2,407	$	147,767
Accretion		(4,033)		(17,141)		(1,070)		(2,377)		(259)		(24,880)
Transfer from (to) non-accretable discount		-		4,168		861		145		-		5,174
Balance at end of period	$	50,586	$	70,227	$	-	$	5,100	$	2,148	$	128,061
Non-Accretable Discount Activity:
Balance at beginning of period	$	31,340	$	67,136	$	-	$	-	$	8,847	$	107,323
Change in actual and expected losses		(1,481)		(16,372)		861		145		(78)		(16,925)
Transfer (to) from accretable yield		-		(4,168)		(861)		(145)		-		(5,174)
Balance at end of period	$	29,859	$	46,596	$	-	$	-	$	8,769	$	85,224

	Six- Month Period Ended June 30, 2014
	Loans Secured by   1-4 Family Residential Properties		Commercial and Other Construction		Construction & Development Secured by 1-4 Family Residential Properties		Leasing		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	53,250	$	95,093	$	1,690	$	10,238	$	2,688	$	162,959
Accretion		(8,197)		(31,993)		(2,150)		(5,388)		(540)		(48,268)
Transfer from (to) non-accretable discount		5,533		7,127		460		250		-		13,370
Balance at end of period	$	50,586	$	70,227	$	-	$	5,100	$	2,148	$	128,061
Non-Accretable Discount Activity:
Balance at beginning of period	$	39,182	$	81,092	$	-	$	-	$	9,203	$	129,477
Change in actual and expected losses		(3,790)		(27,369)		460		250		(434)		(30,883)
Transfer (to) from accretable yield		(5,533)		(7,127)		(460)		(250)		-		(13,370)
Balance at end of period	$	29,859	$	46,596	$	-	$	-	$	8,769	$	85,224

25

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, 2015 and December 31, 2014:

	June 30,		December 31,
	2015		2014
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year):
Up to the year 2002	$	3,104	$	4,427
Years 2003 and 2004		6,317		7,042
Year 2005		3,926		4,585
Year 2006		7,861		9,274
Years 2007, 2008 and 2009		9,991		8,579
Years 2010, 2011, 2012, 2013, 2014 and 2015		9,183		7,365
		40,382		41,272
Non-traditional		3,784		3,224
Loss mitigation program		19,504		20,934
		63,670		65,430
Commercial
Commercial secured by real estate
Middle market		14,325		9,534
Retail		9,557		9,000
		23,882		18,534
Other commercial and industrial
Institutional		197,559		-
Middle market		703		618
Retail		1,797		2,527
Floor plan		23		-
		200,082		3,145
		223,964		21,679
Consumer
Credit cards		319		375
Personal lines of credit		86		110
Personal loans		1,107		1,092
Cash collateral personal loans		-		13
		1,512		1,590
Auto and leasing		8,587		8,668
Total Non-accrual originated loans	$	297,733	$	97,367

26

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	June 30,		December 31,
	2015		2014
	(In thousands)
Acquired loans accounted under ASC 310-20
Commercial
Commercial secured by real estate
Retail	$	344	$	351
Floor plan		496		407
		840		758
Other commercial and industrial
Retail		178		195
Floor plan		30		234
		208		429
		1,048		1,187
Consumer
Credit cards		1,023		1,399
Personal loans		52		77
		1,075		1,476
Auto		1,277		1,512
Total non-accrual acquired loans accounted under ASC 310-20		3,400		4,175
Total non-accrual loans	$	301,183	$	101,542

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.

Delinquent residential mortgage loans insured or guaranteed under applicable FHA and VA programs are classified as non-performing loans when they become 90 days or more past due, but are not placed in non-accrual status until they become 18 months or more past due, since they are insured loans. Therefore, these loans are included as non-performing loans but excluded from non-accrual loans.

During the quarter ended March 31, 2015, the revolving line of credit to PREPA was classified as non-accrual. At June 30, 2015, this line of credit had an unpaid principal balance of $197.6 million. For the quarter ended June 30, 2015, interest payments received were applied to principal. As of June 30, 2015, the specific reserve was maintained at $24 million.

At June 30, 2015 and December 31, 2014, loans whose terms have been extended and which are classified as troubled-debt restructurings that are not included in non-accrual loans amounted to $88.8 million and $274.4 million, respectively, as they are performing under their new terms. At December 31, 2014, the balance included the revolving line of credit to PREPA.

27

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 $243.4 million and $236.9 million at June 30, 2015 and December 31, 2014, respectively. Impaired commercial loans at June 30, 2015 and December 31, 2014 included the PREPA line of credit with an unpaid principal balance of $197.6 million and $200.0 million, 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 $27.4 million and $841 thousand at June 30, 2015 and December 31, 2014, respectively. The valuation allowance for impaired commercial loans amounted to $27.4 million including $24.0 million of PREPA allowance placed during Q1 2015.The total investment in impaired mortgage loans was $89.3 million and $94.2 million at June 30, 2015 and December 31, 2014, 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 $8.3 million and $9.0 million at June 30, 2015 and December 31, 2014, respectively.

Originated and Other Loans and Leases Held for Investment

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, 2015 and December 31, 2014 are as follows:

	June 30, 2015
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance:
Commercial	$	215,139	$	211,186	$	27,401	13%
Residential troubled-debt restructuring		95,881		89,303		8,268	9%
Impaired loans with no specific allowance:
Commercial		34,305		30,786		N/A	N/A
Total investment in impaired loans	$	345,325	$	331,275	$	35,669	11%

	December 31, 2014
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance
Commercial	$	6,349	$	6,226	$	841	14%
Residential troubled-debt restructuring		99,947		94,185		8,968	10%
Impaired loans with no specific allowance
Commercial		237,806		230,044		N/A	N/A
Total investment in impaired loans	$	344,102	$	330,455	$	9,809	3%

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 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, 2015 and December 31, 2014 are as follows:

	June 30, 2015
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial	$	1,435	$	1,429		N/A	N/A
Total investment in impaired loans	$	1,435	$	1,429	$	-	-
	December 31, 2014
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial	$	672	$	672		N/A	N/A
Total investment in impaired loans	$	672	$	672	$	-	-

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

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, 2015 and December 31, 2014 are as follows:

	June 30, 2015
							Coverage
	Unpaid		Recorded				to Recorded
	Principal		Investment		Allowance		Investment
	(In thousands)
Impaired non-covered loan pools:
Mortgage	$	22,901	$	23,676	$	557	2%
Commercial		230,196		208,083		5,752	3%
Construction		87,488		88,575		9,188	10%
Auto		187,569		195,891		2,862	1%
Total investment in impaired non-covered loan pools	$	528,154	$	516,225	$	18,359	4%

	December 31 , 2014
							Coverage
	Unpaid		Recorded				to Recorded
	Principal		Investment		Allowance		Investment
	(In thousands)
Impaired non-covered loan pools:
Commercial		289,228		255,619		5,506	2%
Construction		90,786		83,751		7,970	10%
Consumer		35,812		29,888		5	0%
Total investment in impaired non-covered loan pools	$	415,826	$	369,258	$	13,481	4%

29

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The tables above only present information with respect to non-covered loans and pools accounted for under ASC 310-30 if there is a recorded impairment to such loans or loan pools and a specific allowance for loan losses. As of June 30, 2015, the Company eliminated the specific allowance of $5 thousand maintained on impaired non-covered acquired consumer loan pool accounted under ASC 310-30 because there was an increase in the net present value of cash flows expected to be collected from such pool when compared with the recorded investment. Likewise, the increase in mortgage and auto loan pools from December 31, 2014 to June 30, 2015 was caused by the establishment of a specific reserve with respect to impaired mortgage and auto loan pools that were required based on the net present value of the cash flows expected to be collected.

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, 2015 and 2014:

	Quarter Ended June 30,
	2015				2014
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)
Originated and other loans held for investment:
Impaired loans with specific allowance
Commercial	$	45	$	212,414	$	39	$	7,200
Residential troubled-debt restructuring		781		89,041		663		90,445
Impaired loans with no specific allowance
Commercial		316		30,015		77		21,951
		1,142		331,470		779		119,596
Acquired loans accounted for under ASC 310-20:
Impaired loans with no specific allowance
Commercial		11		1,446		-		-
Total interest income from impaired loans	$	1,153	$	332,916	$	779	$	119,596

	Six-Month Period Ended June 30,
	2015				2014
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)
Originated and other loans held for investment:
Impaired loans with specific allowance
Commercial	$	90	$	146,144	$	78	$	6,729
Residential troubled-debt restructuring		1,563		91,216		1,270		88,749
Impaired loans with no specific allowance
Commercial		631		95,791		154		21,790
	$	2,284	$	333,151	$	1,502	$	117,268
Acquired loans accounted for under ASC 310-20:
Impaired loans with no specific allowance
Commercial		21		1,923		-		-
Total interest income from impaired loans	$	2,305	$	335,074	$	1,502	$	117,268

30

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Covered Loans

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, 2015 and December 31, 2014 are as follows:

	June 30, 2015
							Coverage
	Unpaid		Recorded				to Recorded
	Principal		Investment		Allowance		Investment
	(In thousands)
Impaired covered loan pools:
Loans secured by 1-4 family residential properties	$	124,906	$	106,937	$	17,594	16%
Construction and development secured by 1-4 family             residential properties		46,732		19,152		12,300	64%
Commercial and other construction		132,636		95,655		41,170	43%
Consumer		6,102		1,718		389	23%
Total investment in impaired covered loan pools	$	310,376	$	223,462	$	71,453	32%

	December 31, 2014
							Coverage
	Unpaid		Recorded		Specific		to Recorded
	Principal		Investment		Allowance		Investment
	(In thousands)
Impaired covered loan pools with specific allowance
Loans secured by 1-4 family residential properties	$	134,579	$	106,116	$	15,522	15%
Construction and development secured by 1-4 family             residential properties		57,123		19,562		10,724	55%
Commercial and other construction		93,894		74,069		37,610	51%
Consumer		7,992		4,506		389	9%
Total investment in impaired covered loan pools	$	293,588	$	204,253	$	64,245	31%

31

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, 2015 and 2014:

	Quarter Ended June 30, 2015
	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	39	$	4,455	5.62%	330	$	4,455	4.21%	330
Commercial	1		29	7.25%	44		29	6.50%	60
Consumer	21		250	14.40%	71		259	13.87%	69
Auto	1		64	12.95%	72		65	12.95%	72
	Six-Month Period Ended June 30, 2015
	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	97	$	11,609	4.65%	348	$	11,594	4.13%	349
Commercial	4		4,533	6.83%	80		4,533	7.00%	141
Consumer	32		396	14.50%	72		440	14.25%	68
Auto	1		64	12.95%	72		65	12.95%	72

	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	6.00%	353	$	4,965	4.12%	418
Commercial	1		73	7.00%	55		73	9.25%	36
Consumer	3		24	14.00%	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	6.00%	349	$	11,446	4.26%	390
Commercial	1		73	7.00%	55		73	9.25%	36
Consumer	8		66	13.00%	70		68	13.31%	68

32

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 six-month periods ended June 30, 2015 and 2014:

	Six-Month Period EndedJune 30,
	2015			2014
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Mortgage	60	$	6,911	22	$	2,703
Consumer	4	$	72	5	$	101

Credit Quality Indicators

The Company categorizes non-covered originated commercial loans and acquired commercial 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, and 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.

33

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

As of June 30, 2015 and December 31, 2014, 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, 2015
	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	$	201,251	$	183,630	$	15,306	$	-	$	-	$	2,315
Institutional		35,113		26,444		8,444		-		-		225
Middle market		198,061		172,626		7,008		109		-		18,318
Retail		203,411		182,468		6,229		4,399		-		10,315
Floor plan		3,097		2,765		192		-		-		140
Real estate		16,646		16,646		-		-		-		-
		657,579		584,579		37,179		4,508		-		31,313
Other commercial and industrial:
Corporate		65,344		59,684		-		-		-		5,660
Institutional		405,220		207,661		-		-		-		197,559
Middle market		102,985		97,775		-		-		-		5,210
Retail		95,246		91,455		484		1,672		-		1,635
Floor plan		37,477		34,306		2,565		12		-		594
		706,272		490,881		3,049		1,684		-		210,658
Total		1,363,851		1,075,460		40,228		6,192		-		241,971
Commercial - acquired loans       (under ASC 310-20)
Commercial secured by real estate:
Retail		344		-		-		344		-		-
Floor plan		2,763		1,521		-		-		-		1,242
		3,107		1,521		-		344		-		1,242
Other commercial and industrial:
Retail		3,960		3,943		-		17		-		-
Floor plan		1,381		1,264		-		30		-		87
		5,341		5,207		-		47		-		87
Total		8,448		6,728		-		391		-		1,329
Total	$	1,372,299	$	1,082,188	$	40,228	$	6,583	$	-	$	243,300

34

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	December 31, 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	$	133,076	$	109,282	$	15,615	$	-	$	-	$	8,179
Institutional		36,611		27,089		9,284		-		-		238
Middle market		164,050		148,360		2,817		-		-		12,873
Retail		175,628		159,209		3,690		2,637		-		10,092
Floor plan		1,650		692		958		-		-		-
Real estate		12,628		12,628		-		-		-		-
		523,643		457,260		32,364		2,637		-		31,382
Other commercial and industrial:
Corporate		63,746		63,746		-		-		-		-
Institutional		478,935		278,953		-		-		-		199,982
Middle market		92,334		87,126		2,815		-		-		2,393
Retail		90,171		85,941		259		2,575		-		1,396
Floor plan		40,903		38,413		1,247		126		-		1,117
		766,089		554,179		4,321		2,701		-		204,888
Total		1,289,732		1,011,439		36,685		5,338		-		236,270
Commercial - acquired loans       (under ASC 310-20)
Commercial secured by real estate:
Retail		351		-		-		351		-		-
Floor plan		4,131		3,724		-		-		-		407
		4,482		3,724		-		351		-		407
Other commercial and industrial:
Retail		4,121		4,080		8		33		-		-
Floor plan		4,072		3,807		-		-		-		265
		8,193		7,887		8		33		-		265
Total		12,675		11,611		8		384		-		672
Total	$	1,302,407	$	1,023,050	$	36,693	$	5,722	$	-	$	236,942

All loans individually measured for impairment are classified as substandard at June 30, 2015 and December 31, 2014.

35

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

At June 30, 2015 and December 31, 2014, the Company had outstanding credit facilities of approximately $515.3 million and $619.0 million, respectively, granted to the Puerto Rico government, including its instrumentalities, public corporations and municipalities. A substantial portion of the Company’s credit exposure to Puerto Rico’s government consists of collateralized loans or obligations that have a specific source of income or revenues identified for their repayment.  Approximately $214 million of these loans are general obligations debt of municipalities secured by ad valorem taxation, without limitation as to rate or amount, on all taxable property within the issuing municipalities.  The good faith, credit and unlimited taxing power of each issuing municipality are pledged for the payment of its general obligations debt. 

In addition, 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 State Insurance Fund Corporation.  The Commonwealth’s instrumentalities or public corporations have varying degrees of independence from the central government.  Some instrumentalities or public corporations that provide essential or important government services, such as the University of Puerto Rico, the Puerto Rico Medical Services Administration and the Puerto Rico Metropolitan Bus Authority, are supported by the Commonwealth through budget appropriations, while others, such as PREPA, are owed substantial amounts for utility services rendered to the Commonwealth.

At June 30, 2015, we had approximately $301.0 million of credit facilities to public corporations of the Commonwealth, including:

·PREPA with an outstanding balance of $197.6 million;

·The State Insurance Fund Corporation with an outstanding balance of $77.6 million, which is approximately 130% collateralized by a portfolio of A-plus rated securities; and

·The Puerto Rico Housing Finance Authority with an outstanding balance of $25.2 million to be repaid from abandoned or unclaimed funds at financial institutions that revert to the government under a Puerto Rico escheat law.

The outstanding balance of credit facilities to public corporations decreased during the second quarter as a result of a repayment in full of a $75 million loan by the Puerto Rico Aqueduct and Sewer Authority.

Oriental Bank is part of a four bank syndicate providing a $550 million revolving line of credit to finance the purchase of fuel for PREPA’s day-to-day power generation activities.  Our participation in the line of credit has an unpaid principal balance of $197.6 million as of June 30, 2015.  As part of the bank syndicate, the Bank entered into a forbearance agreement with PREPA, which has been extended several times, most recently until September 15, 2015.  In connection with such extensions, PREPA appointed a Chief Restructuring Officer to work alongside the Executive Director to develop, organize and manage a financial and operational restructuring of PREPA subject to the approval of PREPA’s Board of Directors.  PREPA also has been in negotiations with its forbearing creditors to restructure its debts and obtain financing for capital improvements needed to its infrastructure.  The Company has classified the credit facility to PREPA as substandard and on non-accrual status. The Company conducted an impairment analysis considering the probability of collection of principal and interest, which included a financial model to project the future liquidity status of PREPA under various scenarios and its capacity to service its financial obligations, and concluded that PREPA had sufficient cash flows for the repayment of the line of credit.  This analysis has been further supported by the various restructuring proposals made by PREPA and its creditors.  Despite the Company’s analysis showing PREPA’s capacity to repay the line of credit, the Company placed its participation in non-accrual and recorded a $24 million provision during the first quarter of 2015.  The impairment analysis was updated for the second quarter with no change in provision.  For the quarter ended June 30, 2015, interest payments are being applied to principal.

PREPA’s enabling act provides for local receivership upon request to any Puerto Rico court of competent jurisdiction in the event of a default in debt-service payments or other obligations in connection with PREPA’s bonds.  The receiver so appointed would be empowered, directly or through its agents and attorneys, to take possession of the undertakings, income and revenues pledged to the payment of the bonds in default; to have, hold, use, operate, manage and control the same; and to exercise all of PREPA’s rights and powers with respect to such undertakings.  However, any such receiver would not have the power to sell, assign, mortgage or otherwise dispose of PREPA’s assets, and its powers would be limited to the operation and maintenance of such undertakings and the collection and application of the income and revenues therefrom.  Although the Puerto Rico government is actively seeking the right to bankruptcy relief for some of its public instrumentalities, including PREPA, both through an amendment to the federal bankruptcy code and the enactment of a local debt restructuring law, such efforts have thus far been unsuccessful.

36

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, 2015 and December 31, 2014, 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, 2015
	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	$	61,209	$	50,718	$	4,340	$	2,256	$	585	$	1,034	$	1,364	$	912
Years 2003 and 2004		104,304		83,388		8,292		4,616		1,899		1,676		2,685		1,748
Year 2005		57,157		44,825		5,338		2,012		646		733		2,547		1,056
Year 2006		81,874		60,987		6,496		3,314		508		2,311		4,672		3,586
Years 2007, 2008             and 2009		93,206		72,190		4,458		2,028		597		3,859		6,029		4,045
Years 2010, 2011, 2012             2013, 2014 and 2015		219,924		203,847		3,398		1,528		384		2,738		3,599		4,430
		617,674		515,955		32,322		15,754		4,619		12,351		20,896		15,777
Non-traditional		33,482		27,705		1,450		543		803		1,421		1,560		-
Loss mitigation program		98,650		15,626		3,535		1,742		1,107		1,487		1,626		73,527
		749,806		559,286		37,307		18,039		6,529		15,259		24,082		89,304
Home equity secured         personal loans		420		420		-		-		-		-		-		-
GNMA's buy-back         option program		6,961		-		-		-		1,995		2,486		2,480		-
		757,187		559,706		37,307		18,039		8,524		17,745		26,562		89,304
Consumer
Credit cards		20,123		19,381		303		120		152		167		-		-
Overdrafts		317		293		22		2		-		-		-		-
Unsecured personal lines of credit		2,282		2,105		97		17		25		38		-		-
Unsecured personal loans		173,628		170,523		1,533		858		714		-		-		-
Cash collateral personal loans		16,279		16,141		87		51		-		-		-		-
		212,629		208,443		2,042		1,048		891		205		-		-
Auto and Leasing		623,198		549,734		47,451		18,593		5,065		2,355		-		-
		1,593,014		1,317,883		86,800		37,680		14,480		20,305		26,562		89,304
Acquired loans (accounted for under ASC 310-20)
Consumer
Credit cards		38,259		35,870		1,005		361		430		593		-		-
Personal loans		3,246		3,070		104		19		14		39		-		-
		41,505		38,940		1,109		380		444		632		-		-
Auto		142,570		128,922		9,364		3,209		788		287		-		-
		184,075		167,862		10,473		3,589		1,232		919		-		-
Total	$	1,777,089	$	1,485,745	$	97,273	$	41,269	$	15,712	$	21,224	$	26,562	$	89,304

37

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	December 31, 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	$	65,744	$	53,432	$	3,963	$	3,083	$	1,044	$	1,360	$	1,975	$	887
Years 2003 and 2004		109,669		86,941		10,391		4,362		1,657		3,215		1,330		1,773
Year 2005		60,472		49,275		3,824		2,205		389		1,673		1,893		1,213
Year 2006		85,550		65,113		5,263		2,967		1,242		2,801		4,624		3,540
Years 2007, 2008             and 2009		93,489		76,246		4,230		1,809		337		3,986		2,813		4,068
Years 2010, 2011, 2012             2013 and 2014		204,424		190,650		2,988		2,490		938		1,397		1,296		4,665
		619,348		521,657		30,659		16,916		5,607		14,432		13,931		16,146
Non-traditional		36,200		30,916		1,477		584		478		600		2,096		49
Loss mitigation program		93,443		10,882		995		1,123		802		405		1,246		77,990
		748,991		563,455		33,131		18,623		6,887		15,437		17,273		94,185
Home equity secured         personal loans		517		517		-		-		-		-		-		-
GNMA's buy-back         option program		42,243		-		-		-		6,416		20,729		15,098		-
		791,751		563,972		33,131		18,623		13,303		36,166		32,371		94,185
Consumer
Credit cards		19,071		18,198		360		139		171		203		-		-
Overdrafts		307		287		20		-		-		-		-		-
Unsecured personal lines of credit		2,200		1,970		102		25		38		62		3		-
Unsecured personal loans		147,939		144,696		1,822		743		623		55		-		-
Cash collateral personal loans		17,243		16,920		275		39		9		-		-		-
		186,760		182,071		2,579		946		841		320		3		-
Auto and Leasing		575,582		503,588		47,658		16,916		5,196		2,224		-		-
		1,554,093		1,249,631		83,368		36,485		19,340		38,710		32,374		94,185
Acquired loans (accounted for under ASC 310-20)
Consumer
Credit cards		41,848		38,419		1,376		654		589		810		-		-
Personal loans		3,496		3,221		151		47		39		38		-		-
		45,344		41,640		1,527		701		628		848		-		-
Auto		184,782		169,064		11,003		3,453		767		495		-		-
		230,126		210,704		12,530		4,154		1,395		1,343		-		-
Total	$	1,784,219	$	1,460,335	$	95,898	$	40,639	$	20,735	$	40,053	$	32,374	$	94,185

38

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, 2015 and December 31, 2014 was as follows:

	June 30,		December 31,
	2015		2014
	(In thousands)
Allowance for loans and lease losses on non-covered loans:
Originated and other loans and leases held for investment:
Mortgage	$	18,076	$	19,679
Commercial		34,779		8,432
Consumer		10,464		9,072
Auto and leasing		15,064		14,255
Unallocated		606		1
		78,989		51,439
Acquired loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		54		65
Consumer		2,616		1,211
Auto		2,859		3,321
		5,529		4,597
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Mortgage		473		-
Commercial		14,940		13,476
Consumer		84		5
Auto		2,862		-
		18,359		13,481
		102,877		69,517
Allowance for loans and lease losses on covered loans:
Loans secured by 1-4 family residential properties		17,593		15,522
Commercial and other construction		53,470		48,334
Consumer		389		389
		71,452		64,245
Total allowance for loan and lease losses	$	174,329	$	133,762

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 June 30, 2015, an assessment of the look-back period and historical loss factor was performed for auto and leasing and consumer and commercial loan portfolios.  The analysis was based on the trends observed and their relation with the economic cycle as of the period ended June 30, 2015.  As a result, for the commercial portfolio, the look-back period was changed to 36 months from the previously determined 12 months.  For auto and leasing and consumer, a look back period of 24 months was maintained.  In addition, during the quarter ended June 30, 2015, an assessment of environmental factors was performed for commercial, auto, and consumer portfolios. As a result, the environmental factors continue to reflect our assessment of the impact to our portfolio, taking into consideration the

39

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

current evolution of the portfolio and expected impact, due to recent economic developments, changes in values of collateral and delinquencies, among others. These changes in the allowance for loan and lease losses’ look-back period and the result of the assessment in 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, 2015
	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	$	18,086	$	33,123	$	9,405	$	15,762	$	383	$	76,759
Charge-offs		(1,356)		(497)		(2,309)		(7,662)		-		(11,824)
Recoveries		67		219		390		3,425		-		4,101
Provision for non-covered             loan and lease losses		1,279		1,934		2,978		3,539		223		9,953
Balance at end of period	$	18,076	$	34,779	$	10,464	$	15,064	$	606	$	78,989

	Six-Month Period Ended June 30, 2015
	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	$	19,679	$	8,432	$	9,072	$	14,255	$	1	$	51,439
Charge-offs		(2,770)		(1,489)		(3,985)		(15,798)		-		(24,042)
Recoveries		67		309		543		6,809		-		7,728
Provision for non-covered             loan and lease losses		1,100		27,527		4,834		9,798		605		43,864
Balance at end of period	$	18,076	$	34,779	$	10,464	$	15,064	$	606	$	78,989

	June 30, 2015
	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	$	8,268	$	27,401	$	-	$	-	$	-	$	35,669
Collectively evaluated for impairment		9,808		7,378		10,464		15,064		606		43,320
Total ending allowance balance	$	18,076	$	34,779	$	10,464	$	15,064	$	606	$	78,989
Loans:
Individually evaluated for impairment	$	89,304	$	241,971	$	-	$	64	$	-	$	331,339
Collectively evaluated for impairment		667,884		1,121,879		212,629		623,134		-		2,625,526
Total ending loan balance	$	757,188	$	1,363,850	$	212,629	$	623,198	$	-	$	2,956,865

40

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Quarter Ended June 30, 2014
	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	$	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 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
	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	$	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 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

	December 31, 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	$	8,968	$	841	$	-	$	-	$	-	$	9,809
Collectively evaluated for impairment		10,711		7,591		9,072		14,255		1		41,630
Total ending allowance balance	$	19,679	$	8,432	$	9,072	$	14,255	$	1	$	51,439
Loans:
Individually evaluated for impairment	$	94,185	$	236,270	$	-	$	-	$	-	$	330,455
Collectively evaluated for impairment		697,566		1,053,462		186,760		575,582		-		2,513,370
Total ending loan balance	$	791,751	$	1,289,732	$	186,760	$	575,582	$	-	$	2,843,825

During the quarter ended March 31, 2015 the Company placed its $200 million participation in a line of credit to PREPA on non-accrual status and recorded a $24.0 million provision for loan and lease losses. During the quarter ended June 30, 2015, interest payments received were applied to principal. As of June 30, 2015, the specific reserve was maintained at $24 million.

41

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, 2015
	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	$	49	1	$	1,885	$	3,516	$	-	$	5,450
Charge-offs		(16)			(1,303)		(1,038)		-		(2,357)
Recoveries		7			429		502		-		938
Provision (recapture) for non-covered acquired           loan and lease losses accounted for           under ASC 310-20		14			1,605		(121)		-		1,498
Balance at end of period	$	54		$	2,616	$	2,859	$	-	$	5,529

	Six-Month Period Ended June 30, 2015
	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	$	65	$1	$	1,211	$	3,321	$	-	$	4,597
Charge-offs		(16)			(2,686)		(2,304)		-		(5,006)
Recoveries		17			563		1,072		-		1,652
(Recapture) Provision for non-covered acquired             loan and lease losses accounted for             under ASC 310-20		(12)			3,528		770		-		4,286
Balance at end of period	$	54		$	2,616	$	2,859	$	-	$	5,529

	June 30, 2015
	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	$	54	$	2,616	$	2,859	$	-	$	5,529
Total ending allowance balance	$	54	$	2,616	$	2,859	$	-	$	5,529
Loans:
Individually evaluated for impairment	$	1,429	$	-	$	-	$	-	$	1,429
Collectively evaluated for impairment		7,019		41,505		142,570		-		191,094
Total ending loan balance	$	8,448	$	41,505	$	142,570	$	-	$	192,523

42

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	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	$	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

	December 31, 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	$	65	$	1,211	$	3,321	$	-	$	4,597
Total ending allowance balance	$	65	$	1,211	$	3,321	$	-	$	4,597
Loans:
Individually evaluated for impairment	$	672	$	-	$	-	$	-	$	672
Collectively evaluated for impairment		12,003		45,344		184,782		-		242,129
Total ending loan balance	$	12,675	$	45,344	$	184,782	$	-	$	242,801

43

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)

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, 2015
	Mortgage			Commercial			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	$	473		$	13,687		$	6		$	-	$	14,166
Provision (recapture) for non-covered acquired             loan and lease losses accounted for             under ASC 310-30		-			1,253			78			2,862		4,193
Balance at end of period	$	473		$	14,940		$	84		$	2,862	$	18,359
	Six-Month Period Ended June 30, 2015
	Mortgage			Commercial			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	$	13,476	1	$	5	$1	$	-	$	13,481
Provision (recapture) for non-covered acquired             loan and lease losses accounted for             under ASC 310-30		473			1,464			79			2,862		4,878
Balance at end of period	$	473		$	14,940		$	84		$	2,862	$	18,359

44

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Quarter Ended June 30, 2014
	Mortgage			Commercial			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	$	-		$	2,653		$	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			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	$	418	$1	$	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

45

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, 2015 and 2014 were as follows:

	Quarter Ended June 30, 2015
	Mortgage		Commercial		Consumer		Leasing		Total
	(In thousands)
Allowance for loan and lease losses for covered loans:
Balance at beginning of period	$	17,340	$	52,922	$	389	$	-	$	70,651
Provision for covered loan and lease losses, net		148		(253)		-		-		(105)
FDIC shared-loss portion of provision for covered loan and lease losses, net		105		801		-		-		906
Balance at end of period	$	17,593	$	53,470	$	389	$	-	$	71,452
	Six-Month Period Ended June 30, 2015
	Mortgage		Commercial		Consumer		Leasing		Total
	(In thousands)
Allowance for loan and lease losses for covered loans:
Balance at beginning of period	$	15,522	$	48,334	$	389	$	-	$	64,245
Provision for (recapture) covered loan and lease losses, net		1,966		2,738		-		-		4,704
FDIC shared-loss portion of provision for covered loan and lease losses, net		105		2,398		-		-		2,503
Balance at end of period	$	17,593	$	53,470	$	389	$	-	$	71,452

46

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Quarter Ended June 30, 2014
	Mortgage		Commercial		Consumer		Leasing		Total
	(In thousands)
Allowance for loan and lease losses for covered loans:
Balance at beginning of period	$	14,221	$	39,562	$	615	$	-	$	54,398
Provision for covered loan and lease losses, net		411		1,184		-		-		1,595
FDIC shared-loss portion of provision for covered loan and lease losses, net		292		3,230		-		-		3,522
Balance at end of period	$	14,924	$	43,976	$	615	$	-	$	59,515
	Six-Month Period Ended June 30, 2014
	Mortgage		Commercial		Consumer		Leasing		Total
	(In thousands)
Allowance for loan and lease losses for covered loans:
Balance at beginning of period	$	12,495	$	39,619	$	615	$	-	$	52,729
Provision for (recapture) covered loan and lease losses, net		2,309		915		-		-		3,224
FDIC shared-loss portion of provision for covered loan and lease losses, net		120		3,442		-		-		3,562
Balance at end of period	$	14,924	$	43,976	$	615	$	-	$	59,515

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.

47

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 to 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 and six-month periods ended June 30, 2015 and 2014:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2015		2014		2015		2014
	(In thousands)
FDIC indemnification asset:
Balance at beginning of period	$	75,221	$	166,194	$	97,378	$	189,240
Shared-loss agreements reimbursements from the FDIC		(24,387)		(10,464)		(38,087)		(18,700)
Increase (decrease) in expected credit losses to be       covered under shared-loss agreements, net		906		3,522		2,503		3,562
FDIC indemnification asset expense		(22,512)		(17,499)		(34,733)		(35,121)
Incurred expenses to be reimbursed under shared-loss agreements		(6,524)		1,907		(4,357)		4,679
Balance at end of period	$	22,704	$	143,660	$	22,704	$	143,660
True-up payment obligation:
Balance at beginning of period	$	22,844	$	19,375	$	21,981	$	18,510
Change in true-up payment obligation		733		856		1,596		1,721
Balance at end of period	$	23,577	$	20,231	$	23,577	$	20,231

The FDIC shared- loss expense bears an inverse relationship with a change in the yield of covered loan pools in accordance with ASC 310-30. ASC 310-30 dictates that such pools should be subject to increases in their yield when the present value of the expected cash flows is higher than the pool’s carrying balance. When the increases in cash flow expectations are driven by reductions in the expected credit losses, the Bank recognizes that such losses are no longer expected to be collected from the FDIC. Accordingly, the Bank reduces the FDIC indemnification asset by amortizing the reduction in expected collections throughout the remaining life of the underlying pools. This amortization is recognized in the FDIC shared-loss expense.

The underlying factors that caused an increase in the expected cash flows and resulting reduction in projected losses are derived from the pool-level cash flow forecasts. Credit loss assumptions used to develop each pool-level cash flow forecast are based on the behavior of defaults, recoveries and losses of the corresponding pool of covered loans.

48

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The FDIC loss share coverage for the commercial loans and other non-single family loans was in effect until June 30, 2015. The coverage for the single family residential loans will expire on June 30, 2020. Accordingly, the Company amortized the remaining portion of the FDIC indemnification asset attributable to non-single family loans at the close of the second quarter of 2015. At June 30, 2015, the Company had a $39.5 million receivable from the FDIC, included in other assets in the unaudited statement of financial condition, corresponding to $12.9 million for the Q1 2015 loss-share certification that was received during July 2015 and $26.6 million for the Q2 2015 loss-share certifications for commercial and other non-single family loans. At June 30, 2015, the FDIC indemnification asset reflects the balance only for single family residential mortgage loans. Notwithstanding the expiration of loss share coverage of non-single family loans, on July 2, 2015, the Company entered into an agreement with the FDIC pursuant to which the FDIC concurred with a potential sale of a pool of loss share assets covered under the non-single family loss share agreement. Pursuant to such agreement, the FDIC agreed to pay up to $20 million in loss share coverage with respect to the aggregate loss resulting from any portfolio sale within 120 days of the agreement.

The FDIC indemnification asset expense of $22.5 million for the quarter increased when compared to $17.5 million for the second quarter of 2014. The expense of $34.7 million for the six-month period ended June 30, 2015 stayed relatively flat when compared to $35.1 million for the same period in 2014. The increase during the quarter was principally driven by differences between the expected losses realized during the last months of the non-single family shared loss agreement and the losses that were ultimately realized and are expected to be collected from the FDIC.  For the six-month periods ended June 30, 2015 and 2014, the amortization expense totaled $2.1 million and $2 thousand, respectively was from stepped up cost recoveries on certain construction, commercial, and leasing pools.

Also in connection with the FDIC assisted acquisition, the Bank agreed to make a true-up payment, also known as a 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 premium (discount) of ($227.5 million) (or ($56.9 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 $23.6 million and $22.0 million, net of discount, as of June 30, 2015 and December 31, 2014, respectively. The estimated liability is included within accrued expenses and other liabilities in the unaudited consolidated statements of financial condition.

The true-up payment obligation, also known as clawback liability, may increase if actual and expected losses decline. The Company measures the true-up payment obligation at fair value. During the quarters and six-month periods ended June 30, 2015 and 2014 the fair value of the true-up payment obligation increased by $733 thousand and $856 thousand and $1.6 million and $1.7 million, respectively. These changes in fair value are included as change in true-up payment obligation within FDIC shared-loss expense, net in the consolidated statements of operations.

The following table provides the fair value and the undiscounted amount of the true-up payment obligation at June 30, 2015 and December 31, 2014:

	June 30,		December 31,
	2015		2014
	(In thousands)
Carrying amount (fair value)	$	23,577	$	21,981
Undiscounted amount	$	37,456	$	40,266

49

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 7 - SERVICING ASSETS

The Company periodically sells or securitizes mortgage loans while retaining the obligation to perform the servicing of such loans. In addition, the Company may purchase or assume the right to service mortgage loans originated by others. Whenever the Company undertakes an obligation to service a loan, management assesses whether a servicing asset and/or liability should be recognized. A servicing asset is recognized whenever the compensation for servicing is expected to more than adequately compensate the Company for servicing the loans and leases. Likewise, a servicing liability would be recognized in the event that servicing fees to be received are not expected to adequately compensate the Company for its expected cost.

All separately recognized servicing assets are recognized at fair value using the fair value measurement method. Under the fair value measurement method, the Company measures servicing rights at fair value at each reporting date, reports changes in fair value of servicing assets in earnings in the period in which the changes occur, and includes these changes, if any, with mortgage banking activities in the consolidated statements of operations. The fair value of servicing rights is subject to fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses.

The fair value of servicing rights 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.

At June 30, 2015, the servicing asset amounted to $5.8 million ($14.0 million — December 31, 2014) related to mortgage servicing rights.

During the second quarter of 2015, the Company completed the sale of certain servicing assets to Scotiabank Puerto Rico for approximately $7.0 million. The Company recognized a loss of $2.7 million related to this transaction, which is included as other non-interest (loss) income in the unaudited consolidated statements of operations.

The following table presents the changes in servicing rights measured using the fair value method for the quarters and six-month periods ended June 30, 2015 and 2014:

		Quarter Ended June 30,				Six-Month Period Ended June 30,
		2015	2014			2015	2014
		(In thousands)				(In thousands)
Fair value at beginning of year	$	12,164	$	13,970	$	13,992	$	13,801
Sale of mortgage servicing rights		(6,985)		-		(6,985)		-
Servicing from mortgage securitizations or asset transfers		1,529		490		2,060		1,053
Changes due to payments on loans		(313)		(271)		(732)		(465)
Changes in fair value related to price of MSR's held for sale		(835)		-		(2,716)		-
Changes in fair value due to changes in valuation model       inputs or assumptions		231		(534)		172		(734)
Fair value at end of year	$	5,791	$	13,655	$	5,791	$	13,655

The following table presents key economic assumption ranges used in measuring the mortgage-related servicing asset fair value for the six month periods June 30, 2015 and 2014:

	Six-Month Period Ended June 30,
	2015	2014
Constant prepayment rate	4.10% - 10.22%	5.60% - 10.08%
Discount rate	10.00% - 12.00%	10.00% - 12.00%

50

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The sensitivity of the current fair value of servicing assets to immediate 10 percent and 20 percent adverse changes in the above key assumptions were as follows:

	June 30, 2015
	(In thousands)
Mortgage-related servicing asset
Carrying value of mortgage servicing asset	$	5,791
Constant prepayment rate
Decrease in fair value due to 10% adverse change	$	(391)
Decrease in fair value due to 20% adverse change	$	(765)
Discount rate
Decrease in fair value due to 10% adverse change	$	(680)
Decrease in fair value due to 20% adverse change	$	(1,306)

These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in fair value based on a 10 percent variation in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated without changing any other assumption.

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.

Servicing fee income is based on a contractual percentage of the outstanding principal balance and is recorded as income when earned. Servicing fees on mortgage loans for the quarter and six-month period ended June 30, 2015 totaled $378 thousand and $618 thousand, respectively. Servicing fees on mortgage loans for the quarter and six-month period ended June 30, 2014 totaled $323 thousand and $444 thousand, respectively.

51

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 8 — DERIVATIVES

The following table presents the Company’s derivative assets and liabilities at June 30, 2015 and December 31, 2014:

	June 30,		December 31,
	2015		2014
	(In thousands)
Derivative assets:
Options tied to S&P 500 Index	$	2,137	$	5,555
Interest rate swaps not designated as hedges		2,154		2,399
Interest rate caps		65		152
Other		20		1
	$	4,376	$	8,107
Derivative liabilities:
Interest rate swaps designated as cash flow hedges		6,514		8,585
Interest rate swaps not designated as hedges		2,154		2,399
Interest rate caps		65		152
Other		6		85
	$	8,739	$	11,221

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 the cash flow hedges is recognized in other comprehensive income (loss) and is subsequently reclassified into operations 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 (loss) related to these interest rate swaps to operations in the next twelve months.

52

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table shows a summary of these swaps and their terms at June 30, 2015:

	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
		38,658	2.4210%	1-Month LIBOR	07/03/13	07/03/13	08/01/23
	$	263,658

An accumulated unrealized loss of $6.5 million and $8.6 million was recognized in accumulated other comprehensive income (loss) related to the valuation of these swaps at June 30, 2015 and December 31, 2014, respectively, and the related liability is being reflected in the accompanying unaudited consolidated statements of financial condition.

For June 30, 2015 and December 31, 2014, interest rate swaps not designated as hedging instruments that were offered to clients represented an asset of $2.2 million and $2.4 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, 2015 and December 31, 2014, interest rate swaps not designated as hedging instruments that are the mirror-images of the derivatives offered to clients represented a liability of $2.2 million and $2.4 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, 2015:

	Notional		Fixed	Variable	Settlement	Maturity
Type	Amount		Rate	Rate Index	Date	Date
	(In thousands)
Interest Rate Swaps - Derivatives Offered to Clients	$	3,865	5.1300%	1-Month LIBOR	07/03/06	07/03/16
		12,500	5.5050%	1-Month LIBOR	04/11/09	04/11/19
	$	16,365
Interest Rate Swaps - Mirror Image Derivatives	$	3,865	5.1300%	1-Month LIBOR	07/03/06	07/03/16
		12,500	5.5050%	1-Month LIBOR	04/11/09	04/11/19
	$	16,365

53

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, 2015 and December 31, 2014, the purchased options used to manage exposure to the S&P 500 Index on stock indexed deposits represented an asset of $2.1 million (notional amount of $5.0 million) and $5.6 million (notional amount of $10.7 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 $2.0 million (notional amount of $4.8 million) and $5.5 million (notional amount of $10.5 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. For both June 30, 2015 and December 31, 2014, the outstanding total notional amount of interest rate caps was $110.0 million. At June 30, 2015 and December 31, 2014, the interest rate caps sold to clients represented a liability of $65 thousand and $152 thousand, respectively, and were included as part of derivative liabilities in the unaudited consolidated statements of financial condition. At June 30, 2015 and December 31, 2014, the interest rate caps purchased as mirror-images represented an asset of $65 thousand and $152 thousand, respectively, and were included as part of derivative assets in the unaudited consolidated statements of financial condition.

NOTE 9 — ACCRUED INTEREST RECEIVABLE ANDOTHER ASSETS

Accrued interest receivable at June 30, 2015 and December 31, 2014 consists of the following:

	June 30,		December 31,
	2015		2014
	(In thousands)
Non-covered loans	$	14,606	$	17,005
Investments		4,648		4,340
	$	19,254	$	21,345

Other assets at June 30, 2015 and December 31, 2014 consist of the following:

		June 30,		December 31,
	2015		2014
	(In thousands)
Prepaid expenses	$	16,492	$	16,018
Core deposit and customer relationship intangibles		8,791		9,743
Other repossessed assets		14,661		21,800
Mortgage tax credits		6,277		6,277
Investment in Statutory Trust		1,083		1,083
FDIC certification receivable		39,548		14,974
Accounts receivable and other assets		45,439		38,830
	$	132,291	$	108,725

54

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Prepaid expenses amounting to $16.5 million and $16.0 million at June 30, 2015 and December 31, 2014, respectively, include prepaid municipal, property and income taxes aggregating to $9.6 million, at each period.

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, 2015 and December 31, 2014, this core deposit intangible amounted to $5.8 million and $6.5 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, 2015 and December 31, 2014, this customer relationship intangible amounted to $3.0 million and $3.3 million, respectively.

Other repossessed assets totaled $14.7 million and $21.8 million at June 30, 2015 and December 31, 2014, respectively, include repossessed automobiles amounting to $14.0 million and $20.7 million, respectively, which are recorded at their net realizable value.

At both  June 30, 2015 and December 31, 2014, tax credits for the Company totaled $6.3 million. These tax credits do not have an expiration date.

At June 30, 2015, the FDIC certification receivable included a $12.9 million receivable corresponding to the FDIC loss-share certification from the first quarter of 2015 that was received in July 2015. In addition, it included a $26.6 million receivable corresponding to the FDIC loss-share certification from the second quarter of 2015 for non-single family residential loans, as the loss share period on these loans was in effect until June 30, 2015.  At December 31, 2014, the FDIC certification receivable included a $15.0 million receivable corresponding to the FDIC loss-share certification from the third quarter of 2014 that was received in January 2015.

NOTE 10— DEPOSITS AND RELATED INTEREST

Total deposits, including related accrued interest payable, as of June 30, 2015 and December 31, 2014 consist of the following:

	June 30,		December 31,
	2015		2014
	(In thousands)
Non-interest bearing demand deposits	$	838,600	$	745,142
Interest-bearing savings and demand deposits		2,348,478		2,544,665
Individual retirement accounts		276,185		303,049
Retail certificates of deposit		447,115		452,150
Institutional certificates of deposit		233,945		260,090
Total core deposits		4,144,323		4,305,096
Brokered deposits		605,361		619,310
Total deposits	$	4,749,684	$	4,924,406

Brokered deposits include $522.6 million in certificates of deposits and $83.0 million in money market accounts at June 30, 2015, and $526.2 million in certificates of deposits and $93.1 million in money market accounts at December 31, 2014.

The weighted average interest rate of the Company’s deposits was 0.65% at June 30, 2015 and 0.66% at December 31, 2014. Interest expense for the quarters and six-month periods ended June 30, 2015 and 2014 was as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2015		2014		2015		2014
	(In thousands)				(In thousands)
Demand and savings deposits	$	3,100	$	4,804	$	6,482	$	9,832
Certificates of deposit		3,504		4,361		7,226		8,311
	$	6,604	$	9,165	$	13,708	$	18,143

55

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

At June 30, 2015 and December 31, 2014, demand and interest-bearing deposits and certificates of deposit included deposits of Puerto Rico Cash & Money Market Fund, Inc., which amounted to $98.7 million and $96.8 million, respectively, with a weighted average rate of 0.77% and 0.78%, and were collateralized with investment securities with a fair value of $80.0 million and $76.3 million, respectively.

At June 30, 2015 and December 31, 2014, time deposits in denominations of $100 thousand or higher, excluding accrued interest and unamortized discounts, amounted to $588.1 million and $608.1 million, respectively. Such amounts include public fund time deposits from various Puerto Rico government municipalities, agencies, and corporations of $9.0 million at a weighted average rate of 0.49% at June 30, 2015, and $6.9 million at a weighted average rate of 0.50% at December 31, 2014.

At June 30, 2015 and December 31, 2014, total public fund deposits from various Puerto Rico government municipalities, agencies, and corporations amounted to $171.0 million and $318.5 million, respectively. These public funds were collateralized with commercial loans amounting to $411.4 million and $414.5 million at June 30, 2015 and December 31, 2014, respectively.

Excluding equity indexed options in the amount of $2.0 million, which are used by the Company to manage its exposure to the S&P 500 Index, and also excluding accrued interest of $1.2 million and unamortized deposit discount in the amount of $442 thousand, the scheduled maturities of certificates of deposit at June 30, 2015 are as follows:

	June 30, 2015
	(In thousands)
Within one year:
Three (3) months or less	$	304,391
Over 3 months through 1 year		637,132
		941,523
Over 1 through 2 years		358,217
Over 2 through 3 years		123,227
Over 3 through 4 years		11,660
Over 4 through 5 years		41,100
	$	1,475,727

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 $2.1 million and $845 thousand as of June 30, 2015 and December 31, 2014, respectively.

56

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 11 — BORROWINGS AND RELATED INTEREST

Securities Sold under Agreements to Repurchase

At June 30, 2015, 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, 2015 and December 31, 2014, securities sold under agreements to repurchase (classified by counterparty), excluding accrued interest in the amount of $3.6 million and $2.3 million, respectively, were as follows:

	June 30,				December 31,
	2015				2014
			Fair Value of				Fair Value of
	Borrowing		Underlying		Borrowing		Underlying
	Balance		Collateral		Balance		Collateral
	(In thousands)
JP Morgan Chase Bank NA		428,902		469,599		307,816		328,198
Credit Suisse Securities (USA) LLC		670,000		749,286		670,000		760,327
Bank of America		27,200		28,989		-		-
Nomura		32,843		34,679		-		-
Total	$	1,158,945	$	1,282,553	$	977,816	$	1,088,525

The following table shows a summary of the Company’s repurchase agreements and their terms, excluding accrued interest in the amount of $3.6 million, at June 30, 2015:

				Weighted-
		Borrowing		Average		Maturity
Year of Maturity		Balance		Coupon	Settlement Date	Date
		(In thousands)
2015	$		24,494	0.380%	5/18/2015	8/18/2015
			27,064	0.400%	6/16/2015	9/16/2015
			32,843	0.430%	5/19/2015	8/17/2015
			59,159	0.390%	5/20/2015	8/20/2015
			70,685	0.390%	2/21/2015	8/21/2015
			27,200	0.500%	6/17/2015	9/15/2015
2016			170,000	1.500%	12/6/2012	12/8/2016
			247,500	0.950%	12/10/2012	9/30/2016
2017			500,000	4.780%	3/2/2007	3/2/2017
		$	1,158,945	2.570%

57

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, 2015 and December 31, 2014 The information excludes repurchase agreement transactions which were collateralized with cash.

	June 30, 2015
					Market Value of Underlying Collateral
			Weighted		FNMA and
	Repurchase		Average		FHLMC		GNMA
	Liability		Rate		Certificates		Certificates		Total
	(Dollars in thousands)
Less than 90 days		241,445		0.41%		257,353		-		257,353
Over 90 days		917,500		3.12%		1,022,195		3,005		1,025,200
Total	$	1,158,945		2.57%	$	1,279,548	$	3,005	$	1,282,553

	December 31, 2014
					Market Value of Underlying Collateral
			Weighted		FNMA and
	Repurchase		Average		FHLMC		GNMA
	Liability		Rate		Certificates		Certificates		Total
	(Dollars in thousands)
Less than 90 days	$	52,816		0.39%	$	56,066	$	-	$	56,066
Over 90 days		925,000		2.83%		1,031,206		1,253		1,032,459
Total	$	977,816		2.41%	$	1,087,272	$	1,253	$	1,088,525

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, 2015 and December 31, 2014, these advances were secured by mortgage and commercial loans amounting to $1.1 billion and $1.2 billion, respectively. Also, at June 30, 2015 and December 31, 2014, the Company had an additional borrowing capacity with the FHLB-NY of $612 million and $606.6 million, respectively. At June 30, 2015 and December 31, 2014, the weighted average remaining maturity of FHLB’s advances was 7.5 months and 8.8 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, 2015.  .

58

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 $325 thousand, at June 30, 2015:

			Weighted-
		Borrowing	Average		Maturity
Year of Maturity		Balance	Coupon	Settlement Date	Date
		(In thousands)
2015	$	25,000	0.35%	6/4/2015	7/6/2015
		50,000	0.34%	6/10/2015	7/10/2015
		100,000	0.35%	6/16/2015	7/16/2015
		25,000	0.35%	6/24/2015	7/24/2015
		25,000	0.34%	6/30/2015	7/30/2015
		38,658	0.35%	6/1/2015	7/1/2015
		263,658
2017		4,384	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		10,024	2.59%	7/19/2013	7/20/2020
	$	333,066	0.74%

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 $102.1 million at June 30, 2015 and $101.6 million at December 31, 2014.

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, 2015	$	58,625
2015		3,350
2016		5,025
	$	67,000

Other borrowings

Other borrowings, presented in the unaudited consolidated statements of financial condition amounted to $2.1 million and $4.0 million at June 30, 2015 and December 31, 2014, respectively, which mainly consists of unsecured fixed-rate borrowings.

59

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 12 – 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, 2015 and December 31, 2014:

June 30, 2015

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

$

4,376

$

-

$

4,376

$

2,013

$

-

$

2,363

December 31, 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

$

8,107

$

-

$

8,107

$

2,006

$

-

$

6,101

60

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

June 30, 2015
							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	$	10,783	$	-	$	10,783	$	-	$	2,980	$	7,803
Securities sold under agreements to repurchase		1,158,945		-		1,158,945		1,282,553		-		(123,608)
Total	$	1,169,728	$	-	$	1,169,728	$	1,282,553	$	2,980	$	(115,805)
December 31, 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	$	16,698	$	-	$	16,698	$	-	$	2,980	$	13,718
Securities sold under agreements to repurchase		977,816		-		977,816		1,088,525		-		(110,709)
Total	$	994,514	$	-	$	994,514	$	1,088,525	$	2,980	$	(96,991)

NOTE 13 — 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. The activity and balance of these loans for the quarters and the six-month periods ended June 30, 2015 and 2014 were as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2015		2014		2015		2014
	(In thousands)				(In thousands)
Balance at the beginning of period	$	27,508	$	19,267	$	27,011	$	18,963
New loans		3,768		13,847		7,623		13,847
Repayments and sales		2,042		(8,963)		(1,316)		(8,659)
Balance at the end of period	$	33,318	$	24,151	$	33,318	$	24,151

61

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 14 — INCOME TAXES

On May 29, 2015 the Governor signed Act No. 72 of 2015.  The main purpose of this Act is to increase government collections in order to alleviate the structural deficit.  The most relevant provisions of the Act, as applicable to the Company, for taxable years beginning after December 31, 2014, are as follows: (1) establishes a new definition of “large taxpayers,” which require them to file its tax return following a special procedure established by the Secretary of the Treasury, (2) net operating losses carried forward may be deducted up to 70% of the alternative minimum net income for purposes of computing the alternative minimum tax, and (3) net operating losses carried forward may be deducted up to 80% of the net income for purposes of computing the regular corporate income tax.

At June 30, 2015 and December 31, 2014, the Company’s net deferred tax asset amounted to $138.4 million and $108.7 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 deferred tax asset, net of the existing valuation allowances recorded at June 30, 2015 and December 31, 2014. 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 carry forward period are reduced.

At June 30, 2015 and December 31, 2014, Oriental International Bank Inc. (“OIB”), the Bank’s international banking entity subsidiary, had $165 thousand and $186 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, 2015 and 2014, $12 thousand and $10 thousand, respectively, related to this residual tax effect from OIB was reclassified from accumulated other comprehensive income (loss) into income tax provision. During the period ended June 30, 2015 and 2014, $22 thousand and $147 thousand, respectively, related to this residual tax effect from OIB was reclassified from accumulated other comprehensive income (loss) into 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, 2015 and December 31, 2014 was $2.5 million and $2.6 million, respectively. The Company had accrued $566 thousand at June 30, 2015 and $470 thousand at December 31, 2014 for the payment of interest and penalties relating to unrecognized tax benefits. During this quarter $100 thousand was released based on negotiations with the IRS.

For the quarter ended June 30, 2015, income tax expense was $769 thousand compared to $10.6 million for the same period in 2014. For the six-month period ended June 30, 2015, income tax expense was $1.7 million compared to $22.4 million for the same period in 2014.

62

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 15 — REGULATORY CAPITAL REQUIREMENTS

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, 2015 for the Company and the Bank (subject to certain phase-in periods through January 1, 2019) and that replaced their general risk-based capital rules, advanced approaches rule, market risk rule, and leverage rules. Among other matters, the new capital rules: (i) introduce a new capital measure called “Common Equity Tier 1” (“CET1”) and related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to prior regulations. The new capital rules prescribe a new standardized approach for risk weightings that expand the risk-weighting categories from the current four Basel I-derived categories (0%, 20%, 50% and 100%) to a larger and more risk-sensitive number of categories, depending on the nature of the assets, and resulting in higher risk weights for a variety of asset classes.

Pursuant to the new capital rules, the minimum capital ratios requirements as of January 1, 2015 are as follows:

             4.5% CET1 to risk-weighted assets;

             6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets;

             8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and

             4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the       

            “leverage ratio”).

As of June 30, 2015 and December 31, 2014, the Company and the Bank met all capital adequacy requirements to which they are subject. As of June 30, 2015 and December 31, 2014, the Bank is “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” an institution must maintain minimum CET1 risk-based, Tier 1 risk-based, total risk-based, and Tier 1 leverage ratios as set forth in the tables presented below.

63

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, 2015 and December 31, 2014 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, 2015
Total capital to risk-weighted assets	$	868,568	17.41%	$	399,100	8.00%	$	498,875	10.00%
Tier 1 capital to risk-weighted assets	$	790,936	15.85%	$	299,325	6.00%	$	399,100	8.00%
Common equity tier 1 capital to risk-weighted assets	$	611,541	12.26%	$	224,494	4.50%	$	324,269	6.50%
Tier 1 capital to average total assets	$	790,936	11.05%	$	286,262	4.00%	$	357,827	5.00%
As of December 31, 2014
Total capital to risk-weighted assets	$	851,437	17.57%	$	387,772	8.00%	$	484,715	10.00%
Tier 1 capital to risk-weighted assets	$	776,525	16.02%	$	193,886	4.00%	$	290,829	6.00%
Tier 1 capital to average total assets	$	776,525	10.61%	$	292,738	4.00%	$	365,922	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, 2015
Total capital to risk-weighted assets	$	819,436	16.48%	$	397,716	8.00%	$	497,145	10.00%
Tier 1 capital to risk-weighted assets	$	742,098	14.93%	$	298,287	6.00%	$	397,716	8.00%
Common equity tier 1 capital to risk-weighted assets	$	742,098	14.93%	$	223,715	4.50%	$	323,144	6.50%
Tier 1 capital to average total assets	$	742,098	10.44%	$	284,228	4.00%	$	355,285	5.00%
As of December 31, 2014
Total capital to risk-weighted assets	$	820,884	16.99%	$	386,444	8.00%	$	483,055	10.00%
Tier 1 capital to risk-weighted assets	$	746,177	15.45%	$	193,222	4.00%	$	289,833	6.00%
Tier 1 capital to average total assets	$	746,177	10.26%	$	290,879	4.00%	$	363,599	5.00%

64

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 16 – STOCKHOLDERS’ EQUITY

    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, 2015 and December 31, 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.

Legal Surplus

The Puerto Rico Banking Act requires that a minimum of 10% of the Bank’s net income or loss for the year be transferred to a reserve fund until such fund (legal surplus) equals the total paid in capital on common and preferred stock. At June 30, 2015 and December 31, 2014, the Bank’s legal surplus amounted to $69.9 million and $70.5 million, respectively. The amount transferred to the legal surplus account is not available for the payment of dividends to shareholders.

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 $12.4 million of authority remains. The shares of common stock repurchased are to be held by the Company as treasury shares. During the quarter ended June 30, 2015 the Company purchased 303,985 shares under this program for a total of $4.2 million, at an average price of $13.9 per share. There were no repurchases during the quarter ended June 30, 2014.

.

The number of shares that may yet be purchased under the $70 million program is estimated at 1,164,671 and was calculated by dividing the remaining balance of $12.4 million by $10.67 (closing price of the Company common stock at June 30, 2015). The Company did not purchase any shares of its common stock during the six-month period ended June 30, 2015, or during the during the six-month period ended June 30, 2014, other than through its publicly announced stock repurchase program.

The activity in connection with common shares held in treasury by the Company for the six-month periods ended June 30, 2015 and 2014 is set forth below:

	Six-Month Period Ended June 30,
	2015			2014
		Dollar			Dollar
	Shares	Amount		Shares	Amount
	(In thousands, except shares data)
Beginning of period	8,012,254	$	97,070	7,030,101	$	80,642
Common shares used upon lapse of restricted stock units	(58,279)		(640)	(30,552)		(323)
Common shares repurchased as part of the stock repurchase program	303,985		4,238	707,400		10,393
End of period	8,257,960	$	100,668	7,706,949	$	90,712

65

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 17 - ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income, net of income tax, as of June 30, 2015 and December 31, 2014 consisted of:

	June 30,		December 31,
	2015		2014
	(In thousands)
Unrealized gain on securities available-for-sale which are not     other-than-temporarily impaired	$	21,562	$	28,743
Income tax effect of unrealized gain on securities available-for-sale		(2,730)		(2,978)
Net unrealized gain on securities available-for-sale which are not         other-than-temporarily impaired		18,832		25,765
Unrealized loss on cash flow hedges		(6,514)		(8,585)
Income tax effect of unrealized loss on cash flow hedges		1,983		2,531
Net unrealized loss on cash flow hedges		(4,531)		(6,054)
Accumulated other comprehensive income, net of taxes	$	14,301	$	19,711

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, 2015 and 2014:

	Quarter Ended June 30,
	2015						2014
	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	$	30,214	$	(5,890)	$	24,324	$	16,035	$	(8,013)	$	8,022
Other comprehensive income (loss) before reclassifications		(11,523)		(180)		(11,703)		13,714		(1,633)		12,081
Amounts reclassified out of accumulated other comprehensive income		141		1,539		1,680		10		1,642		1,652
Other comprehensive income		(11,382)		1,359		(10,023)		13,724		9		13,733
Ending balance	$	18,832	$	(4,531)	$	14,301	$	29,759	$	(8,004)	$	21,755
	Six-Month Period Ended June 30,
	2015						2014
	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	$	25,764	$	(6,053)	$	19,711	$	11,433	$	(8,242)	$	3,191
Other comprehensive income before reclassifications		(7,212)		(1,549)		(8,761)		18,179		(3,025)		15,154
Amounts reclassified out of accumulated other comprehensive income		280		3,071		3,351		147		3,263		3,410
Other comprehensive income (loss)		(6,932)		1,522		(5,410)		18,326		238		18,564
Ending balance	$	18,832	$	(4,531)	$	14,301		29,759	$	(8,004)	$	21,755

66

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents reclassifications out of accumulated other comprehensive income for the quarters and six-month periods ended June 30, 2015 and 2014:

	Amount reclassified out of accumulated
	other comprehensive income
					Affected Line Item in
	Quarter Ended June 30,				Consolidated Statement
		2015		2014	of Operations
	(In thousands)
Cash flow hedges:
Interest-rate contracts	$	1,614	$	1,642	Net interest expense
Tax effect from increase in capital gains tax rate		(75)		-	Income tax expense
Available-for-sale securities:
Residual tax effect from OIB's change in applicable tax rate		12		10	Income tax expense
Tax effect from increase in capital gains tax rate		129		-	Income tax expense
	$	1,680	$	1,652
	Amount reclassified out of accumulated
	other comprehensive income
					Affected Line Item in
	Six-Month Period Ended June 30,				Consolidated Statement
		2015		2014	of Operations
	(In thousands)
Cash flow hedges:
Interest-rate contracts	$	3,220	$	3,263	Net interest expense
Tax effect from increase in capital gains tax rate		(149)		-	Income tax expense
Available-for-sale securities:
Residual tax effect from OIB's change in applicable tax rate		22		147	Income tax expense
Tax effect from increase in capital gains tax rate		258		-	Income tax expense
	$	3,351	$	3,410

67

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 18 – (LOSS) EARNINGS PER COMMON SHARE

The calculation of (loss) earnings per common share for the quarters and six-month periods ended June 30, 2015 and 2014 is as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2015		2014		2015		2014
	(In thousands, except per share data)
Net (loss) income	$	(3,109)	$	21,309	$	(6,097)	$	45,056
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)
(Loss) income available to common shareholders	$	(6,575)	$	17,843	$	(13,028)	$	38,125
Effect of assumed conversion of the convertible                    '     '  preferred stock		1,838		1,838		3,675		3,675
(Loss) income available to common shareholders assuming conversion	$	(4,737)	$	19,681	$	(9,353)	$	41,800
Weighted average common shares and share equivalents:
Average common shares outstanding		44,505		45,014		44,569		45,170
Effect of dilutive securities:
Average potential common shares-options		110		200		148		168
Average potential common shares-assuming                    '     '  conversion of convertible preferred stock		7,159		7,138		7,159		7,138
Total weighted average common shares                       '  'outstanding and equivalents		51,774		52,352		51,876		52,476
(Loss) earnings per common share - basic	$	(0.15)	$	0.40	$	(0.29)	$	0.84
(Loss) earnings per common share - diluted	$	(0.15)	$	0.38	$	(0.29)	$	0.80

In computing diluted (loss) earnings per common share, the 84,000 shares of convertible preferred stock, which remain outstanding at June 30, 2015, with a conversion rate, subject to certain conditions, of 86.0355 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, 2015 and 2014 on the convertible preferred stock were added back as income available to common shareholders.

For the quarters ended June 30, 2015 and 2014, weighted-average stock options with an anti-dilutive effect on (loss) earnings per share not included in the calculation amounted to 566,025 and 364,604, respectively. For the six-month periods ended June 30, 2015 and 2014, weighted-average stock options with an anti-dilutive effect on (loss) earnings per share not included in the calculation amounted to $457,467 and $304,491, respectively.

68

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 19 – GUARANTEES

At June 30, 2015, the unamortized balance of the obligations undertaken in issuing the guarantees under standby letters of credit represented a liability of $15.0 million (December 31, 2014 - $33.0 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, 2015 and December 31, 2014, the unpaid principal balance of residential mortgage loans sold subject to credit recourse was $45.6 million and $67.8 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, 2015 and 2014.

	Quarter Ended June 30,					Six-Month Period Ended June 30,
	2015		2014			2015		2014
	(In thousands)
Balance at beginning of period	$	487	$	1,549	$	927	$	1,955
Net charge-offs/terminations		(198)		(239)		(638)		(645)
Balance at end of period	$	289	$	1,310	$	289	$	1,310

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, 2015, $29.1 million or 64% of the recourse obligation will be extinguished before the end of 2015.

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, 2015 the Company repurchased approximately $1.2 million and $3.4 million, respectively, of unpaid principal balance in mortgage loans subject to the credit recourse provisions. During the quarter and six-month period ended June 30, 2014 the Company repurchased approximately $2.1 million and $3.7 million, respectively, 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, 2015, the Company’s liability for estimated credit losses related to loans sold with credit recourse amounted to $289 thousand (December 31, 2014– $927 thousand).

69

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. At June 30, 2015, under the Company’s representation and warranty arrangements, excluding mortgage loans subject to credit recourse provisions referred to above, approximated $11.7 million in unpaid principal balance (December 31, 2014 – $10.7 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, 2015, the Company recognized $476 thousand and $583 thousand in losses from the repurchase of residential mortgage loans sold subject to credit recourse, and $742 thousand and $1.5 million 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, 2014, the Company recognized $95 thousand and $145 thousand, respectively, 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.

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, 2015, the Company serviced $580 million 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, 2015, the outstanding balance of funds advanced by the Company under such mortgage loan servicing agreements was approximately $468 thousand (December 31, 2014 - $391 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.

70

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 20— 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, 2015 and December 31, 2014 were as follows:

	June 30,		December 31,
	2015		2014
	(In thousands)
Commitments to extend credit	$	492,455	$	493,248
Commercial letters of credit		1,447		885

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, 2015 and December 31, 2014, 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 $647 thousand at June 30, 2015 and $621 thousand at December 31, 2014. 

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.

71

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, 2015 and December 31, 2014, is as follows:

	June 30,		December 31,
	2015		2014
	(In thousands)
Standby letters of credit and financial guarantees	$	15,016	$	32,970
Loans sold with recourse		45,565		67,803
Commitments to sell or securitize mortgage loans		18,853		10,207

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, 2015 and 2014, amounted to $2.3 million and $2.4 million, respectively. For the six-month periods ended June 30, 2015 and 2014, rent expense amounted to $4.7 million and $4.9 million, respectively, and is included in the “occupancy and equipment” caption in the unaudited consolidated statements of operations. Future rental commitments under leases in effect at June 30, 2015, exclusive of taxes, insurance, and maintenance expenses payable by the Company, are summarized as follows:

	Minimum Rent
Year Ending December 31,	(In thousands)
2015	$	4,059
2016		7,794
2017		7,141
2018		6,050
2019		5,887
Thereafter		17,064
	$	47,995

72

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 21 - 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.

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 June 30, 2015 and December 31, 2014, the Company did not have investment securities classified as Level 3.

73

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.

Impaired Loans.

Impaired loans are carried at the present value of expected future cash flows using the loan’s existing rate in a discounted cash flow calculation, or the fair value of the collateral if the loan is collateral-dependent. Expected cash flows are based on internal inputs reflecting expected default rates on contractual cash flows. This method of estimating fair value does not incorporate the exit-price concept of fair value described in Accounting Standards Codification (“ASC”) 820-10 and would generally result in a higher value than the exit-price approach. For loans measured using the estimated fair value of collateral less costs to sell, fair value is generally determined 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 less disposition costs. 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.

74

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Assets and liabilities measured at fair value on a recurring and non-recurring basis, are summarized below:

	June 30, 2015
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	1,044,319	$	-	$	1,044,319
Money market investments		5,795		-		-		5,795
Derivative assets		-		2,238		2,138		4,376
Servicing assets		-		-		5,791		5,791
Derivative liabilities		-		(8,739)		(2,044)		(10,783)
	$	5,795	$	1,037,818	$	5,885	$	1,049,498
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	243,401	$	243,401
Foreclosed real estate		-		-		81,333		81,333
Other repossessed assets		-		-		14,661		14,661
	$	-	$	-	$	339,395	$	339,395

	December 31, 2014
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	1,216,538	$	-	$	1,216,538
Money market investments		4,675		-		-		4,675
Derivative assets		-		2,552		5,555		8,107
Servicing assets		-		-		13,992		13,992
Derivative liabilities		-		(11,221)		(5,477)		(16,698)
	$	4,675	$	1,207,869	$	14,070	$	1,226,614
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	236,942	$	236,942
Foreclosed real estate		-		-		95,661		95,661
Other repossessed assets		-		-		21,800		21,800
	$	-	$	-	$	354,403	$	354,403

75

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, 2015 and 2014:

	Quarter Ended June 30, 2015
	Derivative				Derivative
	asset				liability
	(S&P				(S&P
	Purchased		Servicing		Embedded
Level 3 Instruments Only	Options)		assets		Options)		Total
Balance at beginning of period	$	3,734	$	12,164	$	(3,617)	$	12,281
(Losses) gains included in earnings		(1,596)		-		1,517		(79)
Sale of mortgage servicing rights held-for-sale		-		(6,985)		-		(6,985)
Changes due to payments on loans		-		(313)		-		(313)
New instruments acquired		-		1,529		-		1,529
Changes in fair value related to price of MSRs held for sale		-		(835)		-		(835)
Amortization		-		-		56		56
Changes in fair value of servicing assets		-		231		-		231
Balance at end of period	$	2,138	$	5,791	$	(2,044)	$	5,885
	Six-Month Period Ended June 30, 2015
	Derivative				Derivative
	asset				liability
	(S&P				(S&P
	Purchased		Servicing		Embedded
Level 3 Instruments Only	Options)		assets		Options)		Total
Balance at beginning of period	$	5,555	$	13,992	$	(5,477)	$	14,070
(Losses) gains included in earnings		(3,417)		-		3,299		(118)
Sale of mortgage servicing rights held-for-sale		-		(6,985)		-		(6,985)
Changes due to payments on loans		-		(732)		-		(732)
New instruments acquired		-		2,060		-		2,060
Amortization		-		-		134		134
Changes in fair value related to price of MSRs held for sale		-		(2,716)		-		(2,716)
Changes in fair value of servicing assets		-		172		-		172
Balance at end of period	$	2,138	$	5,791	$	(2,044)	$	5,885

76

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	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
(Losses) gains 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

During the quarters and six-month periods ended June 30, 2015 and 2014, 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.

77

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 and non-recurring basis using significant unobservable inputs (Level 3) at June 30, 2015:

	June 30, 2015
	Fair Value		Valuation Technique	Unobservable Input	Range
	(In thousands)
Derivative assets (S&P     Purchased Options)	$	2,138	Option pricing model	Implied option volatility	30.23%- 38.69%
				Counterparty credit risk     (based on 5-year credit     default swap ("CDS")     spread)	72.89%- 72.89%
Servicing assets	$	5,791	Cash flow valuation	Constant prepayment rate	4.10% - 10.22%
				Discount rate	10.00% - 12.00%
Derivative liability (S&P     Embedded Options)	$	(2,044)	Option pricing model	Implied option volatility	30.23%- 38.69%
				Counterparty credit risk (based on 5-year CDS spread)	72.89%- 72.89%
Collateral dependant     impaired loans	$	40,893	Fair value of property     or collateral	Appraised value less disposition costs	20.20% - 27.20%
Puerto Rico Electric Power     Authority line of credit	$	173,565	Cash flow valuation	Discount rate	7.25%
Other non-collateral dependant  impaired loans		4,949	Cash flow valuation	Discount rate	4.25% - 9.25%
Foreclosed real estate	$	81,333	Fair value of property     or collateral	Appraised value less disposition costs	20.20% - 27.20%
Other repossessed assets	$	14,661	Fair value of property     or collateral	Appraised value less disposition costs	20.20% - 27.20%

78

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.

79

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, 2015 and December 31, 2014 is as follows:

	June 30,				December 31,
	2015				2014
	Fair		Carrying		Fair		Carrying
	Value		Value		Value		Value
	(In thousands)
Level 1
Financial Assets:
Cash and cash equivalents	$	553,535	$	553,535	$	573,427	$	573,427
Restricted cash		6,086		6,086		8,407		8,407
Level 2
Financial Assets:
Trading securities		786		786		1,594		1,594
Investment securities available-for-sale		1,044,319		1,044,319		1,216,538		1,216,538
Investment securities held-to-maturity		547,776		550,553		164,154		162,752
Federal Home Loan Bank (FHLB) stock		20,826		20,826		21,169		21,169
Other investments		3		3		3		3
Derivative assets		2,238		2,238		2,552		2,552
Financial Liabilities:
Derivative liabilities		8,739		8,739		11,221		11,221
Level 3
Financial Assets:
Total loans (including loans held-for-sale)
Non-covered loans, net		4,733,607		4,417,433		4,563,701		4,527,735
Covered loans, net		253,902		222,034		345,660		298,911
Derivative assets		2,138		2,138		5,555		5,555
FDIC indemnification asset		12,746		22,704		75,969		97,378
Accrued interest receivable		19,254		19,254		21,345		21,345
Servicing assets		5,791		5,791		13,992		13,992
Financial Liabilities:
Deposits		4,737,965		4,749,684		4,893,247		4,924,406
Securities sold under agreements to repurchase		1,193,574		1,161,136		1,020,621		980,087
Advances from FHLB		338,033		333,391		339,172		334,331
Other borrowings		1,883		2,090		3,979		4,004
Subordinated capital notes		91,996		102,109		104,288		101,584
Accrued expenses and other liabilities		113,537		113,537		133,290		133,290
Derivative liabilities		2,044		2,044		5,477		5,477

80

OFG BANCORP

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, 2015 and December 31, 2014:

•     Cash and cash equivalents (including money market investments and time deposits with other banks), restricted cash, accrued interest receivable, and 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 and other investments, 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 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 asset 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. Non-performing loans have been valued at the carrying amounts.

81

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

•     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, other borrowings, 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.

NOTE 22 – 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 OPC. 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 retirement 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.

82

OFG BANCORP

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, 2015 and 2014:

	Quarter Ended June 30, 2015
				Wealth				Total Major				Consolidated
	Banking			Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	90,504	$	24	$	8,885	$	99,413	$	-	$	99,413
Interest expense		(7,110)		-		(10,011)		(17,121)		-		(17,121)
Net interest income		83,394		24		(1,126)		82,292		-		82,292
Provision for non-covered    loan and lease losses		(15,644)		-		-		(15,644)		-		(15,644)
Provision for covered    loan and lease losses		105		-		-		105		-		105
Non-interest income (loss)		(11,713)		6,893		164		(4,656)		-		(4,656)
Non-interest expenses		(56,844)		(6,733)		(860)		(64,437)		-		(64,437)
Intersegment revenue		163		-		61		224		(224)		-
Intersegment expenses		(61)		(87)		(76)		(224)		224		-
Income before income taxes	$	(600)	$	97	$	(1,837)	$	(2,340)	$	-	$	(2,340)
Total assets	$	6,153,663	$	21,157	$	2,136,293	$	8,311,113		(912,788)	$	7,398,325
	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

83

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Six-Month Period Ended June 30, 2015
			Wealth				Total Major				Consolidated
	Banking		Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	187,986	$	47	$	18,381	$	206,414	$	-	$	206,414
Interest expense		(14,564)		-		(19,923)		(34,487)		-		(34,487)
Net interest income		173,422		47		(1,542)		171,927		-		171,927
Provision for non-covered loan and lease losses		(53,027)		-		-		(53,027)		-		(53,027)
Provision for covered loan and lease losses, net		(4,705)		-		-		(4,705)		-		(4,705)
Non-interest income(loss)		(13,962)		13,903		2,284		2,225		-		2,225
Non-interest expenses		(106,156)		(11,524)		(3,089)		(120,769)		-		(120,769)
Intersegment revenue		707		-		160		866		(866)		-
Intersegment expenses		(159)		(518)		(189)		(866)		866		-
Income before income taxes	$	(3,880)	$	1,908	$	(2,376)	$	(4,349)	$	-	$	(4,349)
	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 (loss) before income taxes	$	62,930	$	2,205	$	2,319	$	67,454	$	-	$	67,454

84

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 Form 10-K for the year ended December 31, 2014 (the “2014 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 52 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.

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 2014 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 2014 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 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 June 30, 2015, an assessment of the look-back period and historical loss factor was performed for auto and leasing and consumer and commercial loan portfolios.  The analysis was based on the trends observed and their relation with the economic cycle as of the period ended June 30, 2015.  As a result, for the commercial portfolio, the look-back period was changed to 36 months from the previously determined 12 months.  For auto and leasing and consumer, a look back period of 24 months was maintained.  In addition, during the quarter ended June 30, 2015, an assessment of environmental factors was performed for commercial, auto, and consumer portfolios. As a result, the environmental factors continue to reflect our assessment of the impact to our portfolio, taking into consideration the current evolution of the portfolio and expected impact, due to recent economic developments, changes in values of collateral and delinquencies, among others. These changes in the allowance for loan and lease losses’ look-back period and the result of the assessment in economic factors for the commercial, auto, and consumer

85

portfolios are considered a change in accounting estimate as per ASC 250-10 provisions, where adjustments should be made prospectively.  As part 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 2014 Form 10-K.

OVERVIEW OF FINANCIAL PERFORMANCE

SELECTED FINANCIAL DATA
	Quarter Ended June 30,					Six-Month Period Ended June 30,
					Variance					Variance
	2015		2014		%	2015		2014		%
EARNINGS DATA:	(In thousands, except per share data)
Interest income	$	99,413	$	125,900	-21.0%	$	206,414	$	248,974	-17.1%
Interest expense		17,121		19,822	-13.6%		34,487		39,498	-12.7%
Net interest income		82,292		106,078	-22.4%		171,927		209,476	-17.9%
Provision for non-covered loan and lease losses		15,644		13,220	18.3%		53,027		23,282	127.8%
Provision for covered loan and lease losses, net		(105)		1,595	-106.6%		4,705		3,224	45.9%
Total provision for loan and lease losses, net		15,539		14,815	4.9%		57,732		26,506	117.8%
Net interest income after provision for loan             and lease losses		66,753		91,263	-26.9%		114,195		182,970	-37.6%
Non-interest income		(4,656)		507	-1018.3%		2,225		5,736	-61.2%
Non-interest expenses		64,437		59,848	7.7%		120,769		121,252	-0.4%
(Loss) income before taxes		(2,340)		31,922	-107.3%		(4,349)		67,454	-106.4%
Income tax expense (benefit)		769		10,613	-92.8%		1,748		22,398	-92.2%
Net (loss) income		(3,109)		21,309	-114.6%		(6,097)		45,056	-113.5%
Less: dividends on preferred stock		(3,466)		(3,466)	153.0%		(6,931)		(6,931)	153.0%
(Loss) income available to common shareholders	$	(6,575)	$	17,843	-136.8%	$	(13,028)	$	38,125	-134.2%
PER SHARE DATA:
Basic	$	(0.15)	$	0.40	-137.3%	$	(0.29)	$	0.84	-134.6%
Diluted	$	(0.15)	$	0.38	-139.3%	$	(0.29)	$	0.80	-136.7%
Average common shares outstanding		44,505		45,014	-1.1%		44,569		45,170	-1.3%
Average common shares outstanding and equivalents		51,774		52,352	-1.1%		51,876		52,476	-1.1%
Cash dividends declared per common share	$	0.10	$	0.08	25.4%	$	0.20	$	0.16	25.4%
Cash dividends declared on common shares	$	4,457	$	3,560	25.2%	$	8,920	$	7,218	23.6%
PERFORMANCE RATIOS:
Return on average assets (ROA)		-0.17%		1.10%	-115.4%		-0.17%		1.14%	-114.5%
Return on average tangible common equity		-3.93%		10.96%	-135.9%		-3.84%		11.89%	-132.3%
Return on average common equity (ROE)		-3.44%		9.54%	-136.1%		-3.37%		10.32%	-132.7%
Equity-to-assets ratio		12.32%		12.00%	2.7%		12.32%		12.00%	2.7%
Efficiency ratio		63.39%		47.89%	32.4%		57.37%		48.99%	17.1%
Interest rate spread		4.68%		5.91%	-20.8%		4.91%		5.78%	-15.1%
Interest rate margin		4.92%		6.10%	-19.4%		5.14%		5.96%	-13.7%

86

SELECTED FINANCIAL DATA - (Continued)
	June 30,		December 31,		Variance
	2015		2014		%
PERIOD END BALANCES AND CAPITAL RATIOS:	(In thousands, except per share data)
Investments and loans
Investment securities	$	1,616,487	$	1,402,056	15.3%
Loans and leases not covered under shared-loss         agreements with the FDIC, net		4,417,433		4,527,735	-2.4%
Loans and leases covered under shared-loss         agreements with the FDIC, net		222,034		298,911	-25.7%
Total investments and loans	$	6,255,954	$	6,228,702	0.4%
Deposits and borrowings
Deposits	$	4,749,684	$	4,924,406	-3.5%
Securities sold under agreements to repurchase		1,161,136		980,087	18.5%
Other borrowings		437,590		439,919	-0.5%
Total deposits and borrowings	$	6,348,410	$	6,344,412	0.1%
Stockholders’ equity
Preferred stock	$	176,000	$	176,000	0.0%
Common stock		52,626		52,626	0.0%
Additional paid-in capital		539,669		539,311	0.1%
Legal surplus		69,934		70,467	-0.8%
Retained earnings		159,737		181,152	-11.8%
Treasury stock, at cost		(100,668)		(97,070)	-3.7%
Accumulated other comprehensive income		14,301		19,711	-27.4%
Total stockholders' equity	$	911,599	$	942,197	-3.2%
Per share data
Book value per common share	$	16.81	$	17.40	-3.4%
Tangible book value per common share	$	14.67	$	15.25	-3.8%
Market price at end of period	$	10.67	$	16.65	-35.9%
Capital ratios
Leverage capital		11.05%		10.61%	4.1%
Tier 1 common equity to risk-weighted assets		N/A		11.88%	N/A
Common equity Tier 1 capital ratio		12.25%		N/A	N/A
Tier 1 risk-based capital		15.85%		16.02%	-1.1%
Total risk-based capital		17.41%		17.57%	-0.9%
Financial assets managed
Trust assets managed	$	2,793,489	$	2,841,111	-1.7%
Broker-dealer assets gathered	$	2,554,825	$	2,622,001	-2.6%

87

FINANCIAL HIGHLIGHTS OF THE SECOND QUARTER OF 2015

During the second quarter of 2015, the Company reported a loss to common shareholders of $6.6 million, or $0.15 per share, compared to a loss of $6.5 million, or $0.14 per share, in the first quarter of 2015, and to a profit of $17.8 million, or $0.38 per share diluted, in the second quarter of 2014.

When compared to the first quarter of 2015, this quarter was adversely affected by:

·Absence of $4.2 million decrease in tax free interest income from loans to Puerto Rico Electric Power Authority (“PREPA”) and Puerto Rico Aqueduct and Sewer Authority (PRASA). The $200 million PREPA loan was placed on non-accrual status in the first quarter of 2015. While it continues to perform, interest payments are being used to reduce the principal amount. The $75 million remaining balance of the PRASA loan was paid-off on June 1, 2015.

·$10.2 million increase in the FDIC commercial loss share amortization related to the scheduled expiration of the Eurobank loss share coverage for commercial loans.

·$4.5 million of additional loss in other real estate owned (“OREO”) due to revised collateral values as part of the Company’s ongoing and proactive de-risking efforts.

The foregoing adverse items were partially offset by a $26.7 million decline in total provision for loan and lease losses, which had an after tax impact of $21.3 million. This reflects management’s determination that no PREPA provision other than the $24 million recorded in the first quarter of 2015, because the government utility and its creditors are actively working on a repayment agreement. Additionally, no additional provision was required on FDIC-covered commercial loans, compared to $4.8 million recorded in the first quarter of 2015.

In the second quarter of 2015, net interest margin declined to 4.92%.

The efficiency ratio increased to 63.39%. Tangible book value and book value per common share decreased to $14.67 and $16.81, respectively, from $15.12 and $17.25 in the preceding quarter.

The credit balances of the Puerto Rico central government and its public corporations with the Company declined 20.7% to $301.3 million at June 30, 2015 from $380.1 million at March 31, 2015.  This excludes $214.0 million in term loans to five Puerto Rico municipalities, which are separate local governmental entities with their own sources of tax revenues.

Interest Income

Total interest income decreased by $26.4 million to $99.4 million, compared to $125.9 million in the second quarter of 2014, reflecting the transition in our loan portfolio as originated loans with more normal yields grow as higher-yielding acquired loans decrease, due to repayments and maturities. The yield on interest-earning assets decreased to 5.94% in the second quarter of 2015 from 7.24% in the same quarter of 2014.

Interest Expense

Total interest expense decreased by 13.6% in the second quarter of 2015 as compared to the same period in 2014. Such decrease reflects the lower cost of deposits before fair value premium amortization and core deposit intangible amortization (0.65% vs. 0.87%). 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 decreased $23.8 million for the second quarter of 2015. Such decrease reflects a decrease in net interest margin of 118 basis points to 4.92% when compared to the second quarter of 2014.

88

Provision for Loan and Lease Losses

Provision for loan and lease losses increased $723 thousand to $15.5 million when compared to $14.8 million for the second quarter of 2014, reflecting an increase of $2.4 million to $15.6 million in provision for non-covered loan and lease losses. No provision was required on FDIC covered commercial loans for the second quarter of 2015, compared to $1.6 million for the same period in 2014. No additional provision was required to the PREPA loan of credit for the second quarter of 2015.

Non-Interest Income

Core banking and wealth management revenues increased to $19.4 million as compared to the same period in 2014, primarily reflecting an increase of $308 thousand and $217 thousand in mortgage banking service revenues and banking service revenues, respectively, and a decrease of $51 thousand in wealth management revenue.

The fluctuation in the FDIC shared-loss expense of $22.5 million, compared to $17.5 million for the same period in 2014, 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.

Other non-interest loss of $847 thousand, compared to income of $224 thousand for the same period in 2014, is primarily from the recognition of a $835 thousand loss, in the sale of mortgage servicing rights during the second quarter of 2015. During the first quarter of 2015, the Company recognized a $1.9 million loss in the valuation of the mortgage servicing assets, as part of servicing asset sale transaction.

Non-Interest Expense

Non-interest expense of $64.4 million, increased $4.6 million or 7.7% compared to the same period in 2014, primarily reflecting an increase in foreclosure, repossession and other real estate expenses of $3.7 million, mostly from the $4.5 million loss on the revision of collateral values as part of the Company’s de-risking efforts during the second quarter of 2015. The Company’s efficiency ratio for the second quarter of 2015 was 63.39%, compared to 47.89% for the same period in 2014.

Income Tax Expense

Income tax expense was $769 thousand, compared to $10.6 million for the same period in 2014. Decrease in income tax expense reflects the net loss before income taxes of $2.3 million for the second quarter ended June 30, 2015, compared to net income before income taxes of $31.9 million for the year ago quarter.

(Loss) Income Available to Common Shareholders

The Company’s loss to common shareholders amounted to $6.6 million, compared to net income available to common shareholders of $17.8 million for the same period in 2014. Loss per basic common share and fully diluted common share was $0.15 for both, compared to income per basic common share and fully diluted common share of $0.40 and $0.38, respectively, for the second quarter of 2014.

Interest Earning Assets

The loan portfolio declined to $4.639 billion at June 30, 2015, compared to $4.725 billion at March 31, 2015, primarily due to repayments and maturities. This reduction primarily reflects the $75.0 million repayment by PRASA. The investment portfolio of $1.616 billion at June 30, 2015 increased 22.4% compared to $1.321 billion at March 31, 2015.

Interest Bearing Liabilities

Total deposits amounted to $4.750 billion at June 30, 2015, a decrease of 3.0% compared to $4.894 billion at March 31, 2015. Demand and savings deposits decreased 5.19% to $3.187 billion. Cost of deposits, which averaged 0.65% at June 30, 2015 and 0.70% at March 31, 2015, continue to decrease.

89

Stockholders’ Equity

Stockholders’ equity at June 30, 2015 was $911.6 million compared to $942.2 million at December 31, 2014, a decrease of 3.2%. This reflects a decrease of $21.4 million in retained earnings and a decrease of $5.4 million on accumulated other comprehensive income. Book value per share was $16.81 at June 30, 2015 compared to $17.40 at December 31, 2014.

The Company maintains capital ratios in excess of regulatory requirements. At June 30, 2015, Tier 1 Leverage Capital Ratio was 11.05% December 31, 2014 – 10.61%), Tier 1 Risk-Based Capital Ratio was 15.84% (December 31, 2014 – 16.02%), and Total Risk-Based Capital Ratio was 17.40% (December 31, 2014 – 17.57%). Common Equity Tier 1 capital ratio under the new capital rules was 12.25% at June 30, 2015.

Return on Average Assets and Common Equity

Return on average common equity (“ROE”) was (3.44%) compared to 9.54% for the quarter ended June 30, 2014. Return on average assets (“ROA”) was (0.17%) compared to 1.10% for the same period in 2014. Both decreases reflect the net loss for the second quarter of 2015.

Assets under Management

At June 30, 2015, total assets managed by the Company’s trust division and OPC decreased to $2.793 billion compared to $2.912 billion at March 31, 2015. At June 30, 2015, total assets gathered by the securities broker-dealer subsidiary from its customer investment accounts decreased by 3.9% to $2.555 billion, compared to $2.660 billion at March 31, 2015. Changes in trust and broker-dealer related assets primarily reflect a decrease in portfolio balances and fluctuations in market values.

Lending

Total loan production of $286.7 million increased by 29.4% compared to the same period in 2014. Total commercial loan production of $120.5 million increased by 165.2% from $45.4 million for the same period in 2014.

Mortgage loan production of $64.8 million increased by 24.7% from $52.0 million for the same period in 2014, as the Company continued to capture market share formerly held by Doral Bank.

In the aggregate, consumer loan and auto and leasing production totaled $101.4 million, a decrease of 18.3% from the same period in 2014. Such decrease is mostly due to a decrease of 31.33% in auto production.

Total loan portfolio declined by $85.1 million from $4.725 billion at March 31, 2015 to $4.639 billion at June 30, 2015, mostly as the result of scheduled pay downs and maturities in both the non-covered and covered loan portfolios. In addition, this reflects the $75.0 million repaid by PRASA as we continue to decrease our exposure to the Puerto Rico government.

Credit Quality on Non-Covered Loans

Net credit losses, excluding acquired loans, increased $1.4 million to $7.7 million, representing 1.06% of average non-acquired loans outstanding versus 0.96% in the same period in 2014.  The allowance for loan and lease losses on non-covered loans at June 30, 2015, increased to $102.9 million compared to $96.4 million at March 31, 2015. The allowances for loan and lease losses, excluding acquired loans, increased to $79.0 million (2.71% of total non-covered loans, excluding acquired loans) at June 30, 2015, compared to $76.8 million (2.64% of total non-covered loans, excluding acquired loans) at March 31, 2015.

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, decreased slightly to $312.2 million at June 30, 2015 compared to $313.1 million at March 31, 2015.

90

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, 2015, the Company’s pre-tax pre-provision operating income decreased 42.8% to $37.2 million as compared to $65.1 million for the same period in 2014. Pre-tax pre-provision operating income is calculated as follows:

	Quarter Ended June 30,					Six-Month Period Ended June 30,
	2015		2014			2015		2014
	(In thousands)					(In thousands)
PRE-TAX PRE-PROVISION OPERATING INCOME
Net interest income	$	82,292	$	106,078	$	171,927	$	209,476
Core non-interest income:
Banking service revenue		10,212		9,995		20,417		20,552
Wealth management revenue		7,285		7,336		14,440		14,203
Mortgage banking activities		1,862		1,554		3,725		3,249
Total core non-interest income		19,359		18,885		38,582		38,004
Non-interest expenses		64,437		59,848		120,769		121,252
Total pre-tax pre-provision operating income	$	37,214	$	65,115	$	89,740	$	126,228

Tangible common equity consists of common equity less goodwill, core deposit intangibles and customer relationship intangible. 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, tier 1 common equity to risk-weighted assets, and common equity tier 1 to risk-weighted assets and tangible book value per common share are non-GAAP measures.

At June 30, 2015, tangible common equity to total assets decreased to 8.80% from 9.29% and tangible common equity to risk-weighted assets decreased to13.05% from 13.46% at March 31, 2015. Total equity to risk-weighted assets decreased to 18.27% from 18.67% at March 31, 2015.

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. Tangible common equity or related measures should not be considered in isolation or as a substitute for stockholders’ equity, total assets or any other measure calculated in accordance with GAAP.

91

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, 2015 and 2014:

TABLE 1 - QUARTERLY ANALYSIS OF NET INTEREST INCOME AND CHANGES DUE TO VOLUME/RATE
FOR THE QUARTERS ENDED JUNE 30, 2015 AND 2014
	Interest				Average rate		Average balance
	June		June		June	June	June		June
	2015		2014		2015	2014	2015		2014
	(Dollars in thousands)
A - TAX EQUIVALENT SPREAD
Interest-earning assets	$	99,413	$	125,900	5.94%	7.24%	$	6,708,519	$	6,972,133
Tax equivalent adjustment		3,811		9,926	0.23%	0.57%		-		-
Interest-earning assets - tax equivalent		103,224		135,826	6.18%	7.81%		6,708,519		6,972,133
Interest-bearing liabilities		17,121		19,822	1.26%	1.33%		5,452,804		5,985,225
Tax equivalent net interest income / spread		86,103		116,004	4.92%	6.50%		1,255,715		986,908
Tax equivalent interest rate margin					5.15%	6.67%
B - NORMAL SPREAD
Interest-earning assets:
Investments:
Investment securities		8,587		12,606	2.33%	3.64%		1,476,867		1,393,523
Interest bearing cash and money market investments		322		351	0.27%	0.25%		483,507		559,230
Total investments		8,909		12,957	1.84%	2.69%		1,960,374		1,952,753
Loans not covered under shared-loss agreements     with the FDIC:
Originated
Mortgage		9,698		10,341	4.97%	5.36%		782,753		773,425
Commercial		14,375		16,451	4.32%	5.46%		1,333,276		1,209,346
Consumer		4,953		3,641	10.32%	9.92%		192,572		147,230
Auto and leasing		15,213		12,650	9.86%	10.47%		618,746		484,536
Total originated non-covered loans		44,239		43,083	6.06%	6.61%		2,927,347		2,614,537
Acquired
Mortgage		8,813		9,363	5.57%	5.37%		634,794		698,720
Commercial		11,770		18,959	9.49%	11.35%		497,422		669,983
Consumer		3,445		3,992	16.91%	13.84%		81,713		115,676
Auto		9,479		12,667	10.23%	8.80%		371,494		577,114
Total acquired non-covered loans		33,507		44,981	8.48%	8.75%		1,585,422		2,061,493
Total non-covered loans		77,746		88,064	6.91%	7.55%		4,512,769		4,676,030
Loans covered under shared loss agreements with the FDIC		12,758		24,879	21.74%	29.06%		235,376		343,350
Total loans		90,504		112,943	7.65%	9.03%		4,748,145		5,019,380
Total interest earning assets		99,413		125,900	5.94%	7.24%		6,708,519		6,972,133

92

	Interest					Average rate		Average balance
	June		June			June	June	June		June
	2015		2014			2015	2014	2015		2014
	(Dollars in thousands)
Interest-bearing liabilities:
Deposits:
Now Accounts		1,073		2,207		0.38%	0.61%		1,144,931		1,443,824
Savings and money market		1,662		2,192		0.51%	0.75%		1,300,001		1,168,911
Individual retirement accounts		600		940		0.85%	1.14%		283,587		329,584
Retail certificates of deposits		1,326		1,741		1.31%	1.30%		405,302		535,203
Total core deposits		4,661		7,080		0.60%	0.82%		3,133,821		3,477,522
Institutional deposits		698		1,290		1.00%	1.58%		280,930		327,660
Brokered deposits		1,085		1,468		0.76%	0.83%		571,950		709,374
Total wholesale deposits		1,783		2,758		0.84%	1.07%		852,880		1,037,034
		6,444		9,838		0.65%	0.87%		3,986,701		4,514,556
Deposits fair value premium amortization		(131)		(1,010)		0.00%	0.00%		-		-
Core deposit intangible amortization		292		336		0.00%	0.00%		-		-
Total deposits		6,605		9,164		0.66%	0.81%		3,986,701		4,514,556
Borrowings:
Securities sold under agreements to repurchase		7,394		7,372		2.91%	2.93%		1,020,077		1,010,000
Advances from FHLB and other borrowings		2,248		2,289		2.62%	2.55%		344,088		360,130
Subordinated capital notes		875		996		3.44%	3.97%		101,938		100,539
Total borrowings		10,517		10,657		2.88%	2.91%		1,466,103		1,470,669
Total interest bearing liabilities		17,122		19,821		1.26%	1.33%		5,452,804		5,985,225
Net interest income / spread	$	82,292	$	106,078		4.68%	5.91%
Interest rate margin						4.92%	6.10%
Excess of average interest-earning assets     over average interest-bearing liabilities								$	1,255,715	$	986,908
Average interest-earning assets to average     interest-bearing liabilities ratio									123.03%		116.49%
C - CHANGES IN NET INTEREST INCOME DUE TO:
	Volume		Rate		Total
	(In thousands)
Interest Income:
Investments	$	51	$	(4,099)	$	(4,048)
Loans		(10,899)		(11,539)		(22,438)
Total interest income		(10,848)		(15,638)		(26,486)
Interest Expense:
Deposits		(1,072)		(1,488)		(2,560)
Repurchase agreements		74		(52)		22
Other borrowings		(104)		(58)		(162)
Total interest  expense		(1,102)		(1,598)		(2,700)
Net Interest Income	$	(9,746)	$	(14,040)	$	(23,786)

93

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, 2015 AND 2014
	Interest				Average rate		Average balance
	June		June		June	June	June		June
	2015		2014		2015	2014	2015		2014
	(Dollars in thousands)
A - TAX EQUIVALENT SPREAD
Interest-earning assets	$	206,413	$	248,974	6.17%	7.08%	$	6,741,247	$	7,093,560
Tax equivalent adjustment		20,756		13,033	0.62%	0.37%		-		-
Interest-earning assets - tax equivalent		227,169		262,007	6.80%	7.45%		6,741,247		7,093,560
Interest-bearing liabilities		34,486		39,498	1.26%	1.30%		5,499,113		6,124,709
Tax equivalent net interest income / spread		192,683		222,509	5.53%	6.16%		1,242,134		968,851
Tax equivalent interest rate margin					5.76%	6.33%
B - NORMAL SPREAD
Interest-earning assets:
Investments:
Investment securities		17,746		26,690	2.54%	3.58%		1,409,926		1,503,772
Trading securities		36		75	6.15%	8.06%		1,181		1,876
Interest bearing cash and money market investments		645		635	0.25%	0.22%		523,649		574,509
Total investments		18,427		27,400	1.92%	2.66%		1,934,756		2,080,157
Loans not covered under shared-loss agreements     with the FDIC:
Originated
Mortgage		19,908		20,799	5.11%	5.49%		785,029		763,400
Commercial		31,329		30,797	4.85%	5.33%		1,301,367		1,165,891
Consumer		9,538		6,780	10.28%	9.92%		187,049		137,787
Auto and leasing		29,747		23,639	9.89%	10.56%		606,819		451,488
Total originated non-covered loans		90,522		82,015	6.34%	6.57%		2,880,264		2,518,566
Acquired
Mortgage		17,800		18,732	5.59%	5.35%		642,063		705,992
Commercial		26,342		37,671	10.34%	10.79%		513,950		704,082
Consumer		6,634		8,209	15.64%	13.48%		85,541		122,806
Auto		18,426		26,680	8.65%	8.78%		429,618		612,551
Total acquired non-covered loans		69,202		91,292	8.35%	8.58%		1,671,173		2,145,431
Total non-covered loans		159,724		173,307	7.08%	7.49%		4,551,437		4,663,997
Loans covered under shared loss agreements with the FDIC		28,262		48,267	22.35%	27.86%		255,053		349,406
Total loans		187,986		221,574	7.89%	8.91%		4,806,491		5,013,403
Total interest earning assets		206,413		248,974	6.17%	7.08%		6,741,247		7,093,560

94

	Interest					Average rate		Average balance
	June		June			June	June	June		June
	2015		2014			2015	2014	2015		2014
	(Dollars in thousands)
Interest-bearing liabilities:
Deposits:
Now Accounts	$	2,354	$	4,531		0.39%	0.63%	$	1,202,621	$	1,451,547
Savings and money market		3,396		4,488		0.52%	0.79%		1,307,141		1,148,918
Individual retirement accounts		1,371		1,998		0.95%	1.20%		289,877		336,175
Retail certificates of deposits		2,733		3,681		1.32%	1.34%		416,608		553,527
Institutional deposits		1,497		2,699		1.11%	1.54%		272,991		352,456
Total core deposits		11,351		17,397		0.66%	0.91%		3,489,238		3,842,623
Brokered deposits		2,251		2,984		0.77%	0.82%		586,986		730,349
		13,602		20,381		0.67%	0.90%		4,076,224		4,572,972
Deposits fair value premium amortization		(479)		(2,908)		0.00%	0.00%		-		-
Core deposit intangible amortization		585		670		0.00%	0.00%		-		-
Total deposits		13,708		18,143		0.68%	0.80%		4,076,224		4,572,972
Borrowings:
Securities sold under agreements to repurchase		14,559		14,784		3.00%	2.75%		979,950		1,082,968
Advances from FHLB and other borrowings		4,484		4,583		2.65%	2.51%		340,709		367,953
Subordinated capital notes		1,735		1,988		3.44%	3.99%		101,808		100,357
Total borrowings		20,778		21,355		2.95%	2.78%		1,422,467		1,551,278
Total interest bearing liabilities		34,486		39,498		1.26%	1.30%		5,498,691		6,124,250
Net interest income / spread	$	171,927	$	209,476		4.91%	5.78%
Interest rate margin						5.14%	5.96%
Excess of average interest-earning assets over     average interest-bearing liabilities								$	1,242,580	$	969,310
Average interest-earning assets to average     interest-bearing liabilities ratio									122.60%		115.83%
C - CHANGES IN NET INTEREST INCOME DUE TO:
	Volume		Rate		Total
	(In thousands)
Interest Income:
Investments	$	(1,915)	$	(7,058)	$	(8,973)
Loans		(17,217)		(16,371)		(33,588)
Total interest income		(19,132)		(23,429)		(42,561)
Interest Expense:
Deposits		(1,971)		(2,464)		(4,435)
Repurchase agreements		(1,406)		1,181		(225)
Other borrowings		(362)		10		(352)
Total interest  expense		(3,739)		(1,273)		(5,012)
Net Interest Income	$	(15,393)	$	(22,156)	$	(37,549)

95

Net Interest Income

Comparison of quarters ended June 30, 2015 and 2014

Net interest income of $82.3 million decreased 22.42% compared with $106.1 million reported in the same quarter of 2014, reflecting a decrease of 21.0% in interest income from loans and a decrease of 33.3% in interest income from investments.

Interest rate spread decreased 123 basis points from 5.91% to 4.68%. This decrease is mainly due to the net effect of a 130 basis points decrease in the average yield of interest-earning assets from 7.24% to 5.94%.

Interest income decreased to $99.4 million from $125.9 million in the same quarter in 2014. Such decrease reflects decreases of $10.8 million and $15.6 million in the volume and interest rate, respectively, on interest-earning assets. Interest income from loans decreased 19.9% to $90.5 million, reflecting a decrease in both, volume and interest rate of $10.9 million and $11.5 million, respectively, primarily due to the $4.1 million decrease in interest income from loans to PREPA, which was placed in non-accrual at the end of the first quarter of 2015, and PRASA, which was paid off during the second quarter of 2015, and to lower acquired loan balances and yields. Originated loans interest income increased 2.7% to $44.2 million as balances grew 12.0% and yield contracted 55 basis points to 6.06%. Acquired non-covered loans interest income fell 25.5% to $33.5 million as balances declined 23.1% and yield reduced 27 basis points to 8.48%. Covered loans interest income fell 48.7% to $12.8 million as balances declined 31.4% and yield reduced 732 basis points to 21.7%. Interest income from investments decreased 31.2% to $8.9 million, reflecting a decrease in interest rate of $4.1 million. Such decrease in interest income from investments reflects a higher premium amortization on existing securities.

Interest expense decreased 13.6% to $17.1 million, primarily because of a $1.1 million decrease in the volume of interest-bearing liabilities and decrease of $1.6 million in interest rate. The decreasein interest-bearing liabilities is mostly due to the decrease in deposits volume of $1.1 million and in interest rate of $1.5 million. The cost of deposits before fair value amortization and core deposit intangible amortization decreased 22 basis points to 0.65% for the second quarter of 2015, compared to 0.87% for the same quarter of 2014. Cost of borrowings decreased 3 basis points to 2.88% from 2.91%.

The average balance of total interest-earning assets was $6.709 billion, a decrease of 3.8% from the same period in 2014.  The decrease in average balance of interest-earning assets was mainly attributable to a decrease of 12% in average loans.

Comparison of six-month periods  ended June 30, 2015 and 2014

Net interest income of $171.9 million decreased 17.9% compared with $209.5 million reported in the six-month periods of 2014, reflecting a decrease of 15.2% in interest income from loans and a decrease of 32.7% in interest income from investments.

Interest rate spread decreased 87 basis points from 5.78% to 4.91%. This decrease is mainly due to the net effect of a 91 basis points decrease in the average yield of interest-earning assets from 7.08% to 6.17%.

Interest income decreased to $206.4 million from $249.0 million in the same period in 2014. Such decrease reflects decreases of $19.1 million and $23.4 million in the volume and in interest rate, respectively, of interest-earning assets. Interest income from loans decreased 15.2% to $188.0 million, reflecting a decrease in both, volume and interest rate of $17.2 million and $16.4 million, respectively, primarily due to the $4.1 million decrease in interest income from loans to PREPA, which was placed in non-accrual at the end of the first quarter of 2015, and PRASA, which was paid off during the second quarter of 2015, and to lower acquired loan balances and yields. Originated loans interest income increased 10.4% to $90.5 million as balances grew 14.4% and yield contracted 23 basis points to 6.34%. Acquired non-covered loans interest income fell 24.2% to $69.2 million as balances declined 22.1% and yield reduced 23 basis points to 8.35%. Covered loans interest income fell 41.4% to $28.3 million as balances declined 27.0% and yield reduced 551 basis points to 22.35%. Interest income from investments decreased 32.7% to $18.4 million, reflecting a decrease in both, volume and interest rate of $1.9 million and $7.1 million, respectively. Such decrease in interest income from investments reflects a decrease in investment securities from redemptions, maturities and sales, and higher premium amortization on existing securities.

96

Interest expense decreased 12.7% to $34.5 million, primarily because of a $3.7 million decrease in the volume of interest-bearing liabilities and an decrease of $1.3 million in interest rate. The decrease in interest-bearing liabilities is mostly due to the decrease in deposits volume and interest rate of $1.9 million and $2.4 million, respectively, and a decrease in repurchase agreements volume of $1.4 million which was partially offset by an increase in interest rate of $1.1 million. The cost of deposits before fair value amortization and core deposit intangible amortization decreased 23 basis points to 0.67% for the second quarter of 2015, compared to 0.90% for the same quarter of 2014. The decrease in the cost of deposits was partially offset by an increase in the cost of borrowings, which increased 17 basis points to 2.95% from 2.78%.

The average balance of total interest-earning assets was $6.741 billion, a decrease of 5.0% from the same period in 2014.  The decrease in average balance of interest-earning assets was mainly attributable to a decrease of 7.0% in average investments and a decrease of 4.1% in average loans.

TABLE 2 - NON-INTEREST INCOME SUMMARY
	Quarter Ended						Six-Month Period Ended
	June 30,					June 30,
	2015		2014		Variance	2015		2014		Variance
	(Dollars in thousands)					(Dollars in thousands)
Banking service revenue	$	10,212	$	9,995	2.2%	$	20,417	$	20,552	-0.7%
Wealth management revenue		7,285		7,336	-0.7%		14,440		14,203	1.7%
Mortgage banking activities		1,862		1,554	19.8%		3,725		3,249	14.7%
Total banking and financial service revenue		19,359		18,885	2.5%		38,582		38,004	1.5%
FDIC shared-loss expense, net:
FDIC indemnification asset expense		(22,512)		(17,499)	-28.6%		(34,733)		(35,121)	1.1%
Change in true-up payment obligation		(733)		(856)	14.4%		(1,596)		(1,721)	7.3%
		(23,245)		(18,355)	-26.6%		(36,329)		(36,842)	1.4%
Net gain (loss) on:
Sale of securities available for sale		-		-	0.0%		2,572		4,366	-41.1%
Derivatives		77		(247)	131.2%		(13)		(470)	97.2%
Other non-interest (loss) income		(847)		224	-478.1%		(2,587)		678	-481.6%
		(24,015)		(18,378)	-30.7%		(36,357)		(32,268)	-12.7%
Total non-interest income, net	$	(4,656)	$	507	-1018.3%	$	2,225	$	5,736	-61.2%

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, 2015 and 2014

As shown in Table 2 above, the Company recorded a non-interest loss in the amount of $4.7 million, compared to an income of $507 thousand for the same period in 2014, a decrease of 1018.3%, or $5.1 million.

The FDIC shared-loss expense, net, increased to $23.2 million as compared to $18.4 million for the same period in 2014, which primarily resulted from the increase of the FDIC commercial loss share amortization related to the expiration of the non-single family loss share coverage by the FDIC. The increase is also related to the ongoing evaluation of expected cash flows of the covered loan portfolio and from changes in the fair value of the true-up payment obligation (also known as a clawback liability). The majority of the FDIC indemnification asset was recorded for projected claimable losses on non-single family residential loans whose loss share period was effective until June 30, 2015, although the recovery share period extends for an additional three-year period.  The FDIC indemnification asset expense increased to $22.5 million from $17.5 million compared with the same quarter in 2014. The true-up

97

payment obligation decreased slightly to $733 thousand as compared to $856 thousand for the same quarter in 2014. The true-up payment obligation may increase if actual and expected losses decline. The Company measures the true-up payment obligation at fair value.  Notwithstanding the expiration of loss share coverage a non-single family loans, on July 2, 2015, the Company entered into an agreement with the FDIC pursuant to which the FDIC concurred with a potential sale of a pool of loss share assets covered under the non-single family loss share agreement. Pursuant to such agreement, the FDIC agreed to pay up to $20 million in loss share coverage with respect to the aggregate loss resulting from any portfolio sale within 120 days of the agreement.

Banking service revenue, which consists primarily of fees generated by deposit accounts, electronic banking services, and customer services, increased 2.2% to $10.2 million, from $10.0 million for the same period in 2014. The increase is mainly due to higher customer service revenues and checking account fees.

Wealth management revenue, which consists of commissions and fees from fiduciary activities, and securities brokerage and insurance activities, remained at $7.3 million.

Income generated from mortgage banking activities increased 19.8% to $1.9 million, compared to $1.6 million for the same quarter in 2014. The increase in mortgage banking activities is mainly due to higher servicing income, higher cost or market adjustment made to mortgage loans held-for-sale and an increase in sales, partially offset by higher losses in repurchased loans, when compared to same period in 2014.

Other non-interest income declined $1.1 million, mainly related to the sale of mortgage servicing rights consisting of loans owned by GNMA and sold to Scotiabank Puerto Rico for approximately $7.0 million, which closed during the second quarter of 2015. The Company recognized an additional loss of $835 thousand during the quarter related to this transaction.

Comparison of six-month periods ended June 30, 2015 and 2014

The Company recorded non-interest income in the amount of $2.2 million, compared to $5.7 million for the same period in 2014, a decrease of 61.2%, or $3.5 million.

The FDIC shared-loss expense, net, decreased to $36.3 million as compared to $36.8 million for the same period in 2014, which resulted from the ongoing evaluation of expected cash flows of the covered loan portfolio and from changes in the fair value of the true-up payment obligation. The FDIC indemnification asset expense decreased to $34.7 million from $35.1 million compared with the same period in 2014. The true-up payment obligation decreased to $1.6 million as compared to $1.7 million for the same period in 2014. The true-up payment obligation may increase if actual and expected losses decline. The Company measures the true-up payment obligation at fair value.

Banking service revenue, which consists primarily of fees generated by deposit accounts, electronic banking services, and customer services, decreased to $20.4 million, from $20.5 million for the same period in 2014. The decrease is mainly due to lower checking account fees of $687 thousand, lower combined cycle fees, non-sufficient funds and overdrawn fees of $695 thousand as customers shift to the “Cuenta Libre” deposit product, a decrease in branch service commissions from safe deposit box fees of $194 thousand, and a decrease of $208 thousand in lease servicing and other loan fees mainly from auto loans, partially offset by higher electronic banking fees of $1.2 million.

Wealth management revenue, which consists of commissions and fees from fiduciary activities, and securities brokerage and insurance activities, increased 1.7% to $14.4 million, compared to $14.2 million for the same period in 2014. Such increase is mostly due to an increase of $409 thousand from insurance income, offset by a decrease of $236 thousand in broker-dealer commissions.

Income generated from mortgage banking activities increased 14.7% to $3.7 million, compared to $3.2 million for the same period in 2014. The increase in mortgage banking activities is mainly due to higher servicing income, higher cost or market adjustment made to mortgage loans held-for-sale and an increase in sales, partially offset by higher losses in repurchased loans, when compared to same period in 2014.

Gains from the sale of securities were $2.6 million compared to $4.4 million for the same period in 2014. Losses from derivative activities were $13 thousand, compared to $470 thousand for the same period in 2014.

98

Other non-interest income declined $3.3 million, mainly related to the sale of mortgage servicing rights consisting of loans owned by GNMA and sold to Scotiabank Puerto Rico for approximately $7.0 million, which closed during the second quarter of 2015. The Company recognized a loss of $2.7 million related to this transaction.

TABLE 3 - NON-INTEREST EXPENSES SUMMARY
	Quarter Ended					Six-Month Period Ended
	June 30,					June 30,
	2015		2014		Variance %	2015		2014		Variance %
	(Dollars in thousands)					(Dollars in thousands)
Compensation and employee benefits	$	19,260	$	20,707	-7.0%	$	39,440	$	42,494	-7.2%
Professional and service fees		4,143		3,512	18.0%		8,324		7,719	7.8%
Occupancy and equipment		8,883		8,605	3.2%		17,519		16,914	3.6%
Insurance		2,251		2,333	-3.5%		4,204		4,407	-4.6%
Electronic banking charges		5,851		4,796	22.0%		11,218		9,449	18.7%
Information technology expenses		1,543		1,485	3.9%		2,997		3,300	-9.2%
Advertising, business promotion, and strategic initiatives		1,558		1,669	-6.7%		3,186		3,450	-7.7%
Foreclosure, repossession and other real estate expenses		10,337		6,656	55.3%		15,783		13,043	21.0%
Loan servicing and clearing expenses		2,594		1,669	55.4%		4,947		3,728	32.7%
Taxes, other than payroll and income taxes		2,703		3,776	-28.4%		4,182		7,511	-44.3%
Communication		770		813	-5.3%		1,460		1,770	-17.5%
Printing, postage, stationery and supplies		582		645	-9.8%		1,219		1,200	1.6%
Director and investor relations		289		293	-1.4%		583		544	7.2%
Other operating expenses		3,673		2,889	27.1%		5,707		5,723	-0.3%
Total non-interest expenses	$	64,437	$	59,848	7.7%	$	120,769	$	121,252	-0.4%
Relevant ratios and data:
Efficiency ratio		63.39%		47.89%			57.37%		48.99%
Compensation and benefits to         non-interest expense		29.89%		34.60%			32.66%		35.05%
Compensation to average total assets owned		1.05%		1.07%			1.07%		1.08%
Average number of employees		1,509		1,566			1,509		1,559
Average compensation per employee	$	12.8	$	13.2		$	26.1	$	27.3
Average loans per average employee	$	3,147	$	3,205		$	3,185	$	3,216

99

Non-Interest Expenses

Comparison of quarters ended June 30, 2015 and 2014

Non-interest expense for the quarter was $64.4 million, representing an increase of 7.7% compared to $59.8 million in the same quarter of the previous year.

Foreclosure, repossession and other real estate expenses increased 55.3% to $10.3 million, as compared to $6.7 million in the same period of the previous year, principally due to a $2.9 million increase in other real estate owned and mortgage properties markdowns, as part of ongoing and proactive de-risking efforts.

Electronic banking charges increased 22.0% to $5.9 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.

Loan servicing and clearing expenses increased 55.4% or $925 thousand to $2.6 million from $1.7 million for the same quarter in 2014, mainly to an increase of $901 thousand in servicing expenses.

The increases in the foregoing non-interest expenses were partially offset by decreases in compensation and employee benefits and in taxes, other than payroll and income taxes.

Compensation and employee benefits decreased 7.0% to $19.3 million from $20.7 million for the second quarter of 2014. The decrease is due mainly to lower salaries and lower benefits as a result of a headcount reduction.

Taxes, other than payroll and income taxes decreased by $1.1 million or 28.4%, mostly due to a decrease of $1.3 million in the local gross receipts tax that was repealed for taxable years commencing after December 31, 2014.

Efficiency ratio was 63.39% compared to 47.89% for the same period in 2014. The efficiency ratio measures how much of the Company’s revenues 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 (losses) income that are excluded from the efficiency ratio computation amounted to losses of $24.0 million, compared to $18.4 million for the same quarter of 2014.

Comparison of six-month periods ended June 30, 2015 and 2014

Non-interest expense for the six-month period was $120.8 million, representing a decrease of 0.4% compared to $121.3 million in the same period of the previous year.

Compensation and employee benefits decreased 7.2% to $39.4 million from $42.5 million for the same period of 2014. The decrease is due mainly to lower salaries and lower benefits as a result of a headcount reduction from 1,559 to 1,509 as a result of the voluntary early retirement program offered by the Company in December 2014 for qualified employees as a cost savings initiative.

Taxes, other than payroll and income taxes decreased by $3.3 million or 44.32%, mostly due to a decrease of $3.9 million in the local gross receipts tax that was repealed for taxable years commencing after December 31, 2014.

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

Foreclosure, repossession and other real estate expenses increased 21.01% to $15.8 million, as compared to $13.0 million in the same period for the previous year, principally due to a $3.0 million increase in other real estate owned and mortgage properties markdowns, as part of our ongoing and proactive de-risking efforts.

100

Electronic banking charges increased 18.7% to $11.2 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.

Loan servicing and clearing expenses increased 32.7% or $1.2 million to $4.9 million from $3.7 million for the same period in 2014, mainly due to an increase of $850 thousand in servicing expenses and $327 thousand in mortgage servicing migration.

Efficiency ratio was 57.37% compared to 48.99% for the same period in 2014. The efficiency ratio measures how much of the Company’s revenues 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 (losses) income that are excluded from the efficiency ratio computation amounted to losses of $36.4 million, compared to $32.3 million for the same period of 2014.

Provision for Loan and Lease Losses

Comparison of quarters ended June 30, 2015 and 2014

Provision for non-covered loan and lease losses increased 18.33%, or $2.4 million, to $15.6 million from $13.2 million when compared with the same period in 2014. Management determined that no additional PREPA provision was required on the PREPA line of credit due to the ongoing active negotiation of a repayment agreement.

Management also determined that no additional provision was required on FDIC covered commercial loans for the second quarter of 2015, compared to $1.6 million for the same quarter of 2014, as loss-share agreement with the FDIC for non-single family loans was in effect until June 30, 2015.

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 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.

Provision for non-covered loans, excluding acquired loans, increased 33.9% to $10.0 million from $7.4 million when compared with the same quarter in 2014.

Total charge-offs on non-covered loans, excluding acquired loans, increased 33.1% to $11.8 million, as compared to $8.9 million for the same quarter in 2014.  Auto and leasing charge-offs increased $1.7 million to $7.7 million and consumer charge-offs increased $912 thousand to $2.3 million.

Total recoveries on non-covered loans, excluding acquired loans, increased from $1.1 million to $3.8 million. As a result, the recoveries to charge-offs ratio increased from 30.41% to 31.95%. Net credit losses, excluding acquired loans, increased $1.9 million to $8.0 million, representing 1.10% of average non-covered loans outstanding versus 0.94% for the same quarter in 2014, annualized.

The non-covered acquired loans accounted for under ASC 310-20 required a provision for loan and lease losses of $1.5 million, as compared to $2.6 million for the same period in 2014.

Non-covered acquired loans accounted for under ASC 310-30 required a provision for loan and lease losses of $4.2 million, as compared to $3.2 million for the same quarter in 2014. No provision was required on FDIC covered commercial loans for the second quarter of 2015, compared to $1.6 million for the same quarter in 2014. The provision for loan and lease losses for loans accounted for under ASC 310-30 reflects 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.

101

Comparison of six-month periods ended June 30, 2015 and 2014

Provision for non-covered loan and lease losses increased 127.8%, or $29.7 million, to $53.0 million from $23.3 million when compared with the same period in 2014.  Such increase was primarily due to the classification of $200 million participation in the PREPA line of credit on non-accrual status and the recognition of a $24.0 million provision for loan and lease losses on such line during the first quarter of 2015.

Provision for covered loan and lease losses increased 45.9% to $4.7 million from $3.2 million when compared to the same period in 2014.  Provision for the six-month period ended in 2015 included an additional $3.5 million provision for covered loan and lease losses related to the commercial shared loss coverage with the FDIC, which was effective until June 30, 2015.

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, 2015 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.

Provision for non-covered loans, excluding acquired loans, increased 236.0% to $43.9 million from $13.1 million when compared with the same period in 2014. This was the result of the aforementioned $24.0 million provision for loan and lease losses taken on the PREPA line of credit during the first quarter of 2015.

Total charge-offs on non-covered loans, excluding acquired loans, increased 50.3% to $24.0 million, as compared to $16.0 million for the same period in 2014.  Auto and leasing charge-offs increased $5.2 million to $15.8 million and consumer charge-offs increased $1.8 million to $4.0 million.

Total recoveries increased from $4.5 million to $7.7 million. As a result, the recoveries to charge-offs ratio increased from 28.13% to 32.14%. Net credit losses, excluding acquired loans, increased $4.8 million to $16.3 million, representing 1.15% of average non-covered loans outstanding versus 0.91% for the same period in 2014, annualized.

The non-covered acquired loans accounted for under ASC 310-20 required a provision for loan and lease losses of $4.3 million, as compared to $6.8 million for the same period in 2014.

Non-covered acquired loans accounted for under ASC 310-30 required a provision for loan and lease losses of $4.9 million, as compared to $3.4 million for the same period in 2014. Provision for covered loan and lease losses was $4.7 million, compared to $3.2 million for the same period in 2014. The provision for loan and lease losses for loans accounted for under ASC 310-30 reflects 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.

Income Taxes

Comparison of quarters ended June 30, 2015 and 2014

Income tax expense decreased $9.8 million to $769 thousand, compared to $10.6 million for the same quarter in 2014.Decrease in income tax expense reflects the net loss before income taxes of $2.3 million for the quarter, compared to net income before income taxes of $32.0 million for the year ago quarter.

Comparison of six-month periods ended June 30, 2015 and 2014

Income tax expense decreased $20.7 million to $1.7 million, compared to $22.4 million for the same period in 2014.Decrease in income tax expense reflects the net loss before income taxes of $4.3 million for the six-month period ended June 30, 2015, compared to net income before income taxes of $67.5 million for the year ago six-month period.

102

Business Segments

The Company segregates its businesses into the following major reportable segments: 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.  Following are the results of operations and the selected financial information by operating segment for the quarters and six-month periods ended June 30, 2015 and 2014:

	Quarter Ended June 30, 2015
				Wealth				Total Major				Consolidated
	Banking			Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	90,504	$	24	$	8,885	$	99,413	$	-	$	99,413
Interest expense		(7,110)		-		(10,011)		(17,121)		-		(17,121)
Net interest income		83,394		24		(1,126)		82,292		-		82,292
Provision for non-covered    loan and lease losses		(15,644)		-		-		(15,644)		-		(15,644)
Provision for covered    loan and lease losses		105		-		-		105		-		105
Non-interest income (loss)		(11,713)		6,893		164		(4,656)		-		(4,656)
Non-interest expenses		(56,844)		(6,733)		(860)		(64,437)		-		(64,437)
Intersegment revenue		163		-		61		224		(224)		-
Intersegment expenses		(61)		(87)		(76)		(224)		224		-
Income before income taxes	$	(600)	$	97	$	(1,837)	$	(2,340)	$	-	$	(2,340)
Total assets	$	6,153,663	$	21,157	$	2,136,293	$	8,311,113		(912,788)	$	7,398,325
	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

103

	Six-Month Period Ended June 30, 2015
			Wealth				Total Major				Consolidated
	Banking		Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	187,986	$	47	$	18,381	$	206,414	$	-	$	206,414
Interest expense		(14,564)		-		(19,923)		(34,487)		-		(34,487)
Net interest income		173,422		47		(1,542)		171,927		-		171,927
Provision for non-covered loan and lease losses		(53,027)		-		-		(53,027)		-		(53,027)
Provision for covered loan and lease losses, net		(4,705)		-		-		(4,705)		-		(4,705)
Non-interest income(loss)		(13,962)		13,903		2,284		2,225		-		2,225
Non-interest expenses		(106,156)		(11,524)		(3,089)		(120,769)		-		(120,769)
Intersegment revenue		707		-		160		866		(866)		-
Intersegment expenses		(159)		(518)		(189)		(866)		866		-
Income before income taxes	$	(3,880)	$	1,908	$	(2,376)	$	(4,349)	$	-	$	(4,349)
	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 (loss) before income taxes	$	62,930	$	2,205	$	2,319	$	67,454	$	-	$	67,454

Comparison of quarters ended June 30, 2015 and 2014

Banking

Net interest income of the Company’s Banking segment decreased $18.7 million for the second quarter of 2015, or 18.4%, reflecting a decrease of 19.9% in interest income from loans. Interest income from loans reflects a decrease in both, volume and interest rate by $10.9 million and $11.5 million, respectively, primarily due to a decrease of $4.1 million in interest income from loans to PREPA, which was placed in non-accrual at the end of the first quarter of 2015, and PRASA, which was paid off during the second quarter of 2015, and to lower acquired loan balances and yields.

Provision for non-covered loans losses increased $2.4 million when compared to $13.2 million for the second quarter of 2014. During the second quarter of 2015 no provision was registered, representing a decrease of 107% when compared to the second quarter of 2014, as a result of the commercial shared loss coverage with the FDIC that ended on June 30, 2015.

Banking service revenue, which consists primarily of fees generated by deposit accounts, electronic banking services, and customer services, slightly increased 2.2% to $10.2 million, from $10.0 million for the same period in 2014. The increase is mainly due to higher customer service revenues and checking account fees.

104

During the quarter ended June 30, 2015, the Company recognized a loss of $835 thousand related to the sale of its mortgage servicing rights to Scotiabank Puerto Rico. It is included as other non-interest (loss) income.

During the second quarter of 2015 the FDIC indemnification asset expense increased by $5.0 million to $22.5 million from $17.5 million for the quarter in 2014. The majority of the FDIC indemnification asset is recorded for projected claimable losses whose loss share period was in effect until June 30, 2015, although the recovery share period extends for an additional three-year period. During the second quarter of 2015, the true-up payment obligation decreased by $123 thousand when compared to an $856 thousand decrease in the same quarter in 2014. The true-up payment obligation may increase if actual and expected losses decline.

Non-interest expense of $56.8 million increased $7.2 million or 14.5% when compared to the same period in 2014. The increase in non-interest expense is mainly due to foreclosure, repossession and other real estate expenses increase of 55.3% to $10.3 million, as compared to $6.7 million in the same period for the previous year, principally due to a $2.9 increase in markdown of foreclosed real estate. In addition, electronic banking charges increased $1.1 million, mainly from merchant business and debit/credit card interchange transactions as our banking business continues to grow.

Wealth Management

Wealth management revenue, which consists of commissions and fees from fiduciary activities, and securities brokerage and insurance activities, decreased 8% when compared with the second quarter in 2014. Decline in this business segment is mostly due to a decrease of $131 thousand in public finance fees.

Non-interest expenses increased by 5.7% to $6.8 million, due to a payment of $2.1 million required by our broker-dealer’s regulator, partially offset by a decrease in commissions paid when compared to the same period in 2014.

Treasury

Interest income from investments decreased 31.2% to $8.9 million, reflecting a decrease in interest rate of $4.1 million. Such decrease in interest income from investments reflects a higher premium amortization on existing securities.

Non-interest expenses, mainly composed of indirect expenses allocated from support departments decreased 75.8% to $860 thousand as part of the Company’s cost reduction strategy.

Comparison of six-month periods ended June 30, 2015 and 2014

Banking

Net interest income of the Company’s Banking segment decreased $29.8 million for the six-month period ended June 30, 2015, or 14.7%, reflecting a decrease of 15.2% in interest income from loans. Interest income from loans reflects a decrease in volume and interest rate by $17.2 million and $16.4 million, respectively, primarily due to a decrease of $4.1 million in interest income from the loan to PREPA, which was placed in non-accrual at the end of the first quarter of 2015, and the loan to PRASA, which was paid off during the second quarter of 2015, and to lower acquired loan balances and yields.

Provision for non-covered loans losses increased $29.7 million to $53.0 million when compared to $23.3 million for the same period in 2014. During the first quarter of 2015, the Company recorded an additional provision for loan and lease losses of $24 million related to its participation in the line of credit to PREPA. Provision for covered loans losses decreased $1.5 million when compared to the same period of 2014, as a result of the commercial shared loss agreement with the FDIC which ended on June 30, 2015.

105

Banking service revenue, which consists primarily of fees generated by deposit accounts, electronic banking services, and customer services, slightly decreased to $20.4 million, from $20.5 million for the same period in 2014. The decrease is mainly due to lower checking account fees of $687 thousand, lower combined cycle fees, non-sufficient funds and overdrawn fees of $695 thousand as customers shift to the “Cuenta Libre” deposit product, a decrease in branch service commissions from safe deposit box fees of $194 thousand, and a decrease of $208 thousand in lease servicing and other loan fees mainly from auto loans, partially offset by higher electronic banking fees of $1.2 million.

During the six-month period ended June 30, 2015, the Company recognized a loss of $835 thousand related to the sale of its mortgage servicing assets to Scotiabank Puerto Rico. It is included as other non-interest (loss) income.

During the six-month periods ended June 30, 2015 and 2014, the FDIC indemnification asset expense slightly decreased to $34.7 million from $35.1 million for the same period in 2014. The majority of the FDIC indemnification asset is recorded for projected claimable losses on whose loss share period was in effect until June 30, 2015, although the recovery share coverage extends for an additional three-year period. During the six-month period ended June 30, 2015, the change in the true-up payment obligation decreased slightly by $1.6 million as compared to a $1.7 million decrease for the same period in 2014. The true-up payment obligation may increase if actual and expected losses decline.

Non-interest expense of $106.2 million increased 2.9% when compared to the same period in 2014. The increase in non-interest expense is mainly due to an increase in foreclosure, repossession and other real estate expenses of 21.0% to $15.8 million, as compared to $13.0 million in the same period for the previous year, principally due to a $3.0 million increase in markdown of foreclosed real estate, as part of de-risking efforts during the second quarter of 2015. In addition, electronic banking charges increased $1.8 million, mainly from merchant business and credit/debit card interchange transactions as our banking business continues to grow.

Wealth Management

Wealth management revenue, which consists of commissions and fees from fiduciary activities, and securities brokerage and insurance activities, remained leveled at $14 million compared to the same period in 2014.

Non-interest expenses increased by 3.4% to $11.5 million, due to a payment of $2.1 million required by our broker-dealer’s regulator, partially offset by a decrease in commissions paid when compared to the same period in 2014.

Treasury

The investment portfolio of $1.616 billion at June 30, 2015 increased 15.3% compared to $1.402 billion at December 31, 2014. Interest income from investments decreased 32.7% to $18.4 million, reflecting a decrease in both, volume and interest rate of $1.9 million and $7.1 million, respectively. Such decrease in interest income from investments reflects a higher premium amortization on existing securities.

106

ANALYSIS OF FINANCIAL CONDITION

Assets Owned

At June 30, 2015, the Company’s total assets amounted to $7.398 billion representing a decrease of 0.7% when compared to $7.449 billion at December 31, 2014. This reduction is mainly due to a decrease in the loan portfolio. The loan portfolio decreased $187.2 million from $4.827 billion at December 31, 2014 to $4.639 billion, which included the full repayment of the $75 million loan to PRASA during the quarter ended June 30, 2015. Investments securities increased $214.4 million from $1.402 billion at December 31, 2014 to $1.616 billion.

At June 30, 2015, loans represented 74% of total interest-earning assets while investments represented 26%, compared to 77% and 23%, respectively, at December 31, 2014.

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, and auto loans. At June 30, 2015, the Company’s loan portfolio decreased by 4% to $4.639 billion compared to $4.827 billion at December 31, 2014, primarily due to lower acquired loan balances. Our loan portfolio is transitioning as originated loans grow at a slower pace than acquired loans decrease, due to repayments and maturities and the Company continues to reduce its exposure to the Puerto Rico government. At June 30, 2015, the originated loan portfolio increased $113.0 million, or 4.0%, the acquired non-covered loan portfolio decreased $196.0 million, or 11.3%, and the covered loan portfolio decreased $76.9 million, or 25.7% from December 31, 2014.

The FDIC indemnification asset amounted to $23.0 million at June 30, 2015 and $97.4 million as of December 31, 2014, representing a 76.7% reduction. The decrease in the FDIC indemnification asset is mainly related to collections and the amortization of the FDIC indemnification asset of $24.4 million and $22.5 million, respectively, for the second quarter ended June 30, 2015, as loss-share period for non-single family loans was effective until June 30, 2015.

Investments principally consist of U.S. government and agency bonds, mortgage-backed securities, and Puerto Rico government and agency bonds. At June 30, 2015, the investment portfolio increased 15.3% to $1.616 billion from $1.402 billion at December 31, 2014. During the quarter ended June 30, 2015 the Company sold $101.3 million of mortgage-backed securities available for sale and reduced some interest rate sensitivity. Recent purchases of investment securities were categorized as held-to-maturity. The Company’s management will determine the category of upcoming investment securities purchases based on the Company’s expectations at such time.

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, OPC, manages private retirement plans. At June 30, 2015, total assets managed by the Company’s trust division and OPC amounted to $2.793 billion, compared to $2.841 billion at December 31, 2014. 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, 2015, total assets gathered by Oriental Financial Services from its customer investment accounts decreased to $2.555 billion, compared to $2.622 billion at December 31, 2014. Changes in trust and broker-dealer related assets primarily reflect an increase in portfolio and differences in market values.

107

TABLE 4 - ASSETS SUMMARY AND COMPOSITION
	June 30		December 31		Variance
	2015		2014		%
	(Dollars in thousands)
Investments:
FNMA and FHLMC certificates	$	1,387,077	$	1,172,262	18.3%
Obligations of US government-sponsored agencies		6,128		7,182	-14.7%
US Treasury securities		25,049		-	100.0%
CMOs issued by US government-sponsored agencies		155,046		176,129	-12.0%
GNMA certificates		3,874		4,752	-18.5%
Puerto Rico government and public instrumentalities		14,729		15,671	-6.0%
FHLB stock		20,826		21,169	-1.6%
Other debt securities		2,969		3,294	-9.9%
Other investments		789		1,597	-50.6%
Total investments		1,616,487		1,402,056	15.3%
Loans:
Non-covered loans		4,499,542		4,582,713	-1.8%
Allowance for loan and lease losses on non-covered loans		(102,877)		(69,517)	48.0%
Non-covered loans receivable, net		4,396,665		4,513,196	-2.6%
Mortgage loans held for sale		20,768		14,539	42.8%
Total non-covered loans, net		4,417,433		4,527,735	-2.4%
Covered loans		293,486		363,156	-19.2%
Allowance for loan and lease losses on covered loans		(71,452)		(64,245)	11.2%
Total covered loans, net		222,034		298,911	-25.7%
Total loans, net		4,639,467		4,826,646	-3.9%
Total securities and loans		6,255,954		6,228,702	0.4%
Other assets:
Cash and due from banks (including restricted cash)		553,826		577,159	-4.0%
Money market investments		5,795		4,675	24.0%
FDIC indemnification asset		22,704		97,378	-76.7%
Foreclosed real estate		81,333		95,661	-15.0%
Accrued interest receivable		19,254		21,345	-9.8%
Deferred tax asset, net		138,406		108,708	27.3%
Premises and equipment, net		76,486		80,599	-5.1%
Servicing assets		5,791		13,992	-58.6%
Derivative assets		4,376		8,107	-46.0%
Goodwill		86,069		86,069	0.0%
Other assets and customers' liability on acceptances		148,331		126,714	17.1%
Total other assets		1,142,371		1,220,407	-6.4%
Total assets	$	7,398,325	$	7,449,109	-0.7%
Investments portfolio composition:
FNMA and FHLMC certificates		85.9%		83.7%
Obligations of US government-sponsored agencies		0.4%		0.5%
US Treasury securities		1.5%		0.0%
CMOs issued by US government-sponsored agencies		9.6%		12.6%
GNMA certificates		0.2%		0.3%
Puerto Rico government and public instrumentalities		0.9%		1.1%
FHLB stock		1.3%		1.5%
Other debt securities and other investments		0.2%		0.3%
		100.0%		100.0%

108

TABLE 5 — LOANS RECEIVABLE COMPOSITION
	June 30		December 31		Variance
	2015		2014		%
	(Dollars in thousands)
Non-covered loans:
Originated and other loans and leases held for investment:
Mortgage	$	757,187	$	791,751	-4.4%
Commercial		1,363,851		1,289,732	5.7%
Consumer		212,629		186,760	13.9%
Auto and leasing		623,198		575,582	8.3%
Total originated and other loans and leases held for investment		2,956,865		2,843,825	4.0%
Acquired loans:
Accounted for under ASC 310-20
Commercial		8,448		12,675	-33.3%
Consumer		41,505		45,344	-8.5%
Auto		142,570		184,782	-22.8%
		192,523		242,801	-20.7%
Accounted for under ASC 310-30
Mortgage		631,807		656,122	-3.7%
Commercial		406,447		452,201	-10.1%
Construction		93,263		106,361	-12.3%
Consumer		18,869		29,888	-36.9%
Auto		195,891		247,233	-20.8%
		1,346,277		1,491,805	-9.8%
Allowance for loan and lease losses on non-covered loans accounted              for under ASC -30		(18,359)		(13,481)	-36.2%
		1,327,918		1,478,324	-10.2%
		1,520,441		1,721,125	-11.7%
		4,477,306		4,564,950	-1.9%
Deferred loans fees, net		3,877		4,282	-9.5%
Loans receivable		4,481,183		4,569,232	-1.9%
Allowance for loan and lease losses on loans not accounted for under ASC 310-30		(84,518)		(56,036)	-50.8%
Loans receivable, net		4,396,665		4,513,196	-2.6%
Mortgage loans held-for-sale		20,768		14,539	42.8%
Total non-covered loans, net		4,417,433		4,527,735	-2.4%
Covered loans:
Loans secured by 1-4 family residential properties		117,840		117,171	0.6%
Construction and development secured by 1-4 family residential properties		19,152		19,562	-2.1%
Commercial and other construction		153,199		221,917	-31.0%
Consumer		3,295		4,506	-26.9%
Total covered loans		293,486		363,156	-19.2%
Allowance for loan and lease losses on covered loans		(71,452)		(64,245)	-11.2%
Total covered loans, net		222,034		298,911	-25.7%
Total loans receivable, net	$	4,639,467	$	4,826,646	-3.9%

109

As shown in Table 5 above, total loans, net, amounted to $4.639 billion at June 30, 2015 and $4.827 billion at December 31, 2014.

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

·Mortgage loan portfolio amounted to $757.2 million (25.6% of the gross originated loan portfolio) compared to $791.8 million (27.8% of the gross originated loan portfolio) at December 31, 2014. Mortgage loan production totaled $64.8 million and $126.5 million for the quarter and six-month period ended June 30, 2015, respectively, which represents an increase of 24.6% and 23.1% from $52.0 million and $102.8 million for the same periods in 2014. Mortgage loans included delinquent loans in the GNMA buy-back option program amounting to $7.0 million and $42.2 million for the periods ended June 30, 2015 and December 31, 2014, 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. The decrease is mostly due to the sale of mortgage servicing rights of most of these loans to Scotiabank de Puerto Rico during the second quarter of 2015.

·Commercial loan portfolio amounted to $1.364 billion (46.1% of the gross originated loan portfolio) compared to $1.290 billion (45.4% of the gross originated loan portfolio) at December 31, 2014. Commercial loan production increased 165.2% to $120.5 million for the second quarter of 2015 from $45.4 million for the same period in 2014, and 142.0% to $206.2 million for the six-month period ended June 30, 2015 from $85.2 million for the same period in 2014.

·Consumer loan portfolio amounted to $212.6 million (7.2% of the gross originated loan portfolio) compared to $186.8 million (6.6% of the gross originated loan portfolio) at December 31, 2014. Consumer loan production increased 15.4% to $39.8 million for the quarter ended June 30, 2015 from $34.5 million for the same period in 2014, and 5.9% to $66.0 million for the six-month period ended June 30, 2015 from $62.3 million for the same period in 2014.

·Auto loans and leasing portfolio amounted to $623.2 million (21.1% of the gross originated loan portfolio) compared to $575.6 million (20.2% of the gross originated loan portfolio) at December 31, 2014. Auto production was $61.5 million for the quarter ended June 30, 2015 and $127.5 million for the six-month period ended June 30, 2015 compared to $89.6 million and $183.4 million for the same period in 2014.

At June 30, 2015 and December 31, 2014, the Company's non-covered acquired loan portfolio composition was as follows:

	June 30, 2015			December 31, 2014
Portfolio Type		Carrying Amounts	% of Gross Non-Covered Acquired Loan Portfolio		Carrying Amounts	% of Gross Non-Covered Acquired Loan Portfolio
	(Dollars in thousands)
Mortgage	$	631,334	41.5%	$	656,122	38.1%
Commercial		493,218	32.4%		557,761	32.4%
Consumer		60,290	4.0%		75,227	4.4%
Auto		335,599	22.1%		432,015	25.1%
	$	1,520,441	100.00%	$	1,721,125	100.00%

110

TABLE 6 — HIGHER RISK RESIDENTIAL MORTGAGE LOANS
	June 30, 2015
	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	$	12,697	$	258	2.03%	$	20,012	$	425	2.12%	$	94,121	$	1,909	2.03%
90 - 119 days		156		1	0.58%		803		17	2.12%		966		27	2.80%
120 - 179 days		106		7	6.60%		-		-	0.00%		1,228		82	6.68%
180 - 364 days		138		9	6.52%		560		25	4.46%		1,997		117	5.86%
365+ days		211		35	16.59%		459		73	15.90%		8,973		994	11.08%
Total	$	13,308	$	310	2.33%	$	21,834	$	540	2.47%	$	107,285	$	3,129	2.92%
Percentage of total loans excluding     acquired loans accounted for under ASC 310-30		0.42%					0.69%					3.38%
Refinanced or Modified Loans:
Amount	$	2,120	$	197	9.29%	$	196	$	19	9.69%	$	20,535	$	1,501	7.31%
Percentage of Higher-Risk Loan     Category		15.93%					0.90%					19.14%
Loan-to-Value Ratio:
Under 70%	$	8,116	$	199	2.45%	$	1,708	$	35	2.05%	$	-	$	-	-
70% - 79%		2,294		64	2.79%		2,785		57	2.05%		-		-	-
80% - 89%		754		23	3.05%		6,904		220	3.19%		-		-	-
90% and over		2,144		24	1.12%		10,437		228	2.18%		107,285		3,129	2.92%
	$	13,308	$	310	2.33%	$	21,834	$	540	2.47%	$	107,285	$	3,129	2.92%
* Loans may be included in more than one higher-risk loan category and excludes acquired residential mortgage loans.

111

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, 2015
						Maturity
Loans and Securities:		Carrying Value		Less than 1 Year		1 to 3 Years		More than 3 Years	Comments
	(In thousands)
Central government	$	25,218	$	-	$	-	$	25,218		Repayment sources include all available revenues of the Commonwealth
Public corporations		276,085		197,559		909		77,617		$80.0 million which matures in more than 3 years, with pledged securities (rating > A)
Municipalities		213,971		-		51,139		162,832		Repayment from property taxes
Investment securities		20,987		-		10,521		10,466		Revenues derived from trustee properties, leased facilities and Teodoro Moscoso Bridge operations.
Total	$	536,261	$	197,559	$	62,569	$	276,133

Some highlights follow on the data included above:

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

·45% of loans and securities balances mature in 12-months or less.

·Deposits from municipalities, central government and other government entities totaled $171.0 million at June 30, 2015. 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.

·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 PREPA. The Bank’s participation in the line of credit has an unpaid principal balance of $197.6 million as of June 30, 2015. During the first quarter of 2015, the Bank placed its participation in such line of credit on non-accrual status and recorded a $24.0 million provision for loan and lease losses related thereto. There was no change to the PREPA provision during the second quarter of 2015. For such quarter, interest payments received were applied to principal.

112

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.

At June 30, 2015, the Company’s allowance for non-covered loan and lease losses amounted to $102.9 million, an increase from $69.5 million at December 31, 2014.  Such increase is mostly due to the $24.0 million provision for loan and lease losses related to the PREPA line of credit during the first quarter of 2015.

At June 30, 2015, $79.0 million of the allowance corresponded to originated and other loans held for investment, or 2.67% of total non-covered originated and other loans held for investment, compared to $51.4 million or 1.81% of total non-covered originated and other loans held for investment at December 31, 2014. The allowance increased as a result of a $43.9 million provision for loan and lease losses and $7.7 million of recoveries, which were partially offset by charge-offs of $24.0 million during the six-month period ended June 30, 2015. During the first quarter of 2015, the Company recorded a $24.0 million provision for loan and lease losses for the PREPA line of credit. The allowance for commercial loans increased 312.5% (or $26.3 million), when compared with the balances recorded at December 31, 2014. The allowance for residential mortgage loans decreased by 8.1% (or $1.6 million), when compared with the balances recorded at December 31, 2014. The allowance for consumer loans and auto and leases increased by 15.3% (or $1.4 million) and 5.7% (or $809 thousand), respectively, when compared with the balances recorded at December 31, 2014. The unallocated allowance at June 30, 2015 increased $605 thousand, when compared with the balance recorded at December 31, 2014. Changes are related to the evolution and the current trends of the portfolio. In the mortgage loan portfolios, losses have decreased, and therefore, less reserve was required. In the consumer and auto loan portfolios, losses had increased, and therefore, a higher reserve was required. In the commercial loan portfolio losses increased, and therefore, a higher reserve was required in addition to the $24.0 million PREPA provision for loan and lease losses.

Allowance for loan and lease losses recorded for acquired non-covered loans accounted for under the provisions of ASC 310-20 at June 30, 2015 was $5.5 million compared to $4.6 million at December 31, 2014, a 20.3% increase. The allowance increased as a result of a $4.3 million provision for loan and lease losses and $1.7 million of recoveries, which were partially offset by $5.0 million in charge-offs during the six-month period ended June 30, 2015. The allowance for commercial loans decreased by 16.9% (or $11 thousand), when compared with the balance recorded at December 31, 2014. The allowance for consumer loans increased by 116.0% (or $1.4 million) and auto loans decreased by 13.9% (or $462 thousand), respectively, when compared with the balances recorded at December 31, 2014, due to the normal amortization of credit discount of these acquired loans.

Allowance for loan and lease losses recorded for acquired non-covered loans accounted for under ASC-310-30 at June 30, 2015 was $18.4 million as compared to $13.5 million at December 31, 2014. The allowance increased as a result of a $4.9 million provision for loan and lease losses during the six-month period ended June 30, 2015. The allowance for commercial loans increased by 10.9% (or $1.5 million), when compared with the balance recorded at December 31, 2014. The allowance for residential mortgage loans increased $473 thousand, when compared with the balances recorded at December 31, 2014. The allowance for consumer loans and auto loans increased by $79 thousand and $2.9 million, respectively, when compared with the balances recorded at December 31, 2014.

Allowance for loan and lease losses recorded for covered loans at June 30, 2015 was $71.5 million as compared to $64.2 million at December 31, 2014. The allowance increased as a result of a $4.7 million provision for loan and lease losses and a provision of $2.5 million of FDIC shared-loss portion for covered loan and lease losses during the six-month period ended June 30, 2015. The allowance for loan and lease losses on covered loans is accounted for 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.

113

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, 2015 and December 31, 2014, the Company had $301.2 million and $101.5 million, respectively, of non-accrual loans, including acquired loans accounted for under ASC 310-20 (loans with revolving feature and/or acquired at a premium). During the second quarter of 2015, the Company placed its $200.0 million participation in the PREPA line of credit, which was previously classified as troubled-debt-restructuring, on non-accrual status. At June 30, 2015 and December 31, 2014, loans whose terms have been extended and which are classified as troubled-debt restructuring that are not included in non-performing assets amounted to $88.8 million and $274.4 million, respectively.

Oriental Bank is part of a four bank syndicate providing a $550 million revolving line of credit to finance the purchase of fuel for PREPA’s day-to-day power generation activities.  Our participation in the line of credit has an unpaid principal balance of $197.6 million as of June 30, 2015.  As part of the bank syndicate, the Bank entered into a forbearance agreement with PREPA, which has been extended several times, most recently until September 15, 2015.  In connection with such extensions, PREPA appointed a Chief Restructuring Officer to work alongside the Executive Director to develop, organize and manage a financial and operational restructuring of PREPA subject to the approval of PREPA’s Board of Directors.  PREPA also has been in negotiations with its forbearing creditors to restructure its debts and obtain financing for capital improvements needed to its infrastructure.  The Company has classified the credit facility to PREPA as substandard and on non-accrual status. The Company conducted an impairment analysis considering the probability of collection of principal and interest, which included a financial model to project the future liquidity status of PREPA under various scenarios and its capacity to service its financial obligations, and concluded that PREPA had sufficient cash flows for the repayment of the line of credit.  This analysis has been further supported by the various restructuring proposals made by PREPA and its creditors.  Despite the Company’s analysis showing PREPA’s capacity to repay the line of credit, the Company placed its participation in non-accrual and recorded a $24 million provision during the first quarter of 2015.  The impairment analysis was updated for the second quarter with no change in provision.  For the quarter ended June 30, 2015, interest payments are being applied to principal.

Delinquent residential mortgage loans insured or guaranteed under applicable FHA and VA programs are classified as non-performing loans when they become 90 days or more past due, but are not placed in non-accrual status until they become 18 months or more past due, since they are insured loans. Therefore, these loans are included as non-performing loans but excluded from non-accrual loans.

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, 2015, the Company’s non-performing assets increased by 107.1% to $368.9 million (6.35% of total assets, excluding covered assets and acquired loans with deteriorated credit quality) from $178.1 million (4.30% of total assets, excluding covered assets and acquired loans with deteriorated credit quality) at December 31, 2014. 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, 2015, the allowance for originated loan and lease losses to non-performing loans coverage ratio was 25.59% (49.11% at December 31, 2014).

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.

114

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, 2015, the Company’s originated non-performing mortgage loans totaled $74.5 million (23.9% of the Company’s non-performing loans), a 2.4% increase from $72.8 million (66.8% of the Company’s non-performing loans) at December 31, 2014. 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, 2015, the Company’s originated non-performing commercial loans amounted to $224.0 million (71.8% of the Company’s non-performing loans), a 933.3% increase from $21.7 million at December 31, 2014 (19.9% of the Company’s non-performing loans). Most of this portfolio is collateralized by commercial real estate properties. During the first quarter of 2015, the Company placed its $200.0 million participation in the PREPA line of credit, which was previously classified as troubled-debt-restructuring, on non-accrual status. At June 30, 2015, the PREPA line of credit had an outstanding principal balance of $197.6 million.

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, 2015, the Company’s originated non-performing consumer loans totaled $1.5 million (0.5% of the Company’s non-performing loans), a 4.9% decrease from $1.6 million (1.5% of the Company’s non-performing loans) at December 31, 2014.

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, 2015, the Company’s originated non-performing auto loans and leases amounted to $8.6 million (2.8% of the Company’s total non-performing loans), a decrease of 0.9% from $8.7 million at December 31, 2014 (8.0% of the Company’s total non-performing loans).

·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, 2015, the Company’s acquired non-performing commercial lines of credit accounted for under ASC 310-20 amounted to $1.0 million (0.3% of the Company’s non-performing loans), a 11.8% decrease from $1.2 million at December 31, 2014 (1.1% 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, 2015, the Company’s acquired non-performing consumer lines of credit and credit cards accounted for under ASC 310-20 totaled $1.1 million (0.3% of the Company’s non-performing loans), a 27.2% decrease from $1.5 million at December 31, 2014 (1.4% 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, 2015, the Company’s acquired non-performing auto loans accounted for under ASC 310-20 totaled $1.3 million (0.4% of the Company’s non-performing loans), a 15.5% decrease from $1.5 million at December 31, 2014 (1.4% of the Company’s non-performing loans).

115

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 / interests 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.

116

TABLE 8 — ALLOWANCE FOR LOAN AND LEASE LOSSES SUMMARY
	Quarter Ended June 30,				Variance	Six-Month Period Ended June 30,				Variance
	2015		2014		%	2015		2014		%
	(Dollars in thousands)						(Dollars in thousands)
Non-covered loans
Originated and other loans:
Balance at beginning of period	$	76,759	$	49,507	55.0%	$	51,439	$	49,081	4.8%
Provision for non-covered         loan and lease losses		9,953		7,431	33.9%		43,864		13,056	236.0%
Charge-offs		(11,824)		(8,883)	33.1%		(24,042)		(15,999)	50.3%
Recoveries		4,101		2,583	58.8%		7,728		4,500	71.7%
		78,989		50,638	56.0%		78,989		50,638	56.0%
Acquired loans accounted for    under ASC 310-20:
Balance at beginning of period	$	5,450	$	3,618	50.6%	$	4,597	$	2,354	95.3%
Provision for non-covered         loan and lease losses		1,498		2,569	-41.7%		4,286		6,811	-37.1%
Charge-offs		(2,357)		(3,432)	-31.3%		(5,006)		(6,960)	-28.1%
Recoveries		938		689	36.1%		1,652		1,239	33.3%
		5,529		3,444	60.5%		5,529		3,444	60.5%
Acquired loans accounted for    under ASC 310-30:
Balance at beginning of period	$	14,166	$	3,058	363.2%	$	13,481	$	2,863	370.9%
Provision for non-covered         loan and lease losses		4,193		3,220	30.2%		4,878		3,415	42.8%
		18,359		6,278	192.4%		18,359		6,278	192.4%
Total non-covered loans balance   at end of period	$	102,877	$	60,360	70.4%	$	102,877	$	60,360	70.4%
Allowance for loans and lease       losses on originated and other       loans to:
Total originated loans		2.67%		1.92%	39.1%		2.67%		1.92%	39.1%
Non-performing originated loans		25.59%		56.53%	-54.7%		25.59%		56.53%	-54.7%
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		2.87%		1.05%	173.5%		2.87%		1.05%	173.5%
Non-performing acquired loans         accounted for under ASC 310-20		162.67%		76.88%	111.6%		162.67%		76.88%	111.6%
Covered loans
Balance at beginning of period	$	70,651	$	54,398	29.9%	$	64,245	$	52,729	21.8%
Provision for covered         loan and lease losses, net		(105)		1,595	-106.6%		4,704		3,224	45.9%
FDIC shared-loss portion on        (provision for) recapture of loan        and lease losses		906		3,522	-74.3%		2,503		3,562	-29.7%
Balance at end of period	$	71,452	$	59,515	20.1%	$	71,452	$	59,515	20.1%

117

TABLE 9 — ALLOWANCE FOR NON-COVERED LOAN AND LEASE LOSSES BREAKDOWN
		June 30, 2015	December 31, 2014		Variance %
	(Dollars in thousands)
Originated and other loans held for investment
Allowance balance:
Mortgage	$	18,076	$	19,679	-8.1%
Commercial		34,779		8,432	312.5%
Consumer		10,464		9,072	15.3%
Auto and leasing		15,064		14,255	5.7%
Unallocated allowance		606		1	60500.0%
Total allowance balance	$	78,989	$	51,439	53.6%
Allowance composition:
Mortgage		22.88%		38.26%	-40.2%
Commercial		44.03%		16.39%	168.6%
Consumer		13.25%		17.64%	-24.9%
Auto and leasing		19.07%		27.71%	-31.2%
Unallocated allowance		0.77%		0.00%	-1%
		100.00%		100.00%
Allowance coverage ratio at end of period applicable to:
Mortgage		2.39%		2.49%	-4.0%
Commercial		2.55%		0.65%	290.0%
Consumer		4.92%		4.86%	1.3%
Auto and leasing		2.42%		2.48%	-2.4%
Total allowance to total originated loans		2.67%		1.81%	47.7%
Allowance coverage ratio to non-performing loans:
Mortgage		24.25%		27.03%	-10.3%
Commercial		15.53%		38.89%	-60.1%
Consumer		692.06%		570.57%	21.3%
Auto and leasing		175.43%		164.46%	6.7%
Total		25.59%		49.11%	-47.9%
Acquired loans accounted for under ASC 310-20
Allowance balance:
Commercial	$	54	$	65	-16.9%
Consumer		2,616		1,211	116.0%
Auto		2,859		3,321	-13.9%
Total allowance balance	$	5,529	$	4,597	20.3%
Allowance composition:
Commercial		0.98%		1.41%	-30.5%
Consumer		47.31%		26.34%	79.6%
Auto		51.71%		72.25%	-28.4%
		100.00%		100.00%
Allowance coverage ratio at end of period applicable to:
Commercial		0.64%		0.51%	24.6%
Consumer		6.30%		2.67%	136.0%
Auto		2.01%		1.80%	11.6%
Total allowance to total acquired loans		2.87%		1.89%	51.7%
Allowance coverage ratio to non-performing loans:
Commercial		5.16%		5.48%	-5.8%
Consumer		243.35%		82.05%	196.6%
Auto		223.88%		219.64%	1.9%
Total		162.67%		219.64%	-25.9%

118

TABLE 9 — ALLOWANCE FOR NON-COVERED LOAN AND LEASE LOSSES BREAKDOWN (CONTINUED)
		June 30, 2015	December 31, 2014		Variance %
	(Dollars in thousands)
Acquired loans accounted for under ASC 310-30
Allowance balance:
Mortgage	$	473	$	-	100.0%
Commercial		14,940		13,476	10.9%
Consumer		84		5	1580.0%
Auto		2,862		-	100.0%
Total allowance balance	$	18,359	$	13,481	36.2%
Allowance composition:
Mortgage		2.58%		0.00%	100.0%
Commercial		81.38%		99.96%	-18.6%
Consumer		0.46%		0.04%	1133.6%
Auto		15.59%		0.00%	0%
		100.00%		100.00%	0.0%

119

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
	2015		2014		%		2015		2014	%
	(Dollar in thousands)
Originated and other loans and leases:
Mortgage
Charge-offs	$	(1,356)	$	(987)	37.4%	$	(2,770)	$	(2,201)	25.9%
Recoveries		67		88	-23.9%		67		236	100.0%
Total		(1,289)		(899)	43.4%		(2,703)		(1,965)	37.6%
Commercial
Charge-offs		(497)		(543)	-8.5%		(1,489)		(962)	54.8%
Recoveries		219		115	90.4%		309		213	45.1%
Total		(278)		(428)	-35.0%		(1,180)		(749)	57.5%
Consumer
Charge-offs		(2,309)		(1,397)	65.3%		(3,985)		(2,235)	78.3%
Recoveries		67		244	-72.5%		543		391	38.9%
Total		(2,242)		(1,153)	94.4%		(3,442)		(1,844)	86.7%
Auto
Charge-offs		(7,662)		(5,956)	28.6%		(15,798)		(10,601)	49.0%
Recoveries		3,425		2,136	60.3%		6,809		3,660	86.0%
Total		(4,237)		(3,820)	10.9%		(8,989)		(6,941)	29.5%
Net credit losses
Total charge-offs		(11,824)		(8,883)	33.1%		(24,042)		(15,999)	50.3%
Total recoveries		3,778		2,583	46.3%		7,728		4,500	71.7%
Total	$	(8,046)	$	(6,300)	27.7%	$	(16,314)	$	(11,499)	41.9%
Net credit losses to average     loans outstanding:
Mortgage		0.66%		0.46%	43.5%		0.69%		0.51%	35.3%
Commercial		0.08%		0.14%	-42.9%		0.18%		0.13%	38.5%
Consumer		4.66%		3.13%	48.9%		3.68%		2.68%	37.3%
Auto		2.74%		3.15%	-13.0%		2.96%		3.07%	-3.6%
Total		1.10%		0.96%	14.6%		1.13%		0.91%	24.2%
Recoveries to charge-offs		31.95%		29.08%	9.9%		32.14%		28.13%	14.3%
Average originated loans:
Mortgage	$	782,753	$	773,425	1.2%	$	785,029	$	763,400	2.8%
Commercial		1,333,276		1,209,346	10.2%		1,301,367		1,165,891	11.6%
Consumer		192,572		147,230	30.8%		187,049		137,787	35.8%
Auto		618,746		484,536	27.7%		606,819		451,488	34.4%
Total	$	2,927,347	$	2,614,537	12.0%	$	$2,880,264	$	2,518,566	14.4%

120

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
	2015		2014		%		2015		2014	%
	(Dollars in thousands)
Acquired loans accounted for under ASC 310-20:
Commercial
Charge-offs	$	(16)	$	(110)	-85.5%	$	(16)	$	(284)	-94.4%
Recoveries		7		30	100.0%		17		30	-
Total		(9)		(80)	-88.8%		1		(254)	-100.4%
Consumer
Charge-offs		(1,303)		(1,952)	-33.2%		(2,686)		(4,010)	-33.0%
Recoveries		429		124	246.0%		563		224	151.3%
Total		(874)		(1,828)	-52.2%		(2,123)		(3,786)	-43.9%
Auto
Charge-offs		(1,038)		(1,370)	-24.2%		(2,304)		(2,666)	-13.6%
Recoveries		502		535	-6.2%		17		985	-98.3%
Total		(536)		(835)	-35.8%		(2,287)		(1,681)	36.0%
Net credit losses
Total charge-offs		(2,357)		(3,432)	-31.3%		(5,006)		(6,960)	-28.1%
Total recoveries		938		689	36.1%		597		1,239	-51.8%
Total	$	(1,419)	$	(2,743)	-48.3%	$	(4,409)	$	(5,721)	-22.9%
Net credit losses to average     loans outstanding:
Commercial		5.10%		1.29%	296.1%		-0.2%		1.04%	-118.5%
Consumer		5.70%		10.96%	-48.1%		6.8%		11.09%	-38.65%
Auto		1.26%		1.34%	-5.5%		2.1%		1.27%	67.6%
Total		2.45%		3.22%	-23.7%		3.2%		2.99%	5.7%
Recoveries to charge-offs		39.80%		20.08%	98.2%		11.93%		17.80%	-33.0%
Average loans accounted for under ASC 310-20:
Commercial	$	706	$	24,855	-97.2%	$	1,039	$	48,868	-97.9%
Consumer		61,382		66,690	-8.0%		62,425		68,294	-8.6%
Auto		169,644		249,395	-32.0%		215,454		265,459	-18.8%
Total	$	231,732	$	340,940	-32.0%	$	278,918	$	382,621	-27.1%

121

TABLE 11 — NON-PERFORMING ASSETS
	June 30		December 31		Variance
	2015		2014		(%)
	(Dollars in thousands)
Non-performing assets:
Non-accruing loans
Troubled-Debt Restructuring loans	$	223,395	$	27,707	706.3%
Other loans		77,787		73,835	5.4%
Accruing loans
Troubled-Debt Restructuring loans		8,397		3,862	117.4%
Other loans		2,461		3,523	-30.1%
Total non-performing loans	$	312,040	$	108,927	186.5%
Foreclosed real estate not covered under the         shared-loss agreements with the FDIC		42,392		48,147	-12.0%
Other repossessed assets		14,470		21,043	-31.2%
	$	368,902	$	178,117	107.1%
Non-performing assets to total assets, excluding covered assets and acquired loans with deteriorated credit quality (including those by analogy)		6.35%		4.30%	47.8%
Non-performing assets to total capital		40.47%		18.90%	114.1%

	Quarter Ended June 30,				Six-Month Period June 30,
	2015		2014		2015		2014
	(In thousands)
Interest that would have been recorded in the period if the     loans had not been classified as non-accruing loans	$	890	$	723	$	1,597	$	1,213

122

TABLE 12 — NON-PERFORMING LOANS
	June 30,		December 31,		Variance
	2015		2014		%
	(Dollars in thousands)
Non-performing loans:
Originated and other loans held for investment
Mortgage	$	74,528	$	72,815	2.4%
Commercial		224,014		21,679	933.3%
Consumer		1,512		1,590	-4.9%
Auto and leasing		8,587		8,668	-0.9%
		308,641		104,752	194.6%
Acquired loans accounted for under ASC 310-20 (Loans with         revolving feature and/or acquired at a premium)
Commercial		1,047		1,187	-11.8%
Consumer		1,075		1,476	-27.2%
Auto		1,277		1,512	-15.5%
		3,399		4,175	-18.6%
Total	$	312,040	$	108,927	186.5%
Non-performing loans composition percentages:
Originated loans
Mortgage		23.9%		66.8%
Commercial		71.8%		19.9%
Consumer		0.5%		1.5%
Auto and leasing		2.8%		8.0%
Acquired loans accounted for under ASC 310-20 (Loans with         revolving feature and/or acquired at a premium)
Commercial		0.3%		1.1%
Consumer		0.3%		1.4%
Auto		0.4%		1.4%
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)		9.91%		3.53%	180.8%
Total assets, excluding covered assets and loans accounted for         under ASC 310-30 (including those by analogy)		5.37%		2.63%	104.4%
Total capital		34.23%		11.56%	196.1%
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)		1.09%		1.04%	4.39%
Non-performing loans		10.96%		29.42%	-62.8%
Other non-performing loans ratios:
Charge-off rate on non-performing loans to non-performing loans         on which charge-offs have been taken		59.28%		53.42%	11.0%
Allowance for loan and lease losses to non-performing         loans on which no charge-offs have been taken		30.42%		72.88%	-58.3%

123

FDIC Indemnification Asset

The Company recorded the FDIC indemnification asset, measured separately from the covered loans, as part of the Eurobank FDIC-assisted transaction. Based on the accounting guidance in ASC Topic 805, at each reporting date subsequent to the initial recording of the indemnification asset, the Company measures the indemnification asset on the same basis as the covered loans and assesses its collectability. The amount to be ultimately collected for the indemnification asset is dependent upon the performance of the underlying covered assets, the passage of time, claims submitted to the FDIC and the Corporation’s compliance with the terms of the loss sharing agreements. Refer to Note 6 to the consolidated financial statements for additional information on the FDIC loss share agreements.

On July 2, 2015, the Bank entered into an agreement with the FDIC pursuant to which the FDIC concurred with a proposed sale of a pool of shared loss assets under the commercial shared loss agreement.  Pursuant to such agreement, the FDIC agreed to pay the Bank up to $20 million in loss share coverage with respect to the aggregate loss resulting from any portfolio sale of such shared loss assets that may occur within 120 days of the agreement.

TABLE 13 - ACTIVITY OF FDIC INDEMNIFICATION ASSET
	Quarter Ended June 30,
	2015		2014
	(In thousands)
FDIC indemnification asset:
Balance at beginning of period	$	75,221	$	166,194
Shared-loss agreements reimbursements from the FDIC		(24,387)		(10,464)
Increase in expected credit losses to be       covered under shared-loss agreements, net		906		3,522
FDIC indemnification asset expense		(22,512)		(17,499)
Incurred expenses to be reimbursed under shared-loss agreements		(6,524)		1,907
Balance at end of period	$	22,704	$	143,660

TABLE 14 - ACTIVITY IN THE REMAINING FDIC INDEMNIFICATION ASSET DISCOUNT
	Quarter Ended June 30,
	2015		2014
	(In thousands)
Balance at beginning of period	$	4,755	$	60,023
Amortization of negative discount		(22,531)		(17,499)
Impact of lower projected losses		27,733		6,483
Balance at end of period	$	9,957	$	49,007

124

TABLE 15 - LIABILITIES SUMMARY AND COMPOSITION
		June 30,		December 31,
	2015		2014		Variance %
	(Dollars in thousands)
Deposits:
Non-interest bearing deposits	$	838,600	$	745,142	12.5%
NOW accounts		1,097,997		1,251,943	-12.3%
Savings and money market accounts		1,333,201		1,385,823	-3.8%
Certificates of deposit		1,478,629		1,539,752	-4.0%
Total deposits		4,748,427		4,922,660	-3.5%
Accrued interest payable		1,257		1,746	-28.0%
Total deposits and accrued interest payable		4,749,684		4,924,406	-3.5%
Borrowings:
Securities sold under agreements to repurchase		1,161,136		980,087	18.5%
Advances from FHLB		333,391		334,331	-0.3%
Other term notes		2,090		4,004	-47.8%
Subordinated capital notes		102,109		101,584	0.5%
Total borrowings		1,598,726		1,420,006	12.6%
Total deposits and borrowings		6,348,410		6,344,412	0.1%
Other Liabilities:
Derivative liabilities		8,739		11,221	-22.1%
Acceptances outstanding		16,040		17,989	-10.8%
Other liabilities		113,537		133,290	-14.8%
Total liabilities	$	6,486,726	$	6,506,912	-0.3%
Deposits portfolio composition percentages:
Non-interest bearing deposits		17.7%		15.1%
NOW accounts		23.1%		25.4%
Savings and money market accounts		28.1%		28.2%
Certificates of deposit		31.1%		31.3%
		100.0%		100.0%
Borrowings portfolio composition percentages:
Securities sold under agreements to repurchase		72.6%		69.0%
Advances from FHLB		20.9%		23.5%
Other term notes		0.1%		0.3%
Subordinated capital notes		6.4%		7.2%
		100.0%		100.0%
Securities sold under agreements to repurchase (excluding accrued interest)
Amount outstanding at period-end	$	1,158,944	$	977,816
Daily average outstanding balance	$	982,862	$	1,041,378
Maximum outstanding balance at any month-end	$	1,166,445	$	1,149,167

125

Liabilities and Funding Sources

As shown in Table 15 above, at June 30, 2015, the Company’s total liabilities were $6.487 billion, 0.3% less than the $6.507 billion reported at December 31, 2014. Deposits and borrowings, the Company’s funding sources, amounted to $6.348 billion at June 30, 2015 versus $6.344 billion at December 31, 2014, a 0.1% decrease.

At June 30, 2015, deposits represented 75% and borrowings represented 25% of interest-bearing liabilities. At June 30, 2015, deposits, the largest category of the Company’s interest-bearing liabilities, were $4.750 billion, a decrease of 3.5% from $4.924 billion at December 31, 2014. Demand and savings deposits decreased 3.3% to $3.270 billion, brokered deposits declined 2.3% to $605.4 million and higher-priced time deposits declined 5.7% to $957.2 million as part of our efforts to reduce the cost of deposits, which averaged 0.66% at December 31, 2014, to 0.68% at June 30, 2015.

Borrowings consist mainly of repurchase agreements, FHLB-NY advances and subordinated capital notes. At June 30, 2015, borrowings amounted to $1.599 billion, representing an increase of 12.6% when compared with the $1.420 billion reported at December 31, 2014. Repurchase agreements as of June 30, 2015 increased $181.0 million to $1.161 billion from $980.1 million at December 31, 2014, as the Company entered into new three month short-term repurchase agreements.

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 $333.4 million as of June 30, 2015 and $334.3 million as of December 31, 2014. These advances mature from July 2015 through 2020.

Stockholders’ Equity

At June 30, 2015, the Company’s total stockholders’ equity was $911.6 million, a 3.25% decrease when compared to $942.2 million at December 31, 2014. This decline in stockholders’ equity reflects decreases in retained earnings by $21.4 million, in accumulated comprehensive income by $5.4 million and in treasury stock by $3.6 million, which in turn reflects the net loss and dividends declared for the period. Book value per share was $16.81 at June 30, 2015 compared to $17.40 at December 31, 2014.

From December 31, 2014 to June 30, 2015, tangible common equity to total assets decreased to 8.80% from 9.14%, Tier 1 Leverage Capital Ratio increased to 11.05% from 10.61%, Tier 1 Risk-Based Capital Ratio decreased to 15.85% from 16.02%, and Total Risk-Based Capital Ratio decreased to 17.41% from 17.57%. Common Equity Tier 1 Capital Ratio under the new capital rules was 12.26% as of June 30, 2015.

New Capital Rules to Implement Basel III Capital Requirements

In July 2013, the Board of Governors of the Federal Reserve System (the “Board”), the Office of the Comptroller of the Currency (the “OCC”) and the FDIC (together with the Board and the OCC, the “Agencies”) approved new rules (“New Capital Rules”) to establish a revised comprehensive regulatory capital framework for all U.S. banking organizations. The New Capital Rules generally implement the Basel Committee on Banking Supervision’s (the “Basel Committee”) December 2010 final capital framework referred to as “Basel III” for strengthening international capital standards. The New Capital Rules substantially revise the risk-based capital requirements applicable to bank holding companies and their depository institution subsidiaries, including the Company and the Bank, as compared to the current U.S. general risk-based capital rules. The New Capital Rules revise the definitions and the components of regulatory capital, as well as address other issues affecting the numerator in banking institutions’ regulatory capital ratios. The New Capital Rules also address asset risk weights and other matters affecting the denominator in banking institutions’ regulatory capital ratios and replace the existing general risk-weighting approach, which was derived from the Basel Committee’s 1988 “Basel I” capital accords, with a more risk-sensitive approach based, in part, on the “standardized approach” in the Basel Committee’s 2004 “Basel II” capital accords. In addition, the New Capital Rules implement certain provisions of Dodd-Frank Act, including the requirements of Section 939A to remove references to credit ratings from the federal agencies’ rules. The New Capital Rules became effective for the Company and the Bank on January 1, 2015, subject to phase-in periods for certain of their components and other provisions. Among other matters, the New Capital Rules: (i) introduce a new capital measure called “Common Equity Tier 1” (“CET1”) and related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to existing regulations. Under the New Capital Rules, for most banking organizations, including the Company, the most common form of Additional Tier 1 capital is noncumulative perpetual preferred stock and the most common

126

form of Tier 2 capital is subordinated notes and a portion of the allocation for loan and lease losses, in each case, subject to the New Capital Rules’ specific requirements.

Pursuant to the New Capital Rules, the minimum capital ratios as of January 1, 2015 were as follows:

•4.5% CET1 to risk-weighted assets;

•6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets;

•8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and

•4% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the “leverage ratio”).

The New Capital Rules also introduce a new 2.5% “capital conservation buffer”, composed entirely of CET1, on top of the three minimum risk-weighted asset ratios. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the capital conservation buffer will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall. Thus, when fully phased-in on January 1, 2019, the Company and the Bank will be required to maintain an additional capital conservation buffer of 2.5% of CET1, effectively resulting in minimum ratios of (i) CET1 to risk-weighted assets of at least 7%, (ii) Tier 1 capital to risk-weighted assets of at least 8.5%, and (iii) Total capital to risk-weighted assets of at least 10.5%.

The New Capital Rules provide for a number of deductions from and adjustments to CET1. These include, for example, the requirement that mortgage servicing rights, deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks and significant investments in non-consolidated financial entities be deducted from CET1 to the extent that any one such category exceeds 10% of CET1 or all such items, in the aggregate, exceed 15% of CET1.

In addition (as noted above), under the current general risk-based capital rules, the effects of AOCI items included in shareholders’ equity (for example, mark-to-market adjustments to the value of securities held in the available for sale portfolio) under U.S. GAAP are reversed for the purposes of determining regulatory capital ratios. Pursuant to the New Capital Rules, the effects of certain AOCI items are not excluded; however, non-advanced approach banking organizations may make a one-time permanent election to continue to exclude these items. The Company and the Bank made the election to continue to exclude these items in order to avoid significant variations in the level of capital depending upon the impact of interest rate fluctuations on the fair value of their securities portfolio, concurrently with the first filing of the Company’s and Oriental Bank’s periodic regulatory reports in the beginning of 2015. The New Capital Rules also preclude certain hybrid securities, such as trust preferred securities, from inclusion in bank holding companies’ Tier 1 capital, subject to phase-out, in the case of bank holding companies that had $15 billion or more in total consolidated assets as of December 31, 2009. Therefore, the Company is permitted to continue to include its existing trust preferred securities as Tier 1 capital.

Implementation of the deductions and other adjustments to CET1 began on January 1, 2015 and will be phased-in over a 4-year period (beginning at 40% on January 1, 2015 and an additional 20% per year thereafter). The implementation of the capital conservation buffer will begin on January 1, 2016 at the 0.625% level and increase by 0.625% on each subsequent January 1, until it reaches 2.5% on January 1, 2019.

With respect to the Bank, the New Capital Rules revise the “prompt corrective action” (“PCA”) regulations adopted pursuant to Section 38 of the Federal Deposit Insurance Act by: (i) introducing a CET1 ratio requirement at each PCA category (other than critically undercapitalized), with the required CET1 ratio being 6.5% for well-capitalized status; (ii) increasing the minimum Tier 1 capital ratio requirement for each category, with the minimum Tier 1 capital ratio for well-capitalized status being 8% (as compared to the current 6%); and (iii) eliminating the current provision that provides that a bank with a composite supervisory rating of 1 may have a 3% leverage ratio and still be adequately capitalized. The New Capital Rules do not change the total risk-based capital requirement for any PCA category.

The New Capital Rules prescribe a new standardized approach for risk weightings that expand the risk-weighting categories from the current four Basel I-derived categories (0%, 20%, 50% and 100%) to a larger and more risk-sensitive number of categories, depending on the nature of the assets, and resulting in higher risk weights for a variety of asset classes.

127

The following are the consolidated capital ratios of the Company under the New Capital Rules at June 30, 2015 and December 31, 2014:

TABLE 16 — CAPITAL, DIVIDENDS AND STOCK DATA
	June 30,		December 31,		Variance
	2015		2014		%
	(Dollars in thousands, except per share data)
Capital data:
Stockholders’ equity	$	911,599	$	942,197	-3.2%
Regulatory Capital Ratios data:
Common equity tier 1 capital ratio		12.26%		N/A	N/A
Minimum common equity tier 1 capital ratio required		4.50%		N/A	N/A
Actual common equity tier 1 capital	$	611,541		N/A	N/A
Minimum common equity tier 1 capital required	$	224,494		N/A	N/A
Excess over regulatory requirement	$	387,047		N/A	N/A
Risk-weighted assets	$	4,988,754		N/A	N/A
Tier 1 risk-based capital ratio		15.85%		16.02%	-1.1%
Minimum tier 1 risk-based capital ratio required		6.00%		4.00%
Actual tier 1 risk-based capital	$	790,936	$	776,525	1.9%
Minimum tier 1 risk-based capital required	$	299,325	$	193,886	54.4%
Excess over regulatory requirement	$	491,611	$	582,639	-15.6%
Risk-weighted assets	$	4,988,754	$	4,847,150	2.9%
Total risk-based capital ratio		17.41%		17.57%	-0.9%
Minimum total risk-based capital ratio required		8.00%		8.00%
Actual total risk-based capital	$	868,568	$	851,437	2.0%
Minimum total risk-based capital required	$	399,100	$	387,772	2.9%
Excess over regulatory requirement	$	469,468	$	463,665	1.3%
Risk-weighted assets	$	4,988,754	$	4,847,150	2.9%
Leverage capital ratio		11.05%		10.61%	4.1%
Minimum leverage capital ratio required		4.00%		4.00%
Actual tier 1 capital	$	790,936	$	776,525	1.9%
Minimum tier 1 capital required	$	286,262	$	292,738	-2.2%
Excess over regulatory requirement	$	504,674	$	483,787	4.3%
Tangible common equity to total assets		8.80%		9.14%	-3.7%
Tangible common equity to risk-weighted assets		13.05%		14.04%	-7.1%
Total equity to total assets		12.32%		12.65%	-2.6%
Total equity to risk-weighted assets		18.27%		19.44%	-6.0%
Stock data:
Outstanding common shares		44,367,909		44,613,615	-0.6%
Book value per common share	$	16.81	$	17.40	-3.4%
Tangible book value per common share	$	14.67	$	15.25	-3.8%
Market price at end of period	$	10.67	$	16.65	-35.9%
Market capitalization at end of period	$	473,406	$	742,817	-36.3%

128

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, 2015 and December 31, 2014:

	June 30,		December 31,
	2015		2014
		(In thousands, except share or per share information)
Total stockholders' equity	$	911,599	$	942,197
Preferred stock		(176,000)		(176,000)
Preferred stock issuance costs		10,130		10,130
Goodwill		(86,069)		(86,069)
Core deposit intangible		(5,878)		(6,463)
Customer relationship intangible		(2,912)		(3,280)
Total tangible common equity	$	650,870	$	680,515
Total assets		7,398,325		7,449,109
Goodwill		(86,069)		(86,069)
Core deposit intangible		(5,878)		(6,463)
Customer relationship intangible		(2,912)		(3,280)
Total tangible assets	$	7,303,466	$	7,353,297
Tangible common equity to tangible assets		8.91%		9.25%
Common shares outstanding at end of period		44,367,909		44,613,615
Tangible book value per common share	$	14.67	$	15.25

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.

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.

129

The following table presents the Company’s capital adequacy information under the New Capital Rules at June 30:

	June 30
	2015
	(Dollars in thousands)
Risk-based capital:
Common equity tier 1 capital	$	611,541
Additional tier 1 capital		179,395
Tier 1 capital		790,936
Additional Tier 2 capital		77,632
Total risk-based capital	$	868,568
Risk-weighted assets:
Balance sheet items	$	4,943,632
Off-balance sheet items		45,123
Total risk-weighted assets	$	4,988,754
Ratios:
Common equity tier 1 capital (minimum required - 4.5%)		12.26%
Tier 1 capital (minimum required - 6%)		15.85%
Total capital (minimum required - 8%)		17.41%
Leverage ratio		11.05%
Equity to assets		12.32%
Tangible common equity to assets		8.80%

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, 2015 and December 31, 2014:

	June 30		December 31		Variance
	2015		2014		%
	(Dollars in thousands)
Oriental Bank Regulatory Capital Ratios:
Common Equity Tier 1 Capital to Risk-Weighted Assets		14.93%		N/A	N/A
Actual common equity tier 1 capital	$	742,098		N/A	N/A
Minimum capital requirement (4.5%)	$	223,715		N/A	N/A
Minimum to be well capitalized (6.5%)	$	323,144		N/A	N/A
Tier 1 Capital to Risk-Weighted Assets		14.93%		15.45%	-3.4%
Actual tier 1 risk-based capital	$	742,098	$	746,524	-0.6%
Minimum capital requirement (6%)	$	298,287	$	193,222	54.4%
Minimum to be well capitalized (8%)	$	397,716	$	289,833	37.2%
Total Capital to Risk-Weighted Assets		16.48%		16.99%	-3.0%
Actual total risk-based capital	$	819,436	$	820,884	-0.2%
Minimum capital requirement (8%)	$	397,716	$	386,444	2.9%
Minimum to be well capitalized (10%)	$	497,145	$	483,055	2.9%
Total Tier 1 Capital to Average Total Assets		10.44%		10.26%	1.8%
Actual tier 1 capital	$	742,098	$	746,177	-0.5%
Minimum capital requirement (4%)	$	284,228	$	290,879	-2.3%
Minimum to be well capitalized (5%)	$	355,285	$	363,599	-2.3%

130

The Company’s common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “OFG.” At June 30, 2015 and December 31, 2014, the Company’s market capitalization for its outstanding common stock was $473.4 million ($10.67 per share) and $742.8 million ($16.65 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
2015
June 30, 2015	$	17.04	$	10.67	$	0.10
March 31, 2015	$	17.70	$	14.88	$	0.10
2014
December 31, 2014	$	16.76	$	14.35	$	0.10
September 30, 2014	$	18.89	$	14.92	$	0.08
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

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 $12.4 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, 2015 the Company purchased 303,985 shares under this program for a total of $4.2 million, at an average price of $13.9 per share. There were no repurchases during the six-month period ended June 30, 2014.

The number of shares that may yet be purchased under the $70 million program is estimated at 1,164,671 and was calculated by dividing the remaining balance of $12.4 million by $10.67 (closing price of the Company common stock at June 30, 2015). The Company did not purchase any shares of its common stock during the six-month periods ended June 30, 2015, or during the six-month periods ended June 30, 2014, other than through its publicly announced stock repurchase program.

131

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”) and implemented by management through the adoption of a risk management program, which is overseen and monitored by the Chief Risk Officer and the Risk Management 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 risk to 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 executing 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 quarterly 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 five-year time horizon, assuming certain gradual upward and downward interest rate movements, achieved during a twelve-month period. Instantaneous interest rate movements are also modeled. 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.

132

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, 2015 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	$	7,405	2.11%	$	8,239	2.31%
+ 100 Basis points	$	3,926	1.12%	$	4,341	1.22%
- 50 Basis points	$	(1,932)	-0.55%	$	(1,997)	-0.56%

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, 2015.

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 8 to the accompanying unaudited consolidated financial statements for further information concerning the Company’s derivative activities.

133

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 $6.5 million (notional amount of $263.7 million) was recognized at June 30, 2015 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, 2015, interest rate swaps offered to clients not designated as hedging instruments represented a derivative asset of $2.2 million (notional amounts of $16.4 million), and the mirror-image interest rate swaps in which BBVAPR entered into represented a derivative liability of $2.2 million (notional amounts of $16.4 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, 2015, 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 $2.1 million (notional amounts of $5.0 million) and the options sold to customers embedded in the certificates of deposit represented a liability of $2.0 million (notional amount of $4.8 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, 2015, the Company had $263.7 million in interest rate swaps at an average rate of 2.6% designated as cash flow hedges for $263.7 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.

134

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, 2015, the Company had $1.159 billion in repurchase agreements, excluding accrued interests, and $605.4 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, 2015, the Company had approximately $553.5 million in unrestricted cash and cash equivalents, $221.7 million in investment securities that are not pledged as collateral, $620.0 million in borrowing capacity at the FHLB-NY and $699.1 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.

135

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 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 Regulatory Compliance Director who reports to the Deputy General Counsel and the BSA Officer who reports to the Chief Risk Officer. The Regulatory Compliance Director is responsible for the oversight of regulatory compliance and implementation of a company-wide compliance program, except for the Bank Secrecy Act/ Anti-Money Laundering compliance program, which is overseen and implemented by the BSA Officer.

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, 2015, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

136

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, 2014. 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 are exposed to credit and concentration risks in connection with our credit facilities to the government of Puerto Rico, including some of its public corporations, instrumentalities and municipalities, and any credit default on their debt obligations or a further deterioration of the Puerto Rico economy could adversely and materially affect our financial condition and results of operations. 

The Commonwealth of Puerto Rico and its instrumentalities, municipalities and public corporations face severe economic and fiscal challenges that, either individually or in the aggregate, could adversely affect the Commonwealth’s ability to fund or otherwise maintain all necessary government programs and services, and have already caused one of its public corporations, the Public Finance Corporation, to default on a payment due to its bondholders.  Further, the Commonwealth’s liquidity has been significantly reduced and it no longer has access to capital markets.  In June 2015, the Governor issued a public announcement that the Commonwealth will be unable to pay its debts absent a restructuring.  Moreover, the government has enacted legislation that casts significant doubt with respect to whether it will continue making debt payments throughout fiscal year 2016, including a budget that does not appropriate funds needed for debt service payments by certain public corporations and a law that allows the Puerto Rico Treasury Secretary to discontinue funding the debt service reserve for the Commonwealth’s general obligation debt unless the Commonwealth or Government Development Bank for Puerto Rico obtain financing from the capital markets in the current fiscal year ending June 30, 2016.

The Commonwealth’s ability to finance its budget deficits is very limited.  If the government is unable to access the capital markets to place new debt or refinance its upcoming maturities, the government may have to continue implementing additional austerity measures, including reducing spending, imposing new taxes, and taking emergency or extraordinary actions, including a debt restructuring or a default or moratorium on debt-service payments, which would slow Puerto Rico’s weak economy even further.  The Commonwealth may also have to reduce or eliminate important government programs and services in order to attempt to balance its budget and comply with its debt obligations. 

It is uncertain how Puerto Rico’s business, political and social sectors would react to a significant reduction or elimination of such programs and services.  It is also uncertain whether Puerto Rico’s government, including some of its municipalities, instrumentalities and public corporations, will be able to continue to service their debts as they become due.  Any further deterioration of economic or fiscal conditions in Puerto Rico could adversely and materially affect the value of our credit facilities to the government of Puerto Rico and our investment portfolio of Puerto Rico government bonds.

On February 5, 2015, Dr. Anne O. Krueger, Dr. Ranjit S. Teja and Dr. Andrew Wolfe (the “Former IMF economists”), each of whom has previously occupied senior executive positions at the International Monetary Fund (“IMF”), were engaged to analyze the Commonwealth’s economic and financial stability and growth prospects.

137

Their final report was delivered to the Governor of Puerto Rico on June 28, 2015 and was made public on that date.

The report from the Former IMF economists (the “Krueger Report”) states that Puerto Rico faces an acute crisis in the face of faltering economic activity, fiscal solvency and debt sustainability, and institutional credibility.

At June 30, 2015, we had approximately $515.3 million of outstanding credit facilities to the government of Puerto Rico, including its instrumentalities, municipalities and public corporations.  We do not have any credit facilities to the Public Finance Corporation.  A substantial portion of our credit exposure to Puerto Rico’s government consists of collateralized loans or obligations that have a specific source of income or revenues identified for their repayment.  Approximately $214 million of these loans are general obligation debt of municipalities secured by ad valorem taxation, without limitation as to rate or amount, on all taxable property within the issuing municipalities.  The good faith, credit and unlimited taxing power of each issuing municipality are pledged for the payment of its general obligation debt. 

In addition, 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 State Insurance Fund Corporation.  The Commonwealth’s instrumentalities or public corporations have varying degrees of independence from the central government.  Some instrumentalities or public corporations that provide essential or important government services, such as the University of Puerto Rico, the Puerto Rico Medical Services Administration and the Puerto Rico Metropolitan Bus Authority, are supported by the Commonwealth through budget appropriations, while others, such as PREPA, are owed substantial amounts for utility services rendered to the Commonwealth.  It is uncertain whether any such instrumentalities or public corporations will continue to receive government support or whether they will be able to collect amounts owed by the Commonwealth or its instrumentalities.

At June 30, 2015, we had approximately $301.3 million of credit facilities to public corporations of the Commonwealth, including:

·PREPA with an outstanding balance of $197.6 million;

·The State Insurance Fund Corporation with an outstanding balance of $77.6 million, which is approximately 130% collateralized by a portfolio of A-plus rated securities; and

·The Puerto Rico Housing Finance Authority with an outstanding balance of $25.2 million to be repaid from abandoned or unclaimed funds at financial institutions that revert to the government under a Puerto Rico escheat law.

The outstanding balance of credit facilities to public corporations decreased during the second quarter as a result of a repayment in full by the Puerto Rico Aqueduct and Sewer Authority of a $75 million loan.

Our banking subsidiary, Oriental Bank, is part of a four bank syndicate providing a $550 million revolving line of credit to finance the purchase of fuel for PREPA’s day-to-day power generation activities.  Our participation in the line of credit has an unpaid principal balance of $197.6 million as of June 30, 2015.  We, as part of the bank syndicate, entered into a forbearance agreement with PREPA, which has been extended several times, most recently until September 15, 2015.  In connection with such extensions, PREPA appointed a Chief Restructuring Officer to work alongside the Executive Director to develop, organize and manage a financial and operational restructuring of PREPA subject to the approval of PREPA’s Board of Directors.  PREPA also has been in negotiations with its forbearing creditors to restructure its debts and obtain financing for capital improvements needed to its infrastructure.  There can be no assurance that PREPA and its forbearing creditors will agree on any restructuring.  As previously disclosed, we have classified our credit facility to PREPA as substandard and on non-accrual status. We also took a $24 million provision for loan and lease losses against such credit during the first quarter of 2015.

PREPA’s enabling act provides for local receivership upon request to any Puerto Rico court of competent jurisdiction in the event of a default in debt-service payments or other obligations in connection with PREPA’s bonds.  The receiver so appointed would be empowered, directly or through its agents and attorneys, to take possession of the undertakings, income and revenues pledged to the payment of the bonds in default; to have, hold, use, operate, manage and control the same; and to exercise all of PREPA’s rights and powers with respect to such undertakings.  However, any such receiver would not have the power to sell, assign, mortgage or otherwise dispose of PREPA’s assets, and its powers would be limited to the operation and maintenance of such undertakings and the

138

collection and application of the income and revenues therefrom. These provisions have not been tested in the courts, and it is not clear if and how they would apply in connection with other debts and obligations of PREPA upon an event of default.

In June 2014, Puerto Rico enacted the Puerto Rico Public Corporation Debt Enforcement and Recovery Act (the “Recovery Act”), which established procedures for the adjustment of debts of certain public corporations of the Commonwealth, which, as Puerto Rico governmental instrumentalities, are not currently eligible for federal bankruptcy relief under any chapter of the U.S. Bankruptcy Code.  The Recovery Act states in its preamble that it further promotes the government’s public policy of no longer providing financial support to such public corporations, such as PREPA and PRASA, and promoting their economic independence.  In February 2015, the U.S. District Court for the District of Puerto Rico held that the Recovery Act is preempted by the U.S. Bankruptcy Code and is therefore void pursuant to the Supremacy Clause of the United States Constitution.  It also permanently enjoined the Commonwealth from enforcing the Recovery Act.  Such decision was confirmed by the U.S. Circuit Court of Appeals for the First Circuit on July 6, 2015.  However, the Commonwealth has declared its intent to file an appeal before the U.S. Supreme Court.

On February 11, 2015, Puerto Rico’s non-voting representative to the U.S. House of Representatives introduced a bill (H.R. 870) that would empower the government of Puerto Rico to authorize its municipalities and public corporations to restructure their debts under Chapter 9 of the U.S. Bankruptcy Code.  Such bill has been referred to the Subcommittee on Regulatory Reform, Commercial and Antitrust Law.  On July 15, 2015, an identical companion bill (S. 1774) was filed by 12 senators in the U.S. Senate.  It is unclear if and when any of these bills will be approved and, if approved, whether they will have retroactive effect for debts that are currently outstanding. 

If the Bank’s Puerto Rico government debtors are unable to pay their obligations as they become due, or under certain other circumstances, including, for example, a debt restructuring or a moratorium on debt-service payments by such debtors, we may be required to adversely classify additional credit facilities to such Puerto Rico government debtors and provision for additional losses in connection therewith.  Any such additional adverse classification or provision may significantly affect our financial condition and regulatory capital ratios.

We are subject to extensive regulatory oversight by federal and local banking authorities.

We are subject to extensive supervision, regulation and examination by the FDIC, the Federal Reserve Board and the Office of the Commissioner of Financial Institutions of Puerto Rico.  As a result, we are limited in the manner in which we conduct our business, undertake new investments and activities, and obtain financing.  This regulatory structure is designed primarily for the protection of the Deposit Insurance Fund and our depositors, and not to benefit our stockholders.  This regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement actions and examination policies, including policies with respect to capital levels, the timing and amount of dividend payments, the classification of assets, the establishment of adequate loan loss reserves for regulatory purposes, and the timing and amounts of assessments and fees.  Also, any changes to such regulatory structure, including changes in interpretation or implementation of laws, regulations or policies, could affect us in substantial and unpredictable ways.

In addition, we must comply with significant anti-money laundering and anti-terrorism laws and regulations, Community Reinvestment Act laws and regulations, and consumer financial protection laws and regulations.  Government agencies have the authority to impose monetary penalties and other sanctions or restrictions on institutions that fail to comply with these laws and regulations, which could significantly affect our business activities, including our ability to acquire other financial institutions or expand our branch network.

139

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

On June 29, 2011, the Company announced the approval by the Board of Directors of a stock repurchase program to purchase an additional $70 million of the Company’s common stock in the open market.

Any shares of common stock repurchased are held by the Company as treasury shares. The Company records treasury stock purchases under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock. During the quarter ended June 30, 2015, the Company purchased 303,985 additional shares under this program for a total of $4.2 million, at an average price of $13.9 per share.

The following table presents the shares repurchased for each month during the quarter ended June 30, 2015:

				Total number of		Maximum approximate
				shares purchased		dollar value of shares
	Total number of	Average price paid		as part of publicly		that may yet be purchased
Period	shares purchased	per share		announced programs		under the programs
						(In thousands)
April 1-30, 2015	204,338	$	14.38	204,338	$	13,717
May 1-31, 2015	48,200		13.09	48,200		13,086
June 1-30, 2015	51,447		12.81	51,447		12,427
Quarter ended June 30, 2015	303,985	$	13.90	303,985	$	12,427

The number of shares that may yet be purchased under the current $70 million program is estimated at 1,164,671 and was calculated by dividing the remaining balance of $12.4 million by $10.67 (closing price of the Company’s common stock at June 30, 2015). The Company did not purchase any shares of its common stock other than through its publicly announced stock repurchase program during the quarter ended June 30, 2015.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.     MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.     OTHER INFORMATION

None.

140

ITEM 6.     EXHIBITS 

Exhibit No.Description of Document:

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 June 30, 2015, 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.

141

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 10, 2015
	José Rafael Fernández
	President and Chief Executive Officer
By:	/s/ Ganesh Kumar	Date: August 10, 2015
	Ganesh Kumar
	Executive Vice President and Chief Financial Officer
By:	/s/ Maritza Arizmendi	Date: August 10, 2015
	Maritza Arizmendi
	Senior Vice President and Chief Accounting Officer

142

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 10, 2015

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 10, 2015

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, 2015, 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 10th day of August, 2015.

                                                                                                                      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, 2015, 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 10th day of August, 2015.

By:         /s/ Ganesh Kumar

               Ganesh Kumar

Executive Vice President and Chief Financial Officer

XML

Deposits and Related Interest (Tables)

6 Months Ended

Jun. 30, 2015

Deposits, by Component, Alternative [Abstract]

Deposits By Component [Table Text Block]

Total deposits, including related accrued interest payable, as of June 30, 2015 and December 31, 2014consist of the following:

	June 30,		December 31,
	2015		2014
	(In thousands)
Non-interest bearing demand deposits	$	838,600	$	745,142
Interest-bearing savings and demand deposits		2,348,478		2,544,665
Individual retirement accounts		276,185		303,049
Retail certificates of deposit		447,115		452,150
Institutional certificates of deposit		233,945		260,090
Total core deposits		4,144,323		4,305,096
Brokered deposits		605,361		619,310
Total deposits	$	4,749,684	$	4,924,406

Interest Expense Domestic Deposit Liabilities [Table Text Block]

Interest expense for the quarters and six-month periods endedJune 30, 2015 and 2014 was as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2015		2014		2015		2014
	(In thousands)				(In thousands)
Demand and savings deposits	$	3,100	$	4,804	$	6,482	$	9,832
Certificates of deposit		3,504		4,361		7,226		8,311
	$	6,604	$	9,165	$	13,708	$	18,143

Maturities Of Time Deposits [Table Text Block]

Excluding equity indexed options in the amount of $2.0million, which are used by the Company to manage its exposure to the S&P 500 Index, and also excluding accrued interest of $1.2million and unamortized deposit discount in the amount of $442thousand, the scheduled maturities of certificates of deposit at June 30, 2015are as follows:

	June 30, 2015
	(In thousands)
Within one year:
Three (3) months or less	$	304,391
Over 3 months through 1 year		637,132
		941,523
Over 1 through 2 years		358,217
Over 2 through 3 years		123,227
Over 3 through 4 years		11,660
Over 4 through 5 years		41,100
	$	1,475,727

XML

Stockholders' Equity (Common shares held in treasury, activity) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Stockholders' Equity Note [Abstract]
Beginning of period	8,012,254	7,030,101
Common shares used for exercise of restricted stock units (Shares)	(58,279)	(30,552)
Common shares repurchased as part of the stock repurchase program (Shares)	303,985	707,400
End of period	8,257,960	7,706,949
Beginning of period	$ 97,070	$ 80,642
Common shares used for exercise of restricted stock units (Value)	(640)	(323)
Stock purchased under the repurchase program	4,238	10,393
End of period	$ 100,668	$ 90,712

XML

Investment Securities (Investment securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Schedule of Investments [Line Items]
Available for sale Amortized Cost	$ 1,023,573	$ 1,187,679
Available-for-sale Securities, Gross Unrealized Gains	31,118	38,490
Available-for-sale Securities, Gross Unrealized Losses	10,372	9,631
Available-for-sale Securities	$ 1,044,319	$ 1,216,538
Available for sale - Weighted Average Yield	2.87%	2.96%
Held-to-maturity, Amortized cost	$ 550,553	$ 162,752
Held to maturity Securities Unrecognized Gains	984	1,402
Held-to-maturity Securities, Unrecognized Loss	3,761	0
Held to maturity Fair Value	$ 547,776	$ 164,154
Held to maturity - Weighted Average Yield	2.20%	2.48%
Total Securities - Amortized Cost	$ 1,574,126	$ 1,350,431
Total Securities Gross Unrealized Gains	32,102	39,892
Total Securities Gross Unrealized Losses	14,133	9,631
Total Securities Fair Value	$ 1,592,095	$ 1,380,692
Marketable Securities Weighted Average Yield	2.64%	2.90%
Collateralized Mortgage Backed Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	$ 993,636	$ 1,156,455
Available-for-sale Securities, Gross Unrealized Gains	30,970	38,300
Available-for-sale Securities, Gross Unrealized Losses	4,113	4,364
Available-for-sale Securities	$ 1,020,493	$ 1,190,391
Available for sale - Weighted Average Yield	2.83%	2.92%
Held-to-maturity, Amortized cost	$ 525,504
Held to maturity Securities Unrecognized Gains	978
Held-to-maturity Securities, Unrecognized Loss	3,757
Held to maturity Fair Value	$ 522,725
Held to maturity - Weighted Average Yield	2.28%
Collateralized Mortgage Backed Securities [Member] | FNMA and FHLMC [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	$ 832,127	$ 972,836
Available-for-sale Securities, Gross Unrealized Gains	30,638	37,876
Available-for-sale Securities, Gross Unrealized Losses	1,192	1,203
Available-for-sale Securities	$ 861,573	$ 1,009,509
Available for sale - Weighted Average Yield	3.01%	3.12%
Held-to-maturity, Amortized cost	$ 525,504	$ 162,752
Held to maturity Securities Unrecognized Gains	978	1,402
Held-to-maturity Securities, Unrecognized Loss	3,757	0
Held to maturity Fair Value	$ 522,725	$ 164,154
Held to maturity - Weighted Average Yield	2.28%	2.48%
Collateralized Mortgage Backed Securities [Member] | GNMA [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	$ 3,625	$ 4,473
Available-for-sale Securities, Gross Unrealized Gains	249	288
Available-for-sale Securities, Gross Unrealized Losses	0	8
Available-for-sale Securities	$ 3,874	$ 4,753
Available for sale - Weighted Average Yield	5.03%	4.94%
Collateralized Mortgage Backed Securities [Member] | CMO's [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	$ 157,884	$ 179,146
Available-for-sale Securities, Gross Unrealized Gains	83	136
Available-for-sale Securities, Gross Unrealized Losses	2,921	3,153
Available-for-sale Securities	$ 155,046	$ 176,129
Available for sale - Weighted Average Yield	1.83%	1.81%
Securities Investment [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	$ 29,937	$ 31,224
Available-for-sale Securities, Gross Unrealized Gains	148	190
Available-for-sale Securities, Gross Unrealized Losses	6,259	5,267
Available-for-sale Securities	$ 23,826	$ 26,147
Available for sale - Weighted Average Yield	4.35%	4.23%
Held-to-maturity, Amortized cost	$ 25,049
Held to maturity Securities Unrecognized Gains	6
Held-to-maturity Securities, Unrecognized Loss	4
Held to maturity Fair Value	$ 25,051
Held to maturity - Weighted Average Yield	0.49%
Securities Investment [Member] | US Treasury Securities [Member]
Schedule of Investments [Line Items]
Held-to-maturity, Amortized cost	$ 25,049
Held to maturity Securities Unrecognized Gains	6
Held-to-maturity Securities, Unrecognized Loss	4
Held to maturity Fair Value	$ 25,051
Held to maturity - Weighted Average Yield	0.49%
Securities Investment [Member] | Obligation of US Government sponsored agencies at loss [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	$ 6,114	$ 7,148
Available-for-sale Securities, Gross Unrealized Gains	14	33
Available-for-sale Securities, Gross Unrealized Losses	0	0
Available-for-sale Securities	$ 6,128	$ 7,181
Available for sale - Weighted Average Yield	1.36%	1.34%
Securities Investment [Member] | Obligation of Puerto Rico Government and political subdivisions [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	$ 20,988	$ 20,939
Available-for-sale Securities, Gross Unrealized Gains	0	0
Available-for-sale Securities, Gross Unrealized Losses	6,259	5,267
Available-for-sale Securities	$ 14,729	$ 15,672
Available for sale - Weighted Average Yield	5.41%	5.41%
Securities Investment [Member] | Other Debt Obligations [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	$ 2,835	$ 3,137
Available-for-sale Securities, Gross Unrealized Gains	134	157
Available-for-sale Securities, Gross Unrealized Losses	0	0
Available-for-sale Securities	$ 2,969	$ 3,294
Available for sale - Weighted Average Yield	2.99%	2.95%

XML

Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies [Abstract]

Schedule Of Line Of Credit Facilities Text Block

Credit-related financial instruments at June 30, 2015 and December 31, 2014were as follows:

	June 30,		December 31,
	2015		2014
	(In thousands)
Commitments to extend credit	$	492,455	$	493,248
Commercial letters of credit		1,447		885

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, 2015 and December 31, 2014, is as follows:

	June 30,		December 31,
	2015		2014
	(In thousands)
Standby letters of credit and financial guarantees	$	15,016	$	32,970
Loans sold with recourse		45,565		67,803
Commitments to sell or securitize mortgage loans		18,853		10,207

Operating Leases, Future Minimum Payments Due [Abstract]

Contractual Obligation Fiscal Year Maturity Schedule [Table Text Block]

	Minimum Rent
Year Ending December 31,	(In thousands)
2015	$	4,059
2016		7,794
2017		7,141
2018		6,050
2019		5,887
Thereafter		17,064
	$	47,995

XML

Commitments (Summarized credit-related financial instruments) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Commitments and Contingencies [Abstract]
Commitments To Extend Credit	$ 492,455	$ 493,248
Commercial letters credit	1,447	885
Standby letters of credit and financial guarantees	15,016	32,970
Performance letters of credit and financial guarantees	45,565
Loans sold with recourse	$ 18,853	67,803
Commitments To Sell Or Securitize Mortgage Loans		$ 10,207

XML

Loans Receivable (Troubled debt restructurings, Rolling Twelve Months) (Details) $ in Thousands	12 Months Ended
	Jun. 30, 2015 USD ($) number	Jun. 30, 2014 USD ($) number
Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	60	22
Recored Investment | $	$ 6,911	$ 2,703
Commercial Loan [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	4	5
Recored Investment | $	$ 72	$ 101
Consumer Loan [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	0	0
Recored Investment | $	$ 0	$ 0

XML

Fair Value (Reconciliation of assets and liabilities using significant unobservable inputs (Level 3)) (Details) - Fair Value, Measurements, Recurring [Member] - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2014
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance	$ 12,281,000	$ 34,458,000	$ 34,175,000
Gains (losses) included in earnings	(79,000)	(384,000)	(886,000)
Changes in fair value of investment securities available for sale included in other comprehensive income	(6,985,000)	(53,000)	320,000
New instruments acquired	1,529,000	490,000	1,053,000
Principal repayments	(835,000)	(20,271,000)	(20,465,000)
Amortization	56,000	161,000	404,000
Changes in fair value of servicing assets	231,000	(534,000)	(734,000)
Balance	5,885,000	13,867,000	13,867,000
Other Debt Obligations [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance		20,053,000	19,680,000
Gains (losses) included in earnings		0	0
Changes in fair value of investment securities available for sale included in other comprehensive income		(53,000)	320,000
New instruments acquired			0
Principal repayments		(20,000,000)	(20,000,000)
Amortization		0	0
Changes in fair value of servicing assets		0	0
Balance		0	0
Derivative Financial Instruments, Assets [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance	3,734,000	12,555,000	16,430,000
Gains (losses) included in earnings	(1,596,000)	(5,975,000)	(9,850,000)
Changes in fair value of investment securities available for sale included in other comprehensive income	0	0	0
New instruments acquired	0	0	0
Principal repayments	0	0	0
Amortization	0	0	0
Changes in fair value of servicing assets	0	0	0
Balance	2,138,000	6,580,000	6,580,000
Servicing Assets [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance	12,164,000	13,970,000	13,801,000
Gains (losses) included in earnings	0	0	0
Changes in fair value of investment securities available for sale included in other comprehensive income	(6,985,000)	0	0
New instruments acquired	1,529,000	490,000	1,053,000
Principal repayments	(313,000)	(271,000)	(465,000)
Amortization	0	0	0
Changes in fair value of servicing assets	231,000	(534,000)	(734,000)
Balance	5,791,000	13,655,000	13,655,000
Derivative Financial Instruments, Liabilities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance	(3,617,000)	(12,120,000)	(15,736,000)
Gains (losses) included in earnings	1,517,000	5,591,000	8,964,000
Changes in fair value of investment securities available for sale included in other comprehensive income	0	0	0
New instruments acquired	0	0	0
Principal repayments	0	0	0
Amortization	56,000	161,000	404,000
Changes in fair value of servicing assets	0	0	0
Balance	$ (2,044,000)	$ (6,368,000)	$ (6,368,000)

XML

Investment Securities (Investment securities by contractual maturity) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Schedule of Investments [Line Items]
Available for sale Amortized Cost	$ 1,023,573	$ 1,187,679
Available-for-sale Securities	1,044,319	1,216,538
Held-to-maturity, Amortized cost	550,553	162,752
Held to maturity Fair Value	547,776	164,154
Maturities Due From One To Five Years [Member]
Schedule of Investments [Line Items]
Held-to-maturity, Amortized cost	25,049
Held to maturity Fair Value	25,051
Collateralized Mortgage Backed Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	993,636	1,156,455
Available-for-sale Securities	1,020,493	1,190,391
Held-to-maturity, Amortized cost	525,504
Held to maturity Fair Value	522,725
Collateralized Mortgage Backed Securities [Member] | FNMA and FHLMC [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	832,127	972,836
Available-for-sale Securities	861,573	1,009,509
Held-to-maturity, Amortized cost	525,504	162,752
Held to maturity Fair Value	522,725	164,154
Collateralized Mortgage Backed Securities [Member] | GNMA [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	3,625	4,473
Available-for-sale Securities	3,874	4,753
Collateralized Mortgage Backed Securities [Member] | CMO's [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	157,884	179,146
Available-for-sale Securities	155,046	176,129
Collateralized Mortgage Backed Securities [Member] | Maturities Due From Five To Ten Years [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	18,125
Available-for-sale Securities	18,401
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	18,125
Available-for-sale Securities	18,401
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	975,511
Available-for-sale Securities	1,002,092
Held-to-maturity, Amortized cost	525,504
Held to maturity Fair Value	522,725
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	814,002
Available-for-sale Securities	843,172
Held-to-maturity, Amortized cost	525,504
Held to maturity Fair Value	522,725
Collateralized Mortgage Backed Securities [Member] | Maturities Due After Ten Years [Member] | GNMA [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	3,625
Available-for-sale Securities	3,874
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	157,884
Available-for-sale Securities	155,046
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	0
Investment Securities
Schedule of Investments [Line Items]
Available for sale Amortized Cost	29,937	31,224
Available-for-sale Securities	23,826	26,147
Held-to-maturity, Amortized cost	25,049
Held to maturity Fair Value	25,051
Investment Securities | US Treasury Securities [Member]
Schedule of Investments [Line Items]
Held-to-maturity, Amortized cost	25,049
Held to maturity Fair Value	25,051
Investment Securities | Obligation of US Government sponsored agencies at loss [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	6,114	7,148
Available-for-sale Securities	6,128	7,181
Investment Securities | Obligation of Puerto Rico Government and political subdivisions [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	20,988	20,939
Available-for-sale Securities	14,729	15,672
Investment Securities | Other Debt Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	2,835	3,137
Available-for-sale Securities	2,969	$ 3,294
Investment Securities | Maturities Due From One To Five Years [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	10,521
Available-for-sale Securities	8,444
Held-to-maturity, Amortized cost	25,049
Held to maturity Fair Value	25,051
Investment Securities | Maturities Due From One To Five Years [Member] | US Treasury Securities [Member]
Schedule of Investments [Line Items]
Held-to-maturity, Amortized cost	25,049
Held to maturity Fair Value	25,051
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	10,521
Available-for-sale Securities	8,444
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	6,114
Available-for-sale Securities	6,128
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	6,114
Available-for-sale Securities	6,128
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	13,302
Available-for-sale Securities	9,254
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	10,467
Available-for-sale Securities	6,285
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	2,835
Available-for-sale Securities	2,969
Held-to-maturity, Amortized cost	0
Held to maturity Fair Value	$ 0

XML

FDIC Indemnification Asset and True-up Payment Obligation (FDIC Indemnification Asset Roll Forward) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
FDIC Indemnification Asset [Roll Forward]
Balance	$ 75,221	$ 166,194	$ 97,378	$ 189,240
Indemnification agreements reimbursements from FDIC	(24,387)	(10,464)	(38,087)	(18,700)
Increase (decrease) in expected credit losses to be covered under shared-loss agreements, net	906	3,522	2,503	3,562
FDIC indemnification asset, expense	(22,512)	(17,499)	(34,733)	(35,121)
Incurred expenses to be reimbursed under shared-loss agreements	(6,524)	1,907	(4,357)	4,679
Balance	22,704	143,660	22,704	143,660
True-up payment obligation [Roll Forward]
Balance	22,844	19,375	21,981	18,510
Change in true-up payment obligation expense	733	856	1,596	1,721
Balance	$ 23,577	$ 20,231	$ 23,577	$ 20,231

XML

Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Loans and Leases Receivable, Related Parties [Roll Forward]
Balance	$ 27,508	$ 19,267	$ 27,011	$ 18,963
New loans	3,768	13,847	13,847	7,623
Repayments and sales	2,042	(8,963)	(8,659)	(1,316)
Balance	$ 33,318	$ 24,151	$ 33,318	$ 24,151

XML

Earning Per Common Share (Tables)

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The calculation of (loss) earnings per common share for the quarters and six-month periods ended June 30, 2015and 2014 is asfollows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2015		2014		2015		2014
	(In thousands, except per share data)
Net (loss) income	$	(3,109)	$	21,309	$	(6,097)	$	45,056
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)
(Loss) income available to common shareholders	$	(6,575)	$	17,843	$	(13,028)	$	38,125
Effect of assumed conversion of the convertible ' ' preferred stock		1,838		1,838		3,675		3,675
(Loss) income available to common shareholders assuming conversion	$	(4,737)	$	19,681	$	(9,353)	$	41,800
Weighted average common shares and share equivalents:
Average common shares outstanding		44,505		45,014		44,569		45,170
Effect of dilutive securities:
Average potential common shares-options		110		200		148		168
Average potential common shares-assuming ' ' conversion of convertible preferred stock		7,159		7,138		7,159		7,138
Total weighted average common shares ' 'outstanding and equivalents		51,774		52,352		51,876		52,476
(Loss) earnings per common share - basic	$	(0.15)	$	0.40	$	(0.29)	$	0.84
(Loss) earnings per common share - diluted	$	(0.15)	$	0.38	$	(0.29)	$	0.80

XML

Loans Receivable (Tables)

6 Months Ended

Jun. 30, 2015

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, 2015 and December 31, 2014was as follows

	June 30,		December 31,
	2015		2014
	(In thousands)
Non-covered loans:
Originated and other loans and leases held for investment:
Mortgage	$	757,187	$	791,751
Commercial		1,363,851		1,289,732
Consumer		212,629		186,760
Auto and leasing		623,198		575,582
		2,956,865		2,843,825
Acquired loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		8,448		12,675
Consumer		41,505		45,344
Auto		142,570		184,782
		192,523		242,801
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Mortgage		631,807		656,122
Commercial		406,447		452,201
Construction		93,263		106,361
Consumer		18,869		29,888
Auto		195,891		247,233
		1,346,277		1,491,805
		4,495,665		4,578,431
Deferred loan cost , net		3,877		4,282
Loans receivable		4,499,542		4,582,713
Allowance for loan and lease losses on loans not accounted for under ASC 310-30		(102,877)		(69,517)
Loans receivable, net		4,396,665		4,513,196
Mortgage loans held-for-sale		20,768		14,539
Total non-covered loans, net		4,417,433		4,527,735
Covered loans:
Loans secured by 1-4 family residential properties		117,840		117,171
Construction and development secured by 1-4 family residential properties		19,152		19,562
Commercial and other construction		153,199		221,917
Consumer		3,295		4,506
Total covered loans		293,486		363,156
Allowance for loan and lease losses on covered loans		(71,452)		(64,245)
Total covered loans, net		222,034		298,911
Total loans, net	$	4,639,467	$	4,826,646

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, 2015 and December 31, 2014by 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, 2015
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	4,342	$	2,258	$	3,076	$	9,676	$	-	$	51,533	$	61,209	$	42
Years 2003 and 2004		8,460		4,616		6,260		19,336		-		84,968		104,304		-
Year 2005		5,338		2,012		3,926		11,276		-		45,881		57,157		-
Year 2006		6,496		3,315		7,601		17,412		170		64,292		81,874		-
Years 2007, 2008 and 2009		4,781		2,359		10,757		17,897		-		75,309		93,206		1,025
Years 2010, 2011, 2012, 2013 2014 and 2015		3,399		1,528		9,063		13,990		-		205,934		219,924		168
		32,816		16,088		40,683		89,587		170		527,917		617,674		1,235
Non-traditional		1,450		543		3,784		5,777		-		27,705		33,482		-
Loss mitigation program		11,542		6,076		14,627		32,245		5,016		61,389		98,650		3,547
		45,808		22,707		59,094		127,609		5,186		617,011		749,806		4,782
Home equity secured personal loans		-		-		-		-		-		420		420		-
GNMA's buy-back option program		-		-		6,961		6,961		-		-		6,961		-
		45,808		22,707		66,055		134,570		5,186		617,431		757,187		4,782
Commercial
Commercial secured by real estate:
Corporate		-		-		-		-		-		201,251		201,251		-
Institutional		-		-		-		-		-		35,113		35,113		-
Middle market		3,929		-		2,180		6,109		8,216		183,736		198,061		-
Retail		611		153		7,280		8,044		2,048		193,319		203,411		-
Floor plan		-		-		50		50		-		3,047		3,097		-
Real estate		-		-		-		-		-		16,646		16,646		-
		4,540		153		9,510		14,203		10,264		633,112		657,579		-
Other commercial and industrial:
Corporate		-		-		-		-		-		65,344		65,344		-
Institutional		-		-		-		-		197,559		207,661		405,220		-
Middle market		-		-		225		225		479		102,281		102,985		-
Retail		325		284		772		1,381		930		92,935		95,246		-
Floor plan		153		77		23		253		-		37,224		37,477		-
		478		361		1,020		1,859		198,968		505,445		706,272		-
		5,018		514		10,530		16,062		209,232		1,138,557		1,363,851		-

	June 30, 2015
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Consumer
Credit cards		303		120		319		742		-		19,381		20,123		-
Overdrafts		22		2		-		24		-		293		317		-
Personal lines of credit		97		17		63		177		22		2,083		2,282		-
Personal loans		1,532		858		716		3,106		320		170,202		173,628		-
Cash collateral personal loans		87		51		-		138		-		16,141		16,279		-
		2,041		1,048		1,098		4,187		342		208,100		212,629		-
Auto and leasing		47,451		18,593		7,420		73,464		365		549,369		623,198		-
Total	$	100,318	$	42,862	$	85,103	$	228,283	$	215,125	$	2,513,457	$	2,956,865	$	4,782

	December 31, 2014
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	4,128	$	3,157	$	4,395	$	11,680	$	-	$	54,064	$	65,744	$	134
Years 2003 and 2004		10,484		4,735		6,489		21,708		455		87,506		109,669		-
Year 2005		3,824		2,205		4,454		10,483		131		49,858		60,472		-
Year 2006		5,706		3,298		8,667		17,671		548		67,331		85,550		89
Years 2007, 2008 and 2009		5,283		1,809		7,646		14,738		761		77,990		93,489		-
Years 2010, 2011, 2012, 2013 and 2014		3,684		2,992		6,900		13,576		-		190,848		204,424		365
		33,109		18,196		38,551		89,856		1,895		527,597		619,348		588
Non-traditional		1,477		584		3,223		5,284		-		30,916		36,200		-
Loss mitigation program		8,199		7,106		14,114		29,419		6,358		57,666		93,443		2,766
		42,785		25,886		55,888		124,559		8,253		616,179		748,991		3,354
Home equity secured personal loans		-		-		-		-		-		517		517		-
GNMA's buy-back option program		-		-		42,243		42,243		-		-		42,243		-
		42,785		25,886		98,131		166,802		8,253		616,696		791,751		3,354
Commercial
Commercial secured by real estate:
Corporate		-		-		-		-		-		133,076		133,076		-
Institutional		-		-		-		-		-		36,611		36,611		-
Middle market		-		645		396		1,041		8,494		154,515		164,050		-
Retail		330		561		7,275		8,166		1,445		166,017		175,628		-
Floor plan		-		-		-		-		-		1,650		1,650		-
Real estate		-		-		-		-		-		12,628		12,628		-
		330		1,206		7,671		9,207		9,939		504,497		523,643		-
Other commercial and industrial:
Corporate		-		-		-		-		-		63,746		63,746		-
Institutional		-		-		-		-		-		478,935		478,935		-
Middle market		-		-		618		618		-		91,716		92,334		-
Retail		866		412		1,061		2,339		1,047		86,785		90,171		-
Floor plan		-		-		-		-		-		40,903		40,903		-
		866		412		1,679		2,957		1,047		762,085		766,089		-
		1,196		1,618		9,350		12,164		10,986		1,266,582		1,289,732		-

	December 31, 2014
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Consumer
Credit cards		360		139		375		874		-		18,197		19,071		-
Overdrafts		20		-		-		20		-		287		307		-
Personal lines of credit		102		25		102		229		9		1,962		2,200		-
Personal loans		1,822		743		678		3,243		337		144,359		147,939		-
Cash collateral personal loans		275		39		9		323		-		16,920		17,243		-
		2,579		946		1,164		4,689		346		181,725		186,760		-
Auto and leasing		47,658		16,916		7,420		71,994		145		503,443		575,582		-
Total	$	94,218	$	45,366	$	116,065	$	255,649	$	19,730	$	2,568,446	$	2,843,825	$	3,354

The following tables present the aging of the recorded investment in gross acquired loans accounted for under ASC 310-20 as ofJune 30, 2015 and December 31, 2014, by class ofloans:

	June 30, 2015
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Commercial
Commercial secured by real estate
Retail	$	-	$	-	$	344	$	344	$	-	$	-	$	344	$	-
Floor plan		-		-		496		496		-		2,267		2,763		-
		-		-		840		840		-		2,267		3,107		-
Other commercial and industrial
Retail		145		32		173		350		2		3,608		3,960		-
Floor plan		87		130		26		243		4		1,134		1,381		-
		232		162		199		593		6		4,742		5,341		-
		232		162		1,039		1,433		6		7,009		8,448		-
Consumer
Credit cards		1,005		361		1,023		2,389		-		35,870		38,259		-
Personal loans		104		19		52		175		-		3,071		3,246		-
		1,109		380		1,075		2,564		-		38,941		41,505		-
Auto		9,364		3,209		1,075		13,648		65		128,857		142,570		-
Total	$	10,705	$	3,751	$	3,189	$	17,645	$	71	$	174,807	$	192,523	$	-

	December 31, 2014
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Commercial
Commercial secured by real estate
Retail	$	-	$	-	$	351	$	351	$	-	$	-	$	351	$	-
Floor plan		-		62		345		407		-		3,724		4,131		-
		-		62		696		758		-		3,724		4,482		-
Other commercial and industrial
Retail		155		67		192		414		2		3,705		4,121		-
Floor plan		202		134		223		559		10		3,503		4,072		-
		357		201		415		973		12		7,208		8,193		-
		357		263		1,111		1,731		12		10,932		12,675		-
Consumer
Credit cards		1,376		654		1,399		3,429		-		38,419		41,848		-
Personal loans		151		47		77		275		-		3,221		3,496		-
		1,527		701		1,476		3,704		-		41,640		45,344		-
Auto		11,003		3,453		1,262		15,718		76		168,988		184,782		-
Total	$	12,887	$	4,417	$	3,849	$	21,153	$	88	$	221,560	$	242,801	$	-

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

	June 30,	December 31,
	2015	2014
	(In thousands)
Contractual required payments receivable	$2,208,242	$2,394,378
Less: Non-accretable discount	$449,917	$456,627
Cash expected to be collected	1,758,325	1,937,751
Less: Accretable yield	412,048	445,946
Carrying amount, gross	1,346,277	1,491,805
Less: allowance for loan and lease losses	18,359	13,481
Carrying amount, net	$1,327,918	$1,478,324

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 quarters and six-month periodsendedJune 30, 2015 and2014, excluding covered loans

	Quarter Ended June 30, 2015
	Mortgage		Commercial		Construction		Auto		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	284,612	$	57,330	$	19,390	$	47,097	$	5,601	$	414,030
Accretion		(8,813)		(9,597)		(2,143)		(6,163)		(1,287)		(28,003)
Change in Expected Cash Flows		-		23,695		9,867		-		-		33,562
Transfer (to) from non-accretable discount		81		135		(2,501)		(9,403)		4,147		(7,541)
Balance at end of period	$	275,880	$	71,563	$	24,613	$	31,531	$	8,461	$	412,048
Non-Accretable Discount Activity:
Balance at beginning of period	$	392,609	$	15,826	$	3,957	$	14,543	$	23,576	$	450,511
Change in actual and expected losses		(3,421)		(4,921)		536		(256)		(73)		(8,135)
Transfer from (to) accretable yield		(81)		(135)		2,501		9,403		(4,147)		7,541
Balance at end of period	$	389,107	$	10,770	$	6,994	$	23,690	$	19,356	$	449,917

	Six- Month Period Ended June 30, 2015
	Mortgage		Commercial		Construction		Auto		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	298,364	$	61,196	$	25,829	$	53,998	$	6,559	$	445,946
Accretion		(17,800)		(20,356)		(5,953)		(13,151)		(2,213)		(59,473)
Change in Expected Cash Flows		-		23,695		9,867		-		-		33,562
Transfer (to) from non-accretable discount		(4,684)		7,028		(5,130)		(9,316)		4,115		(7,987)
Balance at end of period	$	275,880	$	71,563	$	24,613	$	31,531	$	8,461	$	412,048
Non-Accretable Discount Activity:
Balance at beginning of period	$	389,839	$	23,069	$	3,486	$	16,215	$	24,018	$	456,627
Change in actual and expected losses		(5,416)		(5,271)		(1,622)		(1,841)		(547)		(14,697)
Transfer from (to) accretable yield		4,684		(7,028)		5,130		9,316		(4,115)		7,987
Balance at end of period	$	389,107	$	10,770	$	6,994	$	23,690	$	19,356	$	449,917

	Quarter Ended June 30, 2014
	Mortgage		Commercial		Construction		Auto		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	278,468	$	82,637	$	35,005	$	74,635	$	11,256	$	482,001
Accretion		(9,363)		(12,217)		(5,973)		(10,593)		(1,568)		(39,714)
Transfer (to) from non-accretable discount		-		71		1,640		578		30		2,319
Balance at end of period	$	269,105	$	70,491	$	30,672	$	64,620	$	9,718	$	444,606
Non-Accretable Discount Activity:
Balance at beginning of period	$	458,648	$	41,551	$	7,248	$	29,328	$	26,519	$	563,294
Change in actual and expected losses		(2,859)		(430)		(220)		(1,471)		(1,271)		(6,251)
Transfer from (to) accretable yield		-		(71)		(1,640)		(578)		(30)		(2,319)
Balance at end of period	$	455,789	$	41,050	$	5,388	$	27,279	$	25,218	$	554,724

	Six- Month Period Ended June 30 , 2014
	Mortgage		Commercial		Construction		Auto		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	287,841		96,139		42,993		77,845		12,735		517,553
Accretion		(18,732)		(24,934)		(10,459)		(22,418)		(3,440)		(79,983)
Transfer (to) from non-accretable discount		(4)		(714)		(1,862)		9,193		423		7,036
Balance at end of period	$	269,105		70,491		30,672		64,620		9,718		444,606
Non-Accretable Discount Activity:
Balance at beginning of period	$	463,166		42,515		5,851		39,645		28,410		579,587
Change in actual and expected losses		(7,381)		(2,179)		(2,325)		(3,173)		(2,769)		(17,827)
Transfer from (to) accretable yield		4		714		1,862		(9,193)		(423)		(7,036)
Balance at end of period	$	455,789		41,050		5,388		27,279		25,218		554,724

Covered loans carrying amount [Table Text Block]

Covered Loans

The carrying amount of covered loans at June 30, 2015 and December 31, 2014is as follows:

	June 30		December 31
	2015		2014
	(In thousands)
Contractual required payments receivable	$	419,259	$	535,425
Less: Non-accretable discount		21,132		62,410
Cash expected to be collected		398,127		473,015
Less: Accretable yield		104,641		109,859
Carrying amount, gross		293,486		363,156
Less: Allowance for covered loan and lease losses		71,452		64,245
Carrying amount, net	$	222,034	$	298,911

Accretable Yield for Acquired Loans Covered [Table Text Block]

The following tables describe the accretable yield and non-accretable discount activity of covered loans for the quartersand six-month periods ended June 30, 2015 and 2014:

	Quarter Ended June 30, 2015
	Loans Secured by 1-4 Family Residential Properties		Commercial and Other Construction		Construction & Development Secured by 1-4 Family Residential Properties		Leasing		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	58,332	$	33,481	$	20,806	$	1,665	$	2,004	$	116,288
Accretion		(3,276)		(8,047)		(405)		(937)		(93)		(12,758)
Transfer from (to) non-accretable discount		750		2,039		(2,052)		375		(1)		1,111
Balance at end of period	$	55,806	$	27,473	$	18,349	$	1,103	$	1,910	$	104,641
Non-Accretable Discount Activity:
Balance at beginning of period	$	12,557	$	10,493	$	-	$	-	$	9,662	$	32,712
Change in actual and expected losses		(405)		(8,454)		(2,052)		375		67		(10,469)
Transfer from (to) accretable yield		(750)		(2,039)		2,052		(375)		1		(1,111)
Balance at end of period	$	11,402	$	-	$	-	$	-	$	9,730	$	21,132

	Six- Month Period Ended June 30, 2015
	Loans Secured by 1-4 Family Residential Properties		Commercial and Other Construction		Construction & Development Secured by 1-4 Family Residential Properties		Leasing		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	47,636	$	37,919	$	20,753	$	2,479	$	1,072	$	109,859
Accretion		(6,794)		(17,902)		(1,024)		(2,329)		(213)		(28,262)
Transfer from (to) non-accretable discount		14,964		7,456		(1,380)		953		1,051		23,044
Balance at end of period	$	55,806	$	27,473	$	18,349	$	1,103	$	1,910	$	104,641
Non-Accretable Discount Activity:
Balance at beginning of period	$	27,348	$	24,464	$	-	$	-	$	10,598	$	62,410
Change in actual and expected losses		(982)		(17,008)		(1,380)		953		183		(18,234)
Transfer from (to) accretable yield		(14,964)		(7,456)		1,380		(953)		(1,051)		(23,044)
Balance at end of period	$	11,402	$	-	$	-	$	-	$	9,730	$	21,132

	Quarter Ended June 30, 2014
	Loans Secured by 1-4 Family Residential Properties		Commercial and Other Construction		Construction & Development Secured by 1-4 Family Residential Properties		Leasing		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	54,619	$	83,200	$	209	$	7,332	$	2,407	$	147,767
Accretion		(4,033)		(17,141)		(1,070)		(2,377)		(259)		(24,880)
Transfer from (to) non-accretable discount		-		4,168		861		145		-		5,174
Balance at end of period	$	50,586	$	70,227	$	-	$	5,100	$	2,148	$	128,061
Non-Accretable Discount Activity:
Balance at beginning of period	$	31,340	$	67,136	$	-	$	-	$	8,847	$	107,323
Change in actual and expected losses		(1,481)		(16,372)		861		145		(78)		(16,925)
Transfer (to) from accretable yield		-		(4,168)		(861)		(145)		-		(5,174)
Balance at end of period	$	29,859	$	46,596	$	-	$	-	$	8,769	$	85,224

	Six- Month Period Ended June 30, 2014
	Loans Secured by 1-4 Family Residential Properties		Commercial and Other Construction		Construction & Development Secured by 1-4 Family Residential Properties		Leasing		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	53,250	$	95,093	$	1,690	$	10,238	$	2,688	$	162,959
Accretion		(8,197)		(31,993)		(2,150)		(5,388)		(540)		(48,268)
Transfer from (to) non-accretable discount		5,533		7,127		460		250		-		13,370
Balance at end of period	$	50,586	$	70,227	$	-	$	5,100	$	2,148	$	128,061
Non-Accretable Discount Activity:
Balance at beginning of period	$	39,182	$	81,092	$	-	$	-	$	9,203	$	129,477
Change in actual and expected losses		(3,790)		(27,369)		460		250		(434)		(30,883)
Transfer (to) from accretable yield		(5,533)		(7,127)		(460)		(250)		-		(13,370)
Balance at end of period	$	29,859	$	46,596	$	-	$	-	$	8,769	$	85,224

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, 2015 and December 31, 2014:

	June 30,		December 31,
	2015		2014
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year):
Up to the year 2002	$	3,104	$	4,427
Years 2003 and 2004		6,317		7,042
Year 2005		3,926		4,585
Year 2006		7,861		9,274
Years 2007, 2008 and 2009		9,991		8,579
Years 2010, 2011, 2012, 2013, 2014 and 2015		9,183		7,365
		40,382		41,272
Non-traditional		3,784		3,224
Loss mitigation program		19,504		20,934
		63,670		65,430
Commercial
Commercial secured by real estate
Middle market		14,325		9,534
Retail		9,557		9,000
		23,882		18,534
Other commercial and industrial
Institutional		197,559		-
Middle market		703		618
Retail		1,797		2,527
Floor plan		23		-
		200,082		3,145
		223,964		21,679
Consumer
Credit cards		319		375
Personal lines of credit		86		110
Personal loans		1,107		1,092
Cash collateral personal loans		-		13
		1,512		1,590
Auto and leasing		8,587		8,668
Total Non-accrual originated loans	$	297,733	$	97,367

	June 30,		December 31,
	2015		2014
	(In thousands)
Acquired loans accounted under ASC 310-20
Commercial
Commercial secured by real estate
Retail	$	344	$	351
Floor plan		496		407
		840		758
Other commercial and industrial
Retail		178		195
Floor plan		30		234
		208		429
		1,048		1,187
Consumer
Credit cards		1,023		1,399
Personal loans		52		77
		1,075		1,476
Auto		1,277		1,512
Total non-accrual acquired loans accounted under ASC 310-20		3,400		4,175
Total non-accrual loans	$	301,183	$	101,542

Impaired Financing Receivables [Table Text Block]

Originated and Other Loans and Leases Held for Investment

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, 2015 and December 31, 2014are as follows:

	June 30, 2015
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance:
Commercial	$	215,139	$	211,186	$	27,401	13%
Residential troubled-debt restructuring		95,881		89,303		8,268	9%
Impaired loans with no specific allowance:
Commercial		34,305		30,786		N/A	N/A
Total investment in impaired loans	$	345,325	$	331,275	$	35,669	11%

	December 31, 2014
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance
Commercial	$	6,349	$	6,226	$	841	14%
Residential troubled-debt restructuring		99,947		94,185		8,968	10%
Impaired loans with no specific allowance
Commercial		237,806		230,044		N/A	N/A
Total investment in impaired loans	$	344,102	$	330,455	$	9,809	3%

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

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, 2015 and December 31, 2014are as follows:

	June 30, 2015
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial	$	1,435	$	1,429		N/A	N/A
Total investment in impaired loans	$	1,435	$	1,429	$	-	-
	December 31, 2014
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial	$	672	$	672		N/A	N/A
Total investment in impaired loans	$	672	$	672	$	-	-

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

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, 2015 and December 31, 2014 are as follows

	June 30, 2015
							Coverage
	Unpaid		Recorded				to Recorded
	Principal		Investment		Allowance		Investment
	(In thousands)
Impaired non-covered loan pools:
Mortgage	$	22,901	$	23,676	$	557	2%
Commercial		230,196		208,083		5,752	3%
Construction		87,488		88,575		9,188	10%
Auto		187,569		195,891		2,862	1%
Total investment in impaired non-covered loan pools	$	528,154	$	516,225	$	18,359	4%

	December 31 , 2014
							Coverage
	Unpaid		Recorded				to Recorded
	Principal		Investment		Allowance		Investment
	(In thousands)
Impaired non-covered loan pools:
Commercial		289,228		255,619		5,506	2%
Construction		90,786		83,751		7,970	10%
Consumer		35,812		29,888		5	0%
Total investment in impaired non-covered loan pools	$	415,826	$	369,258	$	13,481	4%

The tables above only present information with respect to non-covered loans and pools accounted for under ASC 310-30 if there is a recorded impairment to such loans or loan pools and a specific allowance for loan losses. As of June 30, 2015, the Company eliminated the specific allowance of $5 thousand maintained on impaired non-covered acquired consumer loan pool accounted under ASC 310-30 because there was an increase in the net present value of cash flows expected to be collected from such pool when compared with the recorded investment. Likewise, the increase in mortgage and auto loan pools from December 31, 2014 to June 30, 2015 was caused by the establishment of a specific reserve with respect to impaired mortgage and auto loan pools that were required based on the net present value of the cash flows expected to be collected.

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 quarters and six-month periodsendedJune 30, 2015 and 2014

	Quarter Ended June 30,
	2015				2014
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)
Originated and other loans held for investment:
Impaired loans with specific allowance
Commercial	$	45	$	212,414	$	39	$	7,200
Residential troubled-debt restructuring		781		89,041		663		90,445
Impaired loans with no specific allowance
Commercial		316		30,015		77		21,951
		1,142		331,470		779		119,596
Acquired loans accounted for under ASC 310-20:
Impaired loans with no specific allowance
Commercial		11		1,446		-		-
Total interest income from impaired loans	$	1,153	$	332,916	$	779	$	119,596

	Six-Month Period Ended June 30,
	2015				2014
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)
Originated and other loans held for investment:
Impaired loans with specific allowance
Commercial	$	90	$	146,144	$	78	$	6,729
Residential troubled-debt restructuring		1,563		91,216		1,270		88,749
Impaired loans with no specific allowance
Commercial		631		95,791		154		21,790
	$	2,284	$	333,151	$	1,502	$	117,268
Acquired loans accounted for under ASC 310-20:
Impaired loans with no specific allowance
Commercial		21		1,923		-		-
Total interest income from impaired loans	$	2,305	$	335,074	$	1,502	$	117,268

Impaired Financing Receivables Covered Loans[Table Text Block]

Covered Loans

The Company’s recorded investment in covered loan pools that have recorded impairments and their relatedallowance for covered loan and lease losses as ofJune 30, 2015 and December 31, 2014are as follows:

	June 30, 2015
							Coverage
	Unpaid		Recorded				to Recorded
	Principal		Investment		Allowance		Investment
	(In thousands)
Impaired covered loan pools:
Loans secured by 1-4 family residential properties	$	124,906	$	106,937	$	17,594	16%
Construction and development secured by 1-4 family residential properties		46,732		19,152		12,300	64%
Commercial and other construction		132,636		95,655		41,170	43%
Consumer		6,102		1,718		389	23%
Total investment in impaired covered loan pools	$	310,376	$	223,462	$	71,453	32%

	December 31, 2014
							Coverage
	Unpaid		Recorded		Specific		to Recorded
	Principal		Investment		Allowance		Investment
	(In thousands)
Impaired covered loan pools with specific allowance
Loans secured by 1-4 family residential properties	$	134,579	$	106,116	$	15,522	15%
Construction and development secured by 1-4 family residential properties		57,123		19,562		10,724	55%
Commercial and other construction		93,894		74,069		37,610	51%
Consumer		7,992		4,506		389	9%
Total investment in impaired covered loan pools	$	293,588	$	204,253	$	64,245	31%

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, 2015and2014:

	Quarter Ended June 30, 2015
	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	39	$	4,455	5.62%	330	$	4,455	4.21%	330
Commercial	1		29	7.25%	44		29	6.50%	60
Consumer	21		250	14.40%	71		259	13.87%	69
Auto	1		64	12.95%	72		65	12.95%	72
	Six-Month Period Ended June 30, 2015
	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	97	$	11,609	4.65%	348	$	11,594	4.13%	349
Commercial	4		4,533	6.83%	80		4,533	7.00%	141
Consumer	32		396	14.50%	72		440	14.25%	68
Auto	1		64	12.95%	72		65	12.95%	72

	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	6.00%	353	$	4,965	4.12%	418
Commercial	1		73	7.00%	55		73	9.25%	36
Consumer	3		24	14.00%	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	6.00%	349	$	11,446	4.26%	390
Commercial	1		73	7.00%	55		73	9.25%	36
Consumer	8		66	13.00%	70		68	13.31%	68

The following table presents troubled-debt restructurings for which there was a payment default during the six-month periodsended June 30, 2015and 2014:

	Six-Month Period EndedJune 30,
	2015			2014
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Mortgage	60	$	6,911	22	$	2,703
Consumer	4	$	72	5	$	101

Financing Receivable Credit Quality Indicators [Table Text Block]

As of June 30, 2015 and December 31, 2014, 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, 2015
	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	$	201,251	$	183,630	$	15,306	$	-	$	-	$	2,315
Institutional		35,113		26,444		8,444		-		-		225
Middle market		198,061		172,626		7,008		109		-		18,318
Retail		203,411		182,468		6,229		4,399		-		10,315
Floor plan		3,097		2,765		192		-		-		140
Real estate		16,646		16,646		-		-		-		-
		657,579		584,579		37,179		4,508		-		31,313
Other commercial and industrial:
Corporate		65,344		59,684		-		-		-		5,660
Institutional		405,220		207,661		-		-		-		197,559
Middle market		102,985		97,775		-		-		-		5,210
Retail		95,246		91,455		484		1,672		-		1,635
Floor plan		37,477		34,306		2,565		12		-		594
		706,272		490,881		3,049		1,684		-		210,658
Total		1,363,851		1,075,460		40,228		6,192		-		241,971
Commercial - acquired loans (under ASC 310-20)
Commercial secured by real estate:
Retail		344		-		-		344		-		-
Floor plan		2,763		1,521		-		-		-		1,242
		3,107		1,521		-		344		-		1,242
Other commercial and industrial:
Retail		3,960		3,943		-		17		-		-
Floor plan		1,381		1,264		-		30		-		87
		5,341		5,207		-		47		-		87
Total		8,448		6,728		-		391		-		1,329
Total	$	1,372,299	$	1,082,188	$	40,228	$	6,583	$	-	$	243,300

	December 31, 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	$	133,076	$	109,282	$	15,615	$	-	$	-	$	8,179
Institutional		36,611		27,089		9,284		-		-		238
Middle market		164,050		148,360		2,817		-		-		12,873
Retail		175,628		159,209		3,690		2,637		-		10,092
Floor plan		1,650		692		958		-		-		-
Real estate		12,628		12,628		-		-		-		-
		523,643		457,260		32,364		2,637		-		31,382
Other commercial and industrial:
Corporate		63,746		63,746		-		-		-		-
Institutional		478,935		278,953		-		-		-		199,982
Middle market		92,334		87,126		2,815		-		-		2,393
Retail		90,171		85,941		259		2,575		-		1,396
Floor plan		40,903		38,413		1,247		126		-		1,117
		766,089		554,179		4,321		2,701		-		204,888
Total		1,289,732		1,011,439		36,685		5,338		-		236,270
Commercial - acquired loans (under ASC 310-20)
Commercial secured by real estate:
Retail		351		-		-		351		-		-
Floor plan		4,131		3,724		-		-		-		407
		4,482		3,724		-		351		-		407
Other commercial and industrial:
Retail		4,121		4,080		8		33		-		-
Floor plan		4,072		3,807		-		-		-		265
		8,193		7,887		8		33		-		265
Total		12,675		11,611		8		384		-		672
Total	$	1,302,407	$	1,023,050	$	36,693	$	5,722	$	-	$	236,942

For residential and consumer loan classes, the Company evaluates credit quality based on the delinquency status of the loan. As ofJune 30, 2015 and December 31, 2014, 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, 2015
	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	$	61,209	$	50,718	$	4,340	$	2,256	$	585	$	1,034	$	1,364	$	912
Years 2003 and 2004		104,304		83,388		8,292		4,616		1,899		1,676		2,685		1,748
Year 2005		57,157		44,825		5,338		2,012		646		733		2,547		1,056
Year 2006		81,874		60,987		6,496		3,314		508		2,311		4,672		3,586
Years 2007, 2008 and 2009		93,206		72,190		4,458		2,028		597		3,859		6,029		4,045
Years 2010, 2011, 2012 2013, 2014 and 2015		219,924		203,847		3,398		1,528		384		2,738		3,599		4,430
		617,674		515,955		32,322		15,754		4,619		12,351		20,896		15,777
Non-traditional		33,482		27,705		1,450		543		803		1,421		1,560		-
Loss mitigation program		98,650		15,626		3,535		1,742		1,107		1,487		1,626		73,527
		749,806		559,286		37,307		18,039		6,529		15,259		24,082		89,304
Home equity secured personal loans		420		420		-		-		-		-		-		-
GNMA's buy-back option program		6,961		-		-		-		1,995		2,486		2,480		-
		757,187		559,706		37,307		18,039		8,524		17,745		26,562		89,304
Consumer
Credit cards		20,123		19,381		303		120		152		167		-		-
Overdrafts		317		293		22		2		-		-		-		-
Unsecured personal lines of credit		2,282		2,105		97		17		25		38		-		-
Unsecured personal loans		173,628		170,523		1,533		858		714		-		-		-
Cash collateral personal loans		16,279		16,141		87		51		-		-		-		-
		212,629		208,443		2,042		1,048		891		205		-		-
Auto and Leasing		623,198		549,734		47,451		18,593		5,065		2,355		-		-
		1,593,014		1,317,883		86,800		37,680		14,480		20,305		26,562		89,304
Acquired loans (accounted for under ASC 310-20)
Consumer
Credit cards		38,259		35,870		1,005		361		430		593		-		-
Personal loans		3,246		3,070		104		19		14		39		-		-
		41,505		38,940		1,109		380		444		632		-		-
Auto		142,570		128,922		9,364		3,209		788		287		-		-
		184,075		167,862		10,473		3,589		1,232		919		-		-
Total	$	1,777,089	$	1,485,745	$	97,273	$	41,269	$	15,712	$	21,224	$	26,562	$	89,304

	December 31, 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	$	65,744	$	53,432	$	3,963	$	3,083	$	1,044	$	1,360	$	1,975	$	887
Years 2003 and 2004		109,669		86,941		10,391		4,362		1,657		3,215		1,330		1,773
Year 2005		60,472		49,275		3,824		2,205		389		1,673		1,893		1,213
Year 2006		85,550		65,113		5,263		2,967		1,242		2,801		4,624		3,540
Years 2007, 2008 and 2009		93,489		76,246		4,230		1,809		337		3,986		2,813		4,068
Years 2010, 2011, 2012 2013 and 2014		204,424		190,650		2,988		2,490		938		1,397		1,296		4,665
		619,348		521,657		30,659		16,916		5,607		14,432		13,931		16,146
Non-traditional		36,200		30,916		1,477		584		478		600		2,096		49
Loss mitigation program		93,443		10,882		995		1,123		802		405		1,246		77,990
		748,991		563,455		33,131		18,623		6,887		15,437		17,273		94,185
Home equity secured personal loans		517		517		-		-		-		-		-		-
GNMA's buy-back option program		42,243		-		-		-		6,416		20,729		15,098		-
		791,751		563,972		33,131		18,623		13,303		36,166		32,371		94,185
Consumer
Credit cards		19,071		18,198		360		139		171		203		-		-
Overdrafts		307		287		20		-		-		-		-		-
Unsecured personal lines of credit		2,200		1,970		102		25		38		62		3		-
Unsecured personal loans		147,939		144,696		1,822		743		623		55		-		-
Cash collateral personal loans		17,243		16,920		275		39		9		-		-		-
		186,760		182,071		2,579		946		841		320		3		-
Auto and Leasing		575,582		503,588		47,658		16,916		5,196		2,224		-		-
		1,554,093		1,249,631		83,368		36,485		19,340		38,710		32,374		94,185
Acquired loans (accounted for under ASC 310-20)
Consumer
Credit cards		41,848		38,419		1,376		654		589		810		-		-
Personal loans		3,496		3,221		151		47		39		38		-		-
		45,344		41,640		1,527		701		628		848		-		-
Auto		184,782		169,064		11,003		3,453		767		495		-		-
		230,126		210,704		12,530		4,154		1,395		1,343		-		-
Total	$	1,784,219	$	1,460,335	$	95,898	$	40,639	$	20,735	$	40,053	$	32,374	$	94,185

XML

FDIC Indemnification Asset and True-up Payment Obligation (Fair value and the undiscounted amount of the true-up payment obligation) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
FDIC-Assisted Acquisition [Abstract]
Business Combination Contingent Consideration Liability	$ 23,577	$ 21,981
Business Combination Contingent Consideration Potential Cash Payment	$ 37,456	$ 40,266

XML

Guarantees (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Guarantee Obligations [Line Items]
Losses from repurchased loans subject to credit recourse	$ 476	$ 95
Loss On GNMA Repurchased Loan Not Subject To Credit Recourse	742	494
Funds Advanced To Investors Under Servicing Agreements	468		$ 468		$ 391
2015 Recourse Obligation Termination	$ 29,100		$ 29,100
Percentage of Future Extinguished Recourse Obligation Terminated in Two Years Or Less	64.00%		64.00%
Serviced mortgage loans for third parties	$ 580,000,000		$ 580,000,000
Loan with recourse [Member]
Guarantee Obligations [Line Items]
Continuing Involvement With Transferred Financial Assets Principal Amount Outstanding	45,600		45,600		67,800
Repurchased GNMA	1,200	$ 3,400	$ 2,100	$ 3,700	$ 3,400
Losses from repurchased loans subject to credit recourse	$ 11,700

XML

Business Segments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Segment Reporting Information [Line Items]
Total interest income	$ 99,413	$ 125,900	$ 206,414	$ 248,974
Interest expense	(17,121)	(19,822)	(34,487)	(39,498)
Net interest income	82,292	106,078	171,927	209,476
Provision For Non Covered Loan And Lease Losses.	(15,644)	(13,220)	(53,027)	(23,282)
Provision for Covered Loan and Lease Losses, net	105	(1,595)	(4,705)	(3,224)
Total non-interest income (loss), net	(4,656)	507	2,225	5,736
Non-interest expenses	(64,437)	(59,848)	(120,769)	(121,252)
Total assets	7,398,325		7,398,325		$ 7,449,109
Banking [Member]
Segment Reporting Information [Line Items]
Total interest income	90,504	112,971	187,986	221,602
Interest expense	(7,110)	(10,828)	(14,564)	(18,344)
Net interest income	83,394	102,143	173,422	203,258
Provision For Non Covered Loan And Lease Losses.	(15,644)	(13,220)	(53,027)	(23,282)
Provision for Covered Loan and Lease Losses, net	105	(1,595)	(4,705)	(3,224)
Total non-interest income (loss), net	(11,713)	(6,507)	(13,962)	(11,603)
Non-interest expenses	(56,844)	(49,651)	(106,156)	(103,198)
Intersegment revenues	163	435	707	979
Intersegment expenses	(61)	0	(159)	0
Income (loss) before Income Taxes, Parent	(600)	31,605	(3,880)	62,930
Total assets	6,153,663	6,508,432	6,153,663	6,508,432
Financial Services
Segment Reporting Information [Line Items]
Total interest income	24	46	47	86
Interest expense	0	0	0	0
Net interest income	24	46	47	86
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	6,893	7,502	13,903	14,024
Non-interest expenses	(6,733)	(6,367)	(11,524)	(11,146)
Intersegment revenues	0	0	0	0
Intersegment expenses	(87)	(327)	(518)	(759)
Income (loss) before Income Taxes, Parent	97	854	1,908	2,205
Total assets	21,157	25,345	21,157	25,345
Treasury [Member]
Segment Reporting Information [Line Items]
Total interest income	8,885	12,883	18,381	27,286
Interest expense	(10,011)	(8,994)	(19,923)	(21,154)
Net interest income	(1,126)	3,889	(1,542)	6,132
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	164	(488)	2,284	3,315
Non-interest expenses	(860)	(3,830)	(3,089)	(6,908)
Intersegment revenues	61	0	160	0
Intersegment expenses	(76)	(108)	(189)	(220)
Income (loss) before Income Taxes, Parent	(1,837)	(537)	(2,376)	2,319
Total assets	2,136,293	2,089,516	2,136,293	2,089,516
Major Segment [Member]
Segment Reporting Information [Line Items]
Total interest income	99,413	125,900	206,414	248,974
Interest expense	(17,121)	(19,822)	(34,487)	(39,498)
Net interest income	82,292	106,078	171,927	209,476
Provision For Non Covered Loan And Lease Losses.	(15,644)	(13,220)	(53,027)	(23,282)
Provision for Covered Loan and Lease Losses, net	105	(1,595)	(4,705)	(3,224)
Total non-interest income (loss), net	(4,656)	507	2,225	5,736
Non-interest expenses	(64,437)	(59,848)	(120,769)	(121,252)
Intersegment revenues	224	435	866	979
Intersegment expenses	(224)	(435)	(866)	(979)
Income (loss) before Income Taxes, Parent	(2,340)	31,922	(4,349)	67,454
Total assets	8,311,113	8,623,293	8,311,113	8,623,293
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	(224)	(435)	(866)	(979)
Intersegment expenses	224	435	866	979
Income (loss) before Income Taxes, Parent	0	0	0	0
Total assets	$ (912,788)	$ (913,148)	$ (912,788)	$ (913,148)

XML

Allowance for Loan and Lease Losses (Composition of the Company's allowance for loan and lease losses) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	$ 102,877	$ 69,517
Loans And Leases Receivable Allowance, Covered	71,452	64,245
Loans And Leases Receivable Allowance Covered and Not Covered	174,329	133,762
Non Covered Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	102,877	69,517
Originated Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	78,989	51,439
Originated Loans [Member] | Residential Portfolio Segment
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	18,076	19,679
Originated Loans [Member] | Commercial Portfolio Segment
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	34,779	8,432
Originated Loans [Member] | Consumer Portfolio Segment
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	10,464	9,072
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	15,064	14,255
Originated Loans [Member] | Unallocated Financing Receivables
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	606	1
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	5,529	4,597
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	54	65
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	2,616	1,211
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	2,859	3,321
Accounted for under ASC 310-30 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	18,359	13,481
Accounted for under ASC 310-30 [Member] | Residential Portfolio Segment
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan and lease losses, non covered	473
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	14,940	13,476
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	84	5
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	71,452	64,245
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	389	389
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	17,593	15,522
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	$ 53,470	$ 48,334

XML

Accrued Interest and Other Assets (Narratives) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Dec. 18, 2012
Other assets [Line Items]
Prepaid Taxes	$ 9,600	$ 9,600
Mortgage tax credits	6,277	6,277
Other Intangible Assets	3,000
Repossessed auto	14,000	20,700
CoreDepositsMember | Eurobank [Member]
Other assets [Line Items]
Other Intangible Assets	$ 5,800	6,500
Customer Relationships [Member] | BBVAPR
Other assets [Line Items]
Other Intangible Assets		$ 3,300	$ 5,000

XML

Investment Securities (Gains and losses by category) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Total Available for Sale Amortization cost	$ 328,800	$ 357,228
Total Available for Sale Unrealized Loss	10,372	9,631
Total Available for Sale Fair Value	318,428	347,597
12 months or more
Available for sale - Amortized cost	136,471	278,320
Available for sale - Unrealized Loss	9,066	9,533
Available-for-sale, Fair Value	127,405	268,787
Less than 12 months
Available for sale - Amortized cost	192,329	78,908
Available for sale - Unrealized Loss	1,306	98
Available for sale - Fair Value	191,023	78,810
Held To Maturity Securities, Continuous Unrealized Loss Position Aggregate Losses [Abstract]
Held to Maturity - Amortized Cost	368,615
Held to Maturity - Unrealized Loss	3,761
Held to Maturity - Fair Value	364,854
Less than 12 months
Held to Maturity - Amortized cost	368,615
Held to Maturity - Unrealized Loss	3,761
Held-to-Maturity - Fair Value	364,854
Investment Securities, Continuous Unrealized Loss Position [Abstract]
Total Securities - Amortized Cost	697,415
Total Securities - Unrealized Position	14,133
Total Securities - Fair Value	683,282
CMO's issued by us government sponsored agenciesat loss
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Total Available for Sale Amortization cost	144,079	159,100
Total Available for Sale Unrealized Loss	2,921	3,153
Total Available for Sale Fair Value	141,158	155,947
12 months or more
Available for sale - Amortized cost	115,483	143,928
Available for sale - Unrealized Loss	2,807	3,086
Available-for-sale, Fair Value	112,676	140,842
Less than 12 months
Available for sale - Amortized cost	28,596	15,172
Available for sale - Unrealized Loss	114	67
Available for sale - Fair Value	28,482	15,105
FNMA and FHLMC [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Total Available for Sale Amortization cost	163,733	177,112
Total Available for Sale Unrealized Loss	1,192	1,203
Total Available for Sale Fair Value	162,541	175,909
12 months or more
Available for sale - Amortized cost		113,376
Available for sale - Unrealized Loss		1,172
Available-for-sale, Fair Value		112,204
Less than 12 months
Available for sale - Amortized cost	163,733	63,736
Available for sale - Unrealized Loss	1,192	31
Available for sale - Fair Value	162,541	63,705
Held To Maturity Securities, Continuous Unrealized Loss Position Aggregate Losses [Abstract]
Held to Maturity - Amortized Cost	358,591
Held to Maturity - Unrealized Loss	3,757
Held to Maturity - Fair Value	354,834
Less than 12 months
Held to Maturity - Amortized cost	358,591
Held to Maturity - Unrealized Loss	3,757
Held-to-Maturity - Fair Value	354,834
Obligation of Puerto Rico Government and political subdivisions [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Total Available for Sale Amortization cost	20,988	20,939
Total Available for Sale Unrealized Loss	6,259	5,267
Total Available for Sale Fair Value	14,729	15,672
12 months or more
Available for sale - Amortized cost	20,988	20,939
Available for sale - Unrealized Loss	6,259	5,267
Available-for-sale, Fair Value	14,729	15,672
Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Total Available for Sale Amortization cost		77
Total Available for Sale Unrealized Loss		8
Total Available for Sale Fair Value		69
12 months or more
Available for sale - Amortized cost		77
Available for sale - Unrealized Loss		8
Available-for-sale, Fair Value		$ 69
US Treasury Securities [Member]
Held To Maturity Securities, Continuous Unrealized Loss Position Aggregate Losses [Abstract]
Held to Maturity - Amortized Cost	10,024
Held to Maturity - Unrealized Loss	4
Held to Maturity - Fair Value	10,020
Less than 12 months
Held to Maturity - Amortized cost	10,024
Held to Maturity - Unrealized Loss	4
Held-to-Maturity - Fair Value	$ 10,020

XML

Regulatory Capital Requirements (Group's and the Bank's actual capital amounts and ratios) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Group [Member]
Capital [Abstract]
Actual - Total capital	$ 868,568	$ 851,437
Actual - Tier 1 capital	790,936	776,525
Actual -Common equity tier 1 capital	611,541
Actual - Tier 1 leverage capital	790,936	776,525
Minimum Capital - Total Capital	399,100	387,772
Minimum capital - Tier 1 capital	299,325	193,886
Minimum capital - Common equity tier 1 capital	224,494
Minimum capital - Tier 1 leverage capital	286,262	292,738
Minimum to be well capitalized - Total Capital	498,875	484,715
Minimum to be well capitalized - Tier 1 capital	399,100	290,829
Minimum to be well capitalized - Common equity tier 1 capital	324,269
Minimum to be well capitalized - Tier 1 leverage	$ 357,827	$ 365,922
Risk Based Ratios [Abstract]
Capital to Risk Weighted Assets	17.41%	17.57%
Tier One Risk Based Capital to Risk Weighted Assets	15.85%	16.02%
Common Equity Tier OneTo Risk Weighted Assets	12.26%
Tier One Leverage Capital to Average Assets	11.05%	10.61%
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	6.00%	4.00%
Common Equity Tier One Required For Capital Adequacy To Risk Weighted Assets	4.50%
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	8.00%	6.00%
Tier One Risk Common Equity Tier One Required To Be Well Capitalized To Risk Weighted Assets	6.50%
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	5.00%	5.00%
Bank [Member]
Capital [Abstract]
Actual - Total capital	$ 819,436	$ 820,884
Actual - Tier 1 capital	742,098	746,177
Actual -Common equity tier 1 capital	742,098
Actual - Tier 1 leverage capital	742,098	746,177
Minimum Capital - Total Capital	397,716	386,444
Minimum capital - Tier 1 capital	298,287	193,222
Minimum capital - Common equity tier 1 capital	223,715
Minimum capital - Tier 1 leverage capital	284,228	290,879
Minimum to be well capitalized - Total Capital	497,145	483,055
Minimum to be well capitalized - Tier 1 capital	397,716	289,833
Minimum to be well capitalized - Common equity tier 1 capital	323,144
Minimum to be well capitalized - Tier 1 leverage	$ 355,285	$ 363,599
Risk Based Ratios [Abstract]
Capital to Risk Weighted Assets	16.48%	16.99%
Tier One Risk Based Capital to Risk Weighted Assets	14.93%	15.45%
Common Equity Tier OneTo Risk Weighted Assets	14.93%
Tier One Leverage Capital to Average Assets	10.44%	10.26%
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	6.00%	4.00%
Common Equity Tier One Required For Capital Adequacy To Risk Weighted Assets	4.50%
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	8.00%	6.00%
Tier One Risk Common Equity Tier One Required To Be Well Capitalized To Risk Weighted Assets	6.50%
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	5.00%	5.00%

XML

Allowance for Loan and Lease Losses (Allowance for Covered Loan and Lease Losses) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of the period			$ 64,245
Balance at end of the period	$ 71,452		71,452
Acquired Loans In An F D I C Assisted Transaction [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of the period	70,651	$ 54,398	64,245	$ 52,729
Provision for covered loan and lease losses, net	(105)	1,595	4,704	3,224
FDIC shared-loss portion of provision for (recapture of) covered loan and lease losses, net	906	3,522	2,503	3,562
Balance at end of the period	71,452	59,515	71,452	59,515
Acquired Loans In An F D I C Assisted Transaction [Member] | Mortgages [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of the period	17,340	14,221	15,522	12,495
Provision for covered loan and lease losses, net	148	411	1,966	2,309
FDIC shared-loss portion of provision for (recapture of) covered loan and lease losses, net	105	292	105	120
Balance at end of the period	17,593	14,924	17,593	14,924
Acquired Loans In An F D I C Assisted Transaction [Member] | Commercial Loan [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of the period	52,922	39,562	48,334	39,619
Provision for covered loan and lease losses, net	(253)	1,184	2,738	915
FDIC shared-loss portion of provision for (recapture of) covered loan and lease losses, net	801	3,230	2,398	3,442
Balance at end of the period	53,470	43,976	53,470	43,976
Acquired Loans In An F D I C Assisted Transaction [Member] | Consumer Loan [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of the period	389	615	389	615
Provision for covered loan and lease losses, net	0	0	0	0
FDIC shared-loss portion of provision for (recapture of) covered loan and lease losses, net	0	0	0	0
Balance at end of the period	389	615	389	615
Acquired Loans In An F D I C Assisted Transaction [Member] | Leasing [Mamber]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of the period	0	0	0	0
Provision for covered loan and lease losses, net	0	0	0	0
FDIC shared-loss portion of provision for (recapture of) covered loan and lease losses, net	0	0	0	0
Balance at end of the period	$ 0	$ 0	$ 0	$ 0

XML

Derivative Activities (Derivative Assets and Liabilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Assets	$ 4,376	$ 8,107
Derivative Liabilities	8,739	11,221
Options tied to Standard & Poor 500 Stock Market Index [Member]
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Assets	2,137	5,555
Designated as Hedging Instrument [Member]
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Liabilities	6,514	8,585
Not Designated as Hedging Instrument [Member]
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Assets	2,154	2,399
Derivative Liabilities	2,154	2,399
Interest Rate Cap [Member]
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Assets	65	152
Derivative Liabilities	65	152
Other derivative
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Assets	20	1
Derivative Liabilities	$ 6	$ 85

XML

Servicing Assets (Narratives) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Mar. 31, 2015	Dec. 31, 2014	Mar. 31, 2014	Dec. 31, 2013
Servicing Assets At Fair Value Line Items
Servicing Asset at Fair Value, Amount	$ 5,791	$ 13,655	$ 5,791	$ 13,655	$ 12,164	$ 13,992	$ 13,970	$ 13,801
Proceeds from the sale of Mortgage Servicing Rights		$ 0	5,927	$ 0
Loss on MSR Held-for-Sale			$ (2,700)
Mortgage related servicing assets [Member]
Servicing Assets At Fair Value Line Items
Servicing fee	$ 323,000

XML

Derivative Activities (Interest rate swap and their term) (Details) - Jun. 30, 2015 - USD ($) $ in Thousands	Total
Interest rate swap designated as cash flow hedges
Derivative [Line Items]
Amount	$ 263,658
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	$ 38,658
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	$ 16,365
Interest rate swaps not designated as hedges - offered to clients
Derivative [Line Items]
Amount	$ 16,365

XML

FDIC Indemnification Indemnification Asset and True-up Payment Obligation (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Mar. 31, 2015	Jun. 30, 2015	Jun. 30, 2014
FDIC-Assisted Acquisition [Abstract]
Percent Of Losses Fdic Absorbs	80.00%		80.00%
Percent Of Losses Recoveries Fdic Shares	80.00%		80.00%
FDIC Assisted Transaction Description	Also in connection with the FDIC assisted acquisition, the Bank agreed to make a true-up payment, also known as a 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 premium (discount) of ($227.5 million) (or ($56.9 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 $23.6 million and $22.0 million, net of discount, as of June 30, 2015 and December 31, 2014, respectively. The estimated liability is included within accrued expenses and other liabilities in the unaudited consolidated statements of financial condition. The true-up payment obligation, also known as clawback liability, may increase if actual and expected losses decline. The Company measures the true-up payment obligation at fair value. During the quarters and six-month periods ended June 30, 2015 and 2014 the fair value of the true-up payment obligation increased by $733 thousand and $856 thousand and $1.6 million and $1.7 million, respectively. These changes in fair value are included as change in true-up payment obligation within FDIC shared-loss expense, net in the consolidated statements of operations.
FDIC Indemnification Asset Noncash Payments Received	$ 26,600	$ 12,900	$ 39,500
Change in additional amortization of the FDIC indemnification asset			$ 2,100	$ 2

XML

Loans Receivable (Credit Quality Indicator of non-covered loans) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	$ 4,495,665	$ 4,578,431
Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	2,956,865	2,843,825
Doubtful	0
Financing Receivable, Individually Evaluated for Impairment	331,339	330,455
Commercial Secured [Member] | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	657,579	523,643
Pass	584,579	457,260
Special Mention	37,179	32,364
Substandard	4,508	2,637
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	31,313	31,382
Commercial Secured [Member] | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	3,107	4,482
Pass	1,521	3,724
Special Mention	0	0
Substandard	344	351
Doubtful		0
Financing Receivable, Individually Evaluated for Impairment	1,242	407
Corporate | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	201,251	133,076
Pass	183,630	109,282
Special Mention	15,306	15,615
Substandard	0	0
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	2,315	8,179
Institutional | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	35,113	36,611
Pass	26,444	27,089
Special Mention	8,444	9,284
Substandard	0	0
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	225	238
Middle Market | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	198,061	164,050
Pass	172,626	148,360
Special Mention	7,008	2,817
Substandard	109	0
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	18,318	12,873
Retail | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	203,411	175,628
Pass	182,468	159,209
Special Mention	6,229	3,690
Substandard	4,399	2,637
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	10,315	10,092
Retail | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	344	351
Pass	0	0
Special Mention	0	0
Substandard	344	351
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	3,097	1,650
Pass	2,765	692
Special Mention	192	958
Substandard	0	0
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	140	0
Floor Plan | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	2,763	4,131
Pass	1,521	3,724
Special Mention	0	0
Substandard	0	0
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	1,242	407
Real Estate | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	16,646	12,628
Pass	16,646	12,628
Special Mention	0	0
Substandard	0	0
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Other commercial and industrial [Member] | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	706,272	766,089
Pass	490,881	554,179
Special Mention	3,049	4,321
Substandard	1,684	2,701
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	210,658	204,888
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	5,341	8,193
Pass	5,207	7,887
Special Mention	0	8
Substandard	47	33
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	87	265
Institutional | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	65,344	63,746
Pass	59,684	63,746
Special Mention	0	0
Substandard	0	0
Doubtful		0
Financing Receivable, Individually Evaluated for Impairment	5,660	0
Institutional | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	405,220	478,935
Pass	207,661	278,953
Special Mention	0	0
Substandard	0	0
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	197,559	199,982
Middle Market | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	102,985	92,334
Pass	97,775	87,126
Special Mention	0	2,815
Substandard	0	0
Doubtful		0
Financing Receivable, Individually Evaluated for Impairment	5,210	2,393
Retail | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	95,246	90,171
Pass	91,455	85,941
Special Mention	484	259
Substandard	1,672	2,575
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	1,635	1,396
Retail | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	3,960	4,121
Pass	3,943	4,080
Special Mention	0	8
Substandard	17	33
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	37,477	40,903
Pass	34,306	38,413
Special Mention	2,565	1,247
Substandard	12	126
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	594	1,117
Floor Plan | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,381	4,072
Pass	1,264	3,807
Special Mention	0	0
Substandard	30	0
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	87	265
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	1,372,299	1,302,407
Pass	1,082,188	1,023,050
Special Mention	40,228	36,693
Substandard	6,583	5,722
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	243,300	236,942
Total Commercial subject to risk rating [Member] | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,363,851	1,289,732
Pass	1,075,460	1,011,439
Special Mention	40,228	36,685
Substandard	6,192	5,338
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	241,971	236,270
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	8,448	12,675
Pass	6,728	11,611
Special Mention	0	8
Substandard	391	384
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	$ 1,329	$ 672

XML

Earnings Per Common Share

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Earnings Per Share Text Block

NOTE 18 – (LOSS) EARNINGS PER COMMON SHARE

The calculation of (loss) earnings per common share for the quarters and six-month periods ended June 30, 2015and 2014 is as

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2015		2014		2015		2014
	(In thousands, except per share data)
Net (loss) income	$	(3,109)	$	21,309	$	(6,097)	$	45,056
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)
(Loss) income available to common shareholders	$	(6,575)	$	17,843	$	(13,028)	$	38,125
Effect of assumed conversion of the convertible ' ' preferred stock		1,838		1,838		3,675		3,675
(Loss) income available to common shareholders assuming conversion	$	(4,737)	$	19,681	$	(9,353)	$	41,800
Weighted average common shares and share equivalents:
Average common shares outstanding		44,505		45,014		44,569		45,170
Effect of dilutive securities:
Average potential common shares-options		110		200		148		168
Average potential common shares-assuming ' ' conversion of convertible preferred stock		7,159		7,138		7,159		7,138
Total weighted average common shares ' 'outstanding and equivalents		51,774		52,352		51,876		52,476
(Loss) earnings per common share - basic	$	(0.15)	$	0.40	$	(0.29)	$	0.84
(Loss) earnings per common share - diluted	$	(0.15)	$	0.38	$	(0.29)	$	0.80

In computing diluted (loss) earnings per common share, the 84,000 shares of convertible preferred stock, which remain outstanding at June 30, 2015, with a conversion rate, subject to certain conditions, of 86.0355shares 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 endedJune 30, 2015and2014 on the convertible preferred stock were added back as income available to common shareholders.

For the quarters ended June 30, 2015and2014, weighted-average stock options with an anti-dilutive effect on (loss) earnings per share not included in the calculation amounted to 566,025 and 364,604, respectively. For the six-month periods ended June 30, 2015and2014, weighted-average stock options with an anti-dilutive effect on (loss) earnings per share not included in the calculation amounted to $457,467 and $304,491, respectively.

XML

Business Segments (Tables)

6 Months Ended

Jun. 30, 2015

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 quarters and six-month periodsendedJune 30, 2015 and 2014:

	Quarter Ended June 30, 2015
				Wealth				Total Major				Consolidated
	Banking			Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	90,504	$	24	$	8,885	$	99,413	$	-	$	99,413
Interest expense		(7,110)		-		(10,011)		(17,121)		-		(17,121)
Net interest income		83,394		24		(1,126)		82,292		-		82,292
Provision for non-covered loan and lease losses		(15,644)		-		-		(15,644)		-		(15,644)
Provision for covered loan and lease losses		105		-		-		105		-		105
Non-interest income (loss)		(11,713)		6,893		164		(4,656)		-		(4,656)
Non-interest expenses		(56,844)		(6,733)		(860)		(64,437)		-		(64,437)
Intersegment revenue		163		-		61		224		(224)		-
Intersegment expenses		(61)		(87)		(76)		(224)		224		-
Income before income taxes	$	(600)	$	97	$	(1,837)	$	(2,340)	$	-	$	(2,340)
Total assets	$	6,153,663	$	21,157	$	2,136,293	$	8,311,113		(912,788)	$	7,398,325
	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

	Six-Month Period Ended June 30, 2015
			Wealth				Total Major				Consolidated
	Banking		Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	187,986	$	47	$	18,381	$	206,414	$	-	$	206,414
Interest expense		(14,564)		-		(19,923)		(34,487)		-		(34,487)
Net interest income		173,422		47		(1,542)		171,927		-		171,927
Provision for non-covered loan and lease losses		(53,027)		-		-		(53,027)		-		(53,027)
Provision for covered loan and lease losses, net		(4,705)		-		-		(4,705)		-		(4,705)
Non-interest income(loss)		(13,962)		13,903		2,284		2,225		-		2,225
Non-interest expenses		(106,156)		(11,524)		(3,089)		(120,769)		-		(120,769)
Intersegment revenue		707		-		160		866		(866)		-
Intersegment expenses		(159)		(518)		(189)		(866)		866		-
Income before income taxes	$	(3,880)	$	1,908	$	(2,376)	$	(4,349)	$	-	$	(4,349)
	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 (loss) before income taxes	$	62,930	$	2,205	$	2,319	$	67,454	$	-	$	67,454

XML

Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2015

Related Party Transactions [Abstract]

Schedule of Related Party Transactions [Table Text Block]

The activity and balance of these loans for the quarters and the six-month periods endedJune 30, 2015 and 2014were as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2015		2014		2015		2014
	(In thousands)				(In thousands)
Balance at the beginning of period	$	27,508	$	19,267	$	27,011	$	18,963
New loans		3,768		13,847		7,623		13,847
Repayments and sales		2,042		(8,963)		(1,316)		(8,659)
Balance at the end of period	$	33,318	$	24,151	$	33,318	$	24,151

XML

Allowance for Loan and Lease Losses (Gross Loan and Allowance for loan and lease losses) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	$ 4,495,665		$ 4,578,431
Non-covered acquired loans accounted under ASC 310-20
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	5,529		4,597	$ 3,444
Financing Receivable, Allowance for Credit Losses	5,529	$ 5,450	4,597		$ 3,618	$ 2,354
Financing Receivable, Individually Evaluated for Impairment	1,429		672
Financing Receivable, Collectively Evaluated for Impairment	191,094		242,129
Loans and Leases Receivable, Gross, Carrying Amount	192,523		242,801
Most recent acquired loans accounted under ASC 310-30
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses	18,359	14,166	13,481		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	35,669		9,809
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	43,320		41,630
Financing Receivable, Allowance for Credit Losses	78,989	76,759	51,439	50,638	49,507	49,081
Financing Receivable, Individually Evaluated for Impairment	331,339		330,455
Financing Receivable, Collectively Evaluated for Impairment	2,625,526		2,513,370
Loans and Leases Receivable, Gross, Carrying Amount	2,956,865		2,843,825
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	473	473	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	8,268		8,968
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	9,808		10,711
Financing Receivable, Allowance for Credit Losses	18,076	18,086	19,679	19,062	19,511	19,937
Financing Receivable, Individually Evaluated for Impairment	89,304		94,185
Financing Receivable, Collectively Evaluated for Impairment	667,884		697,566
Loans and Leases Receivable, Gross, Carrying Amount	757,188		791,751
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, Collectively Evaluated for Impairment	54		65	464
Financing Receivable, Allowance for Credit Losses	54	49	65	464	867	926
Financing Receivable, Individually Evaluated for Impairment	1,429		672
Financing Receivable, Collectively Evaluated for Impairment	7,019		12,003
Loans and Leases Receivable, Gross, Carrying Amount	8,448		12,675
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	14,940	13,687	13,476		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	27,401		841
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	7,378		7,591
Financing Receivable, Allowance for Credit Losses	34,779	33,123	8,432	12,423	13,994	14,897
Financing Receivable, Individually Evaluated for Impairment	241,971		236,270
Financing Receivable, Collectively Evaluated for Impairment	1,121,879		1,053,462
Loans and Leases Receivable, Gross, Carrying Amount	1,363,850		1,289,732
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, Collectively Evaluated for Impairment	2,616		1,211	338
Financing Receivable, Allowance for Credit Losses	2,616	1,885	1,211	338	504	0
Financing Receivable, Individually Evaluated for Impairment	0		0
Financing Receivable, Collectively Evaluated for Impairment	41,505		45,344
Loans and Leases Receivable, Gross, Carrying Amount	41,505		45,344
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	84	6	5		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	10,464		9,072
Financing Receivable, Allowance for Credit Losses	10,464	9,405	9,072	7,887	7,135	6,006
Financing Receivable, Individually Evaluated for Impairment	0		0
Financing Receivable, Collectively Evaluated for Impairment	212,629		186,760
Loans and Leases Receivable, Gross, Carrying Amount	212,629		186,760
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, Collectively Evaluated for Impairment	2,859		3,321	2,642
Financing Receivable, Allowance for Credit Losses	2,859		3,321
Financing Receivable, Individually Evaluated for Impairment	0		0
Financing Receivable, Collectively Evaluated for Impairment	142,570		184,782
Loans and Leases Receivable, Gross, Carrying Amount	142,570		184,782
Leasing [Mamber] | 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	15,064		14,255
Financing Receivable, Allowance for Credit Losses	15,064	15,762	14,255	11,127	8,731	7,866
Financing Receivable, Individually Evaluated for Impairment	64		0
Financing Receivable, Collectively Evaluated for Impairment	623,134		575,582
Loans and Leases Receivable, Gross, Carrying Amount	623,198		575,582
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, Collectively Evaluated for Impairment	0		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	606		1
Financing Receivable, Allowance for Credit Losses	606	$ 383	1	$ 139	$ 136	$ 375
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

Borrowings (Securities Sold Under Agreement to Repurchase by Counterparties) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Borrowings	$ 1,598,726	$ 1,420,006
Securities Sold under Agreements to Repurchase [Member]
Debt Instrument [Line Items]
Borrowings	1,158,945	977,816
Fair Value of Underlying Collateral	1,282,553	1,088,525
Securities Sold under Agreements to Repurchase [Member] | Jp Morgan Chase Bank Na [Member]
Debt Instrument [Line Items]
Borrowings	428,902	670,000
Fair Value of Underlying Collateral	469,599	328,198
Securities Sold under Agreements to Repurchase [Member] | Credit Suisse Securities LLC [Member]
Debt Instrument [Line Items]
Borrowings	670,000	307,816
Fair Value of Underlying Collateral	$ 749,286	$ 760,327

XML

Derivative Activities (Tables)

6 Months Ended

Jun. 30, 2015

Derivative Instrument Detail [Abstract]

Schedule Of Derivative Instruments Text Block

The following table presents the Company’s derivative assets and liabilities at June 30, 2015 and December 31, 2014:

	June 30,		December 31,
	2015		2014
	(In thousands)
Derivative assets:
Options tied to S&P 500 Index	$	2,137	$	5,555
Interest rate swaps not designated as hedges		2,154		2,399
Interest rate caps		65		152
Other		20		1
	$	4,376	$	8,107
Derivative liabilities:
Interest rate swaps designated as cash flow hedges		6,514		8,585
Interest rate swaps not designated as hedges		2,154		2,399
Interest rate caps		65		152
Other		6		85
	$	8,739	$	11,221

The following table shows a summary of these swaps and their terms at June 30, 2015:

	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
		38,658	2.4210%	1-Month LIBOR	07/03/13	07/03/13	08/01/23
	$	263,658

	Notional		Fixed	Variable	Settlement	Maturity
Type	Amount		Rate	Rate Index	Date	Date
	(In thousands)
Interest Rate Swaps - Derivatives Offered to Clients	$	3,865	5.1300%	1-Month LIBOR	07/03/06	07/03/16
		12,500	5.5050%	1-Month LIBOR	04/11/09	04/11/19
	$	16,365
Interest Rate Swaps - Mirror Image Derivatives	$	3,865	5.1300%	1-Month LIBOR	07/03/06	07/03/16
		12,500	5.5050%	1-Month LIBOR	04/11/09	04/11/19
	$	16,365

XML

Restricted Cash (Composition) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Restricted Cash And Cash Equivalents Items Line Items
Deposit pledged as collateral	$ 6,086	$ 8,407
Derivatives
Restricted Cash And Cash Equivalents Items Line Items
Deposit pledged as collateral	2,980	2,980
Obligations under agreements of loans sold with recourse
Restricted Cash And Cash Equivalents Items Line Items
Deposit pledged as collateral	$ 3,106	$ 5,427

XML

Loans Receivable (Interest Income Recognized in loans individually evaluated for impairment) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Non Covered Loan [Member]
Impaired Financing Receivable Interest Income Accrual Method [Abstract]
Total Interest Income	$ 1,153	$ 779	$ 2,305	$ 1,502
Impaired Financing Receivable Average Recorded Investment [Abstract]
Total Average Recorded Investment	332,916	119,596	335,074	117,268
Originated Loans [Member]
Impaired Financing Receivable Interest Income Accrual Method [Abstract]
Total Interest Income	1,142	779	2,284	1,502
Impaired Financing Receivable Average Recorded Investment [Abstract]
Total Average Recorded Investment	331,470	119,596	333,151	117,268
Commercial Loan [Member] | Originated Loans [Member]
Impaired Financing Receivable Interest Income Accrual Method [Abstract]
Impaired Financing Receivable With Related Allowance Interest Income Accrual Method	45	39	90	78
Impaired Financing Receivable With No Related Allowance Interest Income Accrual Method	316	77	631	154
Impaired Financing Receivable Average Recorded Investment [Abstract]
Impaired Financing Receivable With Related Allowance Average Recorded Investment	212,414	7,200	146,144	6,729
Impaired Financing Receivable With No Related Allowance Average Recorded Investment	30,015	21,951	95,791	21,790
Commercial Loan [Member] | Accounted for under ASC 310-20 [Member]
Impaired Financing Receivable Interest Income Accrual Method [Abstract]
Impaired Financing Receivable With No Related Allowance Interest Income Accrual Method	11	0	21	0
Impaired Financing Receivable Average Recorded Investment [Abstract]
Impaired Financing Receivable With No Related Allowance Average Recorded Investment	1,446	0	1,923	0
Troubled Debt Restructuring [Member] | Originated Loans [Member]
Impaired Financing Receivable Interest Income Accrual Method [Abstract]
Impaired Financing Receivable With Related Allowance Interest Income Accrual Method	781	663	1,563	1,270
Impaired Financing Receivable Average Recorded Investment [Abstract]
Impaired Financing Receivable With Related Allowance Average Recorded Investment	$ 89,041	$ 90,445	$ 91,216	$ 88,749

XML

Stockholders' Equity (Shares repurchased under the stock repurchase program) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Mar. 31, 2014
Equity, Class of Treasury Stock [Line Items]
Common shares repurchased as part of the stock repurchase program (Shares)			303,985
Treasury Stock, Value	$ 100,668	$ 97,070

XML

Loans Receivable (Non-Covered Acquired Loan carrying amounts) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Accounts Notes And Loans Receivable Line Items
Financing Receivable Acquired With Deteriorated Credit Quality	$ 2,208,242	$ 2,394,378
Non-acretable discount	449,917	456,627
Cash expected to be collected	1,758,325	1,937,751
Accretable Yield	412,048	445,946
Carrying amount, gross	1,346,277	1,491,805
Allowance for loan and lease losses	18,359	13,481
Carrying amount, net	$ 1,327,918	$ 1,478,324

XML

Guarantees (Tables)

6 Months Ended

Jun. 30, 2015

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, 2015 and 2014.

	Quarter Ended June 30,					Six-Month Period Ended June 30,
	2015		2014			2015		2014
	(In thousands)
Balance at beginning of period	$	487	$	1,549	$	927	$	1,955
Net charge-offs/terminations		(198)		(239)		(638)		(645)
Balance at end of period	$	289	$	1,310	$	289	$	1,310

XML

Resticted Cash

6 Months Ended

Jun. 30, 2015

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,
	2015		2014
	(In thousands)
Cash pledged as collateral to other financial institutions to secure:
Derivatives	$	2,980	$	2,980
Obligations under agreement of loans sold with recourse		3,106		5,427
	$	6,086	$	8,407

At June 30, 2015 and December 31, 2014, the Bank’s international banking entities, Oriental International Bank Inc. (“OIB”) and Oriental Overseas, each held unencumbered certificates of deposit in the amount of $300 thousand as the legal reserve required for international banking entities under Puerto Rico law. Each certificate of deposit cannot be withdrawn by OIB or Oriental Overseas without prior written approval of the Office of the Commissioner of Financial Institutions (“OCFI”).

As part of its derivative activities, the Company has entered into collateral agreements with certain financial counterparties. AtJune 30, 2015 and December 31, 2014, the Company had delivered $3.0 million of cash as collateral for such derivatives activities.

As part of the BBVA Acquisition, the Company assumed a contract with FNMA which required collateral to guarantee the repurchase, if necessary, of loans sold with recourse. At June 30, 2015 and December 31, 2014, the Company delivered as collateral cash amounting to $3.1 million and $5.4 million, respectively.

The Bank is required by Puerto Rico law to maintain average weekly reserve balances to cover government demand deposits. The amount of those minimum average reserve balances for the week that covered June 30, 2015 was $152.7million (December 31, 2014- $141.5 million). At June 30, 2015 and December 31, 2014, the Bank complied with the requirement. Cash and due from bank as well as other short-term, highly liquid securities are used to cover the required average reserve balances.

XML

Earnings Per Common Share (Details) - shares	3 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share [Abstract]
Stock Conversion Rate	86.0355
Weighted average stock anti dilutive effect excluded from calculation of earnings per share	566,025	364,604

XML

Loans Receivable (Accretable yield and non-accretable discount activity) (Details) - Acquired under ASC 310-30 Non-Covered Loans [Member] - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period	$ 414,030,000	$ 482,001,000	$ 445,946,000	$ 517,553,000
Accretion Accretable	(28,003,000)	(39,714,000)	(59,473,000)	(79,983,000)
Change in expected cash flow	33,562,000		33,562,000
Transfer from (to) non-accretable discount	(7,541,000)	2,319,000	(7,987,000)	7,036,000
Balance at end of period	412,048,000	444,606,000	412,048,000	444,606,000
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Balance at beginning of period	450,511,000	563,294,000	456,627,000	579,587,000
Change in actual and expected losses	(8,135,000)	(6,251,000)	(14,697,000)	(17,827,000)
Transfer (to) from accretable yield	7,541,000	(2,319,000)	7,987,000	(7,036,000)
Balance at end of period	449,917,000	554,724,000	449,917,000	554,724,000
Mortgages [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period	284,612,000	278,468,000	298,364,000	287,841,000
Accretion Accretable	(8,813,000)	(9,363,000)	(17,800,000)	(18,732,000)
Change in expected cash flow	0		0
Transfer from (to) non-accretable discount	81,000	0	(4,684,000)	(4,000)
Balance at end of period	275,880,000	269,105,000	275,880,000	269,105,000
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Balance at beginning of period	392,609,000	458,648,000	389,839,000	463,166,000
Change in actual and expected losses	(3,421,000)	(2,859,000)	(5,416,000)	(7,381,000)
Transfer (to) from accretable yield	(81,000)	0	4,684,000	4,000
Balance at end of period	389,107,000	455,789,000	389,107,000	455,789,000
Commercial Loan [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period	57,330,000	82,637,000	61,196,000	96,139,000
Accretion Accretable	(9,597,000)	(12,217,000)	(20,356,000)	(24,934,000)
Change in expected cash flow	23,695,000		23,695,000
Transfer from (to) non-accretable discount	135,000	71,000	7,028,000	(714,000)
Balance at end of period	71,563,000	70,491,000	71,563,000	70,491,000
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Balance at beginning of period	15,826,000	41,551,000	23,069,000	42,515,000
Change in actual and expected losses	(4,921,000)	(430,000)	(5,271,000)	(2,179,000)
Transfer (to) from accretable yield	(135,000)	(71,000)	(7,028,000)	714,000
Balance at end of period	10,770,000	41,050,000	10,770,000	41,050,000
Construction Loans [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period	19,390,000	35,005,000	25,829,000	42,993,000
Accretion Accretable	(2,143,000)	(5,973,000)	(5,953,000)	(10,459,000)
Change in expected cash flow	9,867,000		9,867,000
Transfer from (to) non-accretable discount	(2,501,000)	1,640,000	(5,130,000)	(1,862,000)
Balance at end of period	24,613,000	30,672,000	24,613,000	30,672,000
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Balance at beginning of period	3,957,000	7,248,000	3,486,000	5,851,000
Change in actual and expected losses	536,000	(220,000)	(1,622,000)	(2,325,000)
Transfer (to) from accretable yield	2,501,000	(1,640,000)	5,130,000	1,862,000
Balance at end of period	6,994,000	5,388,000	6,994,000	5,388,000
Automobile Loan [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period	47,097,000	74,635,000	53,998,000	77,845,000
Accretion Accretable	(6,163,000)	(10,593,000)	(13,151,000)	(22,418,000)
Change in expected cash flow	0		0
Transfer from (to) non-accretable discount	(9,403,000)	578,000	(9,316,000)	9,193,000
Balance at end of period	31,531,000	64,620,000	31,531,000	64,620,000
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Balance at beginning of period	14,543,000	29,328,000	16,215,000	39,645,000
Change in actual and expected losses	(256,000)	(1,471,000)	(1,841,000)	(3,173,000)
Transfer (to) from accretable yield	9,403,000	(578,000)	9,316,000	(9,193,000)
Balance at end of period	23,690,000	27,279,000	23,690,000	27,279,000
Consumer Loan [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period	5,601,000	11,256,000	6,559,000	12,735,000
Accretion Accretable	(1,287,000)	(1,568,000)	(2,213,000)	(3,440,000)
Change in expected cash flow	0		0
Transfer from (to) non-accretable discount	4,147,000	30,000	4,115,000	423,000
Balance at end of period	8,461,000	9,718,000	8,461,000	9,718,000
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Balance at beginning of period	23,576,000	26,519,000	24,018,000	28,410,000
Change in actual and expected losses	(73,000)	(1,271,000)	(547,000)	(2,769,000)
Transfer (to) from accretable yield	(4,147,000)	(30,000)	(4,115,000)	(423,000)
Balance at end of period	$ 19,356,000	$ 25,218,000	$ 19,356,000	$ 25,218,000

XML

Regulatory Capital Requirements (Tables)

6 Months Ended

Jun. 30, 2015

Regulatory Capital Requirements 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, 2015 and December 31, 2014are 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, 2015
Total capital to risk-weighted assets	$	868,568	17.41%	$	399,100	8.00%	$	498,875	10.00%
Tier 1 capital to risk-weighted assets	$	790,936	15.85%	$	299,325	6.00%	$	399,100	8.00%
Common equity tier 1 capital to risk-weighted assets	$	611,541	12.26%	$	224,494	4.50%	$	324,269	6.50%
Tier 1 capital to average total assets	$	790,936	11.05%	$	286,262	4.00%	$	357,827	5.00%
As of December 31, 2014
Total capital to risk-weighted assets	$	851,437	17.57%	$	387,772	8.00%	$	484,715	10.00%
Tier 1 capital to risk-weighted assets	$	776,525	16.02%	$	193,886	4.00%	$	290,829	6.00%
Tier 1 capital to average total assets	$	776,525	10.61%	$	292,738	4.00%	$	365,922	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, 2015
Total capital to risk-weighted assets	$	819,436	16.48%	$	397,716	8.00%	$	497,145	10.00%
Tier 1 capital to risk-weighted assets	$	742,098	14.93%	$	298,287	6.00%	$	397,716	8.00%
Common equity tier 1 capital to risk-weighted assets	$	742,098	14.93%	$	223,715	4.50%	$	323,144	6.50%
Tier 1 capital to average total assets	$	742,098	10.44%	$	284,228	4.00%	$	355,285	5.00%
As of December 31, 2014
Total capital to risk-weighted assets	$	820,884	16.99%	$	386,444	8.00%	$	483,055	10.00%
Tier 1 capital to risk-weighted assets	$	746,177	15.45%	$	193,222	4.00%	$	289,833	6.00%
Tier 1 capital to average total assets	$	746,177	10.26%	$	290,879	4.00%	$	363,599	5.00%

XML

Business Segment

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Segment Reporting

NOTE 22– 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 OPC. 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 retirement 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 quarters and six-month periodsendedJune 30, 2015 and 2014:

	Quarter Ended June 30, 2015
				Wealth				Total Major				Consolidated
	Banking			Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	90,504	$	24	$	8,885	$	99,413	$	-	$	99,413
Interest expense		(7,110)		-		(10,011)		(17,121)		-		(17,121)
Net interest income		83,394		24		(1,126)		82,292		-		82,292
Provision for non-covered loan and lease losses		(15,644)		-		-		(15,644)		-		(15,644)
Provision for covered loan and lease losses		105		-		-		105		-		105
Non-interest income (loss)		(11,713)		6,893		164		(4,656)		-		(4,656)
Non-interest expenses		(56,844)		(6,733)		(860)		(64,437)		-		(64,437)
Intersegment revenue		163		-		61		224		(224)		-
Intersegment expenses		(61)		(87)		(76)		(224)		224		-
Income before income taxes	$	(600)	$	97	$	(1,837)	$	(2,340)	$	-	$	(2,340)
Total assets	$	6,153,663	$	21,157	$	2,136,293	$	8,311,113		(912,788)	$	7,398,325
	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

	Six-Month Period Ended June 30, 2015
			Wealth				Total Major				Consolidated
	Banking		Management		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	187,986	$	47	$	18,381	$	206,414	$	-	$	206,414
Interest expense		(14,564)		-		(19,923)		(34,487)		-		(34,487)
Net interest income		173,422		47		(1,542)		171,927		-		171,927
Provision for non-covered loan and lease losses		(53,027)		-		-		(53,027)		-		(53,027)
Provision for covered loan and lease losses, net		(4,705)		-		-		(4,705)		-		(4,705)
Non-interest income(loss)		(13,962)		13,903		2,284		2,225		-		2,225
Non-interest expenses		(106,156)		(11,524)		(3,089)		(120,769)		-		(120,769)
Intersegment revenue		707		-		160		866		(866)		-
Intersegment expenses		(159)		(518)		(189)		(866)		866		-
Income before income taxes	$	(3,880)	$	1,908	$	(2,376)	$	(4,349)	$	-	$	(4,349)
	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 (loss) before income taxes	$	62,930	$	2,205	$	2,319	$	67,454	$	-	$	67,454

XML

Fair Value

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value

NOTE 21- 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.

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 June 30, 2015 and December 31, 2014, the Company did not have investment securities classified as Level 3.

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.

Impaired Loans.

Impaired loans are carried at the present value of expected future cash flows using the loan’s existing rate in a discounted cash flow calculation, or the fair value of the collateral if the loan is collateral-dependent. Expected cash flows are based on internal inputs reflecting expected default rates on contractual cash flows. This method of estimating fair value does not incorporate the exit-price concept of fair value described in Accounting Standards Codification (“ASC”) 820-10 and would generally result in a higher value than the exit-price approach. For loans measured using the estimated fair value of collateral less costs to sell, fair value is generally determined 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 less disposition costs. 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, are summarized below:

	June 30, 2015
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	1,044,319	$	-	$	1,044,319
Money market investments		5,795		-		-		5,795
Derivative assets		-		2,238		2,138		4,376
Servicing assets		-		-		5,791		5,791
Derivative liabilities		-		(8,739)		(2,044)		(10,783)
	$	5,795	$	1,037,818	$	5,885	$	1,049,498
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	243,401	$	243,401
Foreclosed real estate		-		-		81,333		81,333
Other repossessed assets		-		-		14,661		14,661
	$	-	$	-	$	339,395	$	339,395

	December 31, 2014
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	1,216,538	$	-	$	1,216,538
Money market investments		4,675		-		-		4,675
Derivative assets		-		2,552		5,555		8,107
Servicing assets		-		-		13,992		13,992
Derivative liabilities		-		(11,221)		(5,477)		(16,698)
	$	4,675	$	1,207,869	$	14,070	$	1,226,614
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	236,942	$	236,942
Foreclosed real estate		-		-		95,661		95,661
Other repossessed assets		-		-		21,800		21,800
	$	-	$	-	$	354,403	$	354,403

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 June 30, 2015and 2014:

	Quarter Ended June 30, 2015
	Derivative				Derivative
	asset				liability
	(S&P				(S&P
	Purchased		Servicing		Embedded
Level 3 Instruments Only	Options)		assets		Options)		Total
Balance at beginning of period	$	3,734	$	12,164	$	(3,617)	$	12,281
(Losses) gains included in earnings		(1,596)		-		1,517		(79)
Sale of mortgage servicing rights held-for-sale		-		(6,985)		-		(6,985)
Changes due to payments on loans		-		(313)		-		(313)
New instruments acquired		-		1,529		-		1,529
Changes in fair value related to price of MSRs held for sale		-		(835)		-		(835)
Amortization		-		-		56		56
Changes in fair value of servicing assets		-		231		-		231
Balance at end of period	$	2,138	$	5,791	$	(2,044)	$	5,885
	Six-Month Period Ended June 30, 2015
	Derivative				Derivative
	asset				liability
	(S&P				(S&P
	Purchased		Servicing		Embedded
Level 3 Instruments Only	Options)		assets		Options)		Total
Balance at beginning of period	$	5,555	$	13,992	$	(5,477)	$	14,070
(Losses) gains included in earnings		(3,417)		-		3,299		(118)
Sale of mortgage servicing rights held-for-sale		-		(6,985)		-		(6,985)
Changes due to payments on loans		-		(732)		-		(732)
New instruments acquired		-		2,060		-		2,060
Amortization		-		-		134		134
Changes in fair value related to price of MSRs held for sale		-		(2,716)		-		(2,716)
Changes in fair value of servicing assets		-		172		-		172
Balance at end of period	$	2,138	$	5,791	$	(2,044)	$	5,885

	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
(Losses) gains 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

During the quarters and six-month periods ended June 30, 2015 and 2014, 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 and non-recurring basisusing significant unobservable inputs (Level 3) atJune 30, 2015:

	June 30, 2015
	Fair Value		Valuation Technique	Unobservable Input	Range
	(In thousands)
Derivative assets (S&P Purchased Options)	$	2,138	Option pricing model	Implied option volatility	30.23%- 38.69%
				Counterparty credit risk (based on 5-year credit default swap ("CDS") spread)	72.89%- 72.89%
Servicing assets	$	5,791	Cash flow valuation	Constant prepayment rate	4.10% - 10.22%
				Discount rate	10.00% - 12.00%
Derivative liability (S&P Embedded Options)	$	(2,044)	Option pricing model	Implied option volatility	30.23%- 38.69%
				Counterparty credit risk (based on 5-year CDS spread)	72.89%- 72.89%
Collateral dependant impaired loans	$	40,893	Fair value of property or collateral	Appraised value less disposition costs	20.20% - 27.20%
Puerto Rico Electric Power Authority line of credit	$	173,565	Cash flow valuation	Discount rate	7.25%
Other non-collateral dependant impaired loans		4,949	Cash flow valuation	Discount rate	4.25% - 9.25%
Foreclosed real estate	$	81,333	Fair value of property or collateral	Appraised value less disposition costs	20.20% - 27.20%
Other repossessed assets	$	14,661	Fair value of property or collateral	Appraised value less disposition costs	20.20% - 27.20%

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 atJune 30, 2015 and December 31, 2014is as follows:

	June 30,				December 31,
	2015				2014
	Fair		Carrying		Fair		Carrying
	Value		Value		Value		Value
	(In thousands)
Level 1
Financial Assets:
Cash and cash equivalents	$	553,535	$	553,535	$	573,427	$	573,427
Restricted cash		6,086		6,086		8,407		8,407
Level 2
Financial Assets:
Trading securities		786		786		1,594		1,594
Investment securities available-for-sale		1,044,319		1,044,319		1,216,538		1,216,538
Investment securities held-to-maturity		547,776		550,553		164,154		162,752
Federal Home Loan Bank (FHLB) stock		20,826		20,826		21,169		21,169
Other investments		3		3		3		3
Derivative assets		2,238		2,238		2,552		2,552
Financial Liabilities:
Derivative liabilities		8,739		8,739		11,221		11,221
Level 3
Financial Assets:
Total loans (including loans held-for-sale)
Non-covered loans, net		4,733,607		4,417,433		4,563,701		4,527,735
Covered loans, net		253,902		222,034		345,660		298,911
Derivative assets		2,138		2,138		5,555		5,555
FDIC indemnification asset		12,746		22,704		75,969		97,378
Accrued interest receivable		19,254		19,254		21,345		21,345
Servicing assets		5,791		5,791		13,992		13,992
Financial Liabilities:
Deposits		4,737,965		4,749,684		4,893,247		4,924,406
Securities sold under agreements to repurchase		1,193,574		1,161,136		1,020,621		980,087
Advances from FHLB		338,033		333,391		339,172		334,331
Other borrowings		1,883		2,090		3,979		4,004
Subordinated capital notes		91,996		102,109		104,288		101,584
Accrued expenses and other liabilities		113,537		113,537		133,290		133,290
Derivative liabilities		2,044		2,044		5,477		5,477

The following methods and assumptions were used to estimate the fair values of significant financial instruments at June 30, 2015 and December 31, 2014:

•Cash and cash equivalents (including money market investments and time deposits with other banks), restricted cash, accrued interest receivable, and 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 and other investments, 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 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 assetis 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.Non-performing loans have been valued at the carrying amounts.

•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, other borrowings, 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.

XML

Borrowings (Advances from the Federal Home Loan Bank) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Advances From Federal Home Loan Banks [Line Items]
Borrowings	$ 1,598,726	$ 1,420,006
Federal Home Loan Bank Advances [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowings	$ 333,066
FHLB, Weighted Average Interest Rate	0.74%
Federal Home Loan Bank Advances [Member] | April 3, 2017 [Member] | Five Million [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowings	$ 4,384
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]
Borrowings	$ 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]
Borrowings	$ 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]
Borrowings	$ 10,024
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]
Borrowings	$ 263,658
Federal Loan Home Bank Advances Short Term Period Matured [Member] | April 7, 2015 [Member] | Twenty Five Millions [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowings	$ 25,000
FHLB, Weighted Average Interest Rate	0.35%
Settlement Date	Jun. 04, 2015
Maturity Date	Jul. 06, 2015
Federal Loan Home Bank Advances Short Term Period Matured [Member] | April 10, 2015 [Member] | Fifty Millions [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowings	$ 50,000
FHLB, Weighted Average Interest Rate	0.34%
Settlement Date	Jun. 10, 2015
Maturity Date	Jul. 10, 2015
Federal Loan Home Bank Advances Short Term Period Matured [Member] | April 16, 2015 [Member] | One Hundred Millions [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowings	$ 100,000
FHLB, Weighted Average Interest Rate	0.35%
Settlement Date	Jun. 16, 2015
Maturity Date	Jul. 16, 2015
Federal Loan Home Bank Advances Short Term Period Matured [Member] | April 24, 2015 [Member] | Twenty Five Millions [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowings	$ 25,000
FHLB, Weighted Average Interest Rate	0.35%
Settlement Date	Jun. 24, 2015
Maturity Date	Jul. 24, 2015
Federal Loan Home Bank Advances Short Term Period Matured [Member] | April 30, 2015 [Member] | Twenty Five Millions [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowings	$ 25,000
FHLB, Weighted Average Interest Rate	0.34%
Settlement Date	Jun. 30, 2015
Maturity Date	Jul. 30, 2015
Federal Loan Home Bank Advances Short Term Period Matured [Member] | April 1, 2015 [Member] | Fourty Million [Member]
Advances From Federal Home Loan Banks [Line Items]
Borrowings	$ 38,658
FHLB, Weighted Average Interest Rate	0.35%
Settlement Date	Jun. 01, 2015
Maturity Date	Jul. 01, 2015

XML

Investment Securities (Gross realize gains and losses by category) (Details) - Collateralized Mortgage Backed Securities [Member] - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Schedule of Available-for-sale Securities [Line Items]
Sale Price	$ 103,831	$ 163,235
Book Value	101,258	158,869
Available-for-sale Securities, Gross Realized Gains	2,572	4,366
Available-for-sale Securities, Gross Realized Losses	0	0
FNMA and FHLMC [Member]
Schedule of Available-for-sale Securities [Line Items]
Sale Price	40,307	115,158
Book Value	37,735	110,792
Available-for-sale Securities, Gross Realized Gains	2,571	4,366
Available-for-sale Securities, Gross Realized Losses	0	0
GNMA [Member]
Schedule of Available-for-sale Securities [Line Items]
Sale Price	63,524	48,077
Book Value	63,523	48,077
Available-for-sale Securities, Gross Realized Gains	1	0
Available-for-sale Securities, Gross Realized Losses	$ 0	$ 0

XML

Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2015

Stockholders' Equity [Abstract]

Schedule of Treasury Stock by Class [Table Text Block]

The activity in connection with common shares held in treasury by the Company for the six-month periodsended June 30, 2015 and 2014 is set forth below

	Six-Month Period Ended June 30,
	2015			2014
		Dollar			Dollar
	Shares	Amount		Shares	Amount
	(In thousands, except shares data)
Beginning of period	8,012,254	$	97,070	7,030,101	$	80,642
Common shares used upon lapse of restricted stock units	(58,279)		(640)	(30,552)		(323)
Common shares repurchased as part of the stock repurchase program	303,985		4,238	707,400		10,393
End of period	8,257,960	$	100,668	7,706,949	$	90,712

XML

Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

New Accounting Pronouncements Policy [Policy Text Block]

Recent Accounting Developments

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability rather than as an asset. The standard does not affect the recognition and measurement of debt issuance costs; therefore, the amortization of such costs shall continue to be reported as interest expense. ASU 2015-03 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permissible for financial statements that have not been previously issued. The new guidance is to be applied on a retrospective basis to all prior periods. The Company does not expect the adoption of ASU 2015-03 to have a material impact on its consolidated financial statements.

Other than the accounting pronouncement disclosed above, there were no other new accounting pronouncements issued during the second quarter of 2015 that could have a material impact on the Company’s financial position, operating results or financials statement disclosures.

XML

Restricted Cash (Tables)

6 Months Ended

Jun. 30, 2015

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,
	2015		2014
	(In thousands)
Cash pledged as collateral to other financial institutions to secure:
Derivatives	$	2,980	$	2,980
Obligations under agreement of loans sold with recourse		3,106		5,427
	$	6,086	$	8,407

XML

Organization, Consolidation and Basis of Presentation

6 Months Ended

Jun. 30, 2015

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 (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, Oriental Pension Consultants, Inc. (“OPC”), formerly known as Caribbean Pension Consultants, Inc.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 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 these acquisitions have been integrated with the Company’s existing business.

Significant Accounting Policies

Recent Accounting Developments

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability rather than as an asset. The standard does not affect the recognition and measurement of debt issuance costs; therefore, the amortization of such costs shall continue to be reported as interest expense. ASU 2015-03 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permissible for financial statements that have not been previously issued. The new guidance is to be applied on a retrospective basis to all prior periods. The Company does not expect the adoption of ASU 2015-03 to have a material impact on its consolidated financial statements.

Other than the accounting pronouncement disclosed above, there were no other new accounting pronouncements issued during the second quarter of 2015 that could have a material impact on the Company’s financial position, operating results or financials statement disclosures.

XML

Investments Securities (Tables)

6 Months Ended

Jun. 30, 2015

Investments [Abstract]

Investment Table Text Block

The amortized cost, gross unrealized gains and losses, fair value, and weighted average yield of the securitiesowned by the Company at June 30, 2015 and December 31, 2014were as follows:

	June 30, 2015
			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	$	832,127	$	30,638	$	1,192	$	861,573	3.01%
GNMA certificates		3,625		249		-		3,874	5.03%
CMOs issued by US government-sponsored agencies		157,884		83		2,921		155,046	1.83%
Total mortgage-backed securities		993,636		30,970		4,113		1,020,493	2.83%
Investment securities
Obligations of US government-sponsored agencies		6,114		14		-		6,128	1.36%
Obligations of Puerto Rico government and political subdivisions		20,988		-		6,259		14,729	5.41%
Other debt securities		2,835		134		-		2,969	2.99%
Total investment securities		29,937		148		6,259		23,826	4.35%
Total securities available for sale	$	1,023,573	$	31,118	$	10,372	$	1,044,319	2.87%
Held-to-maturity
Mortgage-backed securities
FNMA and FHLMC certificates		525,504		978		3,757		522,725	2.28%
Investment securities
US Treasury securities		25,049		6		4		25,051	0.49%
Total securities held to maturity		550,553		984		3,761		547,776	2.20%
Total	$	1,574,126	$	32,102	$	14,133	$	1,592,095	2.64%

	December 31, 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	$	972,836	$	37,876	$	1,203	$	1,009,509	3.12%
GNMA certificates		4,473		288		8		4,753	4.94%
CMOs issued by US government-sponsored agencies		179,146		136		3,153		176,129	1.81%
Total mortgage-backed securities		1,156,455		38,300		4,364		1,190,391	2.92%
Investment securities
Obligations of US government-sponsored agencies		7,148		33		-		7,181	1.34%
Obligations of Puerto Rico government and public instrumentalities		20,939		-		5,267		15,672	5.41%
Other debt securities		3,137		157		-		3,294	2.95%
Total investment securities		31,224		190		5,267		26,147	4.23%
Total securities available-for-sale	$	1,187,679	$	38,490	$	9,631	$	1,216,538	2.96%
Held-to-maturity
Mortgage-backed securities
FNMA and FHLMC certificates		162,752		1,402		-		164,154	2.48%
Total	$	1,350,431	$	39,892	$	9,631	$	1,380,692	2.90%

The amortized cost and fair value of the Company’s investment securities at June 30, 2015, by contractual maturity, are shown in the next table.

	June 30, 2015
	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	$	18,125	$	18,401	$	-	$	-
Total due after 5 to 10 years		18,125		18,401		-		-
Due after 10 years
FNMA and FHLMC certificates		814,002		843,172		525,504		522,725
GNMA certificates		3,625		3,874		-		-
CMOs issued by US government-sponsored agencies		157,884		155,046		-		-
Total due after 10 years		975,511		1,002,092		525,504		522,725
Total mortgage-backed securities		993,636		1,020,493		525,504		522,725
Investment securities
Due from 1 to 5 years
US Treasury securities		-		-		25,049		25,051
Obligations of Puerto Rico government and political subdivisions		10,521		8,444		-		-
Total due from 1 to 5 years		10,521		8,444		25,049		25,051
Due after 5 to 10 years
Obligations of US government and sponsored agencies		6,114		6,128		-		-
Total due after 5 to 10 years		6,114		6,128		-		-
Due after 10 years
Obligations of Puerto Rico government and political subdivisions		10,467		6,285		-		-
Other debt securities		2,835		2,969		-		-
Total due after 10 years		13,302		9,254		-		-
Total investment securities		29,937		23,826		25,049		25,051
Total securities available-for-sale	$	1,023,573	$	1,044,319	$	550,553	$	547,776

Realized Gain Loss On Investments Table Text Block

The table below presents the gross realized gains by category for such periods

	Six-Month Period Ended June 30,2015
			Book Value
Description	Sale Price		at Sale		Gross Gains		Gross Losses
	(In thousands)
Sale of securities available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates	$	40,307	$	37,735	$	2,571	$	-
GNMA certificates		63,524		63,523		1		-
Total	$	103,831	$	101,258	$	2,572	$	-

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

Unrealized Gain Loss On Investments Table Text Block

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, 2015
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies	$	115,483	$	2,807	$	112,676
Obligations of Puerto Rico government and political subdivisions		20,988		6,259		14,729
	$	136,471	$	9,066	$	127,405
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US Government-sponsored agencies	$	28,596	$	114	$	28,482
FNMA and FHLMC certificates		163,733		1,192		162,541
		192,329		1,306		191,023
Securities held-to-maturity
FNMA and FHLMC Certificates		358,591		3,757		354,834
US Treausury Securities		10,024		4		10,020
		368,615		3,761		364,854
	$	560,944	$	5,067	$	555,877
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies	$	144,079	$	2,921	$	141,158
FNMA and FHLMC certificates		163,733		1,192		162,541
Obligations of Puerto Rico government and political subdivisions		20,988		6,259		14,729
		328,800		10,372		318,428
Securities held-to-maturity
FNMA and FHLMC Certificates		358,591		3,757		354,834
US Treasury Securities		10,024		4		10,020
		368,615		3,761		364,854
	$	697,415	$	14,133	$	683,282

	December 31, 2014
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico government and political subdivisions	$	20,939	$	5,267	$	15,672
CMOs issued by US government-sponsored agencies		143,928		3,086		140,842
FNMA and FHLMC certificates		113,376		1,172		112,204
GNMA certificates		77		8		69
	$	278,320	$	9,533	$	268,787
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies		15,172		67		15,105
FNMA and FHLMC certificates		63,736		31		63,705
	$	78,908	$	98	$	78,810
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies		159,100		3,153		155,947
FNMA and FHLMC certificates		177,112		1,203		175,909
Obligations of Puerto Rico government and political subdivisions		20,939		5,267		15,672
GNMA certificates		77		8		69
	$	357,228	$	9,631	$	347,597

XML

Servicing Assets (Key Economic Assumptions) (Details) - Mortgage related servicing assets [Member]	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Minimum [Member]
Servicing Assets At Fair Value Line Items
Constant prepayment rate	4.10%	5.60%
Servicing Assets And Servicing Liabilities At Fair Value Assumptions Used To Estimate Fair Value Discount Rate	10.00%	10.00%
Maximum [Member]
Servicing Assets At Fair Value Line Items
Constant prepayment rate	10.22%	10.08%
Servicing Assets And Servicing Liabilities At Fair Value Assumptions Used To Estimate Fair Value Discount Rate	12.00%	12.00%

XML

Accumulated Other Comprehensive Income (Changes in Other Comprehensive Income by Components) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Net unrealized gains on securities available for sale
Accumulated Other Comprehensive Income [Line Items]
Beginning balance	$ 30,214	$ 16,035	$ 25,764	$ 11,433
Other Comprehensive Income Loss Before Reclassifications Net Of Tax	(11,523)	13,714	(7,212)	18,179
Reclassification Out Of Accumulated Other Comprehensive Income	141	10	280	147
Other Comprehensive Income (Loss) Other Net Of Tax	(11,382)	13,724	(6,932)	18,326
Ending balance	18,832	29,759	18,832	29,759
Net unrealized loss on cash flow hedges
Accumulated Other Comprehensive Income [Line Items]
Beginning balance	(5,890)	(8,013)	(6,053)	(8,242)
Other Comprehensive Income Loss Before Reclassifications Net Of Tax	(180)	(1,633)	(1,549)	(3,025)
Reclassification Out Of Accumulated Other Comprehensive Income	1,539	1,642	3,071	3,263
Other Comprehensive Income (Loss) Other Net Of Tax	1,359	9	1,522	238
Ending balance	(4,531)	(8,004)	(4,531)	(8,004)
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income [Line Items]
Beginning balance	24,324	8,022	19,711	3,191
Other Comprehensive Income Loss Before Reclassifications Net Of Tax	(11,703)	12,081	(8,761)	15,154
Reclassification Out Of Accumulated Other Comprehensive Income	1,680	1,652	3,351	3,410
Other Comprehensive Income (Loss) Other Net Of Tax	(10,023)	13,733	(5,410)	18,564
Ending balance	$ 14,301	$ 21,755	$ 14,301	$ 21,755

XML

Borrowings (Tables)

6 Months Ended

Jun. 30, 2015

Debt Instruments [Abstract]

Schedule Of Repurchase Agreement Counterparty [Table Text Block]

At June 30, 2015 and December 31, 2014, securities sold under agreements to repurchase (classified by counterparty), excluding accrued interest in the amount of $3.6million and $2.3million, respectively,were as follows:

	June 30,				December 31,
	2015				2014
			Fair Value of				Fair Value of
	Borrowing		Underlying		Borrowing		Underlying
	Balance		Collateral		Balance		Collateral
	(In thousands)
JP Morgan Chase Bank NA		428,902		469,599		307,816		328,198
Credit Suisse Securities (USA) LLC		670,000		749,286		670,000		760,327
Bank of America		27,200		28,989		-		-
Nomura		32,843		34,679		-		-
Total	$	1,158,945	$	1,282,553	$	977,816	$	1,088,525

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 $3.6 million, atJune 30, 2015:

				Weighted-
		Borrowing		Average		Maturity
Year of Maturity		Balance		Coupon	Settlement Date	Date
		(In thousands)
2015	$		24,494	0.380%	5/18/2015	8/18/2015
			27,064	0.400%	6/16/2015	9/16/2015
			32,843	0.430%	5/19/2015	8/17/2015
			59,159	0.390%	5/20/2015	8/20/2015
			70,685	0.390%	2/21/2015	8/21/2015
			27,200	0.500%	6/17/2015	9/15/2015
2016			170,000	1.500%	12/6/2012	12/8/2016
			247,500	0.950%	12/10/2012	9/30/2016
2017			500,000	4.780%	3/2/2007	3/2/2017
		$	1,158,945	2.570%

Schedule of Repurchase Agreements [Table]

	June 30, 2015
					Market Value of Underlying Collateral
			Weighted		FNMA and
	Repurchase		Average		FHLMC		GNMA
	Liability		Rate		Certificates		Certificates		Total
	(Dollars in thousands)
Less than 90 days		241,445		0.41%		257,353		-		257,353
Over 90 days		917,500		3.12%		1,022,195		3,005		1,025,200
Total	$	1,158,945		2.57%	$	1,279,548	$	3,005	$	1,282,553

	December 31, 2014
					Market Value of Underlying Collateral
			Weighted		FNMA and
	Repurchase		Average		FHLMC		GNMA
	Liability		Rate		Certificates		Certificates		Total
	(Dollars in thousands)
Less than 90 days	$	52,816		0.39%	$	56,066	$	-	$	56,066
Over 90 days		925,000		2.83%		1,031,206		1,253		1,032,459
Total	$	977,816		2.41%	$	1,087,272	$	1,253	$	1,088,525

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 $325thousand, at June 30, 2015:

			Weighted-
		Borrowing	Average		Maturity
Year of Maturity		Balance	Coupon	Settlement Date	Date
		(In thousands)
2015	$	25,000	0.35%	6/4/2015	7/6/2015
		50,000	0.34%	6/10/2015	7/10/2015
		100,000	0.35%	6/16/2015	7/16/2015
		25,000	0.35%	6/24/2015	7/24/2015
		25,000	0.34%	6/30/2015	7/30/2015
		38,658	0.35%	6/1/2015	7/1/2015
		263,658
2017		4,384	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		10,024	2.59%	7/19/2013	7/20/2020
	$	333,066	0.74%

Redemtion Funds [Table Text Block]

	Redemption fund
	(In thousands)
Redemption fund - June 30, 2015	$	58,625
2015		3,350
2016		5,025
	$	67,000

XML

Investment Securities (Narrative) (Details) - Jun. 30, 2015 - USD ($) $ in Millions	Total
Investments, Debt and Equity Securities [Abstract]
Investments Guaranteed by US Treasury and Sponsored Agencies in Unrealized Loss on Position	$ 676.4
Investments Guaranteed by Puerto Rico Government and its Political Subdivisions in Unrealized Loss On Position	$ 21.0
Investments Guaranteed By Us Treasury And Sponsored Agencies in Unrealized Loss Position Percentage To Total Investment in Unrealized Loss Position	97.00%
Investments Guaranteed By Puerto Rico Government and Its Political Subdivisions in Unrealized Loss Position Percentage To Total Investment in Unrealized Loss Position	3.00%
Minimum Government Bond Probability of Default	5.953%
Maximum GovernmentBond Probability Of Default	38.65%
Minimum Government Bond Recovery Rate	61.349%
Maximum Government Bond Recovery Rate	94.046%

XML

Loans Receivable (Risk category of gross non-covered loans not subject to risk rating ) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	$ 4,495,665	$ 4,578,431
Non Covered Loan, Not Subject To Risk Ratings [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,777,089	1,784,219
0 - 29 Days Past Due	1,485,745	1,460,335
30 - 59 Days Past Due	97,273	95,898
60 - 89 Days Past Due	41,269	40,639
90-119 Days Past Due	15,712	20,735
120 - 364 Days Past Due	21,224	40,053
365+ Days Past Due	26,562	32,374
Financing Receivable, Individually Evaluated for Impairment	89,304	94,185
Originated loans, not subject to risk rating [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,593,014	1,554,093
0 - 29 Days Past Due	1,317,883	1,249,631
30 - 59 Days Past Due	86,800	83,368
60 - 89 Days Past Due	37,680	36,485
90-119 Days Past Due	14,480	19,340
120 - 364 Days Past Due	20,305	38,710
365+ Days Past Due	26,562	32,374
Financing Receivable, Individually Evaluated for Impairment	89,304	94,185
Originated loans, not subject to risk rating [Member] | Mortgages [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	757,187	791,751
0 - 29 Days Past Due	559,706	563,972
30 - 59 Days Past Due	37,307	33,131
60 - 89 Days Past Due	18,039	18,623
90-119 Days Past Due	8,524	13,303
120 - 364 Days Past Due	17,745	36,166
365+ Days Past Due	26,562	32,371
Financing Receivable, Individually Evaluated for Impairment	89,304	94,185
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	617,674	619,348
0 - 29 Days Past Due	515,955	521,657
30 - 59 Days Past Due	32,322	30,659
60 - 89 Days Past Due	15,754	16,916
90-119 Days Past Due	4,619	5,607
120 - 364 Days Past Due	12,351	14,432
365+ Days Past Due	20,896	13,931
Financing Receivable, Individually Evaluated for Impairment	15,777	16,146
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	61,209	65,744
0 - 29 Days Past Due	50,718	53,432
30 - 59 Days Past Due	4,340	3,963
60 - 89 Days Past Due	2,256	3,083
90-119 Days Past Due	585	1,044
120 - 364 Days Past Due	1,034	1,360
365+ Days Past Due	1,364	1,975
Financing Receivable, Individually Evaluated for Impairment	912	887
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	104,304	109,669
0 - 29 Days Past Due	83,388	86,941
30 - 59 Days Past Due	8,292	10,391
60 - 89 Days Past Due	4,616	4,362
90-119 Days Past Due	1,899	1,657
120 - 364 Days Past Due	1,676	3,215
365+ Days Past Due	2,685	1,330
Financing Receivable, Individually Evaluated for Impairment	1,748	1,773
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	57,157	60,472
0 - 29 Days Past Due	44,825	49,275
30 - 59 Days Past Due	5,338	3,824
60 - 89 Days Past Due	2,012	2,205
90-119 Days Past Due	646	389
120 - 364 Days Past Due	733	1,673
365+ Days Past Due	2,547	1,893
Financing Receivable, Individually Evaluated for Impairment	1,056	1,213
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	81,874	85,550
0 - 29 Days Past Due	60,987	65,113
30 - 59 Days Past Due	6,496	5,263
60 - 89 Days Past Due	3,314	2,967
90-119 Days Past Due	508	1,242
120 - 364 Days Past Due	2,311	2,801
365+ Days Past Due	4,672	4,624
Financing Receivable, Individually Evaluated for Impairment	3,586	3,540
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	93,206	93,489
0 - 29 Days Past Due	72,190	76,246
30 - 59 Days Past Due	4,458	4,230
60 - 89 Days Past Due	2,028	1,809
90-119 Days Past Due	597	337
120 - 364 Days Past Due	3,859	3,986
365+ Days Past Due	6,029	2,813
Financing Receivable, Individually Evaluated for Impairment	4,045	4,068
Originated loans, not subject to risk rating [Member] | Originated In The Years 2010 2011 2012 2013 2014 And 2015 [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	219,924	204,424
0 - 29 Days Past Due	203,847	190,650
30 - 59 Days Past Due	3,398	2,988
60 - 89 Days Past Due	1,528	2,490
90-119 Days Past Due	384	938
120 - 364 Days Past Due	2,738	1,397
365+ Days Past Due	3,599	1,296
Financing Receivable, Individually Evaluated for Impairment	4,430	4,665
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	33,482	36,200
0 - 29 Days Past Due	27,705	30,916
30 - 59 Days Past Due	1,450	1,477
60 - 89 Days Past Due	543	584
90-119 Days Past Due	803	478
120 - 364 Days Past Due	1,421	600
365+ Days Past Due	1,560	2,096
Financing Receivable, Individually Evaluated for Impairment	0	49
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	98,650	93,443
0 - 29 Days Past Due	15,626	10,882
30 - 59 Days Past Due	3,535	995
60 - 89 Days Past Due	1,742	1,123
90-119 Days Past Due	1,107	802
120 - 364 Days Past Due	1,487	405
365+ Days Past Due	1,626	1,246
Financing Receivable, Individually Evaluated for Impairment	73,527	77,990
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	420	517
0 - 29 Days Past Due	420	517
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	0	0
365+ Days Past Due	0	0
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	6,961	42,243
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	1,995	6,416
120 - 364 Days Past Due	2,486	20,729
365+ Days Past Due	2,480	15,098
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	212,629	186,760
0 - 29 Days Past Due	208,443	182,071
30 - 59 Days Past Due	2,042	2,579
60 - 89 Days Past Due	1,048	946
90-119 Days Past Due	891	841
120 - 364 Days Past Due	205	320
365+ Days Past Due	0	3
Financing Receivable, Individually Evaluated for Impairment	0	0
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	20,123	19,071
0 - 29 Days Past Due	19,381	18,198
30 - 59 Days Past Due	303	360
60 - 89 Days Past Due	120	139
90-119 Days Past Due	152	171
120 - 364 Days Past Due	167	203
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	317	307
0 - 29 Days Past Due	293	287
30 - 59 Days Past Due	22	20
60 - 89 Days Past Due	2	0
90-119 Days Past Due	0	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] | Unsecured personal lines of credit [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	2,282	2,200
0 - 29 Days Past Due	2,105	1,970
30 - 59 Days Past Due	97	102
60 - 89 Days Past Due	17	25
90-119 Days Past Due	25	38
120 - 364 Days Past Due	38	62
365+ Days Past Due	0	3
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	173,628	147,939
0 - 29 Days Past Due	170,523	144,696
30 - 59 Days Past Due	1,533	1,822
60 - 89 Days Past Due	858	743
90-119 Days Past Due	714	623
120 - 364 Days Past Due	0	55
365+ Days Past Due	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
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	16,279	17,243
0 - 29 Days Past Due	16,141	16,920
30 - 59 Days Past Due	87	275
60 - 89 Days Past Due	51	39
90-119 Days Past Due	0	9
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] | Leasing [Mamber]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	623,198	575,582
0 - 29 Days Past Due	549,734	503,588
30 - 59 Days Past Due	47,451	47,658
60 - 89 Days Past Due	18,593	16,916
90-119 Days Past Due	5,065	5,196
120 - 364 Days Past Due	2,355	2,224
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	184,075	230,126
0 - 29 Days Past Due	167,862	210,704
30 - 59 Days Past Due	10,473	12,530
60 - 89 Days Past Due	3,589	4,154
90-119 Days Past Due	1,232	1,395
120 - 364 Days Past Due	919	1,343
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	41,505	45,344
0 - 29 Days Past Due	38,940	41,640
30 - 59 Days Past Due	1,109	1,527
60 - 89 Days Past Due	380	701
90-119 Days Past Due	444	628
120 - 364 Days Past Due	632	848
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	38,259	41,848
0 - 29 Days Past Due	35,870	38,419
30 - 59 Days Past Due	1,005	1,376
60 - 89 Days Past Due	361	654
90-119 Days Past Due	430	589
120 - 364 Days Past Due	593	810
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	3,246	3,496
0 - 29 Days Past Due	3,070	3,221
30 - 59 Days Past Due	104	151
60 - 89 Days Past Due	19	47
90-119 Days Past Due	14	39
120 - 364 Days Past Due	39	38
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	142,570	184,782
0 - 29 Days Past Due	128,922	169,064
30 - 59 Days Past Due	9,364	11,003
60 - 89 Days Past Due	3,209	3,453
90-119 Days Past Due	788	767
120 - 364 Days Past Due	287	495
365+ Days Past Due	0	0
Financing Receivable, Individually Evaluated for Impairment	$ 0	$ 0

XML

Consolidated Statements of Financial Condition (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Cash and cash equivalents
Cash and Due from Banks	$ 547,740	$ 568,752
Money market investments	5,795	4,675
Total cash and cash equivalents	553,535	573,427
Restricted Cash	6,086	8,407
Investments:
Trading Securities, at fair value	786	1,594
Investment securities available-for-sale, at fair value	1,044,319	1,216,538
Investment securities held-to-maturity, at amortized cost	550,553	162,752
Federal Home Loan Bank (FHLB) stock, at cost	20,826	21,169
Other investments	3	3
Total investments	1,616,487	1,402,056
Loans:
Mortgage loans held-for-sale, at lower of cost or fair value	20,768	14,539
Non-covered loans, net of allowance for loan and lease losses	4,396,665	4,513,196
Covered loans, net of allowance for loan and lease losses	222,034	298,911
Total loans, net	4,639,467	4,826,646
Other asset
FDIC indemnification asset	22,704	97,378
Foreclosed real estate covered under shared-loss agreements with the FDIC	38,941	47,514
Foreclosed real estate not covered under shared-loss agreements with the FDIC	42,392	48,147
Accrued interest receivable	19,254	21,345
Deferred tax asset, net	138,406	108,708
Premises and equipment, net	76,486	80,599
Customers' liability on acceptances	16,040	17,989
Servicing Assets	5,791	13,992
Derivative assets	4,376	8,107
Goodwill	86,069	86,069
Other assets	132,291	108,725
Total assets	7,398,325	7,449,109
Deposits:
Demand deposits	1,936,617	1,997,108
Savings accounts	1,333,202	1,385,824
Tme Deposits	1,479,865	1,541,474
Total deposits	4,749,684	4,924,406
Borrowings:
Securities Sold under Agreements to Repurchase	1,161,136	980,087
Advances from FHLB	333,391	334,331
Subordinated capital notes	102,109	101,584
Other borrowings	2,090	4,004
Total borrowings	1,598,726	1,420,006
Derivative liabilities	8,739	11,221
Acceptances executed and outstanding	16,040	17,989
Accrued expenses and other liabilities	113,537	133,290
Total liabilities	6,486,726	6,506,912
Stockholders' equity:
Preferred Stock	92,000	92,000
Convertible Preferred Stock	84,000	84,000
Common stock	52,626	52,626
Additional paid-in capital	539,669	539,311
Legal surplus	69,934	70,467
Retained earnings	159,737	181,152
Treasury stock, at cost	(100,668)	(97,070)
Accumulated other comprehensive income, net of tax, Total	14,301	19,711
Total stockholders' equity	911,599	942,197
Total liabilities and stockholders' equity	$ 7,398,325	$ 7,449,109

XML

Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2015

Disclosure Text Block Abstract

Schedule of Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income, net of income tax, as of June 30, 2015 and December 31, 2014consistedof:

	June 30,		December 31,
	2015		2014
	(In thousands)
Unrealized gain on securities available-for-sale which are not other-than-temporarily impaired	$	21,562	$	28,743
Income tax effect of unrealized gain on securities available-for-sale		(2,730)		(2,978)
Net unrealized gain on securities available-for-sale which are not other-than-temporarily impaired		18,832		25,765
Unrealized loss on cash flow hedges		(6,514)		(8,585)
Income tax effect of unrealized loss on cash flow hedges		1,983		2,531
Net unrealized loss on cash flow hedges		(4,531)		(6,054)
Accumulated other comprehensive income, net of taxes	$	14,301	$	19,711

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, 2015 and 2014:

	Quarter Ended June 30,
	2015						2014
	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	$	30,214	$	(5,890)	$	24,324	$	16,035	$	(8,013)	$	8,022
Other comprehensive income (loss) before reclassifications		(11,523)		(180)		(11,703)		13,714		(1,633)		12,081
Amounts reclassified out of accumulated other comprehensive income		141		1,539		1,680		10		1,642		1,652
Other comprehensive income		(11,382)		1,359		(10,023)		13,724		9		13,733
Ending balance	$	18,832	$	(4,531)	$	14,301	$	29,759	$	(8,004)	$	21,755
	Six-Month Period Ended June 30,
	2015						2014
	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	$	25,764	$	(6,053)	$	19,711	$	11,433	$	(8,242)	$	3,191
Other comprehensive income before reclassifications		(7,212)		(1,549)		(8,761)		18,179		(3,025)		15,154
Amounts reclassified out of accumulated other comprehensive income		280		3,071		3,351		147		3,263		3,410
Other comprehensive income (loss)		(6,932)		1,522		(5,410)		18,326		238		18,564
Ending balance	$	18,832	$	(4,531)	$	14,301		29,759	$	(8,004)	$	21,755

Reclassification out of Accumulated Other Comprehensive Income [Table text block]

The following table presents reclassifications out of accumulated other comprehensive income forthe quarters and six-month periods ended June 30, 2015and 2014:

	Amount reclassified out of accumulated
	other comprehensive income
					Affected Line Item in
	Quarter Ended June 30,				Consolidated Statement
		2015		2014	of Operations
	(In thousands)
Cash flow hedges:
Interest-rate contracts	$	1,614	$	1,642	Net interest expense
Tax effect from increase in capital gains tax rate		(75)		-	Income tax expense
Available-for-sale securities:
Residual tax effect from OIB's change in applicable tax rate		12		10	Income tax expense
Tax effect from increase in capital gains tax rate		129		-	Income tax expense
	$	1,680	$	1,652
	Amount reclassified out of accumulated
	other comprehensive income
					Affected Line Item in
	Six-Month Period Ended June 30,				Consolidated Statement
		2015		2014	of Operations
	(In thousands)
Cash flow hedges:
Interest-rate contracts	$	3,220	$	3,263	Net interest expense
Tax effect from increase in capital gains tax rate		(149)		-	Income tax expense
Available-for-sale securities:
Residual tax effect from OIB's change in applicable tax rate		22		147	Income tax expense
Tax effect from increase in capital gains tax rate		258		-	Income tax expense
	$	3,351	$	3,410

XML

Borrowings (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Other borrowings	$ 2,090	$ 4,004
Subordinated Debt	102,109	101,584
Federal Home Loan Bank Advances [Member]
Debt Instrument [Line Items]
Loans Receivable, Gross, Commercial, Mortgage	1,100,000	1,200
Additional Borrowing Capacity	$ 612,000	$ 606,600
Weighted average period remaining maturity of FHLB advances	7.5 months	8.8 months
Interest Payable	$ 325
Repurchase agreement
Debt Instrument [Line Items]
Interest Payable	$ 3,600	$ 2,300

XML

Accumulated Other Comprehensive Income (Accumulated Comprehensive Income, net of income tax) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Accumulated Other Comprehensive Income [Line Items]
Accumulated other comprehensive income, net of tax, Total	$ 14,301	$ 19,711
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income [Line Items]
Accumulated other comprehensive income, net of tax, Total	14,301	19,711
AccumulatedOtherThanTemporaryImpairmentMember
Accumulated Other Comprehensive Income [Line Items]
Unrealized gain on securities available-for-sale which are not other-than-temporarily impaired	21,562	28,743
Income tax effect of unrealized gain on securities available-for-sale	(2,730)	(2,978)
Net unrealized gain on securities available for sale wich are not other than temporarily impaired	18,832	25,765
Accumulated Net Gain Loss From Designated Or Qualifying Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income [Line Items]
Unrealized loss on cash flow hedges	(6,514)	(8,585)
Income tax effect of unrealized loss on cash flow hedges	1,983	2,531
Net unrealized (loss) income on cash flow hedges	$ (4,531)	$ (6,054)

XML

Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($)	Total	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Legal Surplus [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning Balance at Dec. 31, 2013		$ 176,000,000	$ 52,707,000	$ 538,071,000	$ 61,957,000	$ 133,629,000	$ (80,642,000)	$ 3,191,000
Stock-based compensation expense				946,000
Exercised Stock Options			23,000	242,000
Lapsed restricted stock units				(323,000)			323,000
Transfer from retained earnings/transfer to legal surplus					4,481,000	(4,481,000)
Net (loss) income	$ 45,056,000					45,056,000
Cash dividends declared on common stock						(7,218,000)
Cash dividends declared on preferred stock						(6,931,000)
Stock purchased	10,393,000						(10,393,000)
Other comprehensive loss, net of tax	18,564,000							18,564,000
Ending Balance at Jun. 30, 2014	925,202,000	176,000,000	52,730,000	538,936,000	66,438,000	160,055,000	(90,712,000)	21,755,000
Beginning Balance at Dec. 31, 2014	942,197,000	176,000,000	52,626,000	539,311,000	70,467,000	181,152,000	(97,070,000)	19,711,000
Stock-based compensation expense				794,000
Exercised Stock Options			0	0
Lapsed restricted stock units				(436,000)			640,000
Transfer from retained earnings/transfer to legal surplus					(533,000)	533,000
Net (loss) income	(6,097,000)					(6,097,000)
Cash dividends declared on common stock						(8,920,000)
Cash dividends declared on preferred stock						(6,931,000)
Stock purchased	4,238,000						(4,238,000)
Other comprehensive loss, net of tax	(5,410,000)							(5,410,000)
Ending Balance at Jun. 30, 2015	$ 911,599,000	$ 176,000,000	$ 52,626,000	$ 539,669,000	$ 69,934,000	$ 159,737,000	$ (100,668,000)	$ 14,301,000

XML

Deposits and Related Interest (Interest expense) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Interest Expense Domestic Deposit Liabilities [Abstract]
Demand and saving deposits	$ 3,100	$ 4,804	$ 6,482	$ 9,832
Certificates of Deposits	3,504	4,361	7,226	8,311
Total	$ 6,604	$ 9,165	$ 13,708	$ 18,143

XML

Loans Receivable (Composition of loan portfolio) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	$ 4,495,665	$ 4,578,431
Deferred loan cost (fees), net	3,877	4,282
Loans Receivable Net Of Deferred Income	4,499,542	4,582,713
Allowance for loan and lease losses on non-covered loans	(102,877)	(69,517)
Loans not covered under shared-loss agreements with the FDIC, net of allowance for loan and lease losses, excluding loans held-for-sale.	4,396,665	4,513,196
Mortgage loans held-for-sale	20,768	14,539
Loans not covered under shared-loss agreements with the FDIC, net of allowance for loan and lease losses, including loans held-for-sale.	4,417,433	4,527,735
Loans And Leases Receivable Net Reported Amount Covered [Abstract]
Loans And Leases Receivable Gross Carrying Amount Covered	293,486	363,156
Allowance for Covered Loan and Lease Losses, net	(71,452)	(64,245)
Loans covered under shared-loss agreements with the FDIC, net of allowance for loan and lease losses	222,034	298,911
Loans And Leases Receivable Net Reported Amount Covered And Not Covered	4,639,467	4,826,646
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	(102,877)	(69,517)
Originated Loans [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	2,956,865	2,843,825
Allowance for loan and lease losses on non-covered loans	(78,989)	(51,439)
Originated Loans [Member] | Mortgages [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	757,187	791,751
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	1,363,851	1,289,732
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	212,629	186,760
Originated Loans [Member] | Leasing [Mamber]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	623,198	575,582
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	192,523	242,801
Allowance for loan and lease losses on non-covered loans	(5,529)	(4,597)
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	8,448	12,675
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	41,505	45,344
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	142,570	184,782
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	1,346,277	1,491,805
Allowance for loan and lease losses on non-covered loans	(18,359)	(13,481)
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	631,807	656,122
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	406,447	452,201
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	18,869	29,888
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	195,891	247,233
Non-covered loans accounted under ASC 310-30 | Construction Loans [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	93,263	106,361
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	293,486	363,156
Allowance for Covered Loan and Lease Losses, net	(71,452)	(64,245)
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	3,295	4,506
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	117,840	117,171
Allowance for Covered Loan and Lease Losses, net	(17,593)	(15,522)
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	19,152	19,562
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	153,199	221,917
Allowance for Covered Loan and Lease Losses, net	$ (53,470)	$ (48,334)

XML

Borrowings (Repurchase Transaction Liability and Market Value of its Underlying Collateral) (Details) - Securities Sold under Agreements to Repurchase [Member] - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Assets Sold Under Agreements To Repurchase Line Items
Assets Sold Under Agreements To Repurchase Repurchase Liability	$ 1,158,945	$ 977,816
Assets Sold Under Agreements To Repurchase Interest Rate	2.57%	2.41%
Market value of underlying collateral of a repurchase agreement	$ 1,282,553	$ 1,088,525
FNMA and FHLMC [Member]
Assets Sold Under Agreements To Repurchase Line Items
Market value of underlying collateral of a repurchase agreement	1,279,548	1,087,272
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	3,005	1,253
Maturity up to 30 days
Assets Sold Under Agreements To Repurchase Line Items
Assets Sold Under Agreements To Repurchase Repurchase Liability	$ 241,445	$ 52,816
Assets Sold Under Agreements To Repurchase Interest Rate	0.41%	0.39%
Market value of underlying collateral of a repurchase agreement	$ 257,353	$ 56,066
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	257,353	56,066
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	0
Maturity over 90 days
Assets Sold Under Agreements To Repurchase Line Items
Assets Sold Under Agreements To Repurchase Repurchase Liability	$ 917,500	$ 925,000
Assets Sold Under Agreements To Repurchase Interest Rate	3.12%	2.83%
Market value of underlying collateral of a repurchase agreement	$ 1,025,200	$ 1,032,459
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	1,022,195	1,031,206
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	$ 3,005	$ 1,253

XML

FDIC Indemnification and True-up Payment Obligation (Tables)

6 Months Ended

Jun. 30, 2015

Banking and Thrift [Abstract]

FDIC Indemnification Asset and True-Up Payment Obligation Roll Forward

The following table presents the activity in the FDIC indemnification asset and true-up payment obligation for the quarters and six-month periods ended June 30, 2015 and 2014:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2015		2014		2015		2014
	(In thousands)
FDIC indemnification asset:
Balance at beginning of period	$	75,221	$	166,194	$	97,378	$	189,240
Shared-loss agreements reimbursements from the FDIC		(24,387)		(10,464)		(38,087)		(18,700)
Increase (decrease) in expected credit losses to be covered under shared-loss agreements, net		906		3,522		2,503		3,562
FDIC indemnification asset expense		(22,512)		(17,499)		(34,733)		(35,121)
Incurred expenses to be reimbursed under shared-loss agreements		(6,524)		1,907		(4,357)		4,679
Balance at end of period	$	22,704	$	143,660	$	22,704	$	143,660
True-up payment obligation:
Balance at beginning of period	$	22,844	$	19,375	$	21,981	$	18,510
Change in true-up payment obligation		733		856		1,596		1,721
Balance at end of period	$	23,577	$	20,231	$	23,577	$	20,231

Schedule Of Business Acquisitions By Acquisition Contingent Consideration Text Block

	June 30,		December 31,
	2015		2014
	(In thousands)
Carrying amount (fair value)	$	23,577	$	21,981
Undiscounted amount	$	37,456	$	40,266

XML

Loans Receivable (Investment in non-covered loans on non-accrual status) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Non Covered Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 301,183	$ 101,542
Non-covered originated loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	297,733	97,367
Non-covered originated loans [Member] | Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	63,670	65,430
Non-covered originated loans [Member] | Traditional loan
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	40,382	41,272
Non-covered originated loans [Member] | Originated Up To The Year 2002 [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	3,104	4,427
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	6,317	7,042
Non-covered originated loans [Member] | Originated In The Year 2005 [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	3,926	4,585
Non-covered originated loans [Member] | Originated In The Year 2006 [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	7,861	9,274
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	9,991	8,579
Non-covered originated loans [Member] | Originated In The Years 2010 2011 2012 2013 2014 And 2015 [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	9,183	7,365
Non-covered originated loans [Member] | NonTraditional Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	3,784	3,224
Non-covered originated loans [Member] | Loss Mitigation Program [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	19,504	20,934
Non-covered originated loans [Member] | Commercial Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	223,964	21,679
Non-covered originated loans [Member] | Commercial Secured [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	23,882	18,534
Non-covered originated loans [Member] | Middle Market Commercial Secured [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	14,325	9,534
Non-covered originated loans [Member] | Retail Commercial Secured [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	9,557	9,000
Non-covered originated loans [Member] | Other Commercial and Industrial[Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	200,082	3,145
Non-covered originated loans [Member] | Institutional
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	197,559	0
Non-covered originated loans [Member] | Middle Market Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	703	618
Non-covered originated loans [Member] | Retail Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	1,797	2,527
Non-covered originated loans [Member] | Floor Plan Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	23	0
Non-covered originated loans [Member] | Consumer Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	1,512	1,590
Non-covered originated loans [Member] | Credit Cards [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	319	375
Non-covered originated loans [Member] | Unsecured personal lines of credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	86	110
Non-covered originated loans [Member] | Unsecured personal loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	1,107	1,092
Non-covered originated loans [Member] | Cash collateral personal loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	0	13
Non-covered originated loans [Member] | Leasing [Mamber]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	8,587	8,668
Accounted for under ASC 310-20 [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	3,400	4,175
Accounted for under ASC 310-20 [Member] | Commercial Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	1,048	1,187
Accounted for under ASC 310-20 [Member] | Commercial Secured [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	840	758
Accounted for under ASC 310-20 [Member] | Retail Commercial Secured [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	344	351
Accounted for under ASC 310-20 [Member] | Floor Plan Commercial Secured [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	496	407
Accounted for under ASC 310-20 [Member] | Other Commercial and Industrial[Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	208	429
Accounted for under ASC 310-20 [Member] | Retail Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	178	195
Accounted for under ASC 310-20 [Member] | Floor Plan Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	30	234
Accounted for under ASC 310-20 [Member] | Consumer Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	1,075	1,476
Accounted for under ASC 310-20 [Member] | Credit Cards [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	1,023	1,399
Accounted for under ASC 310-20 [Member] | Unsecured personal loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	52	77
Accounted for under ASC 310-20 [Member] | Leasing [Mamber]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 1,277	$ 1,512

XML

Regulatory Capital Requirements

6 Months Ended

Jun. 30, 2015

Regulatory Capital Requirements Abstract

Regulatory Capital Requirements Under Banking Regulations Text Block

NOTE 15— REGULATORY CAPITAL REQUIREMENTS

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 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 regulators have adopted new capital rules thatbecame effective January 1, 2015 for the Company and the Bank (subject to certain phase-in periods through January 1, 2019) and that replaced their general risk-based capital rules, advanced approaches rule, market risk rule, and leverage rules. Among other matters, the new capital rules: (i) introduce a new capital measure called “Common Equity Tier 1” (“CET1”) and related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to prior regulations. The new capital rules prescribe a new standardized approach for risk weightings that expand the risk-weighting categories from the current four Basel I-derived categories (0%, 20%, 50% and 100%) to a larger and more risk-sensitive number of categories, depending on the nature of the assets, and resulting in higher risk weights for a variety of asset classes.

Pursuant to the new capital rules, the minimum capital ratios requirements as of January 1, 2015 are as follows:

4.5% CET1 to risk-weighted assets;

6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets;

8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and

4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the

“leverage ratio”).

As of June 30, 2015 and December 31, 2014, the Company and the Bank met all capital adequacy requirements to which they are subject. As of June 30, 2015 and December 31, 2014, the Bank is “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “wellcapitalized,” an institution must maintain minimum CET1 risk-based, Tier 1 risk-based,total 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, 2015 and December 31, 2014are 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, 2015
Total capital to risk-weighted assets	$	868,568	17.41%	$	399,100	8.00%	$	498,875	10.00%
Tier 1 capital to risk-weighted assets	$	790,936	15.85%	$	299,325	6.00%	$	399,100	8.00%
Common equity tier 1 capital to risk-weighted assets	$	611,541	12.26%	$	224,494	4.50%	$	324,269	6.50%
Tier 1 capital to average total assets	$	790,936	11.05%	$	286,262	4.00%	$	357,827	5.00%
As of December 31, 2014
Total capital to risk-weighted assets	$	851,437	17.57%	$	387,772	8.00%	$	484,715	10.00%
Tier 1 capital to risk-weighted assets	$	776,525	16.02%	$	193,886	4.00%	$	290,829	6.00%
Tier 1 capital to average total assets	$	776,525	10.61%	$	292,738	4.00%	$	365,922	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, 2015
Total capital to risk-weighted assets	$	819,436	16.48%	$	397,716	8.00%	$	497,145	10.00%
Tier 1 capital to risk-weighted assets	$	742,098	14.93%	$	298,287	6.00%	$	397,716	8.00%
Common equity tier 1 capital to risk-weighted assets	$	742,098	14.93%	$	223,715	4.50%	$	323,144	6.50%
Tier 1 capital to average total assets	$	742,098	10.44%	$	284,228	4.00%	$	355,285	5.00%
As of December 31, 2014
Total capital to risk-weighted assets	$	820,884	16.99%	$	386,444	8.00%	$	483,055	10.00%
Tier 1 capital to risk-weighted assets	$	746,177	15.45%	$	193,222	4.00%	$	289,833	6.00%
Tier 1 capital to average total assets	$	746,177	10.26%	$	290,879	4.00%	$	363,599	5.00%

XML

Servicing Assets (Tables)

6 Months Ended

Jun. 30, 2015

TransfersAndServicingOfFinancialAssetsAbstract

ScheduleOfServicingAssetsAtFairValueTextBlock

The following table presents the changes in servicing rights measured using the fair value method for the quarters and six-month periodsended June 30, 2015 and 2014:

		Quarter Ended June 30,				Six-Month Period Ended June 30,
		2015	2014			2015	2014
		(In thousands)				(In thousands)
Fair value at beginning of year	$	12,164	$	13,970	$	13,992	$	13,801
Sale of mortgage servicing rights		(6,985)		-		(6,985)		-
Servicing from mortgage securitizations or asset transfers		1,529		490		2,060		1,053
Changes due to payments on loans		(313)		(271)		(732)		(465)
Changes in fair value related to price of MSR's held for sale		(835)		-		(2,716)		-
Changes in fair value due to changes in valuation model inputs or assumptions		231		(534)		172		(734)
Fair value at end of year	$	5,791	$	13,655	$	5,791	$	13,655

ScheduleOfAssumptionsForFairValueOnSecuritizationDateOfInterestsContinuedToBeHeldByTransferorServicingAssetsOrServicingLiabilitiesTextBlock

The following table presents key economic assumption ranges used in measuring the mortgage-related servicing asset fair value for the six month periods June 30, 2015 and 2014:

	Six-Month Period Ended June 30,
	2015	2014
Constant prepayment rate	4.10% - 10.22%	5.60% - 10.08%
Discount rate	10.00% - 12.00%	10.00% - 12.00%

ScheduleOfSensitivityAnalysisOfFairValueOfInterestsContinuedToBeHeldByTransferorServicingAssetsOrServicingLiabilitiesTextBlock

The sensitivity of the current fair value of servicing assets to immediate 10 percent and 20 percent adversechanges in the above key assumptions were as follows:

	June 30, 2015
	(In thousands)
Mortgage-related servicing asset
Carrying value of mortgage servicing asset	$	5,791
Constant prepayment rate
Decrease in fair value due to 10% adverse change	$	(391)
Decrease in fair value due to 20% adverse change	$	(765)
Discount rate
Decrease in fair value due to 10% adverse change	$	(680)
Decrease in fair value due to 20% adverse change	$	(1,306)

XML

Borrowings (Repurchase Agreements) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Borrowing Balance	$ 1,598,726	$ 1,420,006
Securities Sold under Agreements to Repurchase [Member]
Debt Instrument [Line Items]
Borrowing Balance	$ 1,158,945	$ 977,816
Weighted Average Coupon	2.57%
Securities Sold under Agreements to Repurchase [Member] | Due Date: 8 16 2015 [Member]
Debt Instrument [Line Items]
Borrowing Balance	$ 24,494
Weighted Average Coupon	0.38%
Settlement Date	May 18, 2015
Investment Repurchase Agreement, Repurchase Date	Aug. 18, 2015
Securities Sold under Agreements to Repurchase [Member] | Due Date: 9 16 2015 [Member]
Debt Instrument [Line Items]
Borrowing Balance	$ 27,064
Weighted Average Coupon	0.40%
Settlement Date	Jun. 16, 2015
Investment Repurchase Agreement, Repurchase Date	Sep. 16, 2015
Securities Sold under Agreements to Repurchase [Member] | Due Date: 8 17 2015 [Member]
Debt Instrument [Line Items]
Borrowing Balance	$ 32,843
Weighted Average Coupon	0.43%
Settlement Date	May 19, 2015
Investment Repurchase Agreement, Repurchase Date	Aug. 17, 2015
Securities Sold under Agreements to Repurchase [Member] | Due Date: 8 20 2015 [Member]
Debt Instrument [Line Items]
Borrowing Balance	$ 59,159
Weighted Average Coupon	0.39%
Settlement Date	May 20, 2015
Investment Repurchase Agreement, Repurchase Date	Aug. 20, 2015
Securities Sold under Agreements to Repurchase [Member] | Due Date: 8 21 2015 [Member]
Debt Instrument [Line Items]
Borrowing Balance	$ 70,685
Weighted Average Coupon	0.39%
Settlement Date	Feb. 21, 2015
Investment Repurchase Agreement, Repurchase Date	Aug. 21, 2015
Securities Sold under Agreements to Repurchase [Member] | Due Date: 9 1652015 [Member]
Debt Instrument [Line Items]
Borrowing Balance	$ 27,200
Weighted Average Coupon	0.50%
Settlement Date	Jun. 17, 2015
Investment Repurchase Agreement, Repurchase Date	Sep. 15, 2015
Securities Sold under Agreements to Repurchase [Member] | Due date: 12 8 2016 [Member]
Debt Instrument [Line Items]
Borrowing Balance	$ 170,000
Weighted Average Coupon	1.50%
Settlement Date	Dec. 06, 2012
Investment Repurchase Agreement, Repurchase Date	Dec. 08, 2016
Securities Sold under Agreements to Repurchase [Member] | Due date: 9 30 2016 [Member]
Debt Instrument [Line Items]
Borrowing Balance	$ 247,500
Weighted Average Coupon	0.95%
Settlement Date	Dec. 10, 2012
Investment Repurchase Agreement, Repurchase Date	Sep. 30, 2016
Securities Sold under Agreements to Repurchase [Member] | Due date: 3 2 2017 [Member]
Debt Instrument [Line Items]
Borrowing Balance	$ 500,000
Weighted Average Coupon	4.78%
Settlement Date	Mar. 02, 2007
Investment Repurchase Agreement, Repurchase Date	Mar. 02, 2017

XML

Fair Value (Assets and liabilities on recurring and non-recurring basis) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	$ 1,044,319		$ 1,216,538
Money Market Funds, at Carrying Value	5,795		4,675
Derivative Assets	4,376		8,107
Servicing Assets	5,791	$ 12,164	13,992	$ 13,655	$ 13,970	$ 13,801
Derivative liabilities	(8,739)		(11,221)
Other repossessed assets	14,661		21,800
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	1,044,319		1,216,538
Derivative Assets	2,238		2,552
Foreclosed real estate			0
Total			0
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Assets	2,138		5,555
Servicing Assets	5,791		13,992
Derivative liabilities	(2,044)		(5,477)
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	1,044,319		1,216,538
Money Market Funds, at Carrying Value	5,795		4,675
Derivative Assets	4,376		8,107
Servicing Assets	5,791		13,992
Derivative liabilities	(10,783)		(16,698)
Total	1,049,498		1,226,614
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
Money Market Funds, at Carrying Value	5,795		4,675
Derivative Assets	0		0
Servicing Assets	0		0
Derivative liabilities	0		0
Total	5,795		4,675
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	1,044,319		1,216,538
Money Market Funds, at Carrying Value	0		0
Derivative Assets	2,238		2,552
Servicing Assets	0		0
Derivative liabilities	(8,739)		(11,221)
Total	1,037,818		1,207,869
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		0
Money Market Funds, at Carrying Value	0		0
Derivative Assets	2,138		5,555
Servicing Assets	5,791		13,992
Derivative liabilities	(2,044)		(5,477)
Total	5,885		14,070
Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Commercial Loan	243,401		236,942
Foreclosed real estate	81,333		95,661
Other repossessed assets	14,661		21,800
Total	339,395		354,403
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
Other repossessed assets	0		0
Total	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	243,401		236,942
Foreclosed real estate	81,333		95,661
Other repossessed assets	14,661		21,800
Total	$ 339,395		$ 354,403

XML

Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2015

Disclosure Text Block Abstract

Comprehensive Income Note Text Block

NOTE 17-ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income, net of income tax, as of June 30, 2015 and December 31, 2014consistedof:

	June 30,		December 31,
	2015		2014
	(In thousands)
Unrealized gain on securities available-for-sale which are not other-than-temporarily impaired	$	21,562	$	28,743
Income tax effect of unrealized gain on securities available-for-sale		(2,730)		(2,978)
Net unrealized gain on securities available-for-sale which are not other-than-temporarily impaired		18,832		25,765
Unrealized loss on cash flow hedges		(6,514)		(8,585)
Income tax effect of unrealized loss on cash flow hedges		1,983		2,531
Net unrealized loss on cash flow hedges		(4,531)		(6,054)
Accumulated other comprehensive income, net of taxes	$	14,301	$	19,711

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, 2015 and 2014

	Quarter Ended June 30,
	2015						2014
	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	$	30,214	$	(5,890)	$	24,324	$	16,035	$	(8,013)	$	8,022
Other comprehensive income (loss) before reclassifications		(11,523)		(180)		(11,703)		13,714		(1,633)		12,081
Amounts reclassified out of accumulated other comprehensive income		141		1,539		1,680		10		1,642		1,652
Other comprehensive income		(11,382)		1,359		(10,023)		13,724		9		13,733
Ending balance	$	18,832	$	(4,531)	$	14,301	$	29,759	$	(8,004)	$	21,755
	Six-Month Period Ended June 30,
	2015						2014
	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	$	25,764	$	(6,053)	$	19,711	$	11,433	$	(8,242)	$	3,191
Other comprehensive income before reclassifications		(7,212)		(1,549)		(8,761)		18,179		(3,025)		15,154
Amounts reclassified out of accumulated other comprehensive income		280		3,071		3,351		147		3,263		3,410
Other comprehensive income (loss)		(6,932)		1,522		(5,410)		18,326		238		18,564
Ending balance	$	18,832	$	(4,531)	$	14,301		29,759	$	(8,004)	$	21,755

The following table presents reclassifications out of accumulated other comprehensive income forthe quarters and six-month periods ended June 30, 2015and 2014:

	Amount reclassified out of accumulated
	other comprehensive income
					Affected Line Item in
	Quarter Ended June 30,				Consolidated Statement
		2015		2014	of Operations
	(In thousands)
Cash flow hedges:
Interest-rate contracts	$	1,614	$	1,642	Net interest expense
Tax effect from increase in capital gains tax rate		(75)		-	Income tax expense
Available-for-sale securities:
Residual tax effect from OIB's change in applicable tax rate		12		10	Income tax expense
Tax effect from increase in capital gains tax rate		129		-	Income tax expense
	$	1,680	$	1,652
	Amount reclassified out of accumulated
	other comprehensive income
					Affected Line Item in
	Six-Month Period Ended June 30,				Consolidated Statement
		2015		2014	of Operations
	(In thousands)
Cash flow hedges:
Interest-rate contracts	$	3,220	$	3,263	Net interest expense
Tax effect from increase in capital gains tax rate		(149)		-	Income tax expense
Available-for-sale securities:
Residual tax effect from OIB's change in applicable tax rate		22		147	Income tax expense
Tax effect from increase in capital gains tax rate		258		-	Income tax expense
	$	3,351	$	3,410

XML

Loans Receivable (Recorded Investment in Covered Loan Pools with Impairments) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable, Impaired [Line Items]
Allowance for loan and lease losses, covered	$ 71,452	$ 64,245
Covered Loan [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal	310,376	293,588
Recorded Investment	223,462	204,253
Allowance for loan and lease losses, covered	$ 71,453	$ 64,245
Coverage	32.00%	31.00%
Loans Secured by 1-4 properties | Covered Loan [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal	$ 124,906	$ 134,579
Recorded Investment	106,937	106,116
Allowance for loan and lease losses, covered	$ 17,594	$ 15,522
Coverage	16.00%	15.00%
Construction and development secured by multi-family properties [Member] | Covered Loan [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal	$ 46,732	$ 57,123
Recorded Investment	19,152	19,562
Allowance for loan and lease losses, covered	$ 12,300	$ 10,724
Coverage	64.00%	55.00%
Other Commercial and Industrial[Member] | Covered Loan [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal	$ 132,636	$ 93,894
Recorded Investment	95,655	74,069
Allowance for loan and lease losses, covered	$ 41,170	$ 37,610
Coverage	43.00%	51.00%
Consumer Loan [Member] | Covered Loan [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal	$ 6,102	$ 7,992
Recorded Investment	1,718	4,506
Allowance for loan and lease losses, covered	$ 389	$ 389
Coverage	23.00%	9.00%

XML

Income Taxes (Components of Deferred Tax Assets) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Components Of Deferred Tax Liabilities Abstract
Deferred Tax Assets, Net	$ 138,406	$ 108,708

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Net (loss) income	$ (6,097)	$ 45,056
Adjustments to reconcile net income to net cash provied by (used in) operating activities:
Amortization of deferred loan origination fees, net of costs	1,813	1,330
Amortization of discount to fair value of acquired loan	2,766	6,884
Amortization of investment securities premiums, net of accretion of discounts	5,931	203
Amortization of core deposit and customer relationship intangibles	953	1,085
Amortization of fair value premium of acquired deposits	478	2,908
FDIC Loss Share (Expense) Income	36,329	36,842
Depreciation and amortization of premises and equipment	5,930	4,826
Deferred income taxes, net	(1,316)	13,211
Provision for covered and non-covered loan and lease losses, net	57,732	26,506
Stock-based compensation	794	946
(Gain) loss on:
Sale of securities	(2,572)	(4,366)
Sale of mortgage loans held for sale	(2,010)	(2,447)
Gain on sale of derivatives and on sale of TBA	(113)	646
Foreclosed real estate	(706)	5,052
Sale of other repossessed asset	3,427	3,305
Sale of premises and equipment	10	(10)
Originations of loans held-for-sale	(111,433)	(86,058)
Proceeds from sale of loans held-for-sale	46,678	47,834
Net (increase) decrease in:
Trading securities	808	256
Accrued interest receivable	2,091	(3,774)
Servicing Assets	1,216	146
Other assets	(19,813)	11,651
Net increase (decrease) in:
Accrued interest on deposits and borrowings	(608)	(932)
Accrued expenses and other liabilities	24,219	(16,247)
Net cash provided by (used in) operating activities	46,507	94,853
Purchases of:
Investment securities available-for-sale	(1,671)	(217,974)
Investment securities held-to-maturity	(399,206)	(26,707)
FHLB stock	0	(76,725)
Maturities and Redemptions of [Abstract]
Investment securities available-for-sale	121,121	295,013
Investments securities held-to-maturity	10,725	0
FHLB Stock	343	76,794
Proceeds from sale of:
Investment securities available for sale	103,831	163,235
Foreclosed real estate and other repossessed assets	34,136	22,991
Premises and equipment	10	20
Proceeds From Sale Of Mortgage Servicing Rights MSR	5,927	0
Origination and purchase of loans, excluding loans held-for-sale	(414,725)	(347,691)
Principal repayment of loans, including covered loans	491,330	339,102
Reimbursements from the FDIC on shared-loss agreements	31,657	18,700
Additions to premises and equipment	(1,838)	(4,100)
Net change in securities purchased under agreements to resell	0	60,000
Net change in restricted cash	2,321	67,029
Net cash provided by investing activities	(16,039)	369,687
Net increase (decrease) in:
Deposits	(209,272)	(235,062)
Securities sold under agreements to repurchase	181,129	(255,000)
FHLB advances, federal funds purchased, and other borrowings	(2,845)	24,279
Subordinated capital notes	525	787
Exercise of stock options and restricted units lapsed, net	204	265
Purchase of treasury stock	(4,238)	(10,393)
Dividends paid on preferred stock	(6,931)	(6,931)
Dividends paid on common stock	(8,932)	(7,269)
Net cash used in financing activities	(50,360)	(489,324)
Net change in cash and cash equivalents	(19,892)	(24,784)
Cash and cash equivalents at beginning of period	573,427	621,269
Cash and cash equivalents at end of period	553,535	596,485
Supplemental Cash Flow Disclosure and Schedule of Non-cash Activities:
Interest paid	34,403	42,667
Income Taxes Paid	6,730	319
Mortgage loans securitized into mortgage-backed securities	61,854	46,505
Transfer from loans to foreclosed real estate and other repossessed assets	15,390	47,852
Reclassification of loans held-for-investment portfolio to held-for-sale portfolio	1,473	473
Reclassification of loans held-for-sale portfolio to investment portfolio	$ 156	$ 26,376

XML

Consolidated Statements of Financial Condition (Unaudited) (Parenthetical) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Amortized cost of trading securities	$ 1,327,000	$ 2,419,000
Amortized cost of investment securities available-for-sale	1,023,573,000	1,187,679,000
Fair value of held to maturity securities	547,776,000	164,154,000
Allowance for loan and lease losses, non-covered	102,877,000	69,517,000
Allowance for loan and lease losses, covered	$ 71,452,000	$ 64,245,000
Preferred stock, shares authorized	10,000,000	10,000,000
Common stock, par value	$ 1	$ 1
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	52,625,869	52,625,869
Common stock, shares outstanding	44,367,909	44,613,615
Treasury stock, at cost, shares	8,257,960	8,012,254
Tax effect on accumulated other comprehensive income (loss)	$ (185,000)	$ 447,000
Series A Preferred Stock
Preferred stock, shares issued	1,340,000	1,340,000
Preferred stock, liquidation value	$ 25	$ 25
Series B Preferred Stock
Preferred stock, shares issued	1,380,000	1,380,000
Preferred stock, liquidation value	$ 25	$ 25
Series C Convertible Preferred Stock
Preferred stock, shares issued	84,000	84,000
Preferred stock, liquidation value	$ 1,000	$ 1,000
Series D Preferred Stock Member
Preferred stock, shares issued	960,000	960,000
Preferred stock, liquidation value	$ 25	$ 25

XML

Deposits and Related Interest

6 Months Ended

Jun. 30, 2015

Deposits and Related Interest [Abstract]

Deposit and Related Interest

NOTE 10— DEPOSITS AND RELATED INTEREST

Total deposits, including related accrued interest payable, as of June 30, 2015 and December 31, 2014consist of the following:

	June 30,		December 31,
	2015		2014
	(In thousands)
Non-interest bearing demand deposits	$	838,600	$	745,142
Interest-bearing savings and demand deposits		2,348,478		2,544,665
Individual retirement accounts		276,185		303,049
Retail certificates of deposit		447,115		452,150
Institutional certificates of deposit		233,945		260,090
Total core deposits		4,144,323		4,305,096
Brokered deposits		605,361		619,310
Total deposits	$	4,749,684	$	4,924,406

Brokered deposits include $522.6 million in certificates of deposits and $83.0 million in money market accounts at June 30, 2015, and $526.2 million in certificates of deposits and $93.1 million in money market accounts at December 31, 2014.

The weighted average interest rate of the Company’s deposits was 0.65% at June 30, 2015and 0.66% at December 31, 2014.Interest expense for the quarters and six-month periods endedJune 30, 2015 and 2014 was as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2015		2014		2015		2014
	(In thousands)				(In thousands)
Demand and savings deposits	$	3,100	$	4,804	$	6,482	$	9,832
Certificates of deposit		3,504		4,361		7,226		8,311
	$	6,604	$	9,165	$	13,708	$	18,143

At June 30, 2015 and December 31, 2014, demand and interest-bearing deposits and certificates of deposit included deposits of Puerto Rico Cash & Money Market Fund, Inc., which amounted to $98.7 million and $96.8 million, respectively, with a weighted average rate of 0.77%and 0.78%, and were collateralized with investment securities with a fair value of $80.0 million and $76.3 million, respectively.

At June 30, 2015 and December 31, 2014, time deposits in denominations of $100 thousand or higher, excluding accrued interest and unamortized discounts, amounted to $588.1million and $608.1 million, respectively. Such amounts include public fund time deposits from various Puerto Rico government municipalities, agencies, and corporations of $9.0 million at a weighted average rate of 0.49% atJune 30, 2015, and $6.9million at a weighted average rate of 0.50% at December 31, 2014.

At June 30, 2015 and December 31, 2014, total public fund deposits from various Puerto Rico government municipalities, agencies, and corporationsamounted to $171.0million and $318.5million, respectively. These public funds were collateralized with commercial loans amounting to $411.4millionand $414.5million atJune 30, 2015 and December 31, 2014, respectively

Excluding equity indexed options in the amount of $2.0million, which are used by the Company to manage its exposure to the S&P 500 Index, and also excluding accrued interest of $1.2million and unamortized deposit discount in the amount of $442thousand, the scheduled maturities of certificates of deposit at June 30, 2015are as follows:

	June 30, 2015
	(In thousands)
Within one year:
Three (3) months or less	$	304,391
Over 3 months through 1 year		637,132
		941,523
Over 1 through 2 years		358,217
Over 2 through 3 years		123,227
Over 3 through 4 years		11,660
Over 4 through 5 years		41,100
	$	1,475,727

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 $2.1million and $845thousand as ofJune 30, 2015 and December 31, 2014, respectively.

XML

Offsetting Arrangement (Liabilities Offsetting) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Offsetting Liabilities [Line Items]
Gross amount of Recognized Liabilities	$ 1,169,728	$ 994,514
Gross amount Offset in the Statement of Financial Condition	0	0
Net Amount of Liabilities Presented in the Statement of Financial Condition	1,169,728	994,514
Financial Instruments	1,282,553	1,088,525
Cash Collateral Provided	2,980	2,980
Net Amount	(115,805)	(96,991)
Derivative Financial Instruments, Liabilities [Member]
Offsetting Liabilities [Line Items]
Gross amount of Recognized Liabilities	10,783	16,698
Gross amount Offset in the Statement of Financial Condition	0	0
Net Amount of Liabilities Presented in the Statement of Financial Condition	10,783	16,698
Financial Instruments	0	0
Cash Collateral Provided	2,980	2,980
Net Amount	7,803	13,718
Securities Loaned or Sold under Agreements to Repurchase
Offsetting Liabilities [Line Items]
Gross amount of Recognized Liabilities	1,158,945	977,816
Gross amount Offset in the Statement of Financial Condition	0	0
Net Amount of Liabilities Presented in the Statement of Financial Condition	1,158,945	977,816
Financial Instruments	1,282,553	1,088,525
Cash Collateral Provided	0	0
Net Amount	$ (123,608)	$ (110,709)

XML

Deposits and Related Interest (Deposits by Components) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Deposits, by Component, Alternative [Abstract]
Noninterest-bearing demand deposit	$ 838,600	$ 745,142
Interest-bearing saving and demand deposits	2,348,478	2,544,665
Individual Retirement Account	276,185	303,049
Retail certificates of deposists	447,115	452,150
Institutional certificates of deposits	233,945	260,090
Total Core Deposits	4,144,323	4,305,096
Brokered Deposists	605,361	619,310
Deposits, Total	$ 4,749,684	$ 4,924,406

XML

Accrued Interest and Other Assets (Other assets) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Other asset
Other prepaid expenses	$ 16,492	$ 16,018
Core deposit intangible and customer relationship intangibles	8,791	9,743
Other repossessed assets	14,661	21,800
Mortgage tax credits	6,277	6,277
Investment in Statutory Trust	1,083	1,083
Accounts receivable and other assets	45,439	38,830
FDIC Indemnification Receivabe	39,548	14,974
Other assets	$ 132,291	$ 108,725

XML

Commitments (Future rental commitments under leases) (Details) $ in Thousands	Jun. 30, 2015 USD ($)
Operating Leases, Future Minimum Payments Due [Abstract]
2015	$ 4,059
2016	7,794
2017	7,141
2018	6,050
2019	5,887
Thereafter	17,064
Total	$ 47,995

XML

Guarantees (Changes in liabilty of estimated loss from credit recourse agreement) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Movement In Guaranteed Benefit Liability Gross Roll Forward
Balance at beginning of the period	$ 487	$ 1,549	$ 927	$ 1,955
Additions from acquisition	0	0
Net charge-off/terminations	(198)	(239)	638	645
Balance at the end of the period	$ 289	$ 1,310	$ 289	$ 1,310

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 31, 2015
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, 2015
Amendment Flag	false
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		43,867,909

XML

Fair Value (Qualitative information for assets and liabilities) (Details) - Jun. 30, 2015 - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Thousands	Total	Total
Fair Value Inputs Assets Quantitative Information [Line Items]
Fair Value assets and liabilities measured on reccurring basis	$ 2,138	$ 2,138
Derivative asset (S&P Purchased Options) [Member] | Option Pricing Model Technique [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Valuation Technique		Option pricing model
Derivative asset (S&P Purchased Options) [Member] | Option Pricing Model Technique [Member] | Minimum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Implied option volatility	30.23%
Counterparty credit risk (based on 5-year CDS spread)	72.89%
Derivative asset (S&P Purchased Options) [Member] | Option Pricing Model Technique [Member] | Maximum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Implied option volatility	38.69%
Counterparty credit risk (based on 5-year CDS spread)	72.89%
Servicing Assets [Member] | Cash Flow Valuation Technique [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Fair Value assets and liabilities measured on reccurring basis	$ 5,791	$ 5,791
Valuation Technique		Cash flow valuation
Servicing Assets [Member] | Cash Flow Valuation Technique [Member] | Minimum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Constant prepayment rate	4.10%
Discount rate	10.00%
Servicing Assets [Member] | Cash Flow Valuation Technique [Member] | Maximum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Constant prepayment rate	10.22%
Discount rate	12.00%
Derivative liability (S&P Embedded Options) [Member] | Option Pricing Model Technique [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Fair Value assets and liabilities measured on reccurring basis	$ (2,044)	$ (2,044)
Valuation Technique		Option pricing model
Derivative liability (S&P Embedded Options) [Member] | Option Pricing Model Technique [Member] | Minimum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Implied option volatility	30.23%
Counterparty credit risk (based on 5-year CDS spread)	72.89%
Derivative liability (S&P Embedded Options) [Member] | Option Pricing Model Technique [Member] | Maximum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Implied option volatility	38.69%
Counterparty credit risk (based on 5-year CDS spread)	72.89%
Collateral dependant impaired loan | Fair value of property or collateral [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Fair Value assets and liabilities measured on reccurring basis	$ 40,893	$ 40,893
Valuation Technique		Fair value of property or collateral
Collateral dependant impaired loan | Fair value of property or collateral [Member] | Minimum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Appraised value	20.20%	20.20%
Collateral dependant impaired loan | Fair value of property or collateral [Member] | Maximum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Appraised value	27.20%	27.20%
Puerto Rico Electric Power Authority loan | Cash Flow Valuation Technique [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Fair Value assets and liabilities measured on reccurring basis	$ 173,565	$ 173,565
Puerto Rico Electric Power Authority loan | Cash Flow Valuation Technique [Member] | Minimum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Discount rate	7.25%
Puerto Rico Electric Power Authority loan | Cash Flow Valuation Technique [Member] | Maximum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Discount rate	7.25%
Puerto Rico Electric Power Authority loan | Fair value of property or collateral [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Valuation Technique		Cash flow valuation
Other non-collateral dependant impaired loans [Member] | Cash Flow Valuation Technique [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Fair Value assets and liabilities measured on reccurring basis	$ 4,949	$ 4,949
Valuation Technique		Cash flow valuation
Other non-collateral dependant impaired loans [Member] | Cash Flow Valuation Technique [Member] | Minimum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Discount rate	4.75%
Other non-collateral dependant impaired loans [Member] | Cash Flow Valuation Technique [Member] | Maximum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Discount rate	9.25%
Foreclosed real estate [Member] | Fair value of property or collateral [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Fair Value assets and liabilities measured on reccurring basis	$ 81,333	$ 81,333
Valuation Technique		Fair value of property or collateral
Foreclosed real estate [Member] | Fair value of property or collateral [Member] | Minimum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Appraised value	20.20%	20.20%
Foreclosed real estate [Member] | Fair value of property or collateral [Member] | Maximum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Appraised value	27.20%	27.20%
Other repossessed assets [Member] | Fair value of property or collateral [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Fair Value assets and liabilities measured on reccurring basis	$ 14,661	$ 14,661
Valuation Technique		Fair value of property or collateral
Other repossessed assets [Member] | Fair value of property or collateral [Member] | Minimum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Appraised value	20.20%	20.20%
Other repossessed assets [Member] | Fair value of property or collateral [Member] | Maximum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Appraised value	27.20%	27.20%

XML

Borrowings

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Borrowings

NOTE 11 — BORROWINGS AND RELATED INTEREST

Securities Sold under Agreements to Repurchase

At June 30, 2015, 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, 2015 and December 31, 2014, securities sold under agreements to repurchase (classified by counterparty), excluding accrued interest in the amount of $3.6million and $2.3million, respectively,were as follows:

	June 30,				December 31,
	2015				2014
			Fair Value of				Fair Value of
	Borrowing		Underlying		Borrowing		Underlying
	Balance		Collateral		Balance		Collateral
	(In thousands)
JP Morgan Chase Bank NA		428,902		469,599		307,816		328,198
Credit Suisse Securities (USA) LLC		670,000		749,286		670,000		760,327
Bank of America		27,200		28,989		-		-
Nomura		32,843		34,679		-		-
Total	$	1,158,945	$	1,282,553	$	977,816	$	1,088,525

The following table shows a summary of the Company’s repurchase agreements and their terms, excluding accrued interest in the amount of $3.6 million, atJune 30, 2015:

				Weighted-
		Borrowing		Average		Maturity
Year of Maturity		Balance		Coupon	Settlement Date	Date
		(In thousands)
2015	$		24,494	0.380%	5/18/2015	8/18/2015
			27,064	0.400%	6/16/2015	9/16/2015
			32,843	0.430%	5/19/2015	8/17/2015
			59,159	0.390%	5/20/2015	8/20/2015
			70,685	0.390%	2/21/2015	8/21/2015
			27,200	0.500%	6/17/2015	9/15/2015
2016			170,000	1.500%	12/6/2012	12/8/2016
			247,500	0.950%	12/10/2012	9/30/2016
2017			500,000	4.780%	3/2/2007	3/2/2017
		$	1,158,945	2.570%

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, 2015 and December 31, 2014 The information excludes repurchase agreement transactions which were collateralized with cash.

	June 30, 2015
					Market Value of Underlying Collateral
			Weighted		FNMA and
	Repurchase		Average		FHLMC		GNMA
	Liability		Rate		Certificates		Certificates		Total
	(Dollars in thousands)
Less than 90 days		241,445		0.41%		257,353		-		257,353
Over 90 days		917,500		3.12%		1,022,195		3,005		1,025,200
Total	$	1,158,945		2.57%	$	1,279,548	$	3,005	$	1,282,553

	December 31, 2014
					Market Value of Underlying Collateral
			Weighted		FNMA and
	Repurchase		Average		FHLMC		GNMA
	Liability		Rate		Certificates		Certificates		Total
	(Dollars in thousands)
Less than 90 days	$	52,816		0.39%	$	56,066	$	-	$	56,066
Over 90 days		925,000		2.83%		1,031,206		1,253		1,032,459
Total	$	977,816		2.41%	$	1,087,272	$	1,253	$	1,088,525

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, 2015 and December 31, 2014, these advances were secured by mortgage and commercial loans amounting to $1.1billion and $1.2 billion, respectively. Also, at June 30, 2015 andDecember 31, 2014, the Company had an additional borrowing capacity with the FHLB-NY of $612 million and $606.6 million, respectively. At June 30, 2015 and December 31, 2014, the weighted average remaining maturity of FHLB’s advances was 7.5 months and 8.8 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, 2015. .

The following table shows a summary of these advances and their terms, excluding accrued interest in the amount of $325thousand, at June 30, 2015:

			Weighted-
		Borrowing	Average		Maturity
Year of Maturity		Balance	Coupon	Settlement Date	Date
		(In thousands)
2015	$	25,000	0.35%	6/4/2015	7/6/2015
		50,000	0.34%	6/10/2015	7/10/2015
		100,000	0.35%	6/16/2015	7/16/2015
		25,000	0.35%	6/24/2015	7/24/2015
		25,000	0.34%	6/30/2015	7/30/2015
		38,658	0.35%	6/1/2015	7/1/2015
		263,658
2017		4,384	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		10,024	2.59%	7/19/2013	7/20/2020
	$	333,066	0.74%

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 $102.1 million atJune 30, 2015and $101.6 million at December 31, 2014.

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, 2015	$	58,625
2015		3,350
2016		5,025
	$	67,000

Other borrowings

Other borrowings, presented in the unaudited consolidated statements of financial condition amounted to $2.1 million and $4.0 million at June 30, 2015 and December 31, 2014, respectively, which mainly consists of unsecured fixed-rate borrowings.

XML

Premises and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Property Plant And Equipment Line Items
Total Premises and Equipment, net	$ 76,486	$ 80,599

XML

Accrued Interest Receivable and Other Assets (Accrued Interest)(Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Accounts Receivable Net Abstract
Accrued Interest Receivable On Non Covered Loans	$ 14,606	$ 17,005
Accrued Investment Income Receivable	4,648	4,340
Total Interest Receivable	$ 19,254	$ 21,345

XML

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Interest income:
Non-covered loans	$ 77,746	$ 88,064	$ 159,725	$ 173,307
Covered loans	12,758	24,879	28,262	48,267
Total interest income from loans	90,504	112,943	187,987	221,574
Mortgage-backed securities	7,998	11,984	16,587	24,400
Investment securities and other	911	973	1,840	3,000
Total interest income	99,413	125,900	206,414	248,974
Interest expense:
Deposits	6,604	9,165	13,708	18,143
Securities sold under agreements to repurchase	7,394	7,372	14,558	14,784
Advances from FHLB and other borrowings	2,248	2,289	4,483	4,583
Subordinated capital notes	875	996	1,738	1,988
Total interest expense	17,121	19,822	34,487	39,498
Net interest income	82,292	106,078	171,927	209,476
Provision for Non Covered Loan and Lease Losses	15,644	13,220	53,027	23,282
Provision for Covered Loan and Lease Losses	(105)	1,595	4,705	3,224
Total provision for loan and lease losses	15,539	14,815	57,732	26,506
Net interest income after provision for loan and lease losses	66,753	91,263	114,195	182,970
Non-interest income:
Banking service revenues	10,212	9,995	20,417	20,552
Wealth management revenue	7,285	7,336	14,440	14,203
Mortgage banking activities	1,862	1,554	3,725	3,249
Total Banking and Financial Service Revenues	19,359	18,885	38,582	38,004
FDIC shared-loss expense, net [Abstract]
FDIC indemnification asset expense	(22,512)	(17,499)	(34,733)	(35,121)
Change in true-up payment obligation expense	(733)	(856)	(1,596)	(1,721)
FDIC shared-loss expense, net	(23,245)	(18,355)	(36,329)	(36,842)
Net gain (loss) on:
Sale of securities	0	0	2,572	4,366
Derivatives	77	(247)	(13)	(470)
Other non-interest (loss) income	(847)	224	(2,587)	678
Total non-interest income, net	(4,656)	507	2,225	5,736
Non-interest expense:
Compensation and employee benefits	19,260	20,707	39,440	42,494
Professional and service fees	4,143	3,512	8,324	7,719
Occupancy and equipment	8,883	8,605	17,519	16,914
Insurance	2,251	2,333	4,204	4,407
Electronic banking charges	5,851	4,796	11,218	9,449
Information technology related expenses	1,543	1,485	2,997	3,300
Advertising, business promotion, and strategic initiatives	1,558	1,669	3,186	3,450
Foreclosure, repossession and other real estate expenses	10,337	6,656	15,783	13,043
Loan servicing and clearing expenses	2,594	1,669	4,947	3,728
Taxes, other than payroll and income taxes	2,703	3,776	4,182	7,511
Communication	770	813	1,460	1,770
Printing, postage, stationary and supplies	582	645	1,219	1,200
Director and investors relations	289	293	583	544
Other	3,673	2,889	5,707	5,723
Total non-interest expense	64,437	59,848	120,769	121,252
Income before income taxes	(2,340)	31,922	(4,349)	67,454
Income tax expense (benefit)	769	10,613	1,748	22,398
Net (loss) income	(3,109)	21,309	(6,097)	45,056
Dividends on preferred stock	(3,466)	(3,466)	(6,931)	(6,931)
(Loss) Income available to common shareholders	$ (6,575)	$ 17,843	$ (13,028)	$ 38,125
(Loss) Earnings per common share:
Basic	$ (0.15)	$ 0.4	$ (0.29)	$ 0.84
Diluted	$ (0.15)	$ 0.38	$ (0.29)	$ 0.8
Average common shares outstanding and equivalents	51,774	52,352	51,876	52,476
Cash dividends per share of common stock	$ 0.1	$ 0.08	$ 0.2	$ 0.16

XML

Allowance for Loan and Lease Losses

6 Months Ended

Jun. 30, 2015

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, 2015 and December 31, 2014was as follows:

	June 30,		December 31,
	2015		2014
	(In thousands)
Allowance for loans and lease losses on non-covered loans:
Originated and other loans and leases held for investment:
Mortgage	$	18,076	$	19,679
Commercial		34,779		8,432
Consumer		10,464		9,072
Auto and leasing		15,064		14,255
Unallocated		606		1
		78,989		51,439
Acquired loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		54		65
Consumer		2,616		1,211
Auto		2,859		3,321
		5,529		4,597
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Mortgage		473		-
Commercial		14,940		13,476
Consumer		84		5
Auto		2,862		-
		18,359		13,481
		102,877		69,517
Allowance for loans and lease losses on covered loans:
Loans secured by 1-4 family residential properties		17,593		15,522
Commercial and other construction		53,470		48,334
Consumer		389		389
		71,452		64,245
Total allowance for loan and lease losses	$	174,329	$	133,762

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 June 30, 2015, an assessment of the look-back period and historical loss factor was performed for auto and leasing and consumer and commercial loan portfolios. The analysis was based on the trends observed and their relation with the economic cycle as of the period ended June 30, 2015. As a result, for the commercial portfolio, the look-back period was changed to 36 months from the previously determined 12 months. For auto and leasing and consumer, a look back period of 24 months was maintained.  In addition, during the quarter ended June 30, 2015, an assessment of environmental factors was performed for commercial, auto, and consumer portfolios. As a result, the environmental factors continue to reflect our assessment of the impact to our portfolio, taking into consideration the current evolution of the portfolio and expected impact, due to recent economic developments, changes in values of collateral and delinquencies, among others. These changes in the allowance for loan and lease losses’ look-back period and the result of the assessment in 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, 2015
	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	$	18,086	$	33,123	$	9,405	$	15,762	$	383	$	76,759
Charge-offs		(1,356)		(497)		(2,309)		(7,662)		-		(11,824)
Recoveries		67		219		390		3,425		-		4,101
Provision for non-covered loan and lease losses		1,279		1,934		2,978		3,539		223		9,953
Balance at end of period	$	18,076	$	34,779	$	10,464	$	15,064	$	606	$	78,989

	Six-Month Period Ended June 30, 2015
	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	$	19,679	$	8,432	$	9,072	$	14,255	$	1	$	51,439
Charge-offs		(2,770)		(1,489)		(3,985)		(15,798)		-		(24,042)
Recoveries		67		309		543		6,809		-		7,728
Provision for non-covered loan and lease losses		1,100		27,527		4,834		9,798		605		43,864
Balance at end of period	$	18,076	$	34,779	$	10,464	$	15,064	$	606	$	78,989

	June 30, 2015
	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	$	8,268	$	27,401	$	-	$	-	$	-	$	35,669
Collectively evaluated for impairment		9,808		7,378		10,464		15,064		606		43,320
Total ending allowance balance	$	18,076	$	34,779	$	10,464	$	15,064	$	606	$	78,989
Loans:
Individually evaluated for impairment	$	89,304	$	241,971	$	-	$	64	$	-	$	331,339
Collectively evaluated for impairment		667,884		1,121,879		212,629		623,134		-		2,625,526
Total ending loan balance	$	757,188	$	1,363,850	$	212,629	$	623,198	$	-	$	2,956,865

	Quarter Ended June 30, 2014
	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	$	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 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
	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	$	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 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

	December 31, 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	$	8,968	$	841	$	-	$	-	$	-	$	9,809
Collectively evaluated for impairment		10,711		7,591		9,072		14,255		1		41,630
Total ending allowance balance	$	19,679	$	8,432	$	9,072	$	14,255	$	1	$	51,439
Loans:
Individually evaluated for impairment	$	94,185	$	236,270	$	-	$	-	$	-	$	330,455
Collectively evaluated for impairment		697,566		1,053,462		186,760		575,582		-		2,513,370
Total ending loan balance	$	791,751	$	1,289,732	$	186,760	$	575,582	$	-	$	2,843,825

During the quarter ended March 31, 2015 the Company placed its $200 million participation in a line of credit to PREPA on non-accrual status and recorded a $24.0 million provision for loan and lease losses. During the quarter ended June 30, 2015, interest payments received were applied to principal. As of June 30, 2015, the specific reserve was maintained at $24 million.

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, 2015
	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	$	49	1	$	1,885	$	3,516	$	-	$	5,450
Charge-offs		(16)			(1,303)		(1,038)		-		(2,357)
Recoveries		7			429		502		-		938
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-20		14			1,605		(121)		-		1,498
Balance at end of period	$	54		$	2,616	$	2,859	$	-	$	5,529

	Six-Month Period Ended June 30, 2015
	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	$	65	$1	$	1,211	$	3,321	$	-	$	4,597
Charge-offs		(16)			(2,686)		(2,304)		-		(5,006)
Recoveries		17			563		1,072		-		1,652
(Recapture) Provision for non-covered acquired loan and lease losses accounted for under ASC 310-20		(12)			3,528		770		-		4,286
Balance at end of period	$	54		$	2,616	$	2,859	$	-	$	5,529

	June 30, 2015
	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	$	54	$	2,616	$	2,859	$	-	$	5,529
Total ending allowance balance	$	54	$	2,616	$	2,859	$	-	$	5,529
Loans:
Individually evaluated for impairment	$	1,429	$	-	$	-	$	-	$	1,429
Collectively evaluated for impairment		7,019		41,505		142,570		-		191,094
Total ending loan balance	$	8,448	$	41,505	$	142,570	$	-	$	192,523

	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	$	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

	December 31, 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	$	65	$	1,211	$	3,321	$	-	$	4,597
Total ending allowance balance	$	65	$	1,211	$	3,321	$	-	$	4,597
Loans:
Individually evaluated for impairment	$	672	$	-	$	-	$	-	$	672
Collectively evaluated for impairment		12,003		45,344		184,782		-		242,129
Total ending loan balance	$	12,675	$	45,344	$	184,782	$	-	$	242,801

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, 2015
	Mortgage			Commercial			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	$	473		$	13,687		$	6		$	-	$	14,166
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-30		-			1,253			78			2,862		4,193
Balance at end of period	$	473		$	14,940		$	84		$	2,862	$	18,359
	Six-Month Period Ended June 30, 2015
	Mortgage			Commercial			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	$	13,476	1	$	5	$1	$	-	$	13,481
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-30		473			1,464			79			2,862		4,878
Balance at end of period	$	473		$	14,940		$	84		$	2,862	$	18,359

	Quarter Ended June 30, 2014
	Mortgage			Commercial			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	$	-		$	2,653		$	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			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	$	418	$1	$	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

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 endedJune 30, 2015and 2014were as follows:

	Quarter Ended June 30, 2015
	Mortgage		Commercial		Consumer		Leasing		Total
	(In thousands)
Allowance for loan and lease losses for covered loans:
Balance at beginning of period	$	17,340	$	52,922	$	389	$	-	$	70,651
Provision for covered loan and lease losses, net		148		(253)		-		-		(105)
FDIC shared-loss portion of provision for covered loan and lease losses, net		105		801		-		-		906
Balance at end of period	$	17,593	$	53,470	$	389	$	-	$	71,452
	Six-Month Period Ended June 30, 2015
	Mortgage		Commercial		Consumer		Leasing		Total
	(In thousands)
Allowance for loan and lease losses for covered loans:
Balance at beginning of period	$	15,522	$	48,334	$	389	$	-	$	64,245
Provision for (recapture) covered loan and lease losses, net		1,966		2,738		-		-		4,704
FDIC shared-loss portion of provision for covered loan and lease losses, net		105		2,398		-		-		2,503
Balance at end of period	$	17,593	$	53,470	$	389	$	-	$	71,452

	Quarter Ended June 30, 2014
	Mortgage		Commercial		Consumer		Leasing		Total
	(In thousands)
Allowance for loan and lease losses for covered loans:
Balance at beginning of period	$	14,221	$	39,562	$	615	$	-	$	54,398
Provision for covered loan and lease losses, net		411		1,184		-		-		1,595
FDIC shared-loss portion of provision for covered loan and lease losses, net		292		3,230		-		-		3,522
Balance at end of period	$	14,924	$	43,976	$	615	$	-	$	59,515
	Six-Month Period Ended June 30, 2014
	Mortgage		Commercial		Consumer		Leasing		Total
	(In thousands)
Allowance for loan and lease losses for covered loans:
Balance at beginning of period	$	12,495	$	39,619	$	615	$	-	$	52,729
Provision for (recapture) covered loan and lease losses, net		2,309		915		-		-		3,224
FDIC shared-loss portion of provision for covered loan and lease losses, net		120		3,442		-		-		3,562
Balance at end of period	$	14,924	$	43,976	$	615	$	-	$	59,515

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.

XML

Loans Receivable

6 Months Ended

Jun. 30, 2015

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, 2015 and December 31, 2014was as follows:

	June 30,		December 31,
	2015		2014
	(In thousands)
Non-covered loans:
Originated and other loans and leases held for investment:
Mortgage	$	757,187	$	791,751
Commercial		1,363,851		1,289,732
Consumer		212,629		186,760
Auto and leasing		623,198		575,582
		2,956,865		2,843,825
Acquired loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		8,448		12,675
Consumer		41,505		45,344
Auto		142,570		184,782
		192,523		242,801
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Mortgage		631,807		656,122
Commercial		406,447		452,201
Construction		93,263		106,361
Consumer		18,869		29,888
Auto		195,891		247,233
		1,346,277		1,491,805
		4,495,665		4,578,431
Deferred loan cost , net		3,877		4,282
Loans receivable		4,499,542		4,582,713
Allowance for loan and lease losses on loans not accounted for under ASC 310-30		(102,877)		(69,517)
Loans receivable, net		4,396,665		4,513,196
Mortgage loans held-for-sale		20,768		14,539
Total non-covered loans, net		4,417,433		4,527,735
Covered loans:
Loans secured by 1-4 family residential properties		117,840		117,171
Construction and development secured by 1-4 family residential properties		19,152		19,562
Commercial and other construction		153,199		221,917
Consumer		3,295		4,506
Total covered loans		293,486		363,156
Allowance for loan and lease losses on covered loans		(71,452)		(64,245)
Total covered loans, net		222,034		298,911
Total loans, net	$	4,639,467	$	4,826,646

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, 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, 2015 and December 31, 2014by 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, 2015
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	4,342	$	2,258	$	3,076	$	9,676	$	-	$	51,533	$	61,209	$	42
Years 2003 and 2004		8,460		4,616		6,260		19,336		-		84,968		104,304		-
Year 2005		5,338		2,012		3,926		11,276		-		45,881		57,157		-
Year 2006		6,496		3,315		7,601		17,412		170		64,292		81,874		-
Years 2007, 2008 and 2009		4,781		2,359		10,757		17,897		-		75,309		93,206		1,025
Years 2010, 2011, 2012, 2013 2014 and 2015		3,399		1,528		9,063		13,990		-		205,934		219,924		168
		32,816		16,088		40,683		89,587		170		527,917		617,674		1,235
Non-traditional		1,450		543		3,784		5,777		-		27,705		33,482		-
Loss mitigation program		11,542		6,076		14,627		32,245		5,016		61,389		98,650		3,547
		45,808		22,707		59,094		127,609		5,186		617,011		749,806		4,782
Home equity secured personal loans		-		-		-		-		-		420		420		-
GNMA's buy-back option program		-		-		6,961		6,961		-		-		6,961		-
		45,808		22,707		66,055		134,570		5,186		617,431		757,187		4,782
Commercial
Commercial secured by real estate:
Corporate		-		-		-		-		-		201,251		201,251		-
Institutional		-		-		-		-		-		35,113		35,113		-
Middle market		3,929		-		2,180		6,109		8,216		183,736		198,061		-
Retail		611		153		7,280		8,044		2,048		193,319		203,411		-
Floor plan		-		-		50		50		-		3,047		3,097		-
Real estate		-		-		-		-		-		16,646		16,646		-
		4,540		153		9,510		14,203		10,264		633,112		657,579		-
Other commercial and industrial:
Corporate		-		-		-		-		-		65,344		65,344		-
Institutional		-		-		-		-		197,559		207,661		405,220		-
Middle market		-		-		225		225		479		102,281		102,985		-
Retail		325		284		772		1,381		930		92,935		95,246		-
Floor plan		153		77		23		253		-		37,224		37,477		-
		478		361		1,020		1,859		198,968		505,445		706,272		-
		5,018		514		10,530		16,062		209,232		1,138,557		1,363,851		-

	June 30, 2015
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Consumer
Credit cards		303		120		319		742		-		19,381		20,123		-
Overdrafts		22		2		-		24		-		293		317		-
Personal lines of credit		97		17		63		177		22		2,083		2,282		-
Personal loans		1,532		858		716		3,106		320		170,202		173,628		-
Cash collateral personal loans		87		51		-		138		-		16,141		16,279		-
		2,041		1,048		1,098		4,187		342		208,100		212,629		-
Auto and leasing		47,451		18,593		7,420		73,464		365		549,369		623,198		-
Total	$	100,318	$	42,862	$	85,103	$	228,283	$	215,125	$	2,513,457	$	2,956,865	$	4,782

	December 31, 2014
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	4,128	$	3,157	$	4,395	$	11,680	$	-	$	54,064	$	65,744	$	134
Years 2003 and 2004		10,484		4,735		6,489		21,708		455		87,506		109,669		-
Year 2005		3,824		2,205		4,454		10,483		131		49,858		60,472		-
Year 2006		5,706		3,298		8,667		17,671		548		67,331		85,550		89
Years 2007, 2008 and 2009		5,283		1,809		7,646		14,738		761		77,990		93,489		-
Years 2010, 2011, 2012, 2013 and 2014		3,684		2,992		6,900		13,576		-		190,848		204,424		365
		33,109		18,196		38,551		89,856		1,895		527,597		619,348		588
Non-traditional		1,477		584		3,223		5,284		-		30,916		36,200		-
Loss mitigation program		8,199		7,106		14,114		29,419		6,358		57,666		93,443		2,766
		42,785		25,886		55,888		124,559		8,253		616,179		748,991		3,354
Home equity secured personal loans		-		-		-		-		-		517		517		-
GNMA's buy-back option program		-		-		42,243		42,243		-		-		42,243		-
		42,785		25,886		98,131		166,802		8,253		616,696		791,751		3,354
Commercial
Commercial secured by real estate:
Corporate		-		-		-		-		-		133,076		133,076		-
Institutional		-		-		-		-		-		36,611		36,611		-
Middle market		-		645		396		1,041		8,494		154,515		164,050		-
Retail		330		561		7,275		8,166		1,445		166,017		175,628		-
Floor plan		-		-		-		-		-		1,650		1,650		-
Real estate		-		-		-		-		-		12,628		12,628		-
		330		1,206		7,671		9,207		9,939		504,497		523,643		-
Other commercial and industrial:
Corporate		-		-		-		-		-		63,746		63,746		-
Institutional		-		-		-		-		-		478,935		478,935		-
Middle market		-		-		618		618		-		91,716		92,334		-
Retail		866		412		1,061		2,339		1,047		86,785		90,171		-
Floor plan		-		-		-		-		-		40,903		40,903		-
		866		412		1,679		2,957		1,047		762,085		766,089		-
		1,196		1,618		9,350		12,164		10,986		1,266,582		1,289,732		-

	December 31, 2014
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Consumer
Credit cards		360		139		375		874		-		18,197		19,071		-
Overdrafts		20		-		-		20		-		287		307		-
Personal lines of credit		102		25		102		229		9		1,962		2,200		-
Personal loans		1,822		743		678		3,243		337		144,359		147,939		-
Cash collateral personal loans		275		39		9		323		-		16,920		17,243		-
		2,579		946		1,164		4,689		346		181,725		186,760		-
Auto and leasing		47,658		16,916		7,420		71,994		145		503,443		575,582		-
Total	$	94,218	$	45,366	$	116,065	$	255,649	$	19,730	$	2,568,446	$	2,843,825	$	3,354

At June 30, 2015 and December 31, 2014, the Company had $347.5 million and $450.2 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. All loans granted to Puerto Rico government were current at June 30, 2015 and December 31, 2014. We, as part of the bank syndicate, agreed in August 2014 to extend our credit facilities with PREPA to March 31, 2015, and are currently extended to September 15, 2015. After the first extension, the Company classified the credit as substandard and a troubled-debt restructuring. The Company conducted an impairment analysis considering the probability of collection of principal and interest, which included a financial model to project the future liquidity status of PREPA under various scenarios and its capacity to service its financial obligations, and concluded that the PREPA had sufficient cash flows for the repayment of the line of credit. Despite the Company’s analysis showing PREPA’s capacity to repay the line of credit, the Company placed its participation in non-accrual and recorded a $24 million provision during the first quarter of 2015. The impairment analysis was updated for the second quarter with no change in provision. For the quarter ended June 30, 2015, interest payments are being applied to principal

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 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 ofJune 30, 2015 and December 31, 2014, by class ofloans:

	June 30, 2015
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Commercial
Commercial secured by real estate
Retail	$	-	$	-	$	344	$	344	$	-	$	-	$	344	$	-
Floor plan		-		-		496		496		-		2,267		2,763		-
		-		-		840		840		-		2,267		3,107		-
Other commercial and industrial
Retail		145		32		173		350		2		3,608		3,960		-
Floor plan		87		130		26		243		4		1,134		1,381		-
		232		162		199		593		6		4,742		5,341		-
		232		162		1,039		1,433		6		7,009		8,448		-
Consumer
Credit cards		1,005		361		1,023		2,389		-		35,870		38,259		-
Personal loans		104		19		52		175		-		3,071		3,246		-
		1,109		380		1,075		2,564		-		38,941		41,505		-
Auto		9,364		3,209		1,075		13,648		65		128,857		142,570		-
Total	$	10,705	$	3,751	$	3,189	$	17,645	$	71	$	174,807	$	192,523	$	-

	December 31, 2014
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Commercial
Commercial secured by real estate
Retail	$	-	$	-	$	351	$	351	$	-	$	-	$	351	$	-
Floor plan		-		62		345		407		-		3,724		4,131		-
		-		62		696		758		-		3,724		4,482		-
Other commercial and industrial
Retail		155		67		192		414		2		3,705		4,121		-
Floor plan		202		134		223		559		10		3,503		4,072		-
		357		201		415		973		12		7,208		8,193		-
		357		263		1,111		1,731		12		10,932		12,675		-
Consumer
Credit cards		1,376		654		1,399		3,429		-		38,419		41,848		-
Personal loans		151		47		77		275		-		3,221		3,496		-
		1,527		701		1,476		3,704		-		41,640		45,344		-
Auto		11,003		3,453		1,262		15,718		76		168,988		184,782		-
Total	$	12,887	$	4,417	$	3,849	$	21,153	$	88	$	221,560	$	242,801	$	-

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, 2015 and December 31, 2014is as follows:

	June 30,	December 31,
	2015	2014
	(In thousands)
Contractual required payments receivable	$2,208,242	$2,394,378
Less: Non-accretable discount	$449,917	$456,627
Cash expected to be collected	1,758,325	1,937,751
Less: Accretable yield	412,048	445,946
Carrying amount, gross	1,346,277	1,491,805
Less: allowance for loan and lease losses	18,359	13,481
Carrying amount, net	$1,327,918	$1,478,324

At June 30, 2015 and December 31, 2014, the Company had $167.8million and $168.8 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, 2015 and December 31, 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 periodsendedJune 30, 2015 and2014

	Quarter Ended June 30, 2015
	Mortgage		Commercial		Construction		Auto		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	284,612	$	57,330	$	19,390	$	47,097	$	5,601	$	414,030
Accretion		(8,813)		(9,597)		(2,143)		(6,163)		(1,287)		(28,003)
Change in Expected Cash Flows		-		23,695		9,867		-		-		33,562
Transfer (to) from non-accretable discount		81		135		(2,501)		(9,403)		4,147		(7,541)
Balance at end of period	$	275,880	$	71,563	$	24,613	$	31,531	$	8,461	$	412,048
Non-Accretable Discount Activity:
Balance at beginning of period	$	392,609	$	15,826	$	3,957	$	14,543	$	23,576	$	450,511
Change in actual and expected losses		(3,421)		(4,921)		536		(256)		(73)		(8,135)
Transfer from (to) accretable yield		(81)		(135)		2,501		9,403		(4,147)		7,541
Balance at end of period	$	389,107	$	10,770	$	6,994	$	23,690	$	19,356	$	449,917

	Six- Month Period Ended June 30, 2015
	Mortgage		Commercial		Construction		Auto		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	298,364	$	61,196	$	25,829	$	53,998	$	6,559	$	445,946
Accretion		(17,800)		(20,356)		(5,953)		(13,151)		(2,213)		(59,473)
Change in Expected Cash Flows		-		23,695		9,867		-		-		33,562
Transfer (to) from non-accretable discount		(4,684)		7,028		(5,130)		(9,316)		4,115		(7,987)
Balance at end of period	$	275,880	$	71,563	$	24,613	$	31,531	$	8,461	$	412,048
Non-Accretable Discount Activity:
Balance at beginning of period	$	389,839	$	23,069	$	3,486	$	16,215	$	24,018	$	456,627
Change in actual and expected losses		(5,416)		(5,271)		(1,622)		(1,841)		(547)		(14,697)
Transfer from (to) accretable yield		4,684		(7,028)		5,130		9,316		(4,115)		7,987
Balance at end of period	$	389,107	$	10,770	$	6,994	$	23,690	$	19,356	$	449,917

	Quarter Ended June 30, 2014
	Mortgage		Commercial		Construction		Auto		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	278,468	$	82,637	$	35,005	$	74,635	$	11,256	$	482,001
Accretion		(9,363)		(12,217)		(5,973)		(10,593)		(1,568)		(39,714)
Transfer (to) from non-accretable discount		-		71		1,640		578		30		2,319
Balance at end of period	$	269,105	$	70,491	$	30,672	$	64,620	$	9,718	$	444,606
Non-Accretable Discount Activity:
Balance at beginning of period	$	458,648	$	41,551	$	7,248	$	29,328	$	26,519	$	563,294
Change in actual and expected losses		(2,859)		(430)		(220)		(1,471)		(1,271)		(6,251)
Transfer from (to) accretable yield		-		(71)		(1,640)		(578)		(30)		(2,319)
Balance at end of period	$	455,789	$	41,050	$	5,388	$	27,279	$	25,218	$	554,724

	Six- Month Period Ended June 30 , 2014
	Mortgage		Commercial		Construction		Auto		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	287,841		96,139		42,993		77,845		12,735		517,553
Accretion		(18,732)		(24,934)		(10,459)		(22,418)		(3,440)		(79,983)
Transfer (to) from non-accretable discount		(4)		(714)		(1,862)		9,193		423		7,036
Balance at end of period	$	269,105		70,491		30,672		64,620		9,718		444,606
Non-Accretable Discount Activity:
Balance at beginning of period	$	463,166		42,515		5,851		39,645		28,410		579,587
Change in actual and expected losses		(7,381)		(2,179)		(2,325)		(3,173)		(2,769)		(17,827)
Transfer from (to) accretable yield		4		714		1,862		(9,193)		(423)		(7,036)
Balance at end of period	$	455,789		41,050		5,388		27,279		25,218		554,724

Covered Loans

The carrying amount of covered loans at June 30, 2015 and December 31, 2014is as follows:

	June 30		December 31
	2015		2014
	(In thousands)
Contractual required payments receivable	$	419,259	$	535,425
Less: Non-accretable discount		21,132		62,410
Cash expected to be collected		398,127		473,015
Less: Accretable yield		104,641		109,859
Carrying amount, gross		293,486		363,156
Less: Allowance for covered loan and lease losses		71,452		64,245
Carrying amount, net	$	222,034	$	298,911

The following tables describe the accretable yield and non-accretable discount activity of covered loans for the quartersand six-month periods ended June 30, 2015 and 2014:

	Quarter Ended June 30, 2015
	Loans Secured by 1-4 Family Residential Properties		Commercial and Other Construction		Construction & Development Secured by 1-4 Family Residential Properties		Leasing		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	58,332	$	33,481	$	20,806	$	1,665	$	2,004	$	116,288
Accretion		(3,276)		(8,047)		(405)		(937)		(93)		(12,758)
Transfer from (to) non-accretable discount		750		2,039		(2,052)		375		(1)		1,111
Balance at end of period	$	55,806	$	27,473	$	18,349	$	1,103	$	1,910	$	104,641
Non-Accretable Discount Activity:
Balance at beginning of period	$	12,557	$	10,493	$	-	$	-	$	9,662	$	32,712
Change in actual and expected losses		(405)		(8,454)		(2,052)		375		67		(10,469)
Transfer from (to) accretable yield		(750)		(2,039)		2,052		(375)		1		(1,111)
Balance at end of period	$	11,402	$	-	$	-	$	-	$	9,730	$	21,132

	Six- Month Period Ended June 30, 2015
	Loans Secured by 1-4 Family Residential Properties		Commercial and Other Construction		Construction & Development Secured by 1-4 Family Residential Properties		Leasing		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	47,636	$	37,919	$	20,753	$	2,479	$	1,072	$	109,859
Accretion		(6,794)		(17,902)		(1,024)		(2,329)		(213)		(28,262)
Transfer from (to) non-accretable discount		14,964		7,456		(1,380)		953		1,051		23,044
Balance at end of period	$	55,806	$	27,473	$	18,349	$	1,103	$	1,910	$	104,641
Non-Accretable Discount Activity:
Balance at beginning of period	$	27,348	$	24,464	$	-	$	-	$	10,598	$	62,410
Change in actual and expected losses		(982)		(17,008)		(1,380)		953		183		(18,234)
Transfer from (to) accretable yield		(14,964)		(7,456)		1,380		(953)		(1,051)		(23,044)
Balance at end of period	$	11,402	$	-	$	-	$	-	$	9,730	$	21,132

	Quarter Ended June 30, 2014
	Loans Secured by 1-4 Family Residential Properties		Commercial and Other Construction		Construction & Development Secured by 1-4 Family Residential Properties		Leasing		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	54,619	$	83,200	$	209	$	7,332	$	2,407	$	147,767
Accretion		(4,033)		(17,141)		(1,070)		(2,377)		(259)		(24,880)
Transfer from (to) non-accretable discount		-		4,168		861		145		-		5,174
Balance at end of period	$	50,586	$	70,227	$	-	$	5,100	$	2,148	$	128,061
Non-Accretable Discount Activity:
Balance at beginning of period	$	31,340	$	67,136	$	-	$	-	$	8,847	$	107,323
Change in actual and expected losses		(1,481)		(16,372)		861		145		(78)		(16,925)
Transfer (to) from accretable yield		-		(4,168)		(861)		(145)		-		(5,174)
Balance at end of period	$	29,859	$	46,596	$	-	$	-	$	8,769	$	85,224

	Six- Month Period Ended June 30, 2014
	Loans Secured by 1-4 Family Residential Properties		Commercial and Other Construction		Construction & Development Secured by 1-4 Family Residential Properties		Leasing		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	53,250	$	95,093	$	1,690	$	10,238	$	2,688	$	162,959
Accretion		(8,197)		(31,993)		(2,150)		(5,388)		(540)		(48,268)
Transfer from (to) non-accretable discount		5,533		7,127		460		250		-		13,370
Balance at end of period	$	50,586	$	70,227	$	-	$	5,100	$	2,148	$	128,061
Non-Accretable Discount Activity:
Balance at beginning of period	$	39,182	$	81,092	$	-	$	-	$	9,203	$	129,477
Change in actual and expected losses		(3,790)		(27,369)		460		250		(434)		(30,883)
Transfer (to) from accretable yield		(5,533)		(7,127)		(460)		(250)		-		(13,370)
Balance at end of period	$	29,859	$	46,596	$	-	$	-	$	8,769	$	85,224

Non-accrual Loans

The following table presents the recorded investment in loansin non-accrual status by class ofloans as of June 30, 2015 and December 31, 2014:

	June 30,		December 31,
	2015		2014
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year):
Up to the year 2002	$	3,104	$	4,427
Years 2003 and 2004		6,317		7,042
Year 2005		3,926		4,585
Year 2006		7,861		9,274
Years 2007, 2008 and 2009		9,991		8,579
Years 2010, 2011, 2012, 2013, 2014 and 2015		9,183		7,365
		40,382		41,272
Non-traditional		3,784		3,224
Loss mitigation program		19,504		20,934
		63,670		65,430
Commercial
Commercial secured by real estate
Middle market		14,325		9,534
Retail		9,557		9,000
		23,882		18,534
Other commercial and industrial
Institutional		197,559		-
Middle market		703		618
Retail		1,797		2,527
Floor plan		23		-
		200,082		3,145
		223,964		21,679
Consumer
Credit cards		319		375
Personal lines of credit		86		110
Personal loans		1,107		1,092
Cash collateral personal loans		-		13
		1,512		1,590
Auto and leasing		8,587		8,668
Total Non-accrual originated loans	$	297,733	$	97,367

	June 30,		December 31,
	2015		2014
	(In thousands)
Acquired loans accounted under ASC 310-20
Commercial
Commercial secured by real estate
Retail	$	344	$	351
Floor plan		496		407
		840		758
Other commercial and industrial
Retail		178		195
Floor plan		30		234
		208		429
		1,048		1,187
Consumer
Credit cards		1,023		1,399
Personal loans		52		77
		1,075		1,476
Auto		1,277		1,512
Total non-accrual acquired loans accounted under ASC 310-20		3,400		4,175
Total non-accrual loans	$	301,183	$	101,542

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.

Delinquent residential mortgage loans insured or guaranteed under applicable FHA and VA programs are classified as non-performing loans when they become 90 days or more past due, but are not placed in non-accrual status until they become 18 months or more past due, since they are insured loans. Therefore, these loans are included as non-performing loans but excluded from non-accrual loans.

During the quarter ended March 31, 2015, the revolving line of credit to PREPA was classified as non-accrual. At June 30, 2015, this line of credit had an unpaid principal balance of $197.6million. For the quarter ended June 30, 2015, interest payments received were applied to principal. As of June 30, 2015, the specific reserve was maintained at $24 million.

AtJune 30, 2015 and December 31, 2014, loans whose terms have been extended and which are classified as troubled-debt restructurings that are not included in non-accrual loans amounted to $88.8 million and $274.4 million,respectively, as they are performing under their new terms. At December 31, 2014, the balance included the revolving line of credit to PREPA.

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 $243.4 million and $236.9 million at June 30, 2015 and December 31, 2014, respectively. Impaired commercial loans at June 30, 2015 and December 31, 2014 included the PREPA line of credit with an unpaid principal balance of $197.6 million and $200.0 million, 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 $27.4 million and $841 thousand at June 30, 2015 and December 31, 2014, respectively. The valuation allowance for impaired commercial loans amounted to $27.4 million including $24.0 million of PREPA allowance placed during Q1 2015.The total investment in impaired mortgage loans was $89.3 million and $94.2 million at June 30, 2015 and December 31, 2014, 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 $8.3 million and $9.0 million at June 30, 2015 and December 31, 2014, respectively.

Originated and Other Loans and Leases Held for Investment

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, 2015 and December 31, 2014are as follows:

	June 30, 2015
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance:
Commercial	$	215,139	$	211,186	$	27,401	13%
Residential troubled-debt restructuring		95,881		89,303		8,268	9%
Impaired loans with no specific allowance:
Commercial		34,305		30,786		N/A	N/A
Total investment in impaired loans	$	345,325	$	331,275	$	35,669	11%

	December 31, 2014
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance
Commercial	$	6,349	$	6,226	$	841	14%
Residential troubled-debt restructuring		99,947		94,185		8,968	10%
Impaired loans with no specific allowance
Commercial		237,806		230,044		N/A	N/A
Total investment in impaired loans	$	344,102	$	330,455	$	9,809	3%

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

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, 2015 and December 31, 2014are as follows:

	June 30, 2015
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial	$	1,435	$	1,429		N/A	N/A
Total investment in impaired loans	$	1,435	$	1,429	$	-	-
	December 31, 2014
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial	$	672	$	672		N/A	N/A
Total investment in impaired loans	$	672	$	672	$	-	-

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

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, 2015 and December 31, 2014 are as follows:

	June 30, 2015
							Coverage
	Unpaid		Recorded				to Recorded
	Principal		Investment		Allowance		Investment
	(In thousands)
Impaired non-covered loan pools:
Mortgage	$	22,901	$	23,676	$	557	2%
Commercial		230,196		208,083		5,752	3%
Construction		87,488		88,575		9,188	10%
Auto		187,569		195,891		2,862	1%
Total investment in impaired non-covered loan pools	$	528,154	$	516,225	$	18,359	4%

	December 31 , 2014
							Coverage
	Unpaid		Recorded				to Recorded
	Principal		Investment		Allowance		Investment
	(In thousands)
Impaired non-covered loan pools:
Commercial		289,228		255,619		5,506	2%
Construction		90,786		83,751		7,970	10%
Consumer		35,812		29,888		5	0%
Total investment in impaired non-covered loan pools	$	415,826	$	369,258	$	13,481	4%

The tables above only present information with respect to non-covered loans and pools accounted for under ASC 310-30 if there is a recorded impairment to such loans or loan pools and a specific allowance for loan losses. As of June 30, 2015, the Company eliminated the specific allowance of $5 thousand maintained on impaired non-covered acquired consumer loan pool accounted under ASC 310-30 because there was an increase in the net present value of cash flows expected to be collected from such pool when compared with the recorded investment. Likewise, the increase in mortgage and auto loan pools from December 31, 2014 to June 30, 2015 was caused by the establishment of a specific reserve with respect to impaired mortgage and auto loan pools that were required based on the net present value of the cash flows expected to be collected.

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 quarters and six-month periodsendedJune 30, 2015 and 2014:

	Quarter Ended June 30,
	2015				2014
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)
Originated and other loans held for investment:
Impaired loans with specific allowance
Commercial	$	45	$	212,414	$	39	$	7,200
Residential troubled-debt restructuring		781		89,041		663		90,445
Impaired loans with no specific allowance
Commercial		316		30,015		77		21,951
		1,142		331,470		779		119,596
Acquired loans accounted for under ASC 310-20:
Impaired loans with no specific allowance
Commercial		11		1,446		-		-
Total interest income from impaired loans	$	1,153	$	332,916	$	779	$	119,596

	Six-Month Period Ended June 30,
	2015				2014
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)
Originated and other loans held for investment:
Impaired loans with specific allowance
Commercial	$	90	$	146,144	$	78	$	6,729
Residential troubled-debt restructuring		1,563		91,216		1,270		88,749
Impaired loans with no specific allowance
Commercial		631		95,791		154		21,790
	$	2,284	$	333,151	$	1,502	$	117,268
Acquired loans accounted for under ASC 310-20:
Impaired loans with no specific allowance
Commercial		21		1,923		-		-
Total interest income from impaired loans	$	2,305	$	335,074	$	1,502	$	117,268

Covered Loans

The Company’s recorded investment in covered loan pools that have recorded impairments and their relatedallowance for covered loan and lease losses as ofJune 30, 2015 and December 31, 2014are as follows:

	June 30, 2015
							Coverage
	Unpaid		Recorded				to Recorded
	Principal		Investment		Allowance		Investment
	(In thousands)
Impaired covered loan pools:
Loans secured by 1-4 family residential properties	$	124,906	$	106,937	$	17,594	16%
Construction and development secured by 1-4 family residential properties		46,732		19,152		12,300	64%
Commercial and other construction		132,636		95,655		41,170	43%
Consumer		6,102		1,718		389	23%
Total investment in impaired covered loan pools	$	310,376	$	223,462	$	71,453	32%

	December 31, 2014
							Coverage
	Unpaid		Recorded		Specific		to Recorded
	Principal		Investment		Allowance		Investment
	(In thousands)
Impaired covered loan pools with specific allowance
Loans secured by 1-4 family residential properties	$	134,579	$	106,116	$	15,522	15%
Construction and development secured by 1-4 family residential properties		57,123		19,562		10,724	55%
Commercial and other construction		93,894		74,069		37,610	51%
Consumer		7,992		4,506		389	9%
Total investment in impaired covered loan pools	$	293,588	$	204,253	$	64,245	31%

Modifications

The following tables present the troubled-debt restructurings during the quarters and six-month periods ended June 30, 2015and2014:

	Quarter Ended June 30, 2015
	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	39	$	4,455	5.62%	330	$	4,455	4.21%	330
Commercial	1		29	7.25%	44		29	6.50%	60
Consumer	21		250	14.40%	71		259	13.87%	69
Auto	1		64	12.95%	72		65	12.95%	72
	Six-Month Period Ended June 30, 2015
	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	97	$	11,609	4.65%	348	$	11,594	4.13%	349
Commercial	4		4,533	6.83%	80		4,533	7.00%	141
Consumer	32		396	14.50%	72		440	14.25%	68
Auto	1		64	12.95%	72		65	12.95%	72

	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	6.00%	353	$	4,965	4.12%	418
Commercial	1		73	7.00%	55		73	9.25%	36
Consumer	3		24	14.00%	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	6.00%	349	$	11,446	4.26%	390
Commercial	1		73	7.00%	55		73	9.25%	36
Consumer	8		66	13.00%	70		68	13.31%	68

The following table presents troubled-debt restructurings for which there was a payment default during the six-month periodsended June 30, 2015and 2014:

	Six-Month Period EndedJune 30,
	2015			2014
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Mortgage	60	$	6,911	22	$	2,703
Consumer	4	$	72	5	$	101

Credit Quality Indicators

The Company categorizes non-covered originated commercial loans and acquired commercial 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, and 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 well-definedweakness 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, 2015 and December 31, 2014, 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, 2015
	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	$	201,251	$	183,630	$	15,306	$	-	$	-	$	2,315
Institutional		35,113		26,444		8,444		-		-		225
Middle market		198,061		172,626		7,008		109		-		18,318
Retail		203,411		182,468		6,229		4,399		-		10,315
Floor plan		3,097		2,765		192		-		-		140
Real estate		16,646		16,646		-		-		-		-
		657,579		584,579		37,179		4,508		-		31,313
Other commercial and industrial:
Corporate		65,344		59,684		-		-		-		5,660
Institutional		405,220		207,661		-		-		-		197,559
Middle market		102,985		97,775		-		-		-		5,210
Retail		95,246		91,455		484		1,672		-		1,635
Floor plan		37,477		34,306		2,565		12		-		594
		706,272		490,881		3,049		1,684		-		210,658
Total		1,363,851		1,075,460		40,228		6,192		-		241,971
Commercial - acquired loans (under ASC 310-20)
Commercial secured by real estate:
Retail		344		-		-		344		-		-
Floor plan		2,763		1,521		-		-		-		1,242
		3,107		1,521		-		344		-		1,242
Other commercial and industrial:
Retail		3,960		3,943		-		17		-		-
Floor plan		1,381		1,264		-		30		-		87
		5,341		5,207		-		47		-		87
Total		8,448		6,728		-		391		-		1,329
Total	$	1,372,299	$	1,082,188	$	40,228	$	6,583	$	-	$	243,300

	December 31, 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	$	133,076	$	109,282	$	15,615	$	-	$	-	$	8,179
Institutional		36,611		27,089		9,284		-		-		238
Middle market		164,050		148,360		2,817		-		-		12,873
Retail		175,628		159,209		3,690		2,637		-		10,092
Floor plan		1,650		692		958		-		-		-
Real estate		12,628		12,628		-		-		-		-
		523,643		457,260		32,364		2,637		-		31,382
Other commercial and industrial:
Corporate		63,746		63,746		-		-		-		-
Institutional		478,935		278,953		-		-		-		199,982
Middle market		92,334		87,126		2,815		-		-		2,393
Retail		90,171		85,941		259		2,575		-		1,396
Floor plan		40,903		38,413		1,247		126		-		1,117
		766,089		554,179		4,321		2,701		-		204,888
Total		1,289,732		1,011,439		36,685		5,338		-		236,270
Commercial - acquired loans (under ASC 310-20)
Commercial secured by real estate:
Retail		351		-		-		351		-		-
Floor plan		4,131		3,724		-		-		-		407
		4,482		3,724		-		351		-		407
Other commercial and industrial:
Retail		4,121		4,080		8		33		-		-
Floor plan		4,072		3,807		-		-		-		265
		8,193		7,887		8		33		-		265
Total		12,675		11,611		8		384		-		672
Total	$	1,302,407	$	1,023,050	$	36,693	$	5,722	$	-	$	236,942

All loans individually measured for impairment are classified as substandard at June 30, 2015 and December 31, 2014.

At June 30, 2015 and December 31, 2014, the Companyhad outstanding credit facilities of approximately $515.3million and $619.0 million, respectively, granted to the Puerto Rico government, including its instrumentalities, public corporations and municipalities.A substantial portion of the Company’s credit exposure to Puerto Rico’s government consists of collateralized loans or obligations that have a specific source of income or revenues identified for their repayment. Approximately $214 million of these loans are general obligations debt of municipalities secured by ad valorem taxation, without limitation as to rate or amount, on all taxable property within the issuing municipalities. The good faith, credit and unlimited taxing power of each issuing municipality are pledged for the payment of its general obligations debt.

In addition, 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 State Insurance Fund Corporation. The Commonwealth’s instrumentalities or public corporations have varying degrees of independence from the central government. Some instrumentalities or public corporations that provide essential or important government services, such as the University of Puerto Rico, the Puerto Rico Medical Services Administration and the Puerto Rico Metropolitan Bus Authority, are supported by the Commonwealth through budget appropriations, while others, such as PREPA, are owed substantial amounts for utility services rendered to the Commonwealth.

At June 30, 2015, we had approximately $301.0 million of credit facilities to public corporations of the Commonwealth, including:

• PREPA with an outstanding balance of $197.6 million;
• The State Insurance Fund Corporation with an outstanding balance of $77.6 million, which is approximately 130% collateralized by a portfolio of A-plus rated securities; and
• The Puerto Rico Housing Finance Authority with an outstanding balance of $25.2 million to be repaid from abandoned or unclaimed funds at financial institutions that revert to the government under a Puerto Rico escheat law.

The outstanding balance of credit facilities to public corporations decreased during the second quarter as a result of a repayment in full of a $75 million loan by the Puerto Rico Aqueduct and Sewer Authority.

Oriental Bank is part of a four bank syndicate providing a $550 million revolving line of credit to finance the purchase of fuel for PREPA’s day-to-day power generation activities. Our participation in the line of credit has an unpaid principal balance of $197.6 million as of June 30, 2015. As part of the bank syndicate, the Bank entered into a forbearance agreement with PREPA, which has been extended several times, most recently until September 15, 2015. In connection with such extensions, PREPA appointed a Chief Restructuring Officer to work alongside the Executive Director to develop, organize and manage a financial and operational restructuring of PREPA subject to the approval of PREPA’s Board of Directors.  PREPA also has been in negotiations with its forbearing creditors to restructure its debts and obtain financing for capital improvements needed to its infrastructure. The Company has classified the credit facility to PREPA as substandard and on non-accrual status. The Company conducted an impairment analysis considering the probability of collection of principal and interest, which included a financial model to project the future liquidity status of PREPA under various scenarios and its capacity to service its financial obligations, and concluded that PREPA had sufficient cash flows for the repayment of the line of credit. This analysis has been further supported by the various restructuring proposals made by PREPA and its creditors. Despite the Company’s analysis showing PREPA’s capacity to repay the line of credit, the Company placed its participation in non-accrual and recorded a $24 million provision during the first quarter of 2015. The impairment analysis was updated for the second quarter with no change in provision. For the quarter ended June 30, 2015, interest payments are being applied to principal.

PREPA’s enabling act provides for local receivership upon request to any Puerto Rico court of competent jurisdiction in the event of a default in debt-service payments or other obligations in connection with PREPA’s bonds.  The receiver so appointed would be empowered, directly or through its agents and attorneys, to take possession of the undertakings, income and revenues pledged to the payment of the bonds in default; to have, hold, use, operate, manage and control the same; and to exercise all of PREPA’s rights and powers with respect to such undertakings.  However, any such receiver would not have the power to sell, assign, mortgage or otherwise dispose of PREPA’s assets, and its powers would be limited to the operation and maintenance of such undertakings and the collection and application of the income and revenues therefrom. Although the Puerto Rico government is actively seeking the right to bankruptcy relief for some of its public instrumentalities, including PREPA, both through an amendment to the federal bankruptcy code and the enactment of a local debt restructuring law, such efforts have thus far been unsuccessful.

For residential and consumer loan classes, the Company evaluates credit quality based on the delinquency status of the loan. As ofJune 30, 2015 and December 31, 2014, 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, 2015
	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	$	61,209	$	50,718	$	4,340	$	2,256	$	585	$	1,034	$	1,364	$	912
Years 2003 and 2004		104,304		83,388		8,292		4,616		1,899		1,676		2,685		1,748
Year 2005		57,157		44,825		5,338		2,012		646		733		2,547		1,056
Year 2006		81,874		60,987		6,496		3,314		508		2,311		4,672		3,586
Years 2007, 2008 and 2009		93,206		72,190		4,458		2,028		597		3,859		6,029		4,045
Years 2010, 2011, 2012 2013, 2014 and 2015		219,924		203,847		3,398		1,528		384		2,738		3,599		4,430
		617,674		515,955		32,322		15,754		4,619		12,351		20,896		15,777
Non-traditional		33,482		27,705		1,450		543		803		1,421		1,560		-
Loss mitigation program		98,650		15,626		3,535		1,742		1,107		1,487		1,626		73,527
		749,806		559,286		37,307		18,039		6,529		15,259		24,082		89,304
Home equity secured personal loans		420		420		-		-		-		-		-		-
GNMA's buy-back option program		6,961		-		-		-		1,995		2,486		2,480		-
		757,187		559,706		37,307		18,039		8,524		17,745		26,562		89,304
Consumer
Credit cards		20,123		19,381		303		120		152		167		-		-
Overdrafts		317		293		22		2		-		-		-		-
Unsecured personal lines of credit		2,282		2,105		97		17		25		38		-		-
Unsecured personal loans		173,628		170,523		1,533		858		714		-		-		-
Cash collateral personal loans		16,279		16,141		87		51		-		-		-		-
		212,629		208,443		2,042		1,048		891		205		-		-
Auto and Leasing		623,198		549,734		47,451		18,593		5,065		2,355		-		-
		1,593,014		1,317,883		86,800		37,680		14,480		20,305		26,562		89,304
Acquired loans (accounted for under ASC 310-20)
Consumer
Credit cards		38,259		35,870		1,005		361		430		593		-		-
Personal loans		3,246		3,070		104		19		14		39		-		-
		41,505		38,940		1,109		380		444		632		-		-
Auto		142,570		128,922		9,364		3,209		788		287		-		-
		184,075		167,862		10,473		3,589		1,232		919		-		-
Total	$	1,777,089	$	1,485,745	$	97,273	$	41,269	$	15,712	$	21,224	$	26,562	$	89,304

	December 31, 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	$	65,744	$	53,432	$	3,963	$	3,083	$	1,044	$	1,360	$	1,975	$	887
Years 2003 and 2004		109,669		86,941		10,391		4,362		1,657		3,215		1,330		1,773
Year 2005		60,472		49,275		3,824		2,205		389		1,673		1,893		1,213
Year 2006		85,550		65,113		5,263		2,967		1,242		2,801		4,624		3,540
Years 2007, 2008 and 2009		93,489		76,246		4,230		1,809		337		3,986		2,813		4,068
Years 2010, 2011, 2012 2013 and 2014		204,424		190,650		2,988		2,490		938		1,397		1,296		4,665
		619,348		521,657		30,659		16,916		5,607		14,432		13,931		16,146
Non-traditional		36,200		30,916		1,477		584		478		600		2,096		49
Loss mitigation program		93,443		10,882		995		1,123		802		405		1,246		77,990
		748,991		563,455		33,131		18,623		6,887		15,437		17,273		94,185
Home equity secured personal loans		517		517		-		-		-		-		-		-
GNMA's buy-back option program		42,243		-		-		-		6,416		20,729		15,098		-
		791,751		563,972		33,131		18,623		13,303		36,166		32,371		94,185
Consumer
Credit cards		19,071		18,198		360		139		171		203		-		-
Overdrafts		307		287		20		-		-		-		-		-
Unsecured personal lines of credit		2,200		1,970		102		25		38		62		3		-
Unsecured personal loans		147,939		144,696		1,822		743		623		55		-		-
Cash collateral personal loans		17,243		16,920		275		39		9		-		-		-
		186,760		182,071		2,579		946		841		320		3		-
Auto and Leasing		575,582		503,588		47,658		16,916		5,196		2,224		-		-
		1,554,093		1,249,631		83,368		36,485		19,340		38,710		32,374		94,185
Acquired loans (accounted for under ASC 310-20)
Consumer
Credit cards		41,848		38,419		1,376		654		589		810		-		-
Personal loans		3,496		3,221		151		47		39		38		-		-
		45,344		41,640		1,527		701		628		848		-		-
Auto		184,782		169,064		11,003		3,453		767		495		-		-
		230,126		210,704		12,530		4,154		1,395		1,343		-		-
Total	$	1,784,219	$	1,460,335	$	95,898	$	40,639	$	20,735	$	40,053	$	32,374	$	94,185

XML

Stockholders' Equity

6 Months Ended

Jun. 30, 2015

Stockholders' Equity [Abstract]

Stockholders' equity

NOTE 16 – STOCKHOLDERS’ EQUITY

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, 2015 and December 31, 2014 accumulated issuance costs charged against additional paid in capital amounted to $10.1million and $13.6million for preferred and common stock, respectively.

Legal Surplus

The Puerto Rico Banking Act requires that a minimum of 10% of the Bank’s net income or loss for the year be transferred to a reserve fund until such fund (legal surplus) equals the total paid in capital on common and preferred stock. At June 30, 2015 and December 31, 2014, the Bank’s legal surplus amounted to $69.9 million and $70.5 million, respectively. The amount transferred to the legal surplus account is not available for the payment of dividends to shareholders.

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 $12.4 million of authority remains. The shares of common stock repurchased are to be held by the Company as treasury shares. During the quarter ended June 30, 2015 the Company purchased 303,985 shares under this program for a total of $4.2million, at an average price of $13.9 per share. There were no repurchases during the quarter ended June 30, 2014.

.

The number of shares that may yet be purchased under the $70 million program is estimated at 1,164,671 and was calculated by dividing the remaining balance of $12.4 million by $10.67 (closing price of the Company common stock at June 30, 2015). The Company did not purchase any shares of its common stock during the six-month period ended June 30, 2015, or during the during the six-month period endedJune 30, 2014, other than through its publicly announced stock repurchase program

The activity in connection with common shares held in treasury by the Company for the six-month periodsended June 30, 2015 and 2014 is set forth below:

	Six-Month Period Ended June 30,
	2015			2014
		Dollar			Dollar
	Shares	Amount		Shares	Amount
	(In thousands, except shares data)
Beginning of period	8,012,254	$	97,070	7,030,101	$	80,642
Common shares used upon lapse of restricted stock units	(58,279)		(640)	(30,552)		(323)
Common shares repurchased as part of the stock repurchase program	303,985		4,238	707,400		10,393
End of period	8,257,960	$	100,668	7,706,949	$	90,712

XML

Offset of Assets/Liabilities

6 Months Ended

Jun. 30, 2015

Offsetting [Abstract]

Balance sheet Offsetting [Text Block]

NOTE 12 – OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES

The Company’s derivatives are subject to agreements which allow a right of set-off with each respectivecounterparty. 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, 2015 and December 31, 2014:

June 30, 2015

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

$

4,376

$

-

$

4,376

$

2,013

$

-

$

2,363

December 31, 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

$

8,107

$

-

$

8,107

$

2,006

$

-

$

6,101

June 30, 2015
							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	$	10,783	$	-	$	10,783	$	-	$	2,980	$	7,803
Securities sold under agreements to repurchase		1,158,945		-		1,158,945		1,282,553		-		(123,608)
Total	$	1,169,728	$	-	$	1,169,728	$	1,282,553	$	2,980	$	(115,805)
December 31, 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	$	16,698	$	-	$	16,698	$	-	$	2,980	$	13,718
Securities sold under agreements to repurchase		977,816		-		977,816		1,088,525		-		(110,709)
Total	$	994,514	$	-	$	994,514	$	1,088,525	$	2,980	$	(96,991)

XML

Servicing Assets (Sensitivity of current fair value of servicing assets) (Details) - Traditional loan $ in Thousands	Jun. 30, 2015 USD ($)
Servicing Assets At Fair Value Line Items
Servicing Asset	$ 5,791
Constant Prepayment Rate - Decrease in fair value due to 10% adverse change	(391)
Constant Prepayment Rate - Decrease in fair value due to 20% adverse change	(765)
Discount Rate - Decrease in fair value due to 10% adverse change	(680)
Discount Rate - Decrease in fair value due to 20% adverse change	$ (1,306)

XML

Derivative Activities

6 Months Ended

Jun. 30, 2015

Derivative Activities [Abstract]

Derivative Acitivities

NOTE 8— DERIVATIVES

The following table presents the Company’s derivative assets and liabilities at June 30, 2015 and December 31, 2014:

	June 30,		December 31,
	2015		2014
	(In thousands)
Derivative assets:
Options tied to S&P 500 Index	$	2,137	$	5,555
Interest rate swaps not designated as hedges		2,154		2,399
Interest rate caps		65		152
Other		20		1
	$	4,376	$	8,107
Derivative liabilities:
Interest rate swaps designated as cash flow hedges		6,514		8,585
Interest rate swaps not designated as hedges		2,154		2,399
Interest rate caps		65		152
Other		6		85
	$	8,739	$	11,221

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 the cash flow hedges is recognized in other comprehensive income (loss) and is subsequently reclassified into operations 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 (loss) related to these interest rate swaps to operations in the next twelve months.

The following table shows a summary of these swaps and their terms at June 30, 2015:

	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
		38,658	2.4210%	1-Month LIBOR	07/03/13	07/03/13	08/01/23
	$	263,658

An accumulated unrealized loss of $6.5millionand $8.6 million was recognized in accumulated other comprehensive income (loss) related to the valuation of these swaps at June 30, 2015 and December 31, 2014, respectively, and the related liability is being reflected in the accompanying unaudited consolidated statements of financial condition.

For June 30, 2015 and December 31, 2014, interest rate swaps not designated as hedging instruments that were offered to clients represented an asset of $2.2 million and $2.4million, 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, 2015 and December 31, 2014, interest rate swaps not designated as hedging instruments that are the mirror-images of the derivatives offered to clients represented a liability of $2.2 million and $2.4 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, 2015:

	Notional		Fixed	Variable	Settlement	Maturity
Type	Amount		Rate	Rate Index	Date	Date
	(In thousands)
Interest Rate Swaps - Derivatives Offered to Clients	$	3,865	5.1300%	1-Month LIBOR	07/03/06	07/03/16
		12,500	5.5050%	1-Month LIBOR	04/11/09	04/11/19
	$	16,365
Interest Rate Swaps - Mirror Image Derivatives	$	3,865	5.1300%	1-Month LIBOR	07/03/06	07/03/16
		12,500	5.5050%	1-Month LIBOR	04/11/09	04/11/19
	$	16,365

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. AtJune 30, 2015 and December 31, 2014, the purchased options used to manage exposure to the S&P 500 Index on stock indexed deposits represented an asset of $2.1 million (notional amount of $5.0million) and $5.6 million (notional amount of $10.7 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 $2.0million (notional amount of $4.8 million) and $5.5 million (notional amount of $10.5 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. For both June 30, 2015 and December 31, 2014, the outstanding total notional amount of interest rate caps was $110.0 million. At June 30, 2015 and December 31, 2014, the interest rate caps sold to clients represented a liability of $65 thousand and $152 thousand, respectively, and were included as part of derivative liabilities in the unaudited consolidated statements of financial condition. At June 30, 2015 and December 31, 2014, the interest rate caps purchased as mirror-images represented an asset of $65 thousand and $152 thousand, respectively, and were included as part of derivative assets in the unaudited consolidated statements of financial condition.

XML

Loans Receivable (Aging of recorded investment in gross loans) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	$ 4,495,665	$ 4,578,431
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	100,318	94,218
60 - 89 Days Past Due	42,862	45,366
90+ Days Past Due	85,103	116,065
Total Past Due	228,283	255,649
Current but Non-Accrual Loans	215,125	19,730
Current	2,513,457	2,568,446
Total Loans	2,956,865	2,843,825
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	4,782	3,354
Originated Loans [Member] | Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	45,808	42,785
60 - 89 Days Past Due	22,707	25,886
90+ Days Past Due	66,055	98,131
Total Past Due	134,570	166,802
Current but Non-Accrual Loans	5,186	8,253
Current	617,431	616,696
Total Loans	757,187	791,751
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	4,782	3,354
Originated Loans [Member] | Traditional loan
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	32,816	33,109
60 - 89 Days Past Due	16,088	18,196
90+ Days Past Due	40,683	38,551
Total Past Due	89,587	89,856
Current but Non-Accrual Loans	170	1,895
Current	527,917	527,597
Total Loans	617,674	619,348
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	1,235	588
Originated Loans [Member] | Originated Up To The Year 2002 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	4,342	4,128
60 - 89 Days Past Due	2,258	3,157
90+ Days Past Due	3,076	4,395
Total Past Due	9,676	11,680
Current but Non-Accrual Loans	0	0
Current	51,533	54,064
Total Loans	61,209	65,744
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	42	134
Originated Loans [Member] | Originated In The Years 2003 And 2004 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	8,460	10,484
60 - 89 Days Past Due	4,616	4,735
90+ Days Past Due	6,260	6,489
Total Past Due	19,336	21,708
Current but Non-Accrual Loans	0	455
Current	84,968	87,506
Total Loans	104,304	109,669
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	5,338	3,824
60 - 89 Days Past Due	2,012	2,205
90+ Days Past Due	3,926	4,454
Total Past Due	11,276	10,483
Current but Non-Accrual Loans	0	131
Current	45,881	49,858
Total Loans	57,157	60,472
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Originated In The Year 2006 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	6,496	5,706
60 - 89 Days Past Due	3,315	3,298
90+ Days Past Due	7,601	8,667
Total Past Due	17,412	17,671
Current but Non-Accrual Loans	170	548
Current	64,292	67,331
Total Loans	81,874	85,550
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	89
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	4,781	5,283
60 - 89 Days Past Due	2,359	1,809
90+ Days Past Due	10,757	7,646
Total Past Due	17,897	14,738
Current but Non-Accrual Loans	0	761
Current	75,309	77,990
Total Loans	93,206	93,489
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	1,025	0
Originated Loans [Member] | Originated In The Years 2010 2011 2012 2013 2014 And 2015 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	3,399	3,684
60 - 89 Days Past Due	1,528	2,992
90+ Days Past Due	9,063	6,900
Total Past Due	13,990	13,576
Current but Non-Accrual Loans	0	0
Current	205,934	190,848
Total Loans	219,924	204,424
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	168	365
Originated Loans [Member] | NonTraditional Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	1,450	1,477
60 - 89 Days Past Due	543	584
90+ Days Past Due	3,784	3,223
Total Past Due	5,777	5,284
Current but Non-Accrual Loans	0	0
Current	27,705	30,916
Total Loans	33,482	36,200
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	11,542	8,199
60 - 89 Days Past Due	6,076	7,106
90+ Days Past Due	14,627	14,114
Total Past Due	32,245	29,419
Current but Non-Accrual Loans	5,016	6,358
Current	61,389	57,666
Total Loans	98,650	93,443
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	3,547	2,766
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	0	0
Total Past Due	0	0
Current but Non-Accrual Loans	0	0
Current	420	517
Total Loans	420	517
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	6,961	42,243
Total Past Due	6,961	42,243
Current but Non-Accrual Loans	0	0
Current	0	0
Total Loans	6,961	42,243
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	1,363,851	1,289,732
Originated Loans [Member] | Commercial Secured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	4,540	330
60 - 89 Days Past Due	153	1,206
90+ Days Past Due	9,510	7,671
Total Past Due	14,203	9,207
Current but Non-Accrual Loans	10,264	9,939
Current	633,112	504,497
Total Loans	657,579	523,643
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 but Non-Accrual Loans	0	0
Current	201,251	133,076
Total Loans	201,251	133,076
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 but Non-Accrual Loans	0	0
Current	35,113	36,611
Total Loans	35,113	36,611
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	3,929	0
60 - 89 Days Past Due	0	645
90+ Days Past Due	2,180	396
Total Past Due	6,109	1,041
Current but Non-Accrual Loans	8,216	8,494
Current	183,736	154,515
Total Loans	198,061	164,050
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	611	330
60 - 89 Days Past Due	153	561
90+ Days Past Due	7,280	7,275
Total Past Due	8,044	8,166
Current but Non-Accrual Loans	2,048	1,445
Current	193,319	166,017
Total Loans	203,411	175,628
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	50	0
Total Past Due	50	0
Current but Non-Accrual Loans	0	0
Current	3,047	1,650
Total Loans	3,097	1,650
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 but Non-Accrual Loans	0	0
Current	16,646	12,628
Total Loans	16,646	12,628
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	478	866
60 - 89 Days Past Due	361	412
90+ Days Past Due	1,020	1,679
Total Past Due	1,859	2,957
Current but Non-Accrual Loans	198,968	1,047
Current	505,445	762,085
Total Loans	706,272	766,089
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	0
60 - 89 Days Past Due	0	0
90+ Days Past Due	0
Total Past Due	0	0
Current but Non-Accrual Loans	0	0
Current	65,344	63,746
Total Loans	65,344	63,746
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 but Non-Accrual Loans	197,559	0
Current	207,661	478,935
Total Loans	405,220	478,935
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	0	0
90+ Days Past Due	225	618
Total Past Due	225	618
Current but Non-Accrual Loans	479	0
Current	102,281	91,716
Total Loans	102,985	92,334
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	325	866
60 - 89 Days Past Due	284	412
90+ Days Past Due	772	1,061
Total Past Due	1,381	2,339
Current but Non-Accrual Loans	930	1,047
Current	92,935	86,785
Total Loans	95,246	90,171
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	153	0
60 - 89 Days Past Due	77	0
90+ Days Past Due	23	0
Total Past Due	253	0
Current but Non-Accrual Loans	0	0
Current	37,224	40,903
Total Loans	37,477	40,903
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	2,041	2,579
60 - 89 Days Past Due	1,048	946
90+ Days Past Due	1,098	1,164
Total Past Due	4,187	4,689
Current but Non-Accrual Loans	342	346
Current	208,100	181,725
Total Loans	212,629	186,760
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	303	360
60 - 89 Days Past Due	120	139
90+ Days Past Due	319	375
Total Past Due	742	874
Current but Non-Accrual Loans	0	0
Current	19,381	18,197
Total Loans	20,123	19,071
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	22	20
60 - 89 Days Past Due	2	0
90+ Days Past Due	0	0
Total Past Due	24	20
Current but Non-Accrual Loans	0	0
Current	293	287
Total Loans	317	307
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	97	102
60 - 89 Days Past Due	17	25
90+ Days Past Due	63	102
Total Past Due	177	229
Current but Non-Accrual Loans	22	9
Current	2,083	1,962
Total Loans	2,282	2,200
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	1,532	1,822
60 - 89 Days Past Due	858	743
90+ Days Past Due	716	678
Total Past Due	3,106	3,243
Current but Non-Accrual Loans	320	337
Current	170,202	144,359
Total Loans	173,628	147,939
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	87	275
60 - 89 Days Past Due	51	39
90+ Days Past Due	0	9
Total Past Due	138	323
Current but Non-Accrual Loans	0	0
Current	16,141	16,920
Total Loans	16,279	17,243
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	0
Originated Loans [Member] | Leasing [Mamber]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	47,451	47,658
60 - 89 Days Past Due	18,593	16,916
90+ Days Past Due	7,420	7,420
Total Past Due	73,464	71,994
Current but Non-Accrual Loans	365	145
Current	549,369	503,443
Total Loans	623,198	575,582
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	10,705	12,887
60 - 89 Days Past Due	3,751	4,417
90+ Days Past Due	3,189	3,849
Total Past Due	17,645	21,153
Current but Non-Accrual Loans	71	88
Current	174,807	221,560
Total Loans	192,523	242,801
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	232	357
60 - 89 Days Past Due	162	263
90+ Days Past Due	1,039	1,111
Total Past Due	1,433	1,731
Current but Non-Accrual Loans	6	12
Current	7,009	10,932
Total Loans	8,448	12,675
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	0
60 - 89 Days Past Due	0	62
90+ Days Past Due	840	696
Total Past Due	840	758
Current but Non-Accrual Loans	0	0
Current	2,267	3,724
Total Loans	3,107	4,482
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	0
60 - 89 Days Past Due	0	0
90+ Days Past Due	344	351
Total Past Due	344	351
Current but Non-Accrual Loans	0	0
Current	0	0
Total Loans	344	351
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	62
90+ Days Past Due	496	345
Total Past Due	496	407
Current but Non-Accrual Loans	0	0
Current	2,267	3,724
Total Loans	2,763	4,131
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	232	357
60 - 89 Days Past Due	162	201
90+ Days Past Due	199	415
Total Past Due	593	973
Current but Non-Accrual Loans	6	12
Current	4,742	7,208
Total Loans	5,341	8,193
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0	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	145	155
60 - 89 Days Past Due	32	67
90+ Days Past Due	173	192
Total Past Due	350	414
Current but Non-Accrual Loans	2	2
Current	3,608	3,705
Total Loans	3,960	4,121
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	87	202
60 - 89 Days Past Due	130	134
90+ Days Past Due	26	223
Total Past Due	243	559
Current but Non-Accrual Loans	4	10
Current	1,134	3,503
Total Loans	1,381	4,072
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	1,109	1,527
60 - 89 Days Past Due	380	701
90+ Days Past Due	1,075	1,476
Total Past Due	2,564	3,704
Current but Non-Accrual Loans	0	0
Current	38,941	41,640
Total Loans	41,505	45,344
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	1,005	1,376
60 - 89 Days Past Due	361	654
90+ Days Past Due	1,023	1,399
Total Past Due	2,389	3,429
Current but Non-Accrual Loans	0	0
Current	35,870	38,419
Total Loans	38,259	41,848
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	104	151
60 - 89 Days Past Due	19	47
90+ Days Past Due	52	77
Total Past Due	175	275
Current but Non-Accrual Loans	0	0
Current	3,071	3,221
Total Loans	3,246	3,496
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	9,364	11,003
60 - 89 Days Past Due	3,209	3,453
90+ Days Past Due	1,075	1,262
Total Past Due	13,648	15,718
Current but Non-Accrual Loans	65	76
Current	128,857	168,988
Total Loans	142,570	184,782
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	$ 0	$ 0

XML

Stockholders' Equity (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	6 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014	Mar. 31, 2014
Equity, Class of Treasury Stock [Line Items]
Stock Repurchase Program Authorized Amount1	$ 70,000	$ 70,000
Total number of shares purchased					303,985
Treasury Stock, Value, Acquired, Cost Method		4,238	$ 10,393
Stock Repurchase Program Remaining Authorized Repurchase Amount1	$ 12,400	$ 12,400
Stock repurchase program remaining number of shares authorized to be repurchased	1,164,671	1,164,671
SharePrice	$ 10.67	$ 10.67			$ 13.9
Preferred Stock [Member]
Equity, Class of Treasury Stock [Line Items]
Preferred Stock Issue Costs	$ 10,100			$ 10,100
Common Stock [Member]
Equity, Class of Treasury Stock [Line Items]
Common Stock Issuance Cost	$ 13,600	$ 13,600		$ 13,600

XML

FDIC Indemnification Asset and True-up Payment Obligation

6 Months Ended

Jun. 30, 2015

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 to 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 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 asset and true-up payment obligation for the quarters and six-month periods ended June 30, 2015 and 2014:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2015		2014		2015		2014
	(In thousands)
FDIC indemnification asset:
Balance at beginning of period	$	75,221	$	166,194	$	97,378	$	189,240
Shared-loss agreements reimbursements from the FDIC		(24,387)		(10,464)		(38,087)		(18,700)
Increase (decrease) in expected credit losses to be covered under shared-loss agreements, net		906		3,522		2,503		3,562
FDIC indemnification asset expense		(22,512)		(17,499)		(34,733)		(35,121)
Incurred expenses to be reimbursed under shared-loss agreements		(6,524)		1,907		(4,357)		4,679
Balance at end of period	$	22,704	$	143,660	$	22,704	$	143,660
True-up payment obligation:
Balance at beginning of period	$	22,844	$	19,375	$	21,981	$	18,510
Change in true-up payment obligation		733		856		1,596		1,721
Balance at end of period	$	23,577	$	20,231	$	23,577	$	20,231

The FDIC shared- loss expense bears an inverse relationship with a change in the yield of covered loan pools in accordance with ASC 310-30. ASC 310-30 dictates that such pools should be subject to increases in their yield when the present value of the expected cash flows is higher than the pool’s carrying balance. When the increases in cash flow expectations are driven by reductions in the expected credit losses, the Bank recognizes that such losses are no longer expected to be collected from the FDIC. Accordingly, the Bank reduces the FDIC indemnification asset by amortizing the reduction in expected collections throughout the remaining life of the underlying pools. This amortization is recognized in the FDIC shared-loss expense.

The underlying factors that caused an increase in the expected cash flows and resulting reduction in projected losses are derived from the pool-level cash flow forecasts. Credit loss assumptions used to develop each pool-level cash flow forecast are based on the behavior of defaults, recoveries and losses of the corresponding pool of covered loans.

The FDIC loss share coverage for the commercial loans and other non-single family loans was in effect until June 30, 2015. The coverage for the single family residential loans will expire on June 30, 2020. Accordingly, the Company amortized the remaining portion of the FDIC indemnification asset attributable to non-single family loans at the close of the second quarter of 2015. At June 30, 2015, the Company had a $39.5million receivable from the FDIC, included in other assets in the unaudited statement of financial condition, corresponding to $12.9 million for the Q1 2015 loss-share certification that was received during July 2015 and $26.6 million for the Q2 2015 loss-share certifications for commercial and other non-single family loans. At June 30, 2015, the FDIC indemnification asset reflects the balance only for single family residential mortgage loans. Notwithstanding the expiration of loss share coverage of non-single family loans, on July 2, 2015, the Company entered into an agreement with the FDIC pursuant to which the FDIC concurred with a potential sale of a pool of loss share assets covered under the non-single family loss share agreement. Pursuant to such agreement, the FDIC agreed to pay up to $20 million in loss share coverage with respect to the aggregate loss resulting from any portfolio sale within 120 days of the agreement.

The FDIC indemnification asset expense of $22.5 millionfor the quarter increased when compared to $17.5 million for the second quarter of 2014. The expense of $34.7 million for the six-month period ended June 30, 2015 stayed relatively flat when compared to $35.1 million for the same period in 2014. The increase during the quarter was principally driven by differences between the expected losses realized during the last months of the non-single family shared loss agreement and the losses that were ultimately realized and are expected to be collected from the FDIC. For the six-month periods ended June 30, 2015 and 2014, the amortization expense totaled $2.1 million and $2 thousand, respectively was from stepped up cost recoveries on certain construction, commercial, and leasing pools.

Also in connection with the FDIC assisted acquisition, the Bank agreed to make a true-up payment, also known as a 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 premium (discount) of ($227.5 million) (or ($56.9 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 $23.6million and $22.0 million, net of discount, as of June 30, 2015 and December 31, 2014, respectively. The estimated liability is included within accrued expenses and other liabilities in the unaudited consolidated statements of financial condition.

The true-up payment obligation, also known as clawback liability, may increase if actual and expected losses decline. The Company measures the true-up payment obligation at fair value. During the quarters and six-month periods endedJune 30, 2015 and 2014 the fair value of the true-up payment obligation increased by $733 thousand and $856 thousand and $1.6 million and $1.7 million, respectively. These changes in fair value are included as change in true-up payment obligation within FDIC shared-loss expense, net in the consolidated statements of operations.

The following table provides the fair value and the undiscounted amount of the true-up payment obligation at June 30, 2015 and December 31, 2014:

	June 30,		December 31,
	2015		2014
	(In thousands)
Carrying amount (fair value)	$	23,577	$	21,981
Undiscounted amount	$	37,456	$	40,266

XML

Servicing Assets

6 Months Ended

Jun. 30, 2015

TransfersAndServicingAbstract

TransfersAndServicingOfFinancialAssetsTextBlock

NOTE 7- SERVICING ASSETS

The Company periodically sells or securitizes mortgage loans while retaining the obligation to perform the servicingof such loans. In addition, the Company may purchase or assume the right to service mortgage loans originated byothers. Whenever the Company undertakes an obligation to service a loan, management assesses whether a servicingasset and/or liability should be recognized. A servicing asset is recognized whenever the compensation forservicing is expected to more than adequately compensate the Company for servicing the loans and leases. Likewise,a servicing liability would be recognized in the event that servicing fees to be received are not expected toadequately compensate the Company for its expected cost.

All separately recognized servicing assets are recognized at fair value using the fair value measurement method.Under the fair value measurement method, the Company measures servicing rights at fair value at each reporting date, reports changes in fair value of servicing assets in earnings in the period in which the changes occur,and includes these changes, if any, with mortgage banking activities in the consolidated statements of operations.The fair value of servicing rights is subject to fluctuations as a result of changes in estimated and actualprepayment speeds and default rates and losses.

The fair value of servicing rights is estimated by using a cash flow valuation model which calculates the presentvalue of estimated future net servicing cash flows, takinginto consideration actual and expected loan prepaymentrates, discount rates, servicing costs, and other economic factors, which are determined based on current marketconditions.

At June 30, 2015, the servicing asset amounted to $5.8 million ($14.0 million — December 31, 2014) related to mortgage servicing rights.

During the second quarter of 2015, the Company completed the sale of certain servicing assets to Scotiabank Puerto Rico for approximately $7.0 million. The Company recognized a loss of $2.7million related to this transaction, which is included as other non-interest (loss) income in the unaudited consolidated statements of operations.

The following table presents the changes in servicing rights measured using the fair value method for the quarters and six-month periodsended June 30, 2015 and 2014:

		Quarter Ended June 30,				Six-Month Period Ended June 30,
		2015	2014			2015	2014
		(In thousands)				(In thousands)
Fair value at beginning of year	$	12,164	$	13,970	$	13,992	$	13,801
Sale of mortgage servicing rights		(6,985)		-		(6,985)		-
Servicing from mortgage securitizations or asset transfers		1,529		490		2,060		1,053
Changes due to payments on loans		(313)		(271)		(732)		(465)
Changes in fair value related to price of MSR's held for sale		(835)		-		(2,716)		-
Changes in fair value due to changes in valuation model inputs or assumptions		231		(534)		172		(734)
Fair value at end of year	$	5,791	$	13,655	$	5,791	$	13,655

The following table presents key economic assumption ranges used in measuring the mortgage-related servicing asset fair value for the six month periods June 30, 2015 and 2014:

	Six-Month Period Ended June 30,
	2015	2014
Constant prepayment rate	4.10% - 10.22%	5.60% - 10.08%
Discount rate	10.00% - 12.00%	10.00% - 12.00%

The sensitivity of the current fair value of servicing assets to immediate 10 percent and 20 percent adversechanges in the above key assumptions were as follows:

	June 30, 2015
	(In thousands)
Mortgage-related servicing asset
Carrying value of mortgage servicing asset	$	5,791
Constant prepayment rate
Decrease in fair value due to 10% adverse change	$	(391)
Decrease in fair value due to 20% adverse change	$	(765)
Discount rate
Decrease in fair value due to 10% adverse change	$	(680)
Decrease in fair value due to 20% adverse change	$	(1,306)

These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in fair valuebased on a 10 percent variation in assumptions generally cannot be extrapolated because the relationship of thechange in assumption to the change in fair value may not be linear. Also, in this table, the effect of a variation ina particular assumption on the fair value of the retained interest is calculated without changing any otherassumption.

Changes in one factor may result in changes in another (for example, increases in market interest ratesmay result in lower prepayments), which may magnify or offset the sensitivities.Mortgage banking activities, a component of total banking and financial servicerevenue in the consolidatedstatements of operations, include the changes from period to period in the fair value of the mortgage loanservicing rights, which may result from changes in the valuation model inputs or assumptions (principallyreflecting changes in discount rates and prepayment speed assumptions) and other changes, including changesdue to collection/realization of expected cash flows.

Servicing fee income is based on a contractual percentage of the outstanding principal balance and is recorded as income when earned.Servicing fees on mortgage loans for the quarter and six-month period ended June 30, 2015totaled $378 thousand and $618thousand, respectively. Servicing fees on mortgage loans for the quarter and six-month period ended June 30, 2014totaled $323 thousand and $444thousand, respectively

XML

Accrued Interest Receivable and Other Assets

6 Months Ended

Jun. 30, 2015

Accrued Interest Receivable And Other Assets [Abstract]

Other Assets Disclosure [Text Block]

NOTE 9—ACCRUED INTEREST RECEIVABLE ANDOTHER ASSETS

Accrued interest receivable at June 30, 2015 and December 31, 2014consists of the following:

	June 30,		December 31,
	2015		2014
	(In thousands)
Non-covered loans	$	14,606	$	17,005
Investments		4,648		4,340
	$	19,254	$	21,345

Other assets atJune 30, 2015 and December 31, 2014 consist of the following:

		June 30,		December 31,
	2015		2014
	(In thousands)
Prepaid expenses	$	16,492	$	16,018
Core deposit and customer relationship intangibles		8,791		9,743
Other repossessed assets		14,661		21,800
Mortgage tax credits		6,277		6,277
Investment in Statutory Trust		1,083		1,083
FDIC certification receivable		39,548		14,974
Accounts receivable and other assets		45,439		38,830
	$	132,291	$	108,725

Prepaid expenses amounting to $16.5 million and $16.0 million at June 30, 2015 and December 31, 2014, respectively, include prepaid municipal, property and income taxes aggregating to $9.6million, at each period.

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, 2015 and December 31, 2014, this core deposit intangible amounted to $5.8millionand $6.5million, respectively. In addition, the Company recorded a customer relationship intangible amounting to $5.0million 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, 2015 and December 31, 2014, this customer relationship intangible amounted to $3.0million and $3.3 million, respectively.

Other repossessed assets totaled $14.7 million and $21.8 million atJune 30, 2015 and December 31, 2014, respectively, include repossessed automobilesamounting to $14.0 millionand $20.7 million, respectively, which are recorded at their net realizable value.

At both June 30, 2015 and December 31, 2014, tax credits for the Companytotaled $6.3 million.These tax credits do not have an expiration date.

At June 30, 2015, the FDIC certification receivable included a $12.9 million receivable corresponding to the FDIC loss-share certification from the first quarter of 2015 that was received in July 2015. In addition, it included a $26.6 million receivable corresponding to the FDIC loss-share certification from the second quarter of 2015 for non-single family residential loans, as the loss share period on these loans was in effect until June 30, 2015. At December 31, 2014, the FDIC certification receivable included a $15.0 million receivable corresponding to the FDIC loss-share certification from the third quarter of 2014 that was received in January 2015.

XML

Loans Receivable (Accretable yield and non-accretable discount activity of covered loans) (Details) - Acquired Loans In An F D I C Assisted Transaction [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period	$ 116,288	$ 147,767	$ 109,859	$ 162,959
Accretion Accretable	(12,758)	(24,880)	(28,262)	(48,268)
Transfer from (to) non-accretable discount	1,111	5,174	23,044	13,370
Balance at end of period	104,641	128,061	104,641	128,061
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Balance at beginning of period	32,712	107,323	62,410	129,477
Change in actual and expected losses	(10,469)	(16,925)	(18,234)	(30,883)
Transfer (to) from accretable yield	(1,111)	(5,174)	(23,044)	(13,370)
Balance at end of period	21,132	85,224	21,132	85,224
Loans Secured by 1-4 properties
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period	58,332	54,619	47,636	53,250
Accretion Accretable	(3,276)	(4,033)	(6,794)	(8,197)
Transfer from (to) non-accretable discount	750	0	14,964	5,533
Balance at end of period	55,806	50,586	55,806	50,586
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Balance at beginning of period	12,557	31,340	27,348	39,182
Change in actual and expected losses	(405)	(1,481)	(982)	(3,790)
Transfer (to) from accretable yield	(750)	0	(14,964)	(5,533)
Balance at end of period	11,402	29,859	11,402	29,859
Commercial and Other Construction [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period	33,481	83,200	37,919	95,093
Accretion Accretable	(8,047)	(17,141)	(17,902)	(31,993)
Transfer from (to) non-accretable discount	2,039	4,168	7,456	7,127
Balance at end of period	27,473	70,227	27,473	70,227
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Balance at beginning of period	10,493	67,136	24,464	81,092
Change in actual and expected losses	(8,454)	(16,372)	(17,008)	(27,369)
Transfer (to) from accretable yield	(2,039)	(4,168)	(7,456)	(7,127)
Balance at end of period	0	46,596	0	46,596
Construction and development secured by multi-family properties [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period	20,806	209	20,753	1,690
Accretion Accretable	(405)	(1,070)	(1,024)	(2,150)
Transfer from (to) non-accretable discount	(2,052)	861	(1,380)	460
Balance at end of period	18,349	0	18,349	0
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Balance at beginning of period	0	0	0	0
Change in actual and expected losses	(2,052)	861	(1,380)	460
Transfer (to) from accretable yield	2,052	(861)	1,380	(460)
Balance at end of period	0	0	0	0
Leasing [Mamber]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period	1,665	7,332	2,479	10,238
Accretion Accretable	(937)	(2,377)	(2,329)	(5,388)
Transfer from (to) non-accretable discount	375	145	953	250
Balance at end of period	1,103	5,100	1,103	5,100
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Balance at beginning of period	0	0	0	0
Change in actual and expected losses	375	145	953	250
Transfer (to) from accretable yield	(375)	(145)	(953)	(250)
Balance at end of period	0	0	0	0
Consumer Loan [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at beginning of period	2,004	2,407	1,072	2,688
Accretion Accretable	(93)	(259)	(213)	(540)
Transfer from (to) non-accretable discount	(1)	0	1,051	0
Balance at end of period	1,910	2,148	1,910	2,148
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Balance at beginning of period	9,662	8,847	10,598	9,203
Change in actual and expected losses	67	(78)	183	(434)
Transfer (to) from accretable yield	1	0	(1,051)	0
Balance at end of period	$ 9,730	$ 8,769	$ 9,730	$ 8,769

XML

Commitments (Narratives) (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Commitments and Contingencies [Abstract]
Rent Expenses	$ 4,700	$ 4,900
Line of credit reserve	$ 647		$ 647

XML

Derivative Activities (Narratives) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Derivative Instruments, Gain (Loss) [Line Items]
Unrealized Gain (Loss) on Interest Rate Cash Flow Hedges, Pretax, Accumulated Other Comprehensive Income (Loss)	$ 2,016	$ 14	$ 2,071	$ 391
Notional Amount Purchased Option	5,000		5,000		$ 10,700
Embedded Derivative, Fair Value of Embedded Derivative Liability	2,000		2,000		5,500
Notional Amount Embedded Option	4,800		4,800		10,500
Interest Rate Cap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, Notional Amount	110,000		$ 110,000
Unrealized Gain (Loss) on Interest Rate Cash Flow Hedges, Pretax, Accumulated Other Comprehensive Income (Loss)	$ 6,500				$ 8,600

XML

Loans Receivable (Recorded Investment in loans individually evaluated for impairment) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable, Impaired [Line Items]
Allowance for loan and lease losses, non covered	$ 102,877	$ 69,517
Non-covered originated loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal	345,325	344,102
Recorded Investment	331,275	330,455
Allowance for loan and lease losses, non covered	$ 35,669	$ 9,809
Coverage	11.00%	3.00%
Non-covered acquired loans accounted under ASC 310-20
Financing Receivable, Impaired [Line Items]
Unpaid Principal	$ 1,435	$ 672
Recorded Investment	1,429	672
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	$ 528,154	$ 415,826
Recorded Investment	516,225	369,258
Allowance for loan and lease losses, non covered	$ 18,359	$ 13,481
Coverage	4.00%	4.00%
Commercial impaired loans with specific allowance [Member] | Non-covered originated loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal	$ 215,139	$ 6,349
Recorded Investment	211,186	6,226
Allowance for loan and lease losses, non covered	$ 27,401	$ 841
Coverage	13.00%	14.00%
Residential troubled-debt restructuring impaired loans with specific allowance [Member] | Non-covered originated loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal	$ 95,881	$ 99,947
Recorded Investment	89,303	94,185
Allowance for loan and lease losses, non covered	$ 8,268	$ 8,968
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	$ 34,305	$ 237,806
Recorded Investment	30,786	230,044
Commercial impaired loans with no specific allowance [Member] | Non-covered acquired loans accounted under ASC 310-20
Financing Receivable, Impaired [Line Items]
Unpaid Principal	1,435	672
Recorded Investment	1,429	672
Mortgage impaired non-covered loan pool [Member] | Non-covered acquired loans accounted under ASC 310-30
Financing Receivable, Impaired [Line Items]
Unpaid Principal	22,901
Recorded Investment	23,676
Allowance for loan and lease losses, non covered	$ 557
Coverage	2.00%
Commercial impaired non-covered loan pool [Member] | Non-covered acquired loans accounted under ASC 310-30
Financing Receivable, Impaired [Line Items]
Unpaid Principal	$ 230,196	289,228
Recorded Investment	208,083	255,619
Allowance for loan and lease losses, non covered	$ 5,752	$ 5,506
Coverage	3.00%	2.00%
Construction impaired non-covered loan pool [Member] | Non-covered acquired loans accounted under ASC 310-30
Financing Receivable, Impaired [Line Items]
Unpaid Principal	$ 87,488	$ 90,786
Recorded Investment	88,575	83,751
Allowance for loan and lease losses, non covered	$ 9,188	$ 7,970
Coverage	10.00%	10.00%
Consumer impaired non-covered loan pool [Member] | Non-covered acquired loans accounted under ASC 310-30
Financing Receivable, Impaired [Line Items]
Unpaid Principal		$ 35,812
Recorded Investment		29,888
Allowance for loan and lease losses, non covered		$ 5
Coverage		0.00%
Auto impaired non-covered loan pool [Member] | Non-covered acquired loans accounted under ASC 310-30
Financing Receivable, Impaired [Line Items]
Unpaid Principal	$ 187,569
Recorded Investment	195,891
Allowance for loan and lease losses, non covered	$ 2,862

XML

Offsetting Arrangements (Assets Offsetting) (Details) - Derivative - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Offsetting Assets [Line Items]
Gross Amount of Recognized Assets	$ 4,376	$ 8,107
Gross amounts Offset in the Statement of Financial Condition	0	0
Net Amount of Assets in Statement of Financial Condition	4,376	8,107
Financial Instruments	2,013	2,006
Cash Collateral Received	0	0
Net Amount	$ 2,363	$ 6,101

XML

Loans Receivable (Covered Loan carrying amounts) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Accounts Notes And Loans Receivable Line Items
Financing Receivable Acquired With Deteriorated Credit Quality	$ 2,208,242	$ 2,394,378
Non-acretable discount	449,917	456,627
Cash expected to be collected	1,758,325	1,937,751
Accretable Yield	412,048	445,946
Carrying amount, gross	1,346,277	1,491,805
Loans And Leases Receivable Allowance, Covered	71,452	64,245
Covered, net	222,034	298,911
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	419,259	535,425
Non-acretable discount	21,132	62,410
Cash expected to be collected	398,127	473,015
Accretable Yield	104,641	109,859
Carrying amount, gross	$ 293,486	$ 363,156

XML

Deposits and Related Interest (Narratives) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Deposits [Abstract]
Weighted Average Rate Domestic Deposit	0.65%	0.66%
Puerto Rico Cash & Money Market Fund Deposits	$ 98,700	$ 96,800
Puerto Rico Cash & Money Market Fund Deposits Weighted Average Rate	0.77%	0.78%
Puerto Rico Cash & Money Market Fund Deposits Collateral	$ 80,000	$ 76,300
Time Deposits, $100,000 or More	588,100	608,100
Public Fund Time Deposits, $100,000 or more	$ 9,000	$ 6,900
Public Fund Time Deposits Weighted Average Rate, $100,000 or more	0.49%	0.50%
Public funds deposit	$ 171,000	$ 318,500
Public Fund Time Deposits Collateral Commercial Loans	411,400	414,500
Accrued Interest, Time Deposits	1,200
Unamortized deposit discounts	442
Bank Overdrafts	2,100	845
Brokered Certificates of Deposits	522,600	526,200
Brokered Money Market Deposit	83,000	$ 93,100
Equity indexed option	$ 2,000

XML

Allowance for Loan and Lease Losses (Tables)

6 Months Ended

Jun. 30, 2015

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, 2015 and December 31, 2014was as follows:

	June 30,		December 31,
	2015		2014
	(In thousands)
Allowance for loans and lease losses on non-covered loans:
Originated and other loans and leases held for investment:
Mortgage	$	18,076	$	19,679
Commercial		34,779		8,432
Consumer		10,464		9,072
Auto and leasing		15,064		14,255
Unallocated		606		1
		78,989		51,439
Acquired loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		54		65
Consumer		2,616		1,211
Auto		2,859		3,321
		5,529		4,597
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Mortgage		473		-
Commercial		14,940		13,476
Consumer		84		5
Auto		2,862		-
		18,359		13,481
		102,877		69,517
Allowance for loans and lease losses on covered loans:
Loans secured by 1-4 family residential properties		17,593		15,522
Commercial and other construction		53,470		48,334
Consumer		389		389
		71,452		64,245
Total allowance for loan and lease losses	$	174,329	$	133,762

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, 2015
	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	$	18,086	$	33,123	$	9,405	$	15,762	$	383	$	76,759
Charge-offs		(1,356)		(497)		(2,309)		(7,662)		-		(11,824)
Recoveries		67		219		390		3,425		-		4,101
Provision for non-covered loan and lease losses		1,279		1,934		2,978		3,539		223		9,953
Balance at end of period	$	18,076	$	34,779	$	10,464	$	15,064	$	606	$	78,989

	Six-Month Period Ended June 30, 2015
	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	$	19,679	$	8,432	$	9,072	$	14,255	$	1	$	51,439
Charge-offs		(2,770)		(1,489)		(3,985)		(15,798)		-		(24,042)
Recoveries		67		309		543		6,809		-		7,728
Provision for non-covered loan and lease losses		1,100		27,527		4,834		9,798		605		43,864
Balance at end of period	$	18,076	$	34,779	$	10,464	$	15,064	$	606	$	78,989

	June 30, 2015
	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	$	8,268	$	27,401	$	-	$	-	$	-	$	35,669
Collectively evaluated for impairment		9,808		7,378		10,464		15,064		606		43,320
Total ending allowance balance	$	18,076	$	34,779	$	10,464	$	15,064	$	606	$	78,989
Loans:
Individually evaluated for impairment	$	89,304	$	241,971	$	-	$	64	$	-	$	331,339
Collectively evaluated for impairment		667,884		1,121,879		212,629		623,134		-		2,625,526
Total ending loan balance	$	757,188	$	1,363,850	$	212,629	$	623,198	$	-	$	2,956,865

	Quarter Ended June 30, 2014
	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	$	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 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
	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	$	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 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

	December 31, 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	$	8,968	$	841	$	-	$	-	$	-	$	9,809
Collectively evaluated for impairment		10,711		7,591		9,072		14,255		1		41,630
Total ending allowance balance	$	19,679	$	8,432	$	9,072	$	14,255	$	1	$	51,439
Loans:
Individually evaluated for impairment	$	94,185	$	236,270	$	-	$	-	$	-	$	330,455
Collectively evaluated for impairment		697,566		1,053,462		186,760		575,582		-		2,513,370
Total ending loan balance	$	791,751	$	1,289,732	$	186,760	$	575,582	$	-	$	2,843,825

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, 2015
	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	$	49	1	$	1,885	$	3,516	$	-	$	5,450
Charge-offs		(16)			(1,303)		(1,038)		-		(2,357)
Recoveries		7			429		502		-		938
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-20		14			1,605		(121)		-		1,498
Balance at end of period	$	54		$	2,616	$	2,859	$	-	$	5,529

	Six-Month Period Ended June 30, 2015
	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	$	65	$1	$	1,211	$	3,321	$	-	$	4,597
Charge-offs		(16)			(2,686)		(2,304)		-		(5,006)
Recoveries		17			563		1,072		-		1,652
(Recapture) Provision for non-covered acquired loan and lease losses accounted for under ASC 310-20		(12)			3,528		770		-		4,286
Balance at end of period	$	54		$	2,616	$	2,859	$	-	$	5,529

	June 30, 2015
	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	$	54	$	2,616	$	2,859	$	-	$	5,529
Total ending allowance balance	$	54	$	2,616	$	2,859	$	-	$	5,529
Loans:
Individually evaluated for impairment	$	1,429	$	-	$	-	$	-	$	1,429
Collectively evaluated for impairment		7,019		41,505		142,570		-		191,094
Total ending loan balance	$	8,448	$	41,505	$	142,570	$	-	$	192,523

	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	$	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

	December 31, 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	$	65	$	1,211	$	3,321	$	-	$	4,597
Total ending allowance balance	$	65	$	1,211	$	3,321	$	-	$	4,597
Loans:
Individually evaluated for impairment	$	672	$	-	$	-	$	-	$	672
Collectively evaluated for impairment		12,003		45,344		184,782		-		242,129
Total ending loan balance	$	12,675	$	45,344	$	184,782	$	-	$	242,801

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, 2015
	Mortgage			Commercial			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	$	473		$	13,687		$	6		$	-	$	14,166
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-30		-			1,253			78			2,862		4,193
Balance at end of period	$	473		$	14,940		$	84		$	2,862	$	18,359
	Six-Month Period Ended June 30, 2015
	Mortgage			Commercial			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	$	13,476	1	$	5	$1	$	-	$	13,481
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-30		473			1,464			79			2,862		4,878
Balance at end of period	$	473		$	14,940		$	84		$	2,862	$	18,359

	Quarter Ended June 30, 2014
	Mortgage			Commercial			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	$	-		$	2,653		$	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			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	$	418	$1	$	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

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 periods endedJune 30, 2015and 2014were as follows:

	Quarter Ended June 30, 2015
	Mortgage		Commercial		Consumer		Leasing		Total
	(In thousands)
Allowance for loan and lease losses for covered loans:
Balance at beginning of period	$	17,340	$	52,922	$	389	$	-	$	70,651
Provision for covered loan and lease losses, net		148		(253)		-		-		(105)
FDIC shared-loss portion of provision for covered loan and lease losses, net		105		801		-		-		906
Balance at end of period	$	17,593	$	53,470	$	389	$	-	$	71,452
	Six-Month Period Ended June 30, 2015
	Mortgage		Commercial		Consumer		Leasing		Total
	(In thousands)
Allowance for loan and lease losses for covered loans:
Balance at beginning of period	$	15,522	$	48,334	$	389	$	-	$	64,245
Provision for (recapture) covered loan and lease losses, net		1,966		2,738		-		-		4,704
FDIC shared-loss portion of provision for covered loan and lease losses, net		105		2,398		-		-		2,503
Balance at end of period	$	17,593	$	53,470	$	389	$	-	$	71,452

	Quarter Ended June 30, 2014
	Mortgage		Commercial		Consumer		Leasing		Total
	(In thousands)
Allowance for loan and lease losses for covered loans:
Balance at beginning of period	$	14,221	$	39,562	$	615	$	-	$	54,398
Provision for covered loan and lease losses, net		411		1,184		-		-		1,595
FDIC shared-loss portion of provision for covered loan and lease losses, net		292		3,230		-		-		3,522
Balance at end of period	$	14,924	$	43,976	$	615	$	-	$	59,515
	Six-Month Period Ended June 30, 2014
	Mortgage		Commercial		Consumer		Leasing		Total
	(In thousands)
Allowance for loan and lease losses for covered loans:
Balance at beginning of period	$	12,495	$	39,619	$	615	$	-	$	52,729
Provision for (recapture) covered loan and lease losses, net		2,309		915		-		-		3,224
FDIC shared-loss portion of provision for covered loan and lease losses, net		120		3,442		-		-		3,562
Balance at end of period	$	14,924	$	43,976	$	615	$	-	$	59,515

XML

Restricted Cash (Narrative) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Restricted Cash And Investments Abstract
Certificates Of Deposits Oriental International Banking and Oriental Overseas	$ 300	$ 300
Reserve required by local Goverment	$ 152,700	$ 141,500

XML

Income Taxes

6 Months Ended

Jun. 30, 2015

Income Taxes [Abstract]

Income Taxes

NOTE 14 — INCOME TAXES

On May 29, 2015 the Governor signed Act No. 72 of 2015. The main purpose of this Act is to increase government collections in order to alleviate the structural deficit. The most relevant provisions of the Act, as applicable to the Company, for taxable years beginning after December 31, 2014, are as follows: (1) establishes a new definition of “large taxpayers,” which require them to file its tax return following a special procedure established by the Secretary of the Treasury, (2) net operating losses carried forward may be deducted up to 70% of the alternative minimum net income for purposes of computing the alternative minimum tax, and (3) net operating losses carried forward may be deducted up to 80% of the net income for purposes of computing the regular corporate income tax.

At June 30, 2015 and December 31, 2014, the Company’s net deferred tax asset amounted to $138.4 million and $108.7 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 deferred tax asset, net of the existing valuation allowances recorded at June 30, 2015 and December 31, 2014. 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 carry forward period are reduced.

At June 30, 2015 and December 31, 2014, Oriental International Bank Inc. (“OIB”), the Bank’s international banking entity subsidiary, had $165 thousand and $186 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, 2015and 2014, $12 thousand and $10 thousand, respectively, related to this residual tax effect from OIB was reclassified from accumulated other comprehensive income (loss) into income tax provision. During the period endedJune 30, 2015and 2014, $22 thousand and $147 thousand, respectively, related to this residual tax effect from OIB was reclassified from accumulated other comprehensive income (loss) into 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, 2015 and December 31, 2014was $2.5 million and $2.6 million, respectively. The Company had accrued $566thousand at June 30, 2015 and $470 thousand at December 31, 2014 for the payment of interest and penalties relating to unrecognized tax benefits. During this quarter $100 thousand was released based on negotiations with the IRS.

For the quarter ended June 30, 2015, income tax expense was $769 thousand compared to $10.6 million for the same period in 2014. For the six-monthperiod endedJune 30, 2015, income tax expense was $1.7 million compared to $22.4 million for the same period in 2014.

XML

Accumulated Other Comprehensive Income (Reclassifications out of other comprehensive income) (Details) - Reclassification out of Accumulated Other Comprehensive Income [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Interest Rate Contract	$ 1,614	$ 1,642	$ 3,220	$ 3,263
Tax effect from increase in capital gains tax rate, Cash flow hedges	(75)	0	(149)	0
Residual tax effect from OIB's change in applicable tax rate AFS	12	10	22	147
Tax effect from increase in capital gains tax rate AFS	129	0	258	0
Total	$ 1,680	$ 1,652	$ 3,351	$ 3,410

XML

Guarantees

6 Months Ended

Jun. 30, 2015

Guarantees [Abstract]

Guarantees [Text Block]

NOTE 19 – GUARANTEES

At June 30, 2015, the unamortized balance of the obligations undertaken in issuing the guarantees under standby letters of credit represented a liability of $15.0 million (December 31, 2014 - $33.0 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, 2015 and December 31, 2014, the unpaid principal balance of residential mortgage loans sold subject to credit recourse was $45.6million and $67.8million, 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, 2015 and 2014.

	Quarter Ended June 30,					Six-Month Period Ended June 30,
	2015		2014			2015		2014
	(In thousands)
Balance at beginning of period	$	487	$	1,549	$	927	$	1,955
Net charge-offs/terminations		(198)		(239)		(638)		(645)
Balance at end of period	$	289	$	1,310	$	289	$	1,310

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, 2015, $29.1million or 64% of the recourse obligation will be extinguished before the end of 2015.

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, 2015the Company repurchased approximately $1.2 million and $3.4million, respectively, of unpaid principal balance in mortgage loans subject to the credit recourse provisions. During the quarter and six-month period ended June 30, 2014 the Company repurchased approximately $2.1 million and $3.7 million, respectively, 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, 2015, the Company’s liability for estimated credit losses related to loans sold with credit recourse amounted to $289 thousand (December 31, 2014– $927 thousand).

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. At June 30, 2015, under the Company’s representation and warranty arrangements, excluding mortgage loans subject to credit recourse provisions referred to above, approximated $11.7millionin unpaid principal balance (December 31, 2014– $10.7million). 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, 2015, the Company recognized $476thousand and $583 thousand in losses from the repurchase of residential mortgage loans sold subject to credit recourse, and $742 thousand and $1.5 million 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, 2014, the Company recognized $95 thousandand $145 thousand, respectively, in losses from the repurchase of residential mortgage loans sold subject to credit recourse, and $494thousand and $929 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, 2015, the Company serviced $580million 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, 2015, the outstanding balance of funds advanced by the Company under such mortgage loan servicing agreements was approximately $468 thousand(December 31, 2014- $391 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.

XML

Deposits and Related Interest (Maturities of Time Deposits) (Details) $ in Thousands	Jun. 30, 2015 USD ($)
Maturities of Time Deposits [Abstract]
Time Deposit Maturities Less Than Three Month	$ 304,391
Time Deposit Maturities Three To Twelve Month	637,132
Total Time deposits	941,523
Time Deposit Maturities, Year Two	358,217
Time Deposit Maturities, Year Three	123,227
Time Deposit Maturities, Year Four	11,660
Time Deposit Maturities, Year Five	41,100
Certificates of deposit	$ 1,475,727

XML

Fair Value (Tables)

6 Months Ended

Jun. 30, 2015

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, are summarized below:

	June 30, 2015
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	1,044,319	$	-	$	1,044,319
Money market investments		5,795		-		-		5,795
Derivative assets		-		2,238		2,138		4,376
Servicing assets		-		-		5,791		5,791
Derivative liabilities		-		(8,739)		(2,044)		(10,783)
	$	5,795	$	1,037,818	$	5,885	$	1,049,498
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	243,401	$	243,401
Foreclosed real estate		-		-		81,333		81,333
Other repossessed assets		-		-		14,661		14,661
	$	-	$	-	$	339,395	$	339,395

	December 31, 2014
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	1,216,538	$	-	$	1,216,538
Money market investments		4,675		-		-		4,675
Derivative assets		-		2,552		5,555		8,107
Servicing assets		-		-		13,992		13,992
Derivative liabilities		-		(11,221)		(5,477)		(16,698)
	$	4,675	$	1,207,869	$	14,070	$	1,226,614
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	236,942	$	236,942
Foreclosed real estate		-		-		95,661		95,661
Other repossessed assets		-		-		21,800		21,800
	$	-	$	-	$	354,403	$	354,403

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 June 30, 2015and 2014:

	Quarter Ended June 30, 2015
	Derivative				Derivative
	asset				liability
	(S&P				(S&P
	Purchased		Servicing		Embedded
Level 3 Instruments Only	Options)		assets		Options)		Total
Balance at beginning of period	$	3,734	$	12,164	$	(3,617)	$	12,281
(Losses) gains included in earnings		(1,596)		-		1,517		(79)
Sale of mortgage servicing rights held-for-sale		-		(6,985)		-		(6,985)
Changes due to payments on loans		-		(313)		-		(313)
New instruments acquired		-		1,529		-		1,529
Changes in fair value related to price of MSRs held for sale		-		(835)		-		(835)
Amortization		-		-		56		56
Changes in fair value of servicing assets		-		231		-		231
Balance at end of period	$	2,138	$	5,791	$	(2,044)	$	5,885
	Six-Month Period Ended June 30, 2015
	Derivative				Derivative
	asset				liability
	(S&P				(S&P
	Purchased		Servicing		Embedded
Level 3 Instruments Only	Options)		assets		Options)		Total
Balance at beginning of period	$	5,555	$	13,992	$	(5,477)	$	14,070
(Losses) gains included in earnings		(3,417)		-		3,299		(118)
Sale of mortgage servicing rights held-for-sale		-		(6,985)		-		(6,985)
Changes due to payments on loans		-		(732)		-		(732)
New instruments acquired		-		2,060		-		2,060
Amortization		-		-		134		134
Changes in fair value related to price of MSRs held for sale		-		(2,716)		-		(2,716)
Changes in fair value of servicing assets		-		172		-		172
Balance at end of period	$	2,138	$	5,791	$	(2,044)	$	5,885

	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
(Losses) gains 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

Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Table Text Block]

The table below presents quantitative information for all assets and liabilities measured at fair value on a recurring and non-recurring basisusing significant unobservable inputs (Level 3) at

	June 30, 2015
	Fair Value		Valuation Technique	Unobservable Input	Range
	(In thousands)
Derivative assets (S&P Purchased Options)	$	2,138	Option pricing model	Implied option volatility	30.23%- 38.69%
				Counterparty credit risk (based on 5-year credit default swap ("CDS") spread)	72.89%- 72.89%
Servicing assets	$	5,791	Cash flow valuation	Constant prepayment rate	4.10% - 10.22%
				Discount rate	10.00% - 12.00%
Derivative liability (S&P Embedded Options)	$	(2,044)	Option pricing model	Implied option volatility	30.23%- 38.69%
				Counterparty credit risk (based on 5-year CDS spread)	72.89%- 72.89%
Collateral dependant impaired loans	$	40,893	Fair value of property or collateral	Appraised value less disposition costs	20.20% - 27.20%
Puerto Rico Electric Power Authority line of credit	$	173,565	Cash flow valuation	Discount rate	7.25%
Other non-collateral dependant impaired loans		4,949	Cash flow valuation	Discount rate	4.25% - 9.25%
Foreclosed real estate	$	81,333	Fair value of property or collateral	Appraised value less disposition costs	20.20% - 27.20%
Other repossessed assets	$	14,661	Fair value of property or collateral	Appraised value less disposition costs	20.20% - 27.20%

Fair Value By Balance Sheet Grouping [Text Block]

The estimated fair value and carrying value of the Company’s financial instruments atJune 30, 2015 and December 31, 2014is as follows:

	June 30,				December 31,
	2015				2014
	Fair		Carrying		Fair		Carrying
	Value		Value		Value		Value
	(In thousands)
Level 1
Financial Assets:
Cash and cash equivalents	$	553,535	$	553,535	$	573,427	$	573,427
Restricted cash		6,086		6,086		8,407		8,407
Level 2
Financial Assets:
Trading securities		786		786		1,594		1,594
Investment securities available-for-sale		1,044,319		1,044,319		1,216,538		1,216,538
Investment securities held-to-maturity		547,776		550,553		164,154		162,752
Federal Home Loan Bank (FHLB) stock		20,826		20,826		21,169		21,169
Other investments		3		3		3		3
Derivative assets		2,238		2,238		2,552		2,552
Financial Liabilities:
Derivative liabilities		8,739		8,739		11,221		11,221
Level 3
Financial Assets:
Total loans (including loans held-for-sale)
Non-covered loans, net		4,733,607		4,417,433		4,563,701		4,527,735
Covered loans, net		253,902		222,034		345,660		298,911
Derivative assets		2,138		2,138		5,555		5,555
FDIC indemnification asset		12,746		22,704		75,969		97,378
Accrued interest receivable		19,254		19,254		21,345		21,345
Servicing assets		5,791		5,791		13,992		13,992
Financial Liabilities:
Deposits		4,737,965		4,749,684		4,893,247		4,924,406
Securities sold under agreements to repurchase		1,193,574		1,161,136		1,020,621		980,087
Advances from FHLB		338,033		333,391		339,172		334,331
Other borrowings		1,883		2,090		3,979		4,004
Subordinated capital notes		91,996		102,109		104,288		101,584
Accrued expenses and other liabilities		113,537		113,537		133,290		133,290
Derivative liabilities		2,044		2,044		5,477		5,477

XML

Income Taxes (Narratives) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Income Taxes [Abstract]
Unrecognized Tax Benefits, Interest on Income Taxes Accrued	$ 2,500		$ 2,500		$ 566
Deferred Tax Assets, Net	138,406		138,406		108,708
OtherComprehensiveIncomeLossTax			(185)		447
Income Tax Expense (Benefit)	769	$ 10,613	1,748	$ 22,398
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued	566		566
International Banking Entity [Member]
OtherComprehensiveIncomeLossTax	165				$ 186
Other Comprehensive Income Loss Reclassification Adjustment From AOCIF or Sale Of Securities Tax	$ 12	$ 10	$ 22	$ 147
IBE Tax Rate	0.00%

XML

Offset of Assets/Liabilities (Tables)

6 Months Ended

Jun. 30, 2015

Offsetting [Abstract]

Offsetting Assets [Table Text Block]

June 30, 2015

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

$

4,376

$

-

$

4,376

$

2,013

$

-

$

2,363

December 31, 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

$

8,107

$

-

$

8,107

$

2,006

$

-

$

6,101

Offsetting Liabilities [Table Text Block]

June 30, 2015
							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	$	10,783	$	-	$	10,783	$	-	$	2,980	$	7,803
Securities sold under agreements to repurchase		1,158,945		-		1,158,945		1,282,553		-		(123,608)
Total	$	1,169,728	$	-	$	1,169,728	$	1,282,553	$	2,980	$	(115,805)
December 31, 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	$	16,698	$	-	$	16,698	$	-	$	2,980	$	13,718
Securities sold under agreements to repurchase		977,816		-		977,816		1,088,525		-		(110,709)
Total	$	994,514	$	-	$	994,514	$	1,088,525	$	2,980	$	(96,991)

XML

Income taxes (Effective Income Tax Rate Reconciliation) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
IncomeTaxExpenseBenefitContinuingOperationsIncomeTaxReconciliationAbstract
Total Income Tax Expense (Benefit)	$ 769	$ 10,613	$ 1,748	$ 22,398

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Consolidated Statements of Comprehensive Income (Loss) [Abstract]
Net (loss) income	$ (3,109)	$ 21,309	$ (6,097)	$ 45,056
Other comprehensive income (loss) before tax:
Unrealized gain (loss) on securities available-for-sale	(12,916)	14,941	(5,541)	24,504
Realized gain on investment securities included in net income	0	0	(2,572)	(4,366)
Unrealized gain (loss) on cash flow hedges	2,016	14	2,071	391
Other comprehensive income (loss) before taxes	(10,900)	14,955	(6,042)	20,529
Income tax effect	877	(1,221)	632	(1,965)
Other Comprehensive Income (Loss) After taxes	(10,023)	13,734	(5,410)	18,564
Comprehensive income	$ (13,132)	$ 35,043	$ (11,507)	$ 63,620

XML

Derivative Activities (Interest rate swap not designated as hedging instruments and their term) (Details) - Jun. 30, 2015 - USD ($) $ in Thousands	Total
Derivatives Offered to Clients [Member]
Derivative [Line Items]
Amount	$ 16,365
Derivatives Offered to Clients [Member] | Rate 5.13% [Member]
Derivative [Line Items]
Amount	$ 3,865
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	$ 16,365
Mirror Image Derivatives [Member] | Rate 5.13% [Member]
Derivative [Line Items]
Amount	$ 3,865
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

Investment Securities

6 Months Ended

Jun. 30, 2015

Investments [Abstract]

Securities Purchased Under Agreements To Resell And Investments Securities

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, 2015 and December 31, 2014, money market instruments included as part of cash and cash equivalents amounted to $5.8million and $4.7 million,respectively.

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, 2015 and December 31, 2014were as follows:

	June 30, 2015
			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	$	832,127	$	30,638	$	1,192	$	861,573	3.01%
GNMA certificates		3,625		249		-		3,874	5.03%
CMOs issued by US government-sponsored agencies		157,884		83		2,921		155,046	1.83%
Total mortgage-backed securities		993,636		30,970		4,113		1,020,493	2.83%
Investment securities
Obligations of US government-sponsored agencies		6,114		14		-		6,128	1.36%
Obligations of Puerto Rico government and political subdivisions		20,988		-		6,259		14,729	5.41%
Other debt securities		2,835		134		-		2,969	2.99%
Total investment securities		29,937		148		6,259		23,826	4.35%
Total securities available for sale	$	1,023,573	$	31,118	$	10,372	$	1,044,319	2.87%
Held-to-maturity
Mortgage-backed securities
FNMA and FHLMC certificates		525,504		978		3,757		522,725	2.28%
Investment securities
US Treasury securities		25,049		6		4		25,051	0.49%
Total securities held to maturity		550,553		984		3,761		547,776	2.20%
Total	$	1,574,126	$	32,102	$	14,133	$	1,592,095	2.64%

	December 31, 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	$	972,836	$	37,876	$	1,203	$	1,009,509	3.12%
GNMA certificates		4,473		288		8		4,753	4.94%
CMOs issued by US government-sponsored agencies		179,146		136		3,153		176,129	1.81%
Total mortgage-backed securities		1,156,455		38,300		4,364		1,190,391	2.92%
Investment securities
Obligations of US government-sponsored agencies		7,148		33		-		7,181	1.34%
Obligations of Puerto Rico government and public instrumentalities		20,939		-		5,267		15,672	5.41%
Other debt securities		3,137		157		-		3,294	2.95%
Total investment securities		31,224		190		5,267		26,147	4.23%
Total securities available-for-sale	$	1,187,679	$	38,490	$	9,631	$	1,216,538	2.96%
Held-to-maturity
Mortgage-backed securities
FNMA and FHLMC certificates		162,752		1,402		-		164,154	2.48%
Total	$	1,350,431	$	39,892	$	9,631	$	1,380,692	2.90%

The amortized cost and fair value of the Company’s investment securities at June 30, 2015, 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, 2015
	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	$	18,125	$	18,401	$	-	$	-
Total due after 5 to 10 years		18,125		18,401		-		-
Due after 10 years
FNMA and FHLMC certificates		814,002		843,172		525,504		522,725
GNMA certificates		3,625		3,874		-		-
CMOs issued by US government-sponsored agencies		157,884		155,046		-		-
Total due after 10 years		975,511		1,002,092		525,504		522,725
Total mortgage-backed securities		993,636		1,020,493		525,504		522,725
Investment securities
Due from 1 to 5 years
US Treasury securities		-		-		25,049		25,051
Obligations of Puerto Rico government and political subdivisions		10,521		8,444		-		-
Total due from 1 to 5 years		10,521		8,444		25,049		25,051
Due after 5 to 10 years
Obligations of US government and sponsored agencies		6,114		6,128		-		-
Total due after 5 to 10 years		6,114		6,128		-		-
Due after 10 years
Obligations of Puerto Rico government and political subdivisions		10,467		6,285		-		-
Other debt securities		2,835		2,969		-		-
Total due after 10 years		13,302		9,254		-		-
Total investment securities		29,937		23,826		25,049		25,051
Total securities available-for-sale	$	1,023,573	$	1,044,319	$	550,553	$	547,776

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, 2015 and 2014, the Company sold $63.5 million and $48.1 million, respectively, 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 periods.

For the six-month periods ended June 30, 2015 and 2014, the Company recorded a net gain on sale of securities of $2.6 million and $4.4 million, respectively. The table below presents the gross realized gains by category for such periods

	Six-Month Period Ended June 30,2015
			Book Value
Description	Sale Price		at Sale		Gross Gains		Gross Losses
	(In thousands)
Sale of securities available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates	$	40,307	$	37,735	$	2,571	$	-
GNMA certificates		63,524		63,523		1		-
Total	$	103,831	$	101,258	$	2,572	$	-

	Six-Month Period Ended June 30,2014
			Book Value
Description	Sale Price		at Sale		Gross Gains		Gross Losses
	(In thousands)
Sale of securities available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates	$	115,158	$	110,792	$	4,366	$	-
GNMA certificates		48,077		48,077		-		-
Total mortgage-backed securities	$	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, 2015 and December 31, 2014:

	June 30, 2015
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies	$	115,483	$	2,807	$	112,676
Obligations of Puerto Rico government and political subdivisions		20,988		6,259		14,729
	$	136,471	$	9,066	$	127,405
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US Government-sponsored agencies	$	28,596	$	114	$	28,482
FNMA and FHLMC certificates		163,733		1,192		162,541
		192,329		1,306		191,023
Securities held-to-maturity
FNMA and FHLMC Certificates		358,591		3,757		354,834
US Treausury Securities		10,024		4		10,020
		368,615		3,761		364,854
	$	560,944	$	5,067	$	555,877
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies	$	144,079	$	2,921	$	141,158
FNMA and FHLMC certificates		163,733		1,192		162,541
Obligations of Puerto Rico government and political subdivisions		20,988		6,259		14,729
		328,800		10,372		318,428
Securities held-to-maturity
FNMA and FHLMC Certificates		358,591		3,757		354,834
US Treasury Securities		10,024		4		10,020
		368,615		3,761		364,854
	$	697,415	$	14,133	$	683,282

	December 31, 2014
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico government and political subdivisions	$	20,939	$	5,267	$	15,672
CMOs issued by US government-sponsored agencies		143,928		3,086		140,842
FNMA and FHLMC certificates		113,376		1,172		112,204
GNMA certificates		77		8		69
	$	278,320	$	9,533	$	268,787
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies		15,172		67		15,105
FNMA and FHLMC certificates		63,736		31		63,705
	$	78,908	$	98	$	78,810
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies		159,100		3,153		155,947
FNMA and FHLMC certificates		177,112		1,203		175,909
Obligations of Puerto Rico government and political subdivisions		20,939		5,267		15,672
GNMA certificates		77		8		69
	$	357,228	$	9,631	$	347,597

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 the statements of operations with the remaining noncredit-related component recognized in other comprehensive income (loss). A credit loss is determined by assessing whether the amortized cost basis of the security will be recovered by comparing the present value of cash flows expected to be 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 ($676.4million, amortized cost, or 97%) with an unrealized loss position at June 30, 2015 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 ($21.0 million, amortized cost, or 3%) with an unrealized loss position at June 30, 2015 consist of obligations issued or guaranteed by the government of Puerto Rico and its political subdivisions or instrumentalities. The 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, the negative rating decisions taken by the credit rating agencies have affected the market value and liquidity of these securities.

As of June 30, 2015, the Company applied a discounted cash flow analysis to the Puerto Rico government bonds to calculate the cash flows expected to be collected and determine if any portion of the decline in market value of these investments was considered an other-than-temporary impairment. The analysis derives an estimate of value based on the present value of risk-adjusted future cash flows of the underlying investments, and included the following components:

• The contractual future cash flows of the bonds are projected based on the key terms as set forth in the official statements for each investment. Such key terms include among others the interest rate, amortization schedule, if any, and maturity date.
• The risk-adjusted cash flows are calculated based on a monthly default probability and recovery rate assumptions based on the credit rating of each investment. Constant monthly default rates are assumed throughout the life of the bonds which are based on the respective security’s credit rating as of the date of the analysis.
• The adjusted future cash flows are then discounted at the original effective yield of each investment based on the purchase price and expected risk-adjusted future cash flows as of the purchase date of each investment.

The discounted cash flow analysis for the investments showed a cumulative default probability at maturity in the range of 5.953% to 38.650%, thus reflecting that it is more likely than not that the bonds will not default at all during their remaining terms (range between 61.349% and 94.046%). Based on this analysis, the Company determined that it is more likely than not that it will recover all interest and principal invested in the Puerto Rico government bonds and is therefore not required to recognize a credit loss as of June 30, 2015.

XML

Loans Receivable (Narratives) (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Accounts Notes And Loans Receivable Line Items
Financing Receivable Modifications Recorded Investment Not Included In Non Accrual	$ 88.8	$ 274.4
Originated Loans Granted To Puerto Rico Government	347.5	450.2
Acquired Loans Under ASC 310-30 granted to the Puerto Rico Government	167.8	168.8
Line Of Credit Facility Maximum Borrowing Capacity to Puerto Rico Government	515.3	619.0
Credit Facilities Granted to the Puerto Rico Public Corporation	301.0
Unpaid principal balance of the revolving line of credit granted to the Government of Puerto Rico	197.6	$ 200.0
Credit facilities to State Insurance Fund	$ 77.6
Collateral securities percentage SIF	130.00%
Puerto Rico Housing Finance Authority credit facilities	$ 25.2

XML

Servicing Assets (Changes in serving rights at fair value) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Servicing Asset At Fair Value Amount Roll Forward
Fair value	$ 12,164	$ 13,970	$ 13,992	$ 13,801
Sale of Mortgage Servicing Rights	0	6,985	0	6,985
Servicing from mortgage securitizations or asset transfers	1,529	490	2,060	1,053
Changes due to payments on loans	(313)	(271)	(732)	(465)
Changes in fair value due to sales price of mortgage servicing rights held-for-sale	231	(534)	172	(734)
Changes in fair value due to changes in valuation model inputs or assumptions	(835)	0	(2,716)	0
Fair value	$ 5,791	$ 13,655	$ 5,791	$ 13,655

XML

Income Taxes (Components of income tax expense (benefit)) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
ComponentsOfIncomeTaxExpenseBenefitContinuingOperationsAbstract
Deferred Income Tax Expense (Benefit)			$ (1,316)	$ 13,211
Income Tax Expense (Benefit)	$ 769	$ 10,613	$ 1,748	$ 22,398

XML

Loans Receivable (TDR Pre/Post Modifications) (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($) number	Jun. 30, 2014 USD ($) number	Jun. 30, 2015 USD ($) number	Jun. 30, 2014 USD ($) number
Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Number of contracts | number	39	33	97	88
Financing Receivable Modifications Pre Modification Recorded Investment	$ 4,455	$ 5,001	$ 11,609	$ 11,813
Pre Modification Weighted Average Rate	5.62%	6.00%	4.65%	6.00%
Pre Modification Weighted Average Term	330 months	353 months	348 months	349 months
Financing Receivable Modifications Post Modification Recorded Investment	$ 4,455	$ 4,965	$ 11,594	$ 11,446
Post Modification Weighted Average Rate	4.21%	4.12%	4.13%	4.26%
Post Modification Weighted Average Term	330 months	418 months	349 months	390 months
Commercial Loan [Member]
Financing Receivable, Modifications [Line Items]
Number of contracts | number	1	1	4	1
Financing Receivable Modifications Pre Modification Recorded Investment	$ 29	$ 73	$ 4,533	$ 73
Pre Modification Weighted Average Rate	7.25%	7.00%	6.83%	7.00%
Pre Modification Weighted Average Term	44 months	55 months	80 months	55 months
Financing Receivable Modifications Post Modification Recorded Investment	$ 29	$ 73	$ 4,533	$ 73
Post Modification Weighted Average Rate	6.50%	9.25%	7.00%	9.25%
Post Modification Weighted Average Term	60 months	36 months	141 months	36 months
Consumer Loan [Member]
Financing Receivable, Modifications [Line Items]
Number of contracts | number	21	3	32	8
Financing Receivable Modifications Pre Modification Recorded Investment	$ 250	$ 24	$ 396	$ 66
Pre Modification Weighted Average Rate	14.40%	14.00%	14.50%	13.00%
Pre Modification Weighted Average Term	71 months	77 months	72 months	70 months
Financing Receivable Modifications Post Modification Recorded Investment	$ 259	$ 24	$ 440	$ 68
Post Modification Weighted Average Rate	13.87%	13.98%	14.25%	13.31%
Post Modification Weighted Average Term	69 months	72 months	68 months	68 months
Automobile Loan [Member]
Financing Receivable, Modifications [Line Items]
Number of contracts | number	1		1
Financing Receivable Modifications Pre Modification Recorded Investment	$ 64		$ 64
Pre Modification Weighted Average Rate	12.95%		12.95%
Pre Modification Weighted Average Term	72 months		72 months
Financing Receivable Modifications Post Modification Recorded Investment	$ 65		$ 65
Post Modification Weighted Average Rate	12.95%		12.95%
Post Modification Weighted Average Term	72 months		72 months

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies [Abstract]

Commitments

NOTE 20—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, 2015 and December 31, 2014were as follows:

	June 30,		December 31,
	2015		2014
	(In thousands)
Commitments to extend credit	$	492,455	$	493,248
Commercial letters of credit		1,447		885

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, 2015 and December 31, 2014, 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 $647 thousand at June 30, 2015and $621 thousand at December 31, 2014.

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, 2015 and December 31, 2014, is as follows:

	June 30,		December 31,
	2015		2014
	(In thousands)
Standby letters of credit and financial guarantees	$	15,016	$	32,970
Loans sold with recourse		45,565		67,803
Commitments to sell or securitize mortgage loans		18,853		10,207

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, 2015 and2014, amounted to $2.3 million and $2.4 million, respectively. For thesix-month periods ended June 30, 2015 and2014, rent expense amounted to $4.7million and $4.9million, respectively, and is included in the “occupancy and equipment” caption in the unaudited consolidated statements of operations.Future rental commitments under leases in effect at June 30, 2015, exclusive of taxes, insurance, and maintenance expenses payable by the Company, are summarized as follows:

	Minimum Rent
Year Ending December 31,	(In thousands)
2015	$	4,059
2016		7,794
2017		7,141
2018		6,050
2019		5,887
Thereafter		17,064
	$	47,995

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.

XML

Earnings Per Common Share (Earnings per common share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share [Abstract]
Net (loss) income	$ (3,109)	$ 21,309	$ (6,097)	$ 45,056
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	(6,575)	17,843	(13,028)	38,125
Effect of assumed conversion of convertible preferred stock	1,838	1,838	3,675	3,675
Income available to common sharesholders assuming conversion	$ (4,737)	$ 19,681	$ (9,353)	$ 41,800
Average common shares outstanding	44,505	45,014	44,569	45,170
Average potential common shares options	110	200	148	168
Average potential common shares convertible preferred stock	7,159	7,138	7,159	7,138
Average common shares outstanding and equivalents	51,774	52,352	51,876	52,476
Earnings per common share - basic	$ (0.15)	$ 0.4	$ (0.29)	$ 0.84
Earnings per common share - diluted	$ (0.15)	$ 0.38	$ (0.29)	$ 0.8

XML

Fair value (Estimated fair value and carrying value) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013
Assets, Fair Value Disclosure [Abstract]
Available-for-sale Securities	$ 1,044,319		$ 1,216,538
Held to maturity Fair Value	547,776		164,154
Federal Home Loan Bank (FHLB) stock	20,826		21,169
Other Investments	3		3
Derivative Assets	4,376		8,107
Servicing Assets	5,791	$ 12,164	13,992	$ 13,655	$ 13,970	$ 13,801
Liabilities, Fair Value Disclosure [Abstract]
Derivative liabilities	8,739		11,221
Assets,Carrying Value [Abstract]
Total cash and cash equivalents	553,535		573,427	596,485	596,485	621,269
Restricted Cash And Cash Equivalents	6,086		8,407
Trading Securities	786		1,594
Non-covered loans, net of allowance for loan and lease losses	4,396,665		4,513,196
Covered, net	222,034		298,911
FDIC Indemnification Asset	22,704	$ 75,221	97,378	$ 143,660	$ 166,194	$ 189,240
Accrued interest receivable	19,254		21,345
Liabilities,Carrying Value Disclosure [Abstract]
Deposits, Total	4,749,684		4,924,406
Securities Sold under Agreements to Repurchase	1,161,136		980,087
Subordinated capital notes	102,109		101,584
Securities Purchased But Not Yet Received	0		0
Accrued expenses and other liabilities	113,537		133,290
Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Cash and Cash Equivalents, Fair Value Disclosure	553,535		573,427
Restricted Cash, at Fair Value	6,086		8,407
Assets,Carrying Value [Abstract]
Total cash and cash equivalents	553,535		573,427
Restricted Cash And Cash Equivalents	6,086		8,407
Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Available-for-sale Securities	1,044,319		1,216,538
Held to maturity Fair Value	547,776		164,154
Federal Home Loan Bank (FHLB) stock	20,826		21,169
Other Investments	3		3
Derivative Assets	2,238		2,552
Receivables, Fair Value Disclosure	8,739		11,221
Assets,Carrying Value [Abstract]
Trading Securities	786		1,594
Investment held for sale, carrying amount	550,553		162,752
Federal Home Loan Bank Stock at carrying value	20,826		21,169
Other Investment, Carrying Value	3		3
Derivative Assets, carrying value	2,238		2,552
Liabilities,Carrying Value Disclosure [Abstract]
Derivative liabilities at carrying value	8,739		11,221
Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure [Abstract]
Non-covered loans, net	4,733,607		4,563,701
Covered loans, net	253,902		345,660
Derivative Assets	2,138		5,555
FDIC Indemnification Asset Fair Value Disclosure	12,746		75,969
Receivables, Fair Value Disclosure	19,254		21,345
Servicing Assets	5,791		13,992
Liabilities, Fair Value Disclosure [Abstract]
Deposits, Fair Value Disclosure	4,737,965		4,893,247
Securities sold under agreements to repurchase	1,193,574		1,020,621
Advances from FHLB	338,033		339,172
Notes Payable Fair Value Disclosure	1,883		3,979
Subordinated capital notes	91,996		104,288
Derivative liabilities	2,044		5,477
Accrued expenses and other liabilities	113,537		133,290
Assets,Carrying Value [Abstract]
Non-covered loans, net of allowance for loan and lease losses	4,417,433		4,527,735
Covered, net	222,034		298,911
Derivative Assets, carrying value	2,138		5,555
FDIC Indemnification Asset	22,704		97,378
Accrued interest receivable	19,254		21,345
Servicing assets, carrying value	5,791		13,992
Liabilities,Carrying Value Disclosure [Abstract]
Deposits, Total	4,749,684		4,924,406
Securities Sold under Agreements to Repurchase	1,161,136		980,087
Advances from FHLB	333,391		334,331
Term Notes	2,090		4,004
Subordinated capital notes	102,109		101,584
Accrued expenses and other liabilities	113,537		133,290
Derivative liabilities at carrying value	$ 2,044		$ 5,477

XML

Allowance for Loan and Lease Losses (Allowance for loan and lease losses) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Provision for Non Covered Loan and Lease Losses	$ 15,644,000	$ 13,220,000	$ 53,027,000	$ 23,282,000
Non-covered acquired loans accounted under ASC 310-20
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	5,450,000	3,618,000	4,597,000	2,354,000
Charge-offs	(2,357,000)	(3,432,000)	(5,006,000)	(6,960,000)
Recoveries	938,000	689,000	1,652,000	1,239,000
Provision for Non Covered Loan and Lease Losses	1,498,000	2,569,000	4,286,000	6,811,000
Balance at end of period	5,529,000		5,529,000
Most recent acquired loans accounted under ASC 310-30
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	14,166,000	3,058,000	13,481,000	2,863,000
Provision for Non Covered Loan and Lease Losses	4,193,000	3,220,000	4,878,000	3,415,000
Balance at end of period	18,359,000		18,359,000
Non-covered originated loans [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	76,759,000	49,507,000	51,439,000	49,081,000
Charge-offs	(11,824,000)	(8,883,000)	(24,042,000)	(15,999,000)
Recoveries	4,101,000	2,583,000	7,728,000	4,500,000
Provision for Non Covered Loan and Lease Losses	9,953,000	7,431,000	43,864,000	13,056,000
Balance at end of period	78,989,000	50,638,000	78,989,000	50,638,000
Residential Portfolio Segment | Most recent acquired loans accounted under ASC 310-30
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	473,000	0	0	0
Provision for Non Covered Loan and Lease Losses	0	0	473,000	0
Balance at end of period	473,000		473,000
Residential Portfolio Segment | Non-covered originated loans [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	18,086,000	19,511,000	19,679,000	19,937,000
Charge-offs	(1,356,000)	(987,000)	(2,770,000)	(2,201,000)
Recoveries	67,000	88,000	67,000	236,000
Provision for Non Covered Loan and Lease Losses	1,279,000	450,000	1,100,000	1,090,000
Balance at end of period	18,076,000	19,062,000	18,076,000	19,062,000
Commercial Portfolio Segment | Non-covered acquired loans accounted under ASC 310-20
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	49,000	867,000	65,000	926,000
Charge-offs	(16,000)	(110,000)	(16,000)	(284,000)
Recoveries	7,000	30,000	17,000	30,000
Provision for Non Covered Loan and Lease Losses	14,000	(323,000)	(12,000)	(208,000)
Balance at end of period	54,000	464,000	54,000	464,000
Commercial Portfolio Segment | Most recent acquired loans accounted under ASC 310-30
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	13,687,000	2,653,000	13,476,000	1,713,000
Provision for Non Covered Loan and Lease Losses	1,253,000	3,563,000	1,464,000	4,503,000
Balance at end of period	14,940,000		14,940,000
Commercial Portfolio Segment | Non-covered originated loans [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	33,123,000	13,994,000	8,432,000	14,897,000
Charge-offs	(497,000)	(543,000)	(1,489,000)	(962,000)
Recoveries	219,000	115,000	309,000	213,000
Provision for Non Covered Loan and Lease Losses	1,934,000	(1,143,000)	27,527,000	(1,725,000)
Balance at end of period	34,779,000	12,423,000	34,779,000	12,423,000
Consumer Portfolio Segment | Non-covered acquired loans accounted under ASC 310-20
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	1,885,000	504,000	1,211,000	0
Charge-offs	(1,303,000)	(1,952,000)	(2,686,000)	(4,010,000)
Recoveries	429,000	124,000	563,000	224,000
Provision for Non Covered Loan and Lease Losses	1,605,000	1,662,000	3,528,000	4,124,000
Balance at end of period	2,616,000	338,000	2,616,000	338,000
Consumer Portfolio Segment | Most recent acquired loans accounted under ASC 310-30
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	6,000	405,000	5,000	418,000
Provision for Non Covered Loan and Lease Losses	78,000	(343,000)	79,000	(356,000)
Balance at end of period	84,000		84,000
Consumer Portfolio Segment | Non-covered originated loans [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	9,405,000	7,135,000	9,072,000	6,006,000
Charge-offs	(2,309,000)	(1,397,000)	(3,985,000)	(2,235,000)
Recoveries	390,000	244,000	543,000	391,000
Provision for Non Covered Loan and Lease Losses	2,978,000	1,905,000	4,834,000	3,725,000
Balance at end of period	10,464,000	7,887,000	10,464,000	7,887,000
Auto Portfolio Segment | Non-covered acquired loans accounted under ASC 310-20
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	3,516,000	2,247,000	3,321,000	1,428
Charge-offs	(1,038,000)	(1,370,000)	(2,304,000)	(2,666,000)
Recoveries	502,000	535,000	1,072,000	985,000
Provision for Non Covered Loan and Lease Losses	(121,000)	1,230,000	770,000	2,895,000
Balance at end of period	2,859,000		2,859,000
Auto Portfolio Segment | Most recent acquired loans accounted under ASC 310-30
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	0	0	0	732,000
Provision for Non Covered Loan and Lease Losses	2,862,000	0	2,862,000	(732,000)
Balance at end of period	2,862,000		2,862,000
Auto and Leasing Portfolio Segment | Non-covered originated loans [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	15,762,000	8,731,000	14,255,000	7,866,000
Charge-offs	(7,662,000)	(5,956,000)	(15,798,000)	(10,601,000)
Recoveries	3,425,000	2,136,000	6,809,000	3,660,000
Provision for Non Covered Loan and Lease Losses	3,539,000	6,216,000	9,798,000	10,202,000
Balance at end of period	15,064,000	11,127,000	15,064,000	11,127,000
Unallocated Financing Receivables | Non-covered acquired loans accounted under ASC 310-20
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	0	0	0	0
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision for Non Covered Loan and Lease Losses	0	0	0	0
Balance at end of period	0		0
Unallocated Financing Receivables | Non-covered originated loans [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	383,000	136,000	1,000	375,000
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision for Non Covered Loan and Lease Losses	223,000	3,000	605,000	(236,000)
Balance at end of period	$ 606,000	$ 139,000	$ 606,000	$ 139,000

XML

Other Assets (Tables)

6 Months Ended

Jun. 30, 2015

Other asset

Schedule of Accrued interest receivable [Table Text Block]

	June 30,		December 31,
	2015		2014
	(In thousands)
Non-covered loans	$	14,606	$	17,005
Investments		4,648		4,340
	$	19,254	$	21,345

Schedule of Other Assets [Table Text Block]

Other assets atJune 30, 2015 and December 31, 2014 consist of the following

		June 30,		December 31,
	2015		2014
	(In thousands)
Prepaid expenses	$	16,492	$	16,018
Core deposit and customer relationship intangibles		8,791		9,743
Other repossessed assets		14,661		21,800
Mortgage tax credits		6,277		6,277
Investment in Statutory Trust		1,083		1,083
FDIC certification receivable		39,548		14,974
Accounts receivable and other assets		45,439		38,830
	$	132,291	$	108,725

XML

Related Party Transactions

6 Months Ended

Jun. 30, 2015

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 13—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.The activity and balance of these loans for the quarters and the six-month periods endedJune 30, 2015 and 2014were as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2015		2014		2015		2014
	(In thousands)				(In thousands)
Balance at the beginning of period	$	27,508	$	19,267	$	27,011	$	18,963
New loans		3,768		13,847		7,623		13,847
Repayments and sales		2,042		(8,963)		(1,316)		(8,659)
Balance at the end of period	$	33,318	$	24,151	$	33,318	$	24,151

XML

Borrowings (Redemption Fund) (Details) - Redemption Fund [Member] $ in Thousands	Jun. 30, 2015 USD ($)
Debt Instrument [Line Items]
Redemption fund - June 30, 2015	$ 58,625
2015	3,350
2016	5,025
Total	$ 67,000