INVESTMENT SECURITIES (Tables)

3 Months Ended

Mar. 31, 2015

Investment Securities Available for Sale

		March 31, 2015
		Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI		Gross						Fair value		Weighted average yield%
								Unrealized
								gains			losses
		(Dollars in thousands)

U.S. Treasury securities:
	Due within one year	$	7,500	$	-	$	-		$	-		$	7,500	0.11

Obligations of U.S.
government-sponsored
agencies:
	After 1 to 5 years		278,054		-		318			1,918			276,454	1.25
	After 5 to 10 years		102,745		-		850			1,037			102,558	1.93

Puerto Rico government
obligations:
	After 1 to 5 years		39,836		-		-			16,922			22,914	4.49
	After 5 to 10 years		875		-		-			-			875	5.20
	After 10 years		24,821		-		1			7,148			17,674	5.37

United States and Puerto
Rico government
obligations:			453,831		-		1,169			27,025			427,975	1.90

Other (1)

Mortgage-backed securities:
FHLMC certificates:
	After 1 to 5 years		432		-		46			-			478	4.95
	After 10 years		304,628		-		2,733			560			306,801	2.17
			305,060		-		2,779			560			307,279	2.17

GNMA certificates:
	Due within one year		17		-		-			-			17	3.52
	After 1 to 5 years		55		-		2			-			57	3.93
	After 5 to 10 years		24,189		-		956			-			25,145	3.62
	After 10 years		316,122		-		21,942			-			338,064	3.85
			340,383		-		22,900			-			363,283	3.83
FNMA certificates:
	After 1 to 5 years		3,743		-		155			-			3,898	3.37
	After 5 to 10 years		16,924		-		646			31			17,539	2.90
	After 10 years		814,520		-		10,059			2,251			822,328	2.35
			835,187		-		10,860			2,282			843,765	2.37
Collateralized mortgage
	obligations issued or
	guaranteed by the FHLMC:


Other mortgage pass-through
trust certificates:
	Over 5 to 10 years		108		-		-			-			108	7.26
	After 10 years		43,012		11,296		-			-			31,716	2.15
			43,120		11,296		-			-			31,824	2.15
Total mortgage-backed
securities			1,523,750		11,296		36,539			2,842			1,546,151	2.65

Other (1)
	After 1 to 5 years		100		-		-			-			100	1.50


Total investment securities
	available for sale	$	1,977,681	$	11,296	$	37,708		$	29,867		$	1,974,226	2.48


(1)	Represents investment in a Community Investment Fund.

		December 31, 2014
		Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI		Gross						Fair value		Weighted average yield%
								Unrealized
								gains			losses
		(Dollars in thousands)

U.S. Treasury securities:
	Due within one year	$	7,498	$	-	$	1		$	-		$	7,499	0.11

Obligations of U.S.
government-sponsored
agencies:
	After 1 to 5 years		260,889		-		42			4,219			256,712	1.22
	After 5 to 10 years		78,234		-		246			2,077			76,403	1.72

Puerto Rico government
obligations:
	After 1 to 5 years		39,827		-		-			12,419			27,408	4.49
	After 5 to 10 years		886		-		1			-			887	5.20
	After 10 years		20,498		-		-			5,571			14,927	5.83

United States and Puerto
Rico government
obligations:			407,832		-		290			24,286			383,836	1.86

Mortgage-backed securities:
FHLMC certificates:
	After 10 years		315,311		-		1,743			1,260			315,794	2.17

GNMA certificates:
	After 1 to 5 years		39		-		1			-			40	3.26
	After 5 to 10 years		17,108		-		501			-			17,609	3.65
	After 10 years		338,842		-		20,957			-			359,799	3.83
			355,989		-		21,459			-			377,448	3.83
FNMA certificates:
	After 1 to 5 years		4,160		-		181			-			4,341	3.40
	After 5 to 10 years		9,584		-		521			5			10,100	3.49
	After 10 years		837,597		-		7,756			4,854			840,499	2.36
			851,341		-		8,458			4,859			854,940	2.37
Collateralized mortgage
	obligations issued or
	guaranteed by the FHLMC:


Other mortgage pass-through
trust certificates:
	Over 5 to 10 years		111		-		1			-			112	7.27
	After 10 years		45,677		12,141		-			-			33,536	2.17
			45,788		12,141		1			-			33,648	2.17
Total mortgage-backed
	securities		1,568,429		12,141		31,661			6,119			1,581,830	2.66


Equity securities (without

Total investment securities
	available for sale	$	1,976,261	$	12,141	$	31,951		$	30,405		$	1,965,666	2.49

Available-for-Sale Investments' Fair Value and Gross Unrealized Losses

	As of March 31, 2015
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico government obligations	$	-	$	-	$	36,314	$	24,070	$	36,314	$	24,070
U.S. government agencies obligations		4,999		-		261,252		2,955		266,251		2,955
Mortgage-backed securities:
FNMA		311,339		1,195		99,932		1,087		411,271		2,282
FHLMC		110,475		352		21,419		208		131,894		560
Collateralized mortgage
obligations issued or
Other mortgage pass-through
trust certificates		-		-		31,716		11,296		31,716		11,296
Corporate bonds
	$	426,813	$	1,547	$	450,633	$	39,616	$	877,446	$	41,163


	As of December 31, 2014
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico government obligations	$	-	$	-	$	42,335	$	17,990	$	42,335	$	17,990
U.S. government agencies obligations		46,436		74		257,996		6,222		304,432		6,296
Mortgage-backed securities:
FNMA		2,038		5		541,642		4,854		543,680		4,859
FHLMC		-		-		135,277		1,260		135,277		1,260
Collateralized mortgage
obligations issued or
Other mortgage pass-through
trust certificates		-		-		33,536		12,141		33,536		12,141
	$	48,474	$	79	$	1,010,786	$	42,467	$	1,059,260	$	42,546

OTTI Losses on Available-for-Sale Debt Securities

	Private Label MBS
	Quarter ended March 31,
	2015		2014
(In thousands)
Total other-than-temporary impairment losses	$	-	$	-
Credit loss on debt securities for which an OTTI was not previously recognized
Portion of other-than-temporary impairment losses
previously recognized in OCI		(156)		-
Net impairment losses recognized in earnings	$	(156)	$	-

Roll-Forward of Credit Losses on Debt Securities Held by Corporation

The following table summarizes the roll-forward of credit losses on debt securities held by the Corporation for which a portion of an OTTI is recognized in OCI:
	Quarter ended March 31,
	2015		2014
(In thousands)
Credit losses at the beginning of the period	$	5,777	$	5,389
Additions:
Credit losses on debt securities for which an
OTTI was previously recognized		156		-

Ending balance of credit losses on debt securities held for
which a portion of an OTTI was recognized in OCI	$	5,933	$	5,389

Significant Assumptions in Valuation of Private Label MBS

	March 31, 2015		December 31, 2014
	Weighted		Weighted
	Average	Range	Average	Range

Discount rate	14.5%	14.5%	14.5%	14.5%
Prepayment rate	32%	18.04%-100.00%	32%	19.89%-100.00%
Projected Cumulative Loss Rate	7.3%	0.00%-80.00%	7.9%	0.64%-80.00%

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

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- Definition

Tabular disclosure of the amount of other than temporary impairment (OTTI) related to credit losses recognized in earnings including: (a) the beginning balance of the amount related to credit losses on debt securities held by the investor at the beginning of the period for which a portion of an OTTI was recognized in other comprehensive income; (b) additions for the amount related to the credit loss for which an OTTI was not previously recognized; (c) reductions for securities sold during the period (realized); (d) reductions for securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the investor intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis; (e) additional increases to the amount related to the credit loss for which an OTTI was previously recognized when the investor does not intend to sell the security and it is not more likely than not that the investor will be required to sell the security before recovery of its amortized cost basis; (f) reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security; and (g) the ending balance of the amount related to credit losses on debt securities held by the entity at the end of the period for which a portion of an OTTI was recognized in other comprehensive income.

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