Investment securities

6 Months Ended

Jun. 30, 2013

Available For Sale Securities Member

Note 5 – Investment securities available-for-sale

The following tables present the amortized cost, gross unrealized gains and losses, approximate fair value, weighted average yield and contractual maturities of investment securities available-for-sale.

		At June 30, 2013
				Gross		Gross				Weighted
		Amortized		unrealized		unrealized		Fair		average
(In thousands)		cost		gains		losses		value		yield
U.S. Treasury securities
	Within 1 year	$	14,996	$	1	$	-	$	14,997	0.07	%
	After 1 to 5 years		26,862		2,374		-		29,236	3.84
Total U.S. Treasury securities			41,858		2,375		-		44,233	2.49
Obligations of U.S. Government sponsored entities
	Within 1 year		43,256		317		-		43,573	1.46
	After 1 to 5 years		234,827		1,063		3,099		232,791	1.37
	After 5 to 10 years		861,329		1,142		25,363		837,108	1.57
	After 10 years		23,000		-		1,354		21,646	3.09
Total obligations of U.S. Government sponsored entities			1,162,412		2,522		29,816		1,135,118	1.56
Obligations of Puerto Rico, States and political subdivisions
	Within 1 year		115		1		-		116	5.22
	After 1 to 5 years		6,241		57		32		6,266	4.66
	After 5 to 10 years		5,619		-		165		5,454	3.70
	After 10 years		37,220		2		1,800		35,422	5.38
Total obligations of Puerto Rico, States and political subdivisions			49,195		60		1,997		47,258	5.10
Collateralized mortgage obligations - federal agencies
	After 1 to 5 years		5,747		131		-		5,878	1.98
	After 5 to 10 years		26,578		850		-		27,428	2.86
	After 10 years		2,631,601		27,020		35,720		2,622,901	2.04
Total collateralized mortgage obligations - federal agencies			2,663,926		28,001		35,720		2,656,207	2.05
Collateralized mortgage obligations - private label
	After 10 years		1,187		18		-		1,205	4.12
Total collateralized mortgage obligations - private label			1,187		18		-		1,205	4.12
Mortgage-backed securities
	Within 1 year		15		1		-		16	1.75
	After 1 to 5 years		7,253		386		-		7,639	4.63
	After 5 to 10 years		84,122		4,314		950		87,486	4.25
	After 10 years		1,058,386		58,658		2,768		1,114,276	4.11
Total mortgage-backed securities			1,149,776		63,359		3,718		1,209,417	4.12
Equity securities (without contractual maturity)			6,506		2,189		53		8,642	3.17
Other
	After 1 to 5 years		9,816		-		416		9,400	1.68
	After 10 years		3,089		67		-		3,156	3.63
Total other			12,905		67		416		12,556	2.14
Total investment securities available-for-sale		$	5,087,765	$	98,591	$	71,720	$	5,114,636	2.44	%

		At December 31, 2012
				Gross		Gross				Weighted
		Amortized		unrealized		unrealized		Fair		average
(In thousands)		cost		gains		losses		value		yield
U.S. Treasury securities
	Within 1 year	$	7,018	$	20	$	-	$	7,038	1.67	%
	After 1 to 5 years		27,236		2,964		-		30,200	3.83
Total U.S. Treasury securities			34,254		2,984		-		37,238	3.39
Obligations of U.S. Government sponsored entities
	Within 1 year		460,319		7,614		-		467,933	3.82
	After 1 to 5 years		167,177		2,057		-		169,234	1.59
	After 5 to 10 years		456,480		3,263		592		459,151	1.74
Total obligations of U.S. Government sponsored entities			1,083,976		12,934		592		1,096,318	2.60
Obligations of Puerto Rico, States and political subdivisions
	Within 1 year		5,220		26		-		5,246	3.08
	After 1 to 5 years		6,254		130		39		6,345	4.65
	After 5 to 10 years		5,513		-		36		5,477	3.79
	After 10 years		37,265		648		-		37,913	5.38
Total obligations of Puerto Rico, States and political subdivisions			54,252		804		75		54,981	4.91
Collateralized mortgage obligations - federal agencies
	After 1 to 5 years		4,927		35		-		4,962	1.48
	After 5 to 10 years		39,897		1,794		-		41,691	2.94
	After 10 years		2,270,184		50,740		512		2,320,412	2.21
Total collateralized mortgage obligations - federal agencies			2,315,008		52,569		512		2,367,065	2.22
Collateralized mortgage obligations - private label
	After 10 years		2,414		59		-		2,473	4.59
Total collateralized mortgage obligations - private label			2,414		59		-		2,473	4.59
Mortgage-backed securities
	Within 1 year		288		13		-		301	3.47
	After 1 to 5 years		3,838		191		-		4,029	4.12
	After 5 to 10 years		81,645		6,207		-		87,852	4.71
	After 10 years		1,297,585		93,509		129		1,390,965	4.18
Total mortgage-backed securities			1,383,356		99,920		129		1,483,147	4.21
Equity securities (without contractual maturity)			6,507		909		10		7,406	3.46
Other
	After 1 to 5 years		9,992		-		207		9,785	1.67
	After 5 to 10 years		18,032		3,675		-		21,707	11.00
	After 10 years		3,945		136		-		4,081	3.62
Total other			31,969		3,811		207		35,573	7.17
Total investment securities available-for-sale		$	4,911,736	$	173,990	$	1,525	$	5,084,201	2.94	%

The weighted average yield on investment securities available-for-sale is based on amortized cost; therefore, it does not give effect to changes in fair value.

Securities not due on a single contractual maturity date, such as mortgage-backed securities and collateralized mortgage obligations, are classified in the period of final contractual maturity. The expected maturities of collateralized mortgage obligations, mortgage-backed securities and certain other securities may differ from their contractual maturities because they may be subject to prepayments or may be called by the issuer.

The slight increase in investment securities available-for-sale is mainly due to purchases of CMO's and agencies during this quarter, partially offset by portfolio declines in market value in line with underlying market conditions, US Agency maturities, mortgage backed securities prepayments and the prepayment of $22.8 million of EVERTEC's debenture as part of their IPO and debt repayment of $5.8 million during the quarter.

There were no sales of investment securities available-for-sale during the six months ended June 30, 2013. At the end of the second quarter of 2012, the Corporation sold investment securities with settlement date in July 2012. The proceeds received in July 2012 from these transactions were $8.0 million.

Gross realized gains and losses on the sale of investment securities available-for-sale were as follows:

	For the quarter ended June 30,				Six months ended June 30,
(In thousands)		2013		2012		2013		2012
Gross realized gains	$	-	$	-	$	-	$	-
Gross realized losses		-		(349)		-		(349)
Net realized gains (losses) on sale of investment securities available-for-sale	$	-	$	(349)	$	-	$	(349)

The following tables present the Corporation's fair value and gross unrealized losses of investment securities available-for-sale, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

		At June 30, 2013
		Less than 12 months				12 months or more				Total
				Gross				Gross				Gross
		Fair		unrealized		Fair		unrealized		Fair		unrealized
(In thousands)		value		losses		value		losses		value		losses
Obligations of U.S. Government sponsored entities		$	978,478	$	29,462	$	6,024	$	354	$	984,502	$	29,816
Obligations of Puerto Rico, States and political
	subdivisions		40,588		1,972		2,025		25		42,613		1,997
Collateralized mortgage obligations - federal agencies			1,513,901		35,720		-		-		1,513,901		35,720
Mortgage-backed securities			60,331		3,682		908		36		61,239		3,718
Equity securities			1,779		49		46		4		1,825		53
Other			9,399		416		-		-		9,399		416
Total investment securities available-for-sale in an
	unrealized loss position	$	2,604,476	$	71,301	$	9,003	$	419	$	2,613,479	$	71,720

		At December 31, 2012
		Less than 12 months				12 months or more				Total
				Gross				Gross				Gross
		Fair		unrealized		Fair		unrealized		Fair		unrealized
(In thousands)		value		losses		value		losses		value		losses
Obligations of U.S. Government sponsored entities		$	139,278	$	592	$	-	$	-	$	139,278	$	592
Obligations of Puerto Rico, States and political
	subdivisions		6,229		44		2,031		31		8,260		75
Collateralized mortgage obligations - federal agencies			170,136		512		-		-		170,136		512
Mortgage-backed securities			7,411		90		983		39		8,394		129
Equity securities			-		-		51		10		51		10
Other			9,785		207		-		-		9,785		207
Total investment securities available-for-sale in an
	unrealized loss position	$	332,839	$	1,445	$	3,065	$	80	$	335,904	$	1,525

Management evaluates investment securities for other-than-temporary (“OTTI”) declines in fair value on a quarterly basis. Once a decline in value is determined to be other-than-temporary, the value of a debt security is reduced and a corresponding charge to earnings is recognized for anticipated credit losses. Also, for equity securities that are considered other-than-temporarily impaired, the excess of the security's carrying value over its fair value at the evaluation date is accounted for as a loss in the results of operations. The OTTI analysis requires management to consider various factors, which include, but are not limited to: (1) the length of time and the extent to which fair value has been less than the amortized cost basis, (2) the financial condition of the issuer or issuers, (3) actual collateral attributes, (4) the payment structure of the debt security and the likelihood of the issuer being able to make payments, (5) any rating changes by a rating agency, (6) adverse conditions specifically related to the security, industry, or a geographic area, and (7) management's intent to sell the debt security or whether it is more likely than not that the Corporation would be required to sell the debt security before a forecasted recovery occurs.

At June 30, 2013, management performed its quarterly analysis of all debt securities in an unrealized loss position. Based on the analyses performed, management concluded that no individual debt security was other-than-temporarily impaired as of such date. At June 30, 2013, the Corporation did not have the intent to sell debt securities in an unrealized loss position and it is not more likely than not that the Corporation will have to sell the investment securities prior to recovery of their amortized cost basis. Also, management evaluated the Corporation's portfolio of equity securities at June 30, 2013. No other-than-temporary impairment losses on equity securities were recorded during the quarters ended June 30, 2013 and June 30, 2012. Management has the intent and ability to hold the investments in equity securities that are at a loss position at June 30, 2013, for a reasonable period of time for a forecasted recovery of fair value up to (or beyond) the cost of these investments.

The following table states the name of issuers, and the aggregate amortized cost and fair value of the securities of such issuer (includes available-for-sale and held-to-maturity securities), in which the aggregate amortized cost of such securities exceeds 10% of stockholders' equity. This information excludes securities backed by the full faith and credit of the U.S. Government. Investments in obligations issued by a state of the U.S. and its political subdivisions and agencies, which are payable and secured by the same source of revenue or taxing authority, other than the U.S. Government, are considered securities of a single issuer.

		June 30, 2013				December 31, 2012

(In thousands)	Amortized cost		Fair value		Amortized cost		Fair value
FNMA	$	2,147,390	$	2,133,556	$	1,594,933	$	1,634,927
FHLB		339,886		330,477		520,127		528,287
Freddie Mac		1,235,448		1,233,785		1,198,969		1,221,863

Held To Maturity Securities Member

Investments [Abstract]

Investment [Text Block]

Note 6 – Investment securities held-to-maturity

		At June 30, 2013
				Gross		Gross				Weighted
		Amortized		unrealized		unrealized		Fair		average
(In thousands)		cost		gains		losses		value		yield
Obligations of Puerto Rico, States and political subdivisions
	Within 1 year	$	2,525	$	16	$	-	$	2,541	5.74	%
	After 1 to 5 years		21,835		384		-		22,219	3.70
	After 5 to 10 years		19,640		29		520		19,149	6.05
	After 10 years		71,009		3,829		1,348		73,490	2.48
Total obligations of Puerto Rico, States and political subdivisions			115,009		4,258		1,868		117,399	3.39
Collateralized mortgage obligations - federal agencies
	After 10 years		123		5		-		128	5.43
Total collateralized mortgage obligations - federal agencies			123		5		-		128	5.43
Other
	Within 1 year		25,250		-		1		25,249	3.47
	After 1 to 5 years		1,250		-		-		1,250	1.24
Total other			26,500		-		1		26,499	3.36
Total investment securities held-to-maturity		$	141,632	$	4,263	$	1,869	$	144,026	3.39	%

		At December 31, 2012
				Gross		Gross				Weighted
		Amortized		unrealized		unrealized		Fair		average
(In thousands)		cost		gains		losses		value		yield
Obligations of Puerto Rico, States and political subdivisions
	Within 1 year	$	2,420	$	8	$	-	$	2,428	5.74	%
	After 1 to 5 years		21,335		520		19		21,836	3.63
	After 5 to 10 years		18,780		866		5		19,641	6.03
	After 10 years		73,642		449		438		73,653	5.35
Total obligations of Puerto Rico, States and political subdivisions			116,177		1,843		462		117,558	5.15
Collateralized mortgage obligations - federal agencies
	After 10 years		140		4		-		144	5.00
Total collateralized mortgage obligations - federal agencies			140		4		-		144	5.00
Other
	Within 1 year		250		-		-		250	0.86
	After 1 to 5 years		26,250		31		-		26,281	3.40
Total other			26,500		31		-		26,531	3.38
Total investment securities held-to-maturity		$	142,817	$	1,878	$	462	$	144,233	4.82	%

Securities not due on a single contractual maturity date, such as collateralized mortgage obligations, are classified in the period of final contractual maturity. The expected maturities of collateralized mortgage obligations and certain other securities may differ from their contractual maturities because they may be subject to prepayments or may be called by the issuer.

The following tables present the Corporation's fair value and gross unrealized losses of investment securities held-to-maturity, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2013 and December 31, 2012.

		At June 30, 2013
		Less than 12 months				12 months or more				Total
				Gross				Gross				Gross
		Fair		unrealized		Fair		unrealized		Fair		unrealized
(In thousands)		value		losses		value		losses		value		losses
Obligations of Puerto Rico, States and political subdivisions		$	27,855	$	1,155	$	18,832	$	713	$	46,687	$	1,868
Other			24,999		1		-		-		24,999		1
Total investment securities held-to-maturity in an unrealized
	loss position	$	52,854	$	1,156	$	18,832	$	713	$	71,686	$	1,869

		At December 31, 2012
		Less than 12 months				12 months or more				Total
				Gross				Gross				Gross
		Fair		unrealized		Fair		unrealized		Fair		unrealized
(In thousands)		value		losses		value		losses		value		losses

Obligations of Puerto Rico, States and political subdivisions		$	2,365	$	35	$	19,118	$	427	$	21,483	$	462
Total investment securities held-to-maturity in an unrealized
	loss position	$	2,365	$	35	$	19,118	$	427	$	21,483	$	462

As indicated in Note 5 to these consolidated financial statements, management evaluates investment securities for OTTI declines in fair value on a quarterly basis.

The “Obligations of Puerto Rico, States and political subdivisions” classified as held-to-maturity at June 30, 2013 are primarily associated with securities issued by municipalities of Puerto Rico and are generally not rated by a credit rating agency. The Corporation performs periodic credit quality reviews on these issuers. The Corporation does not have the intent to sell securities held-to-maturity and it is not more likely than not that the Corporation will have to sell these investment securities prior to recovery of their amortized cost basis.