Investment securities

3 Months Ended

Mar. 31, 2014

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 March 31, 2014 and December 31, 2013.

		At March 31, 2014
				Gross		Gross				Weighted
		Amortized		unrealized		unrealized		Fair		average
(In thousands)		cost		gains		losses		value		yield
U.S. Treasury securities
	After 1 to 5 years	$	26,281	$	1,809	$	-	$	28,090	3.86	%
Total U.S. Treasury securities			26,281		1,809		-		28,090	3.86
Obligations of U.S. Government sponsored entities
	Within 1 year		6,998		8		-		7,006	0.14
	After 1 to 5 years		1,803,615		1,415		12,537		1,792,493	1.20
	After 5 to 10 years		377,500		163		13,396		364,267	1.52
	After 10 years		23,000		-		1,627		21,373	3.13
Total obligations of U.S. Government sponsored entities			2,211,113		1,586		27,560		2,185,139	1.27
Obligations of Puerto Rico, States and political subdivisions
	After 1 to 5 years		5,391		35		47		5,379	2.86
	After 5 to 10 years		23,261		-		1,248		22,013	5.46
	After 10 years		48,823		53		7,640		41,236	5.85
Total obligations of Puerto Rico, States and political subdivisions			77,475		88		8,935		68,628	5.52
Collateralized mortgage obligations - federal agencies
	After 1 to 5 years		4,510		84		-		4,594	1.84
	After 5 to 10 years		30,681		1,036		13		31,704	2.90
	After 10 years		2,398,213		17,209		63,113		2,352,309	2.06
Total collateralized mortgage obligations - federal agencies			2,433,404		18,329		63,126		2,388,607	2.07
Collateralized mortgage obligations - private label
	After 10 years		311		2		-		313	3.91
Total collateralized mortgage obligations - private label			311		2		-		313	3.91
Mortgage-backed securities
	Within 1 year		166		10		-		176	2.65
	After 1 to 5 years		19,809		1,018		-		20,827	4.41
	After 5 to 10 years		104,025		3,589		1,525		106,089	3.36
	After 10 years		904,177		53,101		2,440		954,838	3.97
Total mortgage-backed securities			1,028,177		57,718		3,965		1,081,930	3.92
Equity securities (without contractual maturity)			3,178		1,166		135		4,209	4.12
Other
	After 1 to 5 years		9,547		-		75		9,472	1.68
	After 10 years		2,439		63		-		2,502	3.61
Total other			11,986		63		75		11,974	2.07
Total investment securities available-for-sale		$	5,791,925	$	80,761	$	103,796	$	5,768,890	2.15	%

		At December 31, 2013
				Gross		Gross				Weighted
		Amortized		unrealized		unrealized		Fair		average
(In thousands)		cost		gains		losses		value		yield
U.S. Treasury securities
	After 1 to 5 years	$	26,474	$	2,008	$	-	$	28,482	3.85	%
Total U.S. Treasury securities			26,474		2,008		-		28,482	3.85
Obligations of U.S. Government sponsored entities
	Within 1 year		25,021		39		-		25,060	1.85
	After 1 to 5 years		1,087,453		1,678		12,715		1,076,416	1.26
	After 5 to 10 years		528,611		100		21,742		506,969	1.52
	After 10 years		23,000		-		2,240		20,760	3.12
Total obligations of U.S. Government sponsored entities			1,664,085		1,817		36,697		1,629,205	1.38
Obligations of Puerto Rico, States and political subdivisions
	After 1 to 5 years		6,228		45		85		6,188	4.64
	After 5 to 10 years		23,147		-		1,978		21,169	6.33
	After 10 years		48,803		29		9,812		39,020	5.84
Total obligations of Puerto Rico, States and political subdivisions			78,178		74		11,875		66,377	5.89
Collateralized mortgage obligations - federal agencies
	After 1 to 5 years		5,131		101		-		5,232	1.79
	After 5 to 10 years		31,613		921		-		32,534	2.98
	After 10 years		2,438,021		18,532		76,023		2,380,530	2.05
Total collateralized mortgage obligations - federal agencies			2,474,765		19,554		76,023		2,418,296	2.06
Collateralized mortgage obligations - private label
	After 10 years		509		4		-		513	3.78
Total collateralized mortgage obligations - private label			509		4		-		513	3.78
Mortgage-backed securities
	Within 1 year		419		24		-		443	3.14
	After 1 to 5 years		15,921		833		-		16,754	4.50
	After 5 to 10 years		62,373		3,058		1,214		64,217	4.12
	After 10 years		1,007,733		50,807		4,313		1,054,227	3.93
Total mortgage-backed securities			1,086,446		54,722		5,527		1,135,641	3.95
Equity securities (without contractual maturity)			3,178		1,109		171		4,116	4.06
Other
	After 1 to 5 years		9,638		-		141		9,497	1.68
	After 10 years		2,604		69		-		2,673	3.61
Total other			12,242		69		141		12,170	2.09
Total investment securities available-for-sale		$	5,345,877	$	79,357	$	130,434	$	5,294,800	2.30	%

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.

There were no securities sold during the quarters ended March 31, 2014 and 2013.

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 March 31, 2014 and December 31, 2013.

		At March 31, 2014
		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		$	1,766,585	$	26,910	$	22,815	$	650	$	1,789,400	$	27,560
Obligations of Puerto Rico, States and political
	subdivisions		29,571		456		35,089		8,479		64,660		8,935
Collateralized mortgage obligations - federal agencies			1,387,656		49,496		220,582		13,630		1,608,238		63,126
Mortgage-backed securities			75,600		2,895		11,817		1,070		87,417		3,965
Equity securities			-		-		1,692		135		1,692		135
Other			-		-		9,472		75		9,472		75
Total investment securities available-for-sale in an
	unrealized loss position	$	3,259,412	$	79,757	$	301,467	$	24,039	$	3,560,879	$	103,796

		At December 31, 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		$	1,326,866	$	32,457	$	69,257	$	4,240	$	1,396,123	$	36,697
Obligations of Puerto Rico, States and political
	subdivisions		54,256		11,685		8,330		190		62,586		11,875
Collateralized mortgage obligations - federal agencies			1,567,654		70,378		96,676		5,645		1,664,330		76,023
Mortgage-backed securities			105,455		4,762		7,225		765		112,680		5,527
Equity securities			1,657		171		-		-		1,657		171
Other			-		-		9,497		141		9,497		141
Total investment securities available-for-sale in an
	unrealized loss position	$	3,055,888	$	119,453	$	190,985	$	10,981	$	3,246,873	$	130,434

As of March 31, 2014, the available-for-sale investment portfolio reflects gross unrealized losses of approximately $104 million, driven by US Agency Collateralized Mortgage Obligations, obligations from the U.S. Government sponsored entities, and obligations of the Puerto Rico Government and its political subdivisions. As part of its analysis for all US Agencies' securities, management considers the US Agency guarantee. The portfolio of obligations of the Puerto Rico Government is comprised of securities with specific sources of income or revenues identified for repayments. The Corporation performs periodic credit quality reviews on these issuers.

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 March 31, 2014, 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 March 31, 2014, 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.

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.

		March 31, 2014				December 31, 2013

(In thousands)	Amortized cost		Fair value		Amortized cost		Fair value
FNMA	$	2,257,350	$	2,219,711	$	2,318,171	$	2,266,610
FHLB		813,953		804,431		336,933		326,220
Freddie Mac		1,522,882		1,513,135		1,434,346		1,418,216

Held To Maturity Securities Member

Investments [Abstract]

Investment [Text Block]

Note 6 – Investment securities held-to-maturity

The following tables present the amortized cost, gross unrealized gains and losses, approximate fair value, weighted average yield and contractual maturities of investment securities held-to-maturity at March 31, 2014 and December 31, 2013.

		At March 31, 2014
				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	$	12,685	$	-	$	23	$	12,662	2.10	%
	After 1 to 5 years		12,595		-		1,034		11,561	5.93
	After 5 to 10 years		20,925		-		5,610		15,315	6.08
	After 10 years		66,200		888		5,431		61,657	2.29
Total obligations of Puerto Rico, States and political subdivisions			112,405		888		12,098		101,195	3.38
Collateralized mortgage obligations - federal agencies
	After 10 years		114		-		9		105	5.45
Total collateralized mortgage obligations - federal agencies			114		-		9		105	5.45
Other
	Within 1 year		26,250		-		-		26,250	3.39
	After 1 to 5 years		250		-		1		249	1.37
Total other			26,500		-		1		26,499	3.37
Total investment securities held-to-maturity		$	139,019	$	888	$	12,108	$	127,799	3.38	%

		At December 31, 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	$	12,570	$	-	$	12	$	12,558	2.06	%
	After 1 to 5 years		12,060		-		984		11,076	5.91
	After 5 to 10 years		20,015		-		5,251		14,764	6.06
	After 10 years		69,236		257		13,179		56,314	2.43
Total obligations of Puerto Rico, States and political subdivisions			113,881		257		19,426		94,712	3.40
Collateralized mortgage obligations - federal agencies
	After 10 years		115		7		-		122	5.45
Total collateralized mortgage obligations - federal agencies			115		7		-		122	5.45
Other
	Within 1 year		26,000		-		645		25,355	3.41
	After 1 to 5 years		500		-		1		499	1.33
Total other			26,500		-		646		25,854	3.37
Total investment securities held-to-maturity		$	140,496	$	264	$	20,072	$	120,688	3.40	%

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 March 31, 2014 and December 31, 2013.

		At March 31, 2014
		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		$	55,600	$	6,718	$	24,695	$	5,380	$	80,295	$	12,098
Collateralized mortgage obligations - federal agencies			105		9		-		-		105		9
Other			249		1		-		-		249		1
Total investment securities held-to-maturity in an unrealized
	loss position	$	55,954	$	6,728	$	24,695	$	5,380	$	80,649	$	12,108

		At December 31, 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		$	60,028	$	12,180	$	13,044	$	7,246	$	73,072	$	19,426
Other			24,604		646		-		-		24,604		646
Total investment securities held-to-maturity in an unrealized
	loss position	$	84,632	$	12,826	$	13,044	$	7,246	$	97,676	$	20,072

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 March 31, 2014 are primarily associated with securities issued by municipalities of Puerto Rico and are generally not rated by a credit rating agency. This includes $62 million of securities issued by three municipalities of Puerto Rico that are payable from the real and personal property taxes collected within such municipalities. These bonds have seniority to the payment of operating cost and expenses of the municipality. The portfolio also includes approximately $40 million in securities for which the underlying source of payment is not the central government, but in which it provides a guarantee in the event of default. In February 2014, the three principal nationally recognized rating agencies (Moody's Investor Services, Standard and Poor's and Fitch Ratings) downgraded the general-obligation bonds of the Commonwealth and other obligations of Puerto Rico instrumentalities to non-investment grade categories, citing concerns about financial flexibility and a reduced capacity to borrow in the financial markets. 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.