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, 2013

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

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

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

 45,640,105 common shares ($1.00 par value per share) outstanding as of July 31, 2013

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION			Page
Item 1.	Financial Statements
	Unaudited Consolidated Statements of Financial Condition		1
	Unaudited Consolidated Statements of Operations		2
	Unaudited Consolidated Statements of Comprehensive Income		3
	Unaudited Consolidated Statements of Changes in Stockholders’ Equity		4
	Unaudited Consolidated Statements of Cash Flows		5
	Notes to Unaudited Consolidated Financial Statements
		Note 1– Organization, Consolidation and Basis of Presentation	7
		Note 2 – Business Combinations	10
		Note 3 – Securities Purchased Under Agreements to Resell and Investments	13
		Note 4 – Loans	19
		Note 5 – Allowance for Loan and Lease Losses	26
		Note 6 – Premises and Equipment	38
		Note 7 – Derivative Activities	39
		Note 8 – Accrued Interests Receivable and Other Assets	41
		Note 9 – Deposits and Related Interests	42
		Note 10 – Borrowings	43
		Note 11 – Related Party Transactions	46
		Note 12 – Income Taxes	47
		Note 13 – Stockholders’ Equity and Earnings per Common Share	48
		Note 14 – Commitments	53
		Note 15 – Contingencies	55
		Note 16 – Fair Value of Financial Instruments	55
		Note 17 – Offsetting Arrangements	64
		Note 18 – Business Segments	66
		Note 19 – Subsequent Events	68
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
		Critical Accounting Policies and  Estimates	69
		Overview of Financial Performance	70
		Selected Financial Data	70
		Analysis of Results of Operations	78
		Analysis of Financial Condition	87
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		108
Item 4.	Control and Procedures		112
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings		113
Item 1A.	Risk Factors		113
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		113
Item 3.	Default upon Senior Securities		113
Item 4.	Mine Safety Disclosures		113
Item 5.	Other Information		113
Item 6.	Exhibits		113
SIGNATURES			114
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, formerly known as Oriental Financial Group Inc. (“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 by the U.S. or Puerto Rico governments or a downgrade in the credit ratings of the U.S. or Puerto

Rico governments;

·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 stock and bond markets;

·competition in the financial services industry;

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

·possible legislative, tax or regulatory changes; and

·difficulties in integrating the acquired Puerto Rico operations of Banco Bilbao Vizcaya Argentaria, S. A.  (“BBVAPR”) into the Company’s operations.

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, 2013 AND DECEMBER 31, 2012

	June 30,		December 31,
	2013		2012
	(In thousands, except share data)
ASSETS
Cash and cash equivalents
Cash and due from banks	$	737,330	$	855,490
Money market investments		10,983		13,205
Total cash and cash equivalents		748,313		868,695
Securities purchased under agreements to resell		-		80,000
Investments:
Trading securities, at fair value, with amortized cost of $2,286 (December 31, 2012 - $508)		2,209		495
Investment securities available-for-sale, at fair value, with amortized cost of $1,807,335 (December 31, 2012 - $2,118,825)		1,836,229		2,194,286
Federal Home Loan Bank (FHLB) stock, at cost		22,156		38,411
Other investments		66		73
Total investments		1,860,660		2,233,265
Securities sold but not yet delivered		16,732		-
Loans:
Mortgage loans held-for-sale, at lower of cost or fair value		78,350		64,145
Loans not covered under shared-loss agreements with the FDIC, net of allowance for loan and lease losses of $46,625 (December 31, 2012 - $39,921)		4,543,299		4,709,778
Loans covered under shared-loss agreements with the FDIC, net of allowance for loan and lease losses of $53,992 (December 31, 2012 - $54,124)		369,380		395,307
Total loans, net		4,991,029		5,169,230
Other assets:
FDIC shared-loss indemnification asset		236,472		286,799
Foreclosed real estate covered under shared-loss agreements with the FDIC		25,193		22,283
Foreclosed real estate not covered under shared-loss agreements with the FDIC		56,496		51,233
Accrued interest receivable		17,508		17,554
Deferred tax asset, net		155,165		122,501
Premises and equipment, net		84,301		84,997
Customers' liability on acceptances		30,571		26,996
Servicing assets		12,994		10,795
Derivative assets		19,655		21,889
Goodwill		76,383		76,383
Other assets		104,462		123,642
Total assets	$	8,435,934	$	9,196,262
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Demand deposits	$	2,294,635	$	2,447,152
Savings accounts		1,006,558		634,819
Certificates of deposit		2,363,845		2,607,588
Total deposits		5,665,038		5,689,559
Borrowings:
Short term borrowings		-		92,210
Securities sold under agreements to repurchase		1,313,870		1,695,247
Advances from FHLB and other borrowings		322,300		554,177
Subordinated capital notes		98,961		146,038
Total borrowings		1,735,131		2,487,672
Other liabilities:
Derivative liabilities		16,701		26,260
Acceptances executed and outstanding		30,571		26,996
Accrued expenses and other liabilities		117,569		102,169
Total liabilities		7,565,010		8,332,656
Commitments and contingencies (See Notes 14 and 15)
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, 2012 - 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, 2012 - 84,000); $1,000 liquidation value		84,000		84,000
Common stock, $1 par value; 100,000,000 shares authorized; 52,688,584 shares issued;
45,640,105 shares outstanding (December 31, 2012 - 52,670,878; 45,580,281)		52,689		52,671
Additional paid-in capital		538,105		537,453
Legal surplus		57,906		52,143
Retained earnings		111,292		70,734
Treasury stock, at cost, 7,048,479 shares (December 31, 2012 - 7,090,597 shares)		(80,834)		(81,275)
Accumulated other comprehensive income, net of tax of -$174 (December 31, 2012 - $1,802)		15,766		55,880
Total stockholders’ equity		870,924		863,606
Total liabilities and stockholders’ equity	$	8,435,934	$	9,196,262
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, 2013 AND 2012

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands, except per share data)
Interest income:
Loans not covered under shared-loss agreements with the FDIC	$	90,611	$	17,223	$	170,874	$	35,345
Loans covered under shared-loss agreements with the FDIC		23,999		20,342		44,228		41,884
Total interest income from loans		114,610		37,565		215,102		77,229
Mortgage-backed securities		9,080		21,573		19,898		49,636
Investment securities and other		2,118		1,650		4,436		3,843
Total interest income		125,808		60,788		239,436		130,708
Interest expense:
Deposits		9,973		7,885		20,451		17,008
Securities sold under agreements to repurchase		7,109		16,500		14,357		34,070
Advances from FHLB and other borrowings		2,187		2,926		3,847		5,930
FDIC-guaranteed term notes		-		-		-		909
Subordinated capital notes		1,170		321		2,830		649
Total interest expense		20,439		27,632		41,485		58,566
Net interest income		105,369		33,156		197,951		72,142
Provision for non-covered loan and lease losses		37,527		3,800		45,443		6,800
Provision for covered loan and lease losses, net		1,211		1,467		1,883		8,624
Total provision for loan and lease losses		38,738		5,267		47,326		15,424
Net interest income after provision for loan and lease losses		66,631		27,889		150,625		56,718
Non-interest income:
Financial service revenue		8,030		5,903		15,690		11,791
Banking service revenue		13,334		3,145		25,716		6,225
Mortgage banking activities		2,525		2,436		5,679		4,938
Total banking and financial service revenues		23,889		11,484		47,085		22,954
FDIC shared-loss expense, net		(19,965)		(5,583)		(32,836)		(10,410)
Net gain (loss) on:
Sale of securities		-		11,979		-		19,338
Derivatives		1,569		(107)		1,271		(108)
Early extinguishment of subordinated capital notes		-		-		1,061		-
Other		2,303		63		2,349		(779)
Total non-interest income, net		7,796		17,836		18,930		30,995
Non-interest expense:
Compensation and employee benefits		24,089		11,184		47,338		21,550
Professional and service fees		7,710		5,222		16,832		10,643
Occupancy and equipment		8,066		4,292		17,282		8,501
Insurance		2,723		1,442		5,401		3,262
Electronic banking charges		4,094		1,609		7,822		3,166
Advertising, business promotion, and strategic initiatives		1,670		1,564		3,079		2,412
Merger and restructuring charges		5,274		-		10,808		-
Foreclosure, repossession and other real estate expenses		2,156		936		3,661		1,686
Loan servicing and clearing expenses		1,884		955		3,360		1,923
Taxes, other than payroll and income taxes		5,132		(107)		7,754		1,067
Loss on sale of foreclosed real estate and other repossessed assets		1,696		886		3,573		1,282
Communication		835		392		1,699		781
Printing, postage, stationary and supplies		851		322		2,017		630
Director and investor relations		377		342		613		651
Other		2,265		671		4,393		1,555
Total non-interest expense		68,822		29,710		135,632		59,109
Income before income taxes		5,605		16,015		33,923		28,604
Income tax expense  (benefit)		(31,934)		1,057		(24,808)		2,994
Net income		37,539		14,958		58,731		25,610
Less: dividends on preferred stock		(3,466)		(1,201)		(6,931)		(2,401)
Income available to common shareholders	$	34,073	$	13,757	$	51,800	$	23,209
Earnings per common share:
Basic	$	0.75	$	0.34	$	1.14	$	0.57
Diluted	$	0.68	$	0.34	$	1.05	$	0.57
Average common shares outstanding and equivalents		52,968		40,808		52,929		40,986
Cash dividends per share of common stock	$	0.06	$	0.06	$	0.12	$	0.12
See notes to unaudited consolidated financial statements.

2

OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE QUARTERS AND SIX-MONTHS PERIODS ENDED JUNE 30, 2013 AND 2012

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Net income	$	37,539	$	14,958	$	58,731	$	25,610
Other comprehensive loss before tax:
Unrealized (gain) loss on securities available-for-sale		(35,576)		7,059		(46,568)		9,000
Realized gain on investment securities included in net income		-		(11,979)		-		(19,338)
Unrealized loss (gain) on cash flow hedges		3,016		(6,791)		4,477		(8,792)
Other comprehensive loss before taxes		(32,560)		(11,711)		(42,091)		(19,130)
Income tax effect		1,275		2,875		1,977		3,260
Other comprehensive loss after taxes		(31,285)		(8,836)		(40,114)		(15,870)
Comprehensive income	$	6,254	$	6,122	$	18,617	$	9,740
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, 2013 AND 2012

	Six-Month Period Ended June 30,
	2013		2012
	(In thousands)
Preferred stock:
Balance at beginning and end of period	$	176,000	$	68,000
Common stock:
Balance at beginning of year		52,671		47,809
Exercised stock options		18		33
Balance at end of period		52,689		47,842
Additional paid-in capital:
Balance at beginning of year		537,453		499,096
Stock-based compensation expense		888		787
Exercised stock options		167		361
Lapsed restricted stock units		(364)		(392)
Common stock issuance costs		(16)		-
Preferred stock issuance costs		(23)		-
Balance at end of period		538,105		499,852
Legal surplus:
Balance at beginning of year		52,143		50,178
Transfer from retained earnings		5,763		2,490
Balance at end of period		57,906		52,668
Retained earnings:
Balance at beginning of year		70,734		68,149
Net income		58,731		25,610
Cash dividends declared on common stock		(5,479)		(4,886)
Cash dividends declared on preferred stock		(6,931)		(2,401)
Transfer to legal surplus		(5,763)		(2,490)
Balance at end of period		111,292		83,982
Treasury stock:
Balance at beginning of year		(81,275)		(74,808)
Stock repurchased		-		(7,022)
Lapsed restricted stock units		364		392
Stock used to match defined contribution plan		77		35
Balance at end of period		(80,834)		(81,403)
Accumulated other comprehensive income, net of tax:
Balance at beginning of year		55,880		37,131
Other comprehensive loss, net of tax		(40,114)		(15,870)
Balance at end of period		15,766		21,261
Total stockholders’ equity	$	870,924	$	692,202
See notes to unaudited consolidated financial statements.

4

OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2013 AND 2012

	Six-Month Period Ended June 30,
	2013		2012
	(In thousands)
Cash flows from operating activities:
Net income	$	58,731	$	25,610
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred loan origination fees, net of costs		486		297
Amortization of fair value discounts on acquired loans		3,504		-
Amortization of investment securities premiums, net of accretion of discounts		12,624		25,558
Amortization of core deposit and customer relationship intangibles		1,288		75
Amortization of fair value premiums on acquired deposits		9,649		-
FDIC shared-loss expense, net		32,836		10,410
Amortization of prepaid FDIC assessment		-		2,613
Other impairments on securities		7		-
Depreciation and amortization of premises and equipment		5,265		2,373
Deferred income taxes, net		(30,776)		(420)
Provision for covered and non-covered loan and lease losses, net		47,326		15,424
Stock-based compensation		888		787
(Gain) loss on:
Sale of securities		-		(19,338)
Sale of mortgage loans held for sale		(1,771)		(2,898)
Derivatives		(1,271)		108
Early extinguishment of subordinated capital notes		(1,061)		-
Foreclosed real estate		3,109		1,284
Sale of other repossessed assets		464		-
Sale of premises and equipment		-		(86)
Originations of loans held-for-sale		(179,127)		(93,940)
Proceeds from sale of loans held-for-sale		68,809		49,388
Net (increase) decrease in:
Trading securities		(1,714)		(34)
Accrued interest receivable		46		2,924
Servicing assets		(2,199)		(322)
Other assets		20,730		4,259
Net increase (decrease) in:
Accrued interest on deposits and borrowings		(995)		(4,498)
Accrued expenses and other liabilities		12,093		(13,167)
Net cash provided by operating activities		58,941		6,407
Cash flows from investing activities:
Purchases of:
Investment securities available-for-sale		(17,802)		(558,201)
Investment securities held-to-maturity		-		(119,025)
FHLB stock		(12,465)		-
Maturities and redemptions of:
Investment securities  available-for-sale		313,866		378,144
Investment securities  held-to-maturity		-		102,251
FHLB stock		28,720		911
Proceeds from sales of:
Investment securities  available-for-sale		75,660		553,602
Foreclosed real estate		18,219		4,639
Other repossessed assets		12,912		1,941
Premises and equipment		1,667		368
Origination and purchase of loans, excluding loans held-for-sale		(422,590)		(112,974)
Principal repayment of loans, including covered loans		528,274		128,340
Reimbursements from the FDIC on shared-loss agreements		18,696		39,729
Additions to premises and equipment		(6,237)		(1,225)
Net change in securities purchased under agreements to resell		80,000		(225,000)
Net cash provided by investing activities		618,920		193,500

5

OFG BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS – (Continued)

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2013 AND 2012

	Six-Month Period Ended June 30,
	2013		2012
	(In thousands)
Cash flows from financing activities:
Net increase (decrease) in:
Deposits		(36,125)		(212,846)
Short term borrowings		(92,210)		-
Securities sold under agreements to repurchase		(381,358)		-
FHLB advances		(231,617)		5,070
Subordinated capital notes		(46,017)		-
FDIC-guaranteed term notes		-		(105,000)
Exercise of stock options		185		394
Issuance of common stock costs		(16)		-
Issuance of preferred stock costs		(23)		-
Purchase of treasury stock		-		(7,022)
Termination of derivative instruments		1,348		(124)
Dividends paid on preferred stock		(6,931)		(2,401)
Dividends paid on common stock		(5,479)		(4,886)
Net cash used in financing activities		(798,243)		(326,815)
Net change in cash and cash equivalents		(120,382)		(126,908)
Cash and cash equivalents at beginning of period		868,695		591,487
Cash and cash equivalents at end of period	$	748,313	$	464,579
Supplemental Cash Flow Disclosure and Schedule of Non-cash Activities:
Interest paid	$	40,491	$	63,266
Income taxes paid	$	378	$	8,031
Mortgage loans securitized into mortgage-backed securities	$	89,590	$	37,730
Transfer from loans to foreclosed real estate and other repossessed assets	$	45,714	$	11,723
Securities sold but not yet delivered	$	16,732	$	-
Reclassification of loans held for investment portfolio to held for sale portfolio	$	40,328	$	5,182
See notes to unaudited consolidated financial statements

6

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 –  ORGANIZATION, CONSOLIDATION AND BASIS OF PRESENTATION

Nature of Operations

OFG Bancorp (the “Company”) is a publicly-owned financial holding company incorporated under the laws of the Commonwealth of Puerto Rico. The Company operates through various subsidiaries including, a commercial bank, Oriental Bank (or the “Bank”), two broker-dealers, Oriental Financial Services Corp. (“Oriental Financial Services”) and OFS Securities, Inc. (“OFS Securities”), an insurance agency, Oriental Insurance, Inc. (“Oriental Insurance”) and a retirement plan administrator, Caribbean Pension Consultants, Inc. (“CPC”). The Company also has a special purpose entity, Oriental Financial (PR) Statutory Trust II (the “Statutory Trust II”). 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, leasing, auto loans, financial planning, insurance sales, money management and investment banking and brokerage services, as well as corporate and individual trust services. On April 25, 2013, the Company changed its corporate name from Oriental Financial Group Inc. to OFG Bancorp.

On December 18, 2012, the Company purchased from Banco Bilbao Vizcaya Argentaria, S. A. (“BBVA”), all of the outstanding common stock of each of (i) BBVAPR Holding Corporation (“BBVAPR Holding”), the sole shareholder of Banco Bilbao Vizcaya Argentaria Puerto Rico (“BBVAPR Bank”), a Puerto Rico chartered commercial bank, and BBVA Seguros, Inc. (“BBVA Seguros”), an insurance agency, and (ii) BBVA Securities of Puerto Rico, Inc. (“BBVA Securities,” now known as “OFS Securities”), a registered broker-dealer. This transaction is referred to as the BBVAPR Acquisition” and BBVAPR Holding, BBVAPR Bank, BBVA Seguros and BBVA Securities are collectively referred to as the “BBVAPR Companies” or “BBVAPR.”

Basis of Presentation and Use of Estimates

The accounting and reporting policies of the Company conform with U.S. generally accepted accounting principles (“GAAP”) and to banking industry practices.

The unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information and should be read in conjunction with the audited consolidated financial statements in our annual report on Form 10-K for the year ended December 31, 2012 (“2012 Form 10-K”). All significant intercompany balances and transactions have been eliminated in consolidation. These unaudited statements are, in the opinion of management, a fair statement of the results for the periods reported and include all necessary adjustments, all of a normal recurring nature, for a fair statement of such results. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and related disclosures. These estimates are based on information available as of the date of the consolidated financial statements. While management makes its best judgment, actual amounts or results could differ from these estimates. Interim period results are not necessarily indicative of the results to be expected for the full year.

Certain reclassifications have been made to 2012 unaudited consolidated financial statements and notes to the financial statements to conform to the 2013 presentation.

Significant Accounting Policies

We provide a summary of our significant accounting policies in our 2012 Form 10-K under “Notes to Consolidated Financial Statements—Note 1—Summary of Significant Accounting Policies.” Below we describe recent accounting changes.

7

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income - In February 2013, the FASB issued an amendment to enhance current disclosure requirements of reclassifications out of accumulated other comprehensive income and their corresponding effect on net income to be presented, in one place, information about significant amounts reclassified and, in some cases, cross-reference to related footnote disclosures. Previously, this information was presented in different places throughout the financial statements. The amendments require disclosure of information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, they require the presentation, either on the face of the statement where net income is presented or in the notes, of significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, the Company is required to cross-reference to other disclosures required under GAAP that provide additional detail about those amounts. The amended guidance was effective for annual and interim reporting periods beginning on or after December 15, 2012, prospectively. Our adoption of the guidance is presented in “Note 13 – Stockholders’ Equity and Earnings per Share.”

Testing Indefinite-Lived Intangible Assets for Impairment - In July 2012, the FASB issued ASU No. 2012-02, Intangibles— 

Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. The ASU is intended to simplify the guidance for testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other than goodwill. Some examples of intangible assets subject to the guidance include indefinite-lived trademarks, licenses and distribution rights. The ASU allows companies to perform a qualitative assessment about the likelihood of impairment of an indefinite-lived intangible asset to determine whether further impairment testing is necessary, similar in approach to the goodwill impairment test. The ASU became effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Our adoption of the guidance had no effect on our unaudited consolidated financial statements.

Offsetting Financial Assets and Liabilities - In December 2011, the FASB issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. The ASU is intended to enhance current disclosure requirements on offsetting financial assets and liabilities. The new disclosures enable financial statement users to compare balance sheets prepared under GAAP and IFRS, which are subject to different offsetting models. The guidance requires disclosure of both gross and net information about instruments and transactions eligible for offset in the balance sheet as well as instruments and transactions subject to an agreement similar to a master netting arrangement. The disclosures are required irrespective of whether such instruments are presented gross or net on the balance sheet. In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarify that the scope of this guidance applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. The amended guidance was effective for annual and interim reporting periods beginning on or after January 1, 2013, with comparative retrospective disclosures required for all periods presented. We adopted the guidance in the first quarter of 2013. Our adoption of the guidance had no effect on our financial condition, results of operations or liquidity since it only impacts disclosures only. The new disclosures required by the amended guidance are included in “Note 17 – Offsetting Arrangements” hereto.

Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution— FASB ASU 2012-06, “Business Combinations” (Topic 805) was issued in October 2012. This update addresses the diversity in practice about how to interpret the terms “on the same basis” and “contractual limitations” when subsequently measuring an indemnification asset recognized in a government-assisted (Federal Deposit Insurance Corporation) acquisition of a financial institution that includes a loss-sharing agreement (indemnification agreement). When a reporting entity recognizes an indemnification asset as a result of a government-assisted acquisition of a financial institution and subsequently the cash flows expected to be collected on the indemnification asset change as a result of a change in cash flows expected to be collected on the assets subject to indemnification, the reporting entity should subsequently account for the change in the measurement of the indemnification asset on the same basis as the change in the assets subject to indemnification. Any amortization of changes in value should be limited to the contractual term of the indemnification agreement, that is, the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets. The amendments in this update are effective for fiscal years and interim periods within those years, beginning on or after December 15, 2012. The adoption of this guidance did not have a material effect on the unaudited consolidated financial statements, since the Company already followed the same basis approach.

8

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Future Application of Accounting Standards

Accounting for Financial Instruments—Credit Losses - In December 2012, the FASB issued a proposed ASU, Financial Instruments—Credit Losses. This proposed ASU, or exposure draft, was issued for public comment in order to allow stakeholders the opportunity to review the proposal and provide comments to the FASB, and does not constitute accounting guidance until a final ASU is issued. The exposure draft contains proposed guidance developed by the FASB with the goal of improving financial reporting about expected credit losses on loans, securities and other financial assets held by banks, financial institutions, and other public and private organizations. The exposure draft proposes a new accounting model intended to require earlier recognition of credit losses, while also providing additional transparency about credit risk. The FASB’s proposed model would utilize a single “expected credit loss” measurement objective for the recognition of credit losses, replacing the multiple existing impairment models in GAAP which generally require that a loss be “incurred” before it is recognized. The FASB’s proposed model represents a significant departure from existing GAAP, and may result in material changes to the Company’s accounting for financial instruments. The impact of the FASB’s final ASU to the Company’s financial statements will be assessed when it is issued. The exposure draft does not contain a proposed effective date. This would be included in the final ASU, when issued.

Other Potential Amendments to Current Accounting Standards - The FASB and International Accounting Standards Board, either jointly or separately, are currently working on several major projects, including amendments to existing accounting standards governing financial instruments, leases, and consolidation and investment companies. As part of the joint financial instruments project, the FASB has issued a proposed ASU that would result in significant changes to the guidance for recognition and measurement of financial instruments, in addition to the proposed ASU that would change the accounting for credit losses on financial instruments discussed above. The FASB is also working on a joint project that would require substantially all leases to be capitalized on the balance sheet. Additionally, the FASB has issued a proposal on principal-agent considerations that would change the way the Company needs to evaluate whether to consolidate Variable Interest Entities (“VIE”) and non-VIE partnerships. Furthermore, the FASB has issued a proposed ASU that would change the criteria used to determine whether an entity is subject to the accounting and reporting requirements of an investment company. The principal-agent consolidation proposal would require all VIEs, including those that are investment companies, to be evaluated for consolidation under the same requirements. All of these projects may have significant impacts for the Company. Upon completion of the standards, the Company will need to reevaluate its accounting and disclosures. However, due to ongoing deliberations of the standard setters, the Company is currently unable to determine the effect of future amendments or proposals.

9

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 2 – BUSINESS COMBINATIONS

BBVAPR Acquisition

On December 18, 2012, the Company purchased from BBVA, all of the outstanding common stock of each of BBVAPR Holding and BBVA Securities for an aggregate purchase price of $500 million. Immediately following the closing of the BBVAPR Acquisition, the Company merged BBVAPR Bank with and into Oriental Bank, with Oriental Bank continuing as the surviving entity.

The assets acquired and liabilities assumed as of December 18, 2012 were presented at their fair value. In many cases, the determination of these fair values required management to make estimates about discount rates, expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. The fair values initially assigned to the assets acquired and liabilities assumed were preliminary and subject to refinement for up to one year after the closing date of the acquisition as new information relative to closing date fair values became available. During the quarter ended June 30, 2013, the Company recorded retrospective adjustments to the preliminary estimated fair values of certain acquired loans, foreclosed real estate, deferred income taxes, and other assets acquired, to reflect new information obtained during the measurement period (as defined by ASC Topic 805), about facts and circumstances that existed as of the acquisition date that, if known, would have affected the acquisition-date fair value measurements. As detailed in the table below, the main adjustment occurred in the loans acquired. The adjustment resulted from in-depth reviews of the actual terms and amortization schedules. The original cash flows were revised to reflect the results of this review.

Net-assets acquired and their respective measurement period adjustments are reflected in the table below:

							Measurement
							Period		Fair Value
							Adjustments,			as
	Book Value		Fair Value		Fair Value		net		Remeasured
	December 18, 2012		Adjustments, net		December 18, 2012			June 30, 2013	June 30, 2013
	(In thousands)
Assets
Cash and cash equivalents	$	394,638	$	-	$	394,638	$	-	$	394,638
Investments		561,623		-		561,623		-		561,623
Loans		3,678,979		(118,913)		3,560,066		(12,798)		3,547,268
Accrued interest receivable		19,133		(18,252)		881		-		881
Foreclosed real estate		44,853		(8,896)		35,957		(1,932)		34,025
Deferred tax asset, net		35,327		50,005		85,332		5,300		90,632
Premises and equipment		37,412		29,067		66,479		-		66,479
Legacy goodwill		116,353		(116,353)		-		-		-
Core deposit intangible		-		8,473		8,473		-		8,473
Customer relationship intangible		-		5,060		5,060		-		5,060
Other assets		119,286		(7,663)		111,623		(2,936)		108,687
Total assets acquired		5,007,604		(177,472)		4,830,132		(12,366)		4,817,766
Liabilities
Deposits		3,472,951		21,489		3,494,440		-		3,494,440
Securities sold under agreements to repurchase		338,020		20,465		358,485		-		358,485
Other borrowings		348,624		1,108		349,732		-		349,732
Subordinated capital notes		117,000		(7,159)		109,841		-		109,841
Accrued expenses and other liabilities		80,392		(1,438)		78,954		-		78,954
Total liabilities assumed		4,356,987		34,465		4,391,452		-		4,391,452
Net assets acquired	$	650,617	$	(211,937)	$	438,680	$	(12,366)	$	426,314
Cash consideration	$	500,000	$	-	$	500,000	$	-	$	500,000
Goodwill					$	61,320	$	12,366	$	73,686

10

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Merger and Restructuring Charges

Merger and restructuring charges are recorded in the unaudited consolidated statement of operations and include incremental costs to integrate the operations of the Company and BBVAPR. These charges represent costs associated with these one-time activities and do not represent ongoing costs of the fully integrated combined organization.

The following table presents severance and employee-related charges, systems integrations and other merger-related charges in connection with the BBVAPR Acquisition for the quarter and six-month period ended June 30, 2013:

	Quarter Ended June 30, 2013		Six-Month Period Ended June 30, 2013
	(In thousands)		(In thousands)
Severance and employee-related charges	$	400	$	1,150
Systems integrations and related charges		2,231		3,177
Other-contract cancellation fee		2,643		6,481
Total merger and restructuring charges	$	5,274	$	10,808

Restructuring Reserve

Restructuring reserves are established by a charge to merger and restructuring charges, and the restructuring charges are included in the merger and restructuring charges table.

The following table presents the changes in restructuring reserves for the quarter and six-month period ended June 30, 2013:

	Quarter Ended June 30, 2013		Six-Month Period Ended June 30, 2013
	(In thousands)		(In thousands)
Balance at the beginning of the period	$	6,336	$	4,202
Merger and restructuring charges		5,274		10,808
Cash payments and other		(11,334)		(14,734)
Balance at the end of the period	$	276	$	276

Payments under merger and restructuring reserves associated with the BBVAPR Acquisition are expected to continue in 2013 and will be accounted under applicable accounting guidance to the cost being incurred.

11

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The FDIC-Assisted Acquisition and FDIC Shared-Loss Indemnification Asset

On April 30, 2010, the Bank acquired certain assets and assumed certain deposits and other liabilities in the FDIC-assisted acquisition of Eurobank. These assets acquired and liabilities assumed were recorded at fair value on the date of acquisition. As part of the Purchase and Assumption Agreement between the Bank and the FDIC (the “Purchase and Assumption Agreement”), the Bank and the FDIC entered into shared-loss agreements, whereby the FDIC covers a substantial portion of any losses on loans (and related unfunded loan commitments), foreclosed real estate and other repossessed properties.

The acquired loans, foreclosed real estate, and other repossessed property 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 indemnification asset represents the portion of estimated losses covered by the shared-loss agreements between the Bank and the FDIC.

The Bank agreed to make a true-up payment, also known as clawback liability, to the FDIC on the date that is 45 days following the last day (such day, the “True-Up Measurement Date”) of the final shared-loss month, or upon the final disposition of all covered assets under the shared-loss agreements in the event losses thereunder fail to reach expected levels. Under the shared-loss agreements, the Bank will pay to the FDIC 50% of the excess, if any, of: (i) 20% of the Intrinsic Loss Estimate of $906.0 million (or $181.2 million) (as determined by the FDIC) less (ii) the sum of: (A) 25% of the asset discount (per bid) (or $227.5 million); plus (B) 25% of the cumulative shared-loss payments (defined as the aggregate of all of the payments made or payable to the Bank minus the aggregate of all of the payments made or payable to the FDIC); plus (C) the sum of the period servicing amounts for every consecutive twelve-month period prior to and ending on the True-Up Measurement Date in respect of each of the shared-loss agreements during which the shared-loss provisions of the applicable shared-loss agreement is in effect (defined as the product of the simple average of the principal amount of shared-loss loans and shared-loss assets at the beginning and end of such period times 1%). The true-up payment represents an estimated liability of $16.9 million and $15.5 million, net of discount, as of June 30, 2013 and December 31, 2012, respectively. This estimated liability is accounted for as a reduction of the indemnification asset.

The FDIC shared-loss indemnification asset activity for the six-month periods ended June 30, 2013 and 2012 follows:

	Six-Month Period Ended June 30,
	2013		2012
	(In thousands)
Balance at beginning of period	$	286,799	$	392,367
Shared-loss agreements reimbursements from the FDIC		(18,696)		(39,729)
Increase (decrease) in expected credit losses to be       covered under shared-loss agreements, net		(2,015)		12,748
FDIC shared-loss expense, net		(32,836)		(10,410)
Incurred expenses to be reimbursed under shared-loss agreements		3,220		4,791
Balance at end of period	$	236,472	$	359,767

During the quarter ended June 30, 2013, the Company recorded $7.1 million in additional amortization of the FDIC indemnification asset from stepped up costs recoveries on certain construction and leasing pools.

12

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 3 – SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL AND INVESTMENTS

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, 2013 and December 31, 2012, money market instruments included as part of cash and cash equivalents amounted to $11.0 million and $13.2 million, respectively.

Securities Purchased Under Agreements to Resell

Securities purchased under agreements to resell consist of short-term investments and are carried at the amounts at which the assets will be subsequently resold as specified in the respective agreements. At December 31, 2012, securities purchased under agreements to resell amounted to $80.0 million. The fair value of the collateral securities held by the Company on these transactions as of December 31, 2012 was approximately $82.1 million. On June 30, 2013 the Company had no securities purchased under agreements to resell.

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, 2013 and December 31, 2012 were as follows:

	June 30, 2013
			Gross		Gross				Weighted
	Amortized		Unrealized		Unrealized		Fair		Average
	Cost		Gains		Losses		Value		Yield
	(In thousands)
Available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates	$	1,358,834	$	36,112	$	4,324	$	1,390,622		2.92%
GNMA certificates		10,590		604		13		11,180		4.88%
CMOs issued by US Government sponsored agencies		250,806		85		2,528		248,363		1.81%
Total mortgage-backed securities		1,620,230		36,801		6,865		1,650,165		2.76%
Investment securities
US Treasury securities		26,499		2		-		26,501		0.08%
Obligations of US Government sponsored agencies		15,078		35		-		15,113		1.23%
Obligations of Puerto Rico Government and             political subdivisions		120,989		-		1,294		119,695		4.42%
Other debt securities		24,539		216		-		24,755		3.45%
Total investment securities		187,105		253		1,294		186,064		3.42%
Total securities available for sale	$	1,807,335	$	37,054	$	8,159	$	1,836,229		2.83%

13

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	December 31, 2012
			Gross		Gross				Weighted
	Amortized		Unrealized		Unrealized		Fair		Average
	Cost		Gains		Losses		Value		Yield
	(In thousands)
Available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates	$	1,622,037	$	71,411	$	1	$	1,693,447		3.06%
GNMA certificates		14,177		995		8		15,164		4.89%
CMOs issued by US Government sponsored agencies		288,409		3,784		793		291,400		1.85%
Total mortgage-backed securities		1,924,623		76,190		802		2,000,011		2.89%
Investment securities
US treasury securities		26,498		-		2		26,496		0.71%
Obligations of US Government sponsored agencies		21,623		224		-		21,847		1.35%
Obligations of Puerto Rico Government and             political subdivisions		120,950		9		438		120,521		3.82%
Other debt securities		25,131		280		-		25,411		3.46%
Total investment securities		194,202		513		440		194,275		2.99%
Total securities available-for-sale	$	2,118,825	$	76,703	$	1,242	$	2,194,286		2.90%

14

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The amortized cost and fair value of the Company’s investment securities at June 30, 2013, 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, 2013
	Available-for-sale
	Amortized Cost		Fair Value
	(In thousands)
Mortgage-backed securities
Due after 5 to 10 years
FNMA and FHLMC certificates	$	32,779	$	33,345
Total due after 5 to 10 years		32,779		33,345
Due after 10 years
FNMA and FHLMC certificates		1,326,055		1,357,277
GNMA certificates		10,590		11,180
CMOs issued by US Government sponsored agencies		250,806		248,363
Total due after 10 years		1,587,451		1,616,820
Total  mortgage-backed securities		1,620,230		1,650,165
Investment securities
Due in less than one year
US Treasury securities		26,499		26,501
Other debt securities		20,000		20,058
Total due in less than one year		46,499		46,559
Due from 1 to 5 years
Obligations of Puerto Rico Government and political subdivisions		412		399
Total due from 1 to 5 years		412		399
Due after 5 to 10 years
Obligations of Puerto Rico Government and political subdivisions		11,425		11,053
Obligations of US Government and sponsored agencies		15,078		15,113
Total due after 5 to 10 years		26,503		26,166
Due after 10 years
Obligations of Puerto Rico Government and political subdivisions		109,152		108,243
Other debt securities		4,539		4,697
Total due after 10 years		113,691		112,940
Total  investment securities		187,105		186,064
Total securities available-for-sale	$	1,807,335	$	1,836,229

15

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The BBVAPR Acquisition and the related deleverage of the investment securities portfolio that the Company completed during the second half of 2012 reduced the interest rate risk profile of the Company.  During the six-month period ended June 30, 2013, the Company did not execute any sale of securities from its portfolio other than $92.4 million of available-for-sale GNMA certificates that were sold as part of its recurring mortgage loan origination and securitization activities. These sales produced a nominal gain during such period. During the six-month period ended June 30, 2012, there were certain sales of available-for-sale securities because the Company believed that gains could be realized and that there were good opportunities to invest the proceeds in other investment securities with attractive yields and terms that would allow the Company to continue protecting its net interest margin.

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.

For the six-month period ended June 30, 2012, the Company recorded a net gain on sale of securities of $19.3 million. The table below presents the gross realized gains by category for such period:

	Six-Month period Ended June 30, 2012
			Book Value
Description	Sale Price		at Sale		Gross Gains		Gross Losses
	(In thousands)
Sale of securities available-for-sale
Mortgage-backed securities and CMOs
FNMA and FHLMC certificates	$	367,971	$	349,400	$	18,581	$	-
GNMA certificates		39,484		39,483		1		-
CMOs issued by US Government sponsored agencies		19,725		18,372		1,353		-
Total mortgage-backed securities and CMOs		427,180		407,255		19,935		-
Investment securities
Obligations of U.S. Government sponsored agencies		80,000		80,000		-		-
Obligations of Puerto Rico Government and political subdivisions		35,882		36,478		31		628
Structured credit investments		10,530		10,530		-		-
Total investment securities		126,412		127,008		31		628
Total	$	553,592	$	534,263	$	19,966	$	628

16

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, 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:

	June 30, 2013
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	1,712		61		1,651
CMOs issued by US Government sponsored agencies		2,094		171		1,923
	$	3,806	$	232	$	3,574
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	20,588	$	1,233	$	19,355
CMOs issued by US Government sponsored agencies		203,524		2,357		201,167
FNMA and FHLMC certificates		219,983		4,324		215,659
GNMA certificates		206		13		193
	$	444,301	$	7,927	$	436,374
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	22,300	$	1,294	$	21,006
CMOs issued by US Government sponsored agencies		205,618		2,528		203,090
FNMA and FHLMC certificates		219,983		4,324		215,659
GNMA certificates		206		13		193
	$	448,107	$	8,159	$	439,948

17

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	December 31, 2012
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	1,673	$	12	$	1,661
CMOs issued by US Government sponsored agencies		2,194		178		2,016
	$	3,867	$	190	$	3,677
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	19,086	$	426	$	18,660
CMOs issued by US Government sponsored agencies		10,671		615		10,056
US Treasury Securities		11,498		2		11,496
GNMA certificates		84		8		76
FNMA and FHLMC certificates		68		1		67
	$	41,407	$	1,052	$	40,355
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	20,759	$	438	$	20,321
CMOs issued by US Government sponsored agencies		12,865		793		12,072
US Treasury Securities		11,498		2		11,496
GNMA certificates		84		8		76
FNMA and FHLMC certificates		68		1		67
	$	45,274	$	1,242	$	44,032

The Company conducts quarterly reviews to identify and evaluate each investment in an unrealized loss position for other-than-temporary impairment.  Any portion of a decline in value associated with credit loss is recognized in income with the remaining noncredit-related component recognized in other comprehensive income. A credit loss is determined by assessing whether the amortized cost basis of the security will be recovered by comparing the present value of cash flows expected to be collected from the security, discounted at the rate equal to the yield used to accrete current and prospective beneficial interest for the security. The shortfall of the present value of the cash flows expected to be collected in relation to the amortized cost basis is considered to be the “credit loss.” Other-than-temporary impairment analysis is based on estimates that depend on market conditions and are subject to further change over time. In addition, while the Company believes that the methodology used to value these exposures is reasonable, the methodology is subject to continuing refinement, including those made as a result of market developments. Consequently, it is reasonably possible that changes in estimates or conditions could result in the need to recognize additional other-than-temporary impairment charges in the future.

Securities in an unrealized loss position at June 30, 2013 are mainly composed of highly liquid securities that in most cases have a large and efficient secondary market. Valuations are performed on a monthly basis. The Company’s management believes that the unrealized losses of such securities at June 30, 2013 are temporary and are substantially related to market interest rate fluctuations and not to deterioration in the creditworthiness of the issuer or guarantor. At June 30, 2013, the Company does not have the intent to sell these investments in an unrealized loss position.

18

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. The Company presents loans subject to the loss sharing agreements as “covered loans” in the information below, and loans that are not subject to FDIC loss sharing agreements as “non-covered loans.” The risks of the Eurobank FDIC-assisted acquisition acquired loans are significantly different from those loans not covered under the FDIC loss sharing agreements because of the loss protection provided by the FDIC. Also, 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 segregated between originated 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).

For a summary of the accounting policy related to loans, interest recognition and allowance for loan and lease losses, please refer to the summary of significant accounting policies included in Note 1 of our 2012 Form 10-K under “Notes to Consolidated Financial Statements”.

The composition of the Company’s loan portfolio at June 30, 2013 and December 31, 2012 was as follows:

	June 30,		December 31,
	2013		2012
	(In thousands)
Loans not covered under shared-loss agreements with FDIC:
Originated and other loans and leases held for investment:
Mortgage	$	755,298	$	804,942
Commercial		702,074		353,930
Auto and leasing		233,092		50,720
Consumer		89,608		48,136
		1,780,072		1,257,728
Acquired loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		140,234		317,244
Commercial secured by real estate		14,519		29,215
Auto		373,587		457,894
Consumer		62,751		68,878
		591,091		873,231
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Commercial		747,077		942,267
Construction		140,060		196,692
Mortgage		781,389		810,135
Auto		462,691		554,938
Consumer		88,375		118,171
		2,219,592		2,622,203
		4,590,755		4,753,162
Deferred loan fees, net		(831)		(3,463)
Loans receivable		4,589,924		4,749,699
Allowance for loan and lease losses on non-covered loans		(46,625)		(39,921)
Loans receivable, net		4,543,299		4,709,778
Mortgage loans held-for-sale		78,350		64,145
Total loans not covered under shared-loss agreements with FDIC, net		4,621,649		4,773,923
Loans covered under shared-loss agreements with FDIC:
Loans secured by 1-4 family residential properties		123,507		128,811
Construction and development secured by 1-4 family residential properties		16,478		15,969
Commercial and other construction		275,489		289,070
Leasing		943		7,088
Consumer		6,955		8,493
Total loans covered under shared-loss agreements with FDIC		423,372		449,431
Allowance for loan and lease losses on covered loans		(53,992)		(54,124)
Total loans covered under shared-loss agreements with FDIC, net		369,380		395,307
Total loans, net	$	4,991,029	$	5,169,230

19

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 held for investment loan transactions are encompassed within four portfolio segments: mortgage, commercial, consumer, and auto and leasing.

The following table presents the aging of the recorded investment in gross originated and other loans held for investment as of June 30, 2013 and December 31, 2012 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, 2013
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	-	$	2,937	$	6,993	$	9,930	$	79,666	$	89,596	$	6
Years 2003 and 2004		-		5,413		3,429		8,842		117,754		126,596		-
Year 2005		-		2,136		1,431		3,567		65,196		68,763		-
Year 2006		-		3,369		2,838		6,207		87,614		93,821		-
Years 2007, 2008             and 2009		-		2,863		3,407		6,270		104,169		110,439		433
Years 2010, 2011, 2012             and 2013		-		391		2,115		2,506		96,270		98,776		76
		-		17,109		20,213		37,322		550,669		587,991		515
Non-traditional		-		1,520		2,212		3,732		42,695		46,427		-
Loss mitigation program		-		4,993		14,287		19,280		68,335		87,615		1,606
		-		23,622		36,712		60,334		661,699		722,033		2,121
Home equity secured personal loans		-		-		12		12		740		752		-
GNMA's buy-back option program		-		-		32,513		32,513		-		32,513		-
		-		23,622		69,237		92,859		662,439		755,298		2,121
Commercial
Commercial secured by real estate		11,033		1,381		12,694		25,108		386,236		411,344		-
Other commercial and industrial		324		66		753		1,143		289,587		290,730		-
		11,357		1,447		13,447		26,251		675,823		702,074		-
Consumer		670		165		370		1,205		88,403		89,608		-
Auto and leasing		8,826		2,075		1,096		11,997		221,095		233,092		-
Total	$	20,853	$	27,309	$	84,150	$	132,312	$	1,647,760	$	1,780,072	$	2,121

20

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	December 31, 2012
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional         (by origination year):
Up to the year 2002	$	6,906	$	2,116	$	11,363	$	20,385	$	80,883	$	101,268	$	-
Years 2003 and 2004		12,048		5,206		18,162		35,416		114,446		149,862		-
Year 2005		4,983		1,746		8,860		15,589		65,312		80,901		-
Year 2006		9,153		3,525		15,363		28,041		85,045		113,086		-
Years 2007, 2008             and 2009		2,632		1,682		8,965		13,279		108,358		121,637		-
Years 2010, 2011 and 2012             and 2012		632		769		1,162		2,563		64,084		66,647		-
		36,354		15,044		63,875		115,273		518,128		633,401		-
Non-traditional		2,850		1,067		11,160		15,077		42,742		57,819		-
Loss mitigation program		8,933		4,649		19,989		33,571		53,739		87,310
		48,137		20,760		95,024		163,921		614,609		778,530		-
Home equity secured personal loans		-		-		10		10		726		736		-
GNMA's buy-back option program		-		-		25,676		25,676		-		25,676		-
		48,137		20,760		120,710		189,607		615,335		804,942		-
Commercial
Commercial secured by real estate		9,062		271		15,335		24,668		226,606		251,274		-
Other commercial and industrial		345		189		2,378		2,912		99,744		102,656		-
		9,407		460		17,713		27,580		326,350		353,930		-
Consumer		747		92		409		1,248		46,888		48,136		-
Auto and leasing		251		129		131		511		50,209		50,720		-
Total	$	58,542	$	21,441	$	138,963	$	218,946	$	1,038,782	$	1,257,728	$	-

During the quarter ended June 30, 2013, the Company transferred $55.0 million of non-performing residential mortgage loans held-for-investment to held-for-sale at a fair value of $27.0 million. The difference between fair value and book value was recorded as charge-off to the mortgage portfolio. The provision for loan and lease losses during the quarter and six-month period ended June 30, 2013 increased to provide the coverage necessary under the allowance policy for the remaining mortgage loans, following the effects that the aforementioned reclassification had on the mortgage portfolio allowance level.

21

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

Credit cards, retail and commercial revolving lines of credits, floor plans and performing auto loans with FICO scores over 660 acquired at a premium as part of the BBVAPR Acquisition 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 BBVAPR Acquisition that were accounted for under the provisions of ASC 310-20, which had fully amortized their premium or discount, recorded at the date of acquisition, are removed from the acquired loan category at the end of the reporting period.

The following table presents the aging of the recorded investment in gross acquired loans accounted for under ASC 310-20 as of June 30, 2013 and December 31, 2012 by class of loans:

	June 30, 2013
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Commercial	$	291	$	134	$	493	$	918	$	139,316	$	140,234	$	-
Commercial secured by real estate		9		-		-		9		14,510		14,519		-
Auto		8,849		1,892		674		11,415		362,172		373,587		-
Consumer		1,767		7		1,069		2,843		59,908		62,751		-
Total	$	10,916	$	2,033	$	2,236	$	15,185	$	575,906	$	591,091	$	-

	December 31, 2012
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Commercial	$	715	$	76	$	193	$	984	$	316,260	$	317,244	$	-
Commercial secured by real estate		315		-		-		315		28,900		29,215		-
Auto		6,753		1,023		275		8,051		449,843		457,894		-
Consumer		982		-		1,095		2,077		66,801		68,878		-
Total	$	8,765	$	1,099	$	1,563	$	11,427	$	861,804	$	873,231	$	-

22

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)

Loans acquired as part of the BBVAPR Acquisition, 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 statement of financial condition at June 30, 2013 and December 31, 2012 is as follows:

	June 30, 2013	December 31, 2012
	(In thousands)
Contractual required payments receivable	$ 3,429,294	$ 3,954,484
Less: Non-accretable discount	713,641	741,872
Cash expected to be collected	2,715,653	3,212,612
Less: Accretable yield	496,061	590,409
Carrying amount	$ 2,219,592	$ 2,622,203

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

	Quarter Ended June 30, 2013			Six-Month Period Ended June 30, 2013
	(In thousands)
Accretable Yield Activity
Balance at beginning of period		$	542,741		$	590,409
Accretion			(54,427)			(102,095)
Transfer from non-accretable discount			7,747			7,747
Balance at end of period		$	496,061		$	496,061
	Quarter Ended June 30, 2013			Six-Month Period Ended June 30, 2013
	(In thousands)
Non-Accretable Discount Activity
Balance at beginning of period		$	733,126		$	741,872
Principal losses			(11,738)			(20,484)
Transfer to accretable yield			(7,747)			(7,747)
Balance at end of period		$	713,641		$	713,641

23

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Covered Loans

The carrying amount of covered loans at June 30, 2013 and December 31, 2012 is as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Contractual required payments receivable	$	782,763	$	874,994
Less: Non-accretable discount		192,259		237,555
Cash expected to be collected		590,504		637,439
Less: Accretable yield		167,132		188,008
Carrying amount, gross		423,372		449,431
Less: Allowance for covered loan and lease losses		53,992		54,124
Carrying amount, net	$	369,380	$	395,307

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, 2013 and 2012:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Accretable yield activity
Balance at beginning of period	$	174,107	$	174,878	$	188,008	$	188,822
Accretion		(23,999)		(20,342)		(44,228)		(41,884)
Transfer from non-accretable discount		17,024		22,712		23,352		30,310
Balance at end of period	$	167,132	$	177,248	$	167,132	$	177,248
	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Non-accretable discount activity
Balance at beginning of period	$	214,236	$	379,780	$	237,555	$	412,170
Principal losses		(4,953)		(42,664)		(21,944)		(67,456)
Transfer to accretable yield		(17,024)		(22,712)		(23,352)		(30,310)
Balance at end of period	$	192,259	$	314,404	$	192,259	$	314,404

24

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, 2013 and December 31, 2012:

	June 30,		December 31,
	2013		2012
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year):
Up to the year 2002	$	6,987	$	11,362
Years 2003 and 2004		3,465		18,162
Year 2005		1,481		8,859
Year 2006		2,875		15,363
Years 2007, 2008 and 2009		3,580		8,967
Years 2010, 2011, 2012 and 2013		3,988		1,162
		22,376		63,875
Non-traditional		2,287		11,160
Loss mitigation program		28,450		39,957
		53,113		114,992
Home equity secured personal loans		12		10
		53,125		115,002
Commercial
Commercial secured by real estate		29,491		26,517
Other commercial and industrial		2,939		2,989
		32,430		29,506
Consumer		370		442
Auto and leasing		1,096		131
Acquired loans accounted under ASC 310-20
Commercial		493		193
Auto		674		275
Consumer		1,069		1,095
		2,236		1,563
Total non-accrual loans	$	89,257	$	146,644

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.

These loans do not include certain non-performing residential mortgage loans with a net book value of $55.0 million reclassified during the quarter ended June 30, 2013 to the loan held-for-sale category. Without this re-classification to loans held-for-sale, non-accruing loan balances would have been relatively consistent between December 31, 2012 and June 30, 2013.

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

At June 30, 2013 and December 31, 2012, loans whose terms have been extended and which are classified as troubled-debt restructurings that are not included in non-accrual loans amounted to $55.7 million and $52.0 million, respectively.

25

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 5 - ALLOWANCE FOR LOAN AND LEASE LOSSES

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.

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, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Balance at beginning of period	$	22,889	$	16,314	$	1,313	$	1,741	$	77	$	42,334
Charge-offs		(29,120)		(2,886)		(323)		(709)		-		(33,038)
Recoveries		-		234		43		209		-		486
Provision for non-covered             loan and lease losses		27,606		3,961		1,309		2,400		643		35,919
Balance at end of period	$	21,375	$	17,623	$	2,342	$	3,641	$	720	$	45,701

	Six-Month Period Ended June 30, 2013
							Auto and
	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Balance at beginning of period	$	21,092	$	17,072	$	856	$	533	$	368	$	39,921
Charge-offs		(31,707)		(3,444)		(569)		(800)		-		(36,520)
Recoveries		-		262		107		216		-		585
Provision for non-covered             loan and lease losses		31,990		3,733		1,948		3,692		352		41,715
Balance at end of period	$	21,375	$	17,623	$	2,342	$	3,641	$	720	$	45,701

26

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	June 30, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Ending allowance balance attributable       to loans:
Individually evaluated for impairment	$	8,879	$	5,795	$	-	$	-	$	-	$	14,674
Collectively evaluated for impairment		12,496		11,828		2,342		3,641		720		31,027
Total ending allowance balance	$	21,375	$	17,623	$	2,342	$	3,641	$	720	$	45,701
Loans:
Individually evaluated for impairment	$	81,849	$	43,831	$	-	$	-	$	-	$	125,680
Collectively evaluated for impairment		673,449		658,244		89,608		233,091		-		1,654,392
Total ending loan balance	$	755,298	$	702,075	$	89,608	$	233,091	$	-	$	1,780,072

27

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Quarter Ended June 30, 2012
	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Balance at beginning of period	$	18,967	$	15,045	$	1,328	$	510	$	1,511	$	37,361
Charge-offs		(1,948)		(1,721)		(184)		-		-		(3,853)
Recoveries		-		34		56		4		-		94
Provision for (recapture of) non-covered             loan and lease losses		2,769		2,620		(202)		(317)		(1,070)		3,800
Balance at end of period	$	19,788	$	15,978	$	998	$	197	$	441	$	37,402

	Six-Month Period Ended June 30, 2012
	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Balance at beginning of period	$	21,652	$	12,548	$	1,423	$	845	$	542	$	37,010
Charge-offs		(2,869)		(3,358)		(366)		(31)		-		(6,624)
Recoveries		-		101		107		8		-		216
Provision for (recapture of) non-covered             loan and lease losses		1,005		6,687		(166)		(625)		(101)		6,800
Balance at end of period	$	19,788	$	15,978	$	998	$	197	$	441	$	37,402

	December 31, 2012
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	5,334	$	4,121	$	-	$	-	$	-	$	9,455
Collectively evaluated for impairment		15,758		12,951		856		533		368		30,466
Total ending allowance balance	$	21,092	$	17,072	$	856	$	533	$	368	$	39,921
Loans:
Individually evaluated for impairment	$	74,783	$	46,199	$	-	$	-	$	-	$	120,982
Collectively evaluated for impairment		730,159		307,731		48,136		50,720		-		1,136,746
Total ending loans balance	$	804,942	$	353,930	$	48,136	$	50,720	$	-	$	1,257,728

28

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

The following tables present the activity in our allowance for loan losses and related recorded investment of the associated loans in our non-covered acquired loan portfolio, excluding loans accounted for under ASC 310-30, for the quarter and six-month period ended June 30, 2013:

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

	June 30, 2013
	Commercial		Consumer		Auto		Unallocated		Total
Allowance for loan and lease losses:
Ending allowance balance attributable       to loans:
Collectively evaluated for impairment		924		-		-		-		924
Total ending allowance balance	$	924	$	-	$	-	$	-	$	924
Loans:
Collectively evaluated for impairment		154,753		62,751		373,587		-		591,091
Total ending loan balance	$	154,753	$	62,751	$	373,587	$	-	$	591,091

29

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 $43.8 million and $46.2 million at June 30, 2013 and December 31, 2012, respectively.  The impaired commercial loans were measured based on the fair value of collateral or the present value of cash flows method, including those identified as troubled-debt restructurings. The valuation allowance for impaired commercial loans amounted to approximately $5.8 million and $4.1 million at June 30, 2013 and December 31, 2012, respectively. The total investment in impaired mortgage loans was $81.8 million and $74.8 million at June 30, 2013 and December 31, 2012, 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 $8.9 million and $5.3 million at June 30, 2013 and December 31, 2012, respectively.

The Company’s recorded investment in commercial and mortgage loans that were individually evaluated for impairment, excluding loans accounted for under ASC 310-30, and the related allowance for loan and lease losses at June 30, 2013 and December 31, 2012 are as follows:

Originated and Other Loans and Leases Held for Investment

	June 30, 2013
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance:
Commercial	$	22,168	$	19,276	$	5,795	30%
Residential troubled-debt restructuring		85,271		81,849		8,879	11%
Impaired loans with no specific allowance:
Commercial		31,334		24,555		N/A	N/A
Total investment in impaired loans	$	138,773	$	125,680	$	14,674	12%

	December 31, 2012
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance
Commercial	$	16,666	$	14,570	$	4,121	28%
Residential troubled-debt restructuring		76,859		74,783		5,334	7%
Impaired loans with no specific allowance
Commercial		36,293		31,629		N/A	N/A
Total investment in impaired loans	$	129,818	$	120,982	$	9,455	8%
Acquired Loans Accounted for under ASC-310-20 (Loans with revolving feature and/or acquired at a premium)
	June 30, 2013
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial		36,293		31,629		N/A	N/A
Total investment in impaired loans	$	36,293	$	31,629	$	-	0%

30

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents the interest recognized in 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, 2013 and 2012:

	Quarter Ended June 30,
	2013				2012
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)
Impaired loans with specific allowance
Commercial	$	255	$	17,049	$	132	$	16,105
Residential troubled-debt restructuring		682		83,081		461		62,548
Impaired loans with no specific allowance
Commercial		226		23,304		49		25,031
Total interest income from impaired loans	$	1,163	$	123,434	$	642	$	103,684

	Six-Month Period Ended June 30,
	2013				2012
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
Impaired loans with specific allowance
Commercial	$	322	$	17,789	$	264	$	20,516
Residential troubled-debt restructuring		1,273		80,914		874		59,466
Impaired loans with no specific allowance
Commercial		364		25,304		104		21,864
Total interest income from impaired loans	$	1,959	$	124,007	$	1,242	$	101,846

31

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Modifications

The following table presents the troubled-debt restructurings during the quarters and six-month periods ended June 30, 2013 and 2012:

	Quarter Ended June 30, 2013
	Number of contracts	Pre Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage loans	42	$	5,372	6.47%	355	$	5,715	4.26%	420
Commercial loans	2		1,842	8.99%	87		1,842	4.00%	66
Consumer loans	2		18	13.67%	41		18	13.67%	60
	Six-Month Period Ended June 30, 2013
	Number of contracts	Pre Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage loans	86	$	10,555	6.56%	342	$	11,288	4.59%	417
Commercial loans	2		1,842	8.99%	87		1,842	4.00%	66
Consumer loans	2		18	13.67%	41		18	13.67%	60
	Quarter Ended June 30, 2012
	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 loans	45	$	6,028	6.52%	290	$	6,380	4.95%	378
Commercial loans	3		3,698	6.25%	65		3,968	6.08%	71
	Six-Month Period Ended June 30, 2012
	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 loans	103	$	15,473	6.50%	313	$	16,419	4.96%	393
Commercial loans	6		5,600	5.80%	49		5,407	6.22%	65

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 twelve-month periods ended June 30, 2013 and 2012:

	Twelve-Month Period Ended June 30,
	2013			2012
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Mortgage loans	48	$	6,414	32	$	4,110
Consumer	2	$	29	-	$	-

Credit Quality Indicators

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

The Company uses the following definitions for risk ratings:

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 affected 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, 2013 and December 31, 2012, and based on the most recent analysis performed, the risk category of gross non-covered originated and acquired loans accounted for under ASC 310-20 subject to risk rating by class of loans is as follows:

	June 30, 2013
	Risk Ratings
											Individually
	Balance				Special						Measured for
	Outstanding		Pass		Mention		Substandard		Doubtful		Impairment
	(In thousands)
Commercial - originated and other loans held for investment
Commercial secured         by real estate	$	412,958	$	346,115	$	29,355	$	1,293	$	282	$	35,913
Other commercial         and industrial		289,117		278,319		2,763		118		-		7,918
		702,075		624,434		32,118		1,411		282		43,831
Commercial - acquired loans       (under ASC 310-20)
Commercial secured         by real estate		14,519		14,031		245		244		-		-
Other commercial         and industrial		140,234		137,786		727		1,721		-		-
		154,753		151,817		972		1,965		-		-
Total	$	856,828	$	776,251	$	33,090	$	3,376	$	282	$	43,831

	December 31, 2012
	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	$	251,274	$	183,033	$	23,928	$	2,127	$	99	$	42,087
Other commercial         and industrial		102,656		85,806		8,569		4,169		-		4,112
		353,930		268,839		32,497		6,296		99		46,199
Commercial - acquired loans       (under ASC 310-20)
Construction and commercial         real estate		20,337		19,701		245		391		-		-
Commercial and industrial		317,632		315,085		213		2,334		-		-
		337,969		334,786		458		2,725		-		-
Total	$	691,899	$	603,625	$	32,955	$	9,021	$	99	$	46,199

34

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, 2013 and December 31, 2012, and based on the most recent analysis performed, the risk category of non-covered gross originated loans and acquired loans accounted for under ASC 310-20 not subject to risk rating by class of loans is as follows:

June 30, 2013
Delinquency
	Individually
Balance	Measured for

Outstanding	0-29 days	30-59 days	60-89 days	90-119 days	120-364 days	365+ days	Impairment
(In thousands)

Originated and other loans and leases held for investment
Mortgage
Traditional         (by origination year)
Up to the year 2002	$	89,596	$	84,184	$	-	$	2,937	$	367	$	87	$	1,719	$	302
Years 2003 and 2004		126,596		117,665		-		5,413		1,319		737		1,373		89
Year 2005		68,763		65,026		-		2,136		663		267		502		169
Year 2006		93,821		87,259		-		3,369		968		440		1,273		512
Years 2007, 2008             and 2009		110,439		104,041		-		2,782		342		2,199		676		399
Years 2010, 2011,             2012 and 2013		98,776		94,271		-		391		951		800		365		1,998
		587,991		552,446		-		17,028		4,610		4,530		5,908		3,469
Non-traditional		46,427		42,695		-		1,520		807		160		1,152		93
Loss mitigation program		87,615		7,980		-		98		47		234		969		78,287
		722,033		603,121		-		18,646		5,464		4,924		8,029		81,849
Home equity secured         personal loans		752		740		-		-		-		-		12		-
GNMA's buy-back option program		32,513		-		-		-		5,782		15,775		10,956		-
		755,298		603,861		-		18,646		11,246		20,699		18,997		81,849
Consumer		89,608		88,218		660		156		167		199		-		208
Auto and Leasing		233,092		221,095		8,826		2,075		759		337		-		-
		1,077,998		913,174		9,486		20,877		12,172		21,235		18,997		82,057
Acquired loans (under ASC 310-20)
Auto		373,588		362,173		8,849		1,892		495		179		-		-
Consumer		62,751		59,908		1,767		7		1,054		15		-		-
		436,339		422,081		10,616		1,899		1,549		194		-		-
Total	$	1,514,337	$	1,335,255	$	20,102	$	22,776	$	13,721	$	21,429	$	18,997	$	82,057

35

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2012
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	$	101,268	$	80,715	$	6,907	$	2,116	$	886	$	3,720	$	6,442	$	482
Years 2003 and 2004		149,862		114,341		12,048		5,206		2,082		3,994		11,533		658
Year 2005		80,900		65,245		4,983		1,746		1,202		1,846		5,727		151
Year 2006		113,086		84,926		9,012		3,525		1,530		5,103		8,695		295
Years 2007, 2008             and 2009		121,639		108,357		2,632		1,682		641		2,532		5,732		63
Years 2010, 2011             and 2012		66,646		64,084		632		769		249		452		460		-
		633,401		517,668		36,214		15,044		6,590		17,647		38,589		1,649
Non-traditional		57,819		42,742		2,850		1,067		455		2,287		8,418		-
Loss mitigation program		87,310		9,595		606		128		102		253		3,492		73,134
		778,530		570,005		39,670		16,239		7,147		20,187		50,499		74,783
Home equity secured         personal loans		736		726		-		-		-		-		10		-
GNMA's buy back         option program		25,676		-		-		-		6,064		10,659		8,953		-
		804,942		570,731		39,670		16,239		13,211		30,846		59,462		74,783
Consumer		48,136		46,888		747		92		188		218		3		-
Auto and leasing		50,720		50,209		251		129		46		85		-		-
		903,798		667,828		40,668		16,460		13,445		31,149		59,465		74,783
Acquired loans (under ASC 310-20)
Mortgage		1,591		1,070								521
Auto		457,894		449,843		6,753		1,023		264		11		-		-
Consumer		68,878		66,801		982		-		1,089		4		2		-
		528,363		517,714		7,735		1,023		1,353		536		2		-
Total	$	1,432,161	$	1,185,542	$	48,403	$	17,483	$	14,798	$	31,685	$	59,467	$	74,783

The reduction in mortgage loans over 90 days past due from December 31, 2012 is due to the reclassification of certain non-performing residential mortgage loans originated before 2010, ,with the a net book value of $55.0 million to the loan held-for-sale category.

Non-covered Acquired Loans Accounted under ASC 310-30

Loans acquired in the BBVAPR Acquisition accounted for under ASC 310-30 were recognized at fair value as of December 18, 2012, which included the impact of expected credit losses, and therefore, no allowance for credit losses was recorded at the acquisition date. To the extent credit deterioration occurs after the date of acquisition, the Company would record an allowance for loan and lease losses. Management determined that there was no need to record an allowance for loan and lease losses on loans acquired in the BBVAPR Acquisition accounted for under ASC 310-30 as of June 30, 2013 and December 31, 2012.

36

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, 2013 and 2012 were as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Balance at beginning of the period	$	52,974	$	56,437	$	54,124	$	37,256
Provision for covered loan and lease losses, net		1,210		1,467		1,882		8,624
FDIC shared-loss portion of provision for (recapture of)
covered loan and lease losses, net		(192)		724		(2,014)		12,748
Balance at end of the period	$	53,992	$	58,628	$	53,992	$	58,628

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.

Provision for covered loans and lease losses for the quarter and six-month period ended June 30, 2013 was $1.2 million and $1.9 million, respectively, reflecting the Company’s quarterly 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. During the quarter ended June 30, 2013, a commercial real estate loan pool underperformed, requiring additional allowance for the quarter. The six-month period ended June 30, 2013, is mainly affected by the aforementioned commercial real estate pool together with two pools of non-performing residential mortgage loans pools. The six-month period ended June 30, 2013 was benefited by the reversal of the allowance of pools of commercial and industrial loans and pools of commercial loans secured by real estate.

37

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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, 2013 and December 31, 2012 are as follows:

	June 30, 2013
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired covered loan pools with specific allowance
Loans secured by 1-4 family residential properties	$	51,613	$	36,483	$	7,072	19%
Construction and development secured by 1-4 family             residential properties		66,024		16,170		6,741	42%
Commercial and other construction		242,054		75,941		39,504	52%
Consumer		12,790		6,818		675	10%
Total investment in impaired covered loan pools	$	372,481	$	135,412	$	53,992	40%

	December 31, 2012
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired covered loan pools with specific allowance
Loans secured by 1-4 family residential properties	$	45,208	$	29,482	$	4,986	17%
Construction and development secured by 1-4 family             residential properties		68,255		15,185		6,137	40%
Commercial and other construction		252,373		121,237		42,323	35%
Consumer		14,494		8,493		678	8%
Total investment in impaired covered loan pools	$	380,330	$	174,397	$	54,124	31%

NOTE 6 —  PREMISES AND EQUIPMENT

Premises and equipment at June 30, 2013 and December 31, 2012 are stated at cost less accumulated depreciation and amortization as follows:

	Useful Life	June 30,		December 31,
	(Years)	2013		2012
		(In thousands)
Land	—	$	5,677	$	2,876
Buildings and improvements	40		63,673		63,133
Leasehold improvements	5 — 10		23,637		23,602
Furniture and fixtures	3 — 7		11,685		10,441
Information technology and other	3 — 7		23,271		20,874
			127,943		120,926
Less: accumulated depreciation and amortization			(43,642)		(35,929)
		$	84,301	$	84,997

Depreciation and amortization of premises and equipment totaled $3.0 million and $6.1 million in the quarter and six-month period ended June 30, 2013, respectively, and $1.2 million and $2.4 million in the quarter and six-month period ended June 30, 2012, respectively. These are included in the unaudited consolidated statements of operations as part of occupancy and equipment expenses.

38

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 7 —  DERIVATIVE ACTIVITIES

During the quarter and six-month period ended June 30, 2013, gains of $1.6 million and $1.3 million, respectively, were recognized and reflected as “Derivative Activities” in the unaudited consolidated statements of operations, which were mainly related to the mortgage hedging activities. During the quarter and six-month period ended June 30, 2012, there were no significant transactions impacting the Company’s operations reflected as “Derivative Activities” in the unaudited consolidated statements of operations.

The following table details “Derivative Assets” and “Derivative Liabilities” as reflected in the unaudited consolidated statements of financial condition at June 30, 2013 and December 31, 2012:

	June 30,		December 31,
	2013		2012
	(In thousands)
Derivative assets:
Options tied to S&P 500 Index	$	16,020	$	13,233
Interest rate swaps not designated as hedges		3,245		8,426
Interest rate caps		270		230
Other		120		-
	$	19,655	$	21,889
Derivative liabilities:
Interest rate swaps designated as cash flow hedges	$	13,187	$	17,665
Interest rate swaps not designated as hedges		3,244		8,365
Interest rate caps		270		230
	$	16,701	$	26,260

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 borrowings transactions and are properly documented as such, and therefore, qualify for cash flow hedge accounting. Any gain or loss associated with the effective portion of our cash flow hedges was recognized in other comprehensive income and is subsequently reclassified into earnings in the period during which the hedged forecasted transactions affect earnings.  Changes in the fair value of these derivatives are recorded in accumulated other comprehensive income to the extent there is no significant ineffectiveness in the cash flow hedging relationships. Currently, the Company does not expect to reclassify any amount included in other comprehensive income related to these interest rate swaps to earnings in the next twelve months.

The following table shows a summary of these swaps and their terms at June 30, 2013:

	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
	$	225,000

39

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

An unrealized loss of $13.2 million was recognized in accumulated other comprehensive income related to the valuation of these swaps at June 30, 2013, and the related liability is being reflected in the accompanying unaudited consolidated statements of financial condition. 

At June 30, 2013 and December 31, 2012, interest rate swaps not designated as hedging instruments that were offered to clients represented an asset of $3.2  million and $8.4 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, 2013 and December 31, 2012, interest rate swaps not designated as hedging instruments that are the mirror-images of the derivatives offered to clients represented a liability of $3.2 million and $8.4 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, 2013:

	Notional		Fixed	Variable	Settlement	Maturity
Type	Amount		Rate	Rate Index	Date	Date
	(In thousands)
Interest Rate Swaps - Derivatives Offered to Clients	$	4,232	5.1300%	1-Month Libor	07/03/06	07/03/16
		12,500	5.5050%	1-Month Libor	04/11/09	04/11/19
		1,150	5.1500%	3-Month Libor	10/24/08	10/24/13
	$	17,882
Interest Rate Swaps - Mirror Image Derivatives	$	4,232	5.1300%	1-Month Libor	07/03/06	07/03/16
		12,500	5.5050%	1-Month Libor	04/11/09	04/11/19
		1,150	4.9550%	3-Month Libor	10/24/08	10/24/13
	$	17,882

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, 2013 and December 31, 2012, the purchased options used to manage exposure to the S&P 500 Index on stock indexed deposits represented an asset of $16.0 million (notional amount of $49.1 million) and $13.2 million (notional amount of $66.6 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 $15.3 million (notional amount of $42.9 million) and $12.7 million (notional amount of $62.3 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; therefore, they are marked to market through earnings. The outstanding total notional amount of interest rate caps was $94.0 million June 30, 2013 and December 31, 2012. At June 30, 2013, the interest rate caps sold to clients represented a liability of $270 thousand and were included as part of derivative liabilities in the unaudited consolidated statements of financial condition.  At June 30, 2013, the interest rate caps purchased as mirror-images represented an asset of $270 thousand and were included as part of derivative assets in the unaudited consolidated statements of financial condition.

40

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 8 —  ACCRUED INTEREST RECEIVABLE AND OTHER ASSETS

Accrued interest receivable at June 30, 2013 and December 31, 2012 consists of the following:

	June 30,		December 31,
	2013		2012
	(In thousands)
Non-covered loans	$	11,459	$	10,533
Investments		6,049		7,021
	$	17,508	$	17,554

Other assets at June 30, 2013 and December 31, 2012 consist of the following:

	June 30,		December 31,
	2013		2012
	(In thousands)
Prepaid FDIC insurance	$	-	$	6,451
Other prepaid expenses		23,568		19,674
Servicing advances		-		7,976
Mortgage tax credits		8,706		8,706
Core deposit and customer relationship intangibles		13,201		14,490
Investment in Statutory Trust		1,086		1,086
Other repossessed assets		8,921		6,084
Accounts receivable and other assets		48,980		59,175
	$	104,462	$	123,642

On November 12, 2009, the FDIC adopted a final rule requiring insured depository institutions to prepay on December 31, 2009 their estimated quarterly risk-based assessments for the fourth quarter of 2009, and for all of 2010, 2011, and 2012, along with each institution’s risk-based deposit insurance assessment for the third quarter of 2009. The prepayment balance of the assessment amounted to $6.5 million at December 31, 2012. Pursuant to guidelines issued by the FDIC, the assessment due for the first quarter of 2013 paid on June 28, 2013 was offset by the amount of the credit for prepaid assessments.

Other prepaid expenses amounting to $23.6 million and $19.7 million at June 30, 2013 and December 31, 2012, respectively, include prepaid municipal, property and income taxes aggregating to $17.1 million and $12.0 million, respectively.

Servicing advances amounting to $8.0 million at December 31, 2012, represent the advances made to Bayview Loan Servicing, LLC in order to service some of the loans acquired in the FDIC-assisted acquisition of Eurobank. This servicing agreement was terminated effective May 31, 2013.

At June 30, 2013 and December 31, 2012, tax credits for the Company amounted $8.7 million.  Mortgage loan tax credits acquired as part of the BBVAPR Acquisition amounted to $6.3 million and $7.4 million at June 30, 2013 and December 31, 2012, respectively. These tax credits do not have an expiration date.

As part of the FDIC-assisted acquisition of Eurobank and the recent BBVAPR Acquisition, the Company recorded a core deposit intangible representing the value of checking and savings deposits acquired. At June 30, 2013 and December 31, 2012, this core deposit intangible amounted to $8.6 million and $9.5 million, respectively. In addition, as part of the BBVAPR Acquisition on December 18, 2012, the Company recorded a customer relationship intangible amounting to $5.0 million representing the value of customer relationships acquired in the broker-dealer and insurance subsidiaries as of December 31, 2012.  At June 30, 2013, this customer relationship intangible amounted to $4.6 million.

41

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Other repossessed assets totaled $8.9 million and $6.1 million at June 30, 2013 and December 31, 2012, respectively. Repossessed auto loans acquired as part of the BBVAPR Acquisition amounted to $8.6 million and $5.9 million at June 30, 2013 and December 31, 2012, respectively.

NOTE 9 —  DEPOSITS AND RELATED INTEREST

Total deposits as of June 30, 2013 and December 31, 2012 consist of the following:

	June 30, 2013		December 31, 2012
	(In thousands)
Non-interest bearing demand deposits	$	872,806	$	799,667
Interest-bearing savings and demand deposits		2,331,589		2,282,305
Individual retirement accounts		352,637		376,611
Retail certificates of deposit		688,877		699,983
Institutional certificates of deposits		645,037		602,828
Total core deposits		4,890,946		4,761,394
Brokered deposits		774,092		928,165
Total deposits	$	5,665,038	$	5,689,559

The weighted average interest rate of the Company’s deposits was 0.73% at June 30, 2013 and  1.33% at December 31, 2012, inclusive of non-interest bearing deposits of $934.7 million and $799.7 million, respectively.  Interest expense for the quarters and the six-month periods ended June 30, 2013 and 2012 was as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Demand and savings deposits	$	5,435	$	2,848	$	11,397	$	6,024
Certificates of deposit		4,538		5,037		9,054		10,984
	$	9,973	$	7,885	$	20,451	$	17,008

At June 30, 2013 and December 31, 2012, demand and interest-bearing deposits and certificates of deposit included deposits of the Puerto Rico Cash & Money Market Fund Inc., which amounted to $93.3 million and $101.5 million, respectively, with a weighted average rate of 0.77% and 0.77%, and were collateralized with investment securities with a fair value of $68.3 million and $80.3 million, respectively.

At June 30, 2013 and December 31, 2012, time deposits in denominations of $100 thousand or higher, excluding accrued interest and unamortized discounts, amounted to $1.18 billion and $1.87 billion, including public fund time deposits from various Puerto Rico government municipalities, agencies, and corporations of $170.5 million and $78.3 million, respectively, at a weighted average rate of 0.48% at June 30, 2013 and 0.72% at December 31, 2012.

At June 30, 2013 and December 31, 2012, public fund deposits from various Puerto Rico government agencies were collateralized with investment securities with a fair value of $98.7 million and $114.6 million, respectively, and with commercial loans amounting to $464.1 million at June 30, 2013 and $485.8 million at December 31, 2012.

42

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Excluding equity indexed options in the amount of $15.3 million, which are used by the Company to manage its exposure to the S&P 500 Index, and also excluding accrued interest of $3.3 million and unamortized deposit discounts in the amount of $9.0 million, the scheduled maturities of certificates of deposit at June 30, 2013 are as follows:

	June 30, 2013
	(In thousands)
Within one year:
Three (3) months or less	$	492,297
Over 3 months through 1 year		759,405
		1,251,702
Over 1 through 2 years		634,600
Over 2 through 3 years		258,143
Over 3 through 4 years		143,128
Over 4 through 5 years		61,763
	$	2,349,336

The aggregate amount of overdraft in demand deposit accounts that were reclassified to loans amounted to $1.0 million and $2.8 million as of June 30, 2013 and December 31, 2012, respectively.

NOTE 10 —  BORROWINGS

Short term borrowings

At June 30, 2013, no short term borrowings were outstanding, compared to December 31, 2012 when these totaled $92.2 million and mainly consisted of unsecured fixed rate borrowings with a weighted average rate of 0.30%.

Securities Sold under Agreements to Repurchase

At June 30, 2013, 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 the agreements.

At June 30, 2013 and December 31, 2012, securities sold under agreements to repurchase (classified by counterparty), excluding accrued interest in the amount of $2.3 million at both dates, were as follows:

	June 30,				December 31,
	2013				2012
			Fair Value of				Fair Value of
	Borrowing		Underlying		Borrowing		Underlying
	Balance		Collateral		Balance		Collateral
	(In thousands)
UBS Financial Services Inc.	$	500,000	$	597,126	$	500,000	$	616,751
JP Morgan Chase Bank NA		255,000		273,783		412,837		443,436
Credit Suisse Securities (USA) LLC		255,000		270,180		255,000		269,943
Deutsche Bank		255,000		271,702		255,000		273,288
Citigroup Global Markets Inc.		46,573		52,473		150,000		162,652
Barclays Bank		-		-		68,650		77,521
Wells Fargo		-		-		51,444		54,943
Total	$	1,311,573	$	1,465,264	$	1,692,931	$	1,898,534

43

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table shows a summary of the Company’s repurchase agreements and their terms, excluding accrued interest in the amount of $2.3 million, at June 30, 2013:

			Weighted-
	Borrowing		Average		Maturity
Year of Maturity	Balance		Coupon	Settlement Date	Date
	(In thousands)
2013	$	46,573	0.420%	6/25/2013	7/8/2013
2014		255,000	0.500%	12/13/2012	1/7/2014
		255,000	0.550%	12/10/2012	6/13/2014
		85,000	0.675%	12/3/2012	12/3/2014
		170,000	0.675%	12/6/2012	12/8/2014
		765,000
2017		500,000	4.665%	3/2/2007	3/2/2017
	$	1,311,573	2.129%

None of the structured repurchase agreements referred to above with maturity dates up to the date of this report were renewed.

Advances from the Federal Home Loan Bank

Advances are received from the FHLB 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, 2013 and December 31, 2012, these advances were secured by mortgage and commercial loans amounting to $1.3 billion both periods. Also, at June 30, 2013, the Company had an additional borrowing capacity with the FHLB of $714.4 million. At June 30, 2013 and December 31, 2012, the weighted average remaining maturity of FHLB’s advances was 11.7 months and 3.5 months, respectively. The original terms of these advances range between one month and five years, and the FHLB does not have the right to exercise put options at par on any advances outstanding as of June 30, 2013.The following table shows a summary of these advances and their terms, excluding accrued interest in the amount of $294 thousand, at June 30, 2013:

			Weighted-
		Borrowing	Average		Maturity
Year of Maturity		Balance	Coupon	Settlement Date	Date
(In thousands)
2013	$	25,000	0.360%	6/4/2013	7/5/2013
		50,000	0.360%	6/10/2013	7/10/2013
		100,000	0.390%	6/17/2013	7/16/2013
		25,000	0.400%	6/24/2013	7/24/2013
		25,000	0.410%	6/28/2013	7/30/2013
		225,000
2017		4,844	1.240%	4/3/2012	4/3/2017
2018		30,000	2.187%	1/16/2013	1/16/2018
		25,000	2.177%	1/16/2013	1/16/2018
		55,000
	$	284,844	0.745%

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.

44

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Subordinated Capital Notes

Subordinated capital notes amounted to $99.0 million and $146.0 million at June 30, 2013 and December 31, 2012, respectively.

In August 2003, the Statutory Trust II, a special purpose entity of the Company, was formed for the purpose of issuing trust redeemable preferred securities. In September 2003, $35.0 million of trust redeemable preferred securities were issued by the Statutory Trust II as part of a pooled underwriting transaction. Pooled underwriting involves participating with other bank holding companies in issuing the securities through a special purpose pooling vehicle created by the underwriters.

The proceeds from this issuance were used by the Statutory Trust II to purchase a like amount of a floating rate junior subordinated deferrable interest debenture issued by the Company. The subordinated deferrable interest debenture has a par value of $36.1 million, bears interest based on 3-month LIBOR plus 295 basis points (3.22% at June 30, 2013; 3.26% at December 31, 2012), is payable quarterly, and matures on September 17, 2033. It may be called at par after five years and quarterly thereafter (next call date September 2013). The trust redeemable preferred securities have the same maturity and call provisions as the subordinated deferrable interest debenture.  The subordinated deferrable interest debenture issued by the Company is accounted for as a liability denominated as a subordinated capital note on the unaudited consolidated statements of financial condition.

Under Federal Reserve Board rules, restricted core capital elements, which are qualifying trust preferred securities, qualifying cumulative perpetual preferred stock (and related surplus) and certain minority interests in consolidated subsidiaries, are limited in the aggregate to no more than 25% of a bank holding company’s core capital elements (including restricted core capital elements), net of goodwill less any associated deferred tax liability. However, under the Dodd-Frank Act, and the capital rules adopted in July 2013 by the federal banking regulators to implement the agreements reached by the Basel Committee on Banking Supervision in “Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems” and to make other changes consistent with the Dodd-Frank Act, which are scheduled to become effective January 1, 2015 (subject to certain phase-in periods through January 1, 2019),bank holding companies are prohibited from including in their Tier 1 capital hybrid debt and equity securities, including trust preferred securities, issued on or after May 19, 2010. Any such instruments issued before May 19, 2010 by a bank holding company, such as the Company, with total consolidated assets of less than $15 billion as of December 31, 2009, are permanently grandfathered under the new capital rules and may continue to be included as Tier 1 capital. Therefore, the Company is permitted to continue to include its existing trust preferred securities as Tier 1 capital.  

 As part of the BBVAPR Acquisition on December 18, 2012, the Company’s banking subsidiary assumed three subordinated capital notes issued by BBVAPR Bank consisting of the following:

·Subordinated capital notes issued in September 2004 amounting to $50.0 million at a variable rate of three-month LIBOR plus 1.44%  (1.75% at December 31, 2012 ), that was due September 23, 2014. During the quarter ended March 31, 2013, the Bank repurchased and cancelled these subordinated capital notes in whole before maturity and realized a gain of $1.1 million in the Company’s unaudited consolidated statements of operations.

·Subordinated capital notes issued in September 2006 amounting to $37.0 million at a fixed rate of 5.76% through September 29, 2011, and three-month LIBOR plus 1.56% thereafter (1.83% at June 30, 2013; 1.87% at December 31, 2012), due September 29, 2016. Interest on these subordinated notes is payable quarterly during the floating-rate period. The Bank has the option to redeem these subordinated capital notes in whole or in part from time to time before maturity at 100% of the principal amount plus any accrued but unpaid interest to the date of redemption, beginning September 29, 2011, and at each payment date thereafter.

·Subordinated capital notes issued in September 2006 amounting to $30.0 million at a variable rate of three-month LIBOR plus 1.56% thereafter ( 1.83% at June 30, 2013; 1.87% at December 31, 2012), due September 29, 2016. Interest on these subordinated notes is payable quarterly. The Bank has the option to redeem these subordinated capital notes in whole or in part from time to time before maturity at 100% of the principal amount plus any accrued but unpaid interest to the date of redemption, beginning September 29, 2011, and at each payment date thereafter.

45

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

These notes qualify as Tier 2 capital at a discounted rate, which totals $40.2 million at June 30, 2013 and $50.2 million at December 31, 2012.  Generally speaking, subordinated notes are included as Tier 2 capital if they have an original weighted average maturity of at least 5 years and comply with certain other requirements.  As the notes approach maturity, they begin to take on characteristics of a short term obligation.  For this reason, the outstanding amount eligible for inclusion in Tier 2 capital is reduced, or discounted, as the instruments approach maturity: one fifth of the outstanding amount is excluded each year during the instruments last five years before maturity.  When the remaining maturity is less than one year, the instrument is excluded from Tier 2 capital.

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)
2013	$	48,575
2014		6,700
2015		6,700
2016		5,025
	$	67,000

Other borrowings

Other borrowings, presented in the unaudited consolidated statements of financial condition within “Advances from FHLB and other borrowings”, amounted to $37.2 million and $17.6 million at June 30, 2013 and December 31, 2012, respectively. These borrowings mainly consists of federal funds purchased of $29.4 million and $9.9 million at June 30, 2013 and December 31, 2012, respectively, with a weighted average interest rate of 0.30% at both dates, and unsecured fixed-rate borrowings of $7.7 million at both June 30, 2013 and December 31, 2012, with a weighted average interest rate of 0.67% at both dates.

NOTE 11 —  RELATED PARTY TRANSACTIONS

The Bank grants loans to its directors, executive officers and to certain related individuals or organizations in the ordinary course of business. These loans are offered at the same terms as loans to unrelated third parties. As of June 30, 2013 and December 31, 2012, these loan balances amounted to $8.0 million and $6.1 million, respectively. The activity and balance of these loans for the quarters and six-month periods ended June 30, 2013 and 2012 were as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Balance at the beginning of period	$	8,688	$	5,238	$	6,055	$	3,772
New loans		-		-		4,234		1,505
Repayments		(657)		(180)		(2,026)		(219)
Credits of persons no longer         considered related parties		-		-		(232)		-
Balance at the end of period	$	8,031	$	5,058	$	8,031	$	5,058

46

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 12 —  INCOME TAXES

On June 30, 2013 the Governor signed Act No. 40 known as “Ley de Redistribución y Ajuste de la Carga Contributiva” (Act of Redistribution and Adjustment of Tax Burden).  This Act, along with others signed by the Governor, comprises the budget of the Commonwealth of Puerto Rico for 2013-2014. The main purpose of the 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, and effective for taxable years beginning after December 31,2012 are as follows: (1) the maximum Corporate Income Tax rate was  increased from 30% to 39%; (2) the allowance deduction for determining the income subject to surtax was reduced from $750,000 to $75,000 (which must be allocated among the members of a controlled group of corporations; (3) the allowable Net Operating Loss (“NOL”) deduction was reduced to (i) 90% of the corporation’s net income subject to regular tax, for purposes of computing the regular income tax and  (ii)  80% of the alternative minimum taxable income for purposes of computing the alternative minimum tax (“AMT”); (4) the NOL carryover period was extended from 10 to 12 years  for NOLs incurred after December 31, 2012;  (5) a new special tax based on gross income (the “Special Tax”) was added to the Puerto Rico Internal Revenue Code of 2011, as further described below; and (6) a special tax of 1% on insurance premiums earned after June 30, 2013.

 In the case of non-financial institutions, the Special Tax is paid as part of the AMT and thus is accounted for under the provisions of ASC 740. The applicable rate for non-financial institutions increases gradually from 0.2% for gross income in excess of $1.0 million up to 0.85% for gross income in excess of $1.5 billion. In the case of a controlled group of corporations, the tax rate for all members of the group is determined by the aggregate gross income of all members in the group. In the case of financial institutions, the Special Tax is not part of the AMT calculation thus is accounted for as other tax not subject to the provisions of ASC 740 since the same is based on gross income. The applicable rate for financial institutions is 1%, of which fifty percent (50%) may be claimed as a credit against the financial institution’s applicable income tax.

At June 30, 2013 and December 31, 2012, the Company’s net deferred tax asset amounted to $155.2 million and $122.5 million, respectively. Income tax benefit for the quarter and six-month periods ended June 30, 2013 totaled $31.9 million and $24.8 million, respectively. The benefit of both periods is related to the positive effect on the deferred tax asset of the increase in the enacted tax rate from 30% to 39%. Income tax expense for the quarter and six-month period ended June 30, 2012 totaled $1.1 million and $3.0 million, respectively.

At June 30, 2013 and December 31, 2012, OIB had $415 thousand and $504 thousand, respectively, in the 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, 2013 and 2012, $43 thousand and $166 thousand, respectively, related to this residual tax effect from OIB was reclassified from accumulated other comprehensive income into income tax provision. During the six-month periods ended June 30, 2013 and 2012, $89 thousand and $724 thousand, respectively, related to this residual effect from OIB was reclassified from accumulated other comprehensive income to income tax provision.

The Company maintained an effective tax rate for the six-month period ended June 30, 2013 lower than the new maximum marginal statutory rate of 39.00%.  The reconciliation of the enacted tax rate and the effective income tax rate for the six-month period ended June 30, 2013 follows:

	Six-Month Period Ended June 30,
	2013
	Amount		Rate
	(Dollars in thousands)
Tax at statutory rates	$	13,230	39.00%
Tax effect of exempt income, net		(3,607)	-10.63%
Effect in deferred taxes due to increase in tax rates
from 30.00% to 39.00%		(36,928)	-108.85%
Other items, net		2,497	7.35%
Income tax benefit	$	(24,808)	-73.13%

47

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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, 2013 was $5.6 million (December 31, 2012 - $5.3 million). The Company had accrued $1.7 million at June 30, 2013 (December 31, 2012 - $1.4 million) for the payment of interest and penalties relating to unrecognized tax benefits. As part of the BBVAPR Acquisition, there are unrecognized tax benefits amounting to $3.9 million at June 30, 2013 and December 31, 2012. There is also $812 thousand (December 31, 2012 - $665 thousand) in accrued payment of interest and penalties relating to unrecognized tax benefits.

NOTE 13 —  STOCKHOLDERS’ EQUITY AND EARNINGS PER COMMON SHARE

Regulatory Capital Requirements

The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by federal and Puerto Rico banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’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 are scheduled to become effective January 1, 2015 (subject to certain phase-in periods through January 1, 2019) and that will replace their general risk-based capital rules, advanced approaches rule, market risk rule, and leverage rules.

Quantitative measures established by regulation to ensure capital adequacy currently require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined in the regulations) and of Tier 1 capital to average assets (as defined in the regulations). As of June 30, 2013 and December 31, 2012, the Company and the Bank met all capital adequacy requirements to which they are subject. As of June 30, 2013 and December 31, 2012, the Bank is “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” an institution must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following tables.

48

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, 2013 and December 31, 2012 are as follows:

				Minimum Capital
	Actual			Requirement
	Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
Company Ratios
As of June 30, 2013
Total capital to risk-weighted assets	$	807,190	15.83%	$	407,818	8.00%
Tier 1 capital to risk-weighted assets	$	702,801	13.79%	$	203,909	4.00%
Tier 1 capital to total assets	$	702,801	8.54%	$	329,223	4.00%
As of December 31, 2012
Total capital to risk-weighted assets	$	794,195	15.15%	$	419,269	8.00%
Tier 1 capital to risk-weighted assets	$	678,127	12.94%	$	209,634	4.00%
Tier 1 capital to total assets	$	678,127	6.42%	$	422,307	4.00%

							Minimum to be Well
							Capitalized Under Prompt
				Minimum Capital			Corrective Action
	Actual			Requirement			Provisions
	Amount		Ratio	Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
Bank Ratios
As of June 30, 2013
Total capital to risk-weighted assets	$	743,653	15.01%	$	396,291	8.00%	$	495,363	10.00%
Tier 1 capital to risk-weighted assets	$	641,043	12.94%	$	198,145	4.00%	$	297,218	6.00%
Tier 1 capital to total assets	$	641,043	7.84%	$	327,058	4.00%	$	408,823	5.00%
As of December 31, 2012
Total capital to risk-weighted assets	$	719,675	14.03%	$	410,268	8.00%	$	512,835	10.00%
Tier 1 capital to risk-weighted assets	$	604,997	11.80%	$	205,134	4.00%	$	307,701	6.00%
Tier 1 capital to total assets	$	604,997	5.76%	$	420,298	4.00%	$	525,373	5.00%

    Additional paid-in capital

Additional paid-in capital represents contributed capital in excess of par value of common and preferred stock net of costs of the issuance. As of June 30, 2013, 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 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, 2013 and December 31, 2012, the Bank’s legal surplus amounted to $57.9 million and $52.1 million, respectively. The amount transferred to the legal surplus account is not available for the payment of dividends to shareholders.

49

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Earnings per Common Share

The calculation of earnings per common share for the quarters and six-month periods ended June 30, 2013 and 2012 is as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands, except per share data)
Net income	$	37,539	$	14,958	$	58,731	$	25,610
Less: Dividends on preferred stock
Non-Convertible Preferred Stock (Series A, B, and D)		(1,629)		(1,201)		(3,256)		(2,401)
Convertible preferred stock (Series C)		(1,837)		-		(3,675)		-
Income available to common shareholders	$	34,073	$	13,757	$	51,800	$	23,209
Effect of assumed conversion of the Convertible             '    'Preferred Stock		1,837		-		3,675		-
Income available to common shareholders                       assuming conversion	$	35,910	$	13,757	$	55,475	$	23,209
Weighted average common shares and share equivalents:
Average common shares outstanding		45,630		40,703		45,613		40,873
Effect of dilutive securities:
Average potential common shares-options		200		105		178		113
Average potential common shares-assuming                    '     'conversion of convertible preferred stock		7,138		-		7,138		-
Total weighted average common shares                       ' 'outstanding and equivalents		52,968		40,808		52,929		40,986
Earnings per common share - basic	$	0.75	$	0.34	$	1.14	$	0.57
Earnings per common share - diluted	$	0.68	$	0.34	$	1.05	$	0.57

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

For the quarters ended June 30, 2013 and 2012, weighted-average stock options with an anti-dilutive effect on earnings per share not included in the calculation amounted to 243,721 and 708,976, respectively. For the six-month periods ended June 30, 2013 and 2012, weighted-average stock options with an anti-dilutive effect on earnings per share not included in the calculation amounted to 578,393 and 707,143, respectively.

50

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Treasury Stock

Repurchased common stock is 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.

The activity in connection with common shares held in treasury by the Company for the six-month periods ended June 30, 2013 and 2012 is set forth below:

	Six-Month Period Ended June 30,
	2013			2012
		Dollar			Dollar
	Shares	Amount		Shares	Amount
	(In thousands, except shares data)
Beginning of period	7,090,597	$	81,275	6,564,124	$	74,808
Common shares used upon lapse of restricted stock units	(34,800)		(364)	(37,446)		(392)
Common shares repurchased as part of the stock repurchase program	-		-	603,000		7,022
Common shares used to match defined  contribution plan, net	(7,318)		(77)	(18,898)		(35)
End of period	7,048,479	$	80,834	7,110,780	$	81,403

Accumulated Other Comprehensive Income

Accumulated other comprehensive income, net of income tax, as of June 30, 2013 and December 31, 2012 consisted of:

	June 30,		December 31,
	2013		2012
	(In thousands)
Unrealized gain on securities available-for-sale which are not     other-than-temporarily impaired	$	28,779	$	75,347
Income tax effect of unrealized gain on securities available-for-sale		(3,379)		(7,102)
Net unrealized gain on securities available-for-sale which are not         other-than-temporarily impaired		25,400		68,245
Unrealized loss on cash flow hedges		(13,187)		(17,664)
Income tax effect of unrealized loss on cash flow hedges		3,553		5,299
Net unrealized loss on cash flow hedges		(9,634)		(12,365)
	$	15,766	$	55,880

51

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

	Quarter Ended June 30, 2013						Six-Month Period Ended June 30, 2013
	Net unrealized		Net unrealized		Accumulated		Net unrealized		Net unrealized		Accumulated
	gains on		loss on		other		gains on		loss on		other
	securities		cash flow		comprehensive		securities		cash flow		comprehensive
	available-for-sale		hedges		income		available-for-sale		hedges		income
	(In thousands)						(In thousands)
Beginning balance	$	58,393	$	(11,342)	$	47,051	$	68,245	$	(12,365)	$	55,880
Other comprehensive income before reclassifications		(33,036)		292		(32,744)		(42,934)		(21)		(42,955)
Amounts reclassified out of accumulated other comprehensive income		43		1,416		1,459		89		2,752		2,841
Other comprehensive income (loss)		(32,993)		1,708		(31,285)		(42,845)		2,731		(40,114)
Ending balance	$	25,400	$	(9,634)	$	15,766	$	25,400	$	(9,634)	$	15,766

The following table presents reclassifications out of accumulated other comprehensive income for the quarter and six-month period ended June 30, 2013:

			Six-Month Period		Affected Line Item in
	Quarter Ended		Ended		Consolidated Statement
	June 30, 2013		June 30, 2013		of Operations
	(In thousands)		(In thousands)
Cash flow hedges:
Interest-rate contracts	$	1,416	$	2,752	Net interest expense
Available-for-sale securities:
Residual tax effect from OIB's change in applicable tax rate		43		89	Income tax expense
	$	1,459	$	2,841

At June 30, 2013 and December 31, 2012, OIB had $415 thousand and $504 thousand, respectively, in the 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 new Puerto Rico law adopted in 2011, this remaining tax balance will flow through income as these securities are repaid or sold in future periods.

52

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 14 —  COMMITMENTS

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 unaudited 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 amount 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.

Summarized credit-related financial instruments at June 30, 2013 and December 31, 2012 were as follows:

	June 30,		December 31,
	2013		2012
	(In thousands)
Commitments to extend credit	$	445,411	$	591,679
Commercial letters of credit		2,231		2,918

Commitments from loans acquired as part of the BBVAPR Acquisition amounted to $337.1 million and $461.6 million at June 30, 2013 and December 31, 2012, respectively. 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, 2013 and December 31, 2012, commitments to extend credit consisted mainly of undisbursed available amounts on commercial lines of credit, construction loans, and revolving credit card arrangements. Since many of the unused commitments are expected to expire unused or be only partially used, the total amount of these unused commitments does not necessarily represent future cash requirements. These lines of credit had a reserve of $900 thousand at both June 30, 2013 and December 31, 2012.

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.

53

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, 2013 and December 31, 2012, is as follows:

	June 30,		December 31,
	2013		2012
	(In thousands)
Standby letters of credit and financial guarantees	$	67,087	$	69,789
Loans sold with recourse		184,937		172,492
Commitments to sell or securitize mortgage loans		10,977		83,663

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. The Company does not expect any significant losses under these obligations. As of June 30, 2013 and December 31, 2012, no performance was required on any financial guarantees. As part of the BBVAPR Acquisition, the Company assumed $65.9 million of standby letters of credit and $169.3 million of loans sold without recourse commitments at December 31, 2012.

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, 2013 and 2012 amounted to $2.6 million and $1.6 million, respectively, and is included in the “occupancy and equipment” caption in the unaudited consolidated statements of operations. For the six-month periods ended June 30, 2013 and 2012, rent expense amounted to $5.2 million and $3.3 million, respectively. Future rental commitments under leases in effect at June 30, 2013, exclusive of taxes, insurance, and maintenance expenses payable by the Company, are summarized as follows:

Year Ending June 30,	Minimum Rent
	(In thousands)
2013	$	5,332
2014		8,402
2015		8,116
2016		7,492
2017		7,965
Thereafter		24,755
	$	62,062

54

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 15 —  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, OFS Securities 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 unaudited 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 unaudited 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 16 - FAIR VALUEOF FINANCIAL INSTRUMENTS

The Company follows the fair value measurement framework under GAAP.

Fair Value Measurement

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

Money market investments

The fair value of money market investments is based on the carrying amounts reflected in the unaudited 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. 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 Company holds two securities categorized as other debt that are classified as Level 3. The estimated fair value of the other debt securities is determined by using a third-party model to calculate the present value of projected future cash flows. The assumptions are highly uncertain and include primarily market discount rates, current spreads, and an indicative pricing. The assumptions used are drawn from similar securities that are actively traded in the market and have similar characteristics as the collateral underlying the debt securities being evaluated. The valuation is performed on a monthly basis.

55

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Derivative instruments

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

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

Servicing assets

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

Loans receivable considered impaired that are collateral dependent

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

Foreclosed real estate

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

56

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

	June 30, 2013
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	1,816,172	$	20,057	$	1,836,229
Money market investments		10,983		-		-		10,983
Derivative assets		-		3,635		16,020		19,655
Servicing assets		-		-		12,994		12,994
Derivative liabilities		-		(16,701)		(15,315)		(32,016)
	$	10,983	$	1,803,106	$	33,756	$	1,847,845
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	43,831	$	43,831
Foreclosed real estate		-		-		81,689		81,689
	$	-	$	-	$	125,520	$	125,520

	December 31, 2012
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	2,174,274	$	20,012	$	2,194,286
Securities purchased under agreements to resell		-		80,000		-		80,000
Money market investments		13,205		-		-		13,205
Derivative assets		-		8,656		13,233		21,889
Servicing assets		-		-		10,795		10,795
Derivative liabilities		-		(26,260)		(12,707)		(38,967)
	$	13,205	$	2,236,670	$	31,333	$	2,281,208
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	46,199	$	46,199
Foreclosed real estate		-		-		75,447		75,447
	$	-	$	-	$	121,646	$	121,646

57

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 the six-month periods ended June 30, 2013 and 2012:

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

	Quarter Ended June 30, 2012
	Investment securities
	available-for-sale
					Derivative				Derivative
					asset				liability
			Other		(S&P				(S&P
			debt		Purchased		Servicing		Embedded
Level 3 Instruments Only	CLOs		securities		Options)		assets		Options)		Total
Balance at beginning of period	$	29,643	$	9,882	$	12,515	$	10,725	$	(12,138)	$	50,627
Gains (losses) included in earnings		-		-		(1,148)		-		1,119		(29)
Changes in fair value of investment         securities available for sale included         in other comprehensive income		(2,381)		134		-		-		-		(2,247)
New instruments acquired		-		-		-		499		-		499
Principal repayments		18		-		-		(241)		-		(223)
Amortization		-		-		-		-		107		107
Changes in fair value of servicing assets		-		-		-		(207)		-		(207)
Balance at end of period	$	27,280	$	10,016	$	11,367	$	10,776	$	(10,912)	$	48,527

58

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

	Six-Month Period Ended June 30, 2012
	Investment securities available-for-sale
							Derivative				Derivative
							asset				liability
					Other		(S&P				(S&P
					debt		Purchased		Servicing		Embedded
Level 3 Instruments Only	CDOs		CLOs		securities		Options)		assets		Options)		Total
	(In thousands)
Balance at beginning of period	$	10,530	$	26,758	$	10,024	$	9,317	$	10,454	$	(9,362)	$	57,721
Gains (losses) included in earnings		-		-		-		2,050		-		(2,035)		15
Changes in fair value of investment         securities available for sale included         in other comprehensive income		-		488		(7)		-		-		-		481
New instruments acquired		-		-		-		-		919		-		919
Principal repayments		-		34		-		-		(476)		-		(442)
Amortization		-		-		(1)		-		-		485		484
Sales of instruments		(10,530)		-		-		-		-		-		(10,530)
Changes in fair value of servicing assets		-		-		-		-		(121)		-		(121)
Balance at end of period	$	-	$	27,280	$	10,016	$	11,367	$	10,776	$	(10,912)	$	48,527

During the quarters and the six-month periods ended June 30, 2013 and 2012, 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.

59

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The table below presents quantitative information for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at June 30, 2013:

	June 30, 2013
	Fair Value		Valuation Technique	Unobservable Input	Range
	(In thousands)
Investment securities     available-for-sale:
Other debt securities	$	20,058	Market comparable bonds	Indicative pricing	97.50% - 100.50%
				Option adjusted spread	289.1% - 469.2%
				Yield to maturity	3.060% - 5.101%
				Spread to maturity	288.7% - 470.2%
Derivative assets (S&P     Purchased Options)	$	16,020	Option pricing model	Implied option volatility	24.82% - 39.16%
				Counterparty credit risk     (based on 5-year credit     default swap ("CDS")     spread)	100.28% - 174.12%
Servicing assets	$	12,994	Cash flow valuation	Constant prepayment rate	8.41% - 26.96%
				Discount rate	10.50% - 13.50%
Derivative liability (S&P     Embedded Options)	$	(15,315)	Option pricing model	Implied option volatility	24.82% - 39.16%
				Counterparty credit risk (based on 5-year CDS spread)	100.28% - 174.12%
Collateral dependant     impaired loans	$	43,831	Fair value of property     or collateral	Appraised value	Not meaningful

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 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 unaudited 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.

60

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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.

The table below presents a detail of investment securities available-for-sale classified as Level 3 at June 30, 2013:

	June 30, 2013
							Weighted
	Amortized		Unrealized				Average	Principal
Type	Cost		Gains (Losses)		Fair Value		Yield	Protection
	(In thousands)
Other debt securities	$	20,000	$	58	$	20,058	3.50%	N/A

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.

61

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, 2013 and December 31, 2012 is as follows:

	June 30,				December 31,
	2013				2012
	Fair		Carrying		Fair		Carrying
	Value		Value		Value		Value
	(In thousands)
Level 1
Financial Assets:
Cash and cash equivalents	$	748,313	$	748,313	$	868,695	$	868,695
Level 2
Financial Assets:
Securities purchased under agreements to resell		-		-		80,000		80,000
Securities sold but not yet delivered		16,732		16,732		-		-
Trading securities		2,209		2,209		495		495
Investment securities available-for-sale		1,816,171		1,816,171		2,174,274		2,174,274
Federal Home Loan Bank (FHLB) stock		22,156		22,156		38,411		38,411
Derivative assets		3,635		3,635		8,656		8,656
Financial Liabilities:
Derivative liabilities		16,701		16,701		26,260		26,260
Short term borrowings		-		-		92,210		92,210
Level 3
Financial Assets:
Investment securities available-for-sale		20,058		20,058		20,012		20,012
Total loans (including loans held-for-sale)
Non-covered loans, net		4,600,628		4,621,649		4,766,179		4,773,923
Covered loans, net		449,113		369,380		489,885		395,307
Derivative assets		16,020		16,020		13,233		13,233
FDIC shared-loss indemnification asset		173,442		236,472		204,646		286,799
Accrued interest receivable		17,508		17,508		17,554		17,554
Servicing assets		12,994		12,994		10,795		10,795
Financial Liabilities:
Deposits		5,688,574		5,665,038		5,797,097		5,689,559
Securities sold under agreements to repurchase		1,353,970		1,313,870		1,741,272		1,695,247
Advances from FHLB		283,443		285,135		538,355		536,542
Federal funds purchased		29,431		29,431		9,901		9,901
Term notes		7,710		7,734		7,912		7,734
Subordinated capital notes		98,008		98,961		146,415		146,038
Accrued expenses and other liabilities		117,569		117,569		102,169		102,169

62

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, 2013 and December 31, 2012:

•     Cash and cash equivalents (including money market investments and time deposits with other banks), accrued interest receivable, securities purchased under agreements to resell, securities sold but not yet delivered, accrued expenses and other liabilities have been valued at the carrying amounts reflected in the unaudited consolidated statements of financial condition as these are reasonable estimates of fair value given the short-term nature of the instruments.

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

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

•     The fair value of the FDIC shared-loss indemnification asset represents the present value of the estimated cash payments (net of amounts owed to the FDIC) 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 shared-loss indemnification asset is dependent upon the performance of the underlying covered loans, the passage of time and claims paid by the FDIC which are impacted by the Bank’s adherence to certain guidelines established by the FDIC.

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

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

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

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

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

63

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

•     For short term borrowings and federal funds purchased, the carrying amount is considered a reasonable estimate of fair value. The fair value of long-term borrowings, which include securities sold under agreements to repurchase, advances from FHLB, FDIC-guaranteed term notes, other term notes, and subordinated capital notes, is based on the discounted value of the contractual cash flows using current estimated market discount rates for borrowings with similar terms, remaining maturities and put dates.

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

NOTE 17 —  OFFSETTING ARRANGEMENTS

The Company manages credit and counterparty risk by entering into enforceable netting agreements and other collateral arrangements with counterparties to derivative financial instruments and secured financing transactions, including resale and repurchase agreements, and principal securities borrowing and lending agreements. These netting agreements mitigate counterparty credit risk by providing for a single net settlement with a counterparty of all financial transactions covered by the agreement in an event of default as defined under such agreement. In limited cases, a netting agreement may also provide for the periodic netting of settlement payments with respect to multiple different transaction types in the normal course of business.

Certain of  the Company derivative contracts are executed under either standardized netting agreements or, for exchange-traded derivatives, the relevant contracts for a particular exchange which contain enforceable netting provisions. In certain cases, the Company may have cross-product netting arrangements which allow for netting and set-off of a variety of types of derivatives with a single counterparty. A derivative netting arrangement creates an enforceable right of set-off that becomes effective, and affects the realization or settlement of individual financial assets and liabilities, only following a specified event of default. Collateral requirements associated with the derivative contracts are determined after a review of the creditworthiness of each counterparty, and the requirements are monitored and adjusted daily, typically based on net exposure by counterparty. Collateral is generally in the form of cash or highly liquid U.S. government securities.

In connection with the Company’s secured financing activities, the Company enters into netting agreements and other collateral arrangements with counterparties, which provide for the right to liquidate collateral upon an event of default. Required collateral is generally in the form of cash, equities or fixed-income securities. Default events may include the failure to timely make payments or deliver securities, material adverse changes in financial condition or insolvency, the breach of minimum regulatory capital requirements, or loss of license, charter or other legal authorization necessary to perform under the contract.

In order for an arrangement to be eligible for netting, the Company must have a basis to conclude that such netting arrangements are legally enforceable. The analysis of the legal enforceability of an arrangement differs by jurisdiction, depending on the laws of that jurisdiction. In many jurisdictions, specific legislation exists that provides for the enforceability in bankruptcy of close-out netting under a netting agreement, typically by way of specific exception from more general prohibitions on the exercise of creditor rights.

Even though the Company has enforceable netting arrangements, they do not meet the applicable offsetting criteria, and therefore are not offset in the unaudited consolidated statements of financial condition. In addition, the Company does not offset secured financing assets and liabilities.

64

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents derivative financial instruments and secured financing transactions that are subject to enforceable netting arrangements, but do not meet the applicable offsetting criteria and therefore were not offset in our unaudited consolidated statements of financial condition, as of the dates indicated:

		June 30, 2013
		Net amount of
		Assets Presented
		in Statement				Cash
		of Financial		Financial		Collateral		Net
		Condition		Instruments		Received		Amount
		(In thousands)
Derivatives		$	19,655	$	-	$	-	$	19,655
Total		$	19,655	$	-	$	-	$	19,655
		December 31, 2012
		Net amount of
		Assets Presented
		in Statement				Cash
		of Financial		Financial		Collateral		Net
		Condition		Instruments		Received		Amount
		(In thousands)
Derivatives		$	21,889	$	-	$	-	$	21,889
Resale agreements and securities borrowings	(1)		80,000		-		-		80,000
Total		$	101,889	$	-	$	-	$	101,889
(1) Excludes the impact of non-cash collateral. These secured financing transactions are fully collateralized.

65

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents derivative financial instruments and secured financing transactions subject to enforceable netting arrangements that do not meet the applicable offsetting criteria and therefore were not offset in our unaudited consolidated statements of financial condition, as of the dates indicated:

		June 30, 2013
		Net amount of
		Liabilities
		Presented
		in Statement				Cash
		of Financial		Financial		Collateral		Net
		Condition		Instruments		Provided		Amount
		(In thousands)
Derivatives		$	19,534	$	-	$	-	$	19,534
Repurchase agreements and securities lending	(1)		1,311,573		-		-		1,311,573
Total		$	1,331,107	$	-	$	-	$	1,331,107
		December 31, 2012
		Net amount of
		Liabilities
		Presented
		in Statement				Cash
		of Financial		Financial		Collateral		Net
		Condition		Instruments		Provided		Amount
		(In thousands)
Derivatives		$	21,302	$	-	$	-	$	21,302
Repurchase agreements and securities lending	(1)		1,692,931		-		-		1,692,931
Total		$	1,714,233	$	-	$	-	$	1,714,233
(1) Excludes the impact of non-cash collateral. These secured financing transactions are fully collateralized.

NOTE 18 –  BUSINESSSEGMENTS 

The Company segregates its businesses into the following major reportable segments of business: Banking, Financial Services, 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.

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

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

66

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Following are the results of operations and the selected financial information by operating segment as of and for the quarters and the six-month periods ended June 30, 2013 and 2012:

	Quarter Ended June 30, 2013
			Financial				Total Major				Consolidated
	Banking		Services		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	115,047	$	96	$	10,665	$	125,808	$	-	$	125,808
Interest expense		(10,272)		-		(10,167)		(20,439)		-		(20,439)
Net interest income		104,775		96		498		105,369		-		105,369
Provision for non-covered    loan and lease losses		(37,527)		-		-		(37,527)		-		(37,527)
Provision for covered    loan and lease losses		(1,211)		-		-		(1,211)		-		(1,211)
Non-interest income (loss)		(4,197)		8,100		3,893		7,796		-		7,796
Non-interest expenses		(57,918)		(6,650)		(4,254)		(68,822)		-		(68,822)
Intersegment revenue		579		-		-		579		(579)		-
Intersegment expenses		-		(485)		(94)		(579)		579		-
Income before income taxes	$	4,501	$	1,061	$	43	$	5,605	$	-	$	5,605
Total assets	$	6,746,902	$	39,960	$	2,527,039	$	9,313,901	$	(877,967)	$	8,435,934

	Quarter Ended June 30, 2012
			Financial				Total Major				Consolidated
	Banking		Services		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	37,565	$	-	$	23,223	$	60,788	$	-	$	60,788
Interest expense		(5,685)		-		(21,947)		(27,632)		-		(27,632)
Net interest income		31,880		-		1,276		33,156		-		33,156
Provision for non-covered loan and lease losses		(3,800)		-		-		(3,800)		-		(3,800)
Provision for covered loan and lease losses, net		(1,467)		-		-		(1,467)		-		(1,467)
Non-interest income		33		5,941		11,862		17,836		-		17,836
Non-interest expenses		(24,365)		(3,611)		(1,734)		(29,710)		-		(29,710)
Intersegment revenue		440		-		-		440		(440)		-
Intersegment expenses		-		(296)		(144)		(440)		440		-
Income before income taxes	$	2,721	$	2,034	$	11,260	$	16,015	$	-	$	16,015
Total assets	$	3,116,655	$	15,143	$	3,951,720	$	7,083,518	$	(707,240)	$	6,376,278

67

OFG BANCORP

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Six-Month Period Ended June 30, 2013
			Financial				Total Major				Consolidated
	Banking		Services		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	216,571	$	182	$	22,683	$	239,436	$	-	$	239,436
Interest expense		(21,417)		-		(20,068)		(41,485)		-		(41,485)
Net interest income		195,154		182		2,615		197,951		-		197,951
Provision for non-covered loan and lease losses		(45,443)		-		-		(45,443)		-		(45,443)
Provision for covered loan and lease losses, net		(1,883)		-		-		(1,883)		-		(1,883)
Non-interest income (loss)		(901)		15,801		4,030		18,930		-		18,930
Non-interest expenses		(115,834)		(12,777)		(7,020)		(135,631)		-		(135,631)
Intersegment revenue		(624)		-		-		(624)		624		-
Intersegment expenses		-		(786)		1,410		624		(624)		-
Income before income taxes	$	30,469	$	2,420	$	1,035	$	33,924	$	-	$	33,924

	Six-Month Period Ended June 30, 2012
			Financial				Total Major				Consolidated
	Banking		Services		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	77,229	$	-	$	53,479	$	130,708	$	-	$	130,708
Interest expense		(12,094)		-		(46,472)		(58,566)		-		(58,566)
Net interest income		65,135		-		7,007		72,142		-		72,142
Provision for non-covered loan and lease losses		(6,800)		-		-		(6,800)		-		(6,800)
Provision for covered loan and lease losses, net		(8,624)		-		-		(8,624)		-		(8,624)
Non-interest income		701		11,731		18,563		30,995		-		30,995
Non-interest expenses		(46,952)		(8,500)		(3,657)		(59,109)		-		(59,109)
Intersegment revenue		844		-		-		844		(844)		-
Intersegment expenses		-		(605)		(239)		(844)		844		-
Income before income taxes	$	4,304	$	2,626	$	21,674	$	28,604	$	-	$	28,604

NOTE 19 – SUBSEQUENT EVENTS

On August 1, 2013, upon receipt of the required approval of the Financial Industry Authority, OFS Securities merged with and into Oriental Financial Services.

68

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 2012 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, Financial Services, and Treasury, and distinguishes itself based on quality service.  The Company has 56 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.

The BBVAPR Acquisition, the deleveraging of the Company’s investment securities portfolio, and the continued organic growth of its banking operations have transformed the profitability of the Company in line with its strategic direction.  The Company has begun to realize the anticipated benefits of the BBVAPR Acquisition as reflected by its significantly larger and higher yielding loan assets, a significantly larger deposit base and balances, and a sharply reduced size of its investment securities portfolio.  It expects to continue to benefit from a more diverse business portfolio as well as increased scale and leadership in its market.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make a number of judgments, estimates and assumptions that affect the reported amount of assets, liabilities, income and expenses in the consolidated financial statements. Understanding our accounting policies and the extent to which we use management judgment and estimates in applying these policies is integral to understanding our financial statements. We provide a summary of our significant accounting policies in “Note 1—Summary of Significant Accounting Policies” of our annual report on 2012 Form 10-K for the year ended December 31, 2012 (the “2012 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 2012 Form 10-K, we identified the following accounting policies as critical because they require significant judgments and assumptions about highly complex and inherently uncertain matters and the use of reasonably different estimates and assumptions could have a material impact on our reported results of operations or financial condition:

• Business combination

• Allowance for loan and lease losses

• Financial instruments

We evaluate our critical accounting estimates and judgments on an ongoing basis and update them as necessary based on changing conditions. Management has reviewed and approved these critical accounting policies and has discussed its judgments and assumptions with the Audit and Compliance Committee of our Board of Directors. There have been no material changes in the methods used to formulate these critical accounting estimates from those discussed in our 2012 Form 10-K.

69

OVERVIEW OF FINANCIAL PERFORMANCE

SELECTED FINANCIAL DATA
	Quarter Ended June 30,					Six-Month Period Ended June 30,
					Variance					Variance
	2013		2012		%	2013		2012		%
EARNINGS DATA:	(In thousands, except per share data)
Interest income	$	125,808	$	60,788	107.0%	$	239,436	$	130,708	83.2%
Interest expense		20,439		27,632	-26.0%		41,485		58,566	-29.2%
Net interest income		105,369		33,156	217.8%		197,951		72,142	174.4%
Provision for non-covered loan and lease losses		37,527		3,800	887.6%		45,443		6,800	568.3%
Provision for covered loan and lease losses, net		1,211		1,467	-17.5%		1,883		8,624	-78.2%
Total provision for loan and lease losses, net		38,738		5,267	635.5%		47,326		15,424	206.8%
Net interest income after provision for loan             and lease losses		66,631		27,889	138.9%		150,625		56,718	165.6%
Non-interest income		7,796		17,836	-56.3%		18,930		30,995	-38.9%
Non-interest expenses		68,822		29,710	131.6%		135,632		59,109	129.5%
Income before taxes		5,605		16,015	-65.0%		33,923		28,604	18.6%
Income tax expense (benefit)		(31,934)		1,057	-3121.2%		(24,808)		2,994	-928.6%
Net income		37,539		14,958	151.0%		58,731		25,610	129.3%
Less: dividends on preferred stock		(3,466)		(1,201)	153.0%		(6,931)		(2,401)	-188.7%
Income available to common shareholders	$	34,073	$	13,757	147.7%	$	51,800	$	23,209	123.2%
PER SHARE DATA:
Basic	$	0.75	$	0.34	120.9%	$	1.14	$	0.57	100.0%
Diluted	$	0.68	$	0.34	101.1%	$	1.05	$	0.57	84.8%
Average common shares outstanding		45,630		40,703	12.1%		45,613		40,873	11.6%
Average common shares outstanding and equivalents		52,968		40,808	29.8%		52,929		40,986	29.1%
Cash dividends declared per common share	$	0.06	$	0.06	20.0%	$	0.12	$	0.12	0.0%
Cash dividends declared on common shares	$	2,742	$	2,444	12.2%	$	5,479	$	4,887	12.1%
PERFORMANCE RATIOS:
Return on average assets (ROA)		1.77%		0.91%	94.5%		1.36%		0.79%	72.2%
Return on average common equity (ROE)		18.56%		8.69%	113.6%		14.29%		7.38%	93.6%
Equity-to-assets ratio		10.34%		10.86%	-4.8%		10.34%		10.86%	-4.8%
Efficiency ratio		53.24%		66.55%	-20.0%		55.35%		62.16%	-10.9%
Interest rate spread		5.55%		2.24%	147.8%		5.11%		2.38%	114.7%
Interest rate margin		5.56%		2.29%	142.8%		5.13%		2.45%	109.4%

70

SELECTED FINANCIAL DATA - (Continued)
	June 30,		December 31,		Variance
	2013		2012		%
PERIOD END BALANCES AND CAPITAL RATIOS:	(In thousands, except per share data)
Investments and loans
Investments securities	$	1,860,660	$	2,233,265	-16.7%
Loans and leases not covered under shared-loss         agreements with the FDIC, net		4,621,649		4,773,923	-3.2%
Loans and leases covered under shared-loss         agreements with the FDIC, net		369,380		395,307	-6.6%
Securities sold but not yet delivered		16,732		-	100.0%
Total investments and loans	$	6,868,421	$	7,402,495	-7.2%
Deposits and borrowings
Deposits	$	5,665,038	$	5,689,559	-0.4%
Securities sold under agreements to repurchase		1,313,870		1,695,247	-22.5%
Other borrowings		421,261		792,425	-46.8%
Total deposits and borrowings	$	7,400,169	$	8,177,231	-9.5%
Stockholders’ equity
Preferred stock	$	176,000	$	176,000	0.0%
Common stock		52,689		52,671	0.0%
Additional paid-in capital		538,105		537,453	0.1%
Legal surplus		57,906		52,143	11.1%
Retained earnings		111,292		70,734	57.3%
Treasury stock, at cost		(80,834)		(81,275)	0.5%
Accumulated other comprehensive income		15,766		55,880	-71.8%
Total stockholders' equity	$	870,924	$	863,606	0.8%
Per share data
Book value per common share	$	15.45	$	15.31	0.9%
Tangible book value per common share	$	13.49	$	13.31	1.4%
Market price at end of period	$	18.11	$	13.35	35.7%
Capital ratios
Leverage capital		8.54%		6.42%	33.0%
Tier 1 risk-based capital		13.96%		12.94%	7.9%
Total risk-based capital		16.02%		15.15%	5.7%
Tier 1 common equity to risk-weighted assets		9.97%		9.11%	9.5%
Financial assets managed
Trust assets managed	$	2,638,787	$	2,514,401	4.9%
Broker-dealer assets gathered	$	2,822,395		2,722,196	3.7%

71

Financial Highlights

Income available to common shareholders for the quarter and six-month period ended June 30, 2013, increased to $34.1 million and $51.8 million, or $0.68 and $1.05 per diluted share, respectively. The income available to common shareholders are a significant improvement over the $13.8 million and $23.2 million for the quarter and six-month period ended June 30, 2012, respectively.

Interest income from loans for the quarter and six-month period ended June 30, 2013, increased 205.1% and 178.5% when compared with the same periods in 2012, while net interest margin expanded to 5.56% from 2.29% in the second quarter of 2012, and to 5.13% for the six-month period ended June 30, 2013, from 2.45% for the same period in 2012.

During the quarter ended June 30, 2013, the Company’s return on assets was 1.77%, and its return on equity was 18.56%, all of which represent improvements from the second quarter of 2012. The Company improved its efficiency ratio, which decreased to 53.24% from 66.55% when compared with the same quarter in 2012.  For the six-month period ended June 30, 2013, the Company’s return on assets was 1.36% and its  return on equity was 14.29%, both of which  also represent improvements from the  same period in 2012. The efficiency ratio decreased to 55.35% from 62.16% when compared with the same period in 2012.

Operating revenues for the quarter ended June 30, 2013 increased 121.9%, or $62.2 million, to $113.2 million when compared to the same period in 2012.  Operating revenues for the six-month period ended June 30, 2013 increased 110.3%, or $113.7 million, to $216.9 million when compared to the same period in 2012.

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
OPERATING REVENUE
Net interest income	$	105,368	$	33,156	$	197,951	$	72,141
Non-interest income, net		7,796		17,836		18,930		30,995
Total operating revenue	$	113,164	$	50,992	$	216,881	$	103,136

 Interest Income

Total interest income for the quarter and six-month period ended June 30, 2013 increased 107.0% to $125.8 million and 83.2% to $239.4 million, respectively, as compared to the same periods in 2012. This was a result of an increase in interest income from loans of $77.0 million, or 205.1%, and $137.8 million, or 178.5%, when compared to the quarter and six-month period ended June 30, 2012, respectively. This increase was partially offset by a decrease in interest income from investments of $12.0 million, or 51.8%, and $29.1 million, or 54.5%, compared to the quarter and six-month period ended June 30, 2012, respectively.  This result was related to the BBVAPR Acquisition in which the non-covered loans portfolio increased by approximately $3.4 billion when compared to same period in 2012.  In addition, the yield on covered loans increased from 17.75% and 17.64% for the quarter and six-month period ended June 30, 2012, respectively, to 25.62% and 23.10% for the quarter and six-month period ended June 30, 2013. This increase in yield is the result of higher projected cash flows on certain pools of covered loans, as credit losses have been lower than initially estimated for these loan pools. The covered portfolio is beginning to have cost recoveries on pools with lower carrying amounts, and these have the effect of increasing net interest income. Such cost recoveries for the quarter ended June 30, 2013 amounted to $6.2 million in the leasing and the construction loan pools. The accretable yield amounted to $167.1 million at June 30, 2013 compared to $188.0 million at December 31, 2012. 

Interest income from investments reflects a 51.8% and 54.5% decrease for the quarter and six-month period ended June 30, 2013, as compared to the same period in 2012, primarily related to the lower balance in the investment securities portfolio due to the sale of investments securities as part of the deleverage executed during the third and fourth quarters of 2012 in connection with the BBVAPR Acquisition

72

Interest Expense

Total interest expense for the quarter and six-month period ended June 30, 2013 decreased 26.0% to $20.4 million and 29.2% to $41.5 million, respectively, as compared to the same periods in 2012. This reflects the lower cost of both securities sold under agreements to repurchase (2.10% vs. 2.16%; 1.99% vs. 2.23%) and deposits (0.71% vs. 1.40%; 0.73% vs. 1.48%) for the quarter and six-month period ended June 30, 2013, respectively, as compared to the same periods in 2012, which reflects continuing progress in the repricing of the Group’s core retail deposits and further reductions in its cost of funds, in addition to the reduction in the repurchase agreements as a result of the deleverage executed during the third and fourth quarters of 2012 in connection with the BBVAPR Acquisition.

Net Interest Income

Net interest income for the quarter and six-month period ended June 30, 2013 was $105.4 million and $198.0 million, respectively, an increase of 217.8% and 174.4%, respectively, when compared with the same periods in 2012. The increase was mostly due to the net effect of an increase of 426.1% and 383.4% for the quarter and six-month period ended June 30, 2013, respectively, in interest income from non-covered loans as a result of higher loan balances following the BBVAPR Acquisition. It is also due to a decrease of 26.0% and 29.2% in interest expense for the same respective periods due to lower cost of funds, partially offset by a decrease of 51.8% and 54.5% for the same respective periods on interest income from investments, related to lower balances from aforementioned deleverage transactions and a lower yield in the investment securities portfolio.

Net interest margin of 5.56% and 5.13% for the quarter and six-month period ended June 30,2013, respectively, increased 327 basis points and 268 basis points when compared to the quarter and six-month period ended June 30, 2012.

Provision for Loan and Lease Losses

Provision for non-covered loans losses for the quarter and six-month period ended June 30, 2013 increased $33.7 million and $38.6 million, respectively, when compared to the same periods in 2012. The increased  is mostly due to the net impact of $21.0 million in additional provision for loan and lease losses due to reclassification to held-for-sale of non-performing residential mortgage loans with unpaid principal balance of $59 million and the increase in loan averages balances in 2013.  Provision for covered loans losses for the quarter and six-month period ended June 30, 2013 decreased $56 thousand and $6.7 million when compared to the same periods ended June 30, 2012, as some covered construction and development and commercial real estate loan pools underperformed during the second quarter of 2012, which required a provision amounting to $7.2 million, net of the estimated reimbursement from the FDIC , compared to the recorded net provision of $1.2 million resulting from this quarter’s assessment of actual versus expected cash flows on the covered portfolio accounted for under the provisions of ASC 310-30.

Non-Interest Income

During the quarter and six-month period ended June 30, 2013, core banking and financial services revenues increased 108.0% to $23.9 million and 105.1% to $47.1 million, respectively, as compared to the same periods in 2012, primarily reflecting a $10.2 million and $19.5 million increase in banking services revenue to $13.3 million and $25.7 million for the quarter and six-month period ended June 30, 2013, respectively, attributed to an increase of 157.6% in deposits from June 30, 2012, which is principally attributed to the BBVAPR Acquisition.

Net FDIC shared-loss expense of $20.0 million and $32.8 million for the quarter and six-month period ended June 30, 2013, respectively, compared to $5.6 million and $10.4 million for the same periods in 2012. Such increase resulted from the ongoing evaluation of expected cash flows of the loan portfolio acquired in the FDIC-assisted acquisition.  As a result of such evaluation, the Company expects a decrease in losses to be collected from the FDIC and the improved re-yielding of the accretable yield on the covered loans.  This reduction in claimable losses amortizes the shared-loss indemnification asset through the life of the shared-loss agreements. This amortization is net of the accretion of the discount recorded to reflect the expected claimable loss at its net present value. During the quarter ended June 30, 2013 the net amortization included $7.1 million of additional amortization of the FDIC indemnification asset from stepped up cost recoveries on certain construction and leasing loan pools.

There was no gain or loss on the sale of securities in the quarter and six-month period ended June 30, 2013 as compared to gains of $12.0 million and $19.3 million in the same periods in 2012.

73

Non-Interest Expense

Non-interest expense increased to $68.8 million and $135.6 million for the quarter and six-month period ended June 30, 2013, respectively, compared to $29.7 million and $59.1 million in the same periods of the previous year, due to the Company’s expanded operations as a result of the BBVAPR Acquisition, including merger and restructuring costs of $5.3 million and $10.8 million for the quarter and six-month period, respectively. Also, the quarter and six-month period ended June 30, 2013 reflects a $2.0 million impact of the new 1.0% tax on gross revenues, recently enacted in the amendments to the Puerto Rico tax code.

The efficiency ratio for the quarter and six-month period ended June 30, 2013 was 53.24% and 55.35%, respectively, compared to 66.55% and 62.16% for the quarter and six-month period ended June 30, 2012, respectively.

Income Tax Expense

Income tax benefit was $31.9 million and $24.8 million for the quarter and six-month period ended June 30, 2013, respectively, compared to an expense of $1.1 million and $3.0 million for the same periods in 2012. The income tax benefit of $31.9 million for the quarter ended June 30, 2013 includes three items resulting from the recent amendment to the Puerto Rico tax code: (i) a $37.0 million benefit from an increase in the Company’s deferred tax asset as a result of the increase in corporate income taxes to 39% from 30%; (ii) the Company’s income tax expense at the Company’s higher effective rate of 35.5% for the second quarter of 2013; and (iii) the increase in the Company’s income tax expense for the first quarter of 2013 as a result of the increase in the effective tax rate to 35.5% from the previously reported 25.2%.

Income Available to Common Shareholders

For the quarter and six-month period ended June 30, 2013, the Group’s income available to common shareholders amounted to $34.1 million and $51.8 million, respectively, compared to $13.8 million and $23.2 million for the same periods in 2012.  Earnings per basic common share and fully diluted common share were $0.75 and $0.68 for the quarter ended June 30, 2013, respectively, compared to earnings per basic and fully diluted common share of $0.34 for the quarter ended June 30, 2012.  Income per basic common share and fully diluted common share were $1.14 and $1.04, respectively, for the six-month period ended June 30, 2013, compared to income per basic and fully diluted common share of $0.57 for the six-month period ended June 30, 2012. 

Interest Earning Assets

The loan portfolio declined to $4.991 billion at June 30, 2013 compared to $5.169 billion at December 31, 2012 primarily due to the early pay down of some commercial loans and the reclassification of non-performing residential mortgage loans with a book value of $55 million to held-for-sale, at fair value. The investment portfolio of $1.861 billion at June 30, 2013 decreased 9.2% compared to $2.233 billion at December 31, 2012. The decrease in the investment portfolio is mainly due to redemptions and maturities of investments securities available for sale.

Interest Bearing Liabilities

Total deposits decreased slightly to $5.665 billion at June 30, 2013, compared to $5.690 billion at December 31, 2012. Core deposits, including brokered deposits, increased 2.7% compared to December 31, 2012, while brokered certificate of deposits decreased 16.6%.  Securities sold under agreements to repurchase decreased 22.5%, or $381.4 million, as the Company used available cash to pay off $380 million repurchase agreements at maturity. During the six-month period ended June 30, 2013, the Company settled, prior to maturity, a former BBVAPR subordinated note of $50 million.

Stockholders’ Equity

Stockholders’ equity at June 30, 2013 was $870.9 million compared to $863.6 million at December 31, 2012, an increase of 0.8%. This increase reflects the net income for the quarter, partially offset by the change in other comprehensive income.

Book value per share was $15.45 at June 30, 2013 compared to $15.31 at December 31, 2012.

The Company maintains capital ratios in excess of regulatory requirements. At June 30, 2013, Tier 1 Leverage Capital Ratio was 8.54%, Tier 1 Risk-Based Capital Ratio was 13.96%, and Total Risk-Based Capital Ratio was 16.02%.

74

Return on Average Assets and Common Equity

Return on average common equity (“ROE”) for the quarter and six-month period ended June 30, 2013 was 18.56% and 14.29%, respectively, up from 8.69% and 7.38% for the quarter and six-month period ended June 30, 2012, respectively.  Return on average assets (“ROA”) for the quarter and six-month period ended June 30, 2013 was 1.77% and 1.36%, respectively, up from 0.91% and 0.79% for the same periods in 2012. The increases in ROE and ROA  is mostly due to a 151.0% and 129.3% increase in net income from $15.0 million and $25.6 million in the quarter and six-month period ended June 30, 2012, respectively, to $37.5 million and $58.7 million in the quarter and six-month period ended June 30, 2013, respectively.

Assets under Management

Assets managed by the Company’s trust division, the retirement plan administration subsidiary (CPC), and the broker-dealer subsidiaries increased from December 31, 2012. The trust division offers various types of individual retirement accounts (“IRA”) and manages 401(k) and Keogh retirement plans and custodian and corporate trust accounts, while CPC manages the administration of private retirement plans. At June 30, 2013, total assets managed by the Company’s trust division and CPC increased 1.7% to $2.639 billion, compared to $2.514 billion at December 31, 2012, mainly related to employer and employee account contributions and capital market appreciation. At June 30, 2013, total assets managed by the broker-dealer subsidiaries from its customer investment accounts increased 1.1% to $2.822 billion, compared to $2.722 billion at December 31, 2012.

Lending

Total loan production of $601.7 million for the six-month period ended June 30, 2013 increased 190.8% year over year, including $327.0 million in the quarter ended June 30, 2013. Total commercial loan production of $178.3 million for the six-month period ended June 30, 2013, increased 95.5% from the same period in 2012, including $104.3 million in the quarter ended June 30, 2013. These increases are directly related to the BBVAPR Acquisition as the Company continue building a strong institutional pipeline.

Mortgage loan production and purchases of $101.3 million and $178.4 million for the quarter and six-month period ended June 30, 2013, respectively, increased 107.1% and 89.9% from the same periods in 2012. The Company sells most of its conforming mortgages in the secondary market and retains the servicing rights. The increase in mortgage loan production is also the result of the benefits of the completion during this quarter, of the integration of the BBVPR and Oriental mortgage operations. 

Consumer loans production for the quarter and six-month period ended June 30, 2013 totaled $26.6 million and $49.2, up 247.0% and 283.3% when compared with the same periods in 2012. The increase in consumer lending is the result of the benefits of a larger branch network and origination platform following the BBVAPR Acquisition.

Auto and leasing production for the quarter and six-month period ended June 30, 2013 totaled $94.7 million and $195.7 million, respectively, up from $4.4 million and $8.9 million in the quarter and six-month period ended June 30, 2012, respectively. The increase is mainly attributed to the auto loan business newly entered into by the Company following the BBVAPR Acquisition. 

While the loan portfolio remains far greater than it was a year ago and loan production for the quarter and six-month period ended June 30, 2013 has increased considerably from the same periods in 2012, total loan portfolio have declined slightly by $178.2 million from $5.169 billion at December 31, 2012 to $4.991 billion at June 30, 2013, mostly as the result of scheduled pay downs and maturities in both the non-covered and covered portfolios, a scheduled pay down of a PR government obligation of about $125 million, and the reclassification of residential non-performing loans to held-for-sale.

Credit Quality on Non-Covered Loans

Net credit losses, excluding acquired loans, increased $28.8 million to $32.6 million, and $29.5 million to $35.9 million during the quarter and six-month period ended June 30, 2013, respectively, representing 8.86% and 5.11% of average non-covered loans outstanding, versus 1.25% and 1.07% in the same periods in 2012. The credit losses for the quarter and six-month periods ended June 30, 2013 include a $27 million charge-off from nonperforming mortgage loans transferred into the loan held-for-sale category. The allowance for loan and lease losses on non-covered loans increased to $46.6 million (2.62% of total non-covered loans) at June 30, 2013, compared to $39.9 million (3.21% of total non-covered loans) at December 31, 2012. 

75

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 to $88.5 million at June 30, 2013 compared to $145.1 million at December 31, 2012 primarily due to the reclassification of certain non-performing residential mortgage loans with a net book value of $55.0 million, to the loan held-for-sale category. Without this re-class to loans held-for-sale, NPL balances would have been relatively consistent between December 31, 2012 and June 31, 2013.

Non-GAAP Measures

The Company uses certain non-GAAP measures of financial performance to supplement the 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 and six-month period ended June 30, 2013, the Company’s  pre-tax  pre-provision operating income was approximately $65.7 million and $120.2 million, respectively, an increase of 340.1% and 234.0% from $14.9 million and $36.0 million in the same periods of last year. Pre-tax pre-provision operating income is calculated as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
PRE-TAX PRE-PROVISION OPERATING INCOME
Net interest income	$	105,369	$	33,156	$	197,951	$	72,142
Core non-interest income:
Financial service revenue		8,030		5,903		15,690		11,791
Banking service revenue		13,334		3,145		25,716		6,225
Mortgage banking activities		2,525		2,436		5,679		4,938
Total core non-interest income		23,889		11,484		47,085		22,954
Non-interest expenses		(68,822)		(29,710)		(135,632)		(59,109)
Less merger and restructuring charges		5,274		-		10,808		-
		(63,548)		(29,710)		(124,824)		(59,109)
Total pre-tax pre-provision operating income	$	65,710	$	14,930	$	120,212	$	35,987

76

Tangible common equity consists of common equity less goodwill and core deposit intangibles. Tier 1 common equity consists of common equity less goodwill, core deposit intangibles, net unrealized gains on available for sale securities, net unrealized losses on cash flow hedges, and disallowed deferred tax asset and servicing assets.  Ratios of tangible common equity to total assets, tangible common equity to risk-weighted assets, total equity to risk-weighted assets and Tier 1 common equity to risk-weighted assets are non-GAAP measures.

At June 30, 2013, tangible common equity to total assets and tangible common equity to risk-weighted assets increased to 7.30% and 12.22%, respectively, from 6.73% and 11.82% at December 31, 2012.  Total equity to risk-weighted assets and Tier 1 common equity to risk-weighted assets at June 30, 2013 increased to 17.30% and 9.97%, respectively, from 16.48% and 9.11% at December 31, 2012

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

77

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, 2013 and 2012:
TABLE 1 - QUARTERLY ANALYSIS OF NET INTEREST INCOME AND CHANGES DUE TO VOLUME/RATE
FOR THE QUARTERS ENDED JUNE 30, 2013 AND 2012
	Interest				Average rate		Average balance
	June		June		June	June	June		June
	2013		2012		2013	2012	2013		2012
	(Dollars in thousands)
A - TAX EQUIVALENT SPREAD
Interest-earning assets	$	125,808	$	60,788	6.64%	4.20%	$	7,580,468	$	5,794,684
Tax equivalent adjustment		1,743		13,675	0.09%	0.94%		-		-
Interest-earning assets - tax equivalent		127,551		74,463	6.73%	5.14%		7,580,468		5,794,684
Interest-bearing liabilities		20,439		27,632	1.09%	1.96%		7,481,718		5,626,256
Tax equivalent net interest income / spread		107,112		46,831	5.65%	3.18%		98,750		168,428
Tax equivalent interest rate margin					5.64%	3.23%
B - NORMAL SPREAD
Interest-earning assets:
Investments:
Investment securities		10,925		22,842	2.26%	2.61%		1,936,849		3,501,015
Trading securities		30		4	7.62%	0.00%		1,574		-
Money market investments		243		377	0.18%	0.24%		538,920		634,707
Total investments		11,198		23,223	1.81%	2.25%		2,477,343		4,135,722
Loans not covered under shared-loss agreements     with the FDIC:
Originated and Other loans held-for-investment
Mortgage		10,494		11,803	5.18%	5.74%		809,898		821,807
Commercial		5,083		4,054	5.10%	5.21%		398,456		311,299
Consumer		1,746		795	9.47%	8.03%		73,776		39,623
Auto and Leasing		5,075		570	10.68%	8.17%		190,129		27,908
Total originated non-covered loans		22,398		17,222	6.09%	5.74%		1,472,259		1,200,637
Acquired
Mortgage		11,138		-	5.46%	-		816,483		-
Commercial		36,446		-	10.45%	-		1,394,769		-
Consumer		5,101		-	12.36%	-		165,053		-
Auto		15,528		-	7.06%	-		879,936		-
Total acquired non-covered loans		68,213		-	8.38%	-		3,256,241		-
Total non-covered loans		90,611		17,222	7.67%	5.74%		4,728,500		1,200,637
Loans covered under shared-loss agreements     with the FDIC:		23,999		20,342	25.62%	17.75%		374,625		458,325
Total loans		114,610		37,564	8.98%	9.06%		5,103,125		1,658,962
Total interest earning assets		125,808		60,787	6.64%	4.20%		7,580,468		5,794,684

78

	Interest					Average rate		Average balance
	June		June			June	June	June		June
	2013		2012			2013	2012	2013		2012
	(Dollars in thousands)
Interest-bearing liabilities:
Deposits:
Non-interest bearing deposits		-		-		0.00%	0.00%		766,574		172,615
NOW accounts		1,966		2,268		0.57%	1.04%		1,388,689		876,041
Savings and money market accounts		3,014		544		1.35%	0.93%		895,377		234,762
Individual retirement accounts		1,552		2,080		1.71%	2.25%		362,839		369,519
Retail certificates of deposit		2,898		1,667		1.68%	2.02%		690,229		330,644
Total core deposits		9,430		6,559		0.92%	1.32%		4,103,708		1,983,581
Institutional certificates of deposit		2,664		506		1.63%	2.12%		653,270		95,382
Brokered deposits		1,790		851		0.83%	2.04%		858,769		167,207
		4,454		1,357		1.18%	2.07%		1,512,039		262,589
Deposits fair value premium amortization		(4,326)		(67)		-	-		-		-
Core deposit intangible amortization		415		36		-	-		-		-
Total deposits		9,973		7,885		0.71%	1.40%		5,615,747		2,246,170
Borrowings:
Securities sold under agreements to repurchase		7,109		16,500		2.10%	2.16%		1,356,856		3,057,598
Advances from FHLB and other borrowings		2,187		2,926		2.14%	4.09%		409,742		286,405
Subordinated capital notes		1,170		321		4.74%	3.56%		98,644		36,083
Total borrowings		10,466		19,747		2.24%	2.34%		1,865,242		3,380,086
Total interest bearing liabilities		20,439		27,632		1.09%	1.96%		7,480,989		5,626,256
Net interest income / spread	$	105,369	$	33,156		5.55%	2.24%
Interest rate margin						5.56%	2.29%
Excess of average interest-earning assets over     average interest-bearing liabilities								$	99,479	$	168,428
Average interest-earning assets to average     interest-bearing liabilities ratio									101.33%		102.99%
C - CHANGES IN NET INTEREST INCOME DUE TO:
	Volume		Rate		Total
	(In thousands)
Interest Income:
Investments	$	(9,312)	$	(2,713)	$	(12,025)
Loans		46,890		30,155		77,045
Total interest income		37,578		27,442		65,020
Interest Expense:
Deposits		11,831		(9,743)		2,088
Securities sold under agreements to repurchase		(9,178)		(213)		(9,391)
Other borrowings		1,872		(1,762)		110
Total interest  expense		4,525		(11,718)		(7,193)
Net Interest Income	$	33,053	$	39,160	$	72,213

79

TABLE 1/A - YEAR-TO-DATE ANALYSIS OF NET INTEREST INCOME AND CHANGES DUE TO VOLUME/RATE
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2013 AND 2012
	Interest				Average rate		Average balance
	June		June		June	June	June		June
	2013		2012		2013	2012	2013		2012
	(Dollars in thousands)
A - TAX EQUIVALENT SPREAD
Interest-earning assets	$	239,436	$	130,708	6.20%	4.43%	$	7,721,878	$	5,900,367
Tax equivalent adjustment		12,336		13,675	0.32%	0.46%		-		-
Interest-earning assets - tax equivalent		251,772		144,383	6.52%	4.89%		7,721,878		5,900,367
Interest-bearing liabilities		41,485		58,566	1.09%	2.05%		7,641,470		5,724,700
Tax equivalent net interest income / spread		210,287		85,817	5.43%	2.84%		80,408		175,667
Tax equivalent interest rate margin					5.45%	2.91%
B - NORMAL SPREAD
Interest-earning assets:
Investments:
Investment securities		23,734		52,696	2.35%	2.92%		2,022,072		3,611,510
Trading securities		50		4	8.51%	0.00%		1,175		-
Money market investments		550		779	0.20%	0.25%		544,502		614,517
Total investments		24,334		53,479	1.90%	2.53%		2,567,749		4,226,027
Loans not covered under shared-loss agreements     with the FDIC:
Originated
Mortgage		21,938		24,516	5.41%	5.92%		810,441		828,700
Commercial		9,978		8,150	5.16%	5.34%		386,882		305,116
Consumer		2,942		1,561	9.13%	8.05%		64,412		38,798
Auto and leasing		7,921		1,118	10.97%	8.37%		144,441		26,719
Total originated non-covered loans		42,779		35,345	6.08%	5.89%		1,406,176		1,199,333
Acquired
Mortgage		22,308		-	5.40%	0.00%		826,101		-
Commercial		62,816		-	8.72%	0.00%		1,441,540		-
Consumer		10,648		-	12.37%	0.00%		172,178		-
Auto		32,323		-	6.99%	0.00%		925,246		-
Total acquired non-covered loans		128,095		-	7.61%	0.00%		3,365,065		-
Total non-covered loans		170,874		35,345	7.16%	5.89%		4,771,241		1,199,333
Loans covered under shared-loss agreements     with the FDIC:		44,228		41,884	23.10%	17.64%		382,888		475,007
Total loans		215,102		77,229	8.35%	9.23%		5,154,129		1,674,340
Total interest earning assets		239,436		130,708	6.20%	4.43%		7,721,878		5,900,367

80

	Interest					Average rate		Average balance
	June		June			June	June	June		June
	2013		2012			2013	2012	2013		2012
	(Dollars in thousands)
Interest-bearing liabilities:
Deposits:
Non-interest bearing deposits		-		-		0.00%	0.00%		766,601		174,497
NOW accounts		5,707		4,817		0.80%	1.11%		1,421,481		869,525
Savings and money market accounts		4,820		1,134		1.10%	0.97%		877,109		235,019
Individual retirement accounts		3,356		4,368		1.83%	2.38%		367,490		367,009
Retail certificates of deposit		6,141		3,795		1.78%	2.20%		691,668		345,644
Total core deposits		20,024		14,114		0.97%	1.42%		4,124,349		1,991,694
Institutional deposits		5,359		1,105		1.71%	2.11%		627,157		104,648
Brokered deposits		3,779		1,893		0.88%	1.84%		857,454		206,049
Total wholesale deposits		9,138		2,998		1.23%	1.93%		1,484,611		310,697
Core deposit intangible amortization		829		71		0.00%	0.00%		-		-
Deposits fair value premium amortization		(9,540)		(175)		0.00%	0.00%		-		-
Total deposits		20,451		17,008		0.73%	1.48%		5,608,960		2,302,391
Borrowings:
Securities sold under agreements to repurchase		14,357		34,070		1.99%	2.23%		1,440,866		3,057,858
Advances from FHLB and other borrowings		3,847		5,930		1.64%	4.17%		469,620		284,188
FDIC-guaranteed term notes		-		909		0.00%	4.11%		-		44,180
Subordinated capital notes		2,830		649		4.65%	3.60%		121,659		36,083
Total borrowings		21,034		41,558		2.07%	2.43%		2,032,145		3,422,309
Total interest bearing liabilities		41,485		58,566		1.09%	2.05%		7,641,105		5,724,700
Net interest income / spread	$	197,951	$	72,142		5.11%	2.38%
Interest rate margin						5.13%	2.45%
Excess of average interest-earning assets     over average interest-bearing liabilities								$	80,773	$	175,667
Average interest-earning assets to average     interest-bearing liabilities ratio									101.06%		103.07%
C - CHANGES IN NET INTEREST INCOME DUE TO:
	Volume		Rate		Total
	(In thousands)
Interest Income:
Investments	$	(20,985)	$	(8,160)	$	(29,145)
Loans		97,144		40,729		137,873
Total interest income		76,159		32,569		108,728
Interest Expense:
Deposits		24,429		(20,986)		3,443
Securities sold under agreements to repurchase		(18,016)		(1,697)		(19,713)
Other borrowings		4,660		(5,471)		(811)
Total interest  expense		11,073		(28,154)		(17,081)
Net Interest Income	$	65,086	$	60,723	$	125,809

81

Net Interest Income

Net interest income amounted to $105.4 million and $198.0 million for the quarter and the six-month period ended June 30, 2013, respectively, a 217.8% and 174.4% increase from $33.2 million and $72.1 million for the same periods in 2012. These changes reflect a decrease of 26.0% and 29.2% in interest expense and an increase of 205.1% and 178.5% in interest income from loans, partially offset by a 51.8% and 54.5% decrease in interest income from investments when comparing the quarter and six-month period ended June 30, 2013 and 2012, respectively.

Interest rate spread for the quarter ended June 30, 2013 increased 331 basis points to 5.55% from 2.24% in the same period of 2012. This increase is mainly due to the net effect of a 87 basis point decrease in the average cost of funds from 1.96% to 1.09%, and a 244 basis point increase in the average yield of interest-earning assets from 4.20% to 6.64%. For the six-month period ended June 30, 2013, interest rate spread increased 273 basis point to 5.11% from 2.38% in the same period of 2012. This increase is mainly due to the net effect of a 96 basis point decrease in the average cost of funds from 2.05% to 1.09%, and a 177 basis point increase in the average yield of interest-earning assets from 4.43% to 6.20%.

The increase in interest income for the quarter was primarily the result of an increase of $37.6 million in interest-earning assets volume variance, and a $27.4 million increase in interest rate variance.  The six-month period increase in interest income was primarily the result of an increase of $76.2 million in interest earning assets volume variance, and a $32.6 million increase in interest rate variance. Interest income from loans increased 205.1% to $114.6 million and 178.5% to $215.1 million for the quarter and six-month period ended June 30, 2013, respectively, mainly due to the loan portfolio acquired as part of the BBVAPR Acquisition. This was mitigated by the fact that interest income on investments decreased 51.8% to $11.2 million and 54.5% to $24.3 million in the quarter and six-month period ended June 30, 2013, respectively, compared to the same periods in 2012, reflecting a lower balance in the investment securities portfolio due to the sale of investments securities as part of the deleverage executed during the third and fourth quarters of 2012 in connection with the BBVAPR Acquisition.

Interest expense decreased 26.0% to $20.4 million and 29.2% to $41.5 million for the quarter and six-month period ended June 30, 2013, respectively. The decrease for the quarter was primarily the result of an $11.7 million decrease in interest rate variance, partially offset by a $4.5 million increase in interest-bearing liabilities volume variance. The six-month period decrease was primarily the result of a $28.2 million decrease in interest rate variance, partially offset by an $11.1 million increase in interest-bearing liabilities volume variance. The decrease in interest rate variance is due to a reduction in the cost of funds and the increase in the volume variance is due to the increase in the balance of deposits, which reflected a decrease in cost of funds of 87 basis points to 1.09% and 96 basis points to 1.09% for the quarter and six-month period ended June 30, 2013, respectively, compared to the same periods in 2012.  The cost of deposits decreased 69 basis points to 0.71% and 75 basis points to 0.73% for the quarter and six-month period ended June 30, 2013, respectively, compared to 1.40% and 1.48% for the same periods in 2012, primarily due to continuing progress in repricing core deposits and to the maturity of higher cost brokered deposits during the periods. The cost of borrowings decreased by 10 basis points to 2.24% and 36 basis points to 2.07% in the quarter and six-month period ended June 30, 2013, respectively, compared to 2.34% and 2.43% for the same periods in 2012. 

For the quarter and six-month period ended June 30, 2013, the average balance of total interest-earning assets was $7.580 billion and $7.722 billion, respectively, an increase of 30.8% for both periods compared to 2012. The increase in average balance of interest-earning assets was mainly attributable to an increase in average loans for the quarter and  six-month period ended June 30, 2013 of 207.6% and 207.8% , respectively, resulting from the loan acquisition  of the portfolio from BBVAPR, mitigated by a reduction of 40.9% and 39.2% in the average investments for the quarter and the six-month period ended June 30, 2013 as a result of the aforementioned  sale of investments as part of the deleverage plan in connection with the BBVAPR Acquisition. For the quarter ended June 30, 2013, the average yield on interest-earning assets was 6.64% compared to 4.20% for the same quarter in 2012, and for the six-month period ended June 30, 2013, was 6.20% compared to 4.43% for the same period in 2012. This was mainly due to the increase in average balance and higher average yields in the non-covered loan portfolio, which their average yield increased to 7.67% from 5.74% and to 7.16% from 5.89% for quarter and six-month period ended June 30, 2013, respectively, compared to the same periods in 2012.

82

TABLE 2 - NON-INTEREST INCOME SUMMARY
	Quarter Ended June 30,					Six-Month Period Ended June 30,
	2013		2012		Variance	2013		2012		Variance
	(Dollars in thousands)
Financial service revenue	$	8,030	$	5,903	36.0%	$	15,690	$	11,791	33.1%
Banking service revenue		13,334		3,145	324.0%		25,716		6,225	313.1%
Mortgage banking activities		2,525		2,436	3.7%		5,679		4,938	15.0%
Total banking and financial service revenue		23,889		11,484	108.0%		47,085		22,954	105.1%
FDIC shared-loss expense, net		(19,965)		(5,583)	-257.6%		(32,836)		(10,410)	-215.4%
Net gain (loss) on:
Sale of securities available for sale		-		11,979	-100.0%		-		19,338	-100.0%
Derivatives		1,569		(107)	1566.4%		1,271		(108)	1276.9%
Early extinguishment of subordinated capital notes		-		-	0.0%		1,061		-	100.0%
Other		2,303		63	3555.6%		2,349		(779)	401.5%
		(16,093)		6,352	-353.4%		(28,155)		8,041	-450.1%
Total non-interest income, net	$	7,796	$	17,836	-56.3%	$	18,930	$	30,995	-38.9%

Non-Interest Income

Non-interest income is affected by the amount of securities, derivatives and trading transactions, the level of trust assets under management, transactions generated by clients’ financial assets serviced by the securities broker-dealer and insurance 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.

As shown in Table 2 above, the Company recorded non-interest income in the amount of $7.8 million and $18.9 million for the quarter and six-month period ended June 30, 2013, respectively, compared to $17.8 million and $31.0 million for the same period in 2012, a decrease of $10.0 million and $12.1 million, respectively.

During the quarter and six-month period ended June 30, 2013, the Company did not have any gain or loss on sale of securities as compared to the quarter and six-month period ended June 30, 2012, in which the Company had  gains of $12.0 million and $19.3 million on sale of securities, respectively.

Also, the increase in the FDIC shared-loss expense to $20.0 million and $32.8 million for the quarter and the six-month period ended June 30, 2013, respectively, compared to $5.6 million and $10.4 million for the same periods in 2012, resulted from the ongoing evaluation of expected cash flows of the covered loan portfolio, which resulted in reduced losses expected to be collected from the FDIC and the improved  re-yielding of the accretable yield on the covered loans. The reduction in claimable losses amortizes the shared-loss indemnification asset through the life of the shared loss agreement. This amortization is net of the accretion of the discount recorded to reflect the expected claimable loss at its net present value. During the quarter ended June 30, 2013, the Company recorded $7.1 million in additional amortization of the FDIC indemnification asset from stepped up cost recoveries on certain construction and leasing loan pools.

During the quarter ended June 30, 2013, the Company recognized a realized gain of $2.1 million, included as “Net gain (loss) on other” in the Statement of Operations, corresponding to the recovery from the sale of a claim in the Lehman Brothers bankruptcy.

Banking service revenue, which consists primarily of fees generated by deposit accounts, electronic banking services, and customer services, increased 324.0% to $13.3 million and 313.1% to $25.7 million in the quarter and six-month period ended  June 30, 2013,  respectively, from $3.1 million and $6.2 million for the same periods in 2012. This increase for the quarter and six-month period ended June 30, 2013, is attributable to an increase in transaction volume due to larger the deposit portfolio, as a result of the BBVAPR Acquisition.

83

Financial service revenue, which consists of commissions and fees from fiduciary activities, and securities brokerage and insurance activities, increased 36.0% to $8.0 million and 33.1% to $15.7 million, for the quarter and six-month period ended June 30, 2013, respectively, compared to $5.9 million and $11.8 million for the same periods in 2012. This increase is mainly due to increased brokerage, trust and insurance business and transactions as a result of the BBVAPR Acquisition.

Income generated from mortgage banking activities increased 3.7% to $2.5 million and 15.0% to $5.7 million for the quarter and six-month period ended June 30, 2013, respectively, compared to $2.4 million and $4.9 million for the same periods in 2012. Such increase is mainly a result of an increase in mortgage loan production for the quarter and six-month period ended June 30, 2013 when compared to the same periods in 2012, as the Company sells the majority of the loans produced into secondary markets. This increase in loan production is partially offset by the effect of the steep rise in interest rate during the later part of the quarter ended June 30, 2013 , resulting in decreased profit margins from the sale of mortgage loans. 

TABLE 3 - NON-INTEREST EXPENSES SUMMARY
	Quarter Ended June 30,					Six-Month Period Ended June 30,
	2013		2012		Variance %	2013		2012		Variance %
	(Dollars in thousands)
Compensation and employee benefits	$	24,089	$	11,184	115.4%	$	47,338	$	21,550	119.7%
Occupancy and equipment		8,066		4,292	87.9%		17,282		8,501	103.3%
Professional and service fees		7,710		5,222	47.6%		16,832		10,643	58.2%
Merger and restructuring charges		5,274		-	100.0%		10,808		-	100.0%
Taxes, other than payroll and income taxes		5,132		(107)	4896.3%		7,754		1,067	626.7%
Electronic banking charges		4,094		1,609	154.4%		7,822		3,166	147.1%
Insurance		2,723		1,442	88.8%		5,401		3,262	65.6%
Foreclosure, repossession and other real estate expenses		2,156		936	130.3%		3,661		1,686	117.1%
Loss on sale of foreclosed real estate and other repossessed assets		1,696		886	91.4%		3,573		1,282	178.7%
Loan servicing and clearing expenses		1,884		955	97.3%		3,360		1,923	74.7%
Advertising, business promotion, and strategic initiatives		1,670		1,564	6.8%		3,079		2,412	27.7%
Printing, postage, stationery and supplies		851		322	164.3%		2,017		630	220.2%
Communication		835		392	113.0%		1,699		781	117.5%
Director and investor relations		377		342	10.2%		613		651	-5.8%
Other operating expenses		2,265		671	237.6%		4,393		1,555	182.5%
Total non-interest expenses	$	68,822	$	29,710	131.6%	$	135,632	$	59,109	129.5%
Relevant ratios and data:
Efficiency ratio		53.24%		66.55%			55.35%		62.16%
Compensation and benefits to         non-interest expense		35.00%		37.64%			34.90%		36.46%
Compensation to total assets owned		1.14%		0.70%			1.12%		0.68%
Average number of employees		1,559		751			1,573		748
Average compensation per employee	$	61.81	$	59.57		$	60.19	$	57.62
Assets owned per average employee	$	5,412	$	8,490		$	5,364	$	8,524

Non-Interest Expenses

Non-interest expense for the quarter ended June 30, 2013 reached $68.8 million, representing an increase of 131.6% compared to $29.7 million for the quarter ended June 30, 2012. For the six-month period ended June 30, 2013, non-interest expense reached $135.6   million, representing an increase of 129.5% compared to $59.1 million for the same periods in 2012, due to the Company’s expanded operations as a result of the BBVAPR Acquisition.   

Compensation and employee benefits increased 115.4% and 119.7% to $24.1 million and $47.3 million for the quarter and six-month period ended June 30, 2013, respectively, from $11.2 million and $21.6 million for the same periods in 2012.These increase are mainly driven by the integration of the employees of BBVAPR. 

84

Professional and service fees increased 47.6% to $7.7 million and 58.2% to $16.8 million for the quarter and six-month period ended June 30, 2013, respectively, as compared to $5.2 million and $10.6 million for the same periods in 2012, mainly due to professional expenses related to the BBVAPR integration.

Occupancy and equipment expenses increased 87.9% to $8.1 million and 103.3% to $17.3 million for the quarter and six-month period ended June 30, 2013, as compared to $4.3 million and $8.5 million for the same periods in 2012, as a result of the BBVAPR Acquisition in which the Bank acquired 36 branches and the building where our new headquarters are located. During the quarter ended June 30, 2013, the Company consolidated 8 branches.

Electronic banking charges increased 154.4% to $4.1 million and 147.1% to $7.8 million for the  quarter and six-month period ended June 30, 2013, respectively, as compared to $1.6 million and $3.2 million for the same periods in 2012, mostly due to the increase in expenses related to merchant business and card interchange transactions resulting from our banking business growth.

During the quarter and six-month period ended June 30, 2013, the Company incurred $5.3 million and $10.8 million, respectively, in expenses related to the merger and restructuring charges.  This amount includes a $3.7 million charge related to an early termination of a contract with a third party servicer of certain loan portfolios acquired in the FDIC-assisted transaction and $3.2 million related to systems integration.  These charges represent costs associated with these one-time activities and do not represent ongoing costs of the fully integrated combined organization. 

Taxes, other than payroll and income taxes, for the quarter and six-month period ended June 30, 2013 increased  to $5.1 million  and to $7.8 million, respectively, as compared to a benefit of $107 thousand and an expense of $1.1 million for the same periods in 2012. The increase primarily reflects a $2.0 million impact from the application of the new 1.0% tax on gross revenues which was part of the recently enacted amendments to the Puerto Rico tax code. Also, included in the benefit of $107 thousand during the quarter ended June 30, 2012 was the reversal of an accrual resulting from a municipal license tax settlement.

Foreclosure, repossession and other real estate expenses for the quarter and six-month period ended June 30, 2013 increased 130.3% to $2.2 million and 117.1% to $3.7 million, respectively, as compared to $936 thousand and $1.7 million for the same periods in 2012, principally due to the increase in foreclosures during the six-month period ended June 30, 2013 as compared to the same periods in 2012.

Advertising, business promotion, and strategic initiatives for the quarter and six-month period ended June 30, 2013 increased 6.8%  and 27.7%, respectively, as compared to the same periods in 2012, primarily to support the Company’s expansion of commercial banking and it’s rebranding.

The increase in the Company’s net-interest income resulted in a decrease in the efficiency ratio to 53.24% for the quarter ended June 30, 2013 compared to  66.55% for  the quarter ended June 30, 2012, and a decrease  to 55.35% for the six-month period ended June 30, 2013 from 62.16%  from the same period in the prior year. The efficiency ratio measures how much of a company’s revenue is used to pay operating expenses. The Company computes its efficiency ratio by dividing non-interest expenses by the sum of its net interest income and non-interest income, but excluding gains on the sale of investments securities, derivatives gains or losses, credit-related other-than-temporary impairment losses, FDIC shared-loss expense, losses on the early extinguishment of repurchase agreements, other gains and losses, and other income that may be considered volatile in nature. Management believes that the exclusion of those items permits greater comparability. Amounts presented  as part of non-interest income that are excluded from the efficiency ratio computation amounted to losses of $16.1 million  and $28.2 million for the quarter and six-month period ended June 30, 2013, respectively,  compared to gains of $6.4  million and  $8.0  million for the same period in 2012 . Revenue for purposes of the efficiency ratio for the quarter and six-month period ended June 30, 2013 amounted to $129.3 million and $245.0 million, respectively, compared to $44.6 million and $95.1 million for the same periods in 2012 .

Provision for Loan and Lease Losses

The provision for non-covered loan and lease losses for the quarter and six-month period ended June 30, 2013 totaled $37.5 million and $45.4 million, respectively, an increase of $33.7 million and $38.6 million from the same periods in 2012, mostly due to the net  impact of $21.0 million in additional provision for loan and lease losses from the reclassification to held-for-sale of non-performing residential mortgage loans with an unpaid principal balance of $59.0 million. Based on an analysis of the credit quality and the composition of the Company’s loan portfolio, management determined that the provision for the quarter ended June 30, 2013 was

85

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.

During the quarter and six-month period ended June 30,  2013, net credit losses amounted to $32.6 million and $35.9 million, respectively, a n increase of  766.0%  and 460.8%  when compared to $3.8 million  and $6.4 million  reported for  the same  periods  in  2012. The increase was primarily due to an increase of $27.2 million and a $28.8 million in net credit losses for mortgage loans during the quarter and the six-month period ended  June 30, 2013, respectively, compared to the same periods in 2012. These include $27.0 million in charge-offs due to the aforementioned reclassification to held-for-sale of non-performing residential loans with an unpaid principal balance of $59.0 million.

Total charge-offs on originated and other loans held-for-investment  increased 757.5% to $33.0 million and 451.3% to $36.5 million  for the  quarter and six-month period ended June 30, 2013, respectively, as compared to the same periods in 2012, and total recoveries increased from $94 thousand  and $216 thousand in the quarter and six-month period ended June 30, 2012, respectively, to $486 thousand and $585 thousand in  the quarter and the six-month period ended June 30, 2013, respectively. As a result, the recoveries to charge-offs ratio decreased from 2.44% and 3.26% in the quarter and six-month period ended June 30, 2012 to 1.47%  and 1.60% in the  quarter and six-month period ended June 30, 2013.

The loans acquired in the BBVAPR Acquisition accounted for under ASC 310-20 (loans with revolving feature and/or acquired at a premium) were recognized at fair value as of December 18, 2012, which included the impact of expected credit losses. Provision for loan and lease losses on these loans for the quarter and the six-month period ended June 30, 2013 was $1.6 million and $3.7 million, respectively. Loans acquired in the BBVAPR Acquisition accounted for under ASC 310-30 (loans acquired with deteriorated credit quality, including those by analogy) were also recognized at fair value as of December 18, 2012, which included the impact of expected credit losses. This portfolio did not require  provision for loan and lease losses for the quarter and the six-month period ended June 30, 2013.

The loans covered by the FDIC shared-loss agreement were recognized at fair value as of April 30, 2010, which included the impact of expected credit losses. To the extent credit deterioration occurs in covered loans after the date of acquisition, the Company records an allowance for loan and lease losses. Also, the Company records an increase in the FDIC shared-loss indemnification asset for the expected reimbursement from the FDIC under the shared-loss agreements. Provision for covered loans and lease losses for the quarter  and six-month period ended June 30,  2013 was $1.2 million and $1.9 million, reflecting the Company’s quarterly 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. During the quarter and six-month period ended June 30, 2012, some covered construction and development and commercial real estate loan pools underperformed, which required a provision amounting to $7.2 million, net of the estimated reimbursement from the FDIC. 

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

Income Taxes

The Company had an income tax benefit of  $31.9 million and $24.8 million for the quarter and six-month period ended June 30, 2013, respectively, compared to an expense of $1.1 million and $3.0 million for the same period in 2012. The income tax benefit of $31.9 million for the quarter ended June 30, 2013 includes three items resulting from the recent amendment to the Puerto Rico tax code: (i) a $37.0 million benefit from an increase in the Company’s deferred tax asset as a result of the increase in corporate income taxes to 39% from 30%; (ii) the Company’s income tax expense at the Company’s higher effective rate of 35.4% for the second quarter of 2013; and (iii) the increase in the Company’s income tax expense for the first quarter of 2013 as a result of the increase in the effective tax rate to 35.4% from the previously reported 25.2%. 

86

ANALYSIS OF FINANCIAL CONDITION

TABLE 4 - ASSETS SUMMARY AND COMPOSITION
	June 30,		December 31,
	2013		2012		Variance %
	(Dollars in thousands)
Investments:
FNMA and FHLMC certificates	$	1,390,622	$	1,693,447	-17.9%
Obligations of US Government sponsored agencies		15,113		21,847	-30.8%
US Treasury securities		26,501		26,496	0.0%
CMOs issued by US Government sponsored agencies		248,363		291,400	-14.8%
GNMA certificates		11,180		15,164	-26.3%
Puerto Rico Government and agency obligations		119,695		120,520	-0.7%
FHLB stock		22,156		38,411	-42.3%
Other debt securities		24,755		25,411	-2.6%
Other investments		2,275		568	300.5%
Total investments		1,860,660		2,233,265	-16.7%
Securities sold but not yet delivered		16,732		-	100.0%
Loans:
Loans not covered under shared-loss agreements with the FDIC		4,589,924		4,749,300	-3.4%
Allowance for loan and lease losses on non covered loans		(46,625)		(39,921)	-16.8%
Non covered loans receivable, net		4,543,299		4,709,379	-3.5%
Mortgage loans held for sale		78,350		64,544	21.4%
Total loans not covered under shared-loss agreements with the FDIC, net		4,621,649		4,773,923	-3.2%
Loans covered under shared-loss agreements with the FDIC		423,372		449,431	-5.8%
Allowance for loan and lease losses on covered loans		(53,992)		(54,124)	0.2%
Total loans covered under shared-loss agreements with the FDIC, net		369,380		395,307	-6.6%
Total loans, net		4,991,029		5,169,230	-3.4%
Securities purchased under agreements to resell		-		80,000	-100.0%
Total securities and loans		6,868,421		7,482,495	-8.2%
Other assets:
Cash and due from banks		737,330		855,490	-13.8%
Money market investments		10,983		13,205	-16.8%
FDIC shared-loss indemnification asset		236,472		286,799	-17.5%
Foreclosed real estate		81,689		73,516	11.1%
Accrued interest receivable		17,508		17,554	-0.3%
Deferred tax asset, net		155,165		122,501	26.7%
Premises and equipment, net		84,301		84,997	-0.8%
Servicing assets		12,994		10,795	20.4%
Derivative assets		19,655		21,889	-10.2%
Goodwill		76,383		76,383	0.0%
Other assets		135,033		150,638	-10.4%
Total other assets		1,567,513		1,713,767	-8.5%
Total assets	$	8,435,934	$	9,196,262	-8.3%
Investments portfolio composition:
FNMA and FHLMC certificates		74.9%		75.8%
Obligations of US Government sponsored agencies		0.8%		1.0%
US Treasury securities		1.4%		1.2%
CMOs issued by US Government sponsored agencies		13.3%		13.0%
GNMA certificates		0.6%		0.7%
Puerto Rico Government and agency obligations		6.4%		5.4%
FHLB stock		1.2%		1.7%
Other debt securities and other investments		1.4%		1.2%
		100.0%		100.0%

87

Assets Owned

At June 30, 2013, the Company’s total assets amounted to $8.436 billion, a decrease of 8.3% when compared to $9.196 billion at December 31, 2012, and interest-earning assets decreased 8.2% from $7.482 billion at December 31, 2012 to $6.868 billion at June 30, 2013.

At June 30, 2013, loans represented 73% of total interest-earning assets while investments represented 27%, compared to 70% and 30%, respectively, at December 31, 2012.

The Company’s loan portfolio is comprised of residential mortgage loans, commercial loans collateralized by mortgages on real estate located in Puerto Rico, other commercial and industrial loans, consumer loans, leases, and auto loans.  Auto loans were added as part of the recent BBVAPR Acquisition.  At June 30, 2013, the Company’s loan portfolio decreased 3.4% to $4.991 billion compared to $5.169 billion at December 31, 2012. The covered loan portfolio decreased $25.9 million, or 6.6%, from December 31, 2012. The non-covered loan portfolio decreased $152.3 million, or 3.2%.

The FDIC shared-loss indemnification asset amounted to $236.5 million as of June 30, 2013 and $286.8 million as of December 31, 2012 ,representing a 17% reduction .The FDIC shared-loss indemnification asset is reduced as claims over losses recognized on covered loans are collected from the FDIC. Realized credit losses in excess of previously forecasted estimates result in an increase in the FDIC shared-loss indemnification asset. Conversely, if realized credit losses are less than previously forecasted estimates, the FDIC shared-loss indemnification asset is amortized through the term of the shared-loss agreements. The decrease in the FDIC shared-loss indemnification asset is mainly related to reimbursements of $18.7 million received from the FDIC during the six-month period ended June 30, 2013, net amortization of $32.8 million and a decrease of $2.1 million in expected net credit impairment losses to be covered under shared-loss agreements, partially offset by $3.2 million in incurred expenses to be reimbursed under the shared-loss agreements.

Investments principally consist of U.S. treasury securities, U.S. government and agency bonds, mortgage-backed securities and Puerto Rico government and agency bonds.  At June 30, 2013, the investment portfolio decreased 16.7% to $1.861 billion from $2.233 billion at December 31, 2012.  This decrease is mostly due to the effect of a decrease of $302.8 million in FNMA and FHLMC certificates.  During the quarter and six-month period ended June 30, 2013, the Company did not have realized gains or losses due to the sale of securities.

88

TABLE 5 — LOANS RECEIVABLE COMPOSITION
	June 30,		December 31,		Variance
	2013		2012		%
	(In thousands)
Loans not covered under shared-loss agreements with FDIC:
Originated and other loans and leases held for investment:
Mortgage	$	755,298	$	804,942	-6.2%
Commercial		702,074		353,930	98.4%
Auto and leasing		233,092		50,720	359.6%
Consumer		89,608		48,136	86.2%
Total originated and other loans and leases held for investment		1,780,072		1,257,728	41.5%
Acquired loans:
Accounted for under ASC 310-20
Commercial and industrial		140,234		317,244	-55.8%
Construction and commercial real estate		14,519		29,215	-50.3%
Auto		373,587		457,894	-18.4%
Consumer		62,751		68,878	-8.9%
		591,091		873,231	-32.3%
Accounted for under ASC 310-30
Commercial		747,077		942,267	-20.7%
Construction		140,060		196,692	-28.8%
Mortgage		781,389		810,135	-3.5%
Auto		462,691		554,938	-16.6%
Consumer		88,375		118,171	-25.2%
		2,219,592		2,622,203	-15.4%
		2,810,683		3,495,434	-19.6%
		4,590,755		4,753,162	-3.4%
Deferred loans fees, net		(831)		(3,463)	76.0%
Loans receivable		4,589,924		4,749,699	-3.4%
Allowance for loan and lease losses on non-covered loans		(46,625)		(39,921)	-16.8%
Loans receivable, net		4,543,299		4,709,778	-3.5%
Mortgage loans held-for-sale		78,350		64,145	22.1%
Total loans not covered under shared-loss agreements with FDIC, net		4,621,649		4,773,923	-3.2%
Loans covered under shared-loss agreements with FDIC:
Loans secured by 1-4 family residential properties		123,507		128,811	-4.1%
Construction and development secured by 1-4 family residential properties		16,478		15,969	3.2%
Commercial and other construction		275,489		289,070	-4.7%
Leasing		943		7,088	-86.7%
Consumer		6,955		8,493	-18.1%
Total loans covered under shared-loss agreements with FDIC		423,372		449,431	-5.8%
Allowance for loan and lease losses on covered loans		(53,992)		(54,124)	0.2%
Total loans covered under shared-loss agreements with FDIC, net		369,380		395,307	-6.6%
Total loans receivable, net	$	4,991,029	$	5,169,230	-3.4%

89

As shown in Table 5 above, total loans receivable net amounted to $5.0 billion at June 30, 2013 compared to $5.2 billion at December 31, 2013. 

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

·Mortgage loan portfolio amounted to $755.3 million (42.4% of the gross originated loan portfolio) compared to $804.9 million (64.1% of the gross originated loan portfolio) at December 31, 2012. Mortgage loan production totaled $101.3 million and $178.4 million for the quarter  and  the six-month  period ended June 30, 2013, respectively, increase of 107.2%  and  90.0% from $48.9 million and $93.9 million in the  previous  year quarter and  six-month period, respectively.

·Commercial loan portfolio amounted to $702.1 million (39.4% of the gross originated loan portfolio) compared to $353.9 million (28.1% of the gross originated loan portfolio) at December 31, 2012. Commercial loan production increased 193.8% to $104.3 million for the second quarter ended June 30, 2013 and increased 95.5% to $178.3 for the six-month period ended June 30, 2013 from $35.5 million and $91.2 million for the same period in 2012.

·Consumer loan portfolio amounted to $89.6 million (5.0% of the gross originated loan portfolio) compared to $48.1 million (3.8% of the gross originated loan portfolio) at December 31, 2012. Consumer loan production increased 245.5% to $26.6 million for the quarter ended June 30, 2013 and 284.4%  to $49.2 million for the six-month period ended  June 30, 2013 from $7.7 million and $12.8 million for the same period in 2012.

·Auto and leasing portfolio amounted to $233.1 million (13.0% of the gross originated loan portfolio) compared to $50.7 million (4.0% of the gross originated loan portfolio) at December 31, 2012. Auto and leasing production was $94.7 million for the quarter ended June 30, 2013 and $195.7 million for the six-month period ended June 30, 2013, compared to $4.4 million and $8.9 million for the same period in 2012 in which the Company only originated leases. The auto business line was added as part of the BBVAPR Acquisition on December 18, 2012.

At  June 30, 2013 the Company's non-covered BBVAPR acquired loan portfolio  composition was as follows :
Portfolio Type		Carrying Amounts	% of Gross Non-Covered Acquired Portfolio
(In thousands)
Mortgage	$	781,389	27.80%
Commercial		1,041,888	37.07%
Consumer		151,124	5.38%
Auto		836,282	29.75%
	$	2,810,683	100.00%

90

TABLE 6 - LIABILITIES SUMMARY AND COMPOSITION
	June 30,		December 31,		Variance
	2013		2012		%
	(Dollars in thousands)
Deposits:
Non-interest bearing deposits	$	872,806	$	799,667	9.1%
NOW accounts		1,421,563		1,647,072	-13.7%
Savings and money market accounts		909,258		634,133	43.4%
Certificates of deposit		2,457,384		2,603,693	-5.6%
Total deposits		5,661,011		5,684,565	-0.4%
Accrued interest payable		4,027		4,994	-19.4%
Total deposits and accrued interest payable		5,665,038		5,689,559	-0.4%
Borrowings:
Short term borrowings		-		92,210	-100.0%
Securities sold under agreements to repurchase		1,313,870		1,695,247	-22.5%
Advances from FHLB		285,135		536,542	-46.9%
Federal funds purchased		29,431		9,901	197.3%
Other term notes		7,734		7,734	0.0%
Subordinated capital notes		98,961		146,038	-32.2%
Total borrowings		1,735,131		2,487,672	-30.3%
Total deposits and borrowings		7,400,169		8,177,231	-9.5%
Derivative liabilities		16,701		26,260	-36.4%
Acceptances outstanding		30,571		26,996	13.2%
Other liabilities		117,569		102,169	15.1%
Total liabilities	$	7,565,010	$	8,332,656	-9.2%
Deposits portfolio composition percentages:
Non-interest bearing deposits		15.4%		14.1%
NOW accounts		25.1%		29.0%
Savings and money market accounts		16.1%		11.2%
Certificates of deposit		43.4%		45.7%
		100.0%		100.0%
Borrowings portfolio composition percentages:
Short term borrowings		0.0%		3.7%
Securities sold under agreements to repurchase		75.8%		68.1%
Advances from FHLB		16.4%		21.6%
Federal funds purchased		1.7%		0.4%
Other term notes		0.4%		0.3%
Subordinated capital notes		5.7%		5.9%
		100.0%		100.0%
Securities sold under agreements to repurchase
Amount outstanding at period-end	$	1,313,870	$	1,695,247
Daily average outstanding balance	$	1,440,866	$	2,888,558
Maximum outstanding balance at any month-end	$	1,695,247	$	3,060,578

91

Liabilities and Funding Sources

As shown in Table 6 above, at June 30, 2013, the Company’s total liabilities were $7.565 billion, 9.2% less than the $8.333 billion reported at December 31, 2012.  Deposits and borrowings, the Company’s funding sources, amounted to $7.400 billion at June 30, 2013 versus $8.177 billion at December 31, 2012, an  9.5% decrease.

At June 30, 2013, deposits represented 77% and borrowings represented 23% of interest-bearing liabilities, compared to 70% and 30%, respectively, at December 31, 2012. At June 30, 2013, deposits and accrued interest payable, the largest category of the Company’s interest-bearing liabilities, were $5.665 billion, down 0.4% from $5.690 billion at December 31, 2012. Core deposits increased  2.7% to $4.891 billion at June 30, 2013 from December 31, 2012, and brokered deposits decreased 16.6% to $774.1 million as of June 30, 2013 from $928.2 million at December 31, 2012.

Borrowings consist mainly of funding sources through the use of repurchase agreements, FHLB advances, subordinated capital notes, and short-term borrowings. At June 30, 2013, borrowings amounted to $1.735 billion, 30.3% lower than the $2.488 billion reported at December 31, 2012. Repurchase agreements as of June 30, 2013 decreased $381.4 million to $1.314 billion from $1.695 billion at December 31, 2012, as the Company used available cash to pay off repurchase agreements at maturity.

As a member of the FHLB, the Bank can obtain advances from the FHLB, secured by the FHLB stock owned by the Bank, as well as by certain of the Bank’s mortgage loans and investment securities. Advances from FHLB amounted to $285.1 million and $536.5 million as of June 30, 2013 and December 31, 2012, respectively. These advances mature from July 2013 through January 2018.

Stockholders’ Equity

At June 30, 2013, the Company’s total stockholders’ equity was $870.9 million, a 0.8% increase when compared to $863.6 million at December 31, 2012.  Increase in stockholders’ equity was mainly driven by the income for the six-month period, partially offset by changes to other comprehensive  income.

Tangible common equity to total assets increased to 7.30% from 6.74% at the end of the last year. Tier 1 Leverage Capital Ratio increased to 8.54% from 6.42%, Tier 1 Risk-Based Capital Ratio increased to 13.96% from 12.94%, and Total Risk-Based Capital Ratio increased to 16.02% from 15.15% on December 31, 2012.

The Company maintains capital ratios in excess of regulatory requirements. At June 30, 2013, Tier 1 Leverage Capital Ratio was 2.14 times the minimum requirement of 4.00%, Tier 1 Risk-Based Capital Ratio was 3.49 times the minimum requirement of 4.00%, and Total Risk-Based Capital Ratio was 2.00 times the minimum requirement of 8.00%.

92

The following are the consolidated capital ratios of the Company at June 30, 2013 and December 31, 2012:

TABLE 7 — CAPITAL, DIVIDENDS AND STOCK DATA
	June 30,		December 31,		Variance
	2013		2012		%
	(Dollars in thousands, except per share data)
Capital data:
Stockholders’ equity	$	870,924	$	863,606	0.8%
Regulatory Capital Ratios data:
Leverage capital ratio		8.54%		6.42%	32.9%
Minimum leverage capital ratio required		4.00%		4.00%
Actual tier 1 capital	$	702,801	$	678,127	3.6%
Minimum tier 1 capital required	$	329,225	$	422,307	-22.0%
Excess over regulatory requirement	$	373,576	$	255,820	46.0%
Tier 1 risk-based capital ratio		13.96%		12.94%	7.9%
Minimum tier 1 risk-based capital ratio required		4.00%		4.00%
Actual tier 1 risk-based capital	$	702,801	$	678,127	3.6%
Minimum tier 1 risk-based capital required	$	201,409	$	209,634	-3.9%
Excess over regulatory requirement	$	501,392	$	468,493	7.0%
Risk-weighted assets	$	5,035,233	$	5,240,861	-3.9%
Total risk-based capital ratio		16.02%		15.15%	5.7%
Minimum total risk-based capital ratio required		8.00%		8.00%
Actual total risk-based capital	$	806,418	$	794,195	1.5%
Minimum total risk-based capital required	$	402,819	$	419,269	-3.9%
Excess over regulatory requirement	$	403,599	$	374,926	7.6%
Risk-weighted assets	$	5,035,233	$	5,240,861	-3.9%
Tangible common equity to total assets		7.30%		6.73%	8.5%
Tangible common equity to risk-weighted assets		12.22%		11.82%	3.4%
Total equity to total assets		10.32%		9.39%	9.9%
Total equity to risk-weighted assets		17.30%		16.48%	5.0%
Tier 1 common equity to risk-weighted assets		9.97%		9.11%	9.4%
Tier 1 common equity capital	$	501,932	$	477,241	5.2%
Stock data:
Outstanding common shares		45,640,105		45,580,281	0.1%
Book value per common share	$	15.45	$	15.31	0.9%
Market price at end of period	$	18.11	$	13.35	35.7%
Market capitalization at end of period	$	826,542	$	608,497	35.8%

	Six-Month Period Ended June 30,
					Variance
	2013		2012		%
Common dividend data:
Cash dividends declared	$	5,479	$	4,886	12.1%
Cash dividends declared per share	$	0.12	$	0.12	0.0%
Payout ratio		11.54%		21.19%	-45.5%
Dividend yield		1.33%		2.17%	-38.9%

93

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, 2013 and December 31, 2012:

	June 30,		December 31,
	2013		2012
	(In thousands, except share or per share information)
Total stockholders' equity	$	870,924	$	863,606
Preferred stock		(176,000)		(176,000)
Preferred stock issuance costs		10,130		10,115
Goodwill		(76,383)		(76,383)
Core deposit intangible		(8,633)		(9,463)
Customer relationship intangible		(4,568)		(5,027)
Total tangible common equity	$	615,470	$	606,848
Total assets		8,435,934		9,196,261
Goodwill		(76,383)		(76,383)
Core deposit intangible		(8,633)		(9,463)
Customer relationship intangible		(4,568)		(5,027)
Total tangible assets	$	8,346,350	$	9,105,388
Tangible common equity to tangible assets		7.37%		6.66%
Common shares outstanding at end of period		45,640,105		45,580,281
Tangible book value per common share	$	13.49	$	13.31

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

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

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

94

The table below presents a reconciliation of the Company’s total common equity (GAAP) at June 30, 2013 and December 31, 2012 to Tier 1 common equity (non-GAAP):

	June 30,		December 31
	2013		2012
	(In thousands)
Common stockholders' equity	$	705,054	$	697,721
Unrealized gains on available-for-sale securities, net of income tax		(25,400)		(68,245)
Unrealized losses on cash flow hedges, net of income tax		9,634		12,365
Disallowed deferred tax assets		(96,473)		(85,010)
Disallowed servicing assets		(1,299)		(1,079)
Intangible assets:
Goodwill		(76,383)		(76,383)
Other disallowed intangibles		(13,201)		(14,490)
Total Tier 1 common equity	$	501,932	$	464,879
Tier 1 common equity to risk-weighted assets		9.97%		8.87%

The following table presents the Company’s capital adequacy information at June 30, 2013 and December 31, 2012:

	June 30,		December 31,
	2013		2012
	(In thousands)
Risk-based capital:
Tier 1 capital	$	702,801	$	678,127
Supplementary (Tier 2) capital		103,616		116,068
Total risk-based capital	$	806,417	$	794,195
Risk-weighted assets:
Balance sheet items	$	4,715,273	$	4,927,919
Off-balance sheet items		319,960		312,942
Total risk-weighted assets	$	5,035,233	$	5,240,861
Ratios:
Tier 1 capital (minimum required - 4%)		13.96%		12.94%
Total capital (minimum required - 8%)		16.02%		15.15%
Leverage ratio		8.54%		6.42%
Equity to assets		10.32%		9.39%
Tangible common equity to assets		7.30%		6.66%

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

The sum of Tier 2 and Tier 3 Capital may not exceed the amount of Tier 1 Capital. At June 30, 2013 and December 31, 2012, the Company was a “well capitalized” institution for regulatory purposes.

95

The Federal Reserve Board has regulations with respect to risk-based and leverage capital ratios that require most intangibles, including goodwill and core deposit intangibles, to be deducted from Tier 1 Capital. The only types of identifiable intangible assets that may be included in, that is, not deducted from, an organization’s capital are readily marketable mortgage servicing assets, nonmortgage servicing assets, and purchased credit card relationships.

In addition, the Federal Reserve Board has established minimum leverage ratio (Tier 1 Capital to total assets) guidelines for bank holding companies and member banks. These guidelines provide for a minimum leverage ratio of 3% for bank holding companies and member banks that meet certain specified criteria, including that they have the highest regulatory rating.  All other bank holding companies and member banks are required to maintain a minimum ratio of Tier 1 Capital to total assets of 4%. The guidelines also provide that banking organizations experiencing internal growth or making acquisitions are expected to maintain strong capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets. Furthermore, the guidelines state that the Federal Reserve Board will continue to consider a “tangible Tier 1 leverage ratio” and other indicators of capital strength in evaluating proposals for expansion or new activities.

Under the Dodd-Frank Act, federal banking regulators are required to establish minimum leverage and risk-based capital requirements on a consolidated basis for insured institutions, depository institution holding companies, and non-bank financial companies supervised by the Federal Reserve Board. The minimum leverage and risk-based capital requirements are to be determined based on the minimum ratios established for insured depository institutions under prompt corrective action regulations. In effect, such provision of the Dodd-Frank Act (i.e., Section 171), which is commonly known as the Collins Amendment, applies to bank holding companies the same leverage and risk based capital requirements that apply to insured depository institutions. Because the capital requirements must be the same for insured depository institutions and their holding companies, the Collins Amendment generally excludes certain debt or equity instruments, such as cumulative perpetual preferred stock and trust preferred securities, from Tier 1 Capital, subject to a three-year phase-out from Tier 1 qualification for such instruments issued before May 19, 2010, with the phase-out commencing on January 1, 2014 for advanced approaches banking organizations and January 1, 2015 for other bank holding companies with consolidated assets of $15 billion or more as of December 31, 2009. However, such instruments issued before May 19, 2010 by a bank holding company, such as the Company, with total consolidated assets of less than $15 billion as of December 31, 2009, are not affected by the Collins Amendment and may continue to be included in Tier 1 Capital as a restricted core capital element.

In July 2013, the Office of the Comptroller of the Currency (the “OCC”), the Federal Reserve Board, and the FDIC adopted new rules that revise and replace the agencies’ current capital rules. The new capital rules revise the agencies’ risk-based and leverage capital requirements for banking organizations, and consolidate three separate notices of proposed rulemaking that the OCC, Federal Reserve Board and FDIC published in the Federal Register on August 30, 2012, with selected changes. These rules implement a revised definition of regulatory capital, a new common equity Tier 1 minimum capital requirement, a higher minimum Tier 1 capital requirement, and, for banking organizations subject to the advanced approaches risk-based capital rules, a supplementary leverage ratio that incorporates a broader set of exposures in the denominator.  The rules incorporate these new requirements into the agencies’ prompt corrective action framework.  In addition, the rules establish limits on a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a specified amount of common equity Tier 1 capital in addition to the amount necessary to meet its minimum risk-based capital requirements.  Further, the rules amend the methodologies for determining risk-weighted assets for all banking organizations; introduce disclosure requirements that would apply to top-tier banking organizations domiciled in the United States with $50 billion or more in total assets; and adopt changes to the agencies’ regulatory capital requirements that meet the requirements of Section 171 and Section 939A of the Dodd-Frank Act.  These rules also codify the agencies’ current capital rules, which have previously resided in various appendices to their respective regulations, into a harmonized integrated regulatory framework.

The Company’s common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “OFG.”  At June 30, 2013 and December 31, 2012, the Company’s market capitalization for its outstanding common stock was $826.5 million ($18.11 per share) and $608.5 million ($13.35 per share), respectively.

96

The following table provides the high and low prices and dividends per share of the Company’s common stock for each quarter in 2013, 2012 and 2011:

					Cash
	Price				Dividend
	High		Low		Per share
2013
June 30, 2013	$	18.11	$	14.26	$	0.06
March 31, 2013	$	15.83	$	13.85	$	0.06
2012
December 31, 2012	$	13.35	$	9.98	$	0.06
September 30, 2012	$	11.49	$	10.02	$	0.06
June 30, 2012	$	12.37	$	9.87	$	0.06
March 31, 2012	$	12.69	$	11.25	$	0.06
2011
December 31, 2011	$	12.35	$	9.19	$	0.06
September 30, 2011	$	13.20	$	9.18	$	0.05
June 30, 2011	$	13.07	$	11.26	$	0.05
March 31, 2011	$	12.84	$	11.40	$	0.05

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, 2013 and at December 31, 2012:

	June 30,		December 31,		Variance
	2013		2012		%
	(Dollars in thousands)
Oriental Bank Regulatory Capital Ratios:
Total Tier 1 Capital to Total Assets		7.84%		5.76%	36.2%
Actual tier 1 capital	$	641,043	$	604,997	6.0%
Minimum capital requirement (4%)	$	327,058	$	420,298	-22.2%
Minimum to be well capitalized (5%)	$	408,823	$	525,373	-22.2%
Tier 1 Capital to Risk-Weighted Assets		12.94%		11.80%	9.7%
Actual tier 1 risk-based capital	$	641,043	$	604,997	6.0%
Minimum capital requirement (4%)	$	198,145	$	205,134	-3.4%
Minimum to be well capitalized (6%)	$	297,218	$	307,701	-3.4%
Total Capital to Risk-Weighted Assets		15.01%		14.03%	7.0%
Actual total risk-based capital	$	743,653	$	719,675	3.3%
Minimum capital requirement (8%)	$	396,291	$	410,268	-3.4%
Minimum to be well capitalized (10%)	$	495,363	$	512,835	-3.4%

97

Company’s Financial Assets Managed

The Company’s financial assets managed include those managed by the Company’s trust division, retirement plan administration subsidiary, and its broker-dealer subsidiaries.  Assets managed by the trust division and the broker-dealer subsidiaries increased from December 31, 2012, mainly as a result of an increase in employer and employee account contributions and capital market appreciation.

The Company’s trust division offers various types of IRAs and manages 401(k) and Keogh retirement plans and custodian and corporate trust accounts, while the retirement plan administration subsidiary, CPC, manages private retirement plans.  At June 30, 2013, total assets managed by the Company’s trust division and CPC amounted to $2.639 billion, compared to $2.514 billion at December 31, 2012. Oriental Financial Services and OFS Securities offer a wide array of investment alternatives to their client base, such as tax-advantaged fixed income securities, mutual funds, stocks, bonds and money management wrap-fee programs.  At June 30, 2013, total assets gathered by Oriental Financial Services and OFS Securities from their customer investment accounts increased to $2.822 billion, compared to $2.722 billion in assets gathered at December 31, 2012.

Allowance for Loan and Lease Losses and Non-Performing Assets

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 13 set forth an analysis of activity in the allowance for loan and lease losses and present selected loan loss statistics. In addition, refer to Table 5 for the composition of the loan portfolio.

Non-covered Loans

At June 30, 2013, the Company’s allowance for non-covered loan and lease losses amounted to $46.6 million, $41.2 million of such allowance corresponded to originated and other loans held for investment, or 2.91% of total non-covered originated and other loans held for investment at June 30, 2013, compared to $39.9 million or 3.17% of total non-covered originated and other loans held for investment at December 31, 2012. The allowance for residential mortgage loans, consumer loans, and auto and leases increased by 8.5% (or $1.8 million), 53.4% (or $457 thousand), and 226.6% (or $1.2 million), respectively, when compared with balances recorded at December 31, 2012.  The allowance for commercial loans decreased by 4.4%, or $758 thousand, when compared with balances recorded at December 31, 2012.  The unallocated allowance at June 30, 2013 decreased by 79.1%, or $291 thousand, when compared with balances recorded at December 31, 2012.

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.

Loans acquired in a business acquisition are recorded at their fair value at the acquisition date. Credit cards, floor plans, revolving lines of credit, and auto loans with FICO scores over 660, acquired as part of the BBVAPR Acquisition are accounted for under the guidance of ASC 310-20, which requires that any differences between 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 acquired in the BBVAPR Acquisition that were accounted for under the provisions of ASC 310-20 which had fully amortized their premium or discount, recorded at the date of acquisition, at the end of the reporting period are removed from the acquired loan category. Allowance for loan and lease losses recorded for acquired loans as of June 30, 2013 was $924 thousand. 

The remaining loans acquired in the BBVAPR Acquisition are accounted for under ASC-310-30 and were recognized at fair value as of December 18, 2012. The Company does not believe differences between cash flows collected on the loans acquired in the BBVAPR Acquisition accounted for under ASC-310-30 and those anticipated at December 18, 2012 are the result of credit deterioration from our original estimates, and thus no allowance for these loans was recorded as of June 30, 2013.

There have been no material changes in criteria or estimation techniques as compared to prior periods that impacted the determination of the current period allowance for loan and lease losses, except for the inclusion of the loans acquired under BBVAPR Acquisition.

The Company’s non-performing assets include non-performing loans and foreclosed real estate (see Tables 11 and 12). At June 30, 2013 and December 31, 2012, the Company had $132.2 million and $146.6 million, respectively, of non-accrual non-covered loans, including acquired loans accounted under ASC 310-20 (loans with revolving feature and/or acquired at a premium).  Covered loans

98

and loans acquired from BBVAPR with credit deterioration are considered to be performing due to the application of the accretion method under ASC 310-30. At June 30, 2013 and December 31, 2012, loans whose terms have been extended and which are classified as troubled-debt restructuring that are not included in non-performing assets amounted to $48.3 million and $52.0 million, respectively.

At June 30, 2013, the Company’s non-performing assets decreased 3.2% to $221.3 million (3.84% of total assets, excluding covered assets and acquired loans with deteriorated credit quality) from $228.5 million (3.72% of total assets, excluding covered assets and acquired loans with deteriorated credit quality) at December 31, 2012.  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, 2013, the allowance for non-covered originated loans and lease losses to non-performing loans coverage ratio was 32.45% (27.13% at December 31, 2012).

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, and does not originate construction and development loans.

The following items comprise non-performing assets:

1.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, 2013, the Company’s originated non-performing mortgage loans totaled $99.1 million (75.0% of the Company’s non-performing loans), a 13.8% decrease from $115.0 million (78.4% of the Company’s non-performing loans) at December 31, 2012.  Non-performing loans in this category are primarily residential mortgage loans. Non-performing loans decrease is primarily due to the reclassification of certain non-performing residential mortgage loans with a net book value of $53.6 million, to the loan held-for-sale category. Without this re-class to loans held-for-sale, non-performing loan balances would have been relatively consistent between December 31, 2012 and June 31, 2013.

·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, 2013, the Company’s originated non-performing commercial loans amounted to $30.8 million (23.3% of the Company’s non-performing loans), a 4.2% increase when compared to non-performing commercial loans of $29.5 million at December 31, 2012 (20.1% of the Company’s non-performing loans).  Most of this portfolio is collateralized by commercial real estate properties.

·Consumer loans — are placed on non-accrual status when they become 90 days past due and written-off when payments are delinquent 120 days in personal loans and 180 days in credit cards and personal lines of credit.  At June 30, 2013, the Company’s originated non-performing consumer loans amounted to $371 thousand (0.3% of the Company’s total non-performing loans), a 16.1% decrease from $442 thousand at December 31, 2012 (0.3% of the Company’s total non-performing loans).

·Auto and leases — are placed on non-accrual status when they become 90 days past due and 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, 2013, the Company’s originated non-performing auto and leases amounted to $219thousand (0.2% of the Company’s total non-performing loans), an increase of 67.2% from $131 thousand at December 31, 2012 (0.1% of the Company’s total non-performing loans).

2.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, 2013, the Company’s acquired non-performing commercial lines of credit accounted for under ASC 310-20 amounted to $153 thousand (0.1% of the Company’s non-performing loans), a 20.7% decrease when compared to non-

99

performing commercial lines of credit accounted for under ASC 310-20 of $193 thousand at December 31, 2012 (0.1% 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 and written-off when payments are delinquent 120 days. At June 30, 2013, the Company’s acquired non-performing auto loans accounted for under ASC 310-20 totaled $605 thousand (0.5% of the Company’s non-performing loans), a 120.0% increase when compared to non-performing auto loans accounted for under ASC 310-20 of $275 thousand at December 31, 2012 (0.2% 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, 2013, the Company’s acquired non-performing consumer lines of credit and credit cards accounted for under ASC 310-20 totaled $1.0 million (0.8% of the Company’s non-performing loans), an 8.6% decrease when compared to non-performing consumer lines of credit and credit cards accounted for under ASC 310-20 of $1.1 million at December 31, 2012 (0.7% of the Company’s non-performing loans).

3.Acquired loans accounted for under ASC 310-30 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.

4.Foreclosed real estate is initially recorded at the lower of the related loan balance or fair value less cost to sell as of the date of foreclosure. Any excess of the loan balance over the fair value of the property is charged against the allowance for loan and lease losses. Subsequently, any excess of the carrying value over the estimated fair value less disposition cost is charged to operations. Net losses on the sale of foreclosed real estate for the quarter and six-month period ended June 30, 2013 amounted to $1.7 million and $3.6 million, respectively, compared to $886 thousand and $1.3 million for the same quarter in 2012.

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 toremain 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 the FNMA and FHLMC, and conventional loans retained by the Company. The program offers diversified alternatives such as regular or reduced payment plans, payment moratorium, mortgage loan modification, partial claims (only FHA), short sale, and payment in lieu of foreclosure.

The Non-traditional Mortgage Loan Program is for non-traditional mortgages, including balloon payment, interest only/interest first, variable interest rate, adjustable interest rate and other qualified loans. Non-traditional mortgage loan portfolios are segregated into the following categories: performing loans that meet secondary market requirement and are refinanced by the credit underwriting guidelines of FHA/VA/FNMA/FMAC, 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 will 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.

Covered Loans

The allowance for loan and lease losses on covered loans acquired in the FDIC-assisted acquisition of Eurobank is accounted under the provisions of ASC 310-30. Under this accounting guidance, the allowance for loan and lease losses on covered loans is evaluated at each financial reporting period, based on forecasted cash flows. Credit related decreases in expected cash flows, compared to those previously forecasted, are recognized by recording a provision for credit losses on covered loans when it is probable that all cash flows

100

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 shared-loss indemnification asset.

During the quarter ended June 30, 2013, the assessment of actual versus expected cash flows resulted in a net provision of $1.2 million, principally because certain pools of commercial real estate backed loans underperformed. The pools in which an additional allowance was recognized had no offsetting adjustment  to the FDIC shared-loss indemnification asset as these losses were not covered by a loss share agreement  and were mainly attributed to delay timing in the expected cash flows rather than additional forecasted losses. 

For the six-month period ended June 30, 2013, the net provision for covered loans amounted to $1.9 million.  The allowance for covered loans decreased from $54.1 million at December 31, 2012 to $53.0 million at June 30, 2013. The decrease in the allowance balance is mainly attributable to the fact that during the first quarter of this period, the assessment of actual versus expected cash flows included the reversal of previously recorded allowance in certain commercial real estate and commercial and industrial pools whose loans the Company has managed to workout with better outcomes than forecasted. 

101

TABLE 8 — ALLOWANCE FOR LOAN AND LEASE LOSSES SUMMARY
	Quarter Ended June 30,					Six-Month Period Ended June 30,
					Variance					Variance
	2013		2012		%	2013		2012		%
	(Dollars in thousands)
Non-covered loans
Originated loans:
Balance at beginning of period	$	42,334	$	37,361	13.3%	$	39,921	$	37,010	7.9%
Provision for non-covered         loan and lease losses		35,919		3,800	845.2%		41,715		6,800	513.5%
Charge-offs		(33,038)		(3,853)	757.5%		(36,521)		(6,624)	451.3%
Recoveries		486		94	417.0%		586		216	171.3%
		45,701		37,402	22.2%		45,701		37,402	22.2%
Acquired loans accounted for under ASC 310-20:
Balance at beginning of period	$	386	$	-	0.0%	$	-	$	-	0.0%
Provision for non-covered         loan and lease losses		1,608		-	100.0%		3,728		-	100.0%
Charge-offs		(2,593)		-	100.0%		(5,764)		-	100.0%
Recoveries		1,523		-	100.0%		2,960		-	100.0%
		924		-	100.0%		924		-	100.0%
Total non-covered loans balance   at end of period	$	46,625	$	37,402	24.7%	$	46,625	$	37,402	24.7%
Allowance for loans and lease       losses on originated loans to:
Total originated loans		2.57%		3.17%	-19.0%		2.57%		3.03%	-15.2%
Non-performing originated loans		51.03%		31.03%	64.4%		51.03%		30.54%	67.1%
Allowance for loans and lease       losses on acquired loans         accounted for under ASC 310-20:
Total acquired loans accounted         for under ASC 310-20		0.16%		-	100.0%		0.07%		-	100.0%
Non-performing acquired loans         accounted for under ASC 310-20		41.32%		-	100.0%		41.32%		-	100.0%
Covered loans
Balance at beginning of period	$	54,124	$	56,437	-4.1%	$	54,124	$	37,256	45.3%
Provision for covered         loan and lease losses, net		672		1,467	-54.2%		672		8,624	-92.2%
FDIC shared-loss portion on        (provision for) recapture of loan        and lease losses		(1,822)		724	-351.7%		(1,822)		12,748	-114.3%
Balance at end of period	$	52,974	$	58,628	-9.6%	$	52,974	$	58,628	-9.6%

102

TABLE 9 — ALLOWANCE FOR NON-COVERED LOAN AND LEASE LOSSES BREAKDOWN
		June 30,		December 31,	Variance
	2013		2012		%
	(Dollars in thousands)
Originated and other loans held for investment
Allowance balance:
Mortgage	$	21,375	$	21,092	1.3%
Commercial		17,623		17,072	3.2%
Auto and leasing		3,641		533	583.1%
Consumer		2,342		856	173.6%
Unallocated allowance		720		368	95.7%
Total allowance balance	$	45,701	$	39,921	14.5%
Allowance composition:
Mortgage		46.77%		52.83%	-11.5%
Commercial		38.56%		42.76%	-9.8%
Auto and leasing		7.97%		1.34%	494.8%
Consumer		5.12%		2.14%	139.3%
Unallocated allowance		1.58%		0.93%	69.9%
		100.00%		100.00%
Allowance coverage ratio at end of period applicable to:
Mortgage		2.83%		2.62%	8.0%
Commercial		2.51%		4.82%	-48.0%
Auto and leasing		1.56%		1.05%	48.6%
Consumer		2.61%		1.78%	47.0%
Unallocated allowance to total originated loans		0.04%		0.03%	38.2%
Total allowance to total originated loans		2.57%		3.17%	-19.1%
Allowance coverage ratio to non-performing loans:
Mortgage		38.40%		18.34%	109.4%
Commercial		54.34%		57.86%	-6.1%
Auto and leasing		332.21%		406.87%	-18.4%
Consumer		631.27%		193.67%	226.0%
Total		51.03%		27.52%	85.4%
Acquired loans accounted for under ASC 310-20
Allowance balance:
Commercial	$	924	$	-	100.0%
Total allowance balance	$	924	$	-	100.0%
Allowance composition:
Commercial		100.00%		0.00%	100.0%
		100.00%		0.00%
Allowance coverage ratio at end of period applicable to:
Commercial		0.60%		0.00%	100.0%
Total allowance to total acquired loans		0.11%		0.00%	100.0%
Allowance coverage ratio to non-performing loans:
Commercial		187.42%		0.00%	100.0%

103

TABLE 10 — NET CREDIT LOSSES STATISTICS ON NON-COVERED ORIGINATED LOAN AND LEASES
	Quarter Ended June 30,					Six-Month Period Ended June 30,
					Variance					Variance
	2013		2012		%	2013		2012		%
	(In thousands)					(In thousands)
Mortgage					200
Charge-offs	$	(29,119)	$	(1,948)	1394.8%	$	(31,708)	$	(2,869)	1005.2%
Total		(29,119)		(1,948)	1394.8%		(31,708)		(2,869)	1005.2%
Commercial
Charge-offs		(2,887)		(1,721)	67.8%		(3,444)		(3,358)	2.6%
Recoveries		234		34	588.2%		262		101	159.4%
Total		(2,653)		(1,687)	57.3%		(3,182)		(3,257)	-2.3%
Consumer
Charge-offs		(323)		(184)	75.5%		(569)		(366)	55.5%
Recoveries		43		56	-23.2%		108		107	0.9%
Total		(280)		(128)	118.8%		(461)		(259)	78.0%
Auto and leasing
Charge-offs		(709)		-	-100.0%		(800)		(31)	2480.6%
Recoveries		209		4	5125.0%		216		8	2600.0%
Total		(500)		4	-12600%		(584)		(23)	2439.1%
Net credit losses
Total charge-offs		(33,038)		(3,853)	757.5%		(36,521)		(6,624)	451.3%
Total recoveries		486		94	417.0%		586		216	171.3%
Total	$	(32,552)	$	(3,759)	766.0%	$	(35,935)	$	(6,408)	460.8%
Net credit losses to average     loans outstanding:
Mortgage		14.38%		0.95%	1413.7%		7.82%		0.69%	1033.3%
Commercial		2.66%		2.17%	22.6%		1.64%		2.13%	-23.0%
Consumer		1.52%		1.29%	17.8%		1.43%		1.34%	6.7%
Auto and leasing		1.05%		-0.06%	-1850.0%		0.81%		0.17%	376.5%
Total		8.84%		1.25%	607.2%		5.11%		1.07%	377.6%
Recoveries to charge-offs		1.47%		2.44%	-39.7%		1.60%		3.26%	-50.8%
Average originated loans:
Mortgage	$	809,898	$	821,807	-1.4%	$	810,441	$	828,700	-2.2%
Commercial		398,456		311,299	28.0%		386,882		305,116	26.8%
Consumer		73,776		39,623	86.2%		64,412		38,798	66.0%
Auto and leasing		190,129		27,908	581.3%		144,441		26,719	440.6%
Total	$	1,472,259	$	1,200,637	22.6%	$	1,406,176	$	1,199,333	17.2%

104

TABLE 11 — NON-PERFORMING ASSETS
	June 30,		December 31,		Variance
	2013		2012		(%)
	(Dollars in thousands)
Non-performing assets:
Non-accruing loans
Troubled Debt Restructuring loans	$	35,566	$	50,468	-29.5%
Other loans		52,762		96,176	-45.1%
Accruing loans
Troubled Debt Restructuring loans		2,821		-	0.0%
Other loans		652		-	0.0%
Total non-performing loans	$	91,801	$	146,644	-37.4%
Foreclosed real estate not covered under the         shared-loss agreements with the FDIC		81,689		75,447	8.3%
Other repossessed asset		8,921		6,084	46.6%
Mortgage loans held for sale		26,586		319	8234.2%
	$	208,997	$	228,494	-8.5%
Non-performing assets to total assets, excluding covered assets and acquired loans with deteriorated credit quality (including those by analogy)		3.59%		3.72%	-3.5%
Non-performing assets to total capital		24.00%		26.46%	-9.3%

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)
Interest that would have been recorded in the period if the     loans had not been classified as non-accruing loans	$	530	$	1,642	$	991	$	3,075

105

TABLE 12 — NON-PERFORMING LOANS
	June 30,		December 31,		Variance
	2013		2012		%
	(Dollars in thousands)
Non-performing loans:
Originated and other loans held for investment
Mortgage	$	55,668	$	115,002	-51.6%
Commercial		32,430		29,506	9.9%
Consumer		371		442	-16.1%
Auto and leasing		1,096		131	736.6%
Acquired loans accounted for under ASC 310-20 (Loans with         revolving feature and/or acquired at a premium)
Commercial		493		193	155.4%
Auto loans		674		275	145.1%
Consumer		1,069		1,095	-2.4%
Total	$	91,801	$	146,644	-37.4%
Non-performing loans composition percentages:
Originated loans
Mortgage		60.6%		78.4%
Commercial		35.3%		20.1%
Consumer		0.4%		0.3%
Auto and leasing		1.2%		0.1%
Acquired loans accounted for under ASC 310-20 (Loans with         revolving feature and/or acquired at a premium)
Commercial		0.5%		0.1%
Auto loans		0.7%		0.2%
Consumer		1.2%		0.7%
Total		100.0%		100.0%
Non-performing loans to:
Total loans, excluding covered loans and loans accounted for         under ASC 310-30 (including those by analogy)		3.87%		6.90%	-43.9%
Total assets, excluding covered assets and loans accounted for         under ASC 310-30 (including those by analogy)		1.58%		2.39%	-34.0%
Total capital		10.54%		16.98%	-37.9%
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)		1.26%		2.01%	-37.2%
Non-performing loans		32.49%		29.17%	11.4%
Other non-performing loans ratios:
Charge-off rate on non-performing loans to non-performing loans         on which charge-offs have been taken		40.25%		27.86%	44.5%
Allowance for loan and lease losses to non-performing         loans on which no charge-offs have been taken		75.23%		37.81%	99.0%

106

TABLE 13 — HIGHER RISK RESIDENTIAL MORTGAGE LOANS

June 30, 2013
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	$	14,555	$	353	2.43%	$	26,680	$	1,233	4.62%	$	86,279	$	3,003	3.48%
90 - 119 days		92	7	7	7.61%		153		9	5.88%		1,783		90	5.05%
120 - 179 days		124		17	13.71%		-		-	0.00%		93		8	8.60%
180 - 364 days		440		30	6.82%		1,375		330	24.00%		1,708		176	10.30%
365+ days		1,787		349	19.53%		2,512		928	36.94%		1,871		266	14.22%
Total	$	16,998	$	756	4.45%	$	30,720	$	2,500	8.14%	$	91,734	$	3,543	3.86%
Percentage of total loans excluding     acquired loans accounted for under ASC 310-30		0.69%					1.25%					3.75%
Refinanced or Modified Loans:
Amount	$	2,680	$	290	10.82%	$	-	$	-	0.00%	$	19,758	$	2,066	10.46%
Percentage of Higher-Risk Loan     Category		15.77%					0.00%					21.54%
Loan-to-Value Ratio:
Under 70%	$	12,835	$	612	4.77%	$	5,599	$	1,243	22.20%	$	-	$	-	-
70% - 79%		2,834		67	2.36%		3,942		182	4.62%		-		-	-
80% - 89%		1,019		36	3.53%		8,535		489	5.73%		-		-	-
90% and over		310		41	13.23%		12,644		586	4.63%		91,734		3,543	3.86%
	$	16,998	$	756	4.45%	$	30,720	$	2,500	8.14%	$	91,734	$	3,543	3.86%
* Loans may be included in more than one higher-risk loan category and excludes acquired residential mortgage loans.

107

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 riskto the Asset/Liability Management Committee (“ALCO”) which is composed of certain executive officers from the business, treasury and finance areas. One of ALCO’s primary goals is to ensure that the market risk assumed by the Company is within the parameters established in such policies.

Interest Rate Risk

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

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

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

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

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

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

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

108

These simulations are highly complex, and use many simplifying 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, 2013 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	$	8,494	2.08%	$	11,596	2.90%
+ 100 Basis points	$	5,441	1.33%	$	7,067	1.77%
- 50 Basis points	$	(273)	-0.07%	$	(93)	-0.02%

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 its structured repurchase agreements and advances from the FHLB. 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 maturity and the re-pricing frequency of the liabilities have been extended to longer terms and the amounts of its structured repurchase agreements and advances from the FHLB  been reduced.

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

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

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

109

expense attributable to the one-month LIBOR rate corresponding to the swap notional stated rate. A derivative liability of $13.2 million was recognized at June 30, 2013, related to the valuation of these swaps. Refer to Note 7 of the unaudited consolidated financial statements for a description of these swaps.

As part of the BBVAPR Acquisition, the Company assumed certain derivative contracts from BBVAPR, including interest rate swaps not designated as hedging instruments which are utilized to convert certain fixed-rate loans to variable rates, and the mirror-images of these interest rate swaps in which BBVAPR entered 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, 2013, interest rate swaps offered to clients not designated as hedging instruments represented a derivative asset of $3.2 million, and the mirror-image interest rate swaps in which BBVAPR entered into represented a derivative liability of $3.2 million. Refer to Note 7 of the unaudited consolidated financial statements for a description of these swaps.

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 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, 2013 and December 31, 2012, 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 $16.0 million and $13.2 million, respectively, and the options sold to customers embedded in the certificates of deposit represented a liability of $15.3 million and $12.7 million, respectively.

Wholesale borrowings — The Company uses interest rate swaps to hedge the variability of interest cash flows of certain advances from FHLB 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, 2013, the Company had $225 million in interest rate swaps at an average rate of 2.63% designated as cash flow hedges for $225 million in advances from FHLB 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 growth remains a challenge due to the lack of significant employment growth, a housing sector that remains under pressure and the Puerto Rico government’s large structural deficit.

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.

110

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 of New York 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 significantly dependent on repurchase agreements. The Company’s repurchase agreements have been structured with initial terms that mature from one month to two years for five repurchase agreements amounting to $811.6 million, and a $500 million repurchase agreement that matures on March 2, 2017. 

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 the 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, 2013, the Company had approximately $748.3million in cash and cash equivalents, $183 million in investment securities, $714 million in borrowing capacity at the FHLB of New York and $885 million in borrowing capacity at the Federal Reserve’s discount window available to cover liquidity needs.

111

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

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

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

Concentration Risk

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

ITEM 4.      CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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

Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d -15 (f) under the Exchange Act) during the quarter ended June 30, 2013, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

112

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

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, 2012.  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.

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

None

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.     MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.      OTHER INFORMATION

None.

Item 6. Exhibits

Exhibit No.Description of Document:

10       Amendment and Termination Agreement, dated April 16, 2013, of Omnibus Asset Servicing Agreement between Oriental Bank and Bayview Loan Servicing, LLC.

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, 2013, 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.

113

Signatures

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

OFG Bancorp

(Registrant)

By:	/s/ José Rafael Fernández	Date: August 8, 2013
	José Rafael Fernández
	President and Chief Executive Officer
By:	/s/ Ganesh Kumar	Date: August 8, 2013
	Ganesh Kumar
	Executive Vice President and Chief Financial Officer

114

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 Oriental Financial Group Inc., certify that:

1.      I have reviewed this quarterly report on Form 10-Q of Oriental Financial Group Inc.;

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

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

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

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

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

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

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

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

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

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

Date: August 8, 2013

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 Oriental Financial Group Inc., certify that:

1 .      I have reviewed this quarterly report on Form 10-Q of Oriental Financial Group Inc.;

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

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

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

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

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

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

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

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

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

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

Date: August 8, 2013

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 Oriental Financial Group Inc.’s (“Oriental”) quarterly report on Form 10-Q for the period ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, José Rafael Fernández, President and Chief Executive Officer of Oriental, 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 Oriental.

In witness whereof, I execute this certification in San Juan, Puerto Rico, this 8th day of August, 2013.

                                                                                                                                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 Oriental Financial Group Inc.’s (“Oriental”) quarterly report on Form 10-Q for the period ended June 30, 2013, 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 Oriental, 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 Oriental.

In witness whereof, I execute this certification in San Juan, Puerto Rico, this 8th day of August, 2013.

By:         /s/ Ganesh Kumar

                Ganesh Kumar

Executive Vice President and Chief Financial Officer

EX-10

 

EXHIBIT 10

[BLS Letterhead]

April 16, 2013

Mr. José Ramón González

Senior Executive Vice President

Banking and Corporate Development

Oriental Bank and Trust

P.O. Box 195115

San Juan, Puerto Rico 00919-5115

Mr. González:

Bayview Loan Servicing, LLC (“Bayview”) is in receipt of the letters dated January 29, 2013 and February 22, 2013 from Oriental Bank and Trust (“Oriental”) regarding the termination of the Omnibus Asset Servicing Agreement, including the Appendix to Omnibus Servicing Agreement for Single Family, Multifamily and Commercial Mortgage Loans (“Mortgage Appendix”) and Appendix to Omnibus Servicing Agreement for Commercial Construction Loans (“Construction Appendix”), each dated June 9, 2010, as amended by the Amendment to Asset Servicing Agreement dated as of January 18, 2011 (collectively the “Agreement”).  Capitalized terms used and not otherwise defined herein have the meanings provided in the Agreement.

This letter (“Letter Agreement”) is intended to document the mutual agreements of Oriental and Bayview regarding certain matters related to the termination of the Agreement and transfer of servicing of the Assets. Specifically, Oriental and Bayview agree:

·The effective termination date of the Agreement shall be May 31, 2013 (“Termination Date”).  The Servicing Fee provided in the Agreement shall continue to apply for its remaining term until such Termination Date.

·Bayview shall continue to maintain and control the Servicing Reserve Account as provided in the Mortgage Appendix for a period of two (2) months following the Termination Date, and shall be permitted to withdraw funds from such Servicing Reserve Account for the payment or reimbursement of (i) Servicing Advances, including Servicing Advances arising prior to the Termination Date but billed or otherwise due after the Termination Date, (ii) costs and expenses in the nature of Servicing Advances arising after the Termination Date, provided that Bayview shall not be obligated to make Servicing Advances after the Termination Date, (iii) other costs and expenses subject to reimbursement to Bayview as provided in the Agreement, including travel and lodging expenses of Bayview personnel requested by Oriental to participate in or attend trials, hearings, depositions, or other litigation activities or preparations associated with the servicing of the Assets or (iv) other amounts permitted to be withdrawn from the Servicing Reserve Account in accordance with the Agreement.  As of the Termination Date, the Servicing Advance Account shall hold $300,000.  Any excess in funds above such

amount shall be delivered to Oriental and any shortage in funds below such amount shall be funded by Oriental, on or before the Termination Date.  Bayview shall deliver to Oriental the funds remaining in the Servicing Reserve Account at the end of the period provided above.  To the extent the Servicing Reserve Account is not sufficient to reimburse Bayview the amounts due as provided above, Oriental shall reimburse Bayview for such deficiencies within ten (10) Business Days following receipt of an invoice therefor.

·The calculation of the Termination Fees pursuant to the Mortgage Appendix and Construction Appendix shall be based on the Servicing Fees for the months of November and December of 2012, and January, February, March and April of 2013, and otherwise calculated in accordance with the Mortgage Appendix and Construction Appendix.  The aggregate Servicing Fees for November 2012 through March 2013 are $3,134,792, and the Servicing Fees for April of 2013 shall be determined by Bayview after the date of this Letter Agreement, and Bayview shall provide Oriental with notice of such amounts promptly after determined.  The Termination Fee shall be paid by Oriental as follows:  (i) the portion of the Termination Fee based upon the Servicing Fees for the months of November and December of 2012 and January, February and  March of 2013 shall be due and payable by Oriental on or before May 15, 2013, and payment thereof shall be condition to Bayview’s termination and transfer related obligations in the Agreement, and (ii) the balance of the Termination Fee shall be netted and retained by Bayview from the funds contained in the Custodial Account, the remainder of which, less additional withdrawals and offsets therefrom as permitted by the Agreement, shall be remitted to Oriental on or before June 18, 2013.

·Bayview shall continue to provide Oriental with access to the Papervision system for viewing Asset documents related to Multifamily Mortgage Loans, Commercial Mortgage Loans, Commercial Construction Loans and Acquired Collateral through October 31, 2013.  Oriental shall pay Bayview $7,500 per month for such access, which shall be due in advance on the first day of each month during such period.  This payment shall permit access by no more than 25 users, and Oriental will pay an additional $500 per month for each additional user requested by Oriental.  The Papervision system will otherwise be provided in the same manner and subject to the same conditions as provided prior to the Termination Date.

·To the extent any invoices are received by Bayview from Carrión, Laffitte & Casellas, Inc. on or following May 1, 2013 for services rendered with respect to the Assets, such invoices shall be forwarded to Oriental for direct payment by Oriental.

In the event of any conflict between the terms of this Letter Agreement and the Agreement, this Letter Agreement shall govern.  Any other terms of the Agreement not in conflict with this Letter Agreement, including terms regarding the termination of the Agreement and transfer of the servicing of the Assets, shall remain in full force and effect.

This Letter Agreement, and any provisions of the Agreement which under the terms of the Agreement survive termination, shall survive the Termination Date.

No amendments, modifications or supplements of this Letter Agreement shall be binding unless executed in writing by Bayview and Oriental.  This Letter Agreement is solely for the benefit of the parties hereto and no provision of this Letter Agreement shall be deemed to confer on any Person, other than Bayview and Oriental, any rights, obligations, remedies or liabilities.

This Letter Agreement may be executed simultaneously in any number of counterparts.  Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page of this Letter Agreement in Portable Document Format (PDF) or other electronically imaged form, or by facsimile transmission, shall be effective as delivery of a manually executed original counterpart of this Letter Agreement.

If the foregoing correctly reflects the understanding and agreement between us, please execute in the appropriate space below, and return the original to the undersigned, retaining a copy for your records. 

Yours truly,

Bayview Loan Servicing, LLC

By:       _/s/    Richard O’ Brien__________________ 

             Richard O’Brien

             President

Accepted and agreed to

as of April ____, 2013:

Oriental Bank and Trust

By:       ____________________________

Name:  ____________________________

Title:    ____________________________

XML

Borrowings (Repurchase Agreements) (Details) (USD $) In Thousands, unless otherwise specified			3 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 One Hundred Millions [Member] Due date: 7 8 2013 [Member] Rate .42% [Member]	Jun. 30, 2013 Two Hundred Fifty Five Millions [Member] Due date: 1 7 2014 [Member] Rate .50% [Member]	Jun. 30, 2013 Two Hundred Fifty Five Millions [Member] Due date: 6 13 2014 [Member] Rate .55% [Member]	Jun. 30, 2013 Eighty Five Millions [Member] Due date: 12 3 2014 [Member] Rate .675% [Member]	Jun. 30, 2013 One Hundred Seventy Millions [Member] Due date: 12 8 2014 [Member] Rate .675% [Member]	Jun. 30, 2013 Five Hundred Millions [Member] Due date: 3 2 2017 [Member] Rate 4.67% [Member]
Repurchase Agreement Disclosure [Line Items]
Borrowing Balance	$ 1,311,573	$ 1,692,931	$ 46,573	$ 255,000	$ 255,000	$ 85,000	$ 170,000	$ 500,000
Weighted Average Coupon	2.12869%		0.42%	0.50%	0.55%	0.675%	0.675%	4.665%
Settlement Date			Jun. 25, 2013	Dec. 13, 2012	Dec. 10, 2012	Dec. 03, 2012	Dec. 06, 2012	Mar. 02, 2007
Investment Repurchase Agreement, Repurchase Date			Jul. 08, 2013	Jan. 07, 2014	Jun. 13, 2014	Dec. 03, 2014	Dec. 08, 2014	Mar. 02, 2017

XML

Derivative Activities (Derivative Instruments) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2013
Interest Rate Swap [Member]
Derivative [Line Items]
Amount	$ 225,000
Interest Rate Swap [Member] | 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 [Member] | 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 [Member] | 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 [Member] | 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 [Member] | 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
Derivatives Offered to Clients [Member]
Derivative [Line Items]
Amount	17,882
Derivatives Offered to Clients [Member] | Rate 5.13% [Member]
Derivative [Line Items]
Amount	4,232
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
Derivatives Offered to Clients [Member] | Rate 5.15% [Member]
Derivative [Line Items]
Amount	1,150
Fixed rate	5.15%
Settlement Date	Oct. 24, 2008
Maturity Date	Oct. 24, 2013
Mirror Image Derivatives [Member]
Derivative [Line Items]
Amount	17,882
Mirror Image Derivatives [Member] | Rate 5.13% [Member]
Derivative [Line Items]
Amount	4,232
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
Mirror Image Derivatives [Member] | Rate 4.96% [Member]
Derivative [Line Items]
Amount	$ 1,150
Fixed rate	4.955%
Settlement Date	Oct. 24, 2008
Maturity Date	Oct. 24, 2013

XML

Accrued Interest Receivable and Other Assets (Accrued Interest)(Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Accounts Receivable, Net [Abstract]
Accrued Interest Receivable On Non Covered Loans	$ 11,459	$ 10,533
Investments	6,049	7,021
Total	$ 17,508	$ 17,554

XML

Offsetting Arrangement (Assets Offsetting) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Offsetting Liabilities [Line Items]
Derivative Liability, Securities Sold under Agreements to Resell, Securities Loaned, Amount Offset Against Collateral	$ 1,331,107	$ 1,714,233

XML

Stockholders Equity (Narratives) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Stockholders' Equity [Abstract]
Legal Surplus	$ 57,900,000		$ 57,900,000		$ 52,100,000
Equity, Class of Treasury Stock [Line Items]
Treasury Stock, Value, Acquired, Cost Method	0	7,022,000
Income Tax Change In Enacted Tax [Line Items]
Effective Income Tax Rate Reconciliation Change In Enacted Tax Rate	(108.85%)
Income Tax Expense (Benefit)	$ (31,934,000)	$ 1,057,000	$ (24,808,000)	$ 2,994,000

XML

Commitments (Summarized credit-related financial instruments) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Commitments and Contingencies [Abstract]
Commitments To Extend Credit	$ 445,411	$ 591,679
Commercial letters credit	2,231	2,918
Standby letters of credit and financial guarantees	67,087	69,789
Loans sold with recourse	184,937	172,492
Commitments To Sell Or Securitize Mortgage Loans	$ 10,977	$ 83,663

XML

Borrowings

3 Months Ended

Jun. 30, 2013

Borrowings [Abstract]

BORROWINGS

NOTE 10— BORROWINGS

Short term borrowings

At June 30, 2013,no short term borrowings were outstanding, compared to December 31, 2012 when these totaled $92.2 million and mainly consisted of unsecured fixed rate borrowings with a weighted average rate of0.30%.

Securities Sold under Agreements to Repurchase

At June 30, 2013, 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 the agreements.

At June 30, 2013and December 31, 2012, securities sold under agreements to repurchase (classified by counterparty), excluding accrued interest in the amount of $2.3million at both dates,were as follows:

	June 30,				December 31,
	2013				2012
			Fair Value of				Fair Value of
	Borrowing		Underlying		Borrowing		Underlying
	Balance		Collateral		Balance		Collateral
	(In thousands)
UBS Financial Services Inc.	$	500,000	$	597,126	$	500,000	$	616,751
JP Morgan Chase Bank NA		255,000		273,783		412,837		443,436
Credit Suisse Securities (USA) LLC		255,000		270,180		255,000		269,943
Deutsche Bank		255,000		271,702		255,000		273,288
Citigroup Global Markets Inc.		46,573		52,473		150,000		162,652
Barclays Bank		-		-		68,650		77,521
Wells Fargo		-		-		51,444		54,943
Total	$	1,311,573	$	1,465,264	$	1,692,931	$	1,898,534

The following table shows a summary of the Company's repurchase agreements and their terms, excluding accrued interest in the amount of $2.3 million, at June 30, 2013:

			Weighted-
	Borrowing		Average		Maturity
Year of Maturity	Balance		Coupon	Settlement Date	Date
	(In thousands)
2013	$	46,573	0.420%	6/25/2013	7/8/2013
2014		255,000	0.500%	12/13/2012	1/7/2014
		255,000	0.550%	12/10/2012	6/13/2014
		85,000	0.675%	12/3/2012	12/3/2014
		170,000	0.675%	12/6/2012	12/8/2014
		765,000
2017		500,000	4.665%	3/2/2007	3/2/2017
	$	1,311,573	2.129%

None of the structured repurchase agreements referred to above with maturity dates up to the date of this report were renewed.

Advances from the Federal Home Loan Bank

Advances are received from the FHLB 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, 2013 and December 31, 2012, these advances were secured by mortgage and commercial loans amounting to $1.3billion both periods. Also, at June 30, 2013, the Company had an additional borrowing capacity with the FHLB of $714.4million. At June 30,2013 and December 31, 2012, the weighted average remaining maturity of FHLB's advances was 11.7 months and3.5months, respectively.The original terms of these advances range between one month and five years, and the FHLB does not have the right to exercise put options at par on any advances outstanding as of June 30, 2013.The following table shows a summary of these advances and their terms, excluding accrued interest in the amount of $294thousand,at June 30, 2013:

			Weighted-
		Borrowing	Average		Maturity
Year of Maturity		Balance	Coupon	Settlement Date	Date
(In thousands)
2013	$	25,000	0.360%	6/4/2013	7/5/2013
		50,000	0.360%	6/10/2013	7/10/2013
		100,000	0.390%	6/17/2013	7/16/2013
		25,000	0.400%	6/24/2013	7/24/2013
		25,000	0.410%	6/28/2013	7/30/2013
		225,000
2017		4,844	1.240%	4/3/2012	4/3/2017
2018		30,000	2.187%	1/16/2013	1/16/2018
		25,000	2.177%	1/16/2013	1/16/2018
		55,000
	$	284,844	0.745%

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 $99.0 million and $146.0 million at June 30, 2013 and December 31, 2012, respectively.

In August 2003, the Statutory Trust II, a special purpose entity of the Company, was formed for the purpose of issuing trust redeemable preferred securities. In September 2003, $35.0 million of trust redeemable preferred securities were issued by the Statutory Trust II as part of a pooled underwriting transaction. Pooled underwriting involves participating with other bank holding companies in issuing the securities through a special purpose pooling vehicle created by the underwriters.

The proceeds from this issuance were used by the Statutory Trust II to purchase a like amount of a floating rate junior subordinated deferrable interest debenture issued by the Company. The subordinated deferrable interest debenture has a par value of $36.1 million, bears interest based on 3-month LIBOR plus 295 basis points(3.22% atJune 30, 2013; 3.26% at December 31, 2012), is payable quarterly, and matures on September 17, 2033. It may be called at par after five years and quarterly thereafter (next call date September 2013). The trust redeemable preferred securities have the same maturity and call provisions as the subordinated deferrable interest debenture. The subordinated deferrable interest debenture issued by the Company is accounted for as a liability denominated as a subordinated capital note on the unaudited consolidated statements of financial condition.

Under Federal Reserve Board rules, restricted core capital elements, which are qualifying trust preferred securities, qualifying cumulative perpetual preferred stock (and related surplus) and certain minority interests in consolidated subsidiaries, are limited in the aggregate to no more than 25% of a bank holding company's core capital elements (including restricted core capital elements), net of goodwill less any associated deferred tax liability. However, under the Dodd-Frank Act,and the capital rules adopted in July 2013 by the federal banking regulators to implement the agreements reached by the Basel Committee on Banking Supervision in “Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems” and to make other changes consistent with the Dodd-Frank Act, which are scheduled to become effective January 1, 2015 (subject to certain phase-in periods through January 1, 2019),bank holding companies are prohibited from including in their Tier 1 capital hybrid debt and equity securities, including trust preferred securities, issued on or after May 19, 2010. Any such instruments issued before May 19, 2010 by a bank holding company, such as the Company, with total consolidated assets of less than $15 billion as of December 31, 2009, are permanently grandfathered under the new capital rules andmay continue to be included as Tier 1 capital. Therefore, the Company is permitted to continue to include its existing trust preferred securities as Tier 1 capital.

As part of the BBVAPR Acquisition on December 18, 2012, the Company's banking subsidiary assumed three subordinated capital notes issued by BBVAPR Bankconsisting of the following:

• Subordinated capital notes issued in September 2004 amounting to $50.0 million at a variable rate of three-month LIBOR plus 1.44% (1.75% at December 31, 2012), that was due September 23, 2014. During the quarter ended March 31, 2013, the Bank repurchased and cancelled these subordinated capital notes in whole before maturity and realized a gain of $1.1 million in the Company's unaudited consolidated statements of operations.
• Subordinated capital notes issued in September 2006 amounting to $37.0 million at a fixed rate of 5.76% through September 29, 2011, and three-month LIBOR plus 1.56% thereafter (1.83% at June 30, 2013; 1.87% at December 31, 2012), due September 29, 2016. Interest on these subordinated notes is payable quarterly during the floating-rate period. The Bank has the option to redeem these subordinated capital notes in whole or in part from time to time before maturity at 100% of the principal amount plus any accrued but unpaid interest to the date of redemption, beginning September 29, 2011, and at each payment date thereafter.
• Subordinated capital notes issued in September 2006 amounting to $30.0 million at a variable rate of three-month LIBOR plus 1.56%thereafter (1.83% at June 30, 2013;1.87% at December 31, 2012), due September 29, 2016. Interest on these subordinated notes is payable quarterly. The Bank has the option to redeem these subordinated capital notes in whole or in part from time to time before maturity at 100% of the principal amount plus any accrued but unpaid interest to the date of redemption, beginning September 29, 2011, andat each payment date thereafter.

These notes qualify as Tier 2 capital at a discounted rate, which totals $40.2million at June 30, 2013 and $50.2 million at December 31, 2012. Generally speaking, subordinated notes are included as Tier 2 capital if they have an original weighted average maturity of at least 5 years and comply with certain other requirements.  As the notes approach maturity, they begin to take on characteristics of a short term obligation. For this reason, the outstanding amount eligible for inclusion in Tier 2 capital is reduced, or discounted, as the instruments approach maturity: one fifth of the outstanding amount is excluded each year during the instruments last five years before maturity. When the remaining maturity is less than one year, the instrument is excluded from Tier 2 capital.

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)
2013	$	48,575
2014		6,700
2015		6,700
2016		5,025
	$	67,000

XML

Investments (Gains and losses by category) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Less than 12 months
Available for sale - Amortized cost	$ 444,301	$ 41,407
Available for sale - Unrealized Loss	7,927	1,052
Available for sale - Fair Value	436,374	40,355
12 months or more
Available for sale - Amortized cost	3,806	3,867
Available for sale - Unrealized Loss	232	190
Available-for-sale, Fair Value	3,574	3,677
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis	448,107	45,274
Available-for-sale Securities Continuous Unrealized Loss Position Aggregate Losses2	8,159	1,242
Total Fair Value	439,948	44,032
US Treasury Securities [Member]
Less than 12 months
Available for sale - Amortized cost		11,498
Available for sale - Unrealized Loss		2
Available for sale - Fair Value		11,496
12 months or more
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis		11,498
Available-for-sale Securities Continuous Unrealized Loss Position Aggregate Losses2		2
Total Fair Value		11,496
US States and Political Subdivisions Debt Securities [Member]
Less than 12 months
Available for sale - Amortized cost	20,588	19,086
Available for sale - Unrealized Loss	1,233	426
Available for sale - Fair Value	19,355	18,660
12 months or more
Available for sale - Amortized cost	1,712	1,673
Available for sale - Unrealized Loss	61	12
Available-for-sale, Fair Value	1,651	1,661
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis	22,300	20,759
Available-for-sale Securities Continuous Unrealized Loss Position Aggregate Losses2	1,294	438
Total Fair Value	21,006	20,321
Collateralized Mortgage Obligations [Member]
Less than 12 months
Available for sale - Amortized cost	203,524	10,671
Available for sale - Unrealized Loss	2,357	615
Available for sale - Fair Value	201,167	10,056
12 months or more
Available for sale - Amortized cost	2,094	2,194
Available for sale - Unrealized Loss	171	178
Available-for-sale, Fair Value	1,923	2,016
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis	205,618	12,865
Available-for-sale Securities Continuous Unrealized Loss Position Aggregate Losses2	2,528	793
Total Fair Value	203,090	12,072
Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Less than 12 months
Available for sale - Amortized cost	206	84
Available for sale - Unrealized Loss	13	8
Available for sale - Fair Value	193	76
12 months or more
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis	206	84
Available-for-sale Securities Continuous Unrealized Loss Position Aggregate Losses2	13	8
Total Fair Value	193	76
Federal National Mortgage Association Certificates and Obligations (FNMA) [Member]
Less than 12 months
Available for sale - Amortized cost		68
Available for sale - Unrealized Loss		1
Available for sale - Fair Value		67
12 months or more
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis		68
Available-for-sale Securities Continuous Unrealized Loss Position Aggregate Losses2		1
Total Fair Value		67
FNMA and FHLMC [Member]
Less than 12 months
Available for sale - Amortized cost	219,983
Available for sale - Unrealized Loss	4,324
Available for sale - Fair Value	215,659
12 months or more
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis	219,983
Available-for-sale Securities Continuous Unrealized Loss Position Aggregate Losses2	4,324
Total Fair Value	$ 215,659

XML

Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Interest income:
Loans Not Covered Under Shared Loss Agreements With Fdic	$ 90,611	$ 17,223	$ 170,874	$ 35,345
Loans Covered Under Shared-loss Agreements With The FDIC, Net Of Allowance For Loan And Lease Losses	23,999	20,342	44,228	41,884
Total interest income from loans	114,610	37,565	215,102	77,229
Mortgage-backed securities	9,080	21,573	19,898	49,636
Investment securities and other	2,118	1,650	4,436	3,843
Total interest income	125,808	60,788	239,436	130,708
Interest expense:
Deposits	9,973	7,885	20,451	17,008
Securities sold under agreements to repurchase	7,109	16,500	14,357	34,070
Advances from FHLB and other borrowings	2,187	2,926	3,847	5,930
FDIC-guaranteed term notes	0	0	0	909
Note payable to the FDIC	0	0	0	0
Subordinated capital notes	1,170	321	2,830	649
Total interest expense	20,439	27,632	41,485	58,566
Interest Income (Expense), Net, Total	105,369	33,156	197,951	72,142
Provision for non-covered loan and lease losses	37,527	3,800	45,443	6,800
Provision for (recapture of) covered loan and lease losses, net	1,211	1,467	1,883	8,624
Total provision for loan and lease losses	38,738	5,267	47,326	15,424
Net interest income after provision for loan and lease losses	66,631	27,889	150,625	56,718
Non-interest income:
Wealth management revenues	8,030	5,903	15,690	11,791
Banking service revenues	13,334	3,145	25,716	6,225
Mortgage banking activities	2,525	2,436	5,679	4,938
Total banking and wealth management revenues	23,889	11,484	47,085	22,954
Other-than-temporary impairments on securities				0
Net (amortization) accretion of FDIC shared-loss indemnification asset	(19,965)	(5,583)	(32,836)	(10,410)
Net gain (loss) on:
Sale of securities	0	11,979	0	19,338
Derivatives	1,569	(107)	1,271	(108)
Early extinguishment ofsubordinated capital notes	0	0	1,061	0
Other	2,303	63	2,349	(779)
Total non-interest income, net	7,796	17,836	18,930	30,995
Non-interest expense:
Compensation and employee benefits	24,089	11,184	47,338	21,550
Professional and service fees	7,710	5,222	16,832	10,643
Occupancy and equipment	8,066	4,292	17,282	8,501
Insurance	2,723	1,442	5,401	3,262
Electronic banking charges	4,094	1,609	7,822	3,166
Advertising, business promotion, and strategic initiatives	1,670	1,564	3,079	2,412
RestructuringCharges	5,274	0	10,808	0
Foreclosure, repossession and other real estate expenses	2,156	936	3,661	1,686
Loan servicing and clearing expenses	1,884	955	3,360	1,923
Taxes, other than payroll and income taxes	5,132	(107)	7,754	1,067
Loss on foreclosed real estate and other repossesed asset	1,696	886	3,573	1,282
Communication	835	392	1,699	781
Printing, postage, stationary and supplies	851	322	2,017	630
Director and investors relations	377	342	613	651
Other	2,265	671	4,393	1,555
Total non-interest expense	68,822	29,710	135,632	59,109
Income before income taxes	5,605	16,015	33,923	28,604
Income tax expense	(31,934)	1,057	(24,808)	2,994
Net income	37,539	14,958	58,731	25,610
Dividends on preferred stock	3,466	1,201	6,931	2,401
Deemed dividend on preferred stock beneficial conversion feature	0	0	0	0
Income available to common shareholders	$ 34,073	$ 13,757	$ 51,800	$ 23,209
Income per common share:
Basic	$ 0.75	$ 0.34	$ 1.14	$ 0.57
Diluted	$ 0.68	$ 0.34	$ 1.05	$ 0.57
Average common shares outstanding and equivalents	52,968	40,808	52,929	40,986
Cash dividends per share of common stock	$ 0.06	$ 0.06	$ 0.12	$ 0.12

XML

Investments

3 Months Ended

Jun. 30, 2013

Investments [Abstract]

INVESTMENTS

NOTE 3 –SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL AND INVESTMENTS

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, 2013 and December 31, 2012, money market instruments included as part of cash and cash equivalents amounted to $11.0millionand $13.2 million,respectively.

Securities Purchased Under Agreements to Resell

Securities purchased under agreements to resell consist of short-term investmentsand are carried at the amounts at which the assets will be subsequently resold as specified in the respective agreements. AtDecember 31, 2012, securities purchased under agreements to resell amounted to $80.0 million. The fair value of the collateral securities held by the Company on these transactions as of December 31, 2012 was approximately $82.1 million.On June 30, 2013 the Company had no securities purchased under agreements to resell.

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, 2013 and December 31, 2012 were as follows:

	June 30, 2013
			Gross		Gross				Weighted
	Amortized		Unrealized		Unrealized		Fair		Average
	Cost		Gains		Losses		Value		Yield
	(In thousands)
Available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates	$	1,358,834	$	36,112	$	4,324	$	1,390,622		2.92%
GNMA certificates		10,590		604		13		11,180		4.88%
CMOs issued by US Government sponsored agencies		250,806		85		2,528		248,363		1.81%
Total mortgage-backed securities		1,620,230		36,801		6,865		1,650,165		2.76%
Investment securities
US Treasury securities		26,499		2		-		26,501		0.08%
Obligations of US Government sponsored agencies		15,078		35		-		15,113		1.23%
Obligations of Puerto Rico Government and political subdivisions		120,989		-		1,294		119,695		4.42%
Other debt securities		24,539		216		-		24,755		3.45%
Total investment securities		187,105		253		1,294		186,064		3.42%
Total securities available for sale	$	1,807,335	$	37,054	$	8,159	$	1,836,229		2.83%

	December 31, 2012
			Gross		Gross				Weighted
	Amortized		Unrealized		Unrealized		Fair		Average
	Cost		Gains		Losses		Value		Yield
	(In thousands)
Available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates	$	1,622,037	$	71,411	$	1	$	1,693,447		3.06%
GNMA certificates		14,177		995		8		15,164		4.89%
CMOs issued by US Government sponsored agencies		288,409		3,784		793		291,400		1.85%
Total mortgage-backed securities		1,924,623		76,190		802		2,000,011		2.89%
Investment securities
US treasury securities		26,498		-		2		26,496		0.71%
Obligations of US Government sponsored agencies		21,623		224		-		21,847		1.35%
Obligations of Puerto Rico Government and political subdivisions		120,950		9		438		120,521		3.82%
Other debt securities		25,131		280		-		25,411		3.46%
Total investment securities		194,202		513		440		194,275		2.99%
Total securities available-for-sale	$	2,118,825	$	76,703	$	1,242	$	2,194,286		2.90%

The amortized cost and fair value of the Company's investment securities at June 30, 2013, 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, 2013
	Available-for-sale
	Amortized Cost		Fair Value
	(In thousands)
Mortgage-backed securities
Due after 5 to 10 years
FNMA and FHLMC certificates	$	32,779	$	33,345
Total due after 5 to 10 years		32,779		33,345
Due after 10 years
FNMA and FHLMC certificates		1,326,055		1,357,277
GNMA certificates		10,590		11,180
CMOs issued by US Government sponsored agencies		250,806		248,363
Total due after 10 years		1,587,451		1,616,820
Total mortgage-backed securities		1,620,230		1,650,165
Investment securities
Due in less than one year
US Treasury securities		26,499		26,501
Other debt securities		20,000		20,058
Total due in less than one year		46,499		46,559
Due from 1 to 5 years
Obligations of Puerto Rico Government and political subdivisions		412		399
Total due from 1 to 5 years		412		399
Due after 5 to 10 years
Obligations of Puerto Rico Government and political subdivisions		11,425		11,053
Obligations of US Government and sponsored agencies		15,078		15,113
Total due after 5 to 10 years		26,503		26,166
Due after 10 years
Obligations of Puerto Rico Government and political subdivisions		109,152		108,243
Other debt securities		4,539		4,697
Total due after 10 years		113,691		112,940
Total investment securities		187,105		186,064
Total securities available-for-sale	$	1,807,335	$	1,836,229

The BBVAPR Acquisition and the related deleverage of the investment securities portfolio that the Company completed during the second half of 2012 reduced the interest rate risk profile of the Company. During the six-month period ended June 30, 2013, the Company did not execute any sale of securities from its portfolio other than $92.4 million of available-for-sale GNMA certificates that were sold as part of its recurring mortgage loan origination and securitization activities. These sales produced a nominal gain during such period. During the six-month period ended June 30, 2012, there were certain sales of available-for-sale securities because the Company believed that gains could be realized and that there were good opportunities to invest the proceeds in other investment securities with attractive yields and terms that would allow the Company to continue protecting its net interest margin.

TheCompany, 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.

For the six-month period ended June 30, 2012, the Company recorded a net gain on sale of securities of $19.3 million. The table below presents the gross realized gains by category for suchperiod:

	Six-Month period Ended June 30, 2012
			Book Value
Description	Sale Price		at Sale		Gross Gains		Gross Losses
	(In thousands)
Sale of securities available-for-sale
Mortgage-backed securities and CMOs
FNMA and FHLMC certificates	$	367,971	$	349,400	$	18,581	$	-
GNMA certificates		39,484		39,483		1		-
CMOs issued by US Government sponsored agencies		19,725		18,372		1,353		-
Total mortgage-backed securities and CMOs		427,180		407,255		19,935		-
Investment securities
Obligations of U.S. Government sponsored agencies		80,000		80,000		-		-
Obligations of Puerto Rico Government and political subdivisions		35,882		36,478		31		628
Structured credit investments		10,530		10,530		-		-
Total investment securities		126,412		127,008		31		628
Total	$	553,592	$	534,263	$	19,966	$	628

The following tables show the Company's gross unrealized losses and fair value 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 June30, 2013 and December 31, 2012:

	June 30, 2013
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	1,712		61		1,651
CMOs issued by US Government sponsored agencies		2,094		171		1,923
	$	3,806	$	232	$	3,574
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	20,588	$	1,233	$	19,355
CMOs issued by US Government sponsored agencies		203,524		2,357		201,167
FNMA and FHLMC certificates		219,983		4,324		215,659
GNMA certificates		206		13		193
	$	444,301	$	7,927	$	436,374
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	22,300	$	1,294	$	21,006
CMOs issued by US Government sponsored agencies		205,618		2,528		203,090
FNMA and FHLMC certificates		219,983		4,324		215,659
GNMA certificates		206		13		193
	$	448,107	$	8,159	$	439,948

	December 31, 2012
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	1,673	$	12	$	1,661
CMOs issued by US Government sponsored agencies		2,194		178		2,016
	$	3,867	$	190	$	3,677
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	19,086	$	426	$	18,660
CMOs issued by US Government sponsored agencies		10,671		615		10,056
US Treasury Securities		11,498		2		11,496
GNMA certificates		84		8		76
FNMA and FHLMC certificates		68		1		67
	$	41,407	$	1,052	$	40,355
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	20,759	$	438	$	20,321
CMOs issued by US Government sponsored agencies		12,865		793		12,072
US Treasury Securities		11,498		2		11,496
GNMA certificates		84		8		76
FNMA and FHLMC certificates		68		1		67
	$	45,274	$	1,242	$	44,032

The Company conducts quarterly reviews to identify and evaluate each investment in an unrealized loss position for other-than-temporary impairment.Any portion of a decline in value associated with credit loss is recognized in income with the remaining noncredit-related component recognized in other comprehensive income. A credit loss is determined by assessing whether the amortized cost basis of the security will be recovered by comparing the present value of cash flows expected to be collected from the security, discounted at the rate equal to the yield used to accrete current and prospective beneficial interest for the security. The shortfall of the present value of the cash flows expected to be collected in relation to the amortized cost basis is considered to be the “credit loss.” Other-than-temporary impairment analysis is based on estimates that depend on market conditionsand are subject to further change over time. In addition, while the Company believes that the methodology used to value these exposures is reasonable, the methodology is subject to continuing refinement, including those made as a result of market developments. Consequently, it is reasonably possible that changes in estimates or conditions could result in the need to recognize additional other-than-temporary impairment charges in the future.

Securities in an unrealized loss position at June 30, 2013 are mainly composed of highly liquid securities that in most cases have a large and efficient secondary market. Valuations are performed on a monthly basis. The Company's management believes that the unrealized losses of such securities at June 30, 2013 are temporary and are substantially related to market interest rate fluctuations and not to deterioration in the creditworthiness of the issuer or guarantor. At June 30, 2013, the Company does not have the intent to sell these investments in an unrealized loss position.

XML

Offsetting Arrangements

3 Months Ended

Jun. 30, 2013

Offsetting [Abstract]

Balance sheet Offsetting [Text Block]

NOTE 17—OFFSETTING ARRANGEMENTS

The Company manages credit and counterparty risk by entering into enforceable netting agreements and other collateral arrangements with counterparties to derivative financial instruments and secured financing transactions, including resale and repurchase agreements, and principal securities borrowing and lending agreements. These netting agreements mitigate counterparty credit risk by providing for a single net settlement with a counterparty of all financial transactions covered by the agreement in an event of default as defined under such agreement. In limited cases, a netting agreement may also provide for the periodic netting of settlement payments with respect to multiple different transaction types in the normal course of business.

Certain of the Company derivative contracts are executed under either standardized netting agreements or, for exchange-traded derivatives, the relevant contracts for a particular exchange which contain enforceable netting provisions. In certain cases, the Company may have cross-product netting arrangements which allow for netting and set-off of a variety of types of derivatives with a single counterparty. A derivative netting arrangement creates an enforceable right of set-off that becomes effective, and affects the realization or settlement of individual financial assets and liabilities, only following a specified event of default. Collateral requirements associated with the derivative contracts aredetermined after a review of the creditworthiness of each counterparty, and the requirements are monitored and adjusted daily, typically based on net exposure by counterparty. Collateral is generally in the form of cash or highly liquid U.S. government securities.

In connection with the Company's secured financing activities, the Company enters into netting agreements and other collateral arrangements with counterparties, which provide for the right to liquidate collateral upon an event of default. Required collateral is generally in the form of cash, equities or fixed-income securities. Default events may include the failure to timely make payments or deliver securities, material adverse changes in financial condition or insolvency, the breach of minimum regulatory capital requirements, or loss of license, charter or other legal authorization necessary to perform under the contract.

In order for an arrangement to be eligible for netting, the Company must have a basis to conclude that such netting arrangements are legally enforceable. The analysis of the legal enforceability of an arrangement differs by jurisdiction, depending on the laws of that jurisdiction. In many jurisdictions, specific legislation exists that provides for the enforceability in bankruptcy of close-out netting under a netting agreement, typically by way of specific exception from more general prohibitions on the exercise of creditor rights.

Even though the Company has enforceable netting arrangements, they do not meet the applicable offsetting criteria, and therefore are not offset in the unaudited consolidated statements of financial condition. In addition, the Company does not offset secured financing assets and liabilities.

The following table presents derivative financial instruments and secured financing transactions that are subject to enforceable netting arrangements, but do not meet the applicable offsetting criteria and therefore were not offset in our unaudited consolidated statements of financial condition, as of the dates indicated:

		June 30, 2013
		Net amount of
		Assets Presented
		in Statement				Cash
		of Financial		Financial		Collateral		Net
		Condition		Instruments		Received		Amount
		(In thousands)
Derivatives		$	19,655	$	-	$	-	$	19,655
Total		$	19,655	$	-	$	-	$	19,655
		December 31, 2012
		Net amount of
		Assets Presented
		in Statement				Cash
		of Financial		Financial		Collateral		Net
		Condition		Instruments		Received		Amount
		(In thousands)
Derivatives		$	21,889	$	-	$	-	$	21,889
Resale agreements and securities borrowings	(1)		80,000		-		-		80,000
Total		$	101,889	$	-	$	-	$	101,889
(1) Excludes the impact of non-cash collateral. These secured financing transactions are fully collateralized.

The following table presents derivative financial instruments and secured financing transactions subject to enforceable netting arrangements that do not meet the applicable offsetting criteria and therefore were not offset in our unaudited consolidated statements of financial condition, as of the dates indicated:

		June 30, 2013
		Net amount of
		Liabilities
		Presented
		in Statement				Cash
		of Financial		Financial		Collateral		Net
		Condition		Instruments		Provided		Amount
		(In thousands)
Derivatives		$	19,534	$	-	$	-	$	19,534
Repurchase agreements and securities lending	(1)		1,311,573		-		-		1,311,573
Total		$	1,331,107	$	-	$	-	$	1,331,107
		December 31, 2012
		Net amount of
		Liabilities
		Presented
		in Statement				Cash
		of Financial		Financial		Collateral		Net
		Condition		Instruments		Provided		Amount
		(In thousands)
Derivatives		$	21,302	$	-	$	-	$	21,302
Repurchase agreements and securities lending	(1)		1,692,931		-		-		1,692,931
Total		$	1,714,233	$	-	$	-	$	1,714,233
(1) Excludes the impact of non-cash collateral. These secured financing transactions are fully collateralized.

XML

Allowance for Loan and Lease Losses (TDR Pre/Post Modifications) (Details) (USD $)	3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended
	Jun. 30, 2013 Residential Mortgage [Member] Quarter [Member]	Jun. 30, 2012 Residential Mortgage [Member] Quarter [Member]	Jun. 30, 2013 Residential Mortgage [Member] Year to Date Period [Member]	Jun. 30, 2012 Residential Mortgage [Member] Year to Date Period [Member]	Jun. 30, 2013 Commercial Loan [Member] Quarter [Member]	Jun. 30, 2012 Commercial Loan [Member] Quarter [Member]	Jun. 30, 2013 Commercial Loan [Member] Year to Date Period [Member]	Jun. 30, 2012 Commercial Loan [Member] Year to Date Period [Member]	Jun. 30, 2013 Consumer Loan [Member] Quarter [Member]	Jun. 30, 2013 Consumer Loan [Member] Year to Date Period [Member]
Financing Receivable, Modifications [Line Items]
Number of contracts	$ 42	$ 45,000	$ 86,000	$ 103,000	$ 2	$ 3,000	$ 2,000	$ 6,000	$ 2	$ 2,000
Financing Receivable, Modifications, Pre-Modification Recorded Investment	5,372,000	6,028,000	10,555,000	15,473,000	1,842,000	3,698,000	1,842,000	5,600,000	18,000	18,000
Pre Modification Weighted Average Rate	6.47%	6.52%	6.56%	6.50%	8.99%	6.25%	8.99%	5.80%	13.67%	13.67%
Pre Modification Weighted Average Term	355 months	290 months	342 months	313 months	87 months	65 months	87 months	49 months	41 months	41 months
Financing Receivable Modifications Post Modification Recorded Investment1	$ 5,715,000	$ 6,380,000	$ 11,288,000	$ 16,419,000	$ 1,842,000	$ 3,968,000	$ 1,842,000	$ 5,407,000	$ 18,000	$ 18,000
Post Modification Weighted Average Rate	4.26%	4.95%	4.59%	4.96%	4.00%	6.08%	4.00%	6.22%	13.67%	13.67%
Post Modification Weighted Average Term	420 months	378 months	417 months	393 months	66 months	71 months	66 months	65 months	60 months	60 months

XML

Loans Receivable (Aging of recorded investment in gross loans) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due		$ 48,403
60 - 89 Days Past Due		17,483
Total Loans		1,432,161
Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	20,853	58,542
60 - 89 Days Past Due	27,309	21,441
90+ Days Past Due	84,150	138,963
Total Past Due	132,312	218,946
Current	1,647,760	1,038,782
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	2,121
Residential Related Loans [Member] | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	48,137
60 - 89 Days Past Due	23,622	20,760
90+ Days Past Due	69,237	120,710
Total Past Due	92,859	189,607
Current	662,439	615,335
Total Loans	755,298	804,942
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	2,121
Residential Related Loans [Member] | Conventional Loan [Member] | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	36,354
60 - 89 Days Past Due	17,109	15,044
90+ Days Past Due	20,213	63,875
Total Past Due	37,322	115,273
Current	550,669	518,128
Total Loans	587,991	633,401
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	515
Residential Related Loans [Member] | Conventional Loan [Member] | Originated Up To The Year 2002 [Member] | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	6,906
60 - 89 Days Past Due	2,937	2,116
90+ Days Past Due	6,993	11,363
Total Past Due	9,930	20,385
Current	79,666	80,883
Total Loans	89,596	101,268
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	6
Residential Related Loans [Member] | Conventional Loan [Member] | Originated In The Years 2003 And 2004 [Member] | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	12,048
60 - 89 Days Past Due	5,413	5,206
90+ Days Past Due	3,429	18,162
Total Past Due	8,842	35,416
Current	117,754	114,446
Total Loans	126,596	149,862
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0
Residential Related Loans [Member] | Conventional Loan [Member] | Originated In The Year 2005 [Member] | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	4,983
60 - 89 Days Past Due	2,136	1,746
90+ Days Past Due	1,431	8,860
Total Past Due	3,567	15,589
Current	65,196	65,312
Total Loans	68,763	80,901
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0
Residential Related Loans [Member] | Conventional Loan [Member] | Originated In The Year 2006 [Member] | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	9,153
60 - 89 Days Past Due	3,369	3,525
90+ Days Past Due	2,838	15,363
Total Past Due	6,207	28,041
Current	87,614	85,045
Total Loans	93,821	113,086
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0
Residential Related Loans [Member] | Conventional Loan [Member] | Originated In The Years 2007 2008 And 2009 [Member] | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	2,632
60 - 89 Days Past Due	2,863	1,682
90+ Days Past Due	3,407	8,965
Total Past Due	6,270	13,279
Current	104,169	108,358
Total Loans	110,439	121,637
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	433
Residential Related Loans [Member] | Conventional Loan [Member] | Originated In The Years 2010 2011 2012 And 2013 [Member] | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	632
60 - 89 Days Past Due	391	769
90+ Days Past Due	2,115	1,162
Total Past Due	2,506	2,563
Current	96,270	64,084
Total Loans	98,776	66,647
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	76
Residential Related Loans [Member] | NonTraditional Mortgage [Member] | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	2,850
60 - 89 Days Past Due	1,520	1,067
90+ Days Past Due	2,212	11,160
Total Past Due	3,732	15,077
Current	42,695	42,742
Total Loans	46,427	57,819
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0
Residential Related Loans [Member] | Loss Mitigation Program [Member] | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	8,933
60 - 89 Days Past Due	4,993	4,649
90+ Days Past Due	14,287	19,989
Total Past Due	19,280	33,571
Current	68,335	53,739
Total Loans	87,615	87,310
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	1,606
Residential Related Loans [Member] | Residential Mortgage [Member] | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	0	48,137
60 - 89 Days Past Due	23,622	20,760
90+ Days Past Due	36,712	95,024
Total Past Due	60,334	163,921
Current	661,699	614,609
Total Loans	722,033	778,530
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	2,121
Residential Related Loans [Member] | Loans And Leases Receivable Consumer Home Equity [Member] | Loans and Leases Held for Investment [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	12	10
Total Past Due	12	10
Current	740	726
Total Loans	752	736
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0
Residential Related Loans [Member] | GNMA's Buy Back Option related | Loans and Leases Held for Investment [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	32,513	25,676
Total Past Due	32,513	25,676
Current	0	0
Total Loans	32,513	25,676
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0
Commercial Loan [Member] | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	11,357	9,407
60 - 89 Days Past Due	1,447	460
90+ Days Past Due	13,447	17,713
Total Past Due	26,251	27,580
Current	675,823	326,350
Total Loans	702,074	353,930
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0
Commercial Loan [Member] | Commercial Secured [Member] | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	11,033	9,062
60 - 89 Days Past Due	1,381	271
90+ Days Past Due	12,694	15,335
Total Past Due	25,108	24,668
Current	386,236	226,606
Total Loans	411,344	251,274
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0
Commercial Loan [Member] | Other commercial [Member] | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	324	345
60 - 89 Days Past Due	66	189
90+ Days Past Due	753	2,378
Total Past Due	1,143	2,912
Current	289,587	99,744
Total Loans	290,730	102,656
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0
Consumer Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	660	747
60 - 89 Days Past Due	156	92
Total Loans	89,608	48,136
Consumer Loan [Member] | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	670	747
60 - 89 Days Past Due	165	92
90+ Days Past Due	370	409
Total Past Due	1,205	1,248
Current	88,403	46,888
Total Loans	89,608	48,136
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0
Consumer Loans Auto Financing Receivable Member
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	8,826
60 - 89 Days Past Due	2,075
Total Loans	233,092
Consumer Loans Auto Financing Receivable Member | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	8,826	251
60 - 89 Days Past Due	2,075	129
90+ Days Past Due	1,096	131
Total Past Due	11,997	511
Current	221,095	50,209
Total Loans	233,092	50,720
Financing Receivable Recorded Investment 90 Days Past Due And Stil lAccruing	0
Consumer Loans Auto Financing Receivable Member | Automobile Loan
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due		251
60 - 89 Days Past Due		129
Total Loans		50,720
Most recent acquired loans accounted under ASC 310-20
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	10,616	7,735
60 - 89 Days Past Due	1,899	1,023
Total Loans	436,339	528,363
Most recent acquired loans accounted under ASC 310-20 | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	10,916	8,765
60 - 89 Days Past Due	2,033	1,099
90+ Days Past Due	2,236	1,563
Total Past Due	15,185	11,427
Current	575,906	861,804
Most recent acquired loans accounted under ASC 310-20 | Other commercial [Member] | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	291	715
60 - 89 Days Past Due	134	76
90+ Days Past Due	493	193
Total Past Due	918	984
Current	139,316	316,260
Total Loans	140,234	317,244
Most recent acquired loans accounted under ASC 310-20 | Automobile Loan
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	8,849	6,753
60 - 89 Days Past Due	1,892	1,023
Total Loans	373,588	457,894
Most recent acquired loans accounted under ASC 310-20 | Automobile Loan | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	8,849	6,753
60 - 89 Days Past Due	1,892	1,023
90+ Days Past Due	674	275
Total Past Due	11,415	8,051
Current	362,172	449,843
Total Loans	373,587	457,894
Most recent acquired loans accounted under ASC 310-20 | Consumer Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	1,767	982
60 - 89 Days Past Due	7	0
Total Loans	62,751	68,878
Most recent acquired loans accounted under ASC 310-20 | lines of credit and credit cards [Member] | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	1,767	982
60 - 89 Days Past Due	7	0
90+ Days Past Due	1,069	1,095
Total Past Due	2,843	2,077
Current	59,908	66,801
Total Loans	62,751	68,878
Most recent acquired loans accounted under ASC 310-20 | Commercial Real Estate and Construction | Loans and Leases Held for Investment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	9	315
60 - 89 Days Past Due	0	0
90+ Days Past Due	0	0
Total Past Due	9	315
Current	14,510	28,900
Total Loans	$ 14,519	$ 29,215

XML

Related Party Transactions

3 Months Ended

Jun. 30, 2013

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 11—RELATED PARTY TRANSACTIONS

The Bank grants loans to its directors, executive officers and to certain related individuals or organizations in the ordinary course of business. These loans are offered at the same terms as loans to unrelated third parties. As of June 30, 2013 and December 31, 2012, these loanbalances amounted to $8.0million and $6.1 million, respectively.The activity and balance of these loans for the quarters and six-month periodsended June 30, 2013 and2012were as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Balance at the beginning of period	$	8,688	$	5,238	$	6,055	$	3,772
New loans		-		-		4,234		1,505
Repayments		(657)		(180)		(2,026)		(219)
Credits of persons no longer considered related parties		-		-		(232)		-
Balance at the end of period	$	8,031	$	5,058	$	8,031	$	5,058

XML

Borrowings (Advances from the Federal Home Loan Bank) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2013
Advances From Federal Home Loan Banks [Line Items]
Long-term Federal Home Loan Bank Advances	$ 284,844
FHLB, Weighted Average Interest Rate	0.745%
July 10 2013 [Member]
Advances From Federal Home Loan Banks [Line Items]
Settlement Date	Jun. 10, 2013
Maturity Date	Jul. 10, 2013
Twenty Five Millions [Member] | July 5 2013 [Member]
Advances From Federal Home Loan Banks [Line Items]
Long-term Federal Home Loan Bank Advances	25,000
FHLB, Weighted Average Interest Rate	0.36%
Settlement Date	Jun. 04, 2013
Maturity Date	Jul. 05, 2013
Twenty Five Millions [Member] | July 24 2014 [Member]
Advances From Federal Home Loan Banks [Line Items]
Long-term Federal Home Loan Bank Advances	25,000
FHLB, Weighted Average Interest Rate	0.40%
Settlement Date	Jun. 24, 2013
Maturity Date	Jul. 24, 2013
Twenty Five Millions [Member] | July 30 2013 [Member]
Advances From Federal Home Loan Banks [Line Items]
Long-term Federal Home Loan Bank Advances	25,000
FHLB, Weighted Average Interest Rate	0.41%
Settlement Date	Jun. 28, 2013
Maturity Date	Jul. 30, 2013
Twenty Five Millions [Member] | January 16, 2018 [Member]
Advances From Federal Home Loan Banks [Line Items]
Long-term Federal Home Loan Bank Advances	25,000
FHLB, Weighted Average Interest Rate	2.177%
Settlement Date	Jan. 16, 2013
Maturity Date	Jan. 16, 2018
Thirty Millions [Member] | January 16, 2018 [Member]
Advances From Federal Home Loan Banks [Line Items]
Long-term Federal Home Loan Bank Advances	30,000
FHLB, Weighted Average Interest Rate	2.187%
Settlement Date	Jan. 16, 2013
Maturity Date	Jan. 16, 2018
Fifty Millions [Member] | July 10 2013 [Member]
Advances From Federal Home Loan Banks [Line Items]
Long-term Federal Home Loan Bank Advances	50,000
FHLB, Weighted Average Interest Rate	0.36%
One Hundred Millions [Member] | July 16, 2013 [Member]
Advances From Federal Home Loan Banks [Line Items]
Long-term Federal Home Loan Bank Advances	100,000
FHLB, Weighted Average Interest Rate	0.39%
Settlement Date	Jun. 17, 2013
Maturity Date	Jul. 16, 2013
Four Million [Member] | April 3 2017 [Member]
Advances From Federal Home Loan Banks [Line Items]
Long-term Federal Home Loan Bank Advances	$ 4,844
FHLB, Weighted Average Interest Rate	1.24%
Settlement Date	Apr. 03, 2012
Maturity Date	Apr. 03, 2017

XML

Business Combinations (FDIC Indemnification Asset) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
FDIC Indemnification Asset [Roll Forward]
Balance	$ 286,799	$ 392,367
Shared-loss agreements reimbursements from the FDIC	(18,696)	(39,729)
Increase (decrease) in expected credit losses to be covered under shared-loss agreements, net	(2,015)	12,748
Accretion (amortization) of FDIC shared-loss indemnification asset, net	(32,836)	(10,410)
Incurred expenses to be reimbursed under shared-loss agreements	3,220	4,791
Balance	$ 236,472	$ 359,767

XML

Deposits and Related Interest (Narratives) (Details) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Deposits [Abstract]
Weighted Average Rate Domestic Deposit	0.73%	1.33%
Puerto Rico Cash & Money Market Fund	$ 93,300,000	$ 101,500,000
Puerto Rico Cash & Money Market Fund Weighted Average Rate	0.77%	0.77%
Puerto Rico Cash & Money Market Fund Collateral	68,300,000	80,300,000
Time Deposits, $100,000 or More	1,180,000,000	1,870,000,000
Public Fund Deposits	170,500,000	78,300,000
Public Fund Deposits Weighted Average Rate	0.48%	0.72%
Public Fund Deposits Collateral Investments	98,700,000	114,600,000
Public Fund Deposits Collateral Commercial Loans	464,100,000	485,800,000
Accrued Interest	3,300,000
Unamortized deposit discounts	9,000,000
Bank Overdrafts	$ 1,000,000	$ 2,800,000

XML

Loans Receivable (Non-Covered BBVA Loan carrying amounts) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Accounts Notes And Loans Receivable Line Items
Financing Receivable Acquired With Deteriorated Credit Quality	$ 3,429,294	$ 3,954,484
Non-acretable discount	713,641	741,872
Cash expected to be collected	2,715,653	3,212,612
Accretable Yield	496,061	590,409
Carrying amount, gross	$ 2,219,592	$ 2,622,203

XML

Income Taxes (Tables)

3 Months Ended

Jun. 30, 2013

Income Taxes [Abstract]

ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock

	Six-Month Period Ended June 30,
	2013
	Amount		Rate
	(Dollars in thousands)
Tax at statutory rates	$	13,230	39.00%
Tax effect of exempt income, net		(3,607)	-10.63%
Effect in deferred taxes due to increase in tax rates
from 30.00% to 39.00%		(36,928)	-108.85%
Other items, net		2,497	7.35%
Income tax benefit	$	(24,808)	-73.13%

XML

Basis of Presentation (Policies)

3 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies [Text Block]

NOTE 1 –ORGANIZATION, CONSOLIDATION AND BASIS OF PRESENTATION

Nature of Operations

OFG Bancorp (the “Company”) is a publicly-owned financial holding company incorporated under the laws of the Commonwealth of Puerto Rico. The Companyoperates through various subsidiaries including, a commercial bank, Oriental Bank (or the “Bank”), two broker-dealers, Oriental Financial Services Corp. (“Oriental Financial Services”) and OFS Securities, Inc. (“OFS Securities”), an insurance agency, Oriental Insurance, Inc. (“Oriental Insurance”) and a retirement plan administrator, Caribbean Pension Consultants, Inc. (“CPC”). The Company also has a special purpose entity, Oriental Financial (PR) Statutory Trust II (the “Statutory Trust II”). 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, leasing, auto loans,financial planning, insurance sales, money management and investment banking and brokerage services, as well as corporate and individual trust services.On April 25, 2013, the Company changed its corporate name from Oriental Financial Group Inc. to OFG Bancorp.

On December 18, 2012, the Company purchased from Banco Bilbao VizcayaArgentaria, S. A. (“BBVA”), all of the outstanding common stock of each of (i) BBVAPR Holding Corporation (“BBVAPR Holding”), the sole shareholder of Banco Bilbao VizcayaArgentaria Puerto Rico (“BBVAPR Bank”), a Puerto Rico chartered commercial bank, and BBVA Seguros, Inc. (“BBVA Seguros”), an insurance agency, and (ii) BBVA Securities of Puerto Rico, Inc. (“BBVA Securities,” now known as “OFS Securities”), a registered broker-dealer. This transaction is referred to as the BBVAPR Acquisition” and BBVAPR Holding, BBVAPR Bank, BBVA Seguros and BBVA Securities are collectively referred to as the “BBVAPR Companies” or “BBVAPR.”

NOTE 1 –ORGANIZATION, CONSOLIDATION AND BASIS OF PRESENTATION

Nature of Operations

OFG Bancorp (the “Company”) is a publicly-owned financial holding company incorporated under the laws of the Commonwealth of Puerto Rico. The Companyoperates through various subsidiaries including, a commercial bank, Oriental Bank (or the “Bank”), two broker-dealers, Oriental Financial Services Corp. (“Oriental Financial Services”) and OFS Securities, Inc. (“OFS Securities”), an insurance agency, Oriental Insurance, Inc. (“Oriental Insurance”) and a retirement plan administrator, Caribbean Pension Consultants, Inc. (“CPC”). The Company also has a special purpose entity, Oriental Financial (PR) Statutory Trust II (the “Statutory Trust II”). 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, leasing, auto loans,financial planning, insurance sales, money management and investment banking and brokerage services, as well as corporate and individual trust services.On April 25, 2013, the Company changed its corporate name from Oriental Financial Group Inc. to OFG Bancorp.

On December 18, 2012, the Company purchased from Banco Bilbao VizcayaArgentaria, S. A. (“BBVA”), all of the outstanding common stock of each of (i) BBVAPR Holding Corporation (“BBVAPR Holding”), the sole shareholder of Banco Bilbao VizcayaArgentaria Puerto Rico (“BBVAPR Bank”), a Puerto Rico chartered commercial bank, and BBVA Seguros, Inc. (“BBVA Seguros”), an insurance agency, and (ii) BBVA Securities of Puerto Rico, Inc. (“BBVA Securities,” now known as “OFS Securities”), a registered broker-dealer. This transaction is referred to as the BBVAPR Acquisition” and BBVAPR Holding, BBVAPR Bank, BBVA Seguros and BBVA Securities are collectively referred to as the “BBVAPR Companies” or “BBVAPR.”

Basis of Presentation and Use of Estimates

The accounting and reporting policies of the Companyconform with U.S. generally accepted accounting principles (“GAAP”) and to banking industry practices.

The unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information and should be read in conjunction with the audited consolidated financial statements in our annual report on Form 10-K for the year ended December 31, 2012 (“2012 Form 10-K”). All significant intercompany balances and transactions have been eliminated in consolidation. These unaudited statements are, in the opinion of management, a fair statement of the results for the periods reported and include all necessary adjustments, all of a normal recurring nature, for a fair statement of such results. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and related disclosures. These estimates are based on information available as of the date of the consolidated financial statements. While management makes its best judgment, actual amounts or results could differ from these estimates. Interim period results are not necessarily indicative of the results to be expected for the full year.

Certain reclassifications have been made to 2012 unaudited consolidated financial statements and notes to the financial statements to conform to the 2013 presentation.

Significant Accounting Policies

We provide a summary of our significant accounting policies in our 2012 Form 10-K under “Notes to Consolidated Financial Statements—Note 1—Summary of Significant Accounting Policies.”

New Accounting Pronouncements Policy [Policy Text Block]

Below we describe recent accounting changes.

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income - In February 2013, the FASB issued an amendment to enhance current disclosure requirements of reclassifications out of accumulated other comprehensive income and their corresponding effect on net income to be presented, in one place, information about significant amounts reclassified and, in some cases, cross-reference to related footnote disclosures. Previously, this information was presented in different places throughout the financial statements. The amendments require disclosure of information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, they require the presentation, either on the face of the statement where net income is presented or in the notes, of significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, the Company is required to cross-reference to other disclosures required under GAAP that provide additional detail about those amounts. The amended guidance was effective for annual and interim reporting periods beginning on or after December 15, 2012, prospectively. Our adoption of the guidance is presented in “Note 13 – Stockholders' Equity and Earnings per Share.”

Testing Indefinite-Lived Intangible Assets for Impairment - In July 2012, the FASB issued ASU No. 2012-02, Intangibles—

Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. The ASU is intended to simplify the guidance for testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other than goodwill. Some examples of intangible assets subject to the guidance include indefinite-lived trademarks, licenses and distribution rights. The ASU allows companies to perform a qualitative assessment about the likelihood of impairment of an indefinite-lived intangible asset to determine whether further impairment testing is necessary, similar in approach to the goodwill impairment test. The ASU became effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Our adoption of the guidance had no effect on our unaudited consolidated financial statements.

Offsetting Financial Assets and Liabilities - In December 2011, the FASB issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. The ASU isintended to enhance current disclosure requirements on offsetting financial assets and liabilities. The new disclosures enable financial statement users to compare balance sheets prepared under GAAP and IFRS, which are subject to different offsetting models. The guidance requires disclosure of both gross and net information about instruments and transactions eligible for offset in the balance sheet as well as instruments and transactions subject to an agreement similar to a master netting arrangement. The disclosures are required irrespective of whether such instruments are presented gross or net on the balance sheet. In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarify that the scope of this guidance applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. The amended guidance was effective for annual and interim reporting periods beginning on or after January 1, 2013, with comparative retrospective disclosures required for all periods presented. We adopted the guidance in the first quarter of 2013. Our adoption of the guidance had no effect on our financial condition, results of operations or liquidity since it only impacts disclosures only. The new disclosures required by the amended guidance are included in “Note 17 – Offsetting Arrangements”hereto.

Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution—FASB ASU 2012-06, “Business Combinations” (Topic 805) was issued in October 2012. This update addresses the diversity in practice about how to interpret the terms “on the same basis” and “contractual limitations” when subsequently measuring an indemnification asset recognized in a government-assisted (Federal Deposit Insurance Corporation) acquisition of a financial institution that includes a loss-sharing agreement (indemnification agreement). When a reporting entity recognizes an indemnification asset as a result of a government-assisted acquisition of a financial institution and subsequently the cash flows expected to be collected on the indemnification asset changeas a result of a change in cash flows expected to be collected on the assets subject to indemnification, the reporting entity should subsequently account for the change in the measurement of the indemnification asset on the same basis as the change in the assets subject to indemnification. Any amortization of changes in value should be limited to the contractual term of the indemnification agreement, that is, the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets. The amendments in this update are effective for fiscal years and interim periods within those years, beginning on or after December 15, 2012. The adoption of this guidance did not have a material effect on the unaudited consolidated financial statements, since the Company already followed the same basis approach.

Future Application of Accounting Standards

Accounting for Financial Instruments—Credit Losses - In December 2012, the FASB issued a proposed ASU, Financial Instruments—Credit Losses. This proposed ASU, or exposuredraft, was issued for public comment in order to allowstakeholders the opportunity to review the proposal and providecomments to the FASB, and does not constitute accountingguidance until a final ASU is issued.The exposure draft contains proposed guidance developedby the FASB with the goal of improving financial reportingabout expected credit losses on loans, securities and otherfinancial assets held by banks, financial institutions, and otherpublic and private organizations. The exposure draft proposes anew accounting model intended to require earlier recognition ofcredit losses, while also providing additional transparency aboutcredit risk.The FASB's proposed model would utilize a single“expected credit loss” measurement objective for therecognition of credit losses, replacing the multiple existingimpairment models in GAAP which generally require thata loss be “incurred” before it is recognized.The FASB's proposed model represents a significantdeparture from existing GAAP, and may result in materialchanges to the Company's accounting for financial instruments.The impact of the FASB's final ASU to the Company'sfinancial statements will be assessed when it is issued. Theexposure draft does not contain a proposed effective date. Thiswould be included in the final ASU, when issued.

Other Potential Amendments to Current AccountingStandards - The FASB and International Accounting Standards Board, either jointly or separately, are currentlyworking on several major projects, including amendments toexisting accounting standards governing financial instruments,leases, andconsolidation and investment companies. As part of thejoint financial instruments project, the FASB has issued aproposed ASU that would result in significant changes to theguidance for recognition and measurement of financialinstruments, in addition to the proposed ASU that would changethe accounting for credit losses on financial instrumentsdiscussed above.The FASB is also working on a joint project that wouldrequire substantially all leases to be capitalized on the balancesheet. Additionally, the FASB has issued a proposal onprincipal-agent considerations that would change the way theCompany needs to evaluate whether to consolidate Variable Interest Entities (“VIE”) andnon-VIE partnerships. Furthermore, the FASB has issued aproposed ASU that would change the criteria used to determinewhether an entity is subject to the accounting and reportingrequirements of an investment company.The principal-agent consolidation proposal would requireall VIEs, including those that are investment companies, to beevaluated for consolidation under the same requirements. All ofthese projects may have significant impacts for the Company.Upon completion of the standards, the Company will need to reevaluateits accounting and disclosures. However, due toongoing deliberations of the standard setters, the Company iscurrently unable to determine the effect of future amendments orproposals.

XML

Subsequent Events

3 Months Ended

Jun. 30, 2013

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE 19– SUBSEQUENT EVENTS

On August 1, 2013, upon receipt of the required approval of the Financial Industry Authority, OFS Securities merged with and into Oriental Financial Services.

XML

Commitments (Narratives) (Details) (USD $)	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Commitments and Contingencies [Abstract]
Rent Expenses	$ 2,600,000	$ 1,600,000
Acquired loans commitments	337,100,000		461,600,000
Acquired standby letters of credit and financial guarantees			65,900,000
Line of credit reserve	$ 900

XML

Business Combination (Merger and restructuring charges) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Restructuring Charges
Severance Costs	$ 400	$ 1,150
Systems integrations costs	2,231	3,177
Other Restructuring Costs	$ 2,643	$ 6,481

XML

Accrued Interest Receivable and Other Assets (Tables)

3 Months Ended

Jun. 30, 2013

Accounts Receivable, Net [Abstract]

Schedule of Accrued interest receivable [Table Text Block]

Accrued interest receivable at June 30, 2013 and December 31, 2012 consists of the following

	June 30,		December 31,
	2013		2012
	(In thousands)
Non-covered loans	$	11,459	$	10,533
Investments		6,049		7,021
	$	17,508	$	17,554

Schedule of Other Assets [Table Text Block]

Other assets at June 30, 2013 and December 31, 2012 consist of the following

	June 30,		December 31,
	2013		2012
	(In thousands)
Prepaid FDIC insurance	$	-	$	6,451
Other prepaid expenses		23,568		19,674
Servicing advances		-		7,976
Mortgage tax credits		8,706		8,706
Core deposit and customer relationship intangibles		13,201		14,490
Investment in Statutory Trust		1,086		1,086
Other repossessed assets		8,921		6,084
Accounts receivable and other assets		48,980		59,175
	$	104,462	$	123,642

XML

Commitments (Tables)

3 Months Ended

Jun. 30, 2013

Commitments and Contingencies [Abstract]

ScheduleOfGuaranteeObligationsTextBlock

Summarized credit-related financial instruments at June 30, 2013 and December 31, 2012were as follows:

	June 30,		December 31,
	2013		2012
	(In thousands)
Commitments to extend credit	$	445,411	$	591,679
Commercial letters of credit		2,231		2,918

	June 30,		December 31,
	2013		2012
	(In thousands)
Standby letters of credit and financial guarantees	$	67,087	$	69,789
Loans sold with recourse		184,937		172,492
Commitments to sell or securitize mortgage loans		10,977		83,663

Operating Leases, Future Minimum Payments Due [Abstract]

Contractual Obligation Fiscal Year Maturity Schedule [Table Text Block]

Year Ending June 30,	Minimum Rent
	(In thousands)
2013	$	5,332
2014		8,402
2015		8,116
2016		7,492
2017		7,965
Thereafter		24,755
	$	62,062

XML

Investments (Narrative) (Details) (USD $)	6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Investments, Debt and Equity Securities [Abstract]
Fair value of securities held as collateral		$ 82,100,000
Sale of GNMA Certificates	$ 92,400,000,000

XML

Allowance for Loan and Lease Losses (Tables)

3 Months Ended

6 Months Ended

Jun. 30, 2013

Jun. 30, 2013

Loans Receivable [Abstract]

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

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

	Quarter Ended June 30, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Balance at beginning of period	$	22,889	$	16,314	$	1,313	$	1,741	$	77	$	42,334
Charge-offs		(29,120)		(2,886)		(323)		(709)		-		(33,038)
Recoveries		-		234		43		209		-		486
Provision for non-covered loan and lease losses		27,606		3,961		1,309		2,400		643		35,919
Balance at end of period	$	21,375	$	17,623	$	2,342	$	3,641	$	720	$	45,701

	Quarter Ended June 30, 2012
	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Balance at beginning of period	$	18,967	$	15,045	$	1,328	$	510	$	1,511	$	37,361
Charge-offs		(1,948)		(1,721)		(184)		-		-		(3,853)
Recoveries		-		34		56		4		-		94
Provision for (recapture of) non-covered loan and lease losses		2,769		2,620		(202)		(317)		(1,070)		3,800
Balance at end of period	$	19,788	$	15,978	$	998	$	197	$	441	$	37,402

	Six-Month Period Ended June 30, 2012
	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Balance at beginning of period	$	21,652	$	12,548	$	1,423	$	845	$	542	$	37,010
Charge-offs		(2,869)		(3,358)		(366)		(31)		-		(6,624)
Recoveries		-		101		107		8		-		216
Provision for (recapture of) non-covered loan and lease losses		1,005		6,687		(166)		(625)		(101)		6,800
Balance at end of period	$	19,788	$	15,978	$	998	$	197	$	441	$	37,402

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

	June 30, 2013
	Commercial		Consumer		Auto		Unallocated		Total
Allowance for loan and lease losses:
Ending allowance balance attributable to loans:
Collectively evaluated for impairment		924		-		-		-		924
Total ending allowance balance	$	924	$	-	$	-	$	-	$	924
Loans:
Collectively evaluated for impairment		154,753		62,751		373,587		-		591,091
Total ending loan balance	$	154,753	$	62,751	$	373,587	$	-	$	591,091

	Six-Month Period Ended June 30, 2013
							Auto and
	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Balance at beginning of period	$	21,092	$	17,072	$	856	$	533	$	368	$	39,921
Charge-offs		(31,707)		(3,444)		(569)		(800)		-		(36,520)
Recoveries		-		262		107		216		-		585
Provision for non-covered loan and lease losses		31,990		3,733		1,948		3,692		352		41,715
Balance at end of period	$	21,375	$	17,623	$	2,342	$	3,641	$	720	$	45,701

	June 30, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	8,879	$	5,795	$	-	$	-	$	-	$	14,674
Collectively evaluated for impairment		12,496		11,828		2,342		3,641		720		31,027
Total ending allowance balance	$	21,375	$	17,623	$	2,342	$	3,641	$	720	$	45,701
Loans:
Individually evaluated for impairment	$	81,849	$	43,831	$	-	$	-	$	-	$	125,680
Collectively evaluated for impairment		673,449		658,244		89,608		233,091		-		1,654,392
Total ending loan balance	$	755,298	$	702,075	$	89,608	$	233,091	$	-	$	1,780,072

	December 31, 2012
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	5,334	$	4,121	$	-	$	-	$	-	$	9,455
Collectively evaluated for impairment		15,758		12,951		856		533		368		30,466
Total ending allowance balance	$	21,092	$	17,072	$	856	$	533	$	368	$	39,921
Loans:
Individually evaluated for impairment	$	74,783	$	46,199	$	-	$	-	$	-	$	120,982
Collectively evaluated for impairment		730,159		307,731		48,136		50,720		-		1,136,746
Total ending loans balance	$	804,942	$	353,930	$	48,136	$	50,720	$	-	$	1,257,728

Impaired Financing Receivables [Table Text Block]

The Company's recorded investment in commercial and mortgage loans that were individually evaluated forimpairment, excluding loans accounted for under ASC 310-30, and the related allowance for loan and lease losses at June 30,2013 and December 31, 2012 are as follows:

Originated and Other Loans and Leases Held for Investment

	June 30, 2013
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance:
Commercial	$	22,168	$	19,276	$	5,795	30%
Residential troubled-debt restructuring		85,271		81,849		8,879	11%
Impaired loans with no specific allowance:
Commercial		31,334		24,555		N/A	N/A
Total investment in impaired loans	$	138,773	$	125,680	$	14,674	12%

	December 31, 2012
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance
Commercial	$	16,666	$	14,570	$	4,121	28%
Residential troubled-debt restructuring		76,859		74,783		5,334	7%
Impaired loans with no specific allowance
Commercial		36,293		31,629		N/A	N/A
Total investment in impaired loans	$	129,818	$	120,982	$	9,455	8%
Acquired Loans Accounted for under ASC-310-20 (Loans with revolving feature and/or acquired at a premium)
	June 30, 2013
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial		36,293		31,629		N/A	N/A
Total investment in impaired loans	$	36,293	$	31,629	$	-	0%

	Six-Month Period Ended June 30,
	2013				2012
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
Impaired loans with specific allowance
Commercial	$	322	$	17,789	$	264	$	20,516
Residential troubled-debt restructuring		1,273		80,914		874		59,466
Impaired loans with no specific allowance
Commercial		364		25,304		104		21,864
Total interest income from impaired loans	$	1,959	$	124,007	$	1,242	$	101,846

	June 30, 2013
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired covered loan pools with specific allowance
Loans secured by 1-4 family residential properties	$	51,613	$	36,483	$	7,072	19%
Construction and development secured by 1-4 family residential properties		66,024		16,170		6,741	42%
Commercial and other construction		242,054		75,941		39,504	52%
Consumer		12,790		6,818		675	10%
Total investment in impaired covered loan pools	$	372,481	$	135,412	$	53,992	40%

	December 31, 2012
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired covered loan pools with specific allowance
Loans secured by 1-4 family residential properties	$	45,208	$	29,482	$	4,986	17%
Construction and development secured by 1-4 family residential properties		68,255		15,185		6,137	40%
Commercial and other construction		252,373		121,237		42,323	35%
Consumer		14,494		8,493		678	8%
Total investment in impaired covered loan pools	$	380,330	$	174,397	$	54,124	31%

The following table presents the interest recognized in commercial and mortgage loans that were individuallyevaluated for impairment, excluding loans accounted for under ASC 310-30, for the quartersand six-month periodsended June 30, 2013 and 2012:

	Quarter Ended June 30,
	2013				2012
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)
Impaired loans with specific allowance
Commercial	$	255	$	17,049	$	132	$	16,105
Residential troubled-debt restructuring		682		83,081		461		62,548
Impaired loans with no specific allowance
Commercial		226		23,304		49		25,031
Total interest income from impaired loans	$	1,163	$	123,434	$	642	$	103,684

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.

Provision for covered loans and lease losses for the quarter and six-month period ended June 30, 2013 was $1.2 million and $1.9 million, respectively, reflecting the Company's quarterly 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. During the quarter ended June 30, 2013, a commercial real estate loan pool underperformed, requiring additional allowance for the quarter. The six-month period ended June 30, 2013, is mainly affected by the aforementioned commercial real estate pool together with two pools of non-performing residential mortgage loans pools. The six-month period ended June 30, 2013 was benefited by the reversal of the allowance of pools of commercial and industrial loans and pools of commercial loans secured by real estate.

The Company's recorded investment in covered loan pools that have recorded impairments and their relatedallowance for covered loan and lease losses as of June 30, 2013 and December 31, 2012 are as follows:

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

The following table presents troubled-debt restructurings for which there was a payment default during the twelve-month periods ended June 30, 2013 and 2012:

	Twelve-Month Period Ended June 30,
	2013			2012
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Mortgage loans	48	$	6,414	32	$	4,110
Consumer	2	$	29	-	$	-

Modifications

The following table presents the troubled-debt restructurings during the quarters and six-month periods ended June 30, 2013 and 2012:

	Quarter Ended June 30, 2013
	Number of contracts	Pre Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage loans	42	$	5,372	6.47%	355	$	5,715	4.26%	420
Commercial loans	2		1,842	8.99%	87		1,842	4.00%	66
Consumer loans	2		18	13.67%	41		18	13.67%	60
	Six-Month Period Ended June 30, 2013
	Number of contracts	Pre Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage loans	86	$	10,555	6.56%	342	$	11,288	4.59%	417
Commercial loans	2		1,842	8.99%	87		1,842	4.00%	66
Consumer loans	2		18	13.67%	41		18	13.67%	60
	Quarter Ended June 30, 2012
	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 loans	45	$	6,028	6.52%	290	$	6,380	4.95%	378
Commercial loans	3		3,698	6.25%	65		3,968	6.08%	71
	Six-Month Period Ended June 30, 2012
	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 loans	103	$	15,473	6.50%	313	$	16,419	4.96%	393
Commercial loans	6		5,600	5.80%	49		5,407	6.22%	65

Financing Receivable Credit Quality Indicators [Table Text Block]

As of June 30, 2013 and December 31, 2012, and based on the most recent analysis performed, the risk category of gross non-covered originated and acquiredloans accounted for under ASC 310-20 subject to risk rating by class of loans is as follows:

	June 30, 2013
	Risk Ratings
											Individually
	Balance				Special						Measured for
	Outstanding		Pass		Mention		Substandard		Doubtful		Impairment
	(In thousands)
Commercial - originated and other loans held for investment
Commercial secured by real estate	$	412,958	$	346,115	$	29,355	$	1,293	$	282	$	35,913
Other commercial and industrial		289,117		278,319		2,763		118		-		7,918
		702,075		624,434		32,118		1,411		282		43,831
Commercial - acquired loans (under ASC 310-20)
Commercial secured by real estate		14,519		14,031		245		244		-		-
Other commercial and industrial		140,234		137,786		727		1,721		-		-
		154,753		151,817		972		1,965		-		-
Total	$	856,828	$	776,251	$	33,090	$	3,376	$	282	$	43,831

	December 31, 2012
	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	$	251,274	$	183,033	$	23,928	$	2,127	$	99	$	42,087
Other commercial and industrial		102,656		85,806		8,569		4,169		-		4,112
		353,930		268,839		32,497		6,296		99		46,199
Commercial - acquired loans (under ASC 310-20)
Construction and commercial real estate		20,337		19,701		245		391		-		-
Commercial and industrial		317,632		315,085		213		2,334		-		-
		337,969		334,786		458		2,725		-		-
Total	$	691,899	$	603,625	$	32,955	$	9,021	$	99	$	46,199

Past Due Financing Receivables [Table Text Block]

The following table presents the aging of the recorded investment in gross originated and other loans held for investment as of June 30, 2013 and December 31, 2012 by class ofloans. Mortgage loans past due included delinquent loans in the GNMA buy-back option program. Servicers of loans underlying GNMA mortgage-backed securities must report as their own assets the defaulted loans that they have the option (but not the obligation) to repurchase, even when they elect not to exercise that option

	June 30, 2013
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	-	$	2,937	$	6,993	$	9,930	$	79,666	$	89,596	$	6
Years 2003 and 2004		-		5,413		3,429		8,842		117,754		126,596		-
Year 2005		-		2,136		1,431		3,567		65,196		68,763		-
Year 2006		-		3,369		2,838		6,207		87,614		93,821		-
Years 2007, 2008 and 2009		-		2,863		3,407		6,270		104,169		110,439		433
Years 2010, 2011, 2012 and 2013		-		391		2,115		2,506		96,270		98,776		76
		-		17,109		20,213		37,322		550,669		587,991		515
Non-traditional		-		1,520		2,212		3,732		42,695		46,427		-
Loss mitigation program		-		4,993		14,287		19,280		68,335		87,615		1,606
		-		23,622		36,712		60,334		661,699		722,033		2,121
Home equity secured personal loans		-		-		12		12		740		752		-
GNMA's buy-back option program		-		-		32,513		32,513		-		32,513		-
		-		23,622		69,237		92,859		662,439		755,298		2,121
Commercial
Commercial secured by real estate		11,033		1,381		12,694		25,108		386,236		411,344		-
Other commercial and industrial		324		66		753		1,143		289,587		290,730		-
		11,357		1,447		13,447		26,251		675,823		702,074		-
Consumer		670		165		370		1,205		88,403		89,608		-
Auto and leasing		8,826		2,075		1,096		11,997		221,095		233,092		-
Total	$	20,853	$	27,309	$	84,150	$	132,312	$	1,647,760	$	1,780,072	$	2,121

	December 31, 2012
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	6,906	$	2,116	$	11,363	$	20,385	$	80,883	$	101,268	$	-
Years 2003 and 2004		12,048		5,206		18,162		35,416		114,446		149,862		-
Year 2005		4,983		1,746		8,860		15,589		65,312		80,901		-
Year 2006		9,153		3,525		15,363		28,041		85,045		113,086		-
Years 2007, 2008 and 2009		2,632		1,682		8,965		13,279		108,358		121,637		-
Years 2010, 2011 and 2012 and 2012		632		769		1,162		2,563		64,084		66,647		-
		36,354		15,044		63,875		115,273		518,128		633,401		-
Non-traditional		2,850		1,067		11,160		15,077		42,742		57,819		-
Loss mitigation program		8,933		4,649		19,989		33,571		53,739		87,310
		48,137		20,760		95,024		163,921		614,609		778,530		-
Home equity secured personal loans		-		-		10		10		726		736		-
GNMA's buy-back option program		-		-		25,676		25,676		-		25,676		-
		48,137		20,760		120,710		189,607		615,335		804,942		-
Commercial
Commercial secured by real estate		9,062		271		15,335		24,668		226,606		251,274		-
Other commercial and industrial		345		189		2,378		2,912		99,744		102,656		-
		9,407		460		17,713		27,580		326,350		353,930		-
Consumer		747		92		409		1,248		46,888		48,136		-
Auto and leasing		251		129		131		511		50,209		50,720		-
Total	$	58,542	$	21,441	$	138,963	$	218,946	$	1,038,782	$	1,257,728	$	-

	June 30, 2013
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Commercial	$	291	$	134	$	493	$	918	$	139,316	$	140,234	$	-
Commercial secured by real estate		9		-		-		9		14,510		14,519		-
Auto		8,849		1,892		674		11,415		362,172		373,587		-
Consumer		1,767		7		1,069		2,843		59,908		62,751		-
Total	$	10,916	$	2,033	$	2,236	$	15,185	$	575,906	$	591,091	$	-

	December 31, 2012
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Commercial	$	715	$	76	$	193	$	984	$	316,260	$	317,244	$	-
Commercial secured by real estate		315		-		-		315		28,900		29,215		-
Auto		6,753		1,023		275		8,051		449,843		457,894		-
Consumer		982		-		1,095		2,077		66,801		68,878		-
Total	$	8,765	$	1,099	$	1,563	$	11,427	$	861,804	$	873,231	$	-

XML

Allowance for Loan and Lease Losses (Gross Loan and Allowance for loan and lease losses) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Individually Evaluated for Impairment			$ 74,783
Loans and Leases Receivable, Gross, Carrying Amount			1,432,161
Residential Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	8,879		5,334
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	12,496		15,758
Financing Receivable, Allowance for Credit Losses	21,375		21,092
Financing Receivable, Individually Evaluated for Impairment	81,849		74,783
Financing Receivable, Collectively Evaluated for Impairment	673,449		730,159
Loans and Leases Receivable, Gross, Carrying Amount	755,298		804,942
Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	5,795		4,121
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	11,828		12,951
Financing Receivable, Allowance for Credit Losses	17,623		17,072
Financing Receivable, Individually Evaluated for Impairment	43,831		46,199
Financing Receivable, Collectively Evaluated for Impairment	658,244		307,731
Loans and Leases Receivable, Gross, Carrying Amount	702,075		353,930
Commercial Portfolio Segment [Member] | Loans receivable Acquired [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	924
Financing Receivable, Allowance for Credit Losses	924	386	0
Financing Receivable, Individually Evaluated for Impairment	0
Financing Receivable, Collectively Evaluated for Impairment	154,753
Loans and Leases Receivable, Gross, Carrying Amount	154,753
Consumer Portfolio Segment [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	2,342		856
Financing Receivable, Allowance for Credit Losses	2,342		856
Financing Receivable, Individually Evaluated for Impairment	0		0
Financing Receivable, Collectively Evaluated for Impairment	89,608		48,136
Loans and Leases Receivable, Gross, Carrying Amount	89,608		48,136
Consumer Portfolio Segment [Member] | Loans receivable Acquired [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	0
Financing Receivable, Allowance for Credit Losses	0	0	0
Financing Receivable, Individually Evaluated for Impairment	0
Financing Receivable, Collectively Evaluated for Impairment	62,751
Loans and Leases Receivable, Gross, Carrying Amount	62,751
Unallocated Financing Receivables [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	720		368
Financing Receivable, Allowance for Credit Losses	720		368
Financing Receivable, Individually Evaluated for Impairment	0		0
Financing Receivable, Collectively Evaluated for Impairment	0		0
Loans and Leases Receivable, Gross, Carrying Amount	0		0
Unallocated Financing Receivables [Member] | Loans receivable Acquired [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	0
Financing Receivable, Allowance for Credit Losses	0	0	0
Financing Receivable, Individually Evaluated for Impairment	0
Financing Receivable, Collectively Evaluated for Impairment	0
Loans and Leases Receivable, Gross, Carrying Amount	0
Auotomobile loans portfolio segment [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	3,641		533
Financing Receivable, Allowance for Credit Losses	3,641		533
Financing Receivable, Individually Evaluated for Impairment	0		0
Financing Receivable, Collectively Evaluated for Impairment	233,091		50,720
Loans and Leases Receivable, Gross, Carrying Amount	233,091		50,720
Auotomobile loans portfolio segment [Member] | Loans receivable Acquired [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	0
Financing Receivable, Allowance for Credit Losses	0
Financing Receivable, Individually Evaluated for Impairment	0
Financing Receivable, Collectively Evaluated for Impairment	373,587
Loans and Leases Receivable, Gross, Carrying Amount	373,587
Total [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	14,674		9,455
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	31,027		30,466
Financing Receivable, Allowance for Credit Losses	45,701		39,921
Financing Receivable, Individually Evaluated for Impairment	125,680		120,982
Financing Receivable, Collectively Evaluated for Impairment	1,654,392		1,136,746
Loans and Leases Receivable, Gross, Carrying Amount	1,780,072		1,257,728
Total [Member] | Loans receivable Acquired [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	924
Financing Receivable, Allowance for Credit Losses	924	386	0
Financing Receivable, Individually Evaluated for Impairment	0
Financing Receivable, Collectively Evaluated for Impairment	591,091
Loans and Leases Receivable, Gross, Carrying Amount	$ 591,091

XML

Segment Reporting (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Segment Reporting Information [Line Items]
Total interest income	$ 125,808	$ 60,788	$ 239,436	$ 130,708
Interest Expense, Total	20,439	27,632	41,485	58,566
Interest Income (Expense), Net, Total	105,369	33,156	197,951	72,142
Provision for Non Covered Loan and Lease Losses	37,527	3,800	45,443	6,800
Provision for Covered Loan and Lease Losses	1,211	1,467	1,883	8,624
Total non-interest income (loss), net	7,796	17,836	18,930	30,995
Noninterest Expense, Total	68,822	29,710	135,632	59,109
Total assets	8,435,934		8,435,934		9,196,262
Total Assets by Segments		6,376,278		6,376,278
Banking [Member]
Segment Reporting Information [Line Items]
Total interest income	115,047	37,565	216,571	77,229
Interest Expense, Total	10,272	5,685	21,417	12,094
Interest Income (Expense), Net, Total	104,775	31,880	195,154	65,135
Provision for Non Covered Loan and Lease Losses	37,527	3,800	45,443	6,800
Provision for Covered Loan and Lease Losses	1,211	1,467	1,883	8,624
Total non-interest income (loss), net	(4,197)	33	(901)	701
Noninterest Expense, Total	57,918	24,365	115,834	46,952
Intersegment revenues	579	440	(624)	844
Expenses From Transactions With Other Operating Segments Of Same Entity	0	0	0	0
Income (loss) before Income Taxes, Parent	4,501	2,721	30,469	4,304
Total assets	6,746,902	3,116,655	6,746,902	3,116,655
Wealth Management [Member]
Segment Reporting Information [Line Items]
Total interest income	96	0	182	0
Interest Expense, Total	0	0	0	0
Interest Income (Expense), Net, Total	96	0	182	0
Provision for Non Covered Loan and Lease Losses	0	0	0	0
Provision for Covered Loan and Lease Losses	0	0	0	0
Total non-interest income (loss), net	8,100	5,941	15,801	11,731
Noninterest Expense, Total	6,650	3,611	12,777	8,500
Intersegment revenues	0	0	0	0
Expenses From Transactions With Other Operating Segments Of Same Entity	485	296	786	605
Income (loss) before Income Taxes, Parent	1,061	2,034	2,420	2,626
Total assets	39,960	15,143	39,960	15,143
Treasury [Member]
Segment Reporting Information [Line Items]
Total interest income	10,665	23,223	22,683	53,479
Interest Expense, Total	10,167	21,947	20,068	46,472
Interest Income (Expense), Net, Total	498	1,276	2,615	7,007
Provision for Non Covered Loan and Lease Losses	0	0	0	0
Provision for Covered Loan and Lease Losses	0	0	0	0
Total non-interest income (loss), net	3,893	11,862	4,030	18,563
Noninterest Expense, Total	4,254	1,734	7,020	3,657
Intersegment revenues	0	0	0	0
Expenses From Transactions With Other Operating Segments Of Same Entity	94	144	(1,410)	239
Income (loss) before Income Taxes, Parent	43	11,260	1,035	21,674
Total assets	2,527,039	3,951,720	2,527,039	3,951,720
Major Segment [Member]
Segment Reporting Information [Line Items]
Total interest income	125,808	60,788	239,436	130,708
Interest Expense, Total	20,439	27,632	41,485	58,566
Interest Income (Expense), Net, Total	105,369	33,156	197,951	72,142
Provision for Non Covered Loan and Lease Losses	37,527	3,800	45,443	6,800
Provision for Covered Loan and Lease Losses	1,211	1,467	1,883	8,624
Total non-interest income (loss), net	7,796	17,836	18,930	30,995
Noninterest Expense, Total	68,822	29,710	135,631	59,109
Intersegment revenues	579	440	(624)	844
Expenses From Transactions With Other Operating Segments Of Same Entity	579	440	(624)	844
Income (loss) before Income Taxes, Parent	5,605	16,015	33,924	28,604
Total assets	9,313,901	7,083,518	9,313,901	7,083,518
Intersegment Elimination [Member]
Segment Reporting Information [Line Items]
Total interest income	0	0	0	0
Interest Expense, Total	0	0	0	0
Interest Income (Expense), Net, Total	0	0	0	0
Provision for Non Covered Loan and Lease Losses	0	0	0	0
Provision for Covered Loan and Lease Losses	0	0	0	0
Total non-interest income (loss), net	0	0	0	0
Noninterest Expense, Total	0	0	0	0
Intersegment revenues	(579)	(440)	624	(844)
Expenses From Transactions With Other Operating Segments Of Same Entity	(579)	(440)	624	(844)
Income (loss) before Income Taxes, Parent	0	0	0	0
Total assets	$ (877,967)	$ (707,240)	$ (877,967)	$ (707,240)

XML

Allowance for Loan and Lease Losses (Recorded Investment in Covered Loan Pools) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended						3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Jun. 30, 2012	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012	Dec. 31, 2011	Jun. 30, 2013 Covered Loan [Member]	Dec. 31, 2012 Covered Loan [Member]	Jun. 30, 2013 Loans Secured by multi-family properties [Member] Covered Loan [Member]	Dec. 31, 2012 Loans Secured by multi-family properties [Member] Covered Loan [Member]	Jun. 30, 2013 Construction and development secured by multi-family properties [Member] Covered Loan [Member]	Dec. 31, 2012 Construction and development secured by multi-family properties [Member] Covered Loan [Member]	Jun. 30, 2013 Other Commercial [Member] Covered Loan [Member]	Dec. 31, 2012 Other Commercial [Member] Covered Loan [Member]	Jun. 30, 2013 Consumer Loan [Member] Covered Loan [Member]	Dec. 31, 2012 Consumer Loan [Member] Covered Loan [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal								$ 372,481	$ 380,330	$ 51,613	$ 45,208	$ 66,024	$ 68,255	$ 242,054	$ 252,373	$ 12,790	$ 14,494
Recorded Investment								135,412	174,397	36,483	29,482	16,170	15,185	75,941	121,237	6,818	8,493
Provision for covered loan and lease losses, net	53,992	53,992	58,628	52,974	54,124	56,437	37,256	53,992	54,124	7,072	4,986	6,741	6,137	39,504	42,323	675	678
Coverage								39.87239%	31.03494%	19.38437%	16.91201%	41.68831%	40.41488%	52.01933%	34.90931%	9.90026%	7.98304%
Average Recorded Investment	$ 123,434	$ 124,007	$ 101,846

XML

Allowance for Loan and Lease Losses (Allowance for loan and lease losses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended				3 Months Ended		6 Months Ended				3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended			3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended		3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended		3 Months Ended			3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended			3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Residential Portfolio Segment [Member]	Dec. 31, 2012 Residential Portfolio Segment [Member]	Jun. 30, 2013 Residential Portfolio Segment [Member] Non-covered originated loans [Member]	Jun. 30, 2012 Residential Portfolio Segment [Member] Non-covered originated loans [Member]	Jun. 30, 2013 Residential Portfolio Segment [Member] Non-covered originated loans [Member]	Jun. 30, 2012 Residential Portfolio Segment [Member] Non-covered originated loans [Member]	Jun. 30, 2013 Commercial Portfolio Segment [Member]	Dec. 31, 2012 Commercial Portfolio Segment [Member]	Jun. 30, 2013 Commercial Portfolio Segment [Member] Non-covered originated loans [Member]	Jun. 30, 2012 Commercial Portfolio Segment [Member] Non-covered originated loans [Member]	Jun. 30, 2013 Commercial Portfolio Segment [Member] Non-covered originated loans [Member]	Jun. 30, 2012 Commercial Portfolio Segment [Member] Non-covered originated loans [Member]	Jun. 30, 2013 Commercial Portfolio Segment [Member] Loans receivable Acquired [Member]	Jun. 30, 2013 Commercial Portfolio Segment [Member] Loans receivable Acquired [Member]	Jun. 30, 2013 Consumer Portfolio Segment [Member]	Dec. 31, 2012 Consumer Portfolio Segment [Member]	Jun. 30, 2013 Consumer Portfolio Segment [Member] Non-covered originated loans [Member]	Jun. 30, 2012 Consumer Portfolio Segment [Member] Non-covered originated loans [Member]	Jun. 30, 2013 Consumer Portfolio Segment [Member] Non-covered originated loans [Member]	Jun. 30, 2012 Consumer Portfolio Segment [Member] Non-covered originated loans [Member]	Jun. 30, 2013 Consumer Portfolio Segment [Member] Loans receivable Acquired [Member]	Jun. 30, 2013 Consumer Portfolio Segment [Member] Loans receivable Acquired [Member]	Jun. 30, 2012 Consumer Loans Auto Financing Receivable Member Non-covered originated loans [Member]	Jun. 30, 2013 Consumer Loans Auto Financing Receivable Member Loans receivable Acquired [Member]	Jun. 30, 2013 Consumer Loans Auto Financing Receivable Member Loans receivable Acquired [Member]	Jun. 30, 2012 Leasing [Member] Non-covered originated loans [Member]	Jun. 30, 2013 Leasing [Member] Non-covered originated loans [Member]	Jun. 30, 2012 Leasing [Member] Non-covered originated loans [Member]	Jun. 30, 2013 Auto and Leasing loans receivable [Member] Non-covered originated loans [Member]	Jun. 30, 2013 Unallocated Financing Receivables [Member]	Dec. 31, 2012 Unallocated Financing Receivables [Member]	Jun. 30, 2013 Unallocated Financing Receivables [Member] Non-covered originated loans [Member]	Jun. 30, 2012 Unallocated Financing Receivables [Member] Non-covered originated loans [Member]	Jun. 30, 2013 Unallocated Financing Receivables [Member] Non-covered originated loans [Member]	Jun. 30, 2012 Unallocated Financing Receivables [Member] Non-covered originated loans [Member]	Jun. 30, 2013 Unallocated Financing Receivables [Member] Loans receivable Acquired [Member]	Jun. 30, 2013 Unallocated Financing Receivables [Member] Loans receivable Acquired [Member]	Jun. 30, 2013 Total [Member]	Dec. 31, 2012 Total [Member]	Jun. 30, 2013 Total [Member] Non-covered originated loans [Member]	Jun. 30, 2012 Total [Member] Non-covered originated loans [Member]	Jun. 30, 2013 Total [Member] Non-covered originated loans [Member]	Jun. 30, 2012 Total [Member] Non-covered originated loans [Member]	Jun. 30, 2013 Total [Member] Loans receivable Acquired [Member]	Jun. 30, 2013 Total [Member] Loans receivable Acquired [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period					$ 21,375	$ 21,092	$ 22,889	$ 18,967	$ 21,092	$ 21,652	$ 17,623	$ 17,072	$ 16,314	$ 15,045	$ 17,072	$ 12,548	$ 386	$ 0	$ 2,342	$ 856	$ 1,313	$ 1,328	$ 856	$ 1,423	$ 0	$ 0		$ 0	$ 0	$ 510	$ 533	$ 845	$ 1,741	$ 720	$ 368	$ 77	$ 1,511	$ 368	$ 542	$ 0	$ 0	$ 45,701	$ 39,921	$ 42,334	$ 37,361	$ 39,921	$ 37,010	$ 386	$ 0
Charge-offs	(2,886)						(29,120)	(1,948)	(31,707)	(2,869)				(1,721)	(3,444)	(3,358)	(25)	(25)			(323)	(184)	(569)	(366)	(1,158)	(2,614)	(31)	(1,410)	(3,125)	0	(800)		(709)			0	0	0	0	0	0			(33,038)	(3,853)	(36,520)	(6,624)	(2,593)	(5,764)
Recoveries	234						0	0	0	0				34	262	101	0	0			43	56	107	107	637	844		886	2,116	4	216	8	209			0	0	0	0	0	0			486	94	585	216	1,523	2,960
Provision for Non Covered Loan and Lease Losses	37,527	3,800	45,443	6,800			27,606	2,769	31,990	1,005			3,961	2,620	3,733	6,687	563	949			1,309	(202)	1,948	(166)	521	1,770		524	1,009	(317)	3,692	(625)	2,400			643	(1,070)	352	(101)	0	0			35,919	3,800	41,715	6,800	1,608	3,728
Balance at end of period					$ 21,375	$ 21,092	$ 21,375	$ 19,788	$ 21,375	$ 19,788	$ 17,623	$ 17,072	$ 17,623	$ 15,978	$ 17,623	$ 15,978	$ 924	$ 924	$ 2,342	$ 856	$ 2,342	$ 998	$ 2,342	$ 998	$ 0	$ 0	$ 197	$ 0	$ 0	$ 197	$ 3,641	$ 197	$ 3,641	$ 720	$ 368	$ 720	$ 441	$ 720	$ 441	$ 0	$ 0	$ 45,701	$ 39,921	$ 45,701	$ 37,402	$ 45,701	$ 37,402	$ 924	$ 924

XML

Segment Reporting (Tables)

3 Months Ended

Jun. 30, 2013

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 as of and for the quartersand the six-month periods endedJune 30, 2013and 2012:

	Quarter Ended June 30, 2013
			Financial				Total Major				Consolidated
	Banking		Services		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	115,047	$	96	$	10,665	$	125,808	$	-	$	125,808
Interest expense		(10,272)		-		(10,167)		(20,439)		-		(20,439)
Net interest income		104,775		96		498		105,369		-		105,369
Provision for non-covered loan and lease losses		(37,527)		-		-		(37,527)		-		(37,527)
Provision for covered loan and lease losses		(1,211)		-		-		(1,211)		-		(1,211)
Non-interest income (loss)		(4,197)		8,100		3,893		7,796		-		7,796
Non-interest expenses		(57,918)		(6,650)		(4,254)		(68,822)		-		(68,822)
Intersegment revenue		579		-		-		579		(579)		-
Intersegment expenses		-		(485)		(94)		(579)		579		-
Income before income taxes	$	4,501	$	1,061	$	43	$	5,605	$	-	$	5,605
Total assets	$	6,746,902	$	39,960	$	2,527,039	$	9,313,901	$	(877,967)	$	8,435,934

	Quarter Ended June 30, 2012
			Financial				Total Major				Consolidated
	Banking		Services		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	37,565	$	-	$	23,223	$	60,788	$	-	$	60,788
Interest expense		(5,685)		-		(21,947)		(27,632)		-		(27,632)
Net interest income		31,880		-		1,276		33,156		-		33,156
Provision for non-covered loan and lease losses		(3,800)		-		-		(3,800)		-		(3,800)
Provision for covered loan and lease losses, net		(1,467)		-		-		(1,467)		-		(1,467)
Non-interest income		33		5,941		11,862		17,836		-		17,836
Non-interest expenses		(24,365)		(3,611)		(1,734)		(29,710)		-		(29,710)
Intersegment revenue		440		-		-		440		(440)		-
Intersegment expenses		-		(296)		(144)		(440)		440		-
Income before income taxes	$	2,721	$	2,034	$	11,260	$	16,015	$	-	$	16,015
Total assets	$	3,116,655	$	15,143	$	3,951,720	$	7,083,518	$	(707,240)	$	6,376,278

	Six-Month Period Ended June 30, 2013
			Financial				Total Major				Consolidated
	Banking		Services		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	216,571	$	182	$	22,683	$	239,436	$	-	$	239,436
Interest expense		(21,417)		-		(20,068)		(41,485)		-		(41,485)
Net interest income		195,154		182		2,615		197,951		-		197,951
Provision for non-covered loan and lease losses		(45,443)		-		-		(45,443)		-		(45,443)
Provision for covered loan and lease losses, net		(1,883)		-		-		(1,883)		-		(1,883)
Non-interest income (loss)		(901)		15,801		4,030		18,930		-		18,930
Non-interest expenses		(115,834)		(12,777)		(7,020)		(135,631)		-		(135,631)
Intersegment revenue		(624)		-		-		(624)		624		-
Intersegment expenses		-		(786)		1,410		624		(624)		-
Income before income taxes	$	30,469	$	2,420	$	1,035	$	33,924	$	-	$	33,924

	Six-Month Period Ended June 30, 2012
			Financial				Total Major				Consolidated
	Banking		Services		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	77,229	$	-	$	53,479	$	130,708	$	-	$	130,708
Interest expense		(12,094)		-		(46,472)		(58,566)		-		(58,566)
Net interest income		65,135		-		7,007		72,142		-		72,142
Provision for non-covered loan and lease losses		(6,800)		-		-		(6,800)		-		(6,800)
Provision for covered loan and lease losses, net		(8,624)		-		-		(8,624)		-		(8,624)
Non-interest income		701		11,731		18,563		30,995		-		30,995
Non-interest expenses		(46,952)		(8,500)		(3,657)		(59,109)		-		(59,109)
Intersegment revenue		844		-		-		844		(844)		-
Intersegment expenses		-		(605)		(239)		(844)		844		-
Income before income taxes	$	4,304	$	2,626	$	21,674	$	28,604	$	-	$	28,604

XML

Allowance for Loan and Lease Losses (Credit Quality Indicator of non-covered loans) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount		$ 1,432,161
Financing Receivable, Individually Evaluated for Impairment		74,783
Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Financing Receivable, Individually Evaluated for Impairment	0
Commercial Secured [Member] | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	14,519
Pass	14,031
Special Mention	245
Substandard	244
Doubtful	0
Financing Receivable, Individually Evaluated for Impairment	0
Commercial Secured [Member] | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	412,958	251,274
Pass	346,115	183,033
Special Mention	29,355	23,928
Substandard	1,293	2,127
Doubtful	282	99
Financing Receivable, Individually Evaluated for Impairment	35,913	42,087
Other Commercial [Member] | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	140,234	317,632
Pass	137,786	315,085
Special Mention	727	213
Substandard	1,721	2,334
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment		0
Other Commercial [Member] | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	289,117	102,656
Pass	278,319	85,806
Special Mention	2,763	8,569
Substandard	118	4,169
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	7,918	4,112
Construction and commercial real estate [Member] | Commercial Acquired loans (under ASC 310-20) [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount		20,337
Pass		19,701
Special Mention		245
Substandard		391
Doubtful		0
Financing Receivable, Individually Evaluated for Impairment		0
Total Commercial subject to risk rating [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	856,828	691,899
Pass	776,251	603,625
Special Mention	33,090	32,955
Substandard	3,376	9,021
Doubtful	282	99
Financing Receivable, Individually Evaluated for Impairment	43,831	46,199
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	154,753	337,969
Pass	151,817	334,786
Special Mention	972	458
Substandard	1,965	2,725
Doubtful	0	0
Financing Receivable, Individually Evaluated for Impairment	0	0
Total Commercial subject to risk rating [Member] | Non-covered originated loans [Member]
Credit Quality Indicators [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	702,075	353,930
Pass	624,434	268,839
Special Mention	32,118	32,497
Substandard	1,411	6,296
Doubtful	282	99
Financing Receivable, Individually Evaluated for Impairment	$ 43,831	$ 46,199

XML

Stockholders' Equity (Group's and the Bank's actual capital amounts and ratios) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Group [Member]
Capital [Abstract]
Actual - Total capital	$ 806,418	$ 794,195
Actual - Tier 1 capital	702,801	678,127
Actual - Tier 1 leverage capital	702,801	678,127
Minimum Capital - Total Capital	402,819	419,269
Minimum capital - Tier 1 capital	201,409	209,634
Minimum capital - Tier 1 leverage capital	329,225	422,307
Risk Based Ratios [Abstract]
Capital to Risk Weighted Assets	16.01551%	15.15%
Tier One Risk Based Capital to Risk Weighted Assets	13.95767%	12.93924%
Tier One Leverage Capital to Average Assets	8.53885%	6.42308%
Capital Required for Capital Adequacy to Risk Weighted Assets	8.00%	8.00%
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	4.00%	4.00%
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	4.00%	4.00%
Bank [Member]
Capital [Abstract]
Actual - Total capital	743,653	719,675
Actual - Tier 1 capital	641,043	604,997
Actual - Tier 1 leverage capital	641,043	604,997
Minimum Capital - Total Capital	396,291	410,268
Minimum capital - Tier 1 capital	198,145	205,134
Minimum capital - Tier 1 leverage capital	327,058	420,298
Minimum to be well capitalized - Total Capital	495,363	512,835
Minimum to be well capitalized - Tier 1 capital	297,218	307,701
Minimum to be well capitalized - Tier 1 leverage	$ 408,823	$ 525,373
Risk Based Ratios [Abstract]
Capital to Risk Weighted Assets	15.01227%	14.03326%
Tier One Risk Based Capital to Risk Weighted Assets	12.94088%	11.79709%
Tier One Leverage Capital to Average Assets	7.84012%	5.76%
Capital Required for Capital Adequacy to Risk Weighted Assets	8.00%	8.00%
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	4.00%	4.00%
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	4.00%	4.00%
Capital Required to be Well Capitalized to Risk Weighted Assets	10.00%	10.00%
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	6.00%	6.00%
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	5.00%	5.00%

XML

Stockholders' Equity (Earnings per common share) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings Per Share [Abstract]
Net income	$ 37,539	$ 14,958	$ 58,731	$ 25,610
Nonconvertible Preferred Stock Dividend (Serie A and B)	1,629	1,201	3,256	2,401
Convertible preferred stock dividends	1,837	0	3,675	0
Income available to common shareholders	34,073	13,757	51,800	23,209
Effect of assumed conversion of convertible preferred stock	1,837	0	3,675	0
Income available to common sharesholders assuming conversion	$ 35,910	$ 13,757	$ 55,475	$ 23,209
Average common shares outstanding	45,630	40,703	45,613	40,873
Average potential common shares options	200	105	178	113
Average potential common shares convertible preferred stock	7,138	0	7,138	0
Earnings per common share - basic	$ 0.75	$ 0.34	$ 1.14	$ 0.57
Earnings per common share - diluted	$ 0.68	$ 0.34	$ 1.05	$ 0.57

XML

Stockholders' Equity (Accumulated Other Comprehensive Income) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended		12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2012	Jun. 30, 2013 Accumulated Other Comprehensive Income (Loss) [Member]	Jun. 30, 2013 Accumulated Other Comprehensive Income (Loss) [Member]	Jun. 30, 2012 Accumulated Other Comprehensive Income (Loss) [Member]	Dec. 31, 2012 Accumulated Other Comprehensive Income (Loss) [Member]	Jun. 30, 2013 AccumulatedOtherThanTemporaryImpairmentMember	Dec. 31, 2012 AccumulatedOtherThanTemporaryImpairmentMember	Jun. 30, 2013 AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember	Dec. 31, 2012 AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember
Accumulated Other Comprehensive Income [Line Items]
Unrealized gain on securities available-for-sale which are not other-than-temporarily impaired							$ 28,779	$ 75,347
Income tax effect of unrealized gain on securities available-for-sale							(3,379)	(7,102)
Accumulated Other Comprehensive Income Loss Available For Sale Securities Adjustment Net Of Tax							25,400	68,245
Unrealized loss on cash flow hedges									(13,187)	(17,664)
Income tax effect of unrealized loss on cash flow hedges									3,553	5,299
Tax Effect Reclassified From Accumulated OCI Into Income Tax Provision	166	724		(40,114)	(15,870)				(9,634)	(12,365)
Total			$ 15,766			$ 55,880

XML

Segment Reporting

3 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE 18–BUSINESSSEGMENTS

The Company segregates its businesses into the following major reportable segments of business: Banking, Financial Services, 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.

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

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

Following are the results of operations and the selected financial information by operating segment as of and for the quartersand the six-month periods endedJune 30, 2013and 2012:

	Quarter Ended June 30, 2013
			Financial				Total Major				Consolidated
	Banking		Services		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	115,047	$	96	$	10,665	$	125,808	$	-	$	125,808
Interest expense		(10,272)		-		(10,167)		(20,439)		-		(20,439)
Net interest income		104,775		96		498		105,369		-		105,369
Provision for non-covered loan and lease losses		(37,527)		-		-		(37,527)		-		(37,527)
Provision for covered loan and lease losses		(1,211)		-		-		(1,211)		-		(1,211)
Non-interest income (loss)		(4,197)		8,100		3,893		7,796		-		7,796
Non-interest expenses		(57,918)		(6,650)		(4,254)		(68,822)		-		(68,822)
Intersegment revenue		579		-		-		579		(579)		-
Intersegment expenses		-		(485)		(94)		(579)		579		-
Income before income taxes	$	4,501	$	1,061	$	43	$	5,605	$	-	$	5,605
Total assets	$	6,746,902	$	39,960	$	2,527,039	$	9,313,901	$	(877,967)	$	8,435,934

	Quarter Ended June 30, 2012
			Financial				Total Major				Consolidated
	Banking		Services		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	37,565	$	-	$	23,223	$	60,788	$	-	$	60,788
Interest expense		(5,685)		-		(21,947)		(27,632)		-		(27,632)
Net interest income		31,880		-		1,276		33,156		-		33,156
Provision for non-covered loan and lease losses		(3,800)		-		-		(3,800)		-		(3,800)
Provision for covered loan and lease losses, net		(1,467)		-		-		(1,467)		-		(1,467)
Non-interest income		33		5,941		11,862		17,836		-		17,836
Non-interest expenses		(24,365)		(3,611)		(1,734)		(29,710)		-		(29,710)
Intersegment revenue		440		-		-		440		(440)		-
Intersegment expenses		-		(296)		(144)		(440)		440		-
Income before income taxes	$	2,721	$	2,034	$	11,260	$	16,015	$	-	$	16,015
Total assets	$	3,116,655	$	15,143	$	3,951,720	$	7,083,518	$	(707,240)	$	6,376,278

	Six-Month Period Ended June 30, 2013
			Financial				Total Major				Consolidated
	Banking		Services		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	216,571	$	182	$	22,683	$	239,436	$	-	$	239,436
Interest expense		(21,417)		-		(20,068)		(41,485)		-		(41,485)
Net interest income		195,154		182		2,615		197,951		-		197,951
Provision for non-covered loan and lease losses		(45,443)		-		-		(45,443)		-		(45,443)
Provision for covered loan and lease losses, net		(1,883)		-		-		(1,883)		-		(1,883)
Non-interest income (loss)		(901)		15,801		4,030		18,930		-		18,930
Non-interest expenses		(115,834)		(12,777)		(7,020)		(135,631)		-		(135,631)
Intersegment revenue		(624)		-		-		(624)		624		-
Intersegment expenses		-		(786)		1,410		624		(624)		-
Income before income taxes	$	30,469	$	2,420	$	1,035	$	33,924	$	-	$	33,924

	Six-Month Period Ended June 30, 2012
			Financial				Total Major				Consolidated
	Banking		Services		Treasury		Segments		Eliminations		Total
	(In thousands)
Interest income	$	77,229	$	-	$	53,479	$	130,708	$	-	$	130,708
Interest expense		(12,094)		-		(46,472)		(58,566)		-		(58,566)
Net interest income		65,135		-		7,007		72,142		-		72,142
Provision for non-covered loan and lease losses		(6,800)		-		-		(6,800)		-		(6,800)
Provision for covered loan and lease losses, net		(8,624)		-		-		(8,624)		-		(8,624)
Non-interest income		701		11,731		18,563		30,995		-		30,995
Non-interest expenses		(46,952)		(8,500)		(3,657)		(59,109)		-		(59,109)
Intersegment revenue		844		-		-		844		(844)		-
Intersegment expenses		-		(605)		(239)		(844)		844		-
Income before income taxes	$	4,304	$	2,626	$	21,674	$	28,604	$	-	$	28,604

XML

Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (USD $) In Thousands	Total	Additional Paid-in Capital [Member]	Additional Paid-in Capital [Member] Preferred Stock Issuance Cost [Member]	Additional Paid-in Capital [Member] Common Stock Issuance Cost [Member]	Legal Surplus [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Preferred Stock [Member]	Common Stock [Member]
Beginning Balance at Dec. 31, 2011	$ 68,149	$ 499,096			$ 50,178		$ (74,808)	$ 37,131	$ 68,000	$ 47,809
Exercised Stock Options		361								33
Deemed dividend on preferred stock beneficial conversion feature	0
Stock-based compensation expense		787
Stock Issuance Cost			0	0
Transfer from/to legal surplus					2,490	(2,490)
Net income	25,610					25,610
Cash dividends declared on common stock						(4,886)
Cash dividends declared on preferred stock						(2,401)
Stock purchased							(7,022)
Lapsed restricted stock units		(392)					392
Stock used to match defined contribution plan							35
Other comprehensive loss, net of tax	(15,870)
Ending Balance at Jun. 30, 2012	692,202	499,852			52,668	83,982	(81,403)	21,261	68,000	47,842
Beginning Balance at Mar. 31, 2012
Exercised Stock Options										33
Deemed dividend on preferred stock beneficial conversion feature	0
Net income	14,958
Stock purchased	7,022
Other comprehensive loss, net of tax	(8,836)
Ending Balance at Jun. 30, 2012	692,202							21,261	68,000	47,842
Beginning Balance at Dec. 31, 2012	863,606	537,453			52,143	70,734	(81,275)	55,880	176,000	52,671
Common Stock, Value, Issued	52,689
Exercised Stock Options		167								18
Deemed dividend on preferred stock beneficial conversion feature	0
Stock-based compensation expense		888
Stock Issuance Cost			(23)	(16)
Transfer from/to legal surplus					5,763	(5,763)
Net income	58,731					58,731
Cash dividends declared on common stock						(5,479)
Cash dividends declared on preferred stock						(6,931)
Stock purchased							0
Lapsed restricted stock units		(364)					364
Stock used to match defined contribution plan							77
Other comprehensive loss, net of tax	(40,114)
Ending Balance at Jun. 30, 2013	870,924	538,105			57,906	111,292	(80,834)	15,766	176,000	52,689
Beginning Balance at Mar. 31, 2013
Common Stock, Value, Issued	52,689
Exercised Stock Options										18
Deemed dividend on preferred stock beneficial conversion feature	0
Net income	37,539
Stock purchased	0
Other comprehensive loss, net of tax	(31,285)
Ending Balance at Jun. 30, 2013	$ 870,924							$ 15,766	$ 176,000	$ 52,689

XML

Offsetting Arrangements (Assets Offsetting) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Offsetting Assets [Line Items]
Derivative Asset Securities Purchased Under Agreements To Resell Securities Borrowed Amount Offset Against Collateral	$ 19,655	$ 101,889
Derivative
Offsetting Assets [Line Items]
Derivative Asset Securities Purchased Under Agreements To Resell Securities Borrowed Amount Offset Against Collateral	19,655	21,889
Federal Funds Sold and Securities Borrowed or Purchased under Agreements to Resell
Offsetting Assets [Line Items]
Derivative Asset Securities Purchased Under Agreements To Resell Securities Borrowed Amount Offset Against Collateral	$ 0	$ 80,000

XML

Basis of Presentation

3 Months Ended

Jun. 30, 2013

Basis of Presentation [Abstract]

BASIS OF PRESENTATION

Basis of Presentation and Use of Estimates

The accounting and reporting policies of the Companyconform with U.S. generally accepted accounting principles (“GAAP”) and to banking industry practices.

The unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information and should be read in conjunction with the audited consolidated financial statements in our annual report on Form 10-K for the year ended December 31, 2012 (“2012 Form 10-K”). All significant intercompany balances and transactions have been eliminated in consolidation. These unaudited statements are, in the opinion of management, a fair statement of the results for the periods reported and include all necessary adjustments, all of a normal recurring nature, for a fair statement of such results. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and related disclosures. These estimates are based on information available as of the date of the consolidated financial statements. While management makes its best judgment, actual amounts or results could differ from these estimates. Interim period results are not necessarily indicative of the results to be expected for the full year.

Certain reclassifications have been made to 2012 unaudited consolidated financial statements and notes to the financial statements to conform to the 2013 presentation.

Significant Accounting Policies

We provide a summary of our significant accounting policies in our 2012 Form 10-K under “Notes to Consolidated Financial Statements—Note 1—Summary of Significant Accounting Policies.” Below we describe recent accounting changes.

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income - In February 2013, the FASB issued an amendment to enhance current disclosure requirements of reclassifications out of accumulated other comprehensive income and their corresponding effect on net income to be presented, in one place, information about significant amounts reclassified and, in some cases, cross-reference to related footnote disclosures. Previously, this information was presented in different places throughout the financial statements. The amendments require disclosure of information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, they require the presentation, either on the face of the statement where net income is presented or in the notes, of significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, the Company is required to cross-reference to other disclosures required under GAAP that provide additional detail about those amounts. The amended guidance was effective for annual and interim reporting periods beginning on or after December 15, 2012, prospectively. Our adoption of the guidance is presented in “Note 13 – Stockholders' Equity and Earnings per Share.”

Testing Indefinite-Lived Intangible Assets for Impairment - In July 2012, the FASB issued ASU No. 2012-02, Intangibles—

Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. The ASU is intended to simplify the guidance for testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other than goodwill. Some examples of intangible assets subject to the guidance include indefinite-lived trademarks, licenses and distribution rights. The ASU allows companies to perform a qualitative assessment about the likelihood of impairment of an indefinite-lived intangible asset to determine whether further impairment testing is necessary, similar in approach to the goodwill impairment test. The ASU became effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Our adoption of the guidance had no effect on our unaudited consolidated financial statements.

Offsetting Financial Assets and Liabilities - In December 2011, the FASB issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. The ASU isintended to enhance current disclosure requirements on offsetting financial assets and liabilities. The new disclosures enable financial statement users to compare balance sheets prepared under GAAP and IFRS, which are subject to different offsetting models. The guidance requires disclosure of both gross and net information about instruments and transactions eligible for offset in the balance sheet as well as instruments and transactions subject to an agreement similar to a master netting arrangement. The disclosures are required irrespective of whether such instruments are presented gross or net on the balance sheet. In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarify that the scope of this guidance applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. The amended guidance was effective for annual and interim reporting periods beginning on or after January 1, 2013, with comparative retrospective disclosures required for all periods presented. We adopted the guidance in the first quarter of 2013. Our adoption of the guidance had no effect on our financial condition, results of operations or liquidity since it only impacts disclosures only. The new disclosures required by the amended guidance are included in “Note 17 – Offsetting Arrangements”hereto.

Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution—FASB ASU 2012-06, “Business Combinations” (Topic 805) was issued in October 2012. This update addresses the diversity in practice about how to interpret the terms “on the same basis” and “contractual limitations” when subsequently measuring an indemnification asset recognized in a government-assisted (Federal Deposit Insurance Corporation) acquisition of a financial institution that includes a loss-sharing agreement (indemnification agreement). When a reporting entity recognizes an indemnification asset as a result of a government-assisted acquisition of a financial institution and subsequently the cash flows expected to be collected on the indemnification asset changeas a result of a change in cash flows expected to be collected on the assets subject to indemnification, the reporting entity should subsequently account for the change in the measurement of the indemnification asset on the same basis as the change in the assets subject to indemnification. Any amortization of changes in value should be limited to the contractual term of the indemnification agreement, that is, the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets. The amendments in this update are effective for fiscal years and interim periods within those years, beginning on or after December 15, 2012. The adoption of this guidance did not have a material effect on the unaudited consolidated financial statements, since the Company already followed the same basis approach.

Future Application of Accounting Standards

Accounting for Financial Instruments—Credit Losses - In December 2012, the FASB issued a proposed ASU, Financial Instruments—Credit Losses. This proposed ASU, or exposuredraft, was issued for public comment in order to allowstakeholders the opportunity to review the proposal and providecomments to the FASB, and does not constitute accountingguidance until a final ASU is issued.The exposure draft contains proposed guidance developedby the FASB with the goal of improving financial reportingabout expected credit losses on loans, securities and otherfinancial assets held by banks, financial institutions, and otherpublic and private organizations. The exposure draft proposes anew accounting model intended to require earlier recognition ofcredit losses, while also providing additional transparency aboutcredit risk.The FASB's proposed model would utilize a single“expected credit loss” measurement objective for therecognition of credit losses, replacing the multiple existingimpairment models in GAAP which generally require thata loss be “incurred” before it is recognized.The FASB's proposed model represents a significantdeparture from existing GAAP, and may result in materialchanges to the Company's accounting for financial instruments.The impact of the FASB's final ASU to the Company'sfinancial statements will be assessed when it is issued. Theexposure draft does not contain a proposed effective date. Thiswould be included in the final ASU, when issued.

Other Potential Amendments to Current AccountingStandards - The FASB and International Accounting Standards Board, either jointly or separately, are currentlyworking on several major projects, including amendments toexisting accounting standards governing financial instruments,leases, andconsolidation and investment companies. As part of thejoint financial instruments project, the FASB has issued aproposed ASU that would result in significant changes to theguidance for recognition and measurement of financialinstruments, in addition to the proposed ASU that would changethe accounting for credit losses on financial instrumentsdiscussed above.The FASB is also working on a joint project that wouldrequire substantially all leases to be capitalized on the balancesheet. Additionally, the FASB has issued a proposal onprincipal-agent considerations that would change the way theCompany needs to evaluate whether to consolidate Variable Interest Entities (“VIE”) andnon-VIE partnerships. Furthermore, the FASB has issued aproposed ASU that would change the criteria used to determinewhether an entity is subject to the accounting and reportingrequirements of an investment company.The principal-agent consolidation proposal would requireall VIEs, including those that are investment companies, to beevaluated for consolidation under the same requirements. All ofthese projects may have significant impacts for the Company.Upon completion of the standards, the Company will need to reevaluateits accounting and disclosures. However, due toongoing deliberations of the standard setters, the Company iscurrently unable to determine the effect of future amendments orproposals.

XML

Loans Receivable

3 Months Ended

Jun. 30, 2013

Loans Receivable [Abstract]

LOANS RECEIVABLE

NOTE 4- LOANS

The Company's loan portfolio is composed of covered loans and non-covered loans. The Company presents loans subject to the loss sharing agreements as “covered loans” in the information below, and loans that are not subject to FDIC loss sharing agreements as “non-covered loans.” The risks of the Eurobank FDIC-assisted acquisition acquired loans are significantly different from those loans not covered under the FDIC loss sharing agreements because of the loss protection provided by the FDIC. Also, 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 segregated between originated 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).

For a summary of the accounting policy related to loans, interest recognition and allowance for loan and lease losses, please refer to the summary of significant accounting policies included in Note 1 of our 2012 Form 10-K under “Notes to Consolidated Financial Statements”.

The composition of the Company's loan portfolio at June 30, 2013 and December 31, 2012 was as follows:

	June 30,		December 31,
	2013		2012
	(In thousands)
Loans not covered under shared-loss agreements with FDIC:
Originated and other loans and leases held for investment:
Mortgage	$	755,298	$	804,942
Commercial		702,074		353,930
Auto and leasing		233,092		50,720
Consumer		89,608		48,136
		1,780,072		1,257,728
Acquired loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		140,234		317,244
Commercial secured by real estate		14,519		29,215
Auto		373,587		457,894
Consumer		62,751		68,878
		591,091		873,231
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Commercial		747,077		942,267
Construction		140,060		196,692
Mortgage		781,389		810,135
Auto		462,691		554,938
Consumer		88,375		118,171
		2,219,592		2,622,203
		4,590,755		4,753,162
Deferred loan fees, net		(831)		(3,463)
Loans receivable		4,589,924		4,749,699
Allowance for loan and lease losses on non-covered loans		(46,625)		(39,921)
Loans receivable, net		4,543,299		4,709,778
Mortgage loans held-for-sale		78,350		64,145
Total loans not covered under shared-loss agreements with FDIC, net		4,621,649		4,773,923
Loans covered under shared-loss agreements with FDIC:
Loans secured by 1-4 family residential properties		123,507		128,811
Construction and development secured by 1-4 family residential properties		16,478		15,969
Commercial and other construction		275,489		289,070
Leasing		943		7,088
Consumer		6,955		8,493
Total loans covered under shared-loss agreements with FDIC		423,372		449,431
Allowance for loan and lease losses on covered loans		(53,992)		(54,124)
Total loans covered under shared-loss agreements with FDIC, net		369,380		395,307
Total loans, net	$	4,991,029	$	5,169,230

Non-covered Loans

Originated and Other Loans and Leases Held for Investment

The Company's originated and other held for investment loan transactions areencompassed within four portfolio segments: mortgage, commercial, consumer, andauto and leasing.

The following table presents the aging of the recorded investment in gross originated and other loans held for investment as of June 30, 2013 and December 31, 2012 by class ofloans. Mortgage loans past due included delinquent loans in the GNMA buy-back option program. Servicers of loans underlying GNMA mortgage-backed securities must report as their own assets the defaulted loans that they have the option (but not the obligation) to repurchase, even when they elect not to exercise that option.

	June 30, 2013
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	-	$	2,937	$	6,993	$	9,930	$	79,666	$	89,596	$	6
Years 2003 and 2004		-		5,413		3,429		8,842		117,754		126,596		-
Year 2005		-		2,136		1,431		3,567		65,196		68,763		-
Year 2006		-		3,369		2,838		6,207		87,614		93,821		-
Years 2007, 2008 and 2009		-		2,863		3,407		6,270		104,169		110,439		433
Years 2010, 2011, 2012 and 2013		-		391		2,115		2,506		96,270		98,776		76
		-		17,109		20,213		37,322		550,669		587,991		515
Non-traditional		-		1,520		2,212		3,732		42,695		46,427		-
Loss mitigation program		-		4,993		14,287		19,280		68,335		87,615		1,606
		-		23,622		36,712		60,334		661,699		722,033		2,121
Home equity secured personal loans		-		-		12		12		740		752		-
GNMA's buy-back option program		-		-		32,513		32,513		-		32,513		-
		-		23,622		69,237		92,859		662,439		755,298		2,121
Commercial
Commercial secured by real estate		11,033		1,381		12,694		25,108		386,236		411,344		-
Other commercial and industrial		324		66		753		1,143		289,587		290,730		-
		11,357		1,447		13,447		26,251		675,823		702,074		-
Consumer		670		165		370		1,205		88,403		89,608		-
Auto and leasing		8,826		2,075		1,096		11,997		221,095		233,092		-
Total	$	20,853	$	27,309	$	84,150	$	132,312	$	1,647,760	$	1,780,072	$	2,121

	December 31, 2012
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	6,906	$	2,116	$	11,363	$	20,385	$	80,883	$	101,268	$	-
Years 2003 and 2004		12,048		5,206		18,162		35,416		114,446		149,862		-
Year 2005		4,983		1,746		8,860		15,589		65,312		80,901		-
Year 2006		9,153		3,525		15,363		28,041		85,045		113,086		-
Years 2007, 2008 and 2009		2,632		1,682		8,965		13,279		108,358		121,637		-
Years 2010, 2011 and 2012 and 2012		632		769		1,162		2,563		64,084		66,647		-
		36,354		15,044		63,875		115,273		518,128		633,401		-
Non-traditional		2,850		1,067		11,160		15,077		42,742		57,819		-
Loss mitigation program		8,933		4,649		19,989		33,571		53,739		87,310
		48,137		20,760		95,024		163,921		614,609		778,530		-
Home equity secured personal loans		-		-		10		10		726		736		-
GNMA's buy-back option program		-		-		25,676		25,676		-		25,676		-
		48,137		20,760		120,710		189,607		615,335		804,942		-
Commercial
Commercial secured by real estate		9,062		271		15,335		24,668		226,606		251,274		-
Other commercial and industrial		345		189		2,378		2,912		99,744		102,656		-
		9,407		460		17,713		27,580		326,350		353,930		-
Consumer		747		92		409		1,248		46,888		48,136		-
Auto and leasing		251		129		131		511		50,209		50,720		-
Total	$	58,542	$	21,441	$	138,963	$	218,946	$	1,038,782	$	1,257,728	$	-

During the quarter ended June 30, 2013, the Company transferred $55.0 million of non-performing residential mortgage loans held-for-investment to held-for-sale at a fair value of $27.0million. The difference between fair value and book value was recorded as charge-off to the mortgage portfolio. The provision for loan and lease losses during the quarter and six-month period ended June 30, 2013 increased to provide the coverage necessary under the allowance policy for the remaining mortgage loans, following the effects that the aforementioned reclassification had on the mortgage portfolio allowance level.

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 BBVAPR Acquisition 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 policyand any accretion of discount or amortization of premium is discontinued. Loans acquired in the BBVAPR Acquisition that were accounted for under the provisions of ASC 310-20, which had fully amortized their premium or discount, recorded at the date of acquisition, are removed from the acquired loan categoryat the end of the reporting period.

The following table presents the aging of the recorded investment in gross acquired loans accounted for under ASC 310-20 as of June 30, 2013 and December 31, 2012 by class ofloans:

	June 30, 2013
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Commercial	$	291	$	134	$	493	$	918	$	139,316	$	140,234	$	-
Commercial secured by real estate		9		-		-		9		14,510		14,519		-
Auto		8,849		1,892		674		11,415		362,172		373,587		-
Consumer		1,767		7		1,069		2,843		59,908		62,751		-
Total	$	10,916	$	2,033	$	2,236	$	15,185	$	575,906	$	591,091	$	-

	December 31, 2012
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Commercial	$	715	$	76	$	193	$	984	$	316,260	$	317,244	$	-
Commercial secured by real estate		315		-		-		315		28,900		29,215		-
Auto		6,753		1,023		275		8,051		449,843		457,894		-
Consumer		982		-		1,095		2,077		66,801		68,878		-
Total	$	8,765	$	1,099	$	1,563	$	11,427	$	861,804	$	873,231	$	-

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

Loans acquired as part of the BBVAPR Acquisition, 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 statement of financial condition at June 30, 2013 and December 31, 2012 is as follows:

	June 30, 2013	December 31, 2012
	(In thousands)
Contractual required payments receivable	$ 3,429,294	$ 3,954,484
Less: Non-accretable discount	713,641	741,872
Cash expected to be collected	2,715,653	3,212,612
Less: Accretable yield	496,061	590,409
Carrying amount	$ 2,219,592	$ 2,622,203

The following tables describe the accretable yield and non-accretable discount activity of acquired loans accounted for under ASC 310-30 for the quarter and six-month period ended June 30, 2013

	Quarter Ended June 30, 2013			Six-Month Period Ended June 30, 2013
	(In thousands)
Accretable Yield Activity
Balance at beginning of period		$	542,741		$	590,409
Accretion			(54,427)			(102,095)
Transfer from non-accretable discount			7,747			7,747
Balance at end of period		$	496,061		$	496,061
	Quarter Ended June 30, 2013			Six-Month Period Ended June 30, 2013
	(In thousands)
Non-Accretable Discount Activity
Balance at beginning of period		$	733,126		$	741,872
Principal losses			(11,738)			(20,484)
Transfer to accretable yield			(7,747)			(7,747)
Balance at end of period		$	713,641		$	713,641

Covered Loans

The carrying amount of covered loans at June 30, 2013 and December 31, 2012is as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Contractual required payments receivable	$	782,763	$	874,994
Less: Non-accretable discount		192,259		237,555
Cash expected to be collected		590,504		637,439
Less: Accretable yield		167,132		188,008
Carrying amount, gross		423,372		449,431
Less: Allowance for covered loan and lease losses		53,992		54,124
Carrying amount, net	$	369,380	$	395,307

The following tables describe the accretable yield and non-accretable discount activity of covered loans for the quarters and six-month periodsended June 30, 2013 and2012:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Accretable yield activity
Balance at beginning of period	$	174,107	$	174,878	$	188,008	$	188,822
Accretion		(23,999)		(20,342)		(44,228)		(41,884)
Transfer from non-accretable discount		17,024		22,712		23,352		30,310
Balance at end of period	$	167,132	$	177,248	$	167,132	$	177,248
	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Non-accretable discount activity
Balance at beginning of period	$	214,236	$	379,780	$	237,555	$	412,170
Principal losses		(4,953)		(42,664)		(21,944)		(67,456)
Transfer to accretable yield		(17,024)		(22,712)		(23,352)		(30,310)
Balance at end of period	$	192,259	$	314,404	$	192,259	$	314,404

Non-accrual Loans

The following table presents the recorded investment in loansin non-accrual status by class ofloans as of June 30, 2013 and December 31, 2012:

	June 30,		December 31,
	2013		2012
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year):
Up to the year 2002	$	6,987	$	11,362
Years 2003 and 2004		3,465		18,162
Year 2005		1,481		8,859
Year 2006		2,875		15,363
Years 2007, 2008 and 2009		3,580		8,967
Years 2010, 2011, 2012 and 2013		3,988		1,162
		22,376		63,875
Non-traditional		2,287		11,160
Loss mitigation program		28,450		39,957
		53,113		114,992
Home equity secured personal loans		12		10
		53,125		115,002
Commercial
Commercial secured by real estate		29,491		26,517
Other commercial and industrial		2,939		2,989
		32,430		29,506
Consumer		370		442
Auto and leasing		1,096		131
Acquired loans accounted under ASC 310-20
Commercial		493		193
Auto		674		275
Consumer		1,069		1,095
		2,236		1,563
Total non-accrual loans	$	89,257	$	146,644

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.

These loans do not include certain non-performing residential mortgage loanswith a net book value of $55.0 million reclassified during the quarter ended June 30, 2013 to theloan held-for-sale category. Without this re-classification to loans held-for-sale, non-accruing loan balances would have been relatively consistent between December 31, 2012 and June 30, 2013.

Effective April 24, 2013, delinquent residential mortgage loans insured or guaranteed under applicable FHA and VA programs are placed in non-accrual when they become18 months or more past due, since they are insured loans. Before that date, they were placed in non-accrual when they became 90 days or more past due.

AtJune 30, 2013 andDecember 31, 2012, loanswhose terms have been extended and which are classified as troubled-debt restructurings that are not included in non-accrual loans amounted to $55.7 million and$52.0 million, respectively.

XML

Premises and Equipment (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 127,943,000		$ 127,943,000		$ 120,926,000
Less: acumulated depreciation and amortization	(43,642,000)		(43,642,000)		(35,929,000)
Total Premises and Equipment, net	84,301,000		84,301,000		84,997,000
Depreciation	3,000,000	1,200,000	6,100,000	2,400,000
Land
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	5,677,000		5,677,000		2,876,000
Buildings and improvements
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	63,673,000		63,673,000		63,133,000
Buildings and improvements | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property Plant And Equipment Useful Life	0 years
Buildings and improvements | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property Plant And Equipment Useful Life	40 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	23,637,000		23,637,000		23,602,000
Leasehold improvements | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property Plant And Equipment Useful Life	5 years
Leasehold improvements | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property Plant And Equipment Useful Life	10 years
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	11,685,000		11,685,000		10,441,000
Furniture and fixtures | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property Plant And Equipment Useful Life	3 years
Furniture and fixtures | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property Plant And Equipment Useful Life	7 years
Information technology and other
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 23,271,000		$ 23,271,000		$ 20,874,000
Information technology and other | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property Plant And Equipment Useful Life	3 years
Information technology and other | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property Plant And Equipment Useful Life	7 years

XML

Business Combinations

3 Months Ended

Jun. 30, 2013

Business Combination, Description

Business Combination Disclosure [Text Block]

NOTE 2 –BUSINESS COMBINATIONS

BBVAPR Acquisition

On December 18, 2012, the Company purchased from BBVA, all of the outstanding common stock of each of BBVAPR Holding and BBVA Securities for an aggregate purchase price of $500 million. Immediately following the closing of the BBVAPR Acquisition, the Company merged BBVAPR Bank with and into Oriental Bank, with Oriental Bank continuing as the surviving entity.

The assets acquired and liabilities assumed as of December 18, 2012 were presented at their fair value. In many cases, the determination of these fair values required management to make estimates about discount rates, expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. The fair values initially assigned to the assets acquired and liabilities assumed were preliminary and subject to refinement for up to one year after the closing date of the acquisition as new information relative to closing date fair values became available. During the quarter ended June 30, 2013, the Company recorded retrospective adjustments to the preliminary estimated fair values of certain acquired loans, foreclosed real estate, deferred income taxes, and other assets acquired, to reflect new information obtained during the measurement period (as defined by ASC Topic 805), about facts and circumstances that existed as of the acquisition date that, if known, would have affected the acquisition-date fair value measurements. As detailed in the table below, the main adjustment occurred in the loans acquired. The adjustment resulted from in-depth reviews of the actual terms and amortization schedules. The original cash flows were revised to reflect the results of this review.

Net-assets acquired and their respective measurement period adjustments are reflected in the table below:

							Measurement
							Period		Fair Value
							Adjustments,			as
	Book Value		Fair Value		Fair Value		net		Remeasured
	December 18, 2012		Adjustments, net		December 18, 2012			June 30, 2013	June 30, 2013
	(In thousands)
Assets
Cash and cash equivalents	$	394,638	$	-	$	394,638	$	-	$	394,638
Investments		561,623		-		561,623		-		561,623
Loans		3,678,979		(118,913)		3,560,066		(12,798)		3,547,268
Accrued interest receivable		19,133		(18,252)		881		-		881
Foreclosed real estate		44,853		(8,896)		35,957		(1,932)		34,025
Deferred tax asset, net		35,327		50,005		85,332		5,300		90,632
Premises and equipment		37,412		29,067		66,479		-		66,479
Legacy goodwill		116,353		(116,353)		-		-		-
Core deposit intangible		-		8,473		8,473		-		8,473
Customer relationship intangible		-		5,060		5,060		-		5,060
Other assets		119,286		(7,663)		111,623		(2,936)		108,687
Total assets acquired		5,007,604		(177,472)		4,830,132		(12,366)		4,817,766
Liabilities
Deposits		3,472,951		21,489		3,494,440		-		3,494,440
Securities sold under agreements to repurchase		338,020		20,465		358,485		-		358,485
Other borrowings		348,624		1,108		349,732		-		349,732
Subordinated capital notes		117,000		(7,159)		109,841		-		109,841
Accrued expenses and other liabilities		80,392		(1,438)		78,954		-		78,954
Total liabilities assumed		4,356,987		34,465		4,391,452		-		4,391,452
Net assets acquired	$	650,617	$	(211,937)	$	438,680	$	(12,366)	$	426,314
Cash consideration	$	500,000	$	-	$	500,000	$	-	$	500,000
Goodwill					$	61,320	$	12,366	$	73,686

Merger and Restructuring Charges

Merger and restructuring charges are recorded in the unaudited consolidated statement of operations and include incremental costs to integrate the operations of the Company and BBVAPR. These charges represent costs associated with these one-time activities and do not represent ongoing costs of the fully integrated combined organization.

The following table presents severance and employee-related charges, systems integrations and other merger-related chargesin connection with the BBVAPRAcquisition for the quarter and six-month period ended June 30, 2013:

	Quarter Ended June 30, 2013		Six-Month Period Ended June 30, 2013
	(In thousands)		(In thousands)
Severance and employee-related charges	$	400	$	1,150
Systems integrations and related charges		2,231		3,177
Other-contract cancellation fee		2,643		6,481
Total merger and restructuring charges	$	5,274	$	10,808

Restructuring Reserve

Restructuring reserves are established by a charge to merger and restructuring charges, and the restructuring charges are included in the merger and restructuring charges table.

The following table presents the changes in restructuring reserves for the quarter and six-month period ended June 30, 2013:

	Quarter Ended June 30, 2013		Six-Month Period Ended June 30, 2013
	(In thousands)		(In thousands)
Balance at the beginning of the period	$	6,336	$	4,202
Merger and restructuring charges		5,274		10,808
Cash payments and other		(11,334)		(14,734)
Balance at the end of the period	$	276	$	276

Payments under merger and restructuring reserves associated with the BBVAPRAcquisition are expected to continue in 2013 and will be accounted under applicable accounting guidance to the cost being incurred.

The FDIC-Assisted Acquisition and FDIC Shared-Loss Indemnification Asset

On April 30, 2010, the Bank acquired certain assets and assumed certain deposits and other liabilities in the FDIC-assisted acquisition of Eurobank. These assets acquired and liabilities assumed were recorded at fair value on the date of acquisition.As part of the Purchase andAssumption Agreement between the Bank and the FDIC (the “Purchase and Assumption Agreement”), the Bankand the FDIC entered into shared-loss agreements, whereby the FDIC covers a substantial portion of any losses on loans (and related unfundedloan commitments), foreclosed real estate and other repossessed properties.

The acquired loans, foreclosed real estate, and other repossessed property subject to the shared-loss agreementsare 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 providefor certain costs directly related to the collection and preservation of covered assets to be reimbursed at an 80%level.Theindemnification asset represents the portion of estimated losses covered by the shared-loss agreements betweenthe Bank and the FDIC.

The Bank agreed to make a true-up payment, also known as clawback liability, to the FDIC on the date that is45 days following the last day (such day, the “True-Up Measurement Date”) of the final shared-loss month, orupon the final disposition of all covered assets under the shared-loss agreements in the event losses thereunderfail to reach expected levels. Under the shared-loss agreements, the Bank will pay to the FDIC 50% of theexcess, if any, of: (i) 20% of the Intrinsic Loss Estimate of $906.0 million (or $181.2 million) (as determined bythe FDIC) less (ii) the sum of: (A) 25% of the asset discount (per bid) (or $227.5 million); plus (B) 25% of thecumulative shared-loss payments (defined as the aggregate of all of the payments made or payable to the Bankminus the aggregate of all of the payments made or payable to the FDIC); plus (C) the sum of the periodservicing amounts for every consecutive twelve-month period prior to and ending on the True-Up MeasurementDate in respect of each of the shared-loss agreements during which the shared-loss provisions of the applicableshared-loss agreement is in effect (defined as the product of the simple average of the principal amount ofshared-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 $16.9million and $15.5million, net of discount, as of June30, 2013 and December 31, 2012, respectively. This estimated liability is accounted for as a reduction of the indemnification asset.

The FDIC shared-loss indemnification asset activity for the six-month periods ended June 30, 2013 and 2012 follows:

	Six-Month Period Ended June 30,
	2013		2012
	(In thousands)
Balance at beginning of period	$	286,799	$	392,367
Shared-loss agreements reimbursements from the FDIC		(18,696)		(39,729)
Increase (decrease) in expected credit losses to be covered under shared-loss agreements, net		(2,015)		12,748
FDIC shared-loss expense, net		(32,836)		(10,410)
Incurred expenses to be reimbursed under shared-loss agreements		3,220		4,791
Balance at end of period	$	236,472	$	359,767

XML

Fair Value (Tables)

3 Months Ended

Jun. 30, 2013

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis 1 [Table Text Block]

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

	June 30, 2013
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	1,816,172	$	20,057	$	1,836,229
Money market investments		10,983		-		-		10,983
Derivative assets		-		3,635		16,020		19,655
Servicing assets		-		-		12,994		12,994
Derivative liabilities		-		(16,701)		(15,315)		(32,016)
	$	10,983	$	1,803,106	$	33,756	$	1,847,845
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	43,831	$	43,831
Foreclosed real estate		-		-		81,689		81,689
	$	-	$	-	$	125,520	$	125,520

	December 31, 2012
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	2,174,274	$	20,012	$	2,194,286
Securities purchased under agreements to resell		-		80,000		-		80,000
Money market investments		13,205		-		-		13,205
Derivative assets		-		8,656		13,233		21,889
Servicing assets		-		-		10,795		10,795
Derivative liabilities		-		(26,260)		(12,707)		(38,967)
	$	13,205	$	2,236,670	$	31,333	$	2,281,208
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	46,199	$	46,199
Foreclosed real estate		-		-		75,447		75,447
	$	-	$	-	$	121,646	$	121,646

Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

The table below presents a reconciliation of all assets and liabilities measured at fair value on a recurring basisusing significant unobservable inputs (Level 3) for the quartersand the six-month periods ended June 30, 2013 and 2012:

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

	Quarter Ended June 30, 2012
	Investment securities
	available-for-sale
					Derivative				Derivative
					asset				liability
			Other		(S&P				(S&P
			debt		Purchased		Servicing		Embedded
Level 3 Instruments Only	CLOs		securities		Options)		assets		Options)		Total
Balance at beginning of period	$	29,643	$	9,882	$	12,515	$	10,725	$	(12,138)	$	50,627
Gains (losses) included in earnings		-		-		(1,148)		-		1,119		(29)
Changes in fair value of investment securities available for sale included in other comprehensive income		(2,381)		134		-		-		-		(2,247)
New instruments acquired		-		-		-		499		-		499
Principal repayments		18		-		-		(241)		-		(223)
Amortization		-		-		-		-		107		107
Changes in fair value of servicing assets		-		-		-		(207)		-		(207)
Balance at end of period	$	27,280	$	10,016	$	11,367	$	10,776	$	(10,912)	$	48,527

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

	Six-Month Period Ended June 30, 2012
	Investment securities available-for-sale
							Derivative				Derivative
							asset				liability
					Other		(S&P				(S&P
					debt		Purchased		Servicing		Embedded
Level 3 Instruments Only	CDOs		CLOs		securities		Options)		assets		Options)		Total
	(In thousands)
Balance at beginning of period	$	10,530	$	26,758	$	10,024	$	9,317	$	10,454	$	(9,362)	$	57,721
Gains (losses) included in earnings		-		-		-		2,050		-		(2,035)		15
Changes in fair value of investment securities available for sale included in other comprehensive income		-		488		(7)		-		-		-		481
New instruments acquired		-		-		-		-		919		-		919
Principal repayments		-		34		-		-		(476)		-		(442)
Amortization		-		-		(1)		-		-		485		484
Sales of instruments		(10,530)		-		-		-		-		-		(10,530)
Changes in fair value of servicing assets		-		-		-		-		(121)		-		(121)
Balance at end of period	$	-	$	27,280	$	10,016	$	11,367	$	10,776	$	(10,912)	$	48,527

Available-for-sale Securities Classified As Level 3 [Table Text Block]

The table below presents a detail of investment securities available-for-sale classified as Level 3 at June 30,2013:

	June 30, 2013
							Weighted
	Amortized		Unrealized				Average	Principal
Type	Cost		Gains (Losses)		Fair Value		Yield	Protection
	(In thousands)
Other debt securities	$	20,000	$	58	$	20,058	3.50%	N/A

Estimated Fair Value And Carrying Value Assets Liabilities [Table Text Block]

The estimated fair value and carrying value of the Company's financial instruments at June 30, 2013 and December 31, 2012 is as follows:

	June 30,				December 31,
	2013				2012
	Fair		Carrying		Fair		Carrying
	Value		Value		Value		Value
	(In thousands)
Level 1
Financial Assets:
Cash and cash equivalents	$	748,313	$	748,313	$	868,695	$	868,695
Level 2
Financial Assets:
Securities purchased under agreements to resell		-		-		80,000		80,000
Securities sold but not yet delivered		16,732		16,732		-		-
Trading securities		2,209		2,209		495		495
Investment securities available-for-sale		1,816,171		1,816,171		2,174,274		2,174,274
Federal Home Loan Bank (FHLB) stock		22,156		22,156		38,411		38,411
Derivative assets		3,635		3,635		8,656		8,656
Financial Liabilities:
Derivative liabilities		16,701		16,701		26,260		26,260
Short term borrowings		-		-		92,210		92,210
Level 3
Financial Assets:
Investment securities available-for-sale		20,058		20,058		20,012		20,012
Total loans (including loans held-for-sale)
Non-covered loans, net		4,600,628		4,621,649		4,766,179		4,773,923
Covered loans, net		449,113		369,380		489,885		395,307
Derivative assets		16,020		16,020		13,233		13,233
FDIC shared-loss indemnification asset		173,442		236,472		204,646		286,799
Accrued interest receivable		17,508		17,508		17,554		17,554
Servicing assets		12,994		12,994		10,795		10,795
Financial Liabilities:
Deposits		5,688,574		5,665,038		5,797,097		5,689,559
Securities sold under agreements to repurchase		1,353,970		1,313,870		1,741,272		1,695,247
Advances from FHLB		283,443		285,135		538,355		536,542
Federal funds purchased		29,431		29,431		9,901		9,901
Term notes		7,710		7,734		7,912		7,734
Subordinated capital notes		98,008		98,961		146,415		146,038
Accrued expenses and other liabilities		117,569		117,569		102,169		102,169

XML

Business Combinations (Tables)

3 Months Ended

Jun. 30, 2013

Jun. 30, 2012

Banking and Thrift [Abstract]

FDIC Indemnification Asset Roll Forward [Table Text Block]

The FDIC shared-loss indemnification asset activity for the six-month periods ended June 30, 2013 and 2012 follows:

	Six-Month Period Ended June 30,
	2013		2012
	(In thousands)
Balance at beginning of period	$	286,799	$	392,367
Shared-loss agreements reimbursements from the FDIC		(18,696)		(39,729)
Increase (decrease) in expected credit losses to be covered under shared-loss agreements, net		(2,015)		12,748
FDIC shared-loss expense, net		(32,836)		(10,410)
Incurred expenses to be reimbursed under shared-loss agreements		3,220		4,791
Balance at end of period	$	236,472	$	359,767

BusinessAcquisitionProFormaInformationAbstract

Business Acquisition, Pro Forma Information [Table Text Block]

Net-assets acquired and their respective measurement period adjustments are reflected in the table below:

							Measurement
							Period		Fair Value
							Adjustments,			as
	Book Value		Fair Value		Fair Value		net		Remeasured
	December 18, 2012		Adjustments, net		December 18, 2012			June 30, 2013	June 30, 2013
	(In thousands)
Assets
Cash and cash equivalents	$	394,638	$	-	$	394,638	$	-	$	394,638
Investments		561,623		-		561,623		-		561,623
Loans		3,678,979		(118,913)		3,560,066		(12,798)		3,547,268
Accrued interest receivable		19,133		(18,252)		881		-		881
Foreclosed real estate		44,853		(8,896)		35,957		(1,932)		34,025
Deferred tax asset, net		35,327		50,005		85,332		5,300		90,632
Premises and equipment		37,412		29,067		66,479		-		66,479
Legacy goodwill		116,353		(116,353)		-		-		-
Core deposit intangible		-		8,473		8,473		-		8,473
Customer relationship intangible		-		5,060		5,060		-		5,060
Other assets		119,286		(7,663)		111,623		(2,936)		108,687
Total assets acquired		5,007,604		(177,472)		4,830,132		(12,366)		4,817,766
Liabilities
Deposits		3,472,951		21,489		3,494,440		-		3,494,440
Securities sold under agreements to repurchase		338,020		20,465		358,485		-		358,485
Other borrowings		348,624		1,108		349,732		-		349,732
Subordinated capital notes		117,000		(7,159)		109,841		-		109,841
Accrued expenses and other liabilities		80,392		(1,438)		78,954		-		78,954
Total liabilities assumed		4,356,987		34,465		4,391,452		-		4,391,452
Net assets acquired	$	650,617	$	(211,937)	$	438,680	$	(12,366)	$	426,314
Cash consideration	$	500,000	$	-	$	500,000	$	-	$	500,000
Goodwill					$	61,320	$	12,366	$	73,686

Restructuring Charges

Schedule of Restructuring and Related Costs [Table Text Block]

The following table presents severance and employee-related charges, systems integrations and other merger-related chargesin connection with the BBVAPRAcquisition for the quarter and six-month period ended June 30, 2013:

	Quarter Ended June 30, 2013		Six-Month Period Ended June 30, 2013
	(In thousands)		(In thousands)
Severance and employee-related charges	$	400	$	1,150
Systems integrations and related charges		2,231		3,177
Other-contract cancellation fee		2,643		6,481
Total merger and restructuring charges	$	5,274	$	10,808

	Quarter Ended June 30, 2013		Six-Month Period Ended June 30, 2013
	(In thousands)		(In thousands)
Balance at the beginning of the period	$	6,336	$	4,202
Merger and restructuring charges		5,274		10,808
Cash payments and other		(11,334)		(14,734)
Balance at the end of the period	$	276	$	276

The following table presents the changes in restructuring reserves for the quarter and six-month period ended June 30, 2013

XML

Premises and Equipment (Tables)

3 Months Ended

Jun. 30, 2013

Premises and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

	Useful Life	June 30,		December 31,
	(Years)	2013		2012
		(In thousands)
Land	—	$	5,677	$	2,876
Buildings and improvements	40		63,673		63,133
Leasehold improvements	5 — 10		23,637		23,602
Furniture and fixtures	3 — 7		11,685		10,441
Information technology and other	3 — 7		23,271		20,874
			127,943		120,926
Less: accumulated depreciation and amortization			(43,642)		(35,929)
		$	84,301	$	84,997

XML

Allowance for Loan and Lease Losses (Allowance for Covered Loan and Lease Losses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of the period	$ 52,974	$ 56,437	$ 54,124	$ 37,256
Provision for covered loan and lease losses, net	1,210	1,467	1,882	8,624
FDIC shared-loss portion of provision for (recapture of) covered loan and lease losses, net	(192)	724	(2,014)	12,748
Balance at end of the period	$ 53,992	$ 58,628	$ 53,992	$ 58,628

XML

Fair Value (Assets and liabilities on recurring and non-recurring basis) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	$ 1,836,229	$ 2,194,286
Money Market Funds, at Carrying Value	10,983	13,205
Derivative Assets	19,655	21,889
Servicing Assets	12,994	10,795
Derivative liabilities	(16,701)	(26,260)
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	1,816,171	2,174,274
Securities purchased under agreements to resell	0	80,000
Derivative Assets	3,635	8,656
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	20,058	20,012
Derivative Assets	16,020	13,233
Servicing Assets	12,994	10,795
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	1,836,229	2,194,286
Securities purchased under agreements to resell		80,000
Money Market Funds, at Carrying Value	10,983	13,205
Derivative Assets	19,655	21,889
Servicing Assets	12,994	10,795
Derivative liabilities	(32,016)	(38,967)
Total	1,847,845	2,281,208
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	0	0
Securities purchased under agreements to resell		0
Money Market Funds, at Carrying Value	10,983	13,205
Derivative Assets	0	0
Servicing Assets	0	0
Derivative liabilities	0	0
Total	10,983	13,205
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	1,816,172	2,174,274
Securities purchased under agreements to resell		80,000
Money Market Funds, at Carrying Value	0	0
Derivative Assets	3,635	8,656
Servicing Assets	0	0
Derivative liabilities	(16,701)	(26,260)
Total	1,803,106	2,236,670
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	20,057	20,012
Securities purchased under agreements to resell		0
Money Market Funds, at Carrying Value	0	0
Derivative Assets	16,020	13,233
Servicing Assets	12,994	10,795
Derivative liabilities	(15,315)	(12,707)
Total	33,756	31,333
Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired commercial loans	43,831	46,199
Foreclosed real estate	81,689	75,447
Total	125,520	121,646
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 loans	0	0
Foreclosed real estate	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 loans	0	0
Foreclosed real estate	0	0
Total	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired commercial loans	43,831	46,199
Foreclosed real estate	81,689	75,447
Total	$ 125,520	$ 121,646

XML

Related Party Transactions (Tables)

3 Months Ended

Jun. 30, 2013

Related Party Transactions [Abstract]

Schedule of Related Party Transactions [Table Text Block]

The activity and balance of these loans for the quarters and six-month periodsended June 30, 2013 and2012were as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Balance at the beginning of period	$	8,688	$	5,238	$	6,055	$	3,772
New loans		-		-		4,234		1,505
Repayments		(657)		(180)		(2,026)		(219)
Credits of persons no longer considered related parties		-		-		(232)		-
Balance at the end of period	$	8,031	$	5,058	$	8,031	$	5,058

XML

Allowance for Loan and Lease Losses (Risk category of gross non-covered loans not subject to risk rating ) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount		$ 1,432,161
0 - 29 Days Past Due		1,185,542
30 - 59 Days Past Due		48,403
60 - 89 Days Past Due		17,483
90-119 Days Past Due		14,798
120 - 364 Days Past Due		31,685
365+ Days Past Due		59,467
Financing Receivable, Individually Evaluated for Impairment		74,783
Residential Related Loans Exclude Individually Impairment Measure [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	755,298	804,942
0 - 29 Days Past Due	603,861	570,731
30 - 59 Days Past Due	0	39,670
60 - 89 Days Past Due	18,646	16,239
90-119 Days Past Due	11,246	13,211
120 - 364 Days Past Due	20,699	30,846
365+ Days Past Due	18,997	59,462
Financing Receivable, Individually Evaluated for Impairment	81,849	74,783
Residential Related Loans Exclude Individually Impairment Measure [Member] | Residential Mortgage [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	722,033	778,530
0 - 29 Days Past Due	603,121	570,005
30 - 59 Days Past Due	0	39,670
60 - 89 Days Past Due	18,646
90-119 Days Past Due	5,464	7,147
120 - 364 Days Past Due	4,924	20,187
365+ Days Past Due	8,029	50,499
Financing Receivable, Individually Evaluated for Impairment	81,849	74,783
Residential Related Loans Exclude Individually Impairment Measure [Member] | Conventional Loan [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	587,991	633,401
0 - 29 Days Past Due	552,446	517,668
30 - 59 Days Past Due	0	36,214
60 - 89 Days Past Due	17,028	15,044
90-119 Days Past Due	4,610	6,590
120 - 364 Days Past Due	4,530	17,647
365+ Days Past Due	5,908	38,589
Financing Receivable, Individually Evaluated for Impairment	3,469	1,649
Residential Related Loans Exclude Individually Impairment Measure [Member] | Conventional Loan [Member] | Originated Up To The Year 2002 [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	89,596	101,268
0 - 29 Days Past Due	84,184	80,715
30 - 59 Days Past Due	0	6,907
60 - 89 Days Past Due	2,937	2,116
90-119 Days Past Due	367	886
120 - 364 Days Past Due	87	3,720
365+ Days Past Due	1,719	6,442
Financing Receivable, Individually Evaluated for Impairment	302	482
Residential Related Loans Exclude Individually Impairment Measure [Member] | Conventional Loan [Member] | Originated In The Years 2003 And 2004 [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	126,596	149,862
0 - 29 Days Past Due	117,665	114,341
30 - 59 Days Past Due	0	12,048
60 - 89 Days Past Due	5,413	5,206
90-119 Days Past Due	1,319	2,082
120 - 364 Days Past Due	737	3,994
365+ Days Past Due	1,373	11,533
Financing Receivable, Individually Evaluated for Impairment	89	658
Residential Related Loans Exclude Individually Impairment Measure [Member] | Conventional Loan [Member] | Originated In The Year 2005 [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	68,763	80,900
0 - 29 Days Past Due	65,026	65,245
30 - 59 Days Past Due	0	4,983
60 - 89 Days Past Due	2,136	1,746
90-119 Days Past Due	663	1,202
120 - 364 Days Past Due	267	1,846
365+ Days Past Due	502	5,727
Financing Receivable, Individually Evaluated for Impairment	169	151
Residential Related Loans Exclude Individually Impairment Measure [Member] | Conventional Loan [Member] | Originated In The Year 2006 [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	93,821	113,086
0 - 29 Days Past Due	87,259	84,926
30 - 59 Days Past Due	0	9,012
60 - 89 Days Past Due	3,369	3,525
90-119 Days Past Due	968	1,530
120 - 364 Days Past Due	440	5,103
365+ Days Past Due	1,273	8,695
Financing Receivable, Individually Evaluated for Impairment	512	295
Residential Related Loans Exclude Individually Impairment Measure [Member] | Conventional Loan [Member] | Originated In The Years 2007 2008 And 2009 [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	110,439	121,639
0 - 29 Days Past Due	104,041	108,357
30 - 59 Days Past Due	0	2,632
60 - 89 Days Past Due	2,782	1,682
90-119 Days Past Due	342	641
120 - 364 Days Past Due	2,199	2,532
365+ Days Past Due	676	5,732
Financing Receivable, Individually Evaluated for Impairment	399	63
Residential Related Loans Exclude Individually Impairment Measure [Member] | Conventional Loan [Member] | Originated In The Years 2010 2011 2012 And 2013 [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	98,776	66,646
0 - 29 Days Past Due	94,271	64,084
30 - 59 Days Past Due	0	632
60 - 89 Days Past Due	391	769
90-119 Days Past Due	951	249
120 - 364 Days Past Due	800	452
365+ Days Past Due	365	460
Financing Receivable, Individually Evaluated for Impairment	1,998	0
Residential Related Loans Exclude Individually Impairment Measure [Member] | NonTraditional Mortgage [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	46,427	57,819
0 - 29 Days Past Due	42,695	42,742
30 - 59 Days Past Due	0	2,850
60 - 89 Days Past Due	1,520	1,067
90-119 Days Past Due	807	455
120 - 364 Days Past Due	160	2,287
365+ Days Past Due	1,152	8,418
Financing Receivable, Individually Evaluated for Impairment	93	0
Residential Related Loans Exclude Individually Impairment Measure [Member] | Loss Mitigation Program Loan Exclude Individually Impairment Measure [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	87,615	87,310
0 - 29 Days Past Due	7,980	9,595
30 - 59 Days Past Due	0	606
60 - 89 Days Past Due	98	128
90-119 Days Past Due	47	102
120 - 364 Days Past Due	234	253
365+ Days Past Due	969	3,492
Financing Receivable, Individually Evaluated for Impairment	78,287	73,134
Residential Related Loans Exclude Individually Impairment Measure [Member] | Loans And Leases Receivable Consumer Home Equity [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	752	736
0 - 29 Days Past Due	740	726
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	12	10
Financing Receivable, Individually Evaluated for Impairment		0
Residential Related Loans Exclude Individually Impairment Measure [Member] | Residential Mortgage Exclude Individually Measured Impairment [Member]
Not Subject To Risk Rating [Line Items]
60 - 89 Days Past Due		16,239
Residential Related Loans Exclude Individually Impairment Measure [Member] | GNMA's Buy Back Option related
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	32,513	25,676
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	5,782	6,064
120 - 364 Days Past Due	15,775	10,659
365+ Days Past Due	10,956	8,953
Financing Receivable, Individually Evaluated for Impairment	0	0
Consumer Loan [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	89,608	48,136
0 - 29 Days Past Due	88,218	46,888
30 - 59 Days Past Due	660	747
60 - 89 Days Past Due	156	92
90-119 Days Past Due	167	188
120 - 364 Days Past Due	199	218
365+ Days Past Due	0	3
Financing Receivable, Individually Evaluated for Impairment	208	0
Loans Exclude Commercial [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,514,337
0 - 29 Days Past Due	1,335,255
30 - 59 Days Past Due	20,102
60 - 89 Days Past Due	22,776
90-119 Days Past Due	13,721
120 - 364 Days Past Due	21,429
365+ Days Past Due	18,997
Financing Receivable, Individually Evaluated for Impairment	82,057
Consumer Loans Auto Financing Receivable Member
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	233,092
0 - 29 Days Past Due	221,095
30 - 59 Days Past Due	8,826
60 - 89 Days Past Due	2,075
90-119 Days Past Due	759
120 - 364 Days Past Due	337
365+ Days Past Due	0
Financing Receivable, Individually Evaluated for Impairment	0
Consumer Loans Auto Financing Receivable Member | Automobile Loan
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount		50,720
0 - 29 Days Past Due		50,209
30 - 59 Days Past Due		251
60 - 89 Days Past Due		129
90-119 Days Past Due		46
120 - 364 Days Past Due		85
365+ Days Past Due		0
Financing Receivable, Individually Evaluated for Impairment		0
Loans receivable Acquired [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	436,339	528,363
0 - 29 Days Past Due	422,081	517,714
30 - 59 Days Past Due	10,616	7,735
60 - 89 Days Past Due	1,899	1,023
90-119 Days Past Due	1,549	1,353
120 - 364 Days Past Due	194	536
365+ Days Past Due	0	2
Financing Receivable, Individually Evaluated for Impairment	0	0
Loans receivable Acquired [Member] | Consumer Loan [Member]
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	62,751	68,878
0 - 29 Days Past Due	59,908	66,801
30 - 59 Days Past Due	1,767	982
60 - 89 Days Past Due	7	0
90-119 Days Past Due	1,054	1,089
120 - 364 Days Past Due	15	4
365+ Days Past Due	0	2
Financing Receivable, Individually Evaluated for Impairment		0
Loans receivable Acquired [Member] | Automobile Loan
Not Subject To Risk Rating [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	373,588	457,894
0 - 29 Days Past Due	362,173	449,843
30 - 59 Days Past Due	8,849	6,753
60 - 89 Days Past Due	1,892	1,023
90-119 Days Past Due	495	264
120 - 364 Days Past Due	179	11
365+ Days Past Due	0	0
Financing Receivable, Individually Evaluated for Impairment	$ 0	$ 0

XML

Stockholders' Equity (Common shares held in treasury) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Dec. 31, 2011
Stockholders' Equity Note [Abstract]
Beginning of period			7,090,597	6,564,124
Common shares used for exercise of restricted stock units (Shares)	(34,800,000)	(37,446)
Common shares repurchased as part of the stock repurchase program (Shares)	0	603,000
Common shares used to match defined contribution plan, net	(7,318)	(18,898)
End of period	7,048,479	7,110,780	7,090,597	6,564,124
Beginning of period			$ 81,275	$ 74,808
Common shares used for exercise of restricted stock units (Value)	(364)	(392)
Stock purchased under the repurchase program	0	7,022
Common shares used to match defined contribution plan, net (Value)	(77)	(35)
End of period	$ 80,834	$ 81,403	$ 81,275	$ 74,808

XML

Loans Receivable (Composition of loan portfolio) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount			$ 1,432,161
LoansAndLeasesReceivableDeferredIncome	(831)		(3,463)
Allowance for loan and lease losses	46,625		39,921
Non-covered loans	4,543,299		4,709,778
Mortgage loans held-for-sale, at lower of cost or fair value	78,350		64,145
Non-covered loans, after mortgages held for sale	4,621,649		4,773,923
Loans And Leases Receivable Net Reported Amount Covered [Abstract]
Loans And Leases Receivable Allowance Covered	53,992	52,974	54,124	58,628	56,437	37,256
Loans covered under shared-loss agreements with the FDIC, net of allowance for loan and lease losses	369,380		395,307
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	423,372		449,431
Non-Covered Loans [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	1,780,072		1,257,728
LoansAndLeasesReceivableDeferredIncome	4,590,755		4,753,162
LoansAndLeasesReceivableNetOfDeferredIncome	4,589,924		4,749,699
Non-covered loans	4,543,299		4,709,778
Mortgage loans held-for-sale, at lower of cost or fair value	78,350		64,145
Non-covered loans accounted under ASC 310-20
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	591,091		873,231
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	2,219,592		2,622,203
Residential Mortgage [Member] | Non-Covered Loans [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	755,298		804,942
Residential Mortgage [Member] | 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	781,389		810,135
Commercial Secured [Member] | Non-covered loans accounted under ASC 310-20
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	14,519		29,215
Commercial and Industrial | Non-Covered Loans [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	702,074		353,930
Commercial and Industrial | 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	747,077		942,267
Consumer Loan [Member] | 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	6,955		8,493
Consumer Loan [Member] | Non-Covered Loans [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	89,608		48,136
Consumer Loan [Member] | Non-covered loans accounted under ASC 310-20
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	62,751		68,878
Consumer Loan [Member] | 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	88,375		118,171
Finance Leases Financing Receivable [Member] | 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	943		7,088
Finance Leases Financing Receivable [Member] | Non-Covered Loans [Member]
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	233,092		50,720
Loans Secured by multi-family properties [Member] | 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	123,507		128,811
Construction and development secured by multi-family properties [Member] | 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	16,478		15,969
Consumer Loans Auto Financing Receivable Member | Non-covered loans accounted under ASC 310-20
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	373,587		457,894
Consumer Loans Auto Financing Receivable Member | 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	462,691		554,938
Construction and commercial real estate [Member] | 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	275,489		289,070
Construction and commercial real estate [Member] | 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	140,060		196,692
Credit cards and line of credits [Member] | Non-covered loans accounted under ASC 310-20
Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Abstract]
Loans and Leases Receivable, Gross, Carrying Amount	$ 140,234		$ 317,244

XML

Investments (Investment securities) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Schedule of Investments [Line Items]
Available for sale Amortized Cost	$ 1,807,335	$ 2,118,825
Available-for-sale Securities, Gross Unrealized Gains	37,054	76,703
Available-for-sale Securities, Gross Unrealized Losses	8,159	1,242
Available-for-sale Securities	1,836,229	2,194,286
Available for sale - Weighted Average Yield	2.831%	2.90%
Collateralized Mortgage Backed Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	1,620,230	1,924,623
Available-for-sale Securities, Gross Unrealized Gains	36,801	76,190
Available-for-sale Securities, Gross Unrealized Losses	6,865	802
Available-for-sale Securities	1,650,165	2,000,011
Available for sale - Weighted Average Yield	2.763%	2.89%
Collateralized Mortgage Backed Securities [Member] | Federal National Mortgage Association Certificates and Obligations (FNMA) [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	1,358,834	1,622,037
Available-for-sale Securities, Gross Unrealized Gains	36,112	71,411
Available-for-sale Securities, Gross Unrealized Losses	4,324	1
Available-for-sale Securities	1,390,622	1,693,447
Available for sale - Weighted Average Yield	2.924%	3.06%
Collateralized Mortgage Backed Securities [Member] | Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	10,590	14,177
Available-for-sale Securities, Gross Unrealized Gains	604	995
Available-for-sale Securities, Gross Unrealized Losses	13	8
Available-for-sale Securities	11,180	15,164
Available for sale - Weighted Average Yield	4.879%	4.89%
Collateralized Mortgage Backed Securities [Member] | Collateralized Mortgage Obligations [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	250,806	288,409
Available-for-sale Securities, Gross Unrealized Gains	85	3,784
Available-for-sale Securities, Gross Unrealized Losses	2,528	793
Available-for-sale Securities	248,363	291,400
Available for sale - Weighted Average Yield	1.806%	1.85%
Securities Investment [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	187,105	194,202
Available-for-sale Securities, Gross Unrealized Gains	253	513
Available-for-sale Securities, Gross Unrealized Losses	1,294	440
Available-for-sale Securities	186,064	194,275
Available for sale - Weighted Average Yield	3.419%	2.99%
Securities Investment [Member] | US Treasury Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	26,499	26,498
Available-for-sale Securities, Gross Unrealized Gains	2	0
Available-for-sale Securities, Gross Unrealized Losses	0	2
Available-for-sale Securities	26,501	26,496
Available for sale - Weighted Average Yield	0.08%	0.71%
Securities Investment [Member] | US Government-sponsored Enterprises Debt Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	15,078	21,623
Available-for-sale Securities, Gross Unrealized Gains	35	224
Available-for-sale Securities, Gross Unrealized Losses	0	0
Available-for-sale Securities	15,113	21,847
Available for sale - Weighted Average Yield	1.229%	1.35%
Securities Investment [Member] | US States and Political Subdivisions Debt Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	120,989	120,950
Available-for-sale Securities, Gross Unrealized Gains	0	9
Available-for-sale Securities, Gross Unrealized Losses	1,294	438
Available-for-sale Securities	119,695	120,521
Available for sale - Weighted Average Yield	4.417%	3.82%
Securities Investment [Member] | Other Debt Obligations [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	24,539	25,131
Available-for-sale Securities, Gross Unrealized Gains	216	280
Available-for-sale Securities, Gross Unrealized Losses	0	0
Available-for-sale Securities	$ 24,755	$ 25,411
Available for sale - Weighted Average Yield	3.45%	3.46%

XML

Business Combination (Net-assets acquired period adjustments) (Details) (USD $)	Jun. 30, 2013	Dec. 31, 2012
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Goodwill of Acquired Business	$ 76,383,000	$ 76,383,000
Book value of assets acquired and liabilities assumed [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	5,007,604,000,000
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	4,356,987,000,000
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNet	650,617,000,000
Fair value adjustment at purchase date of business acquisition [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	(177,472,000,000)
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	34,465,000,000
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNet	(211,937,000,000)
Measurement period adjustment [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	(12,366,000,000)
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	0
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNet	(12,366,000,000)
Adjusted fair value of assets acquired and liabilities assumed at purchase date [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	4,830,132,000,000
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	4,391,452,000,000
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNet	438,680,000,000
Fair value as remeasured [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	4,817,766,000,000
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	4,391,452,000,000
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNet	426,314,000,000
DepositsMember | Book value of assets acquired and liabilities assumed [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	3,472,951,000,000
DepositsMember | Fair value adjustment at purchase date of business acquisition [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	21,489,000,000
DepositsMember | Measurement period adjustment [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	0
DepositsMember | Adjusted fair value of assets acquired and liabilities assumed at purchase date [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	3,494,440,000,000
DepositsMember | Fair value as remeasured [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	3,494,440,000,000
Securities Sold under Agreements to Repurchase [Member] | Book value of assets acquired and liabilities assumed [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	338,020,000,000
Securities Sold under Agreements to Repurchase [Member] | Fair value adjustment at purchase date of business acquisition [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	20,465,000,000
Securities Sold under Agreements to Repurchase [Member] | Measurement period adjustment [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	0
Securities Sold under Agreements to Repurchase [Member] | Adjusted fair value of assets acquired and liabilities assumed at purchase date [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	358,485,000,000
Securities Sold under Agreements to Repurchase [Member] | Fair value as remeasured [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	358,485,000,000
Other Borrowings Member | Book value of assets acquired and liabilities assumed [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	348,624,000,000
Other Borrowings Member | Fair value adjustment at purchase date of business acquisition [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	1,108,000,000
Other Borrowings Member | Measurement period adjustment [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	0
Other Borrowings Member | Adjusted fair value of assets acquired and liabilities assumed at purchase date [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	349,732,000,000
Other Borrowings Member | Fair value as remeasured [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	349,732,000,000
SubordinatedDebtMember | Book value of assets acquired and liabilities assumed [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	117,000,000,000
SubordinatedDebtMember | Fair value adjustment at purchase date of business acquisition [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	(7,159,000,000)
SubordinatedDebtMember | Measurement period adjustment [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	0
SubordinatedDebtMember | Adjusted fair value of assets acquired and liabilities assumed at purchase date [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	109,841,000,000
SubordinatedDebtMember | Fair value as remeasured [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	109,841,000,000
Accrued expenses and other liabilities | Book value of assets acquired and liabilities assumed [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	80,392,000,000
Accrued expenses and other liabilities | Fair value adjustment at purchase date of business acquisition [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	(1,438,000,000)
Accrued expenses and other liabilities | Measurement period adjustment [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	0
Accrued expenses and other liabilities | Adjusted fair value of assets acquired and liabilities assumed at purchase date [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	78,954,000,000
Accrued expenses and other liabilities | Fair value as remeasured [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
BusinessAcquisitionPurchasePriceAllocationLiabilitiesAssumed	78,954,000,000
CashAndCashEquivalentsMember | Book value of assets acquired and liabilities assumed [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	394,638,000,000
CashAndCashEquivalentsMember | Fair value adjustment at purchase date of business acquisition [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	0
CashAndCashEquivalentsMember | Measurement period adjustment [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	0
CashAndCashEquivalentsMember | Adjusted fair value of assets acquired and liabilities assumed at purchase date [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	394,638,000,000
CashAndCashEquivalentsMember | Fair value as remeasured [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	394,638,000,000
InvestmentsMember | Book value of assets acquired and liabilities assumed [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	561,623,000,000
InvestmentsMember | Fair value adjustment at purchase date of business acquisition [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	0
InvestmentsMember | Measurement period adjustment [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	0
InvestmentsMember | Adjusted fair value of assets acquired and liabilities assumed at purchase date [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	561,623,000,000
InvestmentsMember | Fair value as remeasured [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	561,623,000,000
Loans receivable | Book value of assets acquired and liabilities assumed [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	3,678,979,000,000
Loans receivable | Fair value adjustment at purchase date of business acquisition [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	(118,913,000,000)
Loans receivable | Measurement period adjustment [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	(12,798,000,000)
Loans receivable | Adjusted fair value of assets acquired and liabilities assumed at purchase date [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	3,560,066,000,000
Loans receivable | Fair value as remeasured [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	3,547,268,000,000
accounts receivable | Book value of assets acquired and liabilities assumed [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	19,133,000,000
accounts receivable | Fair value adjustment at purchase date of business acquisition [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	(18,252,000,000)
accounts receivable | Measurement period adjustment [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	0
accounts receivable | Adjusted fair value of assets acquired and liabilities assumed at purchase date [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	881,000,000
accounts receivable | Fair value as remeasured [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	881,000,000
Foreclosed real estate [Member] | Book value of assets acquired and liabilities assumed [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	44,853,000,000
Foreclosed real estate [Member] | Fair value adjustment at purchase date of business acquisition [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	(8,896,000,000)
Foreclosed real estate [Member] | Measurement period adjustment [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	(1,932,000,000)
Foreclosed real estate [Member] | Adjusted fair value of assets acquired and liabilities assumed at purchase date [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	35,957,000,000
Foreclosed real estate [Member] | Fair value as remeasured [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	34,025,000,000
Deferred tax asset [Member] | Book value of assets acquired and liabilities assumed [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	35,327,000,000
Deferred tax asset [Member] | Fair value adjustment at purchase date of business acquisition [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	50,005,000,000
Deferred tax asset [Member] | Measurement period adjustment [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	5,300,000,000
Deferred tax asset [Member] | Adjusted fair value of assets acquired and liabilities assumed at purchase date [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	85,332,000,000
Deferred tax asset [Member] | Fair value as remeasured [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	90,632,000,000
Property, Plant and Equipment [Member] | Book value of assets acquired and liabilities assumed [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	37,412,000,000
Property, Plant and Equipment [Member] | Fair value adjustment at purchase date of business acquisition [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	29,067,000,000
Property, Plant and Equipment [Member] | Measurement period adjustment [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	0
Property, Plant and Equipment [Member] | Adjusted fair value of assets acquired and liabilities assumed at purchase date [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	66,479,000,000
Property, Plant and Equipment [Member] | Fair value as remeasured [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	66,479,000,000
CoreDepositsMember | Book value of assets acquired and liabilities assumed [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	0
CoreDepositsMember | Fair value adjustment at purchase date of business acquisition [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	8,473,000,000
CoreDepositsMember | Measurement period adjustment [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	0
CoreDepositsMember | Adjusted fair value of assets acquired and liabilities assumed at purchase date [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	8,473,000,000
CoreDepositsMember | Fair value as remeasured [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	8,473,000,000
CustomerRelationshipsMember | Book value of assets acquired and liabilities assumed [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	0
CustomerRelationshipsMember | Fair value adjustment at purchase date of business acquisition [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	5,060,000,000
CustomerRelationshipsMember | Measurement period adjustment [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	0
CustomerRelationshipsMember | Adjusted fair value of assets acquired and liabilities assumed at purchase date [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	5,060,000,000
CustomerRelationshipsMember | Fair value as remeasured [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	5,060,000,000
Other Assets Member | Book value of assets acquired and liabilities assumed [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	119,286,000,000
Other Assets Member | Fair value adjustment at purchase date of business acquisition [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	(7,663,000,000)
Other Assets Member | Measurement period adjustment [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	(2,936,000,000)
Other Assets Member | Adjusted fair value of assets acquired and liabilities assumed at purchase date [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	111,623,000,000
Other Assets Member | Fair value as remeasured [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	108,687,000,000
Legacy goodwill [Member] | Book value of assets acquired and liabilities assumed [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	116,353,000,000
Legacy goodwill [Member] | Fair value adjustment at purchase date of business acquisition [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	(116,353,000,000)
Legacy goodwill [Member] | Measurement period adjustment [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	0
Goodwill of Acquired Business	12,366,000
Legacy goodwill [Member] | Adjusted fair value of assets acquired and liabilities assumed at purchase date [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	0
Goodwill of Acquired Business	61,320,000
Legacy goodwill [Member] | Fair value as remeasured [Member]
BusinessAcquisitionPurchasePriceAllocationAssetsAcquiredLiabilitiesAssumedNetAbstract
Business Acquisition, Purchase Price Allocation, Assets Acquired	0
Goodwill of Acquired Business	$ 73,686,000

XML

Consolidated Statements of Financial Condition (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Amortized cost of trading securities	$ 2,286	$ 508
Amortized cost of investment securities available-for-sale	1,807,335	2,118,825
Allowance for loan and lease losses	46,625	39,921
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	52,688,584	52,670,878
Common stock, shares outstanding	45,640,105	45,580,281
Treasury stock, at cost, shares	7,048,479	7,090,597
Tax effect on accumulated other comprehensive income (loss)	$ (174)	$ 1,802
Series A Preferred Stock
Preferred stock, shares outstanding	1,340,000	1,340,000
Preferred stock, liquidation value	$ 25	$ 25
Series B Preferred Stock
Preferred stock, shares outstanding	1,380,000	1,380,000
Preferred stock, liquidation value	$ 25	$ 25
Series C Convertible Preferred Stock
Preferred stock, shares outstanding	84,000	84,000
Preferred stock, liquidation value	$ 1,000	$ 1,000
Series D
Preferred stock, shares outstanding	960,000	960,000

XML

Derivative Activities

3 Months Ended

6 Months Ended

Jun. 30, 2013

Jun. 30, 2013

Derivative Activities [Abstract]

DERIVATIVE ACTIVITIES

NOTE 7— DERIVATIVE ACTIVITIES

During the quarter and six-month period ended June 30, 2013, gains of $1.6 million and $1.3million, respectively, were recognized and reflected as “Derivative Activities” in the unaudited consolidated statements of operations, which were mainly related to the mortgage hedging activities.During the quarter and six-month period ended June 30, 2012, there were no significant transactions impacting the Company's operations reflected as “Derivative Activities” in the unaudited consolidated statements of operations.

The following table details “Derivative Assets” and “Derivative Liabilities” as reflected in the unaudited consolidatedstatements of financial condition at June 30, 2013 and December 31, 2012:

	June 30,		December 31,
	2013		2012
	(In thousands)
Derivative assets:
Options tied to S&P 500 Index	$	16,020	$	13,233
Interest rate swaps not designated as hedges		3,245		8,426
Interest rate caps		270		230
Other		120		-
	$	19,655	$	21,889
Derivative liabilities:
Interest rate swaps designated as cash flow hedges	$	13,187	$	17,665
Interest rate swaps not designated as hedges		3,244		8,365
Interest rate caps		270		230
	$	16,701	$	26,260

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 borrowings transactions and are properly documented as such, and therefore, qualify for cash flow hedgeaccounting. Any gain or loss associated with the effective portion of our cash flow hedges was recognized in other comprehensive income and is subsequently reclassified into earnings in the period during which the hedged forecasted transactions affect earnings. Changes in the fair value of these derivatives are recorded in accumulated other comprehensiveincome to the extent there is no significant ineffectiveness in the cash flow hedging relationships. Currently, theCompany does not expect to reclassify any amount included in other comprehensive income related to theseinterest rate swaps to earnings in the next twelve months.

The following table shows a summary of these swaps and their terms at June 30, 2013:

	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
	$	225,000

An unrealized loss of $13.2 million was recognized in accumulated other comprehensive income related to the valuation of these swaps at June30, 2013, and the related liability is being reflected in the accompanying unaudited consolidated statements of financial condition.

At June30, 2013 and December 31, 2012, interest rate swaps not designated as hedging instruments that were offered to clients represented an asset of $3.2 million and $8.4 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 June30, 2013 and December 31, 2012, interest rate swaps not designated as hedging instruments that are the mirror-images of the derivatives offered to clients represented a liability of $3.2 million and $8.4 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, 2013:

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

The Companyhas offered its customers certificates of deposit with an option tied to the performance of the S&P 500 Index. The Company uses option agreements with major broker-dealers to manage its exposure to changes in this index. Under the terms of the option agreements, the Company receives the average increase in the month-end value of the index in exchange for a fixed premium. The changes in fair value of the option agreements used to manage the exposure in the stock market in the certificates of deposit are recorded in earnings. At June 30, 2013and December 31, 2012, the purchased options used to manage exposure to the S&P 500 Index on stock indexed deposits represented an asset of $16.0 million (notional amount of $49.1million) and $13.2 million (notional amount of $66.6million), 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 $15.3million (notional amount of $42.9million) and $12.7million (notional amount of $62.3million), respectively.

Interest rate caps

The Companyhas entered into interest rate cap transactionswith various clients with floating-rate debt who wish to protect their financial results against increases in interest rates. In these cases, theCompanysimultaneously enters into mirror-image interest rate cap transactions with financial counterparties. None of these cap transactions qualify for hedge accounting; therefore, they are marked to market through earnings.The outstanding total notional amount of interest rate caps was $94.0 million June 30, 2013 and December 31, 2012. At June30, 2013, the interest rate caps sold to clients represented a liability of $270 thousand and were included as part of derivative liabilities in the unaudited consolidated statements of financial condition. At June30, 2013, the interest rate caps purchased as mirror-images represented an asset of $270 thousand and were included as part of derivative assets in the unaudited consolidated statements of financial condition.

Other borrowings

Other borrowings, presented in the unaudited consolidated statements of financial condition within “Advances from FHLB and other borrowings”,amounted to $37.2million and $17.6million at June 30, 2013 and December 31, 2012, respectively. These borrowings mainly consists of federal funds purchased of $29.4million and $9.9million at June 30, 2013 and December 31, 2012, respectively, with a weighted average interest rate of 0.30% at both dates,and unsecured fixed-rate borrowings of $7.7 million at both June 30, 2013 and December 31, 2012, with a weighted average interest rate of0.67% at both dates.

	Notional		Fixed	Variable	Settlement	Maturity
Type	Amount		Rate	Rate Index	Date	Date
	(In thousands)
Interest Rate Swaps - Derivatives Offered to Clients	$	4,232	5.1300%	1-Month Libor	07/03/06	07/03/16
		12,500	5.5050%	1-Month Libor	04/11/09	04/11/19
		1,150	5.1500%	3-Month Libor	10/24/08	10/24/13
	$	17,882
Interest Rate Swaps - Mirror Image Derivatives	$	4,232	5.1300%	1-Month Libor	07/03/06	07/03/16
		12,500	5.5050%	1-Month Libor	04/11/09	04/11/19
		1,150	4.9550%	3-Month Libor	10/24/08	10/24/13
	$	17,882

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Consolidated Statements of Comprehensive Income (Loss) [Abstract]
Net income	$ 37,539	$ 14,958	$ 58,731	$ 25,610
Other comprehensive loss before tax:
Unrealized gain (loss) on securities available-for-sale	(35,576)	7,059	(46,568)	9,000
Realized (gain) loss on investment securities included in net income	0	(11,979)	0	(19,338)
Unrealized gain (loss) on cash flow hedges	3,016	(6,791)	4,477	(8,792)
Other comprehensive loss before taxes	(32,560)	(11,711)	(42,091)	(19,130)
Income tax effect	1,275	2,875	1,977	3,260
Total	(31,285)	(8,836)	(40,114)	(15,870)
Comprehensive income (loss)	$ 6,254	$ 6,122	$ 18,617	$ 9,740

XML

Loans Receivable (Accretable yield and non-accretable discount activity for BBVA acquired loans) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Principal Losses	$ (67,456)
Transfer (to) from accretable yield	$ (30,310)

XML

Consolidated Statements of Financial Condition (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Cash and cash equivalents
Cash and due from banks	$ 737,330	$ 855,490
Money market investments	10,983	13,205
Total cash and cash equivalents	748,313	868,695
Securities purchased under agreements to resell	0	80,000
Investments:
Trading Securities	2,209	495
Investment securities available-for-sale, at fair value	1,836,229	2,194,286
Investment securities held-to-maturity, at amortized cost	0	0
Federal Home Loan Bank (FHLB) stock, at cost	22,156	38,411
Other investments	66	73
Total investments	1,860,660	2,233,265
Securities Failed To Deliver	16,732	0
Loans:
Mortgage loans held-for-sale, at lower of cost or fair value	78,350	64,145
Non-covered loans	4,543,299	4,709,778
Loans covered under shared-loss agreements with the FDIC, net of allowance for loan and lease losses	369,380	395,307
Total loans, net	4,991,029	5,169,230
FDIC shared-loss indemnification asset	236,472	286,799
Foreclosed real estate covered under shared-loss agreements with the FDIC	25,193	22,283
Foreclosed real estate not covered under shared-loss agreements with the FDIC	56,496	51,233
Accrued interest receivable	17,508	17,554
Deferred tax asset, net	155,165	122,501
Premises and equipment, net	84,301	84,997
CustomersLiabilityForAcceptancesNet	30,571	26,996
Servicing Assets	12,994	10,795
Derivative assets	19,655	21,889
Goodwill	76,383	76,383
Other assets	104,462	123,642
Total assets	8,435,934	9,196,262
Deposits:
Demand deposits	2,294,635	2,447,152
Savings accounts	1,006,558	634,819
Certificates of deposit	2,363,845	2,607,588
Total deposits	5,665,038	5,689,559
Borrowings:
Short term borrowings	0	92,210
Securities sold under agreements to repurchase and federal funds purchased	1,313,870	1,695,247
Advances from FHLB with Accrued Interest	322,300	554,177
Subordinated capital notes	98,961	146,038
Total borrowings	1,735,131	2,487,672
Derivative liabilities	16,701	26,260
Bank Acceptances Executed And Outstanding	30,571	26,996
Accrued expenses and other liabilities	117,569	102,169
Total liabilities	7,565,010	8,332,656
Stockholders' equity:
Preferred Stock	92,000	92,000
Convertible Preferred Stock	84,000	84,000
Common stock	52,689	52,671
Additional paid-in capital	538,105	537,453
Legal surplus	57,906	52,143
Retained earnings	111,292	70,734
Treasury stock, at cost	(80,834)	(81,275)
Accumulated other comprehensive income, net of tax	15,766	55,880
Total stockholders' equity	870,924	863,606
Total liabilities and stockholders' equity	$ 8,435,934	$ 9,196,262

XML

Investments (Investment securities by contractual maturity) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Schedule of Investments [Line Items]
Available for sale Amortized Cost	$ 1,807,335	$ 2,118,825
Available-for-sale Securities	1,836,229	2,194,286
Collateralized Mortgage Backed Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	1,620,230	1,924,623
Available-for-sale Securities	1,650,165	2,000,011
Collateralized Mortgage Backed Securities [Member] | Federal National Mortgage Association Certificates and Obligations (FNMA) [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	1,358,834	1,622,037
Available-for-sale Securities	1,390,622	1,693,447
Collateralized Mortgage Backed Securities [Member] | Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	10,590	14,177
Available-for-sale Securities	11,180	15,164
Collateralized Mortgage Backed Securities [Member] | Collateralized Mortgage Obligations [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	250,806	288,409
Available-for-sale Securities	248,363	291,400
Collateralized Mortgage Backed Securities [Member] | Maturities Due From Five To Ten Years [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	32,779
Available-for-sale Securities	33,345
Collateralized Mortgage Backed Securities [Member] | Maturities Due From Five To Ten Years [Member] | Federal National Mortgage Association Certificates and Obligations (FNMA) [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	32,779
Available-for-sale Securities	33,345
Collateralized Mortgage Backed Securities [Member] | Maturities Due After Ten Years [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	1,587,451
Available-for-sale Securities	1,616,820
Collateralized Mortgage Backed Securities [Member] | Maturities Due After Ten Years [Member] | Federal National Mortgage Association Certificates and Obligations (FNMA) [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	1,326,055
Available-for-sale Securities	1,357,277
Collateralized Mortgage Backed Securities [Member] | Maturities Due After Ten Years [Member] | Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	10,590
Available-for-sale Securities	11,180
Collateralized Mortgage Backed Securities [Member] | Maturities Due After Ten Years [Member] | Collateralized Mortgage Obligations [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	250,806
Available-for-sale Securities	248,363
Securities Investment [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	187,105	194,202
Available-for-sale Securities	186,064	194,275
Securities Investment [Member] | US Treasury Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	26,499	26,498
Available-for-sale Securities	26,501	26,496
Securities Investment [Member] | US Government-sponsored Enterprises Debt Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	15,078	21,623
Available-for-sale Securities	15,113	21,847
Securities Investment [Member] | US States and Political Subdivisions Debt Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	120,989	120,950
Available-for-sale Securities	119,695	120,521
Securities Investment [Member] | Other Debt Obligations [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	24,539	25,131
Available-for-sale Securities	24,755	25,411
Securities Investment [Member] | Maturities Due In Less Than One Year [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	46,499
Available-for-sale Securities	46,559
Securities Investment [Member] | Maturities Due In Less Than One Year [Member] | US Treasury Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	26,499
Available-for-sale Securities	26,501
Securities Investment [Member] | Maturities Due In Less Than One Year [Member] | Other Debt Obligations [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	20,000
Available-for-sale Securities	20,058
Securities Investment [Member] | Maturities Due From One To Five Years [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	412
Available-for-sale Securities	399
Securities Investment [Member] | Maturities Due From One To Five Years [Member] | US States and Political Subdivisions Debt Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	412
Available-for-sale Securities	399
Securities Investment [Member] | Maturities Due From One To Five Years [Member] | Other Debt Obligations [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	0
Available-for-sale Securities	0
Securities Investment [Member] | Maturities Due From Five To Ten Years [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	26,503
Available-for-sale Securities	26,166
Securities Investment [Member] | Maturities Due From Five To Ten Years [Member] | US Government-sponsored Enterprises Debt Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	15,078
Available-for-sale Securities	15,113
Securities Investment [Member] | Maturities Due From Five To Ten Years [Member] | US States and Political Subdivisions Debt Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	11,425
Available-for-sale Securities	11,053
Securities Investment [Member] | Maturities Due After Ten Years [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	113,691
Available-for-sale Securities	112,940
Securities Investment [Member] | Maturities Due After Ten Years [Member] | US States and Political Subdivisions Debt Securities [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	109,152
Available-for-sale Securities	108,243
Securities Investment [Member] | Maturities Due After Ten Years [Member] | Other Debt Obligations [Member]
Schedule of Investments [Line Items]
Available for sale Amortized Cost	4,539
Available-for-sale Securities	$ 4,697

XML

Accrued Interest Receivable and Other Assets (Other assets) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Accounts Receivable, Net [Abstract]
Prepaid FDIC insurance	$ 0	$ 6,451
Other prepaid expenses	23,568	19,674
Serciving Advance	0	7,976
Mortgage tax credits	8,706	8,706
Other Intangible Assets, Net	13,201	14,490
Investment in Statutory Trust	1,086	1,086
Other repossessed assets (covered by FDIC shared-loss agreements)	8,921	6,084
Accounts receivable and other assets	48,980	59,175
Other assets	$ 104,462	$ 123,642

XML

Derivative Activities (Derivative Assets and Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Assets	$ 19,655	$ 21,889
Derivative Liabilities	16,701	26,260
Options tied to Standard & Poor 500 Stock Market Index [Member]
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Assets	16,020	13,233
Designated as Hedging Instrument [Member]
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Liabilities	13,187	17,665
Not Designated as Hedging Instrument [Member]
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Assets	3,245	8,426
Derivative Liabilities	3,244	8,365
Interest Rate Cap [Member]
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Assets	270	230
Derivative Liabilities	270	230
Other derivative
Derivative Assets Liabilities At Fair Value Net [Line Items]
Derivative Assets	$ 120	$ 0

XML

Investments (Tables)

3 Months Ended

Jun. 30, 2013

Investments [Abstract]

Available For Sale Securities Continuous Unrealized Loss Position Fair Value [Table Text Block]

	June 30, 2013
			Gross		Gross				Weighted
	Amortized		Unrealized		Unrealized		Fair		Average
	Cost		Gains		Losses		Value		Yield
	(In thousands)
Available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates	$	1,358,834	$	36,112	$	4,324	$	1,390,622		2.92%
GNMA certificates		10,590		604		13		11,180		4.88%
CMOs issued by US Government sponsored agencies		250,806		85		2,528		248,363		1.81%
Total mortgage-backed securities		1,620,230		36,801		6,865		1,650,165		2.76%
Investment securities
US Treasury securities		26,499		2		-		26,501		0.08%
Obligations of US Government sponsored agencies		15,078		35		-		15,113		1.23%
Obligations of Puerto Rico Government and political subdivisions		120,989		-		1,294		119,695		4.42%
Other debt securities		24,539		216		-		24,755		3.45%
Total investment securities		187,105		253		1,294		186,064		3.42%
Total securities available for sale	$	1,807,335	$	37,054	$	8,159	$	1,836,229		2.83%

	December 31, 2012
			Gross		Gross				Weighted
	Amortized		Unrealized		Unrealized		Fair		Average
	Cost		Gains		Losses		Value		Yield
	(In thousands)
Available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates	$	1,622,037	$	71,411	$	1	$	1,693,447		3.06%
GNMA certificates		14,177		995		8		15,164		4.89%
CMOs issued by US Government sponsored agencies		288,409		3,784		793		291,400		1.85%
Total mortgage-backed securities		1,924,623		76,190		802		2,000,011		2.89%
Investment securities
US treasury securities		26,498		-		2		26,496		0.71%
Obligations of US Government sponsored agencies		21,623		224		-		21,847		1.35%
Obligations of Puerto Rico Government and political subdivisions		120,950		9		438		120,521		3.82%
Other debt securities		25,131		280		-		25,411		3.46%
Total investment securities		194,202		513		440		194,275		2.99%
Total securities available-for-sale	$	2,118,825	$	76,703	$	1,242	$	2,194,286		2.90%

	June 30, 2013
	Available-for-sale
	Amortized Cost		Fair Value
	(In thousands)
Mortgage-backed securities
Due after 5 to 10 years
FNMA and FHLMC certificates	$	32,779	$	33,345
Total due after 5 to 10 years		32,779		33,345
Due after 10 years
FNMA and FHLMC certificates		1,326,055		1,357,277
GNMA certificates		10,590		11,180
CMOs issued by US Government sponsored agencies		250,806		248,363
Total due after 10 years		1,587,451		1,616,820
Total mortgage-backed securities		1,620,230		1,650,165
Investment securities
Due in less than one year
US Treasury securities		26,499		26,501
Other debt securities		20,000		20,058
Total due in less than one year		46,499		46,559
Due from 1 to 5 years
Obligations of Puerto Rico Government and political subdivisions		412		399
Total due from 1 to 5 years		412		399
Due after 5 to 10 years
Obligations of Puerto Rico Government and political subdivisions		11,425		11,053
Obligations of US Government and sponsored agencies		15,078		15,113
Total due after 5 to 10 years		26,503		26,166
Due after 10 years
Obligations of Puerto Rico Government and political subdivisions		109,152		108,243
Other debt securities		4,539		4,697
Total due after 10 years		113,691		112,940
Total investment securities		187,105		186,064
Total securities available-for-sale	$	1,807,335	$	1,836,229

	Six-Month period Ended June 30, 2012
			Book Value
Description	Sale Price		at Sale		Gross Gains		Gross Losses
	(In thousands)
Sale of securities available-for-sale
Mortgage-backed securities and CMOs
FNMA and FHLMC certificates	$	367,971	$	349,400	$	18,581	$	-
GNMA certificates		39,484		39,483		1		-
CMOs issued by US Government sponsored agencies		19,725		18,372		1,353		-
Total mortgage-backed securities and CMOs		427,180		407,255		19,935		-
Investment securities
Obligations of U.S. Government sponsored agencies		80,000		80,000		-		-
Obligations of Puerto Rico Government and political subdivisions		35,882		36,478		31		628
Structured credit investments		10,530		10,530		-		-
Total investment securities		126,412		127,008		31		628
Total	$	553,592	$	534,263	$	19,966	$	628

	June 30, 2013
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	1,712		61		1,651
CMOs issued by US Government sponsored agencies		2,094		171		1,923
	$	3,806	$	232	$	3,574
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	20,588	$	1,233	$	19,355
CMOs issued by US Government sponsored agencies		203,524		2,357		201,167
FNMA and FHLMC certificates		219,983		4,324		215,659
GNMA certificates		206		13		193
	$	444,301	$	7,927	$	436,374
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	22,300	$	1,294	$	21,006
CMOs issued by US Government sponsored agencies		205,618		2,528		203,090
FNMA and FHLMC certificates		219,983		4,324		215,659
GNMA certificates		206		13		193
	$	448,107	$	8,159	$	439,948

	December 31, 2012
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	1,673	$	12	$	1,661
CMOs issued by US Government sponsored agencies		2,194		178		2,016
	$	3,867	$	190	$	3,677
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	19,086	$	426	$	18,660
CMOs issued by US Government sponsored agencies		10,671		615		10,056
US Treasury Securities		11,498		2		11,496
GNMA certificates		84		8		76
FNMA and FHLMC certificates		68		1		67
	$	41,407	$	1,052	$	40,355
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
Obligations of Puerto Rico Government and political subdivisions	$	20,759	$	438	$	20,321
CMOs issued by US Government sponsored agencies		12,865		793		12,072
US Treasury Securities		11,498		2		11,496
GNMA certificates		84		8		76
FNMA and FHLMC certificates		68		1		67
	$	45,274	$	1,242	$	44,032

XML

Fair Value

3 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

FAIR VALUE

NOTE 16- FAIR VALUEOF FINANCIAL INSTRUMENTS

The Company follows the fair value measurement framework under GAAP.

Fair Value Measurement

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

Money market investments

The fair value of money market investments is based on the carrying amounts reflected in the unaudited 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. 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 Company holds two securities categorized as other debt that are classified as Level 3. The estimated fair value of the other debt securitiesis determined by using a third-party model to calculate the present value of projected future cash flows. The assumptions are highly uncertain and include primarily market discount rates, current spreads, and an indicative pricing. The assumptions used are drawn from similar securities that are actively traded in the market and have similar characteristics as the collateral underlying the debt securities being evaluated. The valuation is performed on a monthly basis.

Derivative instruments

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

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

Servicing assets

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

Loans receivable considered impaired that are collateral dependent

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

Foreclosed real estate

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

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

	June 30, 2013
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	1,816,172	$	20,057	$	1,836,229
Money market investments		10,983		-		-		10,983
Derivative assets		-		3,635		16,020		19,655
Servicing assets		-		-		12,994		12,994
Derivative liabilities		-		(16,701)		(15,315)		(32,016)
	$	10,983	$	1,803,106	$	33,756	$	1,847,845
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	43,831	$	43,831
Foreclosed real estate		-		-		81,689		81,689
	$	-	$	-	$	125,520	$	125,520

	December 31, 2012
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
	(In thousands)
Recurring fair value measurements:
Investment securities available-for-sale	$	-	$	2,174,274	$	20,012	$	2,194,286
Securities purchased under agreements to resell		-		80,000		-		80,000
Money market investments		13,205		-		-		13,205
Derivative assets		-		8,656		13,233		21,889
Servicing assets		-		-		10,795		10,795
Derivative liabilities		-		(26,260)		(12,707)		(38,967)
	$	13,205	$	2,236,670	$	31,333	$	2,281,208
Non-recurring fair value measurements:
Impaired commercial loans	$	-	$	-	$	46,199	$	46,199
Foreclosed real estate		-		-		75,447		75,447
	$	-	$	-	$	121,646	$	121,646

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 quartersand the six-month periods ended June 30, 2013 and 2012:

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

	Quarter Ended June 30, 2012
	Investment securities
	available-for-sale
					Derivative				Derivative
					asset				liability
			Other		(S&P				(S&P
			debt		Purchased		Servicing		Embedded
Level 3 Instruments Only	CLOs		securities		Options)		assets		Options)		Total
Balance at beginning of period	$	29,643	$	9,882	$	12,515	$	10,725	$	(12,138)	$	50,627
Gains (losses) included in earnings		-		-		(1,148)		-		1,119		(29)
Changes in fair value of investment securities available for sale included in other comprehensive income		(2,381)		134		-		-		-		(2,247)
New instruments acquired		-		-		-		499		-		499
Principal repayments		18		-		-		(241)		-		(223)
Amortization		-		-		-		-		107		107
Changes in fair value of servicing assets		-		-		-		(207)		-		(207)
Balance at end of period	$	27,280	$	10,016	$	11,367	$	10,776	$	(10,912)	$	48,527

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

	Six-Month Period Ended June 30, 2012
	Investment securities available-for-sale
							Derivative				Derivative
							asset				liability
					Other		(S&P				(S&P
					debt		Purchased		Servicing		Embedded
Level 3 Instruments Only	CDOs		CLOs		securities		Options)		assets		Options)		Total
	(In thousands)
Balance at beginning of period	$	10,530	$	26,758	$	10,024	$	9,317	$	10,454	$	(9,362)	$	57,721
Gains (losses) included in earnings		-		-		-		2,050		-		(2,035)		15
Changes in fair value of investment securities available for sale included in other comprehensive income		-		488		(7)		-		-		-		481
New instruments acquired		-		-		-		-		919		-		919
Principal repayments		-		34		-		-		(476)		-		(442)
Amortization		-		-		(1)		-		-		485		484
Sales of instruments		(10,530)		-		-		-		-		-		(10,530)
Changes in fair value of servicing assets		-		-		-		-		(121)		-		(121)
Balance at end of period	$	-	$	27,280	$	10,016	$	11,367	$	10,776	$	(10,912)	$	48,527

During the quarters and the six-month periods ended June 30, 2013 and 2012, there were purchases and sales of assets and liabilities measured at fair value on a recurring basis. There were no transfers into and out of Level 1 and Level 2 fair value measurements during such periods.

The table below presents quantitative information for all assets and liabilities measured at fair value on a recurring basisusing significant unobservable inputs (Level 3) atJune 30, 2013:

	June 30, 2013
	Fair Value		Valuation Technique	Unobservable Input	Range
	(In thousands)
Investment securities available-for-sale:
Other debt securities	$	20,058	Market comparable bonds	Indicative pricing	97.50% - 100.50%
				Option adjusted spread	289.1% - 469.2%
				Yield to maturity	3.060% - 5.101%
				Spread to maturity	288.7% - 470.2%
Derivative assets (S&P Purchased Options)	$	16,020	Option pricing model	Implied option volatility	24.82% - 39.16%
				Counterparty credit risk (based on 5-year credit default swap ("CDS") spread)	100.28% - 174.12%
Servicing assets	$	12,994	Cash flow valuation	Constant prepayment rate	8.41% - 26.96%
				Discount rate	10.50% - 13.50%
Derivative liability (S&P Embedded Options)	$	(15,315)	Option pricing model	Implied option volatility	24.82% - 39.16%
				Counterparty credit risk (based on 5-year CDS spread)	100.28% - 174.12%
Collateral dependant impaired loans	$	43,831	Fair value of property or collateral	Appraised value	Not meaningful

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 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 unaudited 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.

The table below presents a detail of investment securities available-for-sale classified as Level 3 at June 30,2013:

	June 30, 2013
							Weighted
	Amortized		Unrealized				Average	Principal
Type	Cost		Gains (Losses)		Fair Value		Yield	Protection
	(In thousands)
Other debt securities	$	20,000	$	58	$	20,058	3.50%	N/A

Fair Value of Financial Instruments

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

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

The estimated fair value and carrying value of the Company's financial instruments at June 30, 2013 and December 31, 2012 is as follows:

	June 30,				December 31,
	2013				2012
	Fair		Carrying		Fair		Carrying
	Value		Value		Value		Value
	(In thousands)
Level 1
Financial Assets:
Cash and cash equivalents	$	748,313	$	748,313	$	868,695	$	868,695
Level 2
Financial Assets:
Securities purchased under agreements to resell		-		-		80,000		80,000
Securities sold but not yet delivered		16,732		16,732		-		-
Trading securities		2,209		2,209		495		495
Investment securities available-for-sale		1,816,171		1,816,171		2,174,274		2,174,274
Federal Home Loan Bank (FHLB) stock		22,156		22,156		38,411		38,411
Derivative assets		3,635		3,635		8,656		8,656
Financial Liabilities:
Derivative liabilities		16,701		16,701		26,260		26,260
Short term borrowings		-		-		92,210		92,210
Level 3
Financial Assets:
Investment securities available-for-sale		20,058		20,058		20,012		20,012
Total loans (including loans held-for-sale)
Non-covered loans, net		4,600,628		4,621,649		4,766,179		4,773,923
Covered loans, net		449,113		369,380		489,885		395,307
Derivative assets		16,020		16,020		13,233		13,233
FDIC shared-loss indemnification asset		173,442		236,472		204,646		286,799
Accrued interest receivable		17,508		17,508		17,554		17,554
Servicing assets		12,994		12,994		10,795		10,795
Financial Liabilities:
Deposits		5,688,574		5,665,038		5,797,097		5,689,559
Securities sold under agreements to repurchase		1,353,970		1,313,870		1,741,272		1,695,247
Advances from FHLB		283,443		285,135		538,355		536,542
Federal funds purchased		29,431		29,431		9,901		9,901
Term notes		7,710		7,734		7,912		7,734
Subordinated capital notes		98,008		98,961		146,415		146,038
Accrued expenses and other liabilities		117,569		117,569		102,169		102,169

The following methods and assumptions were used to estimate the fair values of significant financial instruments at June 30, 2013 and December 31, 2012:

•Cash and cash equivalents (including money market investments and time deposits with other banks), accrued interest receivable, securities purchased under agreements to resell, securities sold but not yet delivered, accrued expenses and other liabilities have been valued at the carrying amounts reflected in the unaudited consolidated statements of financial condition as these are reasonable estimates of fair value given the short-term nature of the instruments.

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

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

•The fair value of the FDIC shared-loss indemnification asset represents the present value of the estimated cash payments (net of amounts owed to the FDIC) 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 shared-loss indemnification asset is dependent upon the performance of the underlying covered loans, the passage of time and claims paid by the FDIC which are impacted by the Bank's adherence to certain guidelines established by the FDIC.

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

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

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

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

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

•For short term borrowings and federal funds purchased, the carrying amount is considered a reasonable estimate of fair value. The fair value of long-term borrowings, which include securities sold under agreements to repurchase, advances from FHLB, FDIC-guaranteed term notes,other term notes, and subordinated capital notes, is based on the discounted value of the contractual cash flows using current estimated market discount rates for borrowings with similar terms, remaining maturities and put dates.

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

XML

Fair Value (Qualitative information for assets and liabilities) (Details) (USD $) In Thousands, unless otherwise specified									3 Months Ended		6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended		3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended			3 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Fair Value, Inputs, Level 3 [Member]	Dec. 31, 2012 Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Other Debt Obligations [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Derivative Financial Instruments, Assets [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Servicing Assets [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Derivative Financial Instruments, Liabilities [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Market Approach Valuation Technique [Member] Other Debt Obligations [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Market Approach Valuation Technique [Member] Minimum [Member] Other Debt Obligations [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Market Approach Valuation Technique [Member] Minimum [Member] Other Debt Obligations [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Market Approach Valuation Technique [Member] Maximum [Member] Other Debt Obligations [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Market Approach Valuation Technique [Member] Maximum [Member] Other Debt Obligations [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Cash Flow Valuation Technique [Member] Servicing Assets [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Cash Flow Valuation Technique [Member] Minimum [Member] Servicing Assets [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Cash Flow Valuation Technique [Member] Maximum [Member] Servicing Assets [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Option Pricing Model Technique [Member] Derivative Financial Instruments, Assets [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Option Pricing Model Technique [Member] Derivative Financial Instruments, Assets [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Option Pricing Model Technique [Member] Derivative Financial Instruments, Liabilities [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Option Pricing Model Technique [Member] Minimum [Member] Derivative Financial Instruments, Liabilities [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Option Pricing Model Technique [Member] Maximum [Member] Derivative Financial Instruments, Assets [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Option Pricing Model Technique [Member] Maximum [Member] Derivative Financial Instruments, Liabilities [Member] Fair Value, Inputs, Level 3 [Member]	Jun. 30, 2013 Fair value of property or collateral [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Available-for-sale Securities	$ 1,836,229	$ 2,194,286	$ 20,058	$ 20,012	$ 20,058
Derivative Assets	19,655	21,889	16,020	13,233		16,020
Servicing Asset at Fair Value, Amount	12,994	10,795	12,994	10,795			12,994
Derivative Financial Instruments, Liabilities, Fair Value Disclosure								(15,315)
Loans and Leases Receivable, Impaired, Commitment to Lend																							$ 43,831
Valuation Technique									Market comparable bonds					Cash flow valuation			Option pricing model		Option pricing model				Fair value of property or collateral
Indicative Pricing											97.50%		100.50%
Yield to maturity											3.06%		5.10%
Spread to maturity											288.70%		470.20%
Implied option volatility																		24.81%		24.81%	39.15%	39.15%
Counterparty credit risk (based on 5-year CDS spread)																		122.10%		100.28%	232.70%	174.12%
Constant prepayment rate															9.43%	33.05%
Discount rate															10.50%	13.50%
FairValueInputsOasSpread										469.20%		289.10%

XML

Business Combinations (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
BusinessAcquisitionEntityAcquiredAndReasonForAcquisitionAbstract
BusinessAcquisitionCostOfAcquiredEntityPurchasePrice	$ 500
FDIC-Assisted Acquisition and FDIC Shared-Loss Indemnification Asset [Abstract]
Percent Of Losses Fdic Absorbs	80.00%
Percent Of Losses Recoveries Fdic Shares	80.00%
Acquisition Date	Apr. 30, 2010
True-Up Payment Description	Under the shared-loss agreements, the Bank will pay to the FDIC 50% of the excess, if any, of: (i) 20% of the Intrinsic Loss Estimate of $906.0 million (or $181.2 million) (as determined by the FDIC) less (ii) the sum of: (A) 25% of the asset discount (per bid) (or $227.5 million); plus (B) 25% of the cumulative shared-loss payments (defined as the aggregate of all of the payments made or payable to the Bank minus the aggregate of all of the payments made or payable to the FDIC); plus (C) the sum of the period servicing amounts for every consecutive twelve-month period prior to and ending on the True-Up Measurement Date in respect of each of the shared-loss agreements during which the shared-loss provisions of the applicable shared-loss agreement is in effect (defined as the product of the simple average of the principal amount of shared-loss loans and shared-loss assets at the beginning and end of such period times 1%). The true-up payment represents an estimated liability of $16.9 million and $15.5 million, net of discount, as of June 30, 2013 and December 31, 2012, respectively. This estimated liability is accounted for as a reduction of the indemnification asset
FDIC Clawback Liability	$ 16.9	$ 15.5

XML

Accrued Interest Receivable and Other Assets (Narratives) (Details) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Accounts Notes And Loans Receivable Line Items
Prepaid Taxes	$ 17,100,000	$ 12,000,000
Mortgage tax credits	8,706,000	8,706,000
Repossessed auto loans acquired	8,600,000	5,900,000
Eurobank [Member] | CoreDepositsMember
Accounts Notes And Loans Receivable Line Items
Other Intangible Assets	8,600,000	9,500,000
BBVAPR
Accounts Notes And Loans Receivable Line Items
Mortgage tax credits	6,300,000	7,400,000
BBVAPR | CustomerRelationshipsMember
Accounts Notes And Loans Receivable Line Items
Other Intangible Assets	$ 4,600,000	$ 5,000,000

XML

Loans Receivable (Narratives) (Details) (USD $)	3 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Accounts Notes And Loans Receivable Line Items
Financing Receivable Modifications Recorded Investment Not Included In Non Accrual	$ 55,700,000	$ 52,000,000
Transfer of Portfolio Loans and Leases to Held-for-sale	$ 55,000

XML

Allowance for Loan and Lease Losses (Recorded Investment in loans individually evaluated for impairment) (Details) (USD $) In Thousands, unless otherwise specified								3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended		3 Months Ended	12 Months Ended		3 Months Ended	12 Months Ended
	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Jun. 30, 2013 Loans receivable Acquired [Member]	Jun. 30, 2013 Non Covered Loan [Member]	Dec. 31, 2012 Non Covered Loan [Member]	Jun. 30, 2013 Covered Loan [Member]	Dec. 31, 2012 Covered Loan [Member]	Jun. 30, 2013 Commercial Loan [Member] Loans receivable Acquired [Member]	Jun. 30, 2013 Commercial Loan [Member] Non Covered Loan [Member]	Dec. 31, 2012 Commercial Loan [Member] Non Covered Loan [Member]	Dec. 31, 2012 Commercial Loan [Member] Non Covered Loan [Member] Loans receivable Acquired [Member]	Jun. 30, 2013 Troubled Debt Restructuring [Member] Non Covered Loan [Member]	Dec. 31, 2012 Troubled Debt Restructuring [Member] Non Covered Loan [Member]	Jun. 30, 2013 Troubled Debt Restructuring [Member] Covered Loan [Member] Loans receivable Acquired [Member]
Impaired Financing Receivable Unpaid Principal Balance [Abstract]
Impaired Financing Receivable With Related Allowance Unpaid Principal Balance										$ 372,481	$ 380,330		$ 22,168	$ 16,666		$ 85,271	$ 76,859
Impaired Financing Receivable With No Related Allowance Unpaid Principal Balance												36,293	31,334		36,293
Total Unpaid Principal							36,293	138,773	129,818
Impaired Financing Receivable Recorded Investment [Abstract]
Impaired Financing Receivable With Related Allowance Recorded Investment										135,412	174,397		19,276	14,570		81,849	74,783
Impaired Financing Receivable With No Related Allowance Recorded Investment												31,629	24,555		31,629
Total Recorded Investment							31,629	125,680	120,982
Provision for covered loan and lease losses, net	$ 53,992	$ 52,974	$ 54,124	$ 58,628	$ 56,437	$ 37,256		$ 14,674	$ 9,455	$ 53,992	$ 54,124		$ 5,795	$ 4,121			$ 5,334	$ 8,879
Coverage								12.00%	8.00%	39.87239%	31.03494%		30.00%	28.00%		11.00%	7.00%

XML

Stockholders Equity (Tables)

3 Months Ended

Jun. 30, 2013

Stockholders' Equity [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

The Company's and the Bank's actual capital amounts and ratios as of June 30, 2013 and December 31, 2012 are as follows:

				Minimum Capital
	Actual			Requirement
	Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
Company Ratios
As of June 30, 2013
Total capital to risk-weighted assets	$	806,418	16.02%	$	402,819	8.00%
Tier 1 capital to risk-weighted assets	$	702,801	13.96%	$	201,409	4.00%
Tier 1 capital to total assets	$	702,801	8.54%	$	329,225	4.00%
As of December 31, 2012
Total capital to risk-weighted assets	$	794,195	15.15%	$	419,269	8.00%
Tier 1 capital to risk-weighted assets	$	678,127	12.94%	$	209,634	4.00%
Tier 1 capital to total assets	$	678,127	6.42%	$	422,307	4.00%

							Minimum to be Well
							Capitalized Under Prompt
				Minimum Capital			Corrective Action
	Actual			Requirement			Provisions
	Amount		Ratio	Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
Bank Ratios
As of June 30, 2013
Total capital to risk-weighted assets	$	743,653	15.01%	$	396,291	8.00%	$	495,363	10.00%
Tier 1 capital to risk-weighted assets	$	641,043	12.94%	$	198,145	4.00%	$	297,218	6.00%
Tier 1 capital to total assets	$	641,043	7.84%	$	327,058	4.00%	$	408,823	5.00%
As of December 31, 2012
Total capital to risk-weighted assets	$	719,675	14.03%	$	410,268	8.00%	$	512,835	10.00%
Tier 1 capital to risk-weighted assets	$	604,997	11.80%	$	205,134	4.00%	$	307,701	6.00%
Tier 1 capital to total assets	$	604,997	5.76%	$	420,298	4.00%	$	525,373	5.00%

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

The calculation of earnings per common share for the quartersand six-month periodsended June 30, 2013 and 2012 is as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands, except per share data)
Net income	$	37,539	$	14,958	$	58,731	$	25,610
Less: Dividends on preferred stock
Non-Convertible Preferred Stock (Series A, B, and D)		(1,629)		(1,201)		(3,256)		(2,401)
Convertible preferred stock (Series C)		(1,837)		-		(3,675)		-
Income available to common shareholders	$	34,073	$	13,757	$	51,800	$	23,209
Effect of assumed conversion of the Convertible ' 'Preferred Stock		1,837		-		3,675		-
Income available to common shareholders assuming conversion	$	35,910	$	13,757	$	55,475	$	23,209
Weighted average common shares and share equivalents:
Average common shares outstanding		45,630		40,703		45,613		40,873
Effect of dilutive securities:
Average potential common shares-options		200		105		178		113
Average potential common shares-assuming ' 'conversion of convertible preferred stock		7,138		-		7,138		-
Total weighted average common shares ' 'outstanding and equivalents		52,968		40,808		52,929		40,986
Earnings per common share - basic	$	0.75	$	0.34	$	1.14	$	0.57
Earnings per common share - diluted	$	0.68	$	0.34	$	1.05	$	0.57

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 periods ended June 30, 2013 and 2012 is set forth below

	Six-Month Period Ended June 30,
	2013			2012
		Dollar			Dollar
	Shares	Amount		Shares	Amount
	(In thousands, except shares data)
Beginning of period	7,090,597	$	81,275	6,564,124	$	74,808
Common shares used upon lapse of restricted stock units	(34,800)		(364)	(37,446)		(392)
Common shares repurchased as part of the stock repurchase program	-		-	603,000		7,022
Common shares used to match defined contribution plan, net	(7,318)		(77)	(18,898)		(35)
End of period	7,048,479	$	80,834	7,110,780	$	81,403

Schedule of Accumulated Other Comprehensive Income (Loss)

	June 30,		December 31,
	2013		2012
	(In thousands)
Unrealized gain on securities available-for-sale which are not other-than-temporarily impaired	$	28,779	$	75,347
Income tax effect of unrealized gain on securities available-for-sale		(3,379)		(7,102)
Net unrealized gain on securities available-for-sale which are not other-than-temporarily impaired		25,400		68,245
Unrealized loss on cash flow hedges		(13,187)		(17,664)
Income tax effect of unrealized loss on cash flow hedges		3,553		5,299
Net unrealized loss on cash flow hedges		(9,634)		(12,365)
	$	15,766	$	55,880

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

	Quarter Ended June 30, 2013						Six-Month Period Ended June 30, 2013
	Net unrealized		Net unrealized		Accumulated		Net unrealized		Net unrealized		Accumulated
	gains on		loss on		other		gains on		loss on		other
	securities		cash flow		comprehensive		securities		cash flow		comprehensive
	available-for-sale		hedges		income		available-for-sale		hedges		income
	(In thousands)						(In thousands)
Beginning balance	$	58,393	$	(11,342)	$	47,051	$	68,245	$	(12,365)	$	55,880
Other comprehensive income before reclassifications		(33,036)		292		(32,744)		(42,934)		(21)		(42,955)
Amounts reclassified out of accumulated other comprehensive income		43		1,416		1,459		89		2,752		2,841
Other comprehensive income (loss)		(32,993)		1,708		(31,285)		(42,845)		2,731		(40,114)
Ending balance	$	25,400	$	(9,634)	$	15,766	$	25,400	$	(9,634)	$	15,766

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

			Six-Month Period		Affected Line Item in
	Quarter Ended		Ended		Consolidated Statement
	June 30, 2013		June 30, 2013		of Operations
	(In thousands)		(In thousands)
Cash flow hedges:
Interest-rate contracts	$	1,416	$	2,752	Net interest expense
Available-for-sale securities:
Residual tax effect from OIB's change in applicable tax rate		43		89	Income tax expense
	$	1,459	$	2,841

XML

Deposits and Related Interest (Tables)

3 Months Ended

Jun. 30, 2013

Deposits, by Component, Alternative [Abstract]

Deposits By Component [Table Text Block]

Total deposits as of June 30, 2013 and December 31, 2012 consist of the following:

	June 30, 2013		December 31, 2012
	(In thousands)
Non-interest bearing demand deposits	$	872,806	$	799,667
Interest-bearing savings and demand deposits		2,331,589		2,282,305
Individual retirement accounts		352,637		376,611
Retail certificates of deposit		688,877		699,983
Institutional certificates of deposits		645,037		602,828
Total core deposits		4,890,946		4,761,394
Brokered deposits		774,092		928,165
Total deposits	$	5,665,038	$	5,689,559

Interest Expense Domestic Deposit Liabilities [Table Text Block]

Interest expense for the quarters and the six-month periods ended June 30, 2013 and 2012 was as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Demand and savings deposits	$	5,435	$	2,848	$	11,397	$	6,024
Certificates of deposit		4,538		5,037		9,054		10,984
	$	9,973	$	7,885	$	20,451	$	17,008

Maturities Of Time Deposits [Table Text Block]

the scheduled maturities of certificates of deposit at June 30, 2013are as follows:

	June 30, 2013
	(In thousands)
Within one year:
Three (3) months or less	$	492,297
Over 3 months through 1 year		759,405
		1,251,702
Over 1 through 2 years		634,600
Over 2 through 3 years		258,143
Over 3 through 4 years		143,128
Over 4 through 5 years		61,763
	$	2,349,336

XML

Borrowings (Tables)

3 Months Ended

Jun. 30, 2013

Debt Instruments [Abstract]

Schedule of Repurchase Agreements by counterparty [Table Text Block]

At June 30, 2013and December 31, 2012, securities sold under agreements to repurchase (classified by counterparty), excluding accrued interest in the amount of $2.3million at both dates,were as follows

	June 30,				December 31,
	2013				2012
			Fair Value of				Fair Value of
	Borrowing		Underlying		Borrowing		Underlying
	Balance		Collateral		Balance		Collateral
	(In thousands)
UBS Financial Services Inc.	$	500,000	$	597,126	$	500,000	$	616,751
JP Morgan Chase Bank NA		255,000		273,783		412,837		443,436
Credit Suisse Securities (USA) LLC		255,000		270,180		255,000		269,943
Deutsche Bank		255,000		271,702		255,000		273,288
Citigroup Global Markets Inc.		46,573		52,473		150,000		162,652
Barclays Bank		-		-		68,650		77,521
Wells Fargo		-		-		51,444		54,943
Total	$	1,311,573	$	1,465,264	$	1,692,931	$	1,898,534

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 $294thousand,at June 30, 2013:

			Weighted-
		Borrowing	Average		Maturity
Year of Maturity		Balance	Coupon	Settlement Date	Date
(In thousands)
2013	$	25,000	0.360%	6/4/2013	7/5/2013
		50,000	0.360%	6/10/2013	7/10/2013
		100,000	0.390%	6/17/2013	7/16/2013
		25,000	0.400%	6/24/2013	7/24/2013
		25,000	0.410%	6/28/2013	7/30/2013
		225,000
2017		4,844	1.240%	4/3/2012	4/3/2017
2018		30,000	2.187%	1/16/2013	1/16/2018
		25,000	2.177%	1/16/2013	1/16/2018
		55,000
	$	284,844	0.745%

Redemtion Funds [Table Text Block]

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)
2013	$	48,575
2014		6,700
2015		6,700
2016		5,025
	$	67,000

XML

Premises and Equipment

3 Months Ended

6 Months Ended

Jun. 30, 2013

Jun. 30, 2013

Premises and Equipment [Abstract]

PREMISES AND EQUIPMENT

NOTE 6— PREMISES AND EQUIPMENT

Premises and equipment at June 30, 2013 and December 31, 2012 are stated at cost less accumulated depreciation and amortization as follows:

	Useful Life	June 30,		December 31,
	(Years)	2013		2012
		(In thousands)
Land	—	$	5,677	$	2,876
Buildings and improvements	40		63,673		63,133
Leasehold improvements	5 — 10		23,637		23,602
Furniture and fixtures	3 — 7		11,685		10,441
Information technology and other	3 — 7		23,271		20,874
			127,943		120,926
Less: accumulated depreciation and amortization			(43,642)		(35,929)
		$	84,301	$	84,997

Depreciation and amortization of premises and equipmenttotaled $3.0 millionand $6.1millionin the quarter and six-month period ended June 30, 2013, respectively, and $1.2million and $2.4million in the quarter and six-month periodendedJune30, 2012, respectively.These are included in the unaudited consolidated statements of operations as part of occupancy and equipment expenses.

XML

Allowance for Loan and Lease Losses (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Individually Evaluated for Impairment		$ 74,783
Residential Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Individually Evaluated for Impairment	81,849	74,783
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	8,879	5,334
Impaired Mortgage loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Individually Evaluated for Impairment	81,800	74,800
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	8,900	5,300
Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Individually Evaluated for Impairment	43,831	46,199
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	5,795	4,121
Impaired commercial loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Individually Evaluated for Impairment	43,800	46,200
Financing Receivable Allowance For Credit Losses Individually Evaluated For Impairment1	$ 5,800	$ 4,100

XML

Related Party Transactions (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Loans and Leases Receivable, Related Parties [Roll Forward]
Balance	$ 8,688	$ 5,238	$ 6,055	$ 3,772
New loans	0	0	4,234	1,505
Repayments	(657)	(180)	(2,026)	(219)
Balance	$ 8,031	$ 5,058	$ 8,031	$ 5,058

XML

Loans Receivable (Tables)

3 Months Ended

Jun. 30, 2013

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

Loans And Leases Receivable Net Reported Amount Covered And Not Covered [Table Text Block]

The composition of the Company's loan portfolio at June 30, 2013 and December 31, 2012 was as follows

	June 30,		December 31,
	2013		2012
	(In thousands)
Loans not covered under shared-loss agreements with FDIC:
Originated and other loans and leases held for investment:
Mortgage	$	755,298	$	804,942
Commercial		702,074		353,930
Auto and leasing		233,092		50,720
Consumer		89,608		48,136
		1,780,072		1,257,728
Acquired loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		140,234		317,244
Commercial secured by real estate		14,519		29,215
Auto		373,587		457,894
Consumer		62,751		68,878
		591,091		873,231
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Commercial		747,077		942,267
Construction		140,060		196,692
Mortgage		781,389		810,135
Auto		462,691		554,938
Consumer		88,375		118,171
		2,219,592		2,622,203
		4,590,755		4,753,162
Deferred loan fees, net		(831)		(3,463)
Loans receivable		4,589,924		4,749,699
Allowance for loan and lease losses on non-covered loans		(46,625)		(39,921)
Loans receivable, net		4,543,299		4,709,778
Mortgage loans held-for-sale		78,350		64,145
Total loans not covered under shared-loss agreements with FDIC, net		4,621,649		4,773,923
Loans covered under shared-loss agreements with FDIC:
Loans secured by 1-4 family residential properties		123,507		128,811
Construction and development secured by 1-4 family residential properties		16,478		15,969
Commercial and other construction		275,489		289,070
Leasing		943		7,088
Consumer		6,955		8,493
Total loans covered under shared-loss agreements with FDIC		423,372		449,431
Allowance for loan and lease losses on covered loans		(53,992)		(54,124)
Total loans covered under shared-loss agreements with FDIC, net		369,380		395,307
Total loans, net	$	4,991,029	$	5,169,230

Past Due Financing Receivables [Table Text Block]

The following table presents the aging of the recorded investment in gross originated and other loans held for investment as of June 30, 2013 and December 31, 2012 by class ofloans. Mortgage loans past due included delinquent loans in the GNMA buy-back option program. Servicers of loans underlying GNMA mortgage-backed securities must report as their own assets the defaulted loans that they have the option (but not the obligation) to repurchase, even when they elect not to exercise that option

	June 30, 2013
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	-	$	2,937	$	6,993	$	9,930	$	79,666	$	89,596	$	6
Years 2003 and 2004		-		5,413		3,429		8,842		117,754		126,596		-
Year 2005		-		2,136		1,431		3,567		65,196		68,763		-
Year 2006		-		3,369		2,838		6,207		87,614		93,821		-
Years 2007, 2008 and 2009		-		2,863		3,407		6,270		104,169		110,439		433
Years 2010, 2011, 2012 and 2013		-		391		2,115		2,506		96,270		98,776		76
		-		17,109		20,213		37,322		550,669		587,991		515
Non-traditional		-		1,520		2,212		3,732		42,695		46,427		-
Loss mitigation program		-		4,993		14,287		19,280		68,335		87,615		1,606
		-		23,622		36,712		60,334		661,699		722,033		2,121
Home equity secured personal loans		-		-		12		12		740		752		-
GNMA's buy-back option program		-		-		32,513		32,513		-		32,513		-
		-		23,622		69,237		92,859		662,439		755,298		2,121
Commercial
Commercial secured by real estate		11,033		1,381		12,694		25,108		386,236		411,344		-
Other commercial and industrial		324		66		753		1,143		289,587		290,730		-
		11,357		1,447		13,447		26,251		675,823		702,074		-
Consumer		670		165		370		1,205		88,403		89,608		-
Auto and leasing		8,826		2,075		1,096		11,997		221,095		233,092		-
Total	$	20,853	$	27,309	$	84,150	$	132,312	$	1,647,760	$	1,780,072	$	2,121

	December 31, 2012
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	6,906	$	2,116	$	11,363	$	20,385	$	80,883	$	101,268	$	-
Years 2003 and 2004		12,048		5,206		18,162		35,416		114,446		149,862		-
Year 2005		4,983		1,746		8,860		15,589		65,312		80,901		-
Year 2006		9,153		3,525		15,363		28,041		85,045		113,086		-
Years 2007, 2008 and 2009		2,632		1,682		8,965		13,279		108,358		121,637		-
Years 2010, 2011 and 2012 and 2012		632		769		1,162		2,563		64,084		66,647		-
		36,354		15,044		63,875		115,273		518,128		633,401		-
Non-traditional		2,850		1,067		11,160		15,077		42,742		57,819		-
Loss mitigation program		8,933		4,649		19,989		33,571		53,739		87,310
		48,137		20,760		95,024		163,921		614,609		778,530		-
Home equity secured personal loans		-		-		10		10		726		736		-
GNMA's buy-back option program		-		-		25,676		25,676		-		25,676		-
		48,137		20,760		120,710		189,607		615,335		804,942		-
Commercial
Commercial secured by real estate		9,062		271		15,335		24,668		226,606		251,274		-
Other commercial and industrial		345		189		2,378		2,912		99,744		102,656		-
		9,407		460		17,713		27,580		326,350		353,930		-
Consumer		747		92		409		1,248		46,888		48,136		-
Auto and leasing		251		129		131		511		50,209		50,720		-
Total	$	58,542	$	21,441	$	138,963	$	218,946	$	1,038,782	$	1,257,728	$	-

	June 30, 2013
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Commercial	$	291	$	134	$	493	$	918	$	139,316	$	140,234	$	-
Commercial secured by real estate		9		-		-		9		14,510		14,519		-
Auto		8,849		1,892		674		11,415		362,172		373,587		-
Consumer		1,767		7		1,069		2,843		59,908		62,751		-
Total	$	10,916	$	2,033	$	2,236	$	15,185	$	575,906	$	591,091	$	-

	December 31, 2012
													Loans 90+
													Days Past
													Due and
	30-59 Days		60-89 Days		90+ Days		Total Past						Still
	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
	(In thousands)
Commercial	$	715	$	76	$	193	$	984	$	316,260	$	317,244	$	-
Commercial secured by real estate		315		-		-		315		28,900		29,215		-
Auto		6,753		1,023		275		8,051		449,843		457,894		-
Consumer		982		-		1,095		2,077		66,801		68,878		-
Total	$	8,765	$	1,099	$	1,563	$	11,427	$	861,804	$	873,231	$	-

Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Acquired During Period [Table Text Block]

The carrying amount corresponding to non-covered loans acquired with deteriorated credit quality, including those accounted under ASC 310-30 by analogy, in the statement of financial condition at June 30, 2013 and December 31, 2012 is as follows:

	June 30, 2013	December 31, 2012
	(In thousands)
Contractual required payments receivable	$ 3,429,294	$ 3,954,484
Less: Non-accretable discount	713,641	741,872
Cash expected to be collected	2,715,653	3,212,612
Less: Accretable yield	496,061	590,409
Carrying amount	$ 2,219,592	$ 2,622,203

The following tables describe the accretable yield and non-accretable discount activity of acquired loans accounted for under ASC 310-30 for the quarter and six-month period ended June 30, 2013

	Quarter Ended June 30, 2013			Six-Month Period Ended June 30, 2013
	(In thousands)
Accretable Yield Activity
Balance at beginning of period		$	542,741		$	590,409
Accretion			(54,427)			(102,095)
Transfer from non-accretable discount			7,747			7,747
Balance at end of period		$	496,061		$	496,061
	Quarter Ended June 30, 2013			Six-Month Period Ended June 30, 2013
	(In thousands)
Non-Accretable Discount Activity
Balance at beginning of period		$	733,126		$	741,872
Principal losses			(11,738)			(20,484)
Transfer to accretable yield			(7,747)			(7,747)
Balance at end of period		$	713,641		$	713,641

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Accretable yield activity
Balance at beginning of period	$	174,107	$	174,878	$	188,008	$	188,822
Accretion		(23,999)		(20,342)		(44,228)		(41,884)
Transfer from non-accretable discount		17,024		22,712		23,352		30,310
Balance at end of period	$	167,132	$	177,248	$	167,132	$	177,248
	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Non-accretable discount activity
Balance at beginning of period	$	214,236	$	379,780	$	237,555	$	412,170
Principal losses		(4,953)		(42,664)		(21,944)		(67,456)
Transfer to accretable yield		(17,024)		(22,712)		(23,352)		(30,310)
Balance at end of period	$	192,259	$	314,404	$	192,259	$	314,404

Covered Loans Carrying Amount [TableText Block]

Covered Loans

The carrying amount of covered loans at June 30, 2013 and December 31, 2012is as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Contractual required payments receivable	$	782,763	$	874,994
Less: Non-accretable discount		192,259		237,555
Cash expected to be collected		590,504		637,439
Less: Accretable yield		167,132		188,008
Carrying amount, gross		423,372		449,431
Less: Allowance for covered loan and lease losses		53,992		54,124
Carrying amount, net	$	369,380	$	395,307

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, 2013 and December 31, 2012:

	June 30,		December 31,
	2013		2012
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year):
Up to the year 2002	$	6,987	$	11,362
Years 2003 and 2004		3,465		18,162
Year 2005		1,481		8,859
Year 2006		2,875		15,363
Years 2007, 2008 and 2009		3,580		8,967
Years 2010, 2011, 2012 and 2013		3,988		1,162
		22,376		63,875
Non-traditional		2,287		11,160
Loss mitigation program		28,450		39,957
		53,113		114,992
Home equity secured personal loans		12		10
		53,125		115,002
Commercial
Commercial secured by real estate		29,491		26,517
Other commercial and industrial		2,939		2,989
		32,430		29,506
Consumer		370		442
Auto and leasing		1,096		131
Acquired loans accounted under ASC 310-20
Commercial		493		193
Auto		674		275
Consumer		1,069		1,095
		2,236		1,563
Total non-accrual loans	$	89,257	$	146,644

XML

Offsetting Arrangements (Tables)

3 Months Ended

Jun. 30, 2013

Offsetting [Abstract]

Offsetting Assets [Table Text Block]

The following table presents derivative financial instruments and secured financing transactions that are subject to enforceable netting arrangements, but do not meet the applicable offsetting criteria and therefore were not offset in our unaudited consolidated statements of financial condition, as of the dates indicated:

		June 30, 2013
		Net amount of
		Assets Presented
		in Statement				Cash
		of Financial		Financial		Collateral		Net
		Condition		Instruments		Received		Amount
		(In thousands)
Derivatives		$	19,655	$	-	$	-	$	19,655
Total		$	19,655	$	-	$	-	$	19,655
		December 31, 2012
		Net amount of
		Assets Presented
		in Statement				Cash
		of Financial		Financial		Collateral		Net
		Condition		Instruments		Received		Amount
		(In thousands)
Derivatives		$	21,889	$	-	$	-	$	21,889
Resale agreements and securities borrowings	(1)		80,000		-		-		80,000
Total		$	101,889	$	-	$	-	$	101,889
(1) Excludes the impact of non-cash collateral. These secured financing transactions are fully collateralized.

Offsetting Liabilities [Table Text Block]

The following table presents derivative financial instruments and secured financing transactions subject to enforceable netting arrangements that do not meet the applicable offsetting criteria and therefore were not offset in our unaudited consolidated statements of financial condition, as of the dates indicated:

		June 30, 2013
		Net amount of
		Liabilities
		Presented
		in Statement				Cash
		of Financial		Financial		Collateral		Net
		Condition		Instruments		Provided		Amount
		(In thousands)
Derivatives		$	19,534	$	-	$	-	$	19,534
Repurchase agreements and securities lending	(1)		1,311,573		-		-		1,311,573
Total		$	1,331,107	$	-	$	-	$	1,331,107
		December 31, 2012
		Net amount of
		Liabilities
		Presented
		in Statement				Cash
		of Financial		Financial		Collateral		Net
		Condition		Instruments		Provided		Amount
		(In thousands)
Derivatives		$	21,302	$	-	$	-	$	21,302
Repurchase agreements and securities lending	(1)		1,692,931		-		-		1,692,931
Total		$	1,714,233	$	-	$	-	$	1,714,233
(1) Excludes the impact of non-cash collateral. These secured financing transactions are fully collateralized.

XML

Fair Value (Reconciliation of assets and liabilities using significant unobservable inputs (Level 3)) (Details) (USD $) In Thousands, unless otherwise specified		3 Months Ended		6 Months Ended			3 Months Ended	6 Months Ended	3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Dec. 31, 2011 Servicing Assets [Member]	Jun. 30, 2013 Fair Value, Measurements, Recurring [Member]	Jun. 30, 2012 Fair Value, Measurements, Recurring [Member]	Jun. 30, 2013 Fair Value, Measurements, Recurring [Member]	Jun. 30, 2012 Fair Value, Measurements, Recurring [Member]	Jun. 30, 2012 Fair Value, Measurements, Recurring [Member] Asset-backed Securities, Securitized Loans and Receivables [Member]	Jun. 30, 2012 Fair Value, Measurements, Recurring [Member] Collateralized Mortgage Obligations [Member]	Jun. 30, 2012 Fair Value, Measurements, Recurring [Member] Collateralized Mortgage Obligations [Member]	Jun. 30, 2013 Fair Value, Measurements, Recurring [Member] Other Debt Obligations [Member]	Jun. 30, 2012 Fair Value, Measurements, Recurring [Member] Other Debt Obligations [Member]	Jun. 30, 2013 Fair Value, Measurements, Recurring [Member] Other Debt Obligations [Member]	Jun. 30, 2012 Fair Value, Measurements, Recurring [Member] Other Debt Obligations [Member]	Jun. 30, 2013 Fair Value, Measurements, Recurring [Member] Derivative Financial Instruments, Assets [Member]	Jun. 30, 2012 Fair Value, Measurements, Recurring [Member] Derivative Financial Instruments, Assets [Member]	Jun. 30, 2013 Fair Value, Measurements, Recurring [Member] Derivative Financial Instruments, Assets [Member]	Jun. 30, 2012 Fair Value, Measurements, Recurring [Member] Derivative Financial Instruments, Assets [Member]	Jun. 30, 2013 Fair Value, Measurements, Recurring [Member] Servicing Assets [Member]	Jun. 30, 2012 Fair Value, Measurements, Recurring [Member] Servicing Assets [Member]	Jun. 30, 2013 Fair Value, Measurements, Recurring [Member] Servicing Assets [Member]	Jun. 30, 2012 Fair Value, Measurements, Recurring [Member] Servicing Assets [Member]	Jun. 30, 2013 Fair Value, Measurements, Recurring [Member] Derivative Financial Instruments, Liabilities [Member]	Jun. 30, 2012 Fair Value, Measurements, Recurring [Member] Derivative Financial Instruments, Liabilities [Member]	Jun. 30, 2013 Fair Value, Measurements, Recurring [Member] Derivative Financial Instruments, Liabilities [Member]	Jun. 30, 2012 Fair Value, Measurements, Recurring [Member] Derivative Financial Instruments, Liabilities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance	$ 10,454	$ 32,150	$ 50,627	$ 31,333	$ 57,721	$ 10,530	$ 29,643	$ 26,758	$ 20,042	$ 9,882	$ 20,012	$ 10,024	$ 15,404	$ 12,515	$ 13,233	$ 9,317	$ 11,543	$ 10,725	$ 10,795		$ (14,839)	$ (12,138)	$ (12,707)	$ (9,362)
Gains (losses) included in earnings		100	(29)	(136)	15	0	0	0	0	0	0	0	616	(1,148)	2,787	2,050	0	0	0	0	(516)	1,119	(2,923)	(2,035)
Changes in fair value of investment securities available for sale included in other comprehensive income		16	(2,247)	46	481	0	(2,381)	488	16	134	46	(7)	0	0	0	0	0	0	0	0	0	0	0	0
New instruments acquired		1,301	499	1,994	919	0	0	0	0	0	0	0	0	0	0	0	1,301	499	1,994	919	0	0	0	0
Principal repayments		(489)	(223)	(557)	(442)	0	18	34	0	0	0	0	0	0	0	0	(489)	(241)	(557)	(476)	0	0	0	0
Amortization		40	107	315	484	0	0	0	0	0	0	(1)	0	0	0	0	0	0	0	0	40	107	315	485
Sale of instruments		0	0	0	(10,530)	(10,530)	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Changes in fair value of servicing assets		639	(207)	762	(121)	0	0	0	0	0	0	0	0	0	0	0	639	(207)	762	(121)	0	0	0	0
Balance	$ 10,454	$ 33,757	$ 48,527	$ 33,757	$ 48,527	$ 0	$ 27,280	$ 27,280	$ 20,058	$ 10,016	$ 20,058	$ 10,016	$ 16,020	$ 11,367	$ 16,020	$ 11,367	$ 12,994	$ 10,776	$ 12,994	$ 10,776	$ (15,315)	$ (10,912)	$ (15,315)	$ (10,912)

XML

Deposits and Related Interest

3 Months Ended

Jun. 30, 2013

Deposits and Related Interest [Abstract]

DEPOSITS AND RELATED INTEREST

NOTE 9— DEPOSITS AND RELATED INTEREST

Total deposits as of June 30, 2013 and December 31, 2012 consist of the following:

	June 30, 2013		December 31, 2012
	(In thousands)
Non-interest bearing demand deposits	$	872,806	$	799,667
Interest-bearing savings and demand deposits		2,331,589		2,282,305
Individual retirement accounts		352,637		376,611
Retail certificates of deposit		688,877		699,983
Institutional certificates of deposits		645,037		602,828
Total core deposits		4,890,946		4,761,394
Brokered deposits		774,092		928,165
Total deposits	$	5,665,038	$	5,689,559

The weighted average interest rate of the Company's deposits was 0.73%at June 30, 2013and1.33% at December 31, 2012, inclusive of non-interest bearing deposits of $934.7million and $799.7million, respectively. Interest expense for the quarters and the six-month periods ended June 30, 2013 and 2012 was as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Demand and savings deposits	$	5,435	$	2,848	$	11,397	$	6,024
Certificates of deposit		4,538		5,037		9,054		10,984
	$	9,973	$	7,885	$	20,451	$	17,008

At June 30, 2013 and December 31, 2012, demand and interest-bearing deposits and certificates of depositincluded deposits of the Puerto Rico Cash & Money Market Fund Inc.,whichamounted to $93.3 million and$101.5 million, respectively, with a weighted average rate of 0.77% and0.77%, and were collateralized with investment securities with a fair value of $68.3million and$80.3 million, respectively.

At June 30, 2013 and December 31, 2012, time deposits in denominations of $100 thousand or higher, excluding accrued interest and unamortized discounts, amounted to $1.18billion and $1.87 billion, including public fund time deposits from various Puerto Rico government municipalities, agencies, and corporations of $170.5million and$78.3million, respectively, at a weighted average rate of 0.48% at June 30, 2013and0.72% atDecember 31, 2012.

At June 30, 2013 and December 31, 2012, public fund deposits from various Puerto Rico government agencieswere collateralized with investment securities with a fair value of $98.7 million and $114.6 million, respectively, and with commercial loans amounting to $464.1 million atJune 30, 2013 and $485.8 million at December 31, 2012.

Excluding equity indexed options in the amount of $15.3 million, which are used by the Companyto manage its exposure to the S&P 500 Index, and also excluding accrued interest of $3.3million and unamortized deposit discounts in the amount of $9.0million, the scheduled maturities of certificates of deposit at June 30, 2013are as follows:

	June 30, 2013
	(In thousands)
Within one year:
Three (3) months or less	$	492,297
Over 3 months through 1 year		759,405
		1,251,702
Over 1 through 2 years		634,600
Over 2 through 3 years		258,143
Over 3 through 4 years		143,128
Over 4 through 5 years		61,763
	$	2,349,336

The aggregate amount of overdraft in demand deposit accounts that were reclassified to loans amounted to $1.0millionand $2.8million as of June 30, 2013 and December 31, 2012, respectively.

XML

Income taxes (Effective Income Tax Rate Reconciliation) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2013
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation
Income Tax Reconciliation, State and Local Income Taxes	$ 13,230
Income Tax Reconciliation, Tax Exempt Income	3,607
Income Tax Reconciliation Change In Enacted Tax Rate	(36,928)
Income Tax Reconciliation, Other Adjustments	2,497
Total Income Tax Expense (Benefit)	$ (24,808)
Effective Income Tax Rate Continuing Operations Tax Rate Reconciliation Abstract
Effective Income Tax Rate Reconciliation State And Local Income Taxes	39.00%
Effective Income Tax Rate Reconciliation Tax Exempt Income	10.63%
Effective Income Tax Rate Reconciliation Change In Enacted Tax Rate	(108.85%)
Effective Income Tax Rate Reconciliation Other Adjustments	7.35%
Effective Income Tax Rate Continuing Operations	(73.13%)

XML

Derivative Activities (Narratives) (Details) (USD $)			3 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Interest Rate Cap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Notional Amount Purchased Option	$ 49,100,000	$ 66,600,000
Embedded Derivative, Fair Value of Embedded Derivative Liability	15,300,000	12,700,000
Notional Amount Embedded Option	42,900,000	62,300,000
Derivative, Notional Amount			94,000,000
Unrealized Gain (Loss) on Interest Rate Cash Flow Hedges, Pretax, Accumulated Other Comprehensive Income (Loss)			$ 13,200,000

XML

Allowance for Loan and Lease Losses

3 Months Ended

6 Months Ended

Jun. 30, 2013

Jun. 30, 2013

Loans Receivable [Abstract]

Allowance For Credit Losses Text Block

NOTE 5 - ALLOWANCE FOR LOAN AND LEASE LOSSES

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 creditquality subsequent to acquisition, and (ii) for loans accounted for under ASC 310-20, the inherent losses in the loans exceed the remaining creditdiscount recorded at the time of acquisition.

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 associatedloans for our originated and other loans held for investment portfolio by segment for the periods indicated:

	Quarter Ended June 30, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Balance at beginning of period	$	22,889	$	16,314	$	1,313	$	1,741	$	77	$	42,334
Charge-offs		(29,120)		(2,886)		(323)		(709)		-		(33,038)
Recoveries		-		234		43		209		-		486
Provision for non-covered loan and lease losses		27,606		3,961		1,309		2,400		643		35,919
Balance at end of period	$	21,375	$	17,623	$	2,342	$	3,641	$	720	$	45,701

	Quarter Ended June 30, 2012
	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Balance at beginning of period	$	18,967	$	15,045	$	1,328	$	510	$	1,511	$	37,361
Charge-offs		(1,948)		(1,721)		(184)		-		-		(3,853)
Recoveries		-		34		56		4		-		94
Provision for (recapture of) non-covered loan and lease losses		2,769		2,620		(202)		(317)		(1,070)		3,800
Balance at end of period	$	19,788	$	15,978	$	998	$	197	$	441	$	37,402

	Six-Month Period Ended June 30, 2012
	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Balance at beginning of period	$	21,652	$	12,548	$	1,423	$	845	$	542	$	37,010
Charge-offs		(2,869)		(3,358)		(366)		(31)		-		(6,624)
Recoveries		-		101		107		8		-		216
Provision for (recapture of) non-covered loan and lease losses		1,005		6,687		(166)		(625)		(101)		6,800
Balance at end of period	$	19,788	$	15,978	$	998	$	197	$	441	$	37,402

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 quarter and six-month period ended June 30, 2013:

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

	June 30, 2013
	Commercial		Consumer		Auto		Unallocated		Total
Allowance for loan and lease losses:
Ending allowance balance attributable to loans:
Collectively evaluated for impairment		924		-		-		-		924
Total ending allowance balance	$	924	$	-	$	-	$	-	$	924
Loans:
Collectively evaluated for impairment		154,753		62,751		373,587		-		591,091
Total ending loan balance	$	154,753	$	62,751	$	373,587	$	-	$	591,091

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 $43.8million and $46.2million at June 30, 2013 and December 31, 2012, respectively. The impaired commercial loans were measured based on the fair value of collateral or the present value of cash flows method, including those identified as troubled-debt restructurings. The valuation allowance for impaired commercial loans amounted to approximately $5.8millionand $4.1 million at June 30, 2013 and December 31, 2012, respectively. The total investment in impaired mortgage loans was $81.8millionand $74.8million at June 30, 2013 and December 31, 2012, 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 $8.9 million and $5.3million at June 30, 2013 and December 31,2012, respectively.

The Company's recorded investment in commercial and mortgage loans that were individually evaluated forimpairment, excluding loans accounted for under ASC 310-30, and the related allowance for loan and lease losses at June 30,2013 and December 31, 2012 are as follows:

Originated and Other Loans and Leases Held for Investment

	June 30, 2013
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance:
Commercial	$	22,168	$	19,276	$	5,795	30%
Residential troubled-debt restructuring		85,271		81,849		8,879	11%
Impaired loans with no specific allowance:
Commercial		31,334		24,555		N/A	N/A
Total investment in impaired loans	$	138,773	$	125,680	$	14,674	12%

	December 31, 2012
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance
Commercial	$	16,666	$	14,570	$	4,121	28%
Residential troubled-debt restructuring		76,859		74,783		5,334	7%
Impaired loans with no specific allowance
Commercial		36,293		31,629		N/A	N/A
Total investment in impaired loans	$	129,818	$	120,982	$	9,455	8%
Acquired Loans Accounted for under ASC-310-20 (Loans with revolving feature and/or acquired at a premium)
	June 30, 2013
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial		36,293		31,629		N/A	N/A
Total investment in impaired loans	$	36,293	$	31,629	$	-	0%

	Six-Month Period Ended June 30,
	2013				2012
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
Impaired loans with specific allowance
Commercial	$	322	$	17,789	$	264	$	20,516
Residential troubled-debt restructuring		1,273		80,914		874		59,466
Impaired loans with no specific allowance
Commercial		364		25,304		104		21,864
Total interest income from impaired loans	$	1,959	$	124,007	$	1,242	$	101,846

The following table presents troubled-debt restructurings for which there was a payment default during the twelve-month periods ended June 30, 2013 and 2012:

	Twelve-Month Period Ended June 30,
	2013			2012
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Mortgage loans	48	$	6,414	32	$	4,110
Consumer	2	$	29	-	$	-

Credit Quality Indicators

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

The Company uses the following definitions for risk ratings:

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

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

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

Loss: Loans classified as “loss” are considered uncollectible and of such little value that their continuanceas bankable assets is not warranted. This classification does not mean that the asset has absolutely norecovery or salvage value, but rather that it is not practical or desirable to defer writing off this worthlessloan even though partial recovery may be affected 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, 2013 and December 31, 2012, and based on the most recent analysis performed, the risk category of gross non-covered originated and acquiredloans accounted for under ASC 310-20 subject to risk rating by class of loans is as follows:

	June 30, 2013
	Risk Ratings
											Individually
	Balance				Special						Measured for
	Outstanding		Pass		Mention		Substandard		Doubtful		Impairment
	(In thousands)
Commercial - originated and other loans held for investment
Commercial secured by real estate	$	412,958	$	346,115	$	29,355	$	1,293	$	282	$	35,913
Other commercial and industrial		289,117		278,319		2,763		118		-		7,918
		702,075		624,434		32,118		1,411		282		43,831
Commercial - acquired loans (under ASC 310-20)
Commercial secured by real estate		14,519		14,031		245		244		-		-
Other commercial and industrial		140,234		137,786		727		1,721		-		-
		154,753		151,817		972		1,965		-		-
Total	$	856,828	$	776,251	$	33,090	$	3,376	$	282	$	43,831

	December 31, 2012
	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	$	251,274	$	183,033	$	23,928	$	2,127	$	99	$	42,087
Other commercial and industrial		102,656		85,806		8,569		4,169		-		4,112
		353,930		268,839		32,497		6,296		99		46,199
Commercial - acquired loans (under ASC 310-20)
Construction and commercial real estate		20,337		19,701		245		391		-		-
Commercial and industrial		317,632		315,085		213		2,334		-		-
		337,969		334,786		458		2,725		-		-
Total	$	691,899	$	603,625	$	32,955	$	9,021	$	99	$	46,199

For residential and consumer loan classes, the Company evaluates credit quality based on the delinquency status of the loan. As of June 30, 2013 and December 31, 2012, and based on the most recent analysis performed, the risk category of non-covered gross originated loans and acquired loans accounted for under ASC 310-20 not subject to risk rating by class of loans is as follows:

	June 30, 2013
	Delinquency
															Individually
	Balance														Measured for
	Outstanding		0-29 days		30-59 days		60-89 days		90-119 days		120-364 days		365+ days		Impairment
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year)
Up to the year 2002	$	89,596	$	84,184	$	-	$	2,937	$	367	$	87	$	1,719	$	302
Years 2003 and 2004		126,596		117,665		-		5,413		1,319		737		1,373		89
Year 2005		68,763		65,026		-		2,136		663		267		502		169
Year 2006		93,821		87,259		-		3,369		968		440		1,273		512
Years 2007, 2008 and 2009		110,439		104,041		-		2,782		342		2,199		676		399
Years 2010, 2011, 2012 and 2013		98,776		94,271		-		391		951		800		365		1,998
		587,991		552,446		-		17,028		4,610		4,530		5,908		3,469
Non-traditional		46,427		42,695		-		1,520		807		160		1,152		93
Loss mitigation program		87,615		7,980		-		98		47		234		969		78,287
		722,033		603,121		-		18,646		5,464		4,924		8,029		81,849
Home equity secured personal loans		752		740		-		-		-		-		12		-
GNMA's buy-back option program		32,513		-		-		-		5,782		15,775		10,956		-
		755,298		603,861		-		18,646		11,246		20,699		18,997		81,849
Consumer		89,608		88,218		660		156		167		199		-		208
Auto and Leasing		233,092		221,095		8,826		2,075		759		337		-		-
		1,077,998		913,174		9,486		20,877		12,172		21,235		18,997		82,057
Acquired loans (under ASC 310-20)
Auto		373,588		362,173		8,849		1,892		495		179		-		-
Consumer		62,751		59,908		1,767		7		1,054		15		-		-
		436,339		422,081		10,616		1,899		1,549		194		-		-
Total	$	1,514,337	$	1,335,255	$	20,102	$	22,776	$	13,721	$	21,429	$	18,997	$	82,057

	December 31, 2012
	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	$	101,268	$	80,715	$	6,907	$	2,116	$	886	$	3,720	$	6,442	$	482
Years 2003 and 2004		149,862		114,341		12,048		5,206		2,082		3,994		11,533		658
Year 2005		80,900		65,245		4,983		1,746		1,202		1,846		5,727		151
Year 2006		113,086		84,926		9,012		3,525		1,530		5,103		8,695		295
Years 2007, 2008 and 2009		121,639		108,357		2,632		1,682		641		2,532		5,732		63
Years 2010, 2011 and 2012		66,646		64,084		632		769		249		452		460		-
		633,401		517,668		36,214		15,044		6,590		17,647		38,589		1,649
Non-traditional		57,819		42,742		2,850		1,067		455		2,287		8,418		-
Loss mitigation program		87,310		9,595		606		128		102		253		3,492		73,134
		778,530		570,005		39,670		16,239		7,147		20,187		50,499		74,783
Home equity secured personal loans		736		726		-		-		-		-		10		-
GNMA's buy back option program		25,676		-		-		-		6,064		10,659		8,953		-
		804,942		570,731		39,670		16,239		13,211		30,846		59,462		74,783
Consumer		48,136		46,888		747		92		188		218		3		-
Auto and leasing		50,720		50,209		251		129		46		85		-		-
		903,798		667,828		40,668		16,460		13,445		31,149		59,465		74,783
Acquired loans (under ASC 310-20)
Mortgage		1,591		1,070								521
Auto		457,894		449,843		6,753		1,023		264		11		-		-
Consumer		68,878		66,801		982		-		1,089		4		2		-
		528,363		517,714		7,735		1,023		1,353		536		2		-
Total	$	1,432,161	$	1,185,542	$	48,403	$	17,483	$	14,798	$	31,685	$	59,467	$	74,783

The reduction in mortgage loans over 90 days past due from December 31, 2012 is due to the reclassification of certain non-performing residential mortgage loans originated before 2010, ,with the a net book value of $55.0 million to the loan held-for-sale category.

Non-coveredAcquired Loans Accounted under ASC 310-30

Loans acquired in the BBVAPR Acquisition accounted for under ASC 310-30 were recognized at fair value as of December 18, 2012, which included the impact of expected credit losses, and therefore, no allowance for credit losses was recorded at the acquisition date. To the extent credit deterioration occurs after the date of acquisition, the Company would record an allowance for loan and lease losses. Management determined that there was no need to record an allowance for loan and lease losses on loans acquired in the BBVAPR Acquisition accounted for under ASC 310-30 as of June 30, 2013 and December 31, 2012.

The changes in the allowance for loan and lease losses on covered loans for the quarters and six-monthperiodsended June 30, 2013 and 2012 were as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Balance at beginning of the period	$	52,974	$	56,437	$	54,124	$	37,256
Provision for covered loan and lease losses, net		1,210		1,467		1,882		8,624
FDIC shared-loss portion of provision for (recapture of)
covered loan and lease losses, net		(192)		724		(2,014)		12,748
Balance at end of the period	$	53,992	$	58,628	$	53,992	$	58,628

	June 30, 2013
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired covered loan pools with specific allowance
Loans secured by 1-4 family residential properties	$	51,613	$	36,483	$	7,072	19%
Construction and development secured by 1-4 family residential properties		66,024		16,170		6,741	42%
Commercial and other construction		242,054		75,941		39,504	52%
Consumer		12,790		6,818		675	10%
Total investment in impaired covered loan pools	$	372,481	$	135,412	$	53,992	40%

	December 31, 2012
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired covered loan pools with specific allowance
Loans secured by 1-4 family residential properties	$	45,208	$	29,482	$	4,986	17%
Construction and development secured by 1-4 family residential properties		68,255		15,185		6,137	40%
Commercial and other construction		252,373		121,237		42,323	35%
Consumer		14,494		8,493		678	8%
Total investment in impaired covered loan pools	$	380,330	$	174,397	$	54,124	31%

	Six-Month Period Ended June 30, 2013
							Auto and
	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Balance at beginning of period	$	21,092	$	17,072	$	856	$	533	$	368	$	39,921
Charge-offs		(31,707)		(3,444)		(569)		(800)		-		(36,520)
Recoveries		-		262		107		216		-		585
Provision for non-covered loan and lease losses		31,990		3,733		1,948		3,692		352		41,715
Balance at end of period	$	21,375	$	17,623	$	2,342	$	3,641	$	720	$	45,701

	June 30, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	8,879	$	5,795	$	-	$	-	$	-	$	14,674
Collectively evaluated for impairment		12,496		11,828		2,342		3,641		720		31,027
Total ending allowance balance	$	21,375	$	17,623	$	2,342	$	3,641	$	720	$	45,701
Loans:
Individually evaluated for impairment	$	81,849	$	43,831	$	-	$	-	$	-	$	125,680
Collectively evaluated for impairment		673,449		658,244		89,608		233,091		-		1,654,392
Total ending loan balance	$	755,298	$	702,075	$	89,608	$	233,091	$	-	$	1,780,072

	December 31, 2012
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	5,334	$	4,121	$	-	$	-	$	-	$	9,455
Collectively evaluated for impairment		15,758		12,951		856		533		368		30,466
Total ending allowance balance	$	21,092	$	17,072	$	856	$	533	$	368	$	39,921
Loans:
Individually evaluated for impairment	$	74,783	$	46,199	$	-	$	-	$	-	$	120,982
Collectively evaluated for impairment		730,159		307,731		48,136		50,720		-		1,136,746
Total ending loans balance	$	804,942	$	353,930	$	48,136	$	50,720	$	-	$	1,257,728

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

	Quarter Ended June 30,
	2013				2012
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)
Impaired loans with specific allowance
Commercial	$	255	$	17,049	$	132	$	16,105
Residential troubled-debt restructuring		682		83,081		461		62,548
Impaired loans with no specific allowance
Commercial		226		23,304		49		25,031
Total interest income from impaired loans	$	1,163	$	123,434	$	642	$	103,684

Modifications

The following table presents the troubled-debt restructurings during the quarters and six-month periods ended June 30, 2013 and 2012:

	Quarter Ended June 30, 2013
	Number of contracts	Pre Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage loans	42	$	5,372	6.47%	355	$	5,715	4.26%	420
Commercial loans	2		1,842	8.99%	87		1,842	4.00%	66
Consumer loans	2		18	13.67%	41		18	13.67%	60
	Six-Month Period Ended June 30, 2013
	Number of contracts	Pre Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage loans	86	$	10,555	6.56%	342	$	11,288	4.59%	417
Commercial loans	2		1,842	8.99%	87		1,842	4.00%	66
Consumer loans	2		18	13.67%	41		18	13.67%	60
	Quarter Ended June 30, 2012
	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 loans	45	$	6,028	6.52%	290	$	6,380	4.95%	378
Commercial loans	3		3,698	6.25%	65		3,968	6.08%	71
	Six-Month Period Ended June 30, 2012
	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 loans	103	$	15,473	6.50%	313	$	16,419	4.96%	393
Commercial loans	6		5,600	5.80%	49		5,407	6.22%	65

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.

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.

Provision for covered loans and lease losses for the quarter and six-month period ended June 30, 2013 was $1.2 million and $1.9 million, respectively, reflecting the Company's quarterly 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. During the quarter ended June 30, 2013, a commercial real estate loan pool underperformed, requiring additional allowance for the quarter. The six-month period ended June 30, 2013, is mainly affected by the aforementioned commercial real estate pool together with two pools of non-performing residential mortgage loans pools. The six-month period ended June 30, 2013 was benefited by the reversal of the allowance of pools of commercial and industrial loans and pools of commercial loans secured by real estate.

The Company's recorded investment in covered loan pools that have recorded impairments and their relatedallowance for covered loan and lease losses as of June 30, 2013 and December 31, 2012 are as follows:

XML

Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities:
Net income	$ 58,731	$ 25,610
Adjustments to reconcile net income to net cash used in operating activities:
Amortization of deferred loan origination fees, net of costs	486	297
Amortization of discount to fair market value of acquired loan	3,504	0
Amortization of investment securities premiums, net of accretion of discounts	12,624	25,558
Amortization of core deposit intangible	1,288	75
Amortization of fair value premiums on acquired deposits	9,649	0
Net amortization (accretion) of FDIC shared-loss indemnification asset	32,836	10,410
Other Impairments On Securities	7	0
Other-than-temporary impairments on securities		0
Amortization of prepaid FDIC assesment	0	2,613
Depreciation and amortization of premises and equipment	5,265	2,373
Deferred income taxes, net	(30,776)	(420)
Provision for covered and non-covered loan and lease losses, net	47,326	15,424
Stock-based compensation	888	787
(Gain) loss on:
Sale of securities	0	(19,338)
Sale of mortgage loans held for sale	(1,771)	(2,898)
Derivatives	(1,271)	108
Early extinguishment of repurchase agreements	1,061	0
Profit (Loss) from Real Estate Operations	3,109	1,284
Sale of other repossessed asset	(464)	0
Sale of premises and equipment	0	(86)
Originations and purchases of loans held-for-sale	(179,127)	(93,940)
Proceeds from sale of loans held-for-sale	68,809	49,388
Net (increase) decrease in:
Trading securities	(1,714)	(34)
Accrued interest receivable	46	2,924
Servicing Asset at Fair Value, Period Increase (Decrease), Total	(2,199)	(322)
Other assets	20,730	4,259
Net increase (decrease) in:
Accrued interest on deposits and borrowings	(995)	(4,498)
Accrued expenses and other liabilities	12,093	(13,167)
Net cash provided by (used in) operating activities	58,941	6,407
Purchases of:
Investment securities available-for-sale	(17,802)	(558,201)
Investment securities held-to-maturity	0	(119,025)
FHLB stock	(12,465)	0
Maturities and Redemptions of [Abstract]
Investment securities available-for-sale	313,866	378,144
Investment securities held-to-maturity	0	102,251
FHLB Stock	28,720	911
Premises and equipment	1,667	368
Proceeds from sale:
Proceeds from Sale and Maturity of Available-for-sale Securities	75,660	553,602
Foreclosed real estate	18,219	4,639
Sale of other repossessed asset	12,912	1,941
Premises and equipment	1,667	368
Origination and purchase of loans, excluding loans held-for-sale	(422,590)	(112,974)
Principal repayment of loans, including covered loans	528,274	128,340
Reimbursements from the FDIC on shared-loss agreements	18,696	39,729
Additions to premises and equipment	(6,237)	(1,225)
Net change in securities purchased under agreements to resell	80,000	(225,000)
Net cash provided by investing activities	618,920	193,500
Net increase (decrease) in:
Deposits	(36,125)	(212,846)
Short Term Borrowings	(92,210)	0
Securities sold under agreements to repurchase	(381,358)	0
FHLB advances	(231,617)	5,070
Subordinated Liabilities, Period Increase (Decrease)	(46,017)	0
FDIC-guaranteed term notes	0	(105,000)
Exercise of stock options	185	394
Proceeds from Issuance of Preferred Stock and Preference Stock	(23)	0
ProceedsFromIssuanceOfCommonStock	(16)	0
Repayments of purchase money note issued to the FDIC	0	0
Purchase of treasury stock	0	(7,022)
Termination of derivative instruments	1,348	(124)
Dividends paid on preferred stock	(6,931)	(2,401)
Dividends paid on common stock	(5,479)	(4,886)
Net cash used in financing activities	(798,243)	(326,815)
Net change in cash and cash equivalents	(120,382)	(126,908)
Cash and cash equivalents at beginning of period	868,695	591,487
Cash and cash equivalents at end of period	748,313	464,579
Supplemental Cash Flow Disclosure and Schedule of Non-cash Activities:
Interest paid	40,491	63,266
Income Taxes Paid	378	8,031
Mortgage loans securitized into mortgage-backed securities	89,590	37,730
OtherComprehensiveIncomeLossTransfersFromHeldToMaturityToAvailableForSaleSecuritiesNetOfTax	0	0
Transfer from loans to foreclosed real estate	45,714	11,723
Conversion of preferred stock to common stock	$ 0	$ 0

XML

Income Taxes (Narratives) (Details) (USD $)	3 Months Ended		6 Months Ended	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2012	Dec. 31, 2012
Income Taxes [Abstract]
Unrecognized Tax Benefits, Interest on Income Taxes Accrued	$ 5,600,000			$ 5,300,000
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued	1,700,000			1,400,000
Income Tax Change In Enacted Tax [Line Items]
IBE Tax Rate	0.00%
Maximum Statutory Rate	39.00%			30.00%
Unrecognized Tax Benefits Interest On Income Taxes Accrued Due To Most Recent Acquistion	3,900,000			3,900,000
Unrecognized Tax Benefits Income Tax Penalties And Interest Accrued Due to Most Recent Acquisition	812,000			665,000
Changes due to tax law enacted, Description	On June 30, 2013 the Governor signed Act No. 40 known as “Ley de Redistribución y Ajuste de la Carga Contributiva” (Act of Redistribution and Adjustment of Tax Burden). This Act, along with others signed by the Governor, comprises the budget of the Commonwealth of Puerto Rico for 2013-2014. The main purpose of the 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, and effective for taxable years beginning after December 31,2012 are as follows: (1) the maximum Corporate Income Tax rate was increased from 30% to 39%; (2) the allowance deduction for determining the income subject to surtax was reduced from $750,000 to $75,000 (which must be allocated among the members of a controlled group of corporations; (3) the allowable Net Operating Loss (“NOL”) deduction was reduced to (i) 90% of the corporation’s net income subject to regular tax, for purposes of computing the regular income tax and (ii) 80% of the alternative minimum taxable income for purposes of computing the alternative minimum tax (“AMT”); (4) the NOL carryover period was extended from 10 to 12 years for NOLs incurred after December 31, 2012; (5) a new special tax based on gross income (the “Special Tax”) was added to the Puerto Rico Internal Revenue Code of 2011, as further described below; and (6) a special tax of 1% on insurance premiums earned after June 30, 2013. In the case of non-financial institutions, the Special Tax is paid as part of the AMT and thus is accounted for under the provisions of ASC 740. The applicable rate for non-financial institutions increases gradually from 0.2% for gross income in excess of $1.0 million up to 0.85% for gross income in excess of $1.5 billion. In the case of a controlled group of corporations, the tax rate for all members of the group is determined by the aggregate gross income of all members in the group. In the case of financial institutions, the Special Tax is not part of the AMT calculation thus is accounted for as other tax not subject to the provisions of ASC 740 since the same is based on gross income. The applicable rate for financial institutions is 1%, of which fifty percent (50%) may be claimed as a credit against the financial institution’s applicable income tax.
Tax Effect Reclassified From Accumulated OCI Into Income Tax Provision		166,000	724,000
International Banking Entity [Member]
Income Tax Change In Enacted Tax [Line Items]
Available-for-sale Securities, Gross Unrealized Gain (Loss)	$ 415,000			$ 504,000

XML

Investments (Gross realize gains and losses by category) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Schedule of Available-for-sale Securities [Line Items]
Sale Price	$ 553,592
Book Value	534,263
Available-for-sale Securities, Gross Realized Gains	19,966
Available-for-sale Securities, Gross Realized Losses	628
Collateralized Mortgage Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Sale Price	19,725
Collateralized Mortgage Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Sale Price	427,180
Book Value	407,255
Available-for-sale Securities, Gross Realized Gains	19,935
Available-for-sale Securities, Gross Realized Losses	0
Collateralized Mortgage Backed Securities [Member] | Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Schedule of Available-for-sale Securities [Line Items]
Sale Price	39,484
Book Value	39,483
Available-for-sale Securities, Gross Realized Gains	1
Available-for-sale Securities, Gross Realized Losses	0
Collateralized Mortgage Backed Securities [Member] | Collateralized Mortgage Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Book Value	18,372
Available-for-sale Securities, Gross Realized Gains	1,353
Available-for-sale Securities, Gross Realized Losses	0
Collateralized Mortgage Backed Securities [Member] | US Treasury Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Book Value	349,400
Collateralized Mortgage Backed Securities [Member] | US Government-sponsored Enterprises Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Sale Price	367,971
Securities Investment [Member]
Schedule of Available-for-sale Securities [Line Items]
Sale Price	126,412
Book Value	127,008
Available-for-sale Securities, Gross Realized Gains	31
Available-for-sale Securities, Gross Realized Losses	628
Securities Investment [Member] | US Treasury Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Gross Realized Gains	18,581
Available-for-sale Securities, Gross Realized Losses	0
Securities Investment [Member] | US Government-sponsored Enterprises Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Sale Price	80,000
Book Value	80,000
Available-for-sale Securities, Gross Realized Gains	0
Available-for-sale Securities, Gross Realized Losses	0
Securities Investment [Member] | US States and Political Subdivisions Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Sale Price	35,882
Book Value	36,478
Available-for-sale Securities, Gross Realized Gains	31
Available-for-sale Securities, Gross Realized Losses	628
Securities Investment [Member] | Structured Finance [Member]
Schedule of Available-for-sale Securities [Line Items]
Sale Price	10,530
Book Value	10,530
Available-for-sale Securities, Gross Realized Gains	0
Available-for-sale Securities, Gross Realized Losses	$ 0

XML

Business Combination (Restructuring Reserves and Exit Costs) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013
Restructuring Charges
Total Exit Costs, Payments and Restructuring Reserves	$ 6,336	$ 4,202
Business Exit Costs	5,274	10,808
Payments for Restructuring	(11,334)	(14,734)
Total Exit Costs, Payments and Restructuring Reserves	$ 276	$ 276

XML

Fair Value (Investment securities available-for-sale classified as level 3) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 1,807,335	$ 2,118,825
Investment securities available-for-sale, at fair value	1,836,229	2,194,286
Available for sale - Weighted Average Yield	2.831%	2.90%
Fair Value, Inputs, Level 3 [Member]
Schedule of Available-for-sale Securities [Line Items]
Investment securities available-for-sale, at fair value	20,058	20,012
Other Debt Obligations [Member] | Fair Value, Inputs, Level 3 [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	20,000
Unrealized Gains (Losses)	58
Investment securities available-for-sale, at fair value	$ 20,058
Available for sale - Weighted Average Yield	3.50%

XML

Deposits and Related Interest (Interest expense) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Interest Expense Domestic Deposit Liabilities [Abstract]
Interest Expense, NOW Accounts, Money Market Accounts, and Savings Deposits	$ 5,435	$ 2,848	$ 11,397	$ 6,024
Interest Expense Domestic Deposit Liabilities, Certificates of Deposit	4,538	5,037	9,054	10,984
Total non interest deposits	$ 9,973	$ 7,885	$ 20,451	$ 17,008

XML

Derivative Activities (Tables)

3 Months Ended

Jun. 30, 2013

Derivative Instrument Detail [Abstract]

Schedule Of Derivative Assets And Liabilities At Fair Value [Table Text Block]

The following table details “Derivative Assets” and “Derivative Liabilities” as reflected in the unaudited consolidatedstatements of financial condition at June 30, 2013 and December 31, 2012:

	June 30,		December 31,
	2013		2012
	(In thousands)
Derivative assets:
Options tied to S&P 500 Index	$	16,020	$	13,233
Interest rate swaps not designated as hedges		3,245		8,426
Interest rate caps		270		230
Other		120		-
	$	19,655	$	21,889
Derivative liabilities:
Interest rate swaps designated as cash flow hedges	$	13,187	$	17,665
Interest rate swaps not designated as hedges		3,244		8,365
Interest rate caps		270		230
	$	16,701	$	26,260

The following table shows a summary of these swaps and their terms at June 30, 2013:

XML

Commitments (Future rental commitments under leases) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Operating Leases, Future Minimum Payments Due [Abstract]
2012	$ 5,332
2013	8,402
2014	8,116
2015	7,492
2016	7,965
Thereafter	24,755
Total	$ 62,062

XML

Stockholders' Equity (Changes in Other Comprehensive Income by Components) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended	3 Months Ended			6 Months Ended	12 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2012	Jun. 30, 2013 Quarter [Member]	Mar. 31, 2013 Quarter [Member]	Jun. 30, 2013 Year to Date Period [Member]	Jun. 30, 2013 Year to Date Period [Member]	Dec. 31, 2012 Year to Date Period [Member]	Jun. 30, 2013 Other comprehensive income Quarter [Member]	Jun. 30, 2013 Other comprehensive income Year to Date Period [Member]	Jun. 30, 2013 Other comprehensive income before reclassifications [Member] Quarter [Member]	Jun. 30, 2013 Other comprehensive income before reclassifications [Member] Year to Date Period [Member]	Jun. 30, 2013 Reclassification out of Accumulated Other Comprehensive Income [Member] Quarter [Member]	Jun. 30, 2013 Reclassification out of Accumulated Other Comprehensive Income [Member] Year to Date Period [Member]	Jun. 30, 2013 AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember	Dec. 31, 2012 AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember
Accumulated Other Comprehensive Income [Line Items]
Accumulated Other Comprehensive Income Loss Available For Sale Securities Adjustment Net Of Tax			$ 25,400	$ 58,393	$ 25,400	$ 25,400	$ 68,245	$ (32,993)	$ (42,845)	$ (33,036)	$ (42,934)	$ 43	$ 89
Tax Effect Reclassified From Accumulated OCI Into Income Tax Provision	166	724		(11,342)	(9,634)	(9,634)	(12,365)	1,708	2,731	292	(21)	1,416	2,752	(9,634)	(12,365)
Total			$ 15,766	$ 47,051		$ 15,766	$ 55,880	$ (31,285)	$ (40,114)	$ (32,744)	$ (42,955)	$ 1,459	$ 2,841

XML

Deposits and Related Interest (Deposits by Components) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Deposits, by Component, Alternative [Abstract]
Noninterest-bearing Deposit Liabilities	$ 872,806	$ 799,667
Interest-bearing Deposit Liabilities	2,331,589	2,282,305
Interest-bearing Domestic Deposit, Time Deposits	352,637	376,611
Interest-bearing Domestic Deposit, Certificates of Deposits	688,877	699,983
Interest Bearing Domestic Deposit Certificates Of Deposits Institutional	645,037	602,828
Total Core Deposits	4,890,946	4,761,394
Interest-bearing Domestic Deposit, Brokered	$ 774,092	$ 928,165

XML

Borrowings (Redemption Fund) (Details) (Redemption Fund [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Redemption Fund [Member]
Debt Instrument [Line Items]
Debt Instrument Cumulative Sinking Fund Obligations	$ 48,575
Long-term Debt, Maturities, Repayments of Principal in Next Twelve Months	6,700
Long-term Debt, Maturities, Repayments of Principal in Year Two	6,700
Long-term Debt, Maturities, Repayments of Principal in Year Three	5,025
Total Cumulative Payments Redemption Fund	$ 67,000

XML

Allowance for Loan and Lease Losses (Interest Income Recognized in loans individually evaluated for impairment) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Impaired Financing Receivable Interest Income Accrual Method [Abstract]
Impaired Financing Receivable With Related Allowance Interest Income Accrual Method	$ 1,163		$ 1,959	$ 1,242
Impaired Financing Receivable With No Related Allowance Interest Income Accrual Method	642
Impaired Financing Receivable Average Recorded Investment [Abstract]
Impaired Financing Receivable With Related Allowance Average Recorded Investment	123,434		124,007	101,846
Impaired Financing Receivable With No Related Allowance Average Recorded Investment	103,684
Commercial Loan [Member]
Impaired Financing Receivable Interest Income Accrual Method [Abstract]
Impaired Financing Receivable With Related Allowance Interest Income Accrual Method	255	132	322	264
Impaired Financing Receivable With No Related Allowance Interest Income Accrual Method	226	49	364	104
Impaired Financing Receivable Average Recorded Investment [Abstract]
Impaired Financing Receivable With Related Allowance Average Recorded Investment	17,049	16,105	17,789	20,516
Impaired Financing Receivable With No Related Allowance Average Recorded Investment	23,304	25,031	25,304	21,864
Troubled Debt Restructuring [Member]
Impaired Financing Receivable Interest Income Accrual Method [Abstract]
Impaired Financing Receivable With Related Allowance Interest Income Accrual Method			1,273	874
Impaired Financing Receivable Average Recorded Investment [Abstract]
Impaired Financing Receivable With Related Allowance Average Recorded Investment			$ 80,914	$ 59,466

XML

Loans Receivable (Covered Loan carrying amounts) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Accounts Notes And Loans Receivable Line Items
Financing Receivable Acquired With Deteriorated Credit Quality	$ 3,429,294	$ 3,954,484
Non-acretable discount	713,641	741,872
Cash expected to be collected	2,715,653	3,212,612
Accretable Yield	496,061	590,409
Carrying amount, gross	2,219,592	2,622,203
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	782,763	874,994
Non-acretable discount	192,259	237,555
Cash expected to be collected	590,504	637,439
Accretable Yield	167,132	188,008
Carrying amount, gross	423,372	449,431
Allowance for loan and lease losses	53,992	54,124
Carrying amount, net	$ 369,380	$ 395,307

XML

Deposits and Related Interest (Maturities of Time Deposits) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Maturities of Time Deposits [Abstract]
Time Deposit Maturities Less Than Three Month	$ 492,297
Time Deposit Maturities Three To Twelve Month	759,405
Total Time deposits	1,251,702
Time Deposit Maturities, Year Two	634,600
Time Deposit Maturities, Year Three	258,143
Time Deposit Maturities, Year Four	143,128
Time Deposit Maturities, Year Five	61,763
Time Deposit Maturities, after Year Five	0
Certificates of deposit	$ 2,349,336

XML

Income Taxes

3 Months Ended

Jun. 30, 2013

Income Taxes [Abstract]

INCOME TAXES

NOTE 12— INCOME TAXES

On June 30, 2013 the Governor signed Act No. 40 known as “Ley de Redistribución y Ajuste de la CargaContributiva” (Act of Redistribution and Adjustment of Tax Burden). This Act, along with others signed by the Governor, comprises the budget of the Commonwealth of Puerto Rico for 2013-2014. The main purpose of the 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, and effective for taxable years beginning after December 31,2012 are as follows: (1) the maximum Corporate Income Tax rate was increased from 30% to 39%; (2) the allowance deduction for determining the income subject to surtax was reduced from $750,000 to $75,000 (which must be allocated among the members of a controlled group of corporations; (3) the allowable Net Operating Loss (“NOL”) deduction was reduced to (i) 90% of the corporation's net income subject to regular tax, for purposes of computing the regular income tax and (ii) 80% of the alternative minimum taxable income for purposes of computing the alternative minimum tax (“AMT”); (4) the NOL carryover period was extended from 10 to 12 years for NOLs incurred after December 31, 2012; (5) a new special tax based on gross income (the “Special Tax”) was added to the Puerto Rico Internal Revenue Code of 2011, as further described below; and (6) a special tax of 1% on insurance premiumsearned after June 30, 2013.

In the case of non-financial institutions,the Special Tax is paid as part of the AMT and thus is accounted for under the provisions of ASC 740. The applicable rate for non-financial institutions increases gradually from 0.2% for gross income in excess of $1.0 million up to 0.85% for gross income in excess of $1.5 billion. In the case of a controlled group of corporations, the tax rate for all members of the group is determined by the aggregate gross income of all members in the group. In the case of financial institutions, the Special Tax is not part of the AMT calculation thus is accounted for as other tax not subject to the provisions of ASC 740 since the same is based on gross income. The applicable rate forfinancial institutions is1%, of which fifty percent (50%) may be claimed as a credit against the financial institution'sapplicable income tax.

At June 30, 2013 and December 31, 2012, the Company's net deferred tax asset amounted to $155.2 million and $122.5 million, respectively. Income tax benefitfor the quarter and six-month periodsended June 30, 2013 totaled $31.9 million and $24.8million, respectively.The benefit of both periods is related to the positive effect on the deferred tax asset of the increase in the enacted tax rate from 30% to 39%. Income tax expense for the quarter and six-month period ended June 30, 2012 totaled $1.1 million and $3.0 million, respectively.

At June 30, 2013 and December 31, 2012, OIB had $415 thousand and $504thousand, respectively,in the income tax effect of unrecognized gain on available-for-sale securities included in other comprehensive income. Following the change in OIB'sapplicable tax rate from 5% to 0% as a result of aPuerto 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, 2013 and 2012, $43 thousand and $166 thousand, respectively, related to this residual tax effect from OIB was reclassified from accumulated other comprehensive income into income tax provision. During the six-month periods ended June 30, 2013 and 2012, $89 thousand and $724 thousand, respectively, related to this residual effect from OIB was reclassified from accumulated other comprehensive income to income tax provision.

The Company maintained an effective tax rate for the six-month period ended June 30, 2013 lower than the new maximum marginal statutory rate of 39.00%. The reconciliation of the enacted tax rate and the effective income tax rate for the six-month period ended June 30, 2013 follows:

	Six-Month Period Ended June 30,
	2013
	Amount		Rate
	(Dollars in thousands)
Tax at statutory rates	$	13,230	39.00%
Tax effect of exempt income, net		(3,607)	-10.63%
Effect in deferred taxes due to increase in tax rates
from 30.00% to 39.00%		(36,928)	-108.85%
Other items, net		2,497	7.35%
Income tax benefit	$	(24,808)	-73.13%

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, 2013 was $5.6million (December 31, 2012 - $5.3 million). The Company had accrued $1.7 million at June 30, 2013 (December 31, 2012 - $1.4 million) for the payment of interest and penalties relating to unrecognized tax benefits. As part of the BBVAPR Acquisition, there are unrecognized tax benefits amounting to $3.9million at June 30, 2013 and December 31, 2012. There is also $812 thousand (December 31, 2012 - $665 thousand) in accrued payment of interest and penalties relating to unrecognized tax benefits.

XML

Accrued Interest Receivable and Other Assets

3 Months Ended

Jun. 30, 2013

Loans Receivable [Abstract]

ACCRUED INTEREST RECEIVABLE AND OTHER ASSETS

NOTE 8— ACCRUED INTEREST RECEIVABLE AND OTHER ASSETS

Accrued interest receivable at June 30, 2013 and December 31, 2012 consists of the following:

	June 30,		December 31,
	2013		2012
	(In thousands)
Non-covered loans	$	11,459	$	10,533
Investments		6,049		7,021
	$	17,508	$	17,554

Other assets at June 30, 2013 and December 31, 2012 consist of the following:

	June 30,		December 31,
	2013		2012
	(In thousands)
Prepaid FDIC insurance	$	-	$	6,451
Other prepaid expenses		23,568		19,674
Servicing advances		-		7,976
Mortgage tax credits		8,706		8,706
Core deposit and customer relationship intangibles		13,201		14,490
Investment in Statutory Trust		1,086		1,086
Other repossessed assets		8,921		6,084
Accounts receivable and other assets		48,980		59,175
	$	104,462	$	123,642

On November 12, 2009, the FDIC adopted a final rule requiring insured depository institutions to prepay on December 31, 2009 their estimated quarterly risk-based assessments for the fourth quarter of 2009, and for all of 2010, 2011, and2012, along with each institution's risk-based deposit insurance assessment for the third quarter of 2009. The prepayment balance of the assessment amounted to $6.5 million atDecember 31, 2012.Pursuant to guidelines issued by the FDIC, the assessment due for the first quarter of 2013 paid on June 28, 2013 was offset by the amount of the credit for prepaid assessments.

Other prepaid expenses amounting to $23.6 million and $19.7 million at June 30, 2013 and December 31, 2012, respectively, include prepaid municipal, property and income taxes aggregating to $17.1 million and $12.0million, respectively.

Servicing advances amounting to $8.0 million at December 31, 2012, represent the advances made to BayviewLoan Servicing, LLC in order to service some of the loans acquired in the FDIC-assisted acquisition of Eurobank. This servicing agreementwas terminated effective May 31, 2013.

At June 30, 2013 and December 31, 2012, tax credits for the Companyamounted $8.7 million. Mortgage loan tax credits acquired as part of the BBVAPR Acquisition amounted to $6.3millionand $7.4 millionat June 30, 2013 and December 31, 2012, respectively. These tax credits do not have an expiration date.

As part of the FDIC-assisted acquisition of Eurobank and the recent BBVAPR Acquisition, the Companyrecorded a core deposit intangible representing the value of checking and savings deposits acquired. At June 30, 2013 and December 31, 2012, this core deposit intangible amounted to $8.6millionand $9.5 million, respectively.In addition, as part of the BBVAPR Acquisition on December 18, 2012, the Company recorded a customer relationship intangible amounting to $5.0million representing the value of customer relationships acquired in the broker-dealer and insurance subsidiaries as of December 31, 2012. At June 30, 2013,this customer relationship intangible amounted to$4.6million.

Other repossessed assets totaled $8.9 million and $6.1million at June 30, 2013 and December 31, 2012, respectively. Repossessed auto loans acquired as part of the BBVAPR Acquisition amounted to $8.6 millionand $5.9 million at June 30, 2013 and December 31, 2012, respectively.

XML

Allowance for Loan and Lease Losses (Troubled debt restructurings, Rolling Twelve Months) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2013 number	Jun. 30, 2012 number
Residential Mortgage [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	48	32
Recored Investment	$ 6,414	$ 4,110
Consumer Loan [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	2	0
Recored Investment	$ 29	$ 0

XML

Contingencies

3 Months Ended

Jun. 30, 2013

Commitments and Contingencies [Abstract]

CONTINGENCIES

NOTE 15—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, OFS Securities 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 unaudited 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 unaudited 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

Stockholders' Equity

3 Months Ended

Jun. 30, 2013

Stockholders' Equity [Abstract]

STOCKHOLDERS' EQUITY

NOTE 13— STOCKHOLDERS' EQUITY AND EARNINGS PER COMMON SHARE

Regulatory Capital Requirements

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

Quantitative measures established by regulation to ensure capital adequacy currently require the Company and the Bank tomaintain minimum amounts and ratios (set forth in the following table) of total and Tier 1 capital (as defined inthe regulations) to risk-weighted assets (as defined in the regulations) and of Tier 1 capital to average assets (asdefined in the regulations). As of June 30, 2013 and December 31, 2012, the Company and the Bank met all capital adequacy requirements to which they are subject. As of June 30, 2013 and December 31, 2012, the Bank is“well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “wellcapitalized,” an institution must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratiosas set forth in the following tables.

The Company's and the Bank's actual capital amounts and ratios as of June 30, 2013 and December 31, 2012 are as follows

				Minimum Capital
	Actual			Requirement
	Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
Company Ratios
As of June 30, 2013
Total capital to risk-weighted assets	$	806,418	16.02%	$	402,819	8.00%
Tier 1 capital to risk-weighted assets	$	702,801	13.96%	$	201,409	4.00%
Tier 1 capital to total assets	$	702,801	8.54%	$	329,225	4.00%
As of December 31, 2012
Total capital to risk-weighted assets	$	794,195	15.15%	$	419,269	8.00%
Tier 1 capital to risk-weighted assets	$	678,127	12.94%	$	209,634	4.00%
Tier 1 capital to total assets	$	678,127	6.42%	$	422,307	4.00%

							Minimum to be Well
							Capitalized Under Prompt
				Minimum Capital			Corrective Action
	Actual			Requirement			Provisions
	Amount		Ratio	Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
Bank Ratios
As of June 30, 2013
Total capital to risk-weighted assets	$	743,653	15.01%	$	396,291	8.00%	$	495,363	10.00%
Tier 1 capital to risk-weighted assets	$	641,043	12.94%	$	198,145	4.00%	$	297,218	6.00%
Tier 1 capital to total assets	$	641,043	7.84%	$	327,058	4.00%	$	408,823	5.00%
As of December 31, 2012
Total capital to risk-weighted assets	$	719,675	14.03%	$	410,268	8.00%	$	512,835	10.00%
Tier 1 capital to risk-weighted assets	$	604,997	11.80%	$	205,134	4.00%	$	307,701	6.00%
Tier 1 capital to total assets	$	604,997	5.76%	$	420,298	4.00%	$	525,373	5.00%

Legal Surplus

The Puerto Rico Banking Act requires that a minimum of 10% of the Bank's net income 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, 2013 and December 31, 2012, the Bank's legal surplus amounted to $57.9 million and $52.1million, respectively. The amount transferred to the legal surplus account is not available for the payment of dividends to shareholders.

Earnings per Common Share

The calculation of earnings per common share for the quartersand six-month periodsended June 30, 2013 and 2012 is as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2013		2012		2013		2012
	(In thousands, except per share data)
Net income	$	37,539	$	14,958	$	58,731	$	25,610
Less: Dividends on preferred stock
Non-Convertible Preferred Stock (Series A, B, and D)		(1,629)		(1,201)		(3,256)		(2,401)
Convertible preferred stock (Series C)		(1,837)		-		(3,675)		-
Income available to common shareholders	$	34,073	$	13,757	$	51,800	$	23,209
Effect of assumed conversion of the Convertible ' 'Preferred Stock		1,837		-		3,675		-
Income available to common shareholders assuming conversion	$	35,910	$	13,757	$	55,475	$	23,209
Weighted average common shares and share equivalents:
Average common shares outstanding		45,630		40,703		45,613		40,873
Effect of dilutive securities:
Average potential common shares-options		200		105		178		113
Average potential common shares-assuming ' 'conversion of convertible preferred stock		7,138		-		7,138		-
Total weighted average common shares ' 'outstanding and equivalents		52,968		40,808		52,929		40,986
Earnings per common share - basic	$	0.75	$	0.34	$	1.14	$	0.57
Earnings per common share - diluted	$	0.68	$	0.34	$	1.05	$	0.57

In computing diluted earnings per common share, the 84,000 shares of convertible preferred stock, which remained outstanding at June30, 2013, with a conversion rate, subject to certain conditions, of 84.9798 shares of common stock per share, were included as average potential common shares from the date they were issued and outstanding. Moreover, in computing diluted earnings per common share, the dividends declared during the quarter and six-month period ended June30, 2013 on the convertible preferred stock were added back as income available to common shareholders.

For the quartersended June 30, 2013 and 2012, weighted-average stock options with an anti-dilutive effect on earnings per share not included in the calculation amounted to 243,721and708,976, respectively. For the six-month periodsended June 30, 2013 and 2012, weighted-average stock options with an anti-dilutive effect on earnings per share not included in the calculation amounted to 578,393and707,143, respectively

Treasury Stock

Repurchased common stock is 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.

The activity in connection with common shares held in treasury by the Company for the six-month periods ended June 30, 2013 and 2012 is set forth below:

	Six-Month Period Ended June 30,
	2013			2012
		Dollar			Dollar
	Shares	Amount		Shares	Amount
	(In thousands, except shares data)
Beginning of period	7,090,597	$	81,275	6,564,124	$	74,808
Common shares used upon lapse of restricted stock units	(34,800)		(364)	(37,446)		(392)
Common shares repurchased as part of the stock repurchase program	-		-	603,000		7,022
Common shares used to match defined contribution plan, net	(7,318)		(77)	(18,898)		(35)
End of period	7,048,479	$	80,834	7,110,780	$	81,403

Accumulated Other Comprehensive Income

Accumulated other comprehensive income, net of income tax, as of June 30, 2013 and December 31, 2012 consisted of:

	June 30,		December 31,
	2013		2012
	(In thousands)
Unrealized gain on securities available-for-sale which are not other-than-temporarily impaired	$	28,779	$	75,347
Income tax effect of unrealized gain on securities available-for-sale		(3,379)		(7,102)
Net unrealized gain on securities available-for-sale which are not other-than-temporarily impaired		25,400		68,245
Unrealized loss on cash flow hedges		(13,187)		(17,664)
Income tax effect of unrealized loss on cash flow hedges		3,553		5,299
Net unrealized loss on cash flow hedges		(9,634)		(12,365)
	$	15,766	$	55,880

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

	Quarter Ended June 30, 2013						Six-Month Period Ended June 30, 2013
	Net unrealized		Net unrealized		Accumulated		Net unrealized		Net unrealized		Accumulated
	gains on		loss on		other		gains on		loss on		other
	securities		cash flow		comprehensive		securities		cash flow		comprehensive
	available-for-sale		hedges		income		available-for-sale		hedges		income
	(In thousands)						(In thousands)
Beginning balance	$	58,393	$	(11,342)	$	47,051	$	68,245	$	(12,365)	$	55,880
Other comprehensive income before reclassifications		(33,036)		292		(32,744)		(42,934)		(21)		(42,955)
Amounts reclassified out of accumulated other comprehensive income		43		1,416		1,459		89		2,752		2,841
Other comprehensive income (loss)		(32,993)		1,708		(31,285)		(42,845)		2,731		(40,114)
Ending balance	$	25,400	$	(9,634)	$	15,766	$	25,400	$	(9,634)	$	15,766

The following table presents reclassifications out of accumulated other comprehensive income for the quarter and six-month period ended June 30, 2013:

			Six-Month Period		Affected Line Item in
	Quarter Ended		Ended		Consolidated Statement
	June 30, 2013		June 30, 2013		of Operations
	(In thousands)		(In thousands)
Cash flow hedges:
Interest-rate contracts	$	1,416	$	2,752	Net interest expense
Available-for-sale securities:
Residual tax effect from OIB's change in applicable tax rate		43		89	Income tax expense
	$	1,459	$	2,841

At June 30, 2013 and December 31, 2012, OIBhad $415thousand and $504thousand, respectively, in the income tax effect of unrecognized gain on available-for-sale securities included in other comprehensive income. Following the change in OIB'sapplicable tax rate from 5% to 0% as a result of a new Puerto Rico law adopted in 2011, this remaining tax balance will flow through income as these securities are repaid or sold in future periods

XML

Fair value (Estimated fair value and carrying value) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012	Dec. 31, 2011
Assets, Fair Value Disclosure [Abstract]
Securities Failed To Deliver	$ 16,732	$ 0
Federal Home Loan Bank (FHLB) stock	22,156	38,411
Derivative Assets	19,655	21,889
FDIC Indemnification Asset Fair Value Disclosure	173,442
Servicing Assets	12,994	10,795
Liabilities, Fair Value Disclosure [Abstract]
Short term borrowings	0	92,210
Assets,Carrying Value [Abstract]
Total cash and cash equivalents	748,313	868,695	464,579	591,487
Securities Purchased under Agreements to Resell	0	80,000
Trading Securities	2,209	495
Investment securities available-for-sale	1,836,229	2,194,286
Held-to-maturity Securities	0	0
Federal Home Loan Bank (FHLB) stock	22,156	38,411
Total loans not covered under shared-loss agreements with FDIC, net	4,543,299	4,709,778
Covered, net	369,380	395,307
Derivative Assets	19,655	21,889
FDIC Indemnification Asset	236,472	286,799	359,767	392,367
Accrued interest receivable	17,508	17,554
Servicing Assets	12,994	10,795
Liabilities,Carrying Value Disclosure [Abstract]
Derivative Liabilities	16,701	26,260
Deposits, Total	5,665,038	5,689,559
Securities Sold under Agreements to Repurchase	1,311,573	1,692,931
Advances from FHLB	284,844
Federal Funds Purchased	29,400	9,900
Subordinated capital notes	98,961	146,038
Accrued expenses and other liabilities	117,569	102,169
Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Cash and Cash Equivalents, Fair Value Disclosure	748,313	868,695
Assets,Carrying Value [Abstract]
Total cash and cash equivalents	748,313	868,695
Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Federal Funds Sold and Securities Borrowed or Purchased under Agreements to Resell, Fair Value Disclosure	0	80,000
Securities Failed To Deliver	16,732	0
Federal Home Loan Bank (FHLB) stock	22,156	38,411
Derivative Assets	3,635	8,656
Receivables, Fair Value Disclosure	16,701	26,260
Liabilities, Fair Value Disclosure [Abstract]
Short term borrowings	0	92,210
Assets,Carrying Value [Abstract]
Securities Purchased under Agreements to Resell	0	80,000
Trading Securities	2,209	495
Investment securities available-for-sale	1,816,171	2,174,274
Federal Home Loan Bank (FHLB) stock	22,156	38,411
Derivative Assets	3,635	8,656
Liabilities,Carrying Value Disclosure [Abstract]
Other Short Term Borrowings	0	92,210
Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure [Abstract]
Non-covered loans, net	4,600,628	4,766,179
Covered loans, net	449,113	489,885
Derivative Assets	16,020	13,233
FDIC Indemnification Asset Fair Value Disclosure		204,646
Receivables, Fair Value Disclosure	17,508	17,554
Servicing Assets	12,994	10,795
Liabilities, Fair Value Disclosure [Abstract]
Accrued expenses and other liabilities	117,569	102,169
Subordinated capital notes	98,008	146,415
Federal Funds Purchased, Fair Value Disclosure	29,431	9,901
Advances from FHLB	283,443	538,355
Securities sold under agreements to repurchase	1,353,970	1,741,272
Deposits, Fair Value Disclosure	5,688,574	5,797,097
Notes Payable Fair Value Disclosure	7,710	7,912
Assets,Carrying Value [Abstract]
Investment securities available-for-sale	20,058	20,012
Total loans not covered under shared-loss agreements with FDIC, net	4,621,649	4,773,923
Covered, net	369,380	395,307
Derivative Assets	16,020	13,233
FDIC Indemnification Asset		286,799
Accrued interest receivable	17,508	17,554
Servicing Assets	12,994	10,795
Liabilities,Carrying Value Disclosure [Abstract]
Deposits, Total	5,665,038	5,689,559
Securities Sold under Agreements to Repurchase	1,313,870	1,695,247
Advances from FHLB	285,135	536,542
Federal Funds Purchased	29,431	9,901
OtherNotesPayable	7,734	7,734
Subordinated capital notes	98,961	146,038
Accrued expenses and other liabilities	$ 117,569	$ 102,169

XML

Document and Entity Information	3 Months Ended
	Jun. 30, 2013	Jan. 31, 2013
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, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		45,640,105

XML

Borrowings (Narrative) (Details) (USD $)	3 Months Ended					3 Months Ended			3 Months Ended		3 Months Ended				3 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Sep. 30, 2003	Jun. 30, 2012 Subordinated capital notes issued in September 2004	Jun. 30, 2013 Subordinated capital notes issued in September 2006	Jun. 30, 2013 Subordinated capital notes issued in September 2006 at fixed rate of 5.76%	Jun. 30, 2013 BBVAPR	Dec. 31, 2012 BBVAPR	Jun. 30, 2013 BBVAPR Subordinated capital notes issued in September 2004	Jun. 30, 2012 BBVAPR Subordinated capital notes issued in September 2004	Jun. 30, 2013 BBVAPR Subordinated capital notes issued in September 2006	Jun. 30, 2012 BBVAPR Subordinated capital notes issued in September 2006	Jun. 30, 2013 BBVAPR Subordinated capital notes issued in September 2006 at fixed rate of 5.76%	Jun. 30, 2012 BBVAPR Subordinated capital notes issued in September 2006 at fixed rate of 5.76%	Jun. 30, 2013 Federal Home Loan Bank Advances [Member]	Dec. 31, 2012 Federal Home Loan Bank Advances [Member]	Jun. 30, 2013 Federal Home Loan Bank Advances [Member] Mortgages [Member]	Jun. 30, 2013 Unsecured Debt [Member]	Dec. 31, 2012 Unsecured Debt [Member]	Jun. 30, 2013 ShortTermDebtMember	Jun. 30, 2013 Junior Subordinated Deferrable Interest Debenture Statutory Trust II [Member]	Jun. 30, 2013 Repurchase agreement	Dec. 31, 2012 Repurchase agreement
Debt Instrument [Line Items]
Loans Receivable, Gross, Commercial, Mortgage																	$ 1,300,000,000
Additional Borrowing Capacity		714,400,000
Weighted average period remaining maturity of FHLB advances															11.7 months	3.5 months
Interest Payable															294,000							2,300,000	2,300,000
Subordinated Debt	98,961,000	146,038,000							50,000,000		30,000,000		37,000,000								36,100,000
Trust redeemable preferred securities issued			35,000,000
Debt Instrument, Interest Rate Terms	3-month LIBOR plus 295 basis points					three-month LIBOR plus 1.56%			three-month LIBOR plus 1.44%		rate of three-month LIBOR plus 1.56%
Debt Instrument, Variable Rate	3.22%	3.26%		1.44%	1.83%	1.83%				1.75%				1.87%
Next Call Date	September 2013											1.87
Other borrowings	37,200,000	17,600,000																7,700,000	7,700,000
Debt, Weighted Average Interest Rate	2.12869%														0.30%			0.67%		0.30%
Federal Funds Purchased	29,400,000	9,900,000
Tier Two Risk Based Capital							$ 40,200,000	$ 50,200,000

XML

Commitments

3 Months Ended

Jun. 30, 2013

Commitments and Contingencies [Abstract]

COMMITMENTS

NOTE 14—COMMITMENTS

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 unaudited 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 amount 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.

Summarized credit-related financial instruments at June 30, 2013 and December 31, 2012were as follows:

	June 30,		December 31,
	2013		2012
	(In thousands)
Commitments to extend credit	$	445,411	$	591,679
Commercial letters of credit		2,231		2,918

Commitments from loans acquired as part of the BBVAPR Acquisition amounted to $337.1 million and$461.6 millionat June 30, 2013 and December 31, 2012, respectively. 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, 2013 and December 31, 2012, 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 $900thousand at both June 30, 2013 and December 31, 2012.

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, 2013 and December 31, 2012, is as follows:

	June 30,		December 31,
	2013		2012
	(In thousands)
Standby letters of credit and financial guarantees	$	67,087	$	69,789
Loans sold with recourse		184,937		172,492
Commitments to sell or securitize mortgage loans		10,977		83,663

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. The Company does not expect any significant losses under these obligations. As of June 30, 2013 and December 31, 2012, no performance was required on any financial guarantees. As part of the BBVAPR Acquisition, the Company assumed $65.9 million of standby letters of credit and $169.3 million of loans sold without recourse commitments at December 31, 2012

Lease Commitments

The Company has entered into various operating lease agreements for branch facilities and administrative offices. Rent expense for the quarters endedJune 30, 2013 and 2012 amounted to $2.6millionand $1.6million, respectively, and is included in the “occupancy and equipment” caption in the unaudited consolidated statements of operations. For the six-month periods ended June 30, 2013 and 2012, rent expense amounted to $5.2million and $3.3 million, respectively. Future rental commitments under leases in effect at June 30, 2013, exclusive of taxes, insurance, and maintenance expenses payable by the Company, are summarized as follows:

Year Ending June 30,	Minimum Rent
	(In thousands)
2013	$	5,332
2014		8,402
2015		8,116
2016		7,492
2017		7,965
Thereafter		24,755
	$	62,062

XML

Loans Receivable (Investment in non-covered loans on non-accrual status) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Residential Related Loans [Member]	Dec. 31, 2010 Residential Related Loans [Member]	Jun. 30, 2013 Residential Related Loans [Member] Residential Mortgage [Member]	Dec. 31, 2012 Residential Related Loans [Member] Residential Mortgage [Member]	Jun. 30, 2013 Residential Related Loans [Member] Conventional Loan [Member]	Dec. 31, 2012 Residential Related Loans [Member] Conventional Loan [Member]	Jun. 30, 2013 Residential Related Loans [Member] Conventional Loan [Member] Originated Up To The Year 2002 [Member]	Dec. 31, 2012 Residential Related Loans [Member] Conventional Loan [Member] Originated Up To The Year 2002 [Member]	Jun. 30, 2013 Residential Related Loans [Member] Conventional Loan [Member] Originated In The Years 2003 And 2004 [Member]	Dec. 31, 2012 Residential Related Loans [Member] Conventional Loan [Member] Originated In The Years 2003 And 2004 [Member]	Jun. 30, 2013 Residential Related Loans [Member] Conventional Loan [Member] Originated In The Year 2005 [Member]	Dec. 31, 2012 Residential Related Loans [Member] Conventional Loan [Member] Originated In The Year 2005 [Member]	Jun. 30, 2013 Residential Related Loans [Member] Conventional Loan [Member] Originated In The Year 2006 [Member]	Dec. 31, 2012 Residential Related Loans [Member] Conventional Loan [Member] Originated In The Year 2006 [Member]	Jun. 30, 2013 Residential Related Loans [Member] Conventional Loan [Member] Originated In The Years 2007 2008 And 2009 [Member]	Dec. 31, 2012 Residential Related Loans [Member] Conventional Loan [Member] Originated In The Years 2007 2008 And 2009 [Member]	Jun. 30, 2013 Residential Related Loans [Member] Conventional Loan [Member] Originated In The Years 2010 2011 2012 And 2013 [Member]	Dec. 31, 2012 Residential Related Loans [Member] Conventional Loan [Member] Originated In The Years 2010 2011 2012 And 2013 [Member]	Jun. 30, 2013 Residential Related Loans [Member] NonTraditional Mortgage [Member]	Dec. 31, 2012 Residential Related Loans [Member] NonTraditional Mortgage [Member]	Jun. 30, 2013 Residential Related Loans [Member] Loss Mitigation Program [Member]	Dec. 31, 2012 Residential Related Loans [Member] Loss Mitigation Program [Member]	Jun. 30, 2013 Residential Related Loans [Member] Home equity secured personal loans [Member]	Dec. 31, 2012 Residential Related Loans [Member] Home equity secured personal loans [Member]	Jun. 30, 2013 Commercial Loan [Member]	Dec. 31, 2012 Commercial Loan [Member]	Jun. 30, 2013 Commercial Loan [Member] Commercial Secured [Member]	Dec. 31, 2012 Commercial Loan [Member] Commercial Secured [Member]	Jun. 30, 2013 Commercial Loan [Member] Other Commercial [Member]	Dec. 31, 2012 Commercial Loan [Member] Other Commercial [Member]	Jun. 30, 2013 Consumer Loan [Member]	Dec. 31, 2012 Consumer Loan [Member]	Jun. 30, 2013 Consumer Loans Auto Financing Receivable Member	Dec. 31, 2012 Consumer Loans Auto Financing Receivable Member	Jun. 30, 2013 Most recent acquired loans accounted under ASC 310-20	Dec. 31, 2012 Most recent acquired loans accounted under ASC 310-20	Jun. 30, 2013 Most recent acquired loans accounted under ASC 310-20 Credit cards and line of credits [Member]	Dec. 31, 2012 Most recent acquired loans accounted under ASC 310-20 Credit cards and line of credits [Member]	Jun. 30, 2013 Most recent acquired loans accounted under ASC 310-20 line of credit	Dec. 31, 2012 Most recent acquired loans accounted under ASC 310-20 line of credit	Jun. 30, 2013 Most recent acquired loans accounted under ASC 310-20 Automobile Loan	Dec. 31, 2012 Most recent acquired loans accounted under ASC 310-20 Automobile Loan
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 89,257	$ 146,644	$ 53,125	$ 115,002	$ 53,113	$ 114,992	$ 22,376	$ 63,875	$ 6,987	$ 11,362	$ 3,465	$ 18,162	$ 1,481	$ 8,859	$ 2,875	$ 15,363	$ 3,580	$ 8,967	$ 3,988	$ 1,162	$ 2,287	$ 11,160	$ 28,450	$ 39,957	$ 12	$ 10	$ 32,430	$ 29,506	$ 29,491	$ 26,517	$ 2,939	$ 2,989	$ 370	$ 442	$ 1,096	$ 131	$ 2,236	$ 1,563	$ 1,069	$ 1,095	$ 493	$ 193	$ 674	$ 275

XML

Loans Receivable (Accretable yield and non-accretable discount activity) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Non Accretable Discount Movement Schedule [Roll Forward]
Principal Losses	$ (67,456)
Transfer (to) from accretable yield	$ (30,310)

XML

Borrowings (Securities Sold Under Agreement to Repurchase by Counterparties) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Repurchase Agreement Counterparty [Line Items]
Borrowing Balance	$ 1,311,573	$ 1,692,931
Fair Value of Underlying Collateral	1,465,264	1,898,534
Credit Suisse Securities LLC [Member]
Repurchase Agreement Counterparty [Line Items]
Borrowing Balance	255,000	255,000
Fair Value of Underlying Collateral	270,180	269,943
Citigroup Global Markets Inc [Member]
Repurchase Agreement Counterparty [Line Items]
Borrowing Balance	46,573	150,000
Fair Value of Underlying Collateral	52,473	162,652
Ubs Financial Services Inc [Member]
Repurchase Agreement Counterparty [Line Items]
Borrowing Balance	500,000	500,000
Fair Value of Underlying Collateral	597,126	616,751
Jp Morgan Chase Bank Na [Member]
Repurchase Agreement Counterparty [Line Items]
Borrowing Balance	255,000	412,837
Fair Value of Underlying Collateral	273,783	443,436
Deutsche Bank [Member]
Repurchase Agreement Counterparty [Line Items]
Borrowing Balance	255,000	255,000
Fair Value of Underlying Collateral	271,702	273,288
Barclays Bank [Member]
Repurchase Agreement Counterparty [Line Items]
Borrowing Balance	0	68,650
Fair Value of Underlying Collateral	0	77,521
Wells Fargo [Member]
Repurchase Agreement Counterparty [Line Items]
Borrowing Balance	0	51,444
Fair Value of Underlying Collateral	$ 0	$ 54,943