Investment Securities

12 Months Ended

Dec. 31, 2020

Investment Securities [Abstract]

Investment Securities

NOTE 4 – INVESTMENT SECURITIES

Money Market Investments

Oriental 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 December 31, 2020 and 2019, money market instruments included as part of cash and cash equivalents amounted to $11.9 million and $6.8 million, respectively.

Investment Securities

The amortized cost, gross unrealized gains and losses, fair value, and weighted average yield of the securities owned by Oriental at December 31, 2020 and 2019 were as follows:

	December 31, 2020
			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	$	206,195	$	4,786	$	32	$	210,949	1.78%
GNMA certificates		174,472		8,478		178		182,772	2.21%
CMOs issued by US government-sponsored agencies		38,309		905		-		39,214	1.96%
Total mortgage-backed securities		418,976		14,169		210		432,935	1.97%
Investment securities
US Treasury securities		10,740		243		-		10,983	1.49%
Obligations of US government-sponsored agencies		1,585		21		-		1,606	1.39%
Other debt securities		875		39		-		914	2.31%
Total investment securities		13,200		303		-		13,503	1.53%
Total securities available for sale	$	432,176	$	14,472	$	210	$	446,438	1.96%

	December 31, 2019
			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	$	403,227	$	846	$	1,417	$	402,656	2.00%
GNMA certificates		215,755		718		4		216,469	2.33%
CMOs issued by US government-sponsored agencies		55,235		16		490		54,761	1.97%
Total mortgage-backed securities		674,217		1,580		1,911		673,886	2.11%
Investment securities
US Treasury securities		397,183		-		-		397,183	1.60%
Obligations of US government-sponsored agencies		1,967		-		6		1,961	1.38%
Other debt securities		1,108		31		-		1,139	3.00%
Total investment securities		400,258		31		6		400,283	1.60%
Total securities available-for-sale	$	1,074,475	$	1,611	$	1,917	$	1,074,169	1.92%

Effective January 1, 2020, Oriental adopted the new accounting standard for credit losses that requires evaluation of available-for-sale debt securities for any expected losses with recognition of an allowance for credit losses, when applicable. For more information, see Note 1 – Significant Accounting Policies. At December 31, 2020, all securities held by Oriental are issued by U.S. government entities and agencies that have a zero-credit loss assumption.The amortized cost and fair value of Oriental’s investment securities at December 31, 2020, 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.

	December 31, 2020
	Available-for-sale
	Amortized Cost		Fair Value
	(In thousands)
Mortgage-backed securities
Due less than one year
FNMA and FHLMC certificates	$	348	$	364
Total due in less than one year		348		364
Due from 1 to 5 years
GNMA certificates		469		472
Total due from 1 to 5 years		469		472
Due after 5 to 10 years
CMOs issued by US government-sponsored agencies	$	32,220	$	33,013
FNMA and FHLMC certificates		96,902	$	100,643
GNMA certificates		58,615	$	60,081
Total due after 5 to 10 years		187,737		193,737
Due after 10 years
FNMA and FHLMC certificates	$	108,945	$	109,942
GNMA certificates		115,388	$	122,219
CMOs issued by US government-sponsored agencies		6,089	$	6,201
Total due after 10 years		230,422		238,362
Total mortgage-backed securities		418,976		432,935
Investment securities
Due less than one year
US Treasury securities	$	735	$	735
Other debt securities		251	$	251
Total due in less than one year		986		986
Due from 1 to 5 years
Obligations of US government-sponsored agencies	$	1,585	$	1,606
US Treasury securities		10,005	$	10,248
Total due from 1 to 5 years		11,590		11,854
Due from 5 to 10 years
Other debt securities		624		663
Total due after 5 to 10 years		624		663
Total investment securities		13,200		13,503
Total	$	432,176	$	446,438

During the year ended December 31, 2020, Oriental sold $316.3 million available-for-sale mortgage-backed securities and recognized a $4.7 million gain in the sale. During the year ended December 31, 2019, Oriental sold $672.2 million available-for-sale mortgage-backed securities, and recognized an $8.3 million gain in the sale. During the year ended December 31, 2018, Oriental sold $17.8 million available-for-sale GNMA certificates from its recurring mortgage loan origination and securitization activities. These sales did not realize any gains or losses during such period.

During the years ended December 31, 2020, 2019, and 2018, Oriental retained securitized GNMA pools totaling $90.1 million, $62.8 million, and $56.8 million amortized cost, respectively, at a yield of 2.48%, 3.23%, and 3.93%, from its own originations.

During the year ended December 31, 2019, Oriental completed the Scotiabank PR & USVI Acquisition recognizing available-for-sale securities amounting to $574.6 million with an average yield of 1.79% and an average duration of 1.6 years. This portfolio was comprised of US treasury notes, agency mortgage-backed-securities and agency CMOs.

	Year Ended December 31, 2020
			Book Value
Description	Sale Price		at Sale		Gross Gains		Gross Losses
	(In thousands)
Sale of securities available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates	$	229,571	$	227,213	$	2,358	$	-
GNMA certificates		91,413		89,043		2,370		-
Total	$	320,984	$	316,256	$	4,728	$	-
	Year Ended December 31, 2019
			Book Value
Description	Sale Price		at Sale		Gross Gains		Gross Losses
	(In thousands)
Sale of securities available-for-sale
Mortgage-backed securities
FNMA and FHLMC certificates	$	451,081	$	447,305	$	3,776	$	-
GNMA certificates		229,385		224,887		4,498		-
Total	$	680,466	$	672,192	$	8,274	$	-

	Year Ended December 31, 2018
			Book Value
Description	Sale Price		at Sale		Gross Gains		Gross Losses
	(In thousands)
Sale of securities available-for-sale
Mortgage-backed securities
GNMA certificates		17,837		17,837		-		-
Total mortgage-backed securities	$	17,837	$	17,837	$	-	$	-

The following table show Oriental’s gross unrealized losses and fair value of investment securities available-for-sale at December 31, 2020 and 2019, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:

	December 31, 2020
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US Government-sponsored agencies	$	-	$	-	$	-
FNMA and FHLMC certificates		-		-		-
Obligations of US Government and sponsored agencies		-		-		-
GNMA certificates		-		-		-
US Treasury Securities		-		-		-
	$	-	$	-	$	-
	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US Government-sponsored agencies		-		-		-
FNMA and FHLMC certificates		34,628		32		34,596
GNMA certificates		5,104		178		4,926
US Treasury Securities		-		-		-
	$	39,732	$	210	$	39,522
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US government-sponsored agencies	$	-	$	-	$	-
FNMA and FHLMC certificates		34,628		32		34,596
Obligations of US government and sponsored agencies		-		-		-
GNMA certificates		5,104		178		4,926
US Treasury Securities		-		-		-
	$	39,732	$	210	$	39,522

	December 31, 2019
	12 months or more
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US Government-sponsored agencies	$	35,417	$	387	$	35,030
FNMA and FHLMC certificates		259,099		1,415		257,684
Obligations of US Government and sponsored agencies		1,967		6		1,961
GNMA certificates		19		-		19
	$	296,502	$	1,808	$	294,694

	Less than 12 months
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US Government-sponsored agencies		11,503		103		11,400
FNMA and FHLMC certificates		4,919		2		4,917
GNMA certificates		3,549		4		3,545
US Treasury Securities		627		-		627
	$	20,598	$	109	$	20,489
	Total
	Amortized		Unrealized		Fair
	Cost		Loss		Value
	(In thousands)
Securities available-for-sale
CMOs issued by US Government-sponsored agencies		46,920		490		46,430
FNMA and FHLMC certificates		264,018		1,417		262,601
Obligations of US government and sponsored agencies		1,967		6		1,961
GNMA certificates		3,568		4		3,564
US Treasury Securities		627		-		627
	$	317,100	$	1,917	$	315,183