Borrowings and Related Interest

12 Months Ended

Dec. 31, 2020

Borrowings and Related Interest [Abstract]

Borrowings and Related Interest

NOTE 15— BORROWINGS AND RELATED INTEREST

Securities Sold under Agreements to Repurchase

At December 31, 2019, securities underlying agreements to repurchase were delivered to, and held by, the counterparties with whom the repurchase agreements were transacted. The counterparties agreed to resell to Oriental the same or similar securities at the maturity of these agreements. The purpose of these transactions was to provide financing for Oriental’s securities portfolio.

At December 31, 2020, Oriental did not have repurchase agreements outstanding due to the maturing of $140 million during the year, which were not renewed, and to $50 million which were terminated early.

		December 31,
		2019
	(In thousands)
Short-term fixed-rate repurchase agreements, interest ranging from 1.85% to 2.70% (December 31, 2019)		$	140,000
Long-term fixed-rate repurchase agreements, interest ranging from 1.85% to 2.86% (December 31, 2019)			50,000
Total assets sold under agreements to repurchase		$	190,000

Repurchase agreements’ maturities were as follows:

	December 31,
	2019
	(In thousands)
Less than 90 days	$	140,000
Over 90-days		50,000
Total	$	190,000

The following securities were sold under agreements to repurchase:

	December 31, 2019
	Amortized				Approximate		Weighted
	Cost of				Fair Value		Average
	Underlying		Balance of		of Underlying		Interest Rate
Underlying Securities	Securities		Borrowing		Securities		of Security
	(Dollars in thousands)
FNMA and FHLMC Certificates	$	204,225	$	190,000	$	204,068		2.98%
Total	$	204,225	$	190,000	$	204,068		2.98%

Advances from the Federal Home Loan Bank of New York

Advances are received from the FHLB-NY under an agreement whereby Oriental is required to maintain a minimum amount of qualifying collateral with a fair value of at least 110% of the outstanding advances. At December 31, 2020 and 2019, these advances were secured by mortgage and commercial loans amounting to $1.159 billion and $1.060 billion, respectively. Also, at December 31, 2020 and 2019, Oriental had an additional borrowing capacity with the FHLB-NY of $814 million and $983 million, respectively. At December 31, 2020 and 2019, the weighted average remaining maturity of FHLB’s advances was 18.2 months and 22.7 months, respectively. The original terms of these advances range between one day and seven years, and the FHLB-NY does not have the right to exercise put options at par on any advances outstanding as of December 31, 2020.

The following table shows a summary of the advances and their terms, excluding accrued interest in the amount of $96 thousand and $160 thousand at December 31, 2020 and 2019, respectively:

	December 31,
		2020		2019
		(In thousands)
Short-term fixed-rate advances from FHLB, with a weighted average interest rate of 0.34% (December 31, 2019 - from 1.85% to 2.59%)	$	30,259	$	40,472
Long-term fixed-rate advances from FHLB, with a weighted average interest rate from 2.92% to 3.24% (December 31, 2019 - from 2.92% to 3.24% )		35,206		37,377
	$	65,465	$	77,849

Advances from FHLB mature as follows:

	December 31,
		2020		2019
	(In thousands)
Under 90 days	$	30,259	$	31,955
Over one to three years		30,972		8,517
Over three to five years		4,234		33,018
Over five years		-		4,359
	$	65,465	$	77,849

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 $36.1 million at December 31, 2020 and 2019, respectively.

In August 2003, the Statutory Trust II, a special purpose entity of Oriental, 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.

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 Oriental. The subordinated deferrable interest debenture has a par value of $36.1 million, bears interest based on 3-month LIBOR plus 295 basis points (3.18% at December 31, 2020; 4.85.% at 2019), is payable quarterly, and matures on September 17, 2033. It may be called at par after five years and quarterly thereafter (next call date March 2021). 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 Oriental is accounted for as a liability denominated as a subordinated capital note on the consolidated statements of financial condition.

The subordinated capital note is treated as Tier 1 capital for regulatory purposes. Under the Dodd-Frank Act and the Basel III capital rules issued by the federal banking regulatory agencies in July 2013, 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 Oriental, with total consolidated assets of less than $15 billion as of December 31, 2009, may continue to be included as Tier 1 capital. Therefore, Oriental is permitted to continue to include its existing trust preferred securities as Tier 1 capital.