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Investment securities

3 Months Ended

Mar. 31, 2012

Availableforsale Securities Member

Notes to Financial Statements [Abstract]

Note 5 – Investment securities available-for-sale

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

		At March 31, 2012
				Gross		Gross				Weighted
		Amortized		unrealized		unrealized		Fair		average
(In thousands)		cost		gains		losses		value		yield
U.S. Treasury securities
	Within 1 year	$	7,012	$	84	$	-	$	7,096	1.50	%
	After 1 to 5 years		27,790		3,198		-		30,988	3.82
Total U.S. Treasury securities			34,802		3,282		-		38,084	3.35
Obligations of U.S. Government sponsored entities
	Within 1 year		99,515		1,735		-		101,250	3.36
	After 1 to 5 years		625,230		21,897		-		647,127	3.31
	After 5 to 10 years		310,004		2,290		940		311,354	2.14
	After 10 years		32,085		369		387		32,067	4.00
Total obligations of U.S. Government sponsored entities			1,066,834		26,291		1,327		1,091,798	3.00
Obligations of Puerto Rico, States and political subdivisions
	Within 1 year		765		4		-		769	4.94
	After 1 to 5 years		13,039		296		23		13,312	4.04
	After 5 to 10 years		4,595		41		-		4,636	5.33
	After 10 years		37,320		799		-		38,119	5.38
Total obligations of Puerto Rico, States and political subdivisions			55,719		1,140		23		56,836	5.06
Collateralized mortgage obligations - federal agencies
	After 1 to 5 years		6,822		81		-		6,903	1.48
	After 5 to 10 years		41,988		1,347		-		43,335	2.86
	After 10 years		1,756,972		51,991		394		1,808,569	2.66
Total collateralized mortgage obligations - federal agencies			1,805,782		53,419		394		1,858,807	2.66
Collateralized mortgage obligations - private label
	After 5 to 10 years		5,041		1		149		4,893	0.77
	After 10 years		52,445		70		2,740		49,775	2.52
Total collateralized mortgage obligations - private label			57,486		71		2,889		54,668	2.37
Mortgage-backed securities
	Within 1 year		32		-		-		32	3.71
	After 1 to 5 years		6,619		311		-		6,930	3.90
	After 5 to 10 years		102,677		7,837		1		110,513	4.67
	After 10 years		1,755,946		131,139		36		1,887,049	4.24
Total mortgage-backed securities			1,865,274		139,287		37		2,004,524	4.26
Equity securities (without contractual maturity)			6,595		875		11		7,459	2.81
Other
	After 5 to 10 years		17,850		3,063		-		20,913	10.99
	After 10 years		5,410		117		-		5,527	3.62
Total other			23,260		3,180		-		26,440	9.28
Total investment securities available-for-sale		$	4,915,752	$	227,545	$	4,681	$	5,138,616	3.40	%

		At December 31, 2011
				Gross		Gross				Weighted
		Amortized		unrealized		unrealized		Fair		average
(In thousands)		cost		gains		losses		value		yield
U.S. Treasury securities
	After 1 to 5 years	$	34,980	$	3,688	$	-	$	38,668	3.35	%
Total U.S. Treasury securities			34,980		3,688		-		38,668	3.35
Obligations of U.S. Government sponsored entities
	Within 1 year		94,492		2,382		-		96,874	3.45
	After 1 to 5 years		655,625		25,860		-		681,485	3.38
	After 5 to 10 years		171,633		2,969		-		174,602	2.94
	After 10 years		32,086		499		-		32,585	3.20
Total obligations of U.S. Government sponsored entities			953,836		31,710		-		985,546	3.30
Obligations of Puerto Rico, States and political subdivisions
	Within 1 year		765		9		-		774	4.97
	After 1 to 5 years		14,824		283		31		15,076	4.07
	After 5 to 10 years		4,595		54		-		4,649	5.33
	After 10 years		37,320		909		-		38,229	5.38
Total obligations of Puerto Rico, States and political subdivisions			57,504		1,255		31		58,728	5.03
Collateralized mortgage obligations - federal agencies
	After 1 to 5 years		2,424		49		-		2,473	3.28
	After 5 to 10 years		55,096		1,446		-		56,542	2.64
	After 10 years		1,589,373		49,462		208		1,638,627	2.84
Total collateralized mortgage obligations - federal agencies			1,646,893		50,957		208		1,697,642	2.83
Collateralized mortgage obligations - private label
	After 5 to 10 years		5,653		1		181		5,473	0.81
	After 10 years		59,460		-		7,141		52,319	2.44
Total collateralized mortgage obligations - private label			65,113		1		7,322		57,792	2.30
Mortgage-backed securities
	Within 1 year		57		1		-		58	3.91
	After 1 to 5 years		7,564		328		-		7,892	3.86
	After 5 to 10 years		111,639		8,020		1		119,658	4.66
	After 10 years		1,870,736		141,274		49		2,011,961	4.25
Total mortgage-backed securities			1,989,996		149,623		50		2,139,569	4.27
Equity securities (without contractual maturity)			6,594		426		104		6,916	2.96
Other
	After 5 to 10 years		17,850		700		-		18,550	10.99
	After 10 years		6,311		101		-		6,412	3.61
Total other			24,161		801		-		24,962	9.06
Total investment securities available-for-sale		$	4,779,077	$	238,461	$	7,715	$	5,009,823	3.58	%

		At March 31, 2011
				Gross		Gross				Weighted
		Amortized		unrealized		unrealized		Fair		average
(In thousands)		cost		gains		losses		value		yield
U.S. Treasury securities
	After 1 to 5 years	$	7,003	$	98	$	-	$	7,101	1.50	%
	After 5 to 10 years		28,505		2,076		-		30,581	3.81
Total U.S. Treasury securities			35,508		2,174		-		37,682	3.35
Obligations of U.S. Government sponsored entities
	Within 1 year		230,290		906		921		230,275	2.95
	After 1 to 5 years		1,005,737		45,685		92		1,051,330	3.73
	After 5 to 10 years		180,000		-		518		179,482	2.66
Total obligations of U.S. Government sponsored entities			1,416,027		46,591		1,531		1,461,087	3.47
Obligations of Puerto Rico, States and political subdivisions
	Within 1 year		10,357		10		-		10,367	3.92
	After 1 to 5 years		15,753		255		6		16,002	4.52
	After 5 to 10 years		20,765		35		167		20,633	5.07
	After 10 years		5,505		62		-		5,567	5.28
Total obligations of Puerto Rico, States and political
subdivisions			52,380		362		173		52,569	4.70
Collateralized mortgage obligations - federal agencies
	Within 1 year		35		-		-		35	3.36
	After 1 to 5 years		1,737		88		-		1,825	4.76
	After 5 to 10 years		91,067		1,019		865		91,221	2.47
	After 10 years		1,487,274		28,001		1,011		1,514,264	2.94
Total collateralized mortgage obligations - federal agencies			1,580,113		29,108		1,876		1,607,345	2.91
Collateralized mortgage obligations - private label
	After 5 to 10 years		8,109		13		90		8,032	0.86
	After 10 years		73,612		51		4,547		69,116	2.30
Total collateralized mortgage obligations - private label			81,721		64		4,637		77,148	2.16
Mortgage-backed securities
	Within 1 year		633		51		-		684	5.35
	After 1 to 5 years		13,444		519		4		13,959	3.98
	After 5 to 10 years		164,579		10,230		8		174,801	4.71
	After 10 years		2,143,295		81,696		967		2,224,024	4.25
Total mortgage-backed securities			2,321,951		92,496		979		2,413,468	4.28
Equity securities (without contractual maturity)			8,722		968		256		9,434	3.43
Other
	After 5 to 10 years		17,850		2,363		-		20,213	11.00
	After 10 years		7,473		-		78		7,395	3.62
Total other			25,323		2,363		78		27,608	8.82
Total investment securities available-for-sale		$	5,521,745	$	174,126	$	9,530	$	5,686,341	3.67	%

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

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

There were no securities sold during the quarters ended March 31, 2012 and 2011.

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

		At March 31, 2012
		Less than 12 months				12 months or more				Total
				Gross				Gross				Gross
		Fair		unrealized		Fair		unrealized		Fair		unrealized
(In thousands)		value		losses		value		losses		value		losses
Obligations of U.S. Government sponsored entities		$	235,106	$	1,327	$	-	$	-	$	235,106	$	1,327
Obligations of Puerto Rico, States and political
	subdivisions		2,816		23		-		-		2,816		23
Collateralized mortgage obligations - federal agencies			101,959		379		3,002		15		104,961		394
Collateralized mortgage obligations - private label			914		29		48,494		2,860		49,408		2,889
Mortgage-backed securities			209		3		1,475		34		1,684		37
Equity securities			47		3		3		8		50		11
Total investment securities available-for-sale in an
	unrealized loss position	$	341,051	$	1,764	$	52,974	$	2,917	$	394,025	$	4,681

		At December 31, 2011
		Less than 12 months				12 months or more				Total
				Gross				Gross				Gross
		Fair		unrealized		Fair		unrealized		Fair		unrealized
(In thousands)		value		losses		value		losses		value		losses
Obligations of Puerto Rico, States and political
	subdivisions	$	7,817	$	28	$	191	$	3	$	8,008	$	31
Collateralized mortgage obligations - federal agencies			90,543		208		-		-		90,543		208
Collateralized mortgage obligations - private label			13,595		539		44,148		6,783		57,743		7,322
Mortgage-backed securities			5,577		14		1,466		36		7,043		50
Equity securities			5,199		95		2		9		5,201		104
Total investment securities available-for-sale in an
	unrealized loss position	$	122,731	$	884	$	45,807	$	6,831	$	168,538	$	7,715

		At March 31, 2011
		Less than 12 months				12 months or more				Total
				Gross				Gross				Gross
		Fair		unrealized		Fair		unrealized		Fair		unrealized
(In thousands)		value		losses		value		losses		value		losses

Obligations of U.S. Government sponsored entities		$	304,080	$	1,531	$	-	$	-	$	304,080	$	1,531
Obligations of Puerto Rico, States and political
	subdivisions		18,138		167		301		6		18,439		173
Collateralized mortgage obligations - federal agencies			345,887		1,876		-		-		345,887		1,876
Collateralized mortgage obligations - private label			21,678		252		46,424		4,385		68,102		4,637
Mortgage-backed securities			35,010		714		9,185		265		44,195		979
Equity securities			3,798		169		51		87		3,849		256
Other			7,395		78		-		-		7,395		78
Total investment securities available-for-sale in an
	unrealized loss position	$	735,986	$	4,787	$	55,961	$	4,743	$	791,947	$	9,530

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

At March 31, 2012, management performed its quarterly analysis of all debt securities in an unrealized loss position. Based on the analyses performed, management concluded that no individual debt security was other-than-temporarily impaired as of such date. At March 31, 2012, the Corporation did not have the intent to sell debt securities in an unrealized loss position and it is not more likely than not that the Corporation will have to sell the investment securities prior to recovery of their amortized cost basis. Also, management evaluated the Corporation's portfolio of equity securities at March 31, 2012. No other-than-temporary impairment losses on equity securities were recorded during the quarters ended March 31, 2012 and 2011. Management has the intent and ability to hold the investments in equity securities that are at a loss position at March 31, 2012, for a reasonable period of time for a forecasted recovery of fair value up to (or beyond) the cost of these investments.

The unrealized losses associated with “Collateralized mortgage obligations – private label” (“private-label CMO”) are primarily related to securities backed by residential mortgages. In addition to verifying the credit ratings for the private-label CMOs, management analyzed the underlying mortgage loan collateral for these bonds. Various statistics or metrics were reviewed for each private-label CMO, including among others, the weighted average loan-to-value, FICO score, and delinquency and foreclosure rates of the underlying assets in the securities. At March 31, 2012, there were no “sub-prime” securities in the Corporation's private-label CMOs portfolios. For private-label CMOs with unrealized losses at March 31, 2012, credit impairment was assessed using a cash flow model that estimates the cash flows on the underlying mortgages, using the security-specific collateral and transaction structure. The model estimates cash flows from the underlying mortgage loans and distributes those cash flows to various tranches of securities, considering the transaction structure and any subordination and credit enhancements that exist in that structure. The cash flow model incorporates actual cash flows through the current period and then projects the expected cash flows using a number of assumptions, including default rates, loss severity and prepayment rates. Management's assessment also considered tests using more stressful parameters. Based on the assessments, management concluded that the tranches of the private-label CMOs held by the Corporation were not other-than-temporarily impaired at March 31, 2012, thus management expects to recover the amortized cost basis of the securities.

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

		March 31, 2012				December 31, 2011				March 31, 2011

(In thousands)	Amortized cost		Fair value		Amortized cost		Fair value		Amortized cost		Fair value
FNMA	$	1,117,928	$	1,157,729	$	1,049,315	$	1,089,069	$	1,029,936	$	1,057,977
FHLB		583,897		604,020		553,940		578,617		1,003,317		1,047,747
Freddie Mac		1,149,415		1,176,487		984,270		1,010,669		977,365		993,342

Heldtomaturity Securities Member

Notes to Financial Statements [Abstract]

Investment securities

Note 6 – Investment securities held-to-maturity

		At March 31, 2012
				Gross		Gross				Weighted
		Amortized		unrealized		unrealized		Fair		average
(In thousands)		cost		gains		losses		value		yield
Obligations of Puerto Rico, States and political subdivisions
	Within 1 year	$	7,375	$	29	$	-	$	7,404	2.31	%
	After 1 to 5 years		11,649		556		-		12,205	5.83
	After 5 to 10 years		19,302		395		51		19,646	6.00
	After 10 years		59,391		116		623		58,884	4.05
Total obligations of Puerto Rico, States and political subdivisions			97,717		1,096		674		98,139	4.52
Collateralized mortgage obligations - federal agencies
	After 10 years		155		6		-		161	5.16
Total collateralized mortgage obligations - federal agencies			155		6		-		161	5.16
Other
	After 1 to 5 years		26,500		29		-		26,529	3.39
Total other			26,500		29		-		26,529	3.39
Total investment securities held-to-maturity		$	124,372	$	1,131	$	674	$	124,829	4.28	%

		At December 31, 2011
				Gross		Gross				Weighted
		Amortized		unrealized		unrealized		Fair		average
(In thousands)		cost		gains		losses		value		yield
Obligations of Puerto Rico, States and political subdivisions
	Within 1 year	$	7,275	$	6	$	-	$	7,281	2.24	%
	After 1 to 5 years		11,174		430		-		11,604	5.80
	After 5 to 10 years		18,512		266		90		18,688	5.99
	After 10 years		62,012		40		855		61,197	4.11
Total obligations of Puerto Rico, States and political subdivisions			98,973		742		945		98,770	4.51
Collateralized mortgage obligations - private label
	After 10 years		160		-		9		151	5.45
Total collateralized mortgage obligations - private label			160		-		9		151	5.45
Other
	After 1 to 5 years		26,250		83		-		26,333	3.41
Total other			26,250		83		-		26,333	3.41
Total investment securities held-to-maturity		$	125,383	$	825	$	954	$	125,254	4.28	%

		At March 31, 2011
				Gross		Gross				Weighted
		Amortized		unrealized		unrealized		Fair		average
(In thousands)		cost		gains		losses		Value		yield
U.S. Treasury securities
	Within 1 year	$	24,734	$	-	$	-	$	24,734	0.02	%
Total U.S. Treasury securities			24,734		-		-		24,734	0.02
Obligations of Puerto Rico, States and political subdivisions
	Within 1 year		2,235		30		-		2,265	5.56
	After 1 to 5 years		15,973		356		-		16,329	4.19
	After 5 to 10 years		18,340		94		264		18,170	5.97
	After 10 years		54,154		6,695		1,325		59,524	4.13
Total obligations of Puerto Rico, States and political subdivisions			90,702		7,175		1,589		96,288	4.55
Collateralized mortgage obligations - private label
	After 10 years		170		-		9		161	5.45
Total collateralized mortgage obligations - private label			170		-		9		161	5.45
Other
	Within 1 year		1,250		-		-		1,250	0.96
	After 1 to 5 years		25,250		133		-		25,383	3.47
Total other			26,500		133		-		26,633	3.35
Total investment securities held-to-maturity		$	142,106	$	7,308	$	1,598	$	147,816	3.54	%

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

The following tables present the Corporation's fair value and gross unrealized losses of investment securities held-to-maturity, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2012, December 31, 2011 and March 31, 2011:

		At March 31, 2012
		Less than 12 months				12 months or more				Total
				Gross				Gross				Gross
		Fair		unrealized		Fair		unrealized		Fair		unrealized
(In thousands)		value		losses		value		losses		value		losses
Obligations of Puerto Rico, States and political subdivisions		$	-	$	-	$	30,866	$	674	$	30,866	$	674
Total investment securities held-to-maturity in an unrealized
	loss position	$	-	$	-	$	30,866	$	674	$	30,866	$	674

		At December 31, 2011
		Less than 12 months				12 months or more				Total
				Gross				Gross				Gross
		Fair		unrealized		Fair		unrealized		Fair		unrealized
(In thousands)		value		losses		value		losses		value		losses

Obligations of Puerto Rico, States and political subdivisions		$	10,323	$	92	$	31,062	$	853	$	41,385	$	945
Collateralized mortgage obligations - private label			-		-		151		9		151		9
Total investment securities held-to-maturity in an unrealized
	loss position	$	10,323	$	92	$	31,213	$	862	$	41,536	$	954

		At March 31, 2011
		Less than 12 months				12 months or more				Total
				Gross				Gross				Gross
		Fair		unrealized		Fair		unrealized		Fair		unrealized
(In thousands)		value		losses		value		losses		value		losses
Obligations of Puerto Rico, States and political subdivisions		$	26,407	$	567	$	30,808	$	1,022	$	57,215	$	1,589
Collateralized mortgage obligations - private label			-		-		161		9		161		9
Total investment securities held-to-maturity in an unrealized
	loss position	$	26,407	$	567	$	30,969	$	1,031	$	57,376	$	1,598

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

The “Obligations of Puerto Rico, States and political subdivisions” classified as held-to-maturity at March 31, 2012 are primarily associated with securities issued by municipalities of Puerto Rico and are generally not rated by a credit rating agency. The Corporation performs periodic credit quality reviews on these issuers. The decline in fair value at March 31, 2012 was attributable to changes in interest rates and not credit quality, thus no other-than-temporary decline in value was necessary to be recorded in these held-to-maturity securities at March 31, 2012. At March 31, 2012, the Corporation does not have the intent to sell securities held-to-maturity and it is not more likely than not that the Corporation will have to sell these investment securities prior to recovery of their amortized cost basis.