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UPDATE ON IMPACTS OF NATURAL DISASTERS | 6 Months Ended
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Jun. 30, 2019
Update On Effects Of Natural Disasters [Abstract] |
Natural Disasters [Text Block] | NOTE 2 – UPDATE ON EFFECTS OF NATURAL DISASTERS Two strong hurricanes affected the Corporation’s service areas during September 2017. The following summarizes the more significant continuing financial repercussions of these natural disasters for the Corporation and for its major subsidiary, FirstBank. Credit Quality and Allowance for Loan and Lease Losses During the first quarter of 2019, the Corporation recorded a loan loss reserve release of approximately $6.4 million in connection with revised estimates associated with the effects of the hurricanes. The revised estimates were primarily attributable to updated payment patterns and probability of default credit risk analyses applied to consumer borrowers, and updated assessments of financial performance and repayment prospects of certain individually-assessed commercial credits. The significant overall uncertainties in the early assessments of hurricane-related credit losses have been largely addressed in the 18-month period after the hurricanes, and the hurricanes’ effect on credit quality is now reflected in the normal process for determining the allowance for loan and lease losses and not through a separate hurricane-related qualitative reserve. Some uncertainties remain, however, including the resolution of insurance claims for certain individual customers. Casualty Losses and Related Insurance The Corporation incurred a variety of costs to operate in disaster response mode, and some facilities and their contents, including certain OREO properties, were damaged by the hurricanes. The Corporation maintains insurance for casualty losses, as well as for reasonable and necessary disaster response costs and certain revenue lost through business interruption. Insurance claim receivables were established for some of the individual costs, when incurred, based on management’s understanding of the underlying coverage and when realization of the claim was deemed probable. During the second quarter of 2019, the Corporation reached settlement on certain claims arising from the hurricanes. As a result, the Corporation received insurance proceeds of approximately $1.5 million, primarily involving repairs and maintenance costs, and impairments related to facilities in the British Virgin Islands. The insurance proceeds were recorded against incurred losses or previously-established accounts receivable. Insurance recoveries are recorded in the same income statement caption as the incurred losses. Recoveries from insurance proceeds in excess of losses incurred, amounting to $0.6 million for the second quarter of 2019, were recognized as a gain from insurance proceeds and reported as part of “Other non-interest income” in the consolidated statements of income. As of June 30, 2019, the Corporation had an insurance claim receivable of $1.5 million (December 31, 2018 - $3.4 million), which is included as part of “Other assets” in the consolidated statements of financial condition. Management also believes that there is a possibility that some gains will be recognized with respect to casualty and lost revenue claims in future periods, but this is contingent on reaching agreements on the Corporation’s claims with the insurance carriers. During the first quarter of 2019, the Corporation recorded a $2.3 million credit against employees’ compensation and benefits expenses related to an employee retention benefit payment (the “Benefit”) received by the Corporation by virtue of the Disaster Tax Relief and Airport Extension Act of 2017, as amended (the “Act”). The Benefit was available to eligible employers affected by Hurricanes Irma and Maria. An eligible employer, as established in the Internal Revenue Circular Letter No. 18-11 issued by the Puerto Rico Department of Treasury, is an employer that (i) on September 16, 2017 (or September 4, 2017 for Hurricane Irma) was engaged in a trade or business in Puerto Rico; (ii) whose business became inoperable on any day after such date and before January 1, 2018, due to damage caused by Hurricane Irma or Maria; and (iii) continued to pay wages to its eligible employees during the period in which the business was inoperable. For purposes of the income tax return, the Benefit will not affect the Corporation’s right to claim a deduction on wages paid and the amount of the Benefit will not be treated as taxable income.

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- Definition The entire disclosure for catastrophic events resulting in damages, including but not limited to, windstorms, explossions or fire. + References No definition available. + Details
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