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LOANS HELD FOR INVESTMENT | 12 Months Ended
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Dec. 31, 2022
LOANS HELD FOR INVESTMENT [Abstract] |
LOAN HELD FOR INVESTMENT [Text Block] | NOTE 4 – LOANS HELD FOR INVESTMENT The following table provides information about the loan portfolio held for investment by portfolio segment and disaggregated by geographic locations as of the indicated dates: As of December 31, As of December 31, 2022 2021 (In thousands) Puerto Rico and Virgin Islands region: Residential mortgage loans, mainly secured by first mortgages $ 2,417,900 $ 2,549,573 Construction loans 34,772 43,133 Commercial mortgage loans 1,834,204 1,702,231 C&I loans 1,860,109 1,946,597 Consumer loans 3,317,489 2,872,384 Loans held for investment $ 9,464,474 $ 9,113,918 Florida region: Residential mortgage loans, mainly secured by first mortgages $ 429,390 $ 429,322 Construction loans 98,181 95,866 Commercial mortgage loans 524,647 465,238 C&I loans 1,026,154 940,654 Consumer loans 9,979 15,660 Loans held for investment $ 2,088,351 $ 1,946,740 Total: Residential mortgage loans, mainly secured by first mortgages $ 2,847,290 $ 2,978,895 Construction loans 132,953 138,999 Commercial mortgage loans 2,358,851 2,167,469 C&I loans (1) 2,886,263 2,887,251 Consumer loans 3,327,468 2,888,044 Loans held for investment (2) 11,552,825 11,060,658 ACL on loans and finance leases (260,464) (269,030) Loans held for investment, net $ 11,292,361 $ 10,791,628 (1) As of December 31, 2022 and 2021, includes $ 838.5 million and $ 952.1 million, respectively, of commercial loans that were secured by real estate and the primary source of repayment at origination was not dependent upon the real estate. (2) Includes accretable fair value net purchase discounts of $ 29.3 million and $ 35.3 million as of December 31, 2022 and 2021, respectively. As of December 31, 2022, and 2021, the Corporation had net deferred origination costs on its loan portfolio amounting to $ 11.2 million and $ 4.3 million, respectively. The total loan portfolio is net of unearned income of $ 103.4 million and $ 79.0 million as of December 31, 2022 and 2021, respectively, of which $ 99.2 million and $ 75.8 million are related to finance leases as of December 31, 2022 and 2021, respectively. As of December 31, 2022, the Corporation was servicing residential mortgage loans owned by others in an aggregate amount of $ 3.9 billion (2021 — $ 4.0 billion), and commercial loan participations owned by others in an aggregate amount of $ 305.1 million as of December 31, 2022 (2021 — $ 383.5 million). Various loans, mainly secured by first mortgages, were assigned as collateral for time deposits accounts, public funds, borrowings, and related unused commitments. Total loans carrying value pledged as collateral amounted to $ 4.3 billion and $ 4.1 billion as of December 31, 2022 and 2021, respectively. As of December 31, 2022, loans pledged as collateral include $ 2.2 billion of pledged collateral related to the Borrower-in-Custody Program (the “BIC Program”) of the FED which remained undrawn and $ 1.8 billion of loans pledged to the FHLB, compared to $ 2.1 billion and $ 1.8 billion, respectively, as of December 31, 2021. When a loan is placed on nonaccrual status, any accrued but uncollected interest income is reversed and charged against interest income and the amortization of any net deferred fees is suspended. The amount of accrued interest reversed against interest income totaled $ 1.7 million, $ 2.0 million and $ 1.9 million for the years ended December 31, 2022, 2021, and 2020, respectively. For the years ended December 31, 2022, 2021, and 2020, the cash interest income recognized on nonaccrual loans amounted to $ 1.5 million, $ 2.3 million, and $ 2.0 million, respectively. As of December 31, 2022, the recorded investment on residential mortgage loans collateralized by residential real estate property that were in the process of foreclosure amounted to $ 72.4 million, including $ 29.4 million of FHA/VA government-guaranteed mortgage loans, and $ 10.0 million of PCD loans acquired prior to the adoption, on January 1, 2020, of CECL. The Corporation commences the foreclosure process on residential real estate loans when a borrower becomes 120 days delinquent. Foreclosure procedures and timelines vary depending on whether the property is located in a judicial or non-judicial state. Occasionally, foreclosures may be delayed due to, among other reasons, mandatory mediations, bankruptcy, court delays, and title issues. As of December 31, 2022 Days Past Due and Accruing Current 30-59 60-89 90+ (1) (2) (3) Nonaccrual (4) (5) Total loans held for investment Nonaccrual Loans with no ACL (6) (In thousands) Residential mortgage loans, mainly secured by first mortgages: FHA/VA government-guaranteed loans (1) (3) (7) $ 67,116 $ - $ 2,586 $ 48,456 $ - $ 118,158 $ - Conventional residential mortgage loans (2) (7) 2,643,909 - 25,630 16,821 42,772 2,729,132 2,292 Commercial loans: Construction loans 130,617 - - 128 2,208 132,953 977 Commercial mortgage loans (2) (7) 2,330,094 300 2,367 3,771 22,319 2,358,851 15,991 C&I loans 2,868,989 1,984 1,128 6,332 7,830 2,886,263 3,300 Consumer loans: Auto loans 1,740,271 40,039 7,089 - 10,672 1,798,071 2,136 Finance leases 707,646 7,148 1,791 - 1,645 718,230 330 Personal loans 346,366 3,738 1,894 - 1,248 353,246 - Credit cards 301,013 3,705 2,238 4,775 - 311,731 - Other consumer loans 141,687 1,804 1,458 - 1,241 146,190 - Total loans held for investment $ 11,277,708 $ 58,718 $ 46,181 $ 80,283 $ 89,935 $ 11,552,825 $ 25,026 (1) It is the Corporation's policy to report delinquent FHA/VA government-guaranteed residential mortgage loans as past-due loans 90 days and still accruing as opposed to nonaccrual loans. The Corporation continues accruing interest on these loans until they have passed the 15 months delinquency mark, taking into consideration the FHA interest curtailment process. These balances include $ 28.2 million of residential mortgage loans guaranteed by the FHA that were over 15 months delinquent. (2) Includes PCD loans previously accounted for under ASC Subtopic 310-30 for which the Corporation made the accounting policy election of maintaining pools of loans as “units of account” both at the time of adoption of CECL on January 1, 2020 and on an ongoing basis for credit loss measurement. These loans will continue to be excluded from nonaccrual loan statistics as long as the Corporation can reasonably estimate the timing and amount of cash flows expected to be collected on the loan pools. The portion of such loans contractually past due 90 days or more, amounting to $ 12.0 million as of December 31, 2022 ($ 11.0 million conventional residential mortgage loans and $ 1.0 million commercial mortgage loans), is presented in the loans past due 90 days or more and still accruing category in the table above. (3) Include rebooked loans, which were previously pooled into GNMA securities, amounting to $ 10.3 million as of December 31, 2022. Under the GNMA program, the Corporation has the option but not the obligation to repurchase loans that meet GNMA’s specified delinquency criteria. For accounting purposes, these loans subject to the repurchase option are required to be reflected on the financial statements with an offsetting liability. (4) Nonaccrual loans in the Florida region amounted to $ 8.3 million as of December 31, 2022, primarily nonaccrual residential mortgage loans. (5) Nonaccrual loans exclude $ 328.1 million of TDR loans that were in compliance with modified terms and in accrual status as of December 31, 2022. (6) Includes $ 0.3 million of nonaccrual C&I loans with no ACL in the Florida region as of December 31, 2022. (7) According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears on two or more monthly payments. FHA/VA government-guaranteed loans, conventional residential mortgage loans, and commercial mortgage loans past due 30-59 days, but less than two payments in arrears, as of December 31, 2022 amounted to $ 6.1 million, $ 65.2 million, and $ 1.6 million, respectively. As of December 31, 2021 Days Past Due and Accruing Current 30-59 60-89 90+ (1)(2)(3) Nonaccrual (4) (5) Total loans held for investment Nonaccrual Loans with no ACL (6) (In thousands) Residential mortgage loans, mainly secured by first mortgages: FHA/VA government-guaranteed loans (1) (3) (7) $ 57,522 $ - $ 2,355 $ 65,515 $ - $ 125,392 $ - Conventional residential mortgage loans (2) (7) 2,738,111 - 31,832 28,433 55,127 2,853,503 3,689 Commercial loans: Construction loans 136,317 18 - - 2,664 138,999 1,000 Commercial mortgage loans (2) (7) 2,129,375 2,402 436 9,919 25,337 2,167,469 8,289 C&I loans 2,858,397 2,047 1,845 7,827 17,135 2,887,251 11,393 Consumer loans: Auto loans 1,533,445 26,462 4,949 - 6,684 1,571,540 3,146 Finance leases 568,606 4,820 713 - 866 575,005 196 Personal loans 310,390 3,299 1,285 - 1,208 316,182 - Credit cards 282,179 3,158 1,904 2,985 - 290,226 - Other consumer loans 130,588 1,996 811 - 1,696 135,091 20 Total loans held for investment $ 10,744,930 $ 44,202 $ 46,130 $ 114,679 $ 110,717 $ 11,060,658 $ 27,733 (1) It is the Corporation's policy to report delinquent FHA/VA government-guaranteed residential mortgage loans as past-due loans 90 days and still accruing as opposed to nonaccrual loans. The Corporation continues accruing interest on these loans until they have passed the 15 months delinquency mark, taking into consideration the FHA interest curtailment process. These balances include $ 46.6 million of residential mortgage loans guaranteed by the FHA that were over 15 months delinquent. (2) Includes PCD loans previously accounted for under ASC Subtopic 310-30 for which the Corporation made the accounting policy election of maintaining pools of loans as “units of account” both at the time of adoption of CECL on January 1, 2020 and on an ongoing basis for credit loss measurement. These loans will continue to be excluded from nonaccrual loan statistics as long as the Corporation can reasonably estimate the timing and amount of cash flows expected to be collected on the loan pools. The portion of such loans contractually past due 90 days or more, amounting to $ 20.6 million as of December 31, 2021 ($ 19.1 million conventional residential mortgage loans and $ 1.5 million commercial mortgage loans), is presented in the loans past due 90 days or more and still accruing category in the table above. (3) Include rebooked loans, which were previously pooled into GNMA securities, amounting to $ 7.2 million as of December 31, 2021. Under the GNMA program, the Corporation has the option but not the obligation to repurchase loans that meet GNMA’s specified delinquency criteria. For accounting purposes, these loans subject to the repurchase option are required to be reflected on the financial statements with an offsetting liability. (4) Nonaccrual loans in the Florida region amounted to $ 8.2 million as of December 31, 2021, primarily nonaccrual residential mortgage loans. (5) Nonaccrual loans exclude $ 363.4 million of TDR loans that were in compliance with modified terms and in accrual status as of December 31, 2021. (6) Includes $ 0.5 million of nonaccrual C&I loans with no ACL in the Florida region as of December 31, 2021. (7) According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears on two or more monthly payments. FHA/VA government-guaranteed loans, conventional residential mortgage loans, and commercial mortgage loans past due 30-59 days, but less than two payments in arrears, as of December 31, 2021 amounted to $ 6.1 million, $ 66.0 million, and $ 0.7 million, respectively. Credit Quality Indicators: The Corporation categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Corporation analyzes non-homogeneous loans, such as commercial mortgage, C&I, and construction loans individually to classify the loans’ credit risk. As mentioned above, the Corporation periodically reviews its commercial and construction loans to evaluate if they are properly classified. The frequency of these reviews will depend on the amount of the aggregate outstanding debt, and the risk rating classification of the obligor. In addition, during the renewal and annual review process of applicable credit facilities, the Corporation evaluates the corresponding loan grades. The Corporation uses the same definition for risk ratings as those described for Puerto Rico municipal bonds accounted for as held-to-maturity debt securities, as discussed in Note 3 – Debt Securities. For residential mortgage and consumer loans, the Corporation also evaluates credit quality based on its interest accrual status. Based on the most recent analysis performed, the amortized cost of commercial and construction loans by portfolio classes and by origination year based on the internal credit-risk category as of December 31, 2022 and the amortized cost of commercial and construction loans by portfolio classes based on the internal credit-risk category as of December 31, 2021 was as follows: As of December 31, 2022 Puerto Rico and Virgin Islands region Term Loans As of December 31, 2021 Amortized Cost Basis by Origination Year (1) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) CONSTRUCTION Risk Ratings: Pass $ 9,463 $ 18,385 $ - $ - $ - $ 4,031 $ - $ 31,879 $ 38,066 Criticized: Special Mention - - - - - - - - 765 Substandard - - - - - 2,893 - 2,893 4,302 Doubtful - - - - - - - - - Loss - - - - - - - - - Total construction loans $ 9,463 $ 18,385 $ - $ - $ - $ 6,924 $ - $ 34,772 $ 43,133 COMMERCIAL MORTGAGE Risk Ratings: Pass $ 391,589 $ 141,456 $ 363,115 $ 296,954 $ 193,795 $ 267,793 $ 1,026 $ 1,655,728 $ 1,395,569 Criticized: Special Mention 1,198 - 3,583 6,919 12,042 121,673 - 145,415 259,263 Substandard 135 - - 2,819 - 30,107 - 33,061 47,399 Doubtful - - - - - - - - - Loss - - - - - - - - - Total commercial mortgage loans $ 392,922 $ 141,456 $ 366,698 $ 306,692 $ 205,837 $ 419,573 $ 1,026 $ 1,834,204 $ 1,702,231 C&I Risk Ratings: Pass $ 297,932 $ 195,460 $ 184,856 $ 315,987 $ 88,484 $ 179,201 $ 527,652 $ 1,789,572 $ 1,852,552 Criticized: Special Mention 138 912 - 500 9,867 2,631 29,176 43,224 32,650 Substandard 203 351 1,324 14,119 725 10,238 353 27,313 61,395 Doubtful - - - - - - - - - Loss - - - - - - - - - Total C&I loans $ 298,273 $ 196,723 $ 186,180 $ 330,606 $ 99,076 $ 192,070 $ 557,181 $ 1,860,109 $ 1,946,597 (1) Excludes accrued interest receivable. As of December 31, 2022 Term Loans As of December 31, 2021 Florida region Amortized Cost Basis by Origination Year (1) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) CONSTRUCTION Risk Ratings: Pass $ 48,536 $ 42,841 $ - $ 14 $ - $ - $ 6,790 $ 98,181 $ 95,866 Criticized: Special Mention - - - - - - - - - Substandard - - - - - - - - - Doubtful - - - - - - - - - Loss - - - - - - - - - Total construction loans $ 48,536 $ 42,841 $ - $ 14 $ - $ - $ 6,790 $ 98,181 $ 95,866 COMMERCIAL MORTGAGE Risk Ratings: Pass $ 176,131 $ 70,525 $ 41,413 $ 54,839 $ 71,404 $ 70,316 $ 18,556 $ 503,184 $ 404,304 Criticized: Special Mention - - 6,986 13,309 - - - 20,295 60,618 Substandard - - 1,168 - - - - 1,168 316 Doubtful - - - - - - - - - Loss - - - - - - - - - Total commercial mortgage loans $ 176,131 $ 70,525 $ 49,567 $ 68,148 $ 71,404 $ 70,316 $ 18,556 $ 524,647 $ 465,238 C&I Risk Ratings: Pass $ 277,637 $ 163,210 $ 77,027 $ 223,504 $ 66,484 $ 35,028 $ 136,261 $ 979,151 $ 826,823 Criticized: Special Mention - - - 5,974 - 11,931 - 17,905 49,946 Substandard - - 267 24,852 - 3,678 301 29,098 63,885 Doubtful - - - - - - - - - Loss - - - - - - - - - Total C&I loans $ 277,637 $ 163,210 $ 77,294 $ 254,330 $ 66,484 $ 50,637 $ 136,562 $ 1,026,154 $ 940,654 (1) Excludes accrued interest receivable. As of December 31, 2022 Total Term Loans As of December 31, 2021 Amortized Cost Basis by Origination Year (1) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) CONSTRUCTION Risk Ratings: Pass $ 57,999 $ 61,226 $ - $ 14 $ - $ 4,031 $ 6,790 $ 130,060 $ 133,932 Criticized: Special Mention - - - - - - - - 765 Substandard - - - - - 2,893 - 2,893 4,302 Doubtful - - - - - - - - - Loss - - - - - - - - - Total construction loans $ 57,999 $ 61,226 $ - $ 14 $ - $ 6,924 $ 6,790 $ 132,953 $ 138,999 COMMERCIAL MORTGAGE Risk Ratings: Pass $ 567,720 $ 211,981 $ 404,528 $ 351,793 $ 265,199 $ 338,109 $ 19,582 $ 2,158,912 $ 1,799,873 Criticized: Special Mention 1,198 - 10,569 20,228 12,042 121,673 - 165,710 319,881 Substandard 135 - 1,168 2,819 - 30,107 - 34,229 47,715 Doubtful - - - - - - - - - Loss - - - - - - - - - Total commercial mortgage loans $ 569,053 $ 211,981 $ 416,265 $ 374,840 $ 277,241 $ 489,889 $ 19,582 $ 2,358,851 $ 2,167,469 C&I Risk Ratings: Pass $ 575,569 $ 358,670 $ 261,883 $ 539,491 $ 154,968 $ 214,229 $ 663,913 $ 2,768,723 $ 2,679,375 Criticized: Special Mention 138 912 - 6,474 9,867 14,562 29,176 61,129 82,596 Substandard 203 351 1,591 38,971 725 13,916 654 56,411 125,280 Doubtful - - - - - - - - - Loss - - - - - - - - - Total C&I loans $ 575,910 $ 359,933 $ 263,474 $ 584,936 $ 165,560 $ 242,707 $ 693,743 $ 2,886,263 $ 2,887,251 (1) Excludes accrued interest receivable. Accrued interest receivable on loans totaled $ 53.1 million as of December 31, 2022 ($ 48.1 million as of December 31, 2021), was reported as part of accrued interest receivable on loans and investment securities in the consolidated statements of financial condition and is excluded from the estimate of credit losses. The following tables present information about collateral dependent loans that were individually evaluated for purposes of determining the ACL as of December 31, 2022 and 2021 As of December 31, 2022 Collateral Dependent Loans - With Allowance Collateral Dependent Loans - With No Related Allowance Collateral Dependent Loans - Total Amortized Cost Related Allowance Amortized Cost Amortized Cost Related Allowance (In thousands) Residential mortgage loans: Conventional residential mortgage loans $ 36,206 $ 2,571 $ - $ 36,206 $ 2,571 Commercial loans: Construction loans - - 956 956 - Commercial mortgage loans 2,466 897 62,453 64,919 897 C&I loans 1,513 322 17,590 19,103 322 Consumer loans: Personal loans 56 1 64 120 1 Other consumer loans 207 29 - 207 29 $ 40,448 $ 3,820 $ 81,063 $ 121,511 $ 3,820 The allowance related to collateral dependent loans reported in the tables above includes qualitative adjustments applied to the loan portfolio that consider possible changes in circumstances that could ultimately impact credit losses and might not be reflected in historical data or forecasted data incorporated in the quantitative models. The underlying collateral for residential mortgage and consumer collateral dependent loans consisted of single-family residential properties, and for commercial and construction loans consisted primarily of office buildings, multifamily residential properties, and retail establishments. The weighted-average loan-to- value coverage for collateral dependent loans as of December 2022 decreased to 70 %, compared to 78 % as of December 31, 2021, mainly driven by the payoff of a $ 16.2 million C&I loan in the Puerto Rico region that had a loan-to-value ratio of 116 %. Purchases and Sales of Loans In the ordinary course of business, the Corporation enters into securitization transactions and whole loan sales with GNMA and GSEs, such as FNMA and FHLMC. During the years ended December 31, 2022, 2021, and 2020, loans pooled into GNMA MBS amounted to approximately $ 144.5 million, $ 190.8 million and $ 219.6 million, respectively, of which the Corporation recognized a net gain on sale of $ 4.2 million, $ 8.8 million, and $ 9.9 million for the years ended December 31, 2022, 2021, and 2020, respectively. Also, during the years ended December 31, 2022, 2021, and 2020, the Corporation sold approximately $ 93.8 million, $ 328.2 million, and $ 255.0 million, respectively, of performing residential mortgage loans to FNMA and FHLMC, of which the Corporation recognized a net gain on sale of $ 4.2 million, $ 11.4 million, and $ 8.3 million for the years ended December 31, 2022, 2021, and 2020, respectively. The Corporation’s continuing involvement with the loans that it sells consists primarily of servicing the loans. In addition, the Corporation agrees to repurchase loans if it breaches any of the representations and warranties included in the sale agreement. These representations and warranties are consistent with the GSEs’ selling and servicing guidelines (i.e., ensuring that the mortgage was properly underwritten according to established guidelines). For loans pooled into GNMA MBS, the Corporation, as servicer, holds an option to repurchase individual delinquent loans issued on or after January 1, 2003 when certain delinquency criteria are met. This option gives the Corporation the unilateral ability, but not the obligation, to repurchase the delinquent loans at par without prior authorization from GNMA. Since the Corporation is considered to have regained effective control over the loans, it is required to recognize the loans and a corresponding repurchase liability regardless of its intent to repurchase the loans. As of December 31, 2022 and 2021, rebooked GNMA delinquent loans that were included in the residential mortgage loan portfolio amounted to $ 10.4 million and $ 7.2 million, respectively. During the years ended December 31, 2022, 2021, and 2020, the Corporation repurchased, pursuant to the aforementioned repurchase option, $ 8.2 million, $ 1.1 million, and $ 55.0 million, respectively, of loans previously pooled into GNMA MBS. The principal balance of these loans is fully guaranteed, and the risk of loss related to the repurchased loans is generally limited to the difference between the delinquent interest payment advanced to GNMA, which is computed at the loan’s interest rate, and the interest payments reimbursed by FHA, which are computed at a pre-determined debenture rate. Repurchases of GNMA loans allow the Corporation, among other things, to maintain acceptable delinquency rates on outstanding GNMA pools and remain as a seller and servicer in good standing with GNMA. Historically, losses on these repurchases of GNMA delinquent loans have been immaterial and no provision has been made at the time of sale. Loan sales to FNMA and FHLMC are without recourse in relation to the future performance of the loans. The Corporation repurchased at par loans previously sold to FNMA and FHLMC in the amount of $ 0.4 million, $ 0.3 million, and $ 42 thousand during the years ended December 31, 2022, 2021, and 2020, respectively. The Corporation’s risk of loss with respect to these loans is also minimal as these repurchased loans are generally performing loans with documentation deficiencies. During the year ended December 31, 2022, the Corporation sold a $ 35.2 million C&I loan participation in the Puerto Rico region and a $ 23.9 million criticized C&I loan participation in the Florida region. Also, during the year ended December 31, 2021, a $ 3.1 million construction loan in the Puerto Rico region and four criticized commercial loan participations in the Florida region totaling $ 43.1 million were sold. Further, during the third quarter of 2021, the Corporation sold $ 52.5 million of non-performing residential mortgage loans and related servicing advances of $ 2.0 million. The Corporation received $ 31.5 million, or 58 % of book value before reserves, for the $ 54.5 million of non-performing loans and related servicing advances. Approximately $ 20.9 million of reserves had been allocated to the loans sold. The transaction resulted in total net charge-offs of $ 23.1 million and an additional loss of approximately $ 2.1 million recorded as charge to the provision for credit losses in the third quarter of 2021. Finally, the Corporation participated in the Main Street Lending program established by the FED under the CARES Act of 2020, as amended, to support lending to small and medium-sized businesses that were in sound financial condition before the onset of the COVID-19 pandemic. Under this program, the Corporation originated loans to borrowers meeting the terms and requirements of the program, including requirements as to eligibility, use of proceeds and priority, and sold a 95% participation interest in these loans to a special purpose vehicle (the “Main Street SPV”) organized by the FED to purchase the participation interests from eligible lenders, including the Corporation. During the fourth quarter of 2020, the Corporation originated 23 loans under this program totaling $ 184.4 million in principal amount and sold participation interests totaling $ 175.1 million to the Main Street SPV. During the years ended December 31, 2022, 2021, and 2020, the Corporation purchased C&I loan participations in the Florida region totaling $ 135.4 million, $ 174.7 million, and $ 40.0 million, respectively. Loan Portfolio Concentration The Corporation’s primary lending area is Puerto Rico. The Corporation’s banking subsidiary, FirstBank, also lends in the USVI and BVI markets and in the United States (principally in the state of Florida). Of the total gross loans held for investment portfolio of $ 11.6 billion as of December 31, 2022, credit risk concentration was approximately 79 % in Puerto Rico, 18 % in the U.S., and 3 % in the USVI and BVI. As of December 31, 2022, the Corporation had $ 169.8 million outstanding in loans extended to the Puerto Rico government, its municipalities and public corporations, compared to $ 178.4 million as of December 31, 2021. As of December 31, 2022, approximately $ 102.7 million consisted of loans extended to municipalities in Puerto Rico that are general obligations supported by assigned property tax revenues, and $ 28.9 million of loans which are supported by one or more specific sources of municipal revenues. The vast majority of revenues of the municipalities included in the Corporation’s loan portfolio are independent of budgetary subsidies provided by the Puerto Rico central government. These municipalities are required by law to levy special property taxes in such amounts as are required to satisfy the payment of all of their respective general obligation bonds and notes. In addition to loans extended to municipalities, the Corporation’s exposure to the Puerto Rico government as of December 31, 2022 included $ 10.8 million in loans granted to an affiliate of the Puerto Rico Electric Power Authority (“PREPA”) and $ 27.4 million in loans to an agency of the Puerto Rico central government. In addition, as of December 31, 2022, the Corporation had $ 84.7 million in exposure to residential mortgage loans that are guaranteed by the PRHFA, a government instrumentality that has been designated as a covered entity under PROMESA, compared to $ 92.8 million as of December 31, 2021. Residential mortgage loans guaranteed by the PRHFA are secured by the underlying properties and the guarantees serve to cover shortfalls in collateral in the event of a borrower default. The Corporation also has credit exposure to USVI government entities. As of December 31, 2022, the Corporation had $ 38.0 million in loans to USVI government public corporations, compared to $ 39.2 million as of December 31, 2021. As of December 31, 2022, all loans were currently performing and up to date on principal and interest payments. Troubled Debt Restructurings The Corporation provides homeownership preservation assistance to its customers through a loss mitigation program. Depending upon the nature of a borrower’s financial condition, restructurings or loan modifications through this program, as well as other restructurings of individual C&I, commercial mortgage, construction, and residential mortgage loans, fit the definition of a TDR. As of December 31, 2022, the Corporation’s total TDR loans held for investment amounted to $ 366.7 million, of which $ 328.1 million were in accruing status. See Note 1 – Nature of Business and Summary Significant of Accounting Policies, for information on when the Corporation classifies TDR loans as either accrual or nonaccrual loans. The total TDR loans held for investment consisted of $ 240.6 million of residential mortgage loans, $ 49.6 million of C&I loans, $ 63.3 million of commercial mortgage loans, $ 1.2 million of construction loans, and $ 12.0 million of consumer loans. As of December 31, 2022, the Corporation included as TDRs $ 0.7 million of residential mortgage loans that were participating in or had been offered a trial modification, which generally represents a six-month period during which the borrower makes monthly payments under the anticipated modified payment terms prior to a formal modification. TDR loans exclude restructured residential mortgage loans that are government-guaranteed (e.g., FHA/VA loans) totaling $ 53.9 million as of December 31, 2022, compared with $ 57.6 million as of December 31, 2021. As of December 31, 2022, the Corporation has committed to lend up to an additional $ 4 thousand on TDR consumer loans. The following tables present TDR loans completed during 2022, 2021 and 2020: Year Ended December 31, 2022 Interest rate below market Maturity or term extension Combination of reduction in interest rate and extension of maturity Forgiveness of principal and/or interest Other (1) Total (In thousands) Conventional residential mortgage loans $ 433 $ 1,551 $ 242 $ - $ 4,874 $ 7,100 Construction loans - - - - - - Commercial mortgage loans - 245 5,178 - 467 5,890 C&I loans 2,402 - 618 825 1,083 4,928 Consumer loans: Auto loans 2,877 232 345 - - 3,454 Finance leases - 573 - - 18 591 Personal loans 99 171 105 - 19 394 Credit cards (2) - - - - 816 816 Other consumer loans 112 272 16 43 - 443 Total TDRs $ 5,923 $ 3,044 $ 6,504 $ 868 $ 7,277 $ 23,616 (1) Other concessions granted by the Corporation include payment plans under judicial stipulation or loss mitigation programs, or a combination of two or more of the concessions listed in the table. Amounts included in Other that represent a combination of concessions are excluded from the amounts reported in the column for such individual concessions. (2) Concession consists of reduction in interest rate and revocation of revolving line privileges. Year Ended December 31, 2021 Interest rate below market Maturity or term extension Combination of reduction in interest rate and extension of maturity Forgiveness of principal and/or interest Other (1) Total (In thousands) Conventional residential mortgage loans $ 365 $ 859 $ 2,647 $ - $ 3,723 $ 7,594 Construction loans - - - - - - Commercial mortgage loans - - 10,586 - 637 11,223 C&I loans - 300 9,100 - 508 9,908 Consumer loans: Auto loans 1,888 433 277 - - 2,598 Finance leases - 645 26 - 26 697 Personal loans 13 60 387 - 44 504 Credit cards (2) - - - - 1,426 1,426 Other consumer loans 110 79 - 77 - 266 Total TDRs $ 2,376 $ 2,376 $ 23,023 $ 77 $ 6,364 $ 34,216 (1) Other concessions granted by the Corporation include payment plans under judicial stipulation or loss mitigation programs, or a combination of two or more of the concessions listed in the table. Amounts included in Other that represent a combination of concessions are excluded from the amounts reported in the column for such individual concessions. (2) Concession consists of reduction in interest rate and revocation of revolving line privileges. Year Ended December 31, 2020 Interest rate below market Maturity or term extension Combination of reduction in interest rate and extension of maturity Forgiveness of principal and/or interest Forbearance Agreement Other (1) Total (In thousands) Conventional residential mortgage loans $ 18 $ 545 $ 2,044 $ - $ - $ 5,700 $ 8,307 Construction loans - - - - - - - Commercial mortgage loans - - 271 - - 553 824 C&I loans 31 - 4,107 - 18,386 - 22,524 Consumer loans: Auto loans 1,902 413 275 - - 33 2,623 Finance leases - 408 - - - - 408 Personal loans 38 74 145 - - 48 305 Credit cards (2) - - - - - 783 783 Other consumer loans 219 83 24 219 - - 545 Total TDRs $ 2,208 $ 1,523 $ 6,866 $ 219 $ 18,386 $ 7,117 $ 36,319 (1) Other concessions granted by the Corporation include payment plans under judicial stipulation or loss mitigation programs, or a combination of two or more of the concessions listed in the table. Amounts included in Other that represent a combination of concessions are excluded from the amounts reported in the column for such individual concessions. (2) Concession consists of reduction in interest rate and revocation of revolving line privileges. Year Ended December 31, 2022 2021 2020 Number of contracts Pre-modification Amortized Cost Post-modification Amortized Cost Number of contracts Pre-modification Amortized Cost Post-modification Amortized Cost Number of contracts Pre-modification Amortized Cost Post-modification Amortized Cost (Dollars in thousands) Conventional residential mortgage loans 68 $ 7,165 $ 7,100 66 $ 7,687 $ 7,594 103 $ 9,027 $ 8,307 Construction loans - - - - - - - - - Commercial mortgage loans 3 5,897 5,890 7 11,285 11,223 5 824 824 C&I loans 17 5,156 4,928 6 10,031 9,908 14 22,544 22,524 Consumer loans: Auto loans 168 3,404 3,454 134 2,601 2,598 163 2,635 2,623 Finance leases 33 592 591 42 692 697 29 408 408 Personal loans 26 366 394 46 497 504 30 306 305 Credit Cards 170 815 816 246 1,426 1,426 159 783 783 Other consumer loans 115 434 443 65 266 266 145 613 545 Total TDRs 600 $ 23,829 $ 23,616 612 $ 34,485 $ 34,216 648 $ 37,140 $ 36,319 Loan modifications considered TDR loans that defaulted (failure by the borrower to make payments of either principal, interest, or both for a period of 90 days or more) during 2022, 2021 and 2020, and had become TDR loans during the 12-months preceding the default date, were as follows: Year Ended December 31, 2022 2021 2020 Number of contracts Amortized Cost Number of contracts Amortized Cost Number of contracts Amortized Cost (Dollars in thousands) Conventional residential mortgage loans 2 $ 124 - $ - 4 $ 465 Construction loans - - - - - - Commercial mortgage loans - - - - - - C&I loans - - - - 3 124 Consumer loans: Auto loans 96 2,049 92 1,625 55 947 Finance leases 1 16 - - 1 5 Personal loans - - 1 1 1 7 Credit cards 28 156 24 126 23 93 Other consumer loans 8 30 11 45 58 209 Total 135 $ 2,375 128 $ 1,797 145 $ 1,850 As of December 31, 2022 As of December 31, 2021 Term Loans Amortized Cost Basis by Origination Year (1) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) Puerto Rico and Virgin Islands Region: FHA/VA government-guaranteed loans Accrual Status: Performing $ 700 $ 693 $ 802 $ 1,407 $ 3,784 $ 110,030 $ - $ 117,416 $ 124,652 Non-Performing - - - - - - - - - Total FHA/VA government-guaranteed loans $ 700 $ 693 $ 802 $ 1,407 $ 3,784 $ 110,030 $ - $ 117,416 $ 124,652 Conventional residential mortgage loans: Accrual Status: Performing $ 172,628 $ 75,397 $ 31,885 $ 47,911 $ 72,285 $ 1,864,907 $ - $ 2,265,013 $ 2,376,946 Non-Performing - 35 - 219 279 34,938 - 35,471 47,975 Total conventional residential mortgage loans $ 172,628 $ 75,432 $ 31,885 $ 48,130 $ 72,564 $ 1,899,845 $ - $ 2,300,484 $ 2,424,921 Total: Accrual Status: Performing $ 173,328 $ 76,090 $ 32,687 $ 49,318 $ 76,069 $ 1,974,937 $ - $ 2,382,429 $ 2,501,598 Non-Performing - 35 - 219 279 34,938 - 35,471 47,975 Total residential mortgage loans in Puerto Rico and Virgin Islands Region $ 173,328 $ 76,125 $ 32,687 $ 49,537 $ 76,348 $ 2,009,875 $ - $ 2,417,900 $ 2,549,573 (1) Excludes accrued interest receivable. As of December 31, 2022 As of December 31, 2021 Term Loans Amortized Cost Basis by Origination Year (1) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) Florida Region: FHA/VA government-guaranteed loans Accrual Status: Performing $ - $ - $ - $ - $ - $ 742 $ - $ 742 $ 740 Non-Performing - - - - - - - - - Total FHA/VA government-guaranteed loans $ - $ - $ - $ - $ - $ 742 $ - $ 742 $ 740 Conventional residential mortgage loans: Accrual Status: Performing $ 82,968 $ 49,479 $ 31,405 $ 31,144 $ 37,268 $ 189,083 $ - $ 421,347 $ 421,430 Non-Performing - - - 272 477 6,552 - 7,301 7,152 Total conventional residential mortgage loans $ 82,968 $ 49,479 $ 31,405 $ 31,416 $ 37,745 $ 195,635 $ - $ 428,648 $ 428,582 Total: Accrual Status: Performing $ 82,968 $ 49,479 $ 31,405 $ 31,144 $ 37,268 $ 189,825 $ - $ 422,089 $ 422,170 Non-Performing - - - 272 477 6,552 - 7,301 7,152 Total residential mortgage loans in Florida region $ 82,968 $ 49,479 $ 31,405 $ 31,416 $ 37,745 $ 196,377 $ - $ 429,390 $ 429,322 (1) Excludes accrued interest receivable. As of December 31, 2022 As of December 31, 2021 Term Loans Amortized Cost Basis by Origination Year (1) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) Total: FHA/VA government-guaranteed loans Accrual Status: Performing $ 700 $ 693 $ 802 $ 1,407 $ 3,784 $ 110,772 $ - $ 118,158 $ 125,392 Non-Performing - - - - - - - - - Total FHA/VA government-guaranteed loans $ 700 $ 693 $ 802 $ 1,407 $ 3,784 $ 110,772 $ - $ 118,158 $ 125,392 Conventional residential mortgage loans: Accrual Status: Performing $ 255,596 $ 124,876 $ 63,290 $ 79,055 $ 109,553 $ 2,053,990 $ - $ 2,686,360 $ 2,798,376 Non-Performing - 35 - 491 756 41,490 - 42,772 55,127 Total conventional residential mortgage loans $ 255,596 $ 124,911 $ 63,290 $ 79,546 $ 110,309 $ 2,095,480 $ - $ 2,729,132 $ 2,853,503 Total: Accrual Status: Performing $ 256,296 $ 125,569 $ 64,092 $ 80,462 $ 113,337 $ 2,164,762 $ - $ 2,804,518 $ 2,923,768 Non-Performing - 35 - 491 756 41,490 - 42,772 55,127 Total residential mortgage loans $ 256,296 $ 125,604 $ 64,092 $ 80,953 $ 114,093 $ 2,206,252 $ - $ 2,847,290 $ 2,978,895 (1) Excludes accrued interest receivable. As of December 31, 2022 As of December 31, 2021 Term Loans Amortized Cost Basis by Origination Year (1) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) Puerto Rico and Virgin Islands Regions: Auto loans: Accrual Status: Performing $ 674,145 $ 510,950 $ 254,196 $ 206,345 $ 99,008 $ 39,138 $ - $ 1,783,782 $ 1,556,097 Non-Performing 1,666 2,140 1,596 2,508 1,385 1,301 - 10,596 6,684 Total auto loans $ 675,811 $ 513,090 $ 255,792 $ 208,853 $ 100,393 $ 40,439 $ - $ 1,794,378 $ 1,562,781 Finance leases: Accrual Status: Performing $ 292,995 $ 192,435 $ 88,196 $ 81,186 $ 48,332 $ 13,441 $ - $ 716,585 $ 574,139 Non-Performing 176 253 305 219 384 308 - 1,645 866 Total finance leases $ 293,171 $ 192,688 $ 88,501 $ 81,405 $ 48,716 $ 13,749 $ - $ 718,230 $ 575,005 Personal loans: Accrual Status: Performing $ 175,875 $ 55,993 $ 29,320 $ 53,911 $ 22,838 $ 13,727 $ - $ 351,664 $ 314,867 Non-Performing 348 249 135 289 112 115 - 1,248 1,208 Total personal loans $ 176,223 $ 56,242 $ 29,455 $ 54,200 $ 22,950 $ 13,842 $ - $ 352,912 $ 316,075 Credit cards: Accrual Status: Performing $ - $ - $ - $ - $ - $ - $ 311,731 $ 311,731 $ 290,226 Non-Performing - - - - - - - - - Total credit cards $ - $ - $ - $ - $ - $ - $ 311,731 $ 311,731 $ 290,226 Other consumer loans: Accrual Status: Performing $ 79,630 $ 21,488 $ 9,345 $ 11,941 $ 4,030 $ 3,761 $ 8,921 $ 139,116 $ 126,734 Non-Performing 409 201 61 119 20 241 71 1,122 1,563 Total other consumer loans $ 80,039 $ 21,689 $ 9,406 $ 12,060 $ 4,050 $ 4,002 $ 8,992 $ 140,238 $ 128,297 Total: Performing $ 1,222,645 $ 780,866 $ 381,057 $ 353,383 $ 174,208 $ 70,067 $ 320,652 $ 3,302,878 $ 2,862,063 Non-Performing 2,599 2,843 2,097 3,135 1,901 1,965 71 14,611 10,321 Total consumer loans in Puerto Rico and Virgin Islands region $ 1,225,244 $ 783,709 $ 383,154 $ 356,518 $ 176,109 $ 72,032 $ 320,723 $ 3,317,489 $ 2,872,384 (1) Excludes accrued interest receivable. As of December 31, 2022 As of December 31, 2021 Term Loans Amortized Cost Basis by Origination Year (1) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) Florida Region: Auto loans: Accrual Status: Performing $ - $ - $ - $ 305 $ 2,333 $ 979 $ - $ 3,617 $ 8,759 Non-Performing - - - - 36 40 - 76 - Total auto loans $ - $ - $ - $ 305 $ 2,369 $ 1,019 $ - $ 3,693 $ 8,759 Finance leases: Accrual Status: Performing $ - $ - $ - $ - $ - $ - $ - $ - $ - Non-Performing - - - - - - - - - Total finance leases $ - $ - $ - $ - $ - $ - $ - $ - $ - Personal loans: Accrual Status: Performing $ 254 $ 71 $ 9 $ - $ - $ - $ - $ 334 $ 107 Non-Performing - - - - - - - - - Total personal loans $ 254 $ 71 $ 9 $ - $ - $ - $ - $ 334 $ 107 Credit cards: Accrual Status: Performing $ - $ - $ - $ - $ - $ - $ - $ - $ - Non-Performing - - - - - - - - - Total credit cards $ - $ - $ - $ - $ - $ - $ - $ - $ - Other consumer loans: Accrual Status: Performing $ 49 $ 231 $ 464 $ - $ 39 $ 2,588 $ 2,462 $ 5,833 $ 6,661 Non-Performing - - - - - 21 98 119 133 Total other consumer loans $ 49 $ 231 $ 464 $ - $ 39 $ 2,609 $ 2,560 $ 5,952 $ 6,794 Total: Performing $ 303 $ 302 $ 473 $ 305 $ 2,372 $ 3,567 $ 2,462 $ 9,784 $ 15,527 Non-Performing - - - - 36 61 98 195 133 Total consumer loans in Florida region $ 303 $ 302 $ 473 $ 305 $ 2,408 $ 3,628 $ 2,560 $ 9,979 $ 15,660 (1) Excludes accrued interest receivable. As of December 31, 2022 As of December 31, 2021 Term Loans Amortized Cost Basis by Origination Year (1) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) Total: Auto loans: Accrual Status: Performing $ 674,145 $ 510,950 $ 254,196 $ 206,650 $ 101,341 $ 40,117 $ - $ 1,787,399 $ 1,564,856 Non-Performing 1,666 2,140 1,596 2,508 1,421 1,341 - 10,672 6,684 Total auto loans $ 675,811 $ 513,090 $ 255,792 $ 209,158 $ 102,762 $ 41,458 $ - $ 1,798,071 $ 1,571,540 Finance leases: Accrual Status: Performing $ 292,995 $ 192,435 $ 88,196 $ 81,186 $ 48,332 $ 13,441 $ - $ 716,585 $ 574,139 Non-Performing 176 253 305 219 384 308 - 1,645 866 Total finance leases $ 293,171 $ 192,688 $ 88,501 $ 81,405 $ 48,716 $ 13,749 $ - $ 718,230 $ 575,005 Personal loans: Accrual Status: Performing $ 176,129 $ 56,064 $ 29,329 $ 53,911 $ 22,838 $ 13,727 $ - $ 351,998 $ 314,974 Non-Performing 348 249 135 289 112 115 - 1,248 1,208 Total personal loans $ 176,477 $ 56,313 $ 29,464 $ 54,200 $ 22,950 $ 13,842 $ - $ 353,246 $ 316,182 Credit cards: Accrual Status: Performing $ - $ - $ - $ - $ - $ - $ 311,731 $ 311,731 $ 290,226 Non-Performing - - - - - - - - - Total credit cards $ - $ - $ - $ - $ - $ - $ 311,731 $ 311,731 $ 290,226 Other consumer loans: Accrual Status: Performing $ 79,679 $ 21,719 $ 9,809 $ 11,941 $ 4,069 $ 6,349 $ 11,383 $ 144,949 $ 133,395 Non-Performing 409 201 61 119 20 262 169 1,241 1,696 Total other consumer loans $ 80,088 $ 21,920 $ 9,870 $ 12,060 $ 4,089 $ 6,611 $ 11,552 $ 146,190 $ 135,091 Total: Performing $ 1,222,948 $ 781,168 $ 381,530 $ 353,688 $ 176,580 $ 73,634 $ 323,114 $ 3,312,662 $ 2,877,590 Non-Performing 2,599 2,843 2,097 3,135 1,937 2,026 169 14,806 10,454 Total consumer loans $ 1,225,547 $ 784,011 $ 383,627 $ 356,823 $ 178,517 $ 75,660 $ 323,283 $ 3,327,468 $ 2,888,044 (1) Excludes accrued interest receivable. As of December 31, 2021 Collateral Dependent Loans - With Allowance Collateral Dependent Loans - With No Related Allowance Collateral Dependent Loans - Total Amortized Cost Related Allowance Amortized Cost Amortized Cost Related Allowance (In thousands) Residential mortgage loans: Conventional residential mortgage loans $ 51,771 $ 3,966 $ 781 $ 52,552 $ 3,966 Commercial loans: Construction loans - - 1,797 1,797 - Commercial mortgage loans 9,908 1,152 56,361 66,269 1,152 C&I loans 5,781 670 34,043 39,824 670 Consumer loans: Personal loans 78 1 - 78 1 Other consumer loans 782 98 - 782 98 $ 68,320 $ 5,887 $ 92,982 $ 161,302 $ 5,887 The Corporation’s aging of the loan portfolio held for investment, as well as information about nonaccrual loans with no ACL by portfolio classes as of December 31, 2022 and 2021 are as follows: The following tables present the amortized cost of residential mortgage loans by portfolio classes and by origination year based on accrual status as of December 31, 2022, and the amortized cost of residential mortgage loans by portfolio classes based on accrual status as of December 31, 2021: The following tables present the amortized cost of consumer loans by portfolio classes and by origination year based on accrual status as of December 31, 2022, and the amortized cost of consumer loans by portfolio classes based on accrual status as of December 31, 2021: For certain TDR loans, the Corporation splits the loans into two new notes (the “Note A” and the “Note B”). The A Note is restructured to comply with the Corporation’s lending standards at current market rates and is tailored to suit the customer’s ability to make timely interest and principal payments. The B Note includes the granting of the concession to the borrower and varies by situation. The B Note is fully charged-off, unless it is collateral-dependent and the source of repayment is independent of the A Note in which case a partial charge -off may be recorded. At the time of the restructuring, the A Note is identified and classified as a TDR loan. During 2022, 2021, and 2020, there were no new Note A and B restructurings.

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