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LOANS HELD FOR INVESTMENT | 9 Months Ended
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Sep. 30, 2023
LOANS HELD FOR INVESTMENT [Abstract] |
LOANS HELD FOR INVESTMENT | NOTE 3 – 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 September 30, As of December 31, 2023 2022 (In thousands) Puerto Rico and Virgin Islands region: Residential mortgage loans, mainly secured by first mortgages $ 2,353,679 $ 2,417,900 Construction loans 102,327 34,772 Commercial mortgage loans 1,780,008 1,834,204 Commercial and Industrial ("C&I") loans 2,088,274 1,860,109 Consumer loans 3,582,001 3,317,489 Loans held for investment $ 9,906,289 $ 9,464,474 Florida region: Residential mortgage loans, mainly secured by first mortgages $ 458,952 $ 429,390 Construction loans 100,447 98,181 Commercial mortgage loans 536,105 524,647 C&I loans 942,680 1,026,154 Consumer loans 6,459 9,979 Loans held for investment $ 2,044,643 $ 2,088,351 Total: Residential mortgage loans, mainly secured by first mortgages $ 2,812,631 $ 2,847,290 Construction loans 202,774 132,953 Commercial mortgage loans 2,316,113 2,358,851 C&I loans (1) 3,030,954 2,886,263 Consumer loans 3,588,460 3,327,468 Loans held for investment (2) 11,950,932 11,552,825 ACL on loans and finance leases (263,615) (260,464) Loans held for investment, net $ 11,687,317 $ 11,292,361 (1) As of September 30, 2023 and December 31, 2022, includes $ 807.6 million and $ 838.5 million, respectively, of commercial loans that were secured by real estate and for which the primary source of repayment at origination was not dependent upon such real estate. (2) Includes accretable fair value net purchase discounts of $ 25.8 million and $ 29.3 million as of September 30, 2023 and December 31, 2022, respectively. When a loan is placed in 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 $ 0.9 million and $ 2.0 million for the quarter and nine-month period ended September 30, 2023, respectively, compared to $ 0.5 million and $ 1.2 million for the quarter and nine-month period ended September 30, 2022, respectively. For the quarter and nine- month period ended September 30, 2023, the cash interest income recognized on nonaccrual loans amounted to $ 0.4 million and $ 1.4 million, respectively, compared to $ 0.3 million and $ 1.0 million for the quarter and nine-month period ended September 30, 2022, respectively. As of September 30, 2023, the recorded investment on residential mortgage loans collateralized by residential real estate property that were in the process of foreclosure amounted to $ 43.8 million, including $ 18.4 million of FHA/VA government-guaranteed mortgage loans, and $ 6.1 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 September 30, 2023 Days Past Due and Accruing Current 30-59 60-89 90+ (1) (2) (3) Nonaccrual (4) Total loans held for investment Nonaccrual Loans with no ACL (5) (In thousands) Residential mortgage loans, mainly secured by first mortgages: FHA/VA government-guaranteed loans (1) (3) (6) $ 69,175 $ - $ 2,754 $ 32,167 $ - $ 104,096 $ - Conventional residential mortgage loans (2) (6) 2,633,303 - 31,328 11,958 31,946 2,708,535 1,910 Commercial loans: Construction loans (6) 199,293 1,834 - 7 1,640 202,774 973 Commercial mortgage loans (2) (6) 2,290,012 930 1,166 2,373 21,632 2,316,113 5,458 C&I loans 2,998,999 441 1,956 10,749 18,809 3,030,954 1,523 Consumer loans: Auto loans 1,826,679 52,755 10,648 - 13,103 1,903,185 102 Finance leases 816,251 10,421 2,346 - 2,522 831,540 - Personal loans 367,428 5,708 2,840 - 1,874 377,850 - Credit cards 308,519 4,563 3,230 5,638 - 321,950 - Other consumer loans 148,251 2,399 1,647 - 1,638 153,935 1 Total loans held for investment $ 11,657,910 $ 79,051 $ 57,915 $ 62,892 $ 93,164 $ 11,950,932 $ 9,967 (1) It is the Corporation's policy to report delinquent Federal Housing Authority (“FHA”)/Veterans Affairs (“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 $ 17.4 million of residential mortgage loans guaranteed by the FHA that were over 15 months delinquent as of September 30, 2023. (2) Includes purchased credit deteriorated ("PCD") loans previously accounted for under ASC Subtopic 310-30, "Loans and Debt Securities Acquired with Deteriorated Credit Quality" ("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 $ 8.9 million as of September 30, 2023 ($ 8.0 million conventional residential mortgage loans and $ 0.9 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 $ 8.5 million as of September 30, 2023. 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 $ 8.7 million as of September 30, 2023, primarily nonaccrual residential mortgage loans and C&I loans. (5) There were no nonaccrual loans with no ACL in the Florida region as of September 30, 2023. (6) 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, commercial mortgage loans, and construction loans past due 30-59 days, but less than two payments in arrears, as of September 30, 2023 amounted to $ 6.9 million, $ 65.5 million, $ 1.0 million, and $ 0.1 million, respectively. As of December 31, 2022 Days Past Due and Accruing Current 30-59 60-89 90+ (1)(2)(3) Nonaccrual (4) Total loans held for investment Nonaccrual Loans with no ACL (5) (In thousands) Residential mortgage loans, mainly secured by first mortgages: FHA/VA government-guaranteed loans (1) (3) (6) $ 67,116 $ - $ 2,586 $ 48,456 $ - $ 118,158 $ - Conventional residential mortgage loans (2) (6) 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) (6) 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 as of December 31, 2022. (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) Includes $ 0.3 million of nonaccrual C&I loans with no ACL in the Florida region as of December 31, 2022. (6) 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. 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, to the audited consolidated financial statements included in the 2022 Annual Report on Form 10-K. 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 September 30, 2023, the gross charge -offs for the nine-month period ended September 30, 2023 by portfolio classes and by origination year, and the amortized cost of commercial and construction loans by portfolio classes based on the internal credit-risk category as of December 31, 2022, were as follows: As of September 30, 2023 Puerto Rico and Virgin Islands region Term Loans As of December 31, 2022 Amortized Cost Basis by Origination Year (1) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) CONSTRUCTION Risk Ratings: Pass $ 44,895 $ 36,361 $ 14,939 $ - $ - $ 3,824 $ - $ 100,019 $ 31,879 Criticized: Special Mention - - - - - - - - - Substandard - - - - - 2,308 - 2,308 2,893 Doubtful - - - - - - - - - Loss - - - - - - - - - Total construction loans $ 44,895 $ 36,361 $ 14,939 $ - $ - $ 6,132 $ - $ 102,327 $ 34,772 Charge-offs on construction loans $ - $ - $ - $ - $ - $ 42 $ - $ 42 COMMERCIAL MORTGAGE Risk Ratings: Pass $ 118,701 $ 382,403 $ 138,404 $ 318,372 $ 278,814 $ 355,823 $ 1,153 $ 1,593,670 $ 1,655,728 Criticized: Special Mention - 4,438 - 33,670 - 112,829 - 150,937 145,415 Substandard - 127 - - 2,825 31,639 - 34,591 33,061 Doubtful - - - - - 810 - 810 - Loss - - - - - - - - - Total commercial mortgage loans $ 118,701 $ 386,968 $ 138,404 $ 352,042 $ 281,639 $ 501,101 $ 1,153 $ 1,780,008 $ 1,834,204 Charge-offs on commercial mortgage loans $ - $ - $ - $ - $ - $ 107 $ - $ 107 C&I Risk Ratings: Pass $ 216,614 $ 293,433 $ 165,637 $ 171,386 $ 284,636 $ 188,691 $ 697,937 $ 2,018,334 $ 1,789,572 Criticized: Special Mention 546 - - - 492 2,469 33,448 36,955 43,224 Substandard 1 - 385 617 13,439 18,178 365 32,985 27,313 Doubtful - - - - - - - - - Loss - - - - - - - - - Total C&I loans $ 217,161 $ 293,433 $ 166,022 $ 172,003 $ 298,567 $ 209,338 $ 731,750 $ 2,088,274 $ 1,860,109 Charge-offs on C&I loans $ - $ - $ - $ - $ - $ 218 $ 57 $ 275 (1) Excludes accrued interest receivable. As of September 30, 2023 Term Loans As of December 31, 2022 Florida region Amortized Cost Basis by Origination Year (1) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) CONSTRUCTION Risk Ratings: Pass $ 787 $ 54,329 $ 39,004 $ - $ - $ - $ 236 $ 94,356 $ 98,181 Criticized: Special Mention - - 6,091 - - - - 6,091 - Substandard - - - - - - - - - Doubtful - - - - - - - - - Loss - - - - - - - - - Total construction loans $ 787 $ 54,329 $ 45,095 $ - $ - $ - $ 236 $ 100,447 $ 98,181 Charge-offs on construction loans $ - $ - $ - $ - $ - $ - $ - $ - COMMERCIAL MORTGAGE Risk Ratings: Pass $ 22,043 $ 185,268 $ 63,924 $ 40,330 $ 50,661 $ 119,451 $ 29,008 $ 510,685 $ 503,184 Criticized: Special Mention - - - - 13,080 11,172 - 24,252 20,295 Substandard - - - 1,168 - - - 1,168 1,168 Doubtful - - - - - - - - - Loss - - - - - - - - - Total commercial mortgage loans $ 22,043 $ 185,268 $ 63,924 $ 41,498 $ 63,741 $ 130,623 $ 29,008 $ 536,105 $ 524,647 Charge-offs on commercial mortgage loans $ - $ - $ - $ - $ - $ - $ - $ - C&I Risk Ratings: Pass $ 80,515 $ 271,894 $ 172,186 $ 57,897 $ 135,159 $ 54,973 $ 122,583 $ 895,207 $ 979,151 Criticized: Special Mention - - 19,532 - 11,878 11,169 - 42,579 17,905 Substandard - - - 632 191 3,185 - 4,008 29,098 Doubtful - - - - - 886 - 886 - Loss - - - - - - - - - Total C&I loans $ 80,515 $ 271,894 $ 191,718 $ 58,529 $ 147,228 $ 70,213 $ 122,583 $ 942,680 $ 1,026,154 Charge-offs on C&I loans $ - $ - $ - $ - $ - $ 6,202 $ - $ 6,202 (1) Excludes accrued interest receivable. As of September 30, 2023 Total Term Loans As of December 31, 2022 Amortized Cost Basis by Origination Year (1) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) CONSTRUCTION Risk Ratings: Pass $ 45,682 $ 90,690 $ 53,943 $ - $ - $ 3,824 $ 236 $ 194,375 $ 130,060 Criticized: Special Mention - - 6,091 - - - - 6,091 - Substandard - - - - - 2,308 - 2,308 2,893 Doubtful - - - - - - - - - Loss - - - - - - - - - Total construction loans $ 45,682 $ 90,690 $ 60,034 $ - $ - $ 6,132 $ 236 $ 202,774 $ 132,953 Charge-offs on construction loans $ - $ - $ - $ - $ - $ 42 $ - $ 42 COMMERCIAL MORTGAGE Risk Ratings: Pass $ 140,744 $ 567,671 $ 202,328 $ 358,702 $ 329,475 $ 475,274 $ 30,161 $ 2,104,355 $ 2,158,912 Criticized: Special Mention - 4,438 - 33,670 13,080 124,001 - 175,189 165,710 Substandard - 127 - 1,168 2,825 31,639 - 35,759 34,229 Doubtful - - - - - 810 - 810 - Loss - - - - - - - - - Total commercial mortgage loans $ 140,744 $ 572,236 $ 202,328 $ 393,540 $ 345,380 $ 631,724 $ 30,161 $ 2,316,113 $ 2,358,851 Charge-offs on commercial mortgage loans $ - $ - $ - $ - $ - $ 107 $ - $ 107 C&I Risk Ratings: Pass $ 297,129 $ 565,327 $ 337,823 $ 229,283 $ 419,795 $ 243,664 $ 820,520 $ 2,913,541 $ 2,768,723 Criticized: Special Mention 546 - 19,532 - 12,370 13,638 33,448 79,534 61,129 Substandard 1 - 385 1,249 13,630 21,363 365 36,993 56,411 Doubtful - - - - - 886 - 886 - Loss - - - - - - - - - Total C&I loans $ 297,676 $ 565,327 $ 357,740 $ 230,532 $ 445,795 $ 279,551 $ 854,333 $ 3,030,954 $ 2,886,263 Charge-offs on C&I loans $ - $ - $ - $ - $ - $ 6,420 $ 57 $ 6,477 (1) Excludes accrued interest receivable. As of September 30, 2023 and December 31, 2022, the balance of revolving loans converted to term loans was no t material. Accrued interest receivable on loans totaled $ 55.2 million as of September 30, 2023 (as compared to $ 53.1 million as of December 31, 2022), 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 September 30, 2023 and December 31, 2022 As of September 30, 2023 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 $ 27,341 $ 1,596 $ 68 $ 27,409 $ 1,596 Commercial loans: Construction loans - - 956 956 - Commercial mortgage loans 12,525 1,651 44,722 57,247 1,651 C&I loans 12,062 2,105 6,649 18,711 2,105 Consumer loans: Personal loans 28 - - 28 - Other consumer loans 162 17 - 162 17 $ 52,118 $ 5,369 $ 52,395 $ 104,513 $ 5,369 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 September 30, 2023 was 72 %, compared to 70 % as of December 31, 2022, which was not considered a significant change in the extent to which collateral secured these loans. 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 first nine months of 2023, loans pooled into GNMA MBS amounted to approximately $ 102.9 million, compared to $ 115.7 million during the first nine months of 2022, for which the Corporation recognized a net gain on sale of $ 2.2 million and $ 3.2 million, respectively. Also, during the first nine months of 2023, the Corporation sold approximately $ 28.6 million of performing residential mortgage loans to FNMA and FHLMC, compared to $ 90.8 million during the first nine months of 2022, for which the Corporation recognized a net gain on sale of $ 0.7 million and $ 4.0 million, 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 September 30, 2023 and December 31, 2022, rebooked GNMA delinquent loans that were included in the residential mortgage loan portfolio amounted to $ 8.5 million and $ 10.4 million, respectively. During the first nine months of 2023 and 2022, the Corporation repurchased, pursuant to the aforementioned repurchase option, $ 2.5 million and $ 8.2 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’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 first nine months of 2023 and 2022, the Corporation purchased C&I loan participations in the Florida region totaling $ 61.3 million and $ 135.4 million, respectively. There were no significant sales of commercial loan participations during the first nine months of 2023. Meanwhile, during the first nine months of 2022, the Corporation sold a $ 35.2 million commercial and industrial loan participation in the Puerto Rico region. 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 $ 12.0 billion as of September 30, 2023, credit risk concentration was approximately 79 % in Puerto Rico, 17 % in the U.S., and 4 % in the USVI and BVI. As of September 30, 2023, the Corporation had $ 185.0 million outstanding in loans extended to the Puerto Rico government, its municipalities and public corporations, compared to $ 169.8 million as of December 31, 2022. As of September 30, 2023, approximately $ 115.8 million consisted of loans extended to municipalities in Puerto Rico that are general obligations supported by assigned property tax revenues, and $ 25.6 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 September 30, 2023 included $ 8.9 million in loans granted to an affiliate of the Puerto Rico Electric Power Authority (“PREPA”) and $ 34.7 million in loans to agencies or public corporations of the Puerto Rico government. In addition, as of September 30, 2023, the Corporation had $ 79.3 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 $ 84.7 million as of December 31, 2022. 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 September 30, 2023, the Corporation had $ 87.5 million in loans to USVI government public corporations, compared to $ 38.0 million as of December 31, 2022. As of September 30, 2023, all loans were currently performing and up to date on principal and interest payments. Loss Mitigation Program for Borrowers Experiencing Financial Difficulty Effective January 1, 2023, the Corporation adopted ASU 2022-02. For additional information on the adoption, see Note 1 – Basis of Presentation and Significant Accounting Policies. The Corporation provides 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 are provided, as well as other restructurings of individual C&I, commercial mortgage, construction, and residential mortgage loans. The Corporation may also modify contractual terms to comply with regulations regarding the treatment of certain bankruptcy filings and discharge situations. The loan modifications granted to borrowers experiencing financial difficulty that are associated with payment delays typically include the following: - Forbearance plans – Payments of either interest and/or principal are deferred for a pre-established period of time, generally not exceeding six months in any given year. The deferred interest and/or principal is repaid as either a lump sum payment at maturity date or by extending the loan’s maturity date by the number of forbearance months granted. - Payment plans – Borrowers are allowed to pay the regular monthly payment plus the pre-established delinquent amounts during a period generally not exceeding six months. At the end of the payment plan, the borrower is required to resume making its regularly scheduled loan payments. - Trial modifications – These types of loan modifications are granted for residential mortgage loans. Borrower s continue making reduced monthly payments during the trial period, which is generally of up to six months. The reduced payments that are made by the borrower during the trial period will result in a payment delay with respect to the original contractual terms of the loan since the loan has not yet been contractually modified. After successful completion of the trial period, the mortgage loan is contractually modified. Modifications in the form of a reduction in interest rate, term extension, an other-than-insignificant payment delay, or any combination of these types of loan modifications that have occurred in the current reporting period for a borrower experiencing financial difficulty are disclosed in the tables below. Many factors are considered when evaluating whether there is an other-than- insignificant payment delay, such as the significance of the restructured payment amount relative to the unpaid principal balance or collateral value of the loan or the relative significance of the delay to the original loan terms. The below disclosures relate to loan modifications granted to borrowers experiencing financial difficulty in which there was a change in the timing and/or amount of contractual cash flows in the form of any of the aforementioned types of modifications, including restructurings that resulted in a more-than-insignificant payment delay. These disclosures exclude $ 0.9 million and $ 3.2 million in restructured residential mortgage loans that are government-guaranteed (e.g., FHA/VA loans) and were modified during the quarter and nine-month period ended September 30, 2023, respectively. The following tables present the amortized cost basis as of September 30, 2023 of loans modified to borrowers experiencing financial difficulty during the quarter and nine-month period ended September 30, 2023, by portfolio classes and type of modification granted, and the percentage of these modified loans relative to the total period-end amortized cost basis of receivables in the portfolio class: As of September 30, 2023 As of December 31, 2022 Term Loans Amortized Cost Basis by Origination Year (1) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) Puerto Rico and Virgin Islands Region: FHA/VA government-guaranteed loans Accrual Status: Performing $ 220 $ 686 $ 1,455 $ 660 $ 1,104 $ 99,007 $ - $ 103,132 $ 117,416 Non-Performing - - - - - - - - - Total FHA/VA government-guaranteed loans $ 220 $ 686 $ 1,455 $ 660 $ 1,104 $ 99,007 $ - $ 103,132 $ 117,416 Conventional residential mortgage loans: Accrual Status: Performing $ 114,791 $ 168,507 $ 69,903 $ 30,088 $ 44,999 $ 1,797,010 $ - $ 2,225,298 $ 2,265,013 Non-Performing - - 35 - 174 25,040 - 25,249 35,471 Total conventional residential mortgage loans $ 114,791 $ 168,507 $ 69,938 $ 30,088 $ 45,173 $ 1,822,050 $ - $ 2,250,547 $ 2,300,484 Total: Accrual Status: Performing $ 115,011 $ 169,193 $ 71,358 $ 30,748 $ 46,103 $ 1,896,017 $ - $ 2,328,430 $ 2,382,429 Non-Performing - - 35 - 174 25,040 - 25,249 35,471 Total residential mortgage loans in Puerto Rico and Virgin Islands Region $ 115,011 $ 169,193 $ 71,393 $ 30,748 $ 46,277 $ 1,921,057 $ - $ 2,353,679 $ 2,417,900 Charge-offs on residential mortgage loans $ - $ - $ - $ 3 $ - $ 2,619 $ - $ 2,622 (1) Excludes accrued interest receivable. As of September 30, 2023 As of December 31, 2022 Term Loans Amortized Cost Basis by Origination Year (1) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) Florida Region: FHA/VA government-guaranteed loans Accrual Status: Performing $ - $ - $ - $ - $ - $ 964 $ - $ 964 $ 742 Non-Performing - - - - - - - - - Total FHA/VA government-guaranteed loans $ - $ - $ - $ - $ - $ 964 $ - $ 964 $ 742 Conventional residential mortgage loans: Accrual Status: Performing $ 71,543 $ 78,806 $ 47,891 $ 29,868 $ 27,387 $ 195,796 $ - $ 451,291 $ 421,347 Non-Performing - 16 - - 257 6,424 - 6,697 7,301 Total conventional residential mortgage loans $ 71,543 $ 78,822 $ 47,891 $ 29,868 $ 27,644 $ 202,220 $ - $ 457,988 $ 428,648 Total: Accrual Status: Performing $ 71,543 $ 78,806 $ 47,891 $ 29,868 $ 27,387 $ 196,760 $ - $ 452,255 $ 422,089 Non-Performing - 16 - - 257 6,424 - 6,697 7,301 Total residential mortgage loans in Florida region $ 71,543 $ 78,822 $ 47,891 $ 29,868 $ 27,644 $ 203,184 $ - $ 458,952 $ 429,390 Charge-offs on residential mortgage loans $ - $ - $ - $ - $ - $ 6 $ - $ 6 (1) Excludes accrued interest receivable. As of September 30, 2023 As of December 31, 2022 Term Loans Amortized Cost Basis by Origination Year (1) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) Total: FHA/VA government-guaranteed loans Accrual Status: Performing $ 220 $ 686 $ 1,455 $ 660 $ 1,104 $ 99,971 $ - $ 104,096 $ 118,158 Non-Performing - - - - - - - - - Total FHA/VA government-guaranteed loans $ 220 $ 686 $ 1,455 $ 660 $ 1,104 $ 99,971 $ - $ 104,096 $ 118,158 Conventional residential mortgage loans: Accrual Status: Performing $ 186,334 $ 247,313 $ 117,794 $ 59,956 $ 72,386 $ 1,992,806 $ - $ 2,676,589 $ 2,686,360 Non-Performing - 16 35 - 431 31,464 - 31,946 42,772 Total conventional residential mortgage loans $ 186,334 $ 247,329 $ 117,829 $ 59,956 $ 72,817 $ 2,024,270 $ - $ 2,708,535 $ 2,729,132 Total: Accrual Status: Performing $ 186,554 $ 247,999 $ 119,249 $ 60,616 $ 73,490 $ 2,092,777 $ - $ 2,780,685 $ 2,804,518 Non-Performing - 16 35 - 431 31,464 - 31,946 42,772 Total residential mortgage loans $ 186,554 $ 248,015 $ 119,284 $ 60,616 $ 73,921 $ 2,124,241 $ - $ 2,812,631 $ 2,847,290 Charge-offs on residential mortgage loans $ - $ - $ - $ 3 $ - $ 2,625 $ - $ 2,628 (1) Excludes accrued interest receivable. As of September 30, 2023 As of December 31, 2022 Term Loans Amortized Cost Basis by Origination Year (1) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) Puerto Rico and Virgin Islands Region: Auto loans: Accrual Status: Performing $ 483,036 $ 567,954 $ 414,852 $ 195,698 $ 149,360 $ 77,639 $ - $ 1,888,539 $ 1,783,782 Non-Performing 1,271 3,122 2,654 1,407 2,472 2,141 - 13,067 10,596 Total auto loans $ 484,307 $ 571,076 $ 417,506 $ 197,105 $ 151,832 $ 79,780 $ - $ 1,901,606 $ 1,794,378 Charge-offs on auto loans $ 630 $ 5,420 $ 3,412 $ 1,391 $ 1,811 $ 1,237 $ - $ 13,901 Finance leases: Accrual Status: Performing $ 243,524 $ 258,990 $ 162,169 $ 70,224 $ 60,539 $ 33,572 $ - $ 829,018 $ 716,585 Non-Performing 7 741 466 434 305 569 - 2,522 1,645 Total finance leases $ 243,531 $ 259,731 $ 162,635 $ 70,658 $ 60,844 $ 34,141 $ - $ 831,540 $ 718,230 Charge-offs on finance leases $ 172 $ 1,182 $ 921 $ 419 $ 446 $ 579 $ - $ 3,719 Personal loans: Accrual Status: Performing $ 133,568 $ 133,763 $ 37,159 $ 19,132 $ 33,558 $ 18,492 $ - $ 375,672 $ 351,664 Non-Performing 162 1,146 196 71 161 138 - 1,874 1,248 Total personal loans $ 133,730 $ 134,909 $ 37,355 $ 19,203 $ 33,719 $ 18,630 $ - $ 377,546 $ 352,912 Charge-offs on personal loans $ 242 $ 5,765 $ 2,137 $ 892 $ 1,812 $ 1,077 $ - $ 11,925 Credit cards: Accrual Status: Performing $ - $ - $ - $ - $ - $ - $ 321,950 $ 321,950 $ 311,731 Non-Performing - - - - - - - - - Total credit cards $ - $ - $ - $ - $ - $ - $ 321,950 $ 321,950 $ 311,731 Charge-offs on credit cards $ - $ - $ - $ - $ - $ - $ 13,294 $ 13,294 Other consumer loans: Accrual Status: Performing $ 69,063 $ 40,513 $ 11,921 $ 6,396 $ 6,377 $ 4,442 $ 9,071 $ 147,783 $ 139,116 Non-Performing 323 671 184 52 91 160 95 1,576 1,122 Total other consumer loans $ 69,386 $ 41,184 $ 12,105 $ 6,448 $ 6,468 $ 4,602 $ 9,166 $ 149,359 $ 140,238 Charge-offs on other consumer loans $ 662 $ 5,418 $ 1,853 $ 446 $ 851 $ 297 $ 354 $ 9,881 Total: Performing $ 929,191 $ 1,001,220 $ 626,101 $ 291,450 $ 249,834 $ 134,145 $ 331,021 $ 3,562,962 $ 3,302,878 Non-Performing 1,763 5,680 3,500 1,964 3,029 3,008 95 19,039 14,611 Total consumer loans in Puerto Rico and Virgin Islands region $ 930,954 $ 1,006,900 $ 629,601 $ 293,414 $ 252,863 $ 137,153 $ 331,116 $ 3,582,001 $ 3,317,489 Charge-offs on total consumer loans $ 1,706 $ 17,785 $ 8,323 $ 3,148 $ 4,920 $ 3,190 $ 13,648 $ 52,720 (1) Excludes accrued interest receivable. As of September 30, 2023 As of December 31, 2022 Term Loans Amortized Cost Basis by Origination Year (1) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) Florida Region: Auto loans: Accrual Status: Performing $ - $ - $ - $ - $ 187 $ 1,356 $ - $ 1,543 $ 3,617 Non-Performing - - - - - 36 - 36 76 Total auto loans $ - $ - $ - $ - $ 187 $ 1,392 $ - $ 1,579 $ 3,693 Charge-offs on auto loans $ - $ - $ - $ - $ 23 $ 263 $ - $ 286 Finance leases: Accrual Status: Performing $ - $ - $ - $ - $ - $ - $ - $ - $ - Non-Performing - - - - - - - - - Total finance leases $ - $ - $ - $ - $ - $ - $ - $ - $ - Charge-offs on finance leases $ - $ - $ - $ - $ - $ - $ - $ - Personal loans: Accrual Status: Performing $ 231 $ - $ 71 $ 2 $ - $ - $ - $ 304 $ 334 Non-Performing - - - - - - - - - Total personal loans $ 231 $ - $ 71 $ 2 $ - $ - $ - $ 304 $ 334 Charge-offs on personal loans $ - $ - $ - $ - $ - $ - $ - $ - Credit cards: Accrual Status: Performing $ - $ - $ - $ - $ - $ - $ - $ - $ - Non-Performing - - - - - - - - - Total credit cards $ - $ - $ - $ - $ - $ - $ - $ - $ - Charge-offs on credit cards $ - $ - $ - $ - $ - $ - $ - $ - Other consumer loans: Accrual Status: Performing $ 55 $ 47 $ 225 $ 451 $ - $ 2,295 $ 1,441 $ 4,514 $ 5,833 Non-Performing - - - - - 20 42 62 119 Total other consumer loans $ 55 $ 47 $ 225 $ 451 $ - $ 2,315 $ 1,483 $ 4,576 $ 5,952 Charge-offs on other consumer loans $ - $ - $ - $ - $ - $ - $ - $ - Total: Performing $ 286 $ 47 $ 296 $ 453 $ 187 $ 3,651 $ 1,441 $ 6,361 $ 9,784 Non-Performing - - - - - 56 42 98 195 Total consumer loans in Florida region $ 286 $ 47 $ 296 $ 453 $ 187 $ 3,707 $ 1,483 $ 6,459 $ 9,979 Charge-offs on total consumer loans $ - $ - $ - $ - $ 23 $ 263 $ - $ 286 (1) Excludes accrued interest receivable. As of September 30, 2023 As of December 31, 2022 Term Loans Amortized Cost Basis by Origination Year (1) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) Total: Auto loans: Accrual Status: Performing $ 483,036 $ 567,954 $ 414,852 $ 195,698 $ 149,547 $ 78,995 $ - $ 1,890,082 $ 1,787,399 Non-Performing 1,271 3,122 2,654 1,407 2,472 2,177 - 13,103 10,672 Total auto loans $ 484,307 $ 571,076 $ 417,506 $ 197,105 $ 152,019 $ 81,172 $ - $ 1,903,185 $ 1,798,071 Charge-offs on auto loans $ 630 $ 5,420 $ 3,412 $ 1,391 $ 1,834 $ 1,500 $ - $ 14,187 Finance leases: Accrual Status: Performing $ 243,524 $ 258,990 $ 162,169 $ 70,224 $ 60,539 $ 33,572 $ - $ 829,018 $ 716,585 Non-Performing 7 741 466 434 305 569 - 2,522 1,645 Total finance leases $ 243,531 $ 259,731 $ 162,635 $ 70,658 $ 60,844 $ 34,141 $ - $ 831,540 $ 718,230 Charge-offs on finance leases $ 172 $ 1,182 $ 921 $ 419 $ 446 $ 579 $ - $ 3,719 Personal loans: Accrual Status: Performing $ 133,799 $ 133,763 $ 37,230 $ 19,134 $ 33,558 $ 18,492 $ - $ 375,976 $ 351,998 Non-Performing 162 1,146 196 71 161 138 - 1,874 1,248 Total personal loans $ 133,961 $ 134,909 $ 37,426 $ 19,205 $ 33,719 $ 18,630 $ - $ 377,850 $ 353,246 Charge-offs on personal loans $ 242 $ 5,765 $ 2,137 $ 892 $ 1,812 $ 1,077 $ - $ 11,925 Credit cards: Accrual Status: Performing $ - $ - $ - $ - $ - $ - $ 321,950 $ 321,950 $ 311,731 Non-Performing - - - - - - - - - Total credit cards $ - $ - $ - $ - $ - $ - $ 321,950 $ 321,950 $ 311,731 Charge-offs on credit cards $ - $ - $ - $ - $ - $ - $ 13,294 $ 13,294 Other consumer loans: Accrual Status: Performing $ 69,118 $ 40,560 $ 12,146 $ 6,847 $ 6,377 $ 6,737 $ 10,512 $ 152,297 $ 144,949 Non-Performing 323 671 184 52 91 180 137 1,638 1,241 Total other consumer loans $ 69,441 $ 41,231 $ 12,330 $ 6,899 $ 6,468 $ 6,917 $ 10,649 $ 153,935 $ 146,190 Charge-offs on other consumer loans $ 662 $ 5,418 $ 1,853 $ 446 $ 851 $ 297 $ 354 $ 9,881 Total: Performing $ 929,477 $ 1,001,267 $ 626,397 $ 291,903 $ 250,021 $ 137,796 $ 332,462 $ 3,569,323 $ 3,312,662 Non-Performing 1,763 5,680 3,500 1,964 3,029 3,064 137 19,137 14,806 Total consumer loans $ 931,240 $ 1,006,947 $ 629,897 $ 293,867 $ 253,050 $ 140,860 $ 332,599 $ 3,588,460 $ 3,327,468 Charge-offs on total consumer loans $ 1,706 $ 17,785 $ 8,323 $ 3,148 $ 4,943 $ 3,453 $ 13,648 $ 53,006 (1) Excludes accrued interest receivable. 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 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 September 30, 2023 and December 31, 2022 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 September 30, 2023, the gross charge -offs for the nine-month period ended September 30, 2023 by origination year, and the amortized cost of residential mortgage loans by portfolio classes based on accrual status as of December 31, 2022: The following tables present the amortized cost of consumer loans by portfolio classes and by origination year based on accrual status as of September 30, 2023, the gross charge-offs for the nine-month period ended September 30, 2023 by portfolio classes and by origination year, and the amortized cost of consumer loans by portfolio classes based on accrual status as of December 31, 2022: Quarter Ended September 30,2023 Payment Delay Only Forbearance Payment Plan Trial Modification Interest Rate Reduction Term Extension Combination of Interest Rate Reduction and Term Extension Other Total Percentage of Total by Portfolio Classes (In thousands) Conventional residential mortgage loans $ - $ - $ 401 $ - $ - $ - $ - $ 401 0.01% Construction loans - - - - - - - - - Commercial mortgage loans - - - - 2,225 - - 2,225 0.10% C&I loans - - - 192 - - - 192 0.01% Consumer loans: Auto loans - - - - 74 59 608 (1) 741 0.04% Personal loans - - - - 67 87 - 154 0.04% Credit cards - - - 368 (2) - - - 368 0.11% Other consumer loans - - - - 54 4 4 (1) 62 0.04% Total modifications $ - $ - $ 401 $ 560 $ 2,420 $ 150 $ 612 $ 4,143 The following tables present by portfolio classes the financial effects of the modifications granted to borrowers experiencing financial difficulty, other than those associated to payment delay, during the quarter and nine-month period ended September 30,2023. The financial effects of the modifications associated to payment delay were discussed above and, as such, were excluded from the tables below: Quarter Ended September 30, 2023 Combination of Interest Rate Reduction and Term Extension Weighted-Average Interest Rate Reduction (%) Weighted-Average Term Extension (in months) Weighted-Average Interest Rate Reduction (%) Weighted-Average Term Extension (in months) (In thousands) Conventional residential mortgage loans - % - - % - Construction loans - % - - % - Commercial mortgage loans - % 13 - % - C&I loans 0.45 % - - % - Consumer loans: Auto loans - % 31 2.27 % 25 Personal loans - % 35 3.61 % 41 Credit cards 16.67 % - - % - Other consumer loans - % 22 2.00 % 10 The following table presents by portfolio classes the performance of loans modified during the nine-month period ended September 30, 2023 that were granted to borrowers experiencing financial difficulty: Nine-Month Period Ended September 30, 2023 30-59 60-89 90+ Total Delinquency Current Total (In thousands) Conventional residential mortgage loans $ 71 $ - $ - $ 71 $ 1,465 $ 1,536 Construction loans - - - - - - Commercial mortgage loans - - - - 32,395 32,395 C&I loans - - - - 377 377 Consumer loans: Auto loans 22 - - 22 1,876 1,898 Personal loans 15 - - 15 282 297 Credit cards 149 35 - 184 849 1,033 Other consumer loans 34 17 15 (1) 66 363 429 Total modifications $ 291 $ 52 $ 15 $ 358 $ 37,607 $ 37,965 (1) Consists of loan modifications that defaulted (failure by the borrower to make payments of either principal, interest, or both for a period of 90 days or more) during the quarter and nine-month period ended September 30, 2023, and that had been modified after January 1, 2023. Nine-Month Period Ended September 30,2023 Payment Delay Only Forbearance Payment Plan Trial Modification Interest Rate Reduction Term Extension Combination of Interest Rate Reduction and Term Extension Other Total Percentage of Total by Portfolio Classes (In thousands) Conventional residential mortgage loans $ - $ - $ 610 $ - $ 687 $ 239 $ - $ 1,536 0.05% Construction loans - - - - - - - - - Commercial mortgage loans - - - - 2,225 30,170 - 32,395 1.40% C&I loans - - - 192 185 - - 377 0.01% Consumer loans: Auto loans - - - - 234 153 1,511 (1) 1,898 0.10% Personal loans - - - - 132 165 - 297 0.08% Credit cards - - - 1,033 (2) - - - 1,033 0.32% Other consumer loans - - - - 311 90 28 (1) 429 0.28% Total modifications $ - $ - $ 610 $ 1,225 $ 3,774 $ 30,817 $ 1,539 $ 37,965 (1) Modification consists of reduction to 0% interest rate for remaining loan term to borrowers in bankruptcy proceedings or consumer credit counseling programs unless dismissal occurs. (2) Modification consists of reduction in interest rate and revocation of revolving line privileges. Nine-Month Period Ended September 30, 2023 Combination of Interest Rate Reduction and Term Extension Weighted-Average Interest Rate Reduction (%) Weighted-Average Term Extension (in months) Weighted-Average Interest Rate Reduction (%) Weighted-Average Term Extension (in months) (In thousands) Conventional residential mortgage loans - % 105 2.95 % 105 Construction loans - % - - % - Commercial mortgage loans - % 13 0.25 % 64 C&I loans 0.45 % 72 - % - Consumer loans: Auto loans - % 27 3.10 % 28 Personal loans - % 35 4.29 % 33 Credit cards 16.27 % - - % - Other consumer loans - % 26 1.74 % 23 Various loans were assigned as collateral for borrowings, government deposits, time deposits accounts, and related unused commitments. The carrying value of loans pledged as collateral amounted to $ 4.4 billion and $ 4.3 billion as of September 30, 2023 and December 31, 2022, respectively. As of each of September 30, 2023 and December 31, 2022, loans pledged as collateral include $ 1.8 billion that were pledged at the FHLB as collateral for borrowings and letters of credit; $ 2.4 billion that were pledged at the FED Discount Window as collateral for borrowings, compared to $ 2.2 billion as of December 31, 2022; and $ 68.2 million serve as collateral for the uninsured portion of government deposits, compared to $ 123.7 million as of December 31, 2022. Troubled Debt Restructuring ("TDR") Disclosures Prior to Adoption of ASU 2022-02 The following provides additional disclosures previously required by ASC Subtopic 310-40, Receivables - Troubled Debt Restructurings by Creditors, related to the quarter and nine-month period ended September 30, 2022. Prior to the adoption of ASU 2022-02, a restructuring of a loan constituted a TDR if the creditor, for economic or legal reasons related to the borrower's financial difficulties, granted a concession to the borrower that it would not otherwise consider. See Note 1 - Nature of Business and Summary of Significant Accounting Policies and Note 4 - Loans Held For Investment to the audited consolidated financial statements included in the 2022 Annual Report on Form 10-K for additional discussion of TDRs. The following tables present TDR loans completed during the quarter and nine-month period ended September 30, 2022: Quarter Ended September 30,2022 Total 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) TDRs: Conventional residential mortgage loans $ - $ 132 $ - $ - $ 1,022 $ 1,154 Construction loans - - - - - - Commercial mortgage loans - - - - - - C&I loans 495 - - - - 495 Consumer loans: Auto loans 661 42 84 - - 787 Finance leases - 82 - - - 82 Personal loans - 75 58 - - 133 Credit cards 252 (2) - - - - 252 Other consumer loans 10 56 - 19 - 85 Total TDRs $ 1,418 $ 387 $ 142 $ 19 $ 1,022 $ 2,988 (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. Nine-Month Period Ended September 30,2022 Total 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) TDRs: Conventional residential mortgage loans $ 215 $ 1,484 $ 190 $ - $ 3,709 $ 5,598 Construction loans - - - - - - Commercial mortgage loans - 245 5,178 - 467 5,890 C&I loans 895 - - 825 1,083 2,803 Consumer loans: Auto loans 2,120 126 264 - - 2,510 Finance leases - 451 - - 18 469 Personal loans 99 135 84 - - 318 Credit cards 647 (2) - - - - 647 Other consumer loans 93 188 - 37 - 318 Total TDRs $ 4,069 $ 2,629 $ 5,716 $ 862 $ 5,277 $ 18,553 (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. Quarter Ended September 30,2022 Nine-Month Period Ended September 30,2022 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) TDRs: Conventional residential mortgage loans 12 $ 1,220 $ 1,154 49 $ 5,668 $ 5,598 Construction loans - - - - - - Commercial mortgage loans - - - 3 5,897 5,890 C&I loans 3 495 495 15 3,031 2,803 Consumer loans: Auto loans 35 790 787 123 2,512 2,510 Finance leases 5 82 82 26 469 469 Personal loans 7 116 133 19 301 318 Credit Cards 50 251 252 139 646 647 Other consumer loans 29 83 85 77 311 318 Total TDRs 141 $ 3,037 $ 2,988 451 $ 18,835 $ 18,553 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 the quarter and nine-month period ended September 30, 2022, and had become TDR loans during the 12-months preceding the default date, were as follows: Quarter Ended September 30,2022 Nine-Month Period Ended September 30,2022 Number of contracts Amortized Cost Number of contracts Amortized Cost (Dollars in thousands) Conventional residential mortgage loans 1 $ 50 5 $ 534 Construction loans - - - - Commercial mortgage loans - - - - C&I loans - - - - Consumer loans: Auto loans 31 776 75 1,674 Finance leases - - 1 16 Personal loans - - - - Credit cards 14 60 39 201 Other consumer loans 1 2 5 19 Total 47 $ 888 125 $ 2,444

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