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ALLOWANCE FOR CREDIT LOSSES FOR LOANS AND FINANCE LEASES
 12 Months Ended
Dec. 31, 2024
ALLOWANCE FOR CREDIT LOSSES FOR LOANS AND FINANCE LEASES [Abstract]  
ALLOWANCE FOR CREDIT LOSSES FOR LOANS AND FINANCE LEASES
NOTE 5 – ALLOWANCE
 
FOR CREDIT LOSSES FOR LOANS AND FINANCE LEASES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following tables present the activity in the ACL on loans and finance leases by portfolio
 
segment for the indicated periods:
Residential Mortgage
Loans
Construction
Loans
Commercial
Mortgage
C&I
 
Loans
Consumer Loans
Total
Year Ended December
 
31, 2024
(In thousands)
ACL:
Beginning balance
$
57,397
$
5,605
$
32,631
$
33,190
$
133,020
$
261,843
Provision for credit losses - (benefit) expense
(16,225)
(1,912)
(10,717)
(4,886)
96,601
62,861
Charge-offs
 
(1,971)
-
-
(2,742)
(109,115)
(113,828)
Recoveries
1,453
131
533
6,704
24,245
(1)
33,066
Ending balance
$
40,654
$
3,824
$
22,447
$
32,266
$
144,751
$
243,942
(1)
 
Includes recoveries totaling $
10
.0 million associated with the bulk sale of fully charged-off consumer loans and finance leases.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential Mortgage
Loans
Construction
Loans
Commercial
Mortgage
C&I
 
Loans
Consumer Loans
Total
Year Ended December
 
31, 2023
(In thousands)
ACL:
Beginning balance
$
62,760
$
2,308
$
35,064
$
32,906
$
127,426
$
260,464
Impact of adoption of ASU 2022-02
(1)
2,056
-
-
7
53
2,116
Provision for credit losses - (benefit) expense
(6,866)
1,408
(2,086)
6,372
67,816
66,644
Charge-offs
 
(3,245)
(62)
(1,133)
(6,936)
(76,726)
(88,102)
Recoveries
2,692
1,951
786
841
14,451
20,721
Ending balance
$
57,397
$
5,605
$
32,631
$
33,190
$
133,020
$
261,843
(1)
Recognized as
 
a result
 
of the
 
adoption of
 
ASU 2022-02,
 
for which
 
the Corporation
 
elected to
 
discontinue the
 
use of
 
a discounted
 
cash flow
 
methodology for
 
restructured accruing
 
loans, which
 
had a
 
corresponding
decrease, net of applicable taxes, in beginning retained earnings as of January 1, 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential Mortgage
Loans
Construction
Loans
Commercial
Mortgage
C&I
 
Loans
Consumer Loans
Total
Year Ended December
 
31, 2022
(In thousands)
ACL:
Beginning balance
$
74,837
$
4,048
$
52,771
$
34,284
$
103,090
$
269,030
Provision for credit losses - (benefit) expense
(8,734)
(2,342)
(18,994)
(1,770)
57,519
25,679
Charge-offs
(6,890)
(123)
(85)
(2,067)
(48,165)
(57,330)
Recoveries
3,547
725
1,372
2,459
14,982
23,085
Ending balance
$
62,760
$
2,308
$
35,064
$
32,906
$
127,426
$
260,464
The
 
Corporation
 
estimates
 
the
 
ACL
 
following
 
the
 
methodologies
 
described
 
in
 
Note
 
1
 
–
 
“Nature
 
of
 
Business
 
and
 
Summary
 
of
Significant Accounting Policies” for each portfolio segment
 
.
The Corporation
 
generally applies
 
probability weights
 
to the
 
baseline and
 
alternative downside
 
economic scenarios
 
to estimate
 
the
ACL with
 
the
 
baseline
 
scenario
 
carrying
 
the highest
 
weight.
 
The
 
scenarios
 
that are
 
chosen
 
each quarter
 
and
 
the
 
weighting
 
given
 
to
each
 
scenario
 
for
 
the
 
different
 
loan
 
portfolio
 
categories
 
depend
 
on
 
a
 
variety
 
of
 
factors
 
including
 
recent
 
economic
 
events,
 
leading
national
 
and
 
regional
 
economic
 
indicators,
 
and
 
industry
 
trends. As
 
of
 
December
 
31,
 
2024
 
and
 
2023,
 
the
 
Corporation applied
 
100%
probability
 
to
 
the
 
baseline
 
scenario
 
for
 
the
 
commercial
 
mortgage
 
and
 
construction
 
loan
 
portfolios
 
since
 
certain
 
macroeconomic
variables
 
associated
 
with
 
commercial
 
real
 
estate
 
property
 
performance
 
and
 
the
 
commercial
 
real
 
estate
 
(“CRE”)
 
price
 
index,
particularly in
 
the Puerto
 
Rico region,
 
are expected
 
to continue
 
to perform
 
in a
 
more favorable
 
manner than
 
the alternative
 
downside
economic scenario.
At least every other
 
year, the
 
Corporation reviews the
 
credit models used
 
in determining the
 
ACL. Such exercise
 
consists primarily
in
 
updating
 
the
 
model
 
with
 
recent
 
historical
 
losses
 
and
 
determining
 
if
 
other
 
changes
 
are
 
required
 
for
 
purposes
 
of
 
estimating
 
credit
losses. During
 
2024, the
 
Corporation completed
 
the aforementioned
 
review for
 
the residential
 
mortgage, auto
 
loan, and
 
finance lease
portfolios, primarily for
 
the Puerto Rico
 
region. The residential
 
mortgage loan portfolio,
 
which has recently
 
experienced a historically
low level of
 
credit losses, as a
 
result of high
 
collateral values in
 
the Puerto Rico
 
region, resulted in
 
a lower required
 
reserve level. For
the auto loan
 
and finance lease portfolios,
 
historical loss trends
 
were updated and
 
resulted in an increase
 
in the required
 
reserve levels
as the loss experience in such portfolios have been trending higher towards historical
 
loss experience.
As
 
of
 
December
 
31,
 
2024,
 
the
 
ACL
 
for
 
loans
 
and
 
finance
 
leases
 
was
 
$
243.9
 
million,
 
a
 
decrease
 
of
 
$
17.9
 
million,
 
from
 
$
261.8
million as
 
of December
 
31, 2023.
 
The ACL
 
for residential
 
mortgage loans
 
decreased by
 
$
16.7
 
million, driven
 
by the
 
aforementioned
updated historical loss experience
 
used for determining the ACL estimate resulting
 
in a downward revision of
 
estimated loss severities
and
 
improvements
 
in
 
the
 
long-term
 
projections
 
of
 
the
 
unemployment
 
rate
 
in
 
the
 
Puerto
 
Rico
 
region,
 
partially
 
offset
 
by
 
newly
originated
 
loans.
 
The
 
ACL
 
for
 
commercial
 
and
 
construction
 
loans
 
decreased
 
by
 
$
12.9
 
million,
 
mainly
 
due
 
to
 
reserve
 
releases
associated
 
with
 
the
 
improved
 
financial
 
condition
 
of
 
certain
 
borrowers
 
and
 
an
 
improvement
 
on
 
the
 
economic
 
outlook
 
of
 
certain
macroeconomic variables,
 
particularly variables
 
associated with commercial
 
real estate property
 
performance and
 
the forecasted CRE
price index, partially offset by loan portfolio growth
 
.
 
Meanwhile, the
 
ACL for
 
consumer loans
 
increased by
 
$
11.7
 
million driven
 
by higher
 
charge-off
 
and delinquency
 
levels and
 
loan
portfolio growth, mainly in auto loans and finance leases.
Net charge-offs
 
were $
80.8
 
million for the
 
year ended December
 
31, 2024, compared
 
to $
67.4
 
million for the
 
same period in
 
2023.
The $
13.4
 
million increase in
 
net charge-offs
 
for the year
 
ended December 31,
 
2024 was driven
 
by an increase
 
in consumer loans
 
and
finance
 
leases
 
charge-offs
 
across
 
all
 
major
 
portfolio
 
classes,
 
partially
 
offset
 
by
 
the
 
effect
 
during
 
2024
 
of
 
both
 
the
 
$
10.0
 
million
recovery associated
 
with the
 
bulk sale
 
of fully
 
charged-off
 
consumer loans
 
and finance
 
leases and
 
a $
5.0
 
million recovery
 
associated
with a C&I loan
 
in the Puerto Rico region,
 
and a $
6.0
 
million net charge-off
 
recorded on a C&I participated
 
loan in the Florida
 
region
during 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The tables below
 
present the ACL
 
related to loans
 
and finance leases
 
and the carrying
 
values of loans
 
by portfolio segment
 
as of
December 31, 2024 and 2023:
As of December 31, 2024
Residential Mortgage
Loans
Construction
Loans
Commercial Mortgage
Loans
C&I
 
Loans
Consumer Loans
Total
(Dollars in thousands)
Total loans held for investment:
 
Amortized cost of loans
$
2,828,431
$
228,396
$
2,565,984
$
3,366,038
$
3,757,707
$
12,746,556
 
Allowance for credit losses
40,654
3,824
22,447
32,266
144,751
243,942
 
Allowance for credit losses to
 
amortized cost
1.44
%
1.67
%
0.87
%
0.96
%
3.85
%
1.91
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2023
Residential Mortgage
Loans
Construction
Loans
Commercial Mortgage
Loans
C&I
 
Loans
Consumer Loans
Total
(Dollars in thousands)
Total loans held for investment:
 
Amortized cost of loans
$
2,821,726
$
214,777
$
2,317,083
$
3,174,232
$
3,657,665
$
12,185,483
 
Allowance for credit losses
57,397
5,605
32,631
33,190
133,020
261,843
 
Allowance for credit losses to
 
amortized cost
2.03
%
2.61
%
1.41
%
1.05
%
3.64
%
2.15
%
In
 
addition,
 
the
 
Corporation
 
estimates
 
expected
 
credit
 
losses
 
over
 
the
 
contractual
 
period
 
in
 
which
 
the
 
Corporation
 
is
 
exposed
 
to
credit
 
risk
 
via
 
a
 
contractual
 
obligation
 
to
 
extend
 
credit,
 
such
 
as
 
unfunded
 
loan
 
commitments
 
and
 
standby
 
letters
 
of
 
credit
 
for
commercial
 
and
 
construction
 
loans,
 
unless
 
the
 
obligation
 
is
 
unconditionally
 
cancellable
 
by
 
the
 
Corporation.
 
See
 
Note
 
27
 
–
“Regulatory Matters,
 
Commitments and
 
Contingencies” for information
 
on off-balance
 
sheet exposures as
 
of December
 
31, 2024 and
2023.
 
The
 
Corporation
 
estimates
 
the
 
ACL
 
for
 
these
 
off-balance
 
sheet
 
exposures
 
following
 
the
 
methodology
 
described
 
in
 
Note
 
1
 
–
“Nature
 
of
 
Business
 
and
 
Summary
 
of
 
Significant
 
Accounting
 
Policies.”
 
As
 
of
 
December
 
31,
 
2024,
 
the
 
ACL
 
for
 
off-balance
 
sheet
credit
 
exposures
 
amounted
 
to
 
$
3.1
 
million,
 
compared
 
to
 
$
4.6
 
million
 
as
 
of
 
December
 
31,
 
2023.
 
The
 
decrease
 
was
 
driven
 
by
 
an
improvement
 
on
 
the
 
economic
 
outlook
 
of
 
certain
 
macroeconomic
 
variables,
 
particularly
 
in
 
variables
 
associated
 
with
 
the
 
CRE
 
price
index.
The
 
following
 
table
 
presents
 
the
 
activity
 
in
 
the
 
ACL
 
for
 
unfunded
 
loan
 
commitments
 
and
 
standby
 
letters
 
of
 
credit
 
for
 
the
 
years
ended December 31, 2024, 2023 and 2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year
 
Ended December 31,
2024
2023
2022
(In thousands)
Beginning Balance
$
4,638
$
4,273
$
1,537
Provision for credit losses - (benefit) expense
(1,495)
365
2,736
 
Ending balance
$
3,143
$
4,638
$
4,273