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ALLOWANCE FOR CREDIT LOSSES FOR LOANS AND FINANCE LEASES
 3 Months Ended
Mar. 31, 2025
ALLOWANCE FOR CREDIT LOSSES FOR LOANS AND FINANCE LEASES [Abstract]  
ALLOWANCE FOR CREDIT LOSSES FOR LOANS AND FINANCE LEASES
NOTE 4 – 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
Quarter Ended March 31, 2025
(In thousands)
ACL:
Beginning balance
$
40,654
$
3,824
$
22,447
$
33,034
$
143,983
$
243,942
Provision for credit losses - expense (benefit)
1,004
(421)
1,656
3,353
19,245
24,837
Charge-offs
 
(235)
-
-
(77)
(27,898)
(28,210)
Recoveries
217
14
40
154
6,275
(1)
6,700
Ending balance
$
41,640
$
3,417
$
24,143
$
36,464
$
141,605
$
247,269
(1)
 
Includes recoveries totaling $
2.4
 
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
Quarter Ended March 31, 2024
(In thousands)
ACL:
Beginning balance
$
57,397
$
5,605
$
32,631
$
33,996
$
132,214
$
261,843
Provision for credit losses - (benefit) expense
(464)
571
(10)
(3,160)
15,980
12,917
Charge-offs
 
(516)
-
-
(532)
(28,291)
(29,339)
Recoveries
272
10
40
5,119
12,730
(1)
18,171
Ending balance
$
56,689
$
6,186
$
32,661
$
35,423
$
132,633
$
263,592
(1)
 
Includes recoveries totaling $
9.5
 
million associated with the bulk sale of fully charged-off
 
consumer loans and finance leases.
The
 
Corporation
 
estimates
 
the
 
ACL
 
following
 
the
 
methodologies
 
described
 
in
 
Note
 
1
 
–
 
“Nature
 
of
 
Business
 
and
 
Summary
 
of
Significant Accounting
 
Policies” to
 
the audited
 
consolidated financial
 
statements included
 
in the
 
2024 Annual
 
Report on
 
Form 10-K,
as updated by the information contained in this report, 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
 
March
 
31,
 
2025
 
and
 
December
 
31,
 
2024,
 
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.
As of March 31, 2025, the ACL for loans and finance leases was $
247.3
 
million, an increase of $
3.4
 
million, from $
243.9
 
million as
of December 31, 2024.
 
The ACL for the first quarter of 2025 includes an increase of
 
$
2.7
 
million in qualitative adjustments due to the
uncertainty in
 
the economic
 
environment. The
 
increase was
 
mainly related
 
to the
 
ACL for
 
commercial and
 
construction loans,
 
which
increased by $
4.7
 
million, mainly due to the
 
impact of renewals of lines
 
of credit, updated financial
 
information of certain commercial
borrowers,
 
and
 
a
 
deterioration
 
in
 
the
 
economic
 
outlook
 
of
 
the
 
forecasted
 
CRE
 
price
 
index.
 
Also,
 
the
 
ACL for
 
residential
 
mortgage
loans increased by
 
$
0.9
 
million mainly
 
due to newly
 
originated loans that
 
carry a higher
 
loss rate, partially
 
offset by improvements
 
in
macroeconomic variables, such as the unemployment rate
 
and the Housing Price Index.
Meanwhile, the
 
ACL for
 
consumer loans
 
decreased by
 
$
2.2
 
million, driven
 
by improvements
 
in macroeconomic
 
variables, mainly
in the projection of the unemployment rate.
Net charge-offs
 
were $
21.4
 
million for
 
the quarter
 
ended March
 
31, 2025,
 
compared to
 
$
11.2
 
million for
 
the same
 
period in
 
2024.
The
 
net
 
charge-offs
 
for
 
the
 
quarters
 
ended
 
March
 
31,
 
2025
 
and
 
2024
 
included
 
$
2.4
 
million
 
and
 
$
9.5
 
million,
 
respectively,
 
in
recoveries associated
 
with the
 
bulk sales
 
of fully
 
charged-off consumer
 
loans and
 
finance leases.
 
The increase
 
in net
 
charge-offs
 
was
also driven by a $
5.0
 
million recovery associated with a C&I loan in the Puerto Rico region during the
 
first quarter of 2024.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The tables below
 
present the ACL
 
related to loans
 
and finance leases
 
and the carrying
 
values of loans
 
by portfolio segment
 
as of
March 31, 2025 and December 31, 2024:
As of March 31, 2025
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
$
2,837,846
$
234,441
$
2,501,689
$
3,359,868
$
3,741,554
$
12,675,398
 
Allowance for credit losses
41,640
3,417
24,143
36,464
141,605
247,269
 
Allowance for credit losses to
 
amortized cost
1.47
%
1.46
%
0.97
%
1.09
%
3.78
%
1.95
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
33,034
143,983
243,942
 
Allowance for credit losses to
 
amortized cost
1.44
%
1.67
%
0.87
%
0.98
%
3.83
%
1.91
%
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
 
19
 
–
“Regulatory
 
Matters,
 
Commitments
 
and
 
Contingencies”
 
for
 
information
 
on
 
off-balance
 
sheet
 
exposures
 
as
 
of
 
March
 
31,
 
2025
 
and
December 31,
 
2024. 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”
 
to
 
the audited
 
consolidated
 
financial statements
included
 
in the
 
2024 Annual
 
Report on
 
Form 10-K.
 
The ACL
 
for off-balance
 
sheet credit
 
exposures amounted
 
to $
3.1
 
million as
 
of
each of March 31, 2025 and December 31, 2024.
 
The following
 
table presents
 
the activity
 
in the
 
ACL for
 
unfunded loan
 
commitments and
 
standby letters
 
of credit
 
for the
 
quarters
ended March 31, 2025 and 2024:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended March 31,
2025
2024
(In thousands)
Beginning balance
$
3,143
$
4,638
Provision for credit losses - (benefit) expense
 
(63)
281
 
Ending balance
$
3,080
$
4,919