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ALLOWANCE FOR CREDIT LOSSES FOR LOANS AND FINANCE LEASES
 9 Months Ended
Sep. 30, 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 September 30, 2025
(In thousands)
ACL:
Beginning balance
$
42,448
$
4,551
$
22,746
$
39,359
$
139,474
$
248,578
Provision for credit losses - (benefit) expense
(2,208)
496
2,503
(1,397)
18,876
18,270
Charge-offs
 
(459)
-
-
(173)
(24,553)
(25,185)
Recoveries
491
313
117
65
4,341
5,327
Ending balance
$
40,272
$
5,360
$
25,366
$
37,854
$
138,138
$
246,990
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential Mortgage
Loans
Construction
Loans
Commercial
Mortgage
C&I
 
Loans
Consumer Loans
Total
Quarter Ended September 30, 2024
(In thousands)
ACL:
Beginning balance
$
46,051
$
5,646
$
30,078
$
35,440
$
137,317
$
254,532
Provision for credit losses - (benefit) expense
(5,476)
(1,659)
(5,914)
885
28,634
16,470
Charge-offs
 
(421)
-
-
(1,437)
(27,187)
(29,045)
Recoveries
497
11
41
211
4,279
5,039
Ending balance
$
40,651
$
3,998
$
24,205
$
35,099
$
143,043
$
246,996
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential Mortgage
Loans
Construction
Loans
Commercial
Mortgage
C&I
 
Loans
Consumer Loans
Total
Nine-Month Period Ended September 30, 2025
(In thousands)
ACL:
Beginning balance
$
40,654
$
3,824
$
22,447
$
33,034
$
143,983
$
243,942
Provision for credit losses - (benefit) expense
(411)
1,196
2,711
4,091
55,901
63,488
Charge-offs
 
(979)
-
-
(316)
(76,629)
(77,924)
Recoveries
1,008
340
208
1,045
14,883
(1)
17,484
Ending balance
$
40,272
$
5,360
$
25,366
$
37,854
$
138,138
$
246,990
(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
Nine-Month Period Ended September 30, 2024
(In thousands)
ACL:
Beginning balance
$
57,397
$
5,605
$
32,631
$
33,996
$
132,214
$
261,843
Provision for credit losses - (benefit) expense
(16,533)
(1,642)
(8,900)
(2,871)
71,263
41,317
Charge-offs
 
(1,428)
-
-
(2,317)
(81,053)
(84,798)
Recoveries
1,215
35
474
6,291
20,619
(1)
28,634
Ending balance
$
40,651
$
3,998
$
24,205
$
35,099
$
143,043
$
246,996
(1)
Includes recoveries totaling $
10.0
 
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 September
 
30, 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
 
September
 
30,
 
2025,
 
the
 
ACL
 
for
 
loans
 
and
 
finance
 
leases
 
was
 
$
247.0
 
million,
 
an
 
increase
 
of
 
$
3.1
 
million,
 
from
 
$
243.9
million as of December 31, 2024. The increase
 
was mainly related to the ACL for commercial and
 
construction loans, which increased
by
 
$
9.3
 
million,
 
mainly
 
due
 
to
 
C&I
 
loan
 
growth,
 
a
 
deterioration
 
in
 
the
 
economic
 
outlook
 
of
 
the
 
commercial
 
real
 
estate
 
property
performance and the forecasted CRE price index,
 
and updated historical prepayment experience.
Meanwhile, the
 
ACL for
 
consumer loans
 
decreased by
 
$
5.8
 
million, driven
 
by improvements
 
in macroeconomic
 
variables, mainly
in
 
the
 
projection
 
of
 
the
 
unemployment
 
rate,
 
and
 
reductions
 
in
 
the
 
unsecured
 
loan
 
portfolio
 
volumes,
 
partially
 
offset
 
by
 
updated
historical
 
loss
 
experience
 
used
 
for
 
determining
 
the
 
ACL
 
estimate
 
in
 
the
 
unsecured
 
loan
 
portfolio.
 
Also,
 
the
 
ACL
 
for
 
residential
mortgage loans
 
decreased by
 
$
0.4
 
million mainly
 
due to
 
improvements in
 
macroeconomic variables,
 
such as
 
the unemployment
 
rate
and the
 
Housing Price
 
Index, and
 
updated historical
 
loss experience
 
used for
 
determining the
 
ACL estimate
 
resulting in
 
a downward
revision of estimated loss severities and lower required reserve levels,
 
partially offset by newly originated loans.
Net charge-offs were
 
$
19.9
 
million and $
60.4
 
million for the third quarter
 
and first nine months of 2025,
 
compared to $
24.0
 
million
and $
56.2
 
million, respectively, for
 
the same periods in 2024. The $
4.1
 
million decrease in net charge-offs for
 
the third quarter of 2025
was driven by
 
a $
2.7
 
million decrease in
 
consumer loans and
 
finance leases net
 
charge-offs, a
 
$
1.2
 
million charge-off
 
recorded on the
sale of a nonaccrual C&I
 
loan in the Puerto Rico region
 
during the third quarter of 2024,
 
and a $
0.3
 
million recovery associated with a
construction loan in the Florida
 
region during the third quarter of
 
2025. The net charge-offs
 
for the first nine months of
 
2025 and 2024
included $
2.4
 
million and $
10.0
 
million, respectively,
 
in recoveries associated with
 
the bulk sales of
 
fully charged-off
 
consumer loans
and
 
finance
 
leases.
 
The
 
increase
 
in
 
net
 
charge-offs
 
for
 
the
 
first
 
nine
 
months
 
of
 
2025
 
was
 
also
 
driven
 
by
 
a
 
$
5.0
 
million
 
recovery
associated with
 
a C&I
 
loan in the
 
Puerto Rico
 
region during
 
the first
 
nine months
 
of 2024,
 
partially offset
 
by a decrease
 
in consumer
loans and finance leases net charge-offs.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The tables below
 
present the ACL
 
related to loans
 
and finance leases
 
and the carrying
 
values of loans
 
by portfolio segment
 
as of
September 30, 2025 and December 31, 2024:
As of September 30, 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
$
2,889,081
$
259,863
$
2,549,375
$
3,614,241
$
3,736,124
$
13,048,684
 
Allowance for credit losses
40,272
5,360
25,366
37,854
138,138
246,990
 
Allowance for credit losses to
 
amortized cost
1.39
%
2.06
%
0.99
%
1.05
%
3.70
%
1.89
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 September 30,
 
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.
 
As
 
of
 
September
 
30,
 
2025,
 
the
 
ACL
 
for
 
off-balance
 
sheet
 
credit
 
exposures
amounted to $
2.6
 
million, compared to $
3.1
 
million as of December 31, 2024.
 
The following
 
table presents
 
the activity
 
in the
 
ACL for
 
unfunded loan
 
commitments and
 
standby letters
 
of credit
 
for the
 
quarters
and nine-month periods ended September 30, 2025 and 2024:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
Nine-Month Period Ended
September 30,
September 30,
2025
2024
2025
2024
(In thousands)
Beginning balance
$
3,367
$
4,502
$
3,143
$
4,638
Provision for credit losses - benefit
 
(756)
(1,041)
(532)
(1,177)
Ending balance
$
2,611
$
3,461
$
2,611
$
3,461