The composition of the Company's allowance for loan and lease losses at June 30, 2014 and December 31, 2013 was as follows:

	June 30,		December 31,
	2014		2013
	(In thousands)
Allowance for loans and lease losses on non-covered loans:
Originated and other loans and leases held for investment:
Mortgage	$	19,062	$	19,937
Commercial		12,423		14,897
Consumer		7,887		6,006
Auto and leasing		11,127		7,866
Unallocated		139		375
		50,638		49,081
Acquired loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		464		926
Consumer		338		-
Auto		2,642		1,428
		3,444		2,354
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Commercial		6,216		1,713
Consumer		62		418
Auto		-		732
		6,278		2,863
		60,360		54,298
Allowance for loans and lease losses on covered loans:
Loans secured by 1-4 family residential properties		14,924		12,495
Commercial and other construction		43,976		39,619
Consumer		615		615
		59,515		52,729
Total allowance for loan and lease losses	$	119,875	$	107,027

The Company maintains an allowance for loan and lease losses at a level that management considers adequate to provide for probable losses based upon an evaluation of known and inherent risks. The Company's allowance for loan and lease losses policy provides for a detailed quarterly analysis of probable losses. The analysis includes a review of historical loan loss experience, value of underlying collateral, current economic conditions, financial condition of borrowers and other pertinent factors. While management uses available information in estimating probable loan losses, future additions to the allowance may be required based on factors beyond the Company's control. We also maintain an allowance for loan losses on acquired loans when: (i) for loans accounted for under ASC 310-30, there is deterioration in credit quality subsequent to acquisition, and (ii) for loans accounted for under ASC 310-20, the inherent losses in the loans exceed the remaining credit discount recorded at the time of acquisition. As part of the Company's continuous enhancement to the allowance for loan and lease losses methodology, during the quarter ended March 31, 2014, an assessment of the look-back period and historical loss factor was performed for auto and leasing and consumer loan portfolios based on the trends observed and their relation with the economic cycle as of the period ended March 31, 2014. Same analysis was performed for the commercial portfolio during the quarter ended June 30, 2014. As a result, the period was changed to 24 months from the previously determined 12 months for auto and leasing and consumer. For the commercial portfolio, a look back period of 12 months was maintained. In addition, during the quarter ended June 30, 2014, an assessment of environmental factors was performed for commercial, auto, and consumer portfolios. As a result, more weight is been given to the environmental factors related to the economy, taking into consideration current evolution of the portfolio and expected impact, due to recent economic developments. These changes in the allowance for loan and lease losses' look back period for the consumer and auto and leasing portfolios, and economic factors for the commercial, auto, and consumer portfolios are considered a change in accounting estimate as per ASC 250-10 provisions, where adjustments should be made prospectively.

The following tables present the activity in our allowance for loan and lease losses and the related recorded investment of the associated loans for our originated and other loans held for investment portfolio by segment for the periods indicated:

	Quarter Ended June 30, 2014
							Auto and
	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Balance at beginning of period	$	19,511	$	13,994	$	7,135	$	8,731	$	136	$	49,507
Charge-offs		(987)		(543)		(1,397)		(5,956)		-		(8,883)
Recoveries		88		115		244		2,136		-		2,583
Provision (recapture) for non-covered originated and other loan and lease losses		450		(1,143)		1,905		6,216		3		7,431
Balance at end of period	$	19,062	$	12,423	$	7,887	$	11,127	$	139	$	50,638


	Six-Month Period Ended June 30, 2014
							Auto and
	Mortgage		Commercial		Consumer		Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Balance at beginning of period	$	19,937	$	14,897	$	6,006	$	7,866	$	375	$	49,081
Charge-offs		(2,201)		(962)		(2,235)		(10,601)		-		(15,999)
Recoveries		236		213		391		3,660		-		4,500
Provision (recapture) for non-covered originated and other loan and lease losses		1,090		(1,725)		3,725		10,202		(236)		13,056
Balance at end of period	$	19,062	$	12,423	$	7,887	$	11,127	$	139	$	50,638

	June 30, 2014
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses on non-covered originated and other loans:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	7,730	$	2,114	$	-	$	-	$	-	$	9,844
Collectively evaluated for impairment		11,332		10,309		7,887		11,127		139		40,794
Total ending allowance balance	$	19,062	$	12,423	$	7,887	$	11,127	$	139	$	50,638
Loans:
Individually evaluated for impairment	$	90,375	$	28,910	$	-	$	-	$	-	$	119,285
Collectively evaluated for impairment		697,626		1,154,262		161,538		508,034		-		2,521,460
Total ending loan balance	$	788,001	$	1,183,172	$	161,538	$	508,034	$	-	$	2,640,745

	Quarter Ended June 30, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Balance at beginning of period	$	22,889	$	16,314	$	1,313	$	1,741	$	77	$	42,334
Charge-offs		(29,120)		(2,886)		(323)		(709)		-		(33,038)
Recoveries		-		234		43		209		-		486
Provision for non-covered originated and other loan and lease losses		27,606		3,961		1,309		2,400		643		35,919
Balance at end of period	$	21,375	$	17,623	$	2,342	$	3,641	$	720	$	45,701


	Six-Month Period Ended June 30, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Balance at beginning of period	$	21,092	$	17,072	$	856	$	533	$	368	$	39,921
Charge-offs		(31,707)		(3,444)		(569)		(800)		-		(36,520)
Recoveries		-		262		107		216		-		585
Provision for non-covered originated and other loan and lease losses		31,990		3,733		1,948		3,692		352		41,715
Balance at end of period	$	21,375	$	17,623	$	2,342	$	3,641	$	720	$	45,701

	December 31, 2013
	Mortgage		Commercial		Consumer		Auto and Leasing		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered originated and other loans:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	8,708	$	1,431	$	-	$	-	$	-	$	10,139
Collectively evaluated for impairment		11,229		13,466		6,006		7,866		375		38,942
Total ending allowance balance	$	19,937	$	14,897	$	6,006	$	7,866	$	375	$	49,081
Loans:
Individually evaluated for impairment	$	84,494	$	28,145	$	-	$	-	$	-	$	112,639
Collectively evaluated for impairment		681,771		1,099,512		127,744		379,874		-		2,288,901
Total ending loans balance	$	766,265	$	1,127,657	$	127,744	$	379,874	$	-	$	2,401,540

Acquired Loans accounted for under ASC 310-20 (Loans with revolving feature and/or acquired at a premium)

The following tables present the activity in our allowance for loan losses and related recorded investment of the associated loans in our non-covered acquired loan portfolio, excluding loans accounted for under ASC 310-30, for the periods indicated:

	Quarter Ended June 30, 2014
	Commercial			Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered acquired loans accounted for under ASC 310-20:
Balance at beginning of period	$	867	1	$	504	$	2,247	$	-	$	3,618
Charge-offs		(110)			(1,952)		(1,370)		-		(3,432)
Recoveries		30			124		535		-		689
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-20		(323)			1,662		1,230		-		2,569
Balance at end of period	$	464		$	338	$	2,642	$	-	$	3,444



	Six-Month Period Ended June 30, 2014
	Commercial			Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered acquired loans accounted for under ASC 310-20:
Balance at beginning of period	$	926	1	$	-	$	1,428	$	-	$	2,354
Charge-offs		(284)			(4,010)		(2,666)		-		(6,960)
Recoveries		30			224		985		-		1,239
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-20		(208)			4,124		2,895		-		6,811
Balance at end of period	$	464		$	338	$	2,642	$	-	$	3,444

	June 30, 2014
	Commercial		Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses on non-covered acquired loans accounted for under ASC 310-20:
Ending allowance balance attributable to loans:
Collectively evaluated for impairment		464		338		2,642		-		3,444
Total ending allowance balance	$	464	$	338	$	2,642	$	-	$	3,444
Loans:
Collectively evaluated for impairment		38,602		49,604		238,399		-		326,605
Total ending loan balance	$	38,602	$	49,604	$	238,399	$	-	$	326,605

	Quarter Ended June 30, 2013
	Commercial			Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered acquired loans accounted for under ASC 310-20:
Balance at beginning of period	$	386	$ 1	$	-	$	-	$	-	$	386
Charge-offs		(25)			(1,158)		(1,410)		-		(2,593)
Recoveries		-			637		886		-		1,523
Provision (recapture)for non-covered acquired loan and lease losses accounted for under ASC 310-20		563			521		524		-		1,608
Balance at end of period	$	924		$	-	$	-	$	-	$	924



	Six-Month Period Ended June 30, 2013
	Commercial			Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses for non-covered acquired loans accounted for under ASC 310-20:
Balance at beginning of period	$	-	$ 1	$	-	$	-	$	-	$	-
Charge-offs		(25)			(2,614)		(3,125)		-		(5,764)
Recoveries		-			844		2,116		-		2,960
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-20		949			1,770		1,009		-		3,728
Balance at end of period	$	924		$	-	$	-	$	-	$	924

	December 31, 2013
	Commercial		Consumer		Auto		Unallocated		Total
	(In thousands)
Allowance for loan and lease losses on non-covered acquired loans accounted for under ASC 310-20:
Ending allowance balance attributable to loans:
Collectively evaluated for impairment		926		-		1428		-		2,354
Total ending allowance balance	$	926	$	-	$	1,428	$	-	$	2,354
Loans:
Collectively evaluated for impairment		77,681		56,174		301,584		-		435,439
Total ending loan balance	$	77,681	$	56,174	$	301,584	$	-	$	435,439

Acquired Loans Accounted for under ASC 310-30 (including those accounted for under ASC 310-30 by analogy)

The following tables present the activity in our allowance for loan losses and related recorded investment of the associated loans in our non-covered acquired loan portfolio accounted for under ASC 310-30, for the periods indicated:

	Quarter Ended June 30, 2014
	Mortgage			Commercial			Construction			Consumer		Auto		Total
	(In thousands)
Allowance for loan and lease losses for non-covered loans accounted for under ASC 310-30:
Balance at beginning of period	$	-	1	$	2,653	1	$	-	$ 1	$	405	$	-	$	3,058
Provision(recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-30		-			3,563			-			(343)		-		3,220
Balance at end of period	$	-		$	6,216		$	-		$	62	$	-	$	6,278



	Six-Month Period Ended June 30, 2014
	Mortgage			Commercial			Construction			Consumer		Auto		Total
	(In thousands)
Allowance for loan and lease losses for non-covered loans accounted for under ASC 310-30:
Balance at beginning of period	$	-	1	$	1,713	1	$	-	1	$	418	$	732	$	2,863
Provision (recapture) for non-covered acquired loan and lease losses accounted for under ASC 310-30		-			4,503			-			(356)		(732)		3,415
Balance at end of period	$	-		$	6,216		$	-		$	62	$	-	$	6,278

Non-covered acquired loans accounted for under ASC 310-30 were recognized at fair value as of December 18, 2012, which included the impact of expected credit losses, and therefore, no allowance for credit losses was recorded during the six-month period ended June 30, 2013.

The Company evaluates all loans, some individually and others as homogeneous groups, for purposes of determining impairment. The total investment in impaired commercial loans was $29.1 million and $28.4 million at June 30, 2014 and December 31, 2013, respectively. The impaired commercial loans were measured based on the fair value of collateral or the present value of cash flows, including those identified as troubled-debt restructurings. The valuation allowance for impaired commercial loans amounted to $2.1 million and $1.4 million at June 30, 2014 and December 31, 2013, respectively. The total investment in impaired mortgage loans was $90.4 million and $84.5 million at June 30, 2014 and December 31, 2013, respectively. Impairment on mortgage loans assessed as troubled-debt restructurings was measured using the present value of cash flows. The valuation allowance for impaired mortgage loans amounted to approximately $7.7 million and $8.7 million at June 30, 2014 and December 31, 2013, respectively.

The Company's recorded investment in non-covered commercial and mortgage loans categorized as originated and other loans and leases held for investment that were individually evaluated for impairment and the related allowance for loan and lease losses at June 30, 2014 and December 31, 2013 are as follows:

The Company's recorded investment in non-covered commercial loans categorized as non-covered acquired loans accounted for under ASC 310-20 that were individually evaluated for impairment and the related allowance for loan and lease losses at June 30, 2014 and December 31, 2013 are as follows:



	June 30, 2014
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial		208		208		N/A	N/A
Total investment in impaired loans	$	208	$	208	$	-	0%


	December 31, 2013
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial		208		208		N/A	N/A
Total investment in impaired loans	$	208	$	208	$	-	0%

The Company's recorded investment in non-covered acquired loan pools accounted for under ASC 310-30 and their related allowance for non-covered loan and lease losses at June 30, 2014 and December 31, 2013 are as follows:

The following table presents the interest recognized in non-covered commercial and mortgage loans that were individually evaluated for impairment, excluding loans accounted for under ASC 310-30, for the quarters and six-month periods ended June 30, 2014 and 2013:

	Quarter Ended June 30,
	2014				2013
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)

Impaired loans with specific allowance
Commercial	$	39	$	7,200	$	255	$	17,049
Residential troubled-debt restructuring		663		90,445		682		83,081
Impaired loans with no specific allowance
Commercial		77		21,951		226		23,304
Total interest income from impaired loans	$	779	$	119,596	$	1,163	$	123,434


	Six-Month Period Ended Ended June 30,
	2014				2013
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)

Impaired loans with specific allowance
Commercial	$	78	$	6,729	$	322	$	17,789
Residential troubled-debt restructuring		1,270		88,749		1,273		80,914
Impaired loans with no specific allowance
Commercial		154		21,790		364		25,304
Total interest income from impaired loans	$	1,502	$	117,268	$	1,959	$	124,007

The following tables present the troubled-debt restructurings during the quarters and six-month periods ended June 30, 2014 and 2013:

	Quarter Ended June 30, 2014
	Number of contracts	Pre-Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage	33	$	5,001	6%	353	$	4,965	4.12%	418
Commercial	1		73	7%	55		73	9.25%	36
Consumer	3		24	14%	77		24	13.98%	72


	Six-Month Period Ended June 30, 2014
	Number of contracts	Pre-Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage	88	$	11,813	6%	349	$	11,446	4.26%	390
Commercial	1		73	7%	55		73	9.25%	36
Consumer	8		66	13%	70		68	13.31%	68


	Quarter Ended June 30, 2013
	Number of contracts	Pre- Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage	42	$	5,372	6%	355	$	5,715	4.26%	420
Commercial	2		1,842	9%	87		1,842	4.00%	66
Consumer	2		18	14%	41		18	13.67%	60


	Six-Month Period Ended June 30, 2013
	Number of contracts	Pre- Modification Outstanding Recorded Investment		Pre-Modification Weighted Average Rate	Pre-Modification Weighted Average Term (in Months)	Post-Modification Outstanding Recorded Investment		Post-Modification Weighted Average Rate	Post-Modification Weighted Average Term (in Months)
	(Dollars in thousands)
Mortgage	86	$	10,555	7%	342	$	11,288	4.59%	417
Commercial	2		1,842	9%	87		1,842	4.00%	66
Consumer	2		18	14%	41		18	13.67%	60

The following table presents troubled-debt restructurings for which there was a payment default during the twelve-month periods ended June 30, 2014 and 2013:

The Company categorizes non-covered originated and other loans and acquired loans accounted for under ASC 310-20 into risk categories based on relevant information about the ability of borrowers to service their debt, such as economic conditions, portfolio risk characteristics, prior loss experience, and the results of periodic credit reviews of individual loans.

Pass: Loans classified as “pass” have a well defined primary source of repayment very likely to be sufficient, with no apparent risk, strong financial position, minimal operating risk, profitability, liquidity and capitalization better than industry standards.

Special Mention: Loans classified as “special mention” have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard: Loans classified as “substandard” are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as “doubtful” have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, questionable and improbable.

Loss: Loans classified as “loss” are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this worthless loan even though partial recovery may be effected in the future.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.

As of June 30, 2014 and December 31, 2013, and based on the most recent analysis performed, the risk category of gross non-covered originated and other loans and acquired loans accounted for under ASC 310-20 subject to risk rating by class of loans is as follows:

	June 30, 2014
	Risk Ratings
											Individually
	Balance				Special						Measured for
	Outstanding		Pass		Mention		Substandard		Doubtful		Impairment
	(In thousands)
Commercial - originated and other loans held for investment
Commercial secured by real estate:
Corporate	$	90,886	$	90,886	$	-	$	-	$	-	$	-
Institutional		30,701		20,581		10,120		-		-		-
Middle market		141,225		121,532		6,726		-		-		12,967
Retail		157,188		142,415		1,382		2,233		-		11,158
Floor plan		1,680		1,579		101		-		-		-
Real estate		11,878		11,878		-		-		-		-
		433,558		388,871		18,329		2,233		-		24,125
Other commercial and industrial:
Corporate		61,329		61,329		-		-		-		-
Institutional		487,725		287,734		199,991		-		-		-
Middle market		80,794		73,967		3,428		389		-		3,010
Retail		77,756		73,753		259		1,969		-		1,775
Floor plan		42,010		40,910		299		801		-		-
		749,614		537,693		203,977		3,159		-		4,785
Total		1,183,172		926,564		222,306		5,392		-		28,910

Commercial - acquired loans (under ASC 310-20)
Commercial secured by real estate:
Corporate		2,999		2,999		-		-		-		-
Retail		2,557		2,091		-		466		-		-
Floor plan		3,947		3,947		-		-		-		-
		9,503		9,037		-		466		-		-
Other commercial and industrial:
Corporate		3,010		2,916		94		-		-		-
Retail		11,420		10,871		100		449		-		-
Floor plan		14,669		14,669		-		-		-		-
		29,099		28,456		194		449		-		-
Total		38,602		37,493		194		915		-		-
Total	$	1,221,774	$	964,057	$	222,500	$	6,307	$	-	$	28,910

	December 31, 2013
	Risk Ratings
											Individually
	Balance				Special						Measured for
	Outstanding		Pass		Mention		Substandard		Doubtful		Impairment
	(In thousands)
Commercial - originated and other loans held for investment
Commercial secured by real estate:
Corporate	$	54,796	$	54,796	$	-	$	-	$	-	$	-
Institutional		4,050		4,050		-		-		-		-
Middle market		161,583		133,061		16,627		118		-		11,777
Retail		166,642		149,018		2,182		2,258		-		13,184
Floor plan		1,835		1,835		-		-		-		-
Real estate		11,655		11,655		-		-		-		-
		400,561		354,415		18,809		2,376		-		24,961
Other commercial and industrial:
Corporate		32,598		32,598		-		-		-		-
Institutional		536,445		536,445		-		-		-		-
Middle market		58,897		53,868		3,466		198		-		1,365
Retail		61,510		58,742		257		691		-		1,820
Floor plan		37,646		37,350		188		108		-		-
		727,096		719,003		3,911		997		-		3,185
Total		1,127,657		1,073,418		22,720		3,373		-		28,146

Commercial - acquired loans (under ASC 310-20)
Commercial secured by real estate:
Corporate		10,166		10,166		-		-		-		-
Retail		5,770		4,378		443		949		-		-
Floor plan		2,677		2,576		-		101		-		-
		18,613		17,120		443		1,050		-		-
Other commercial and industrial:
Corporate		9,793		9,696		-		97		-		-
Retail		27,338		26,044		150		1,144		-		-
Floor plan		21,937		21,769		168		-		-		-
		59,068		57,509		318		1,241		-		-
Total		77,681		74,629		761		2,291		-		-
Total	$	1,205,338	$	1,148,047	$	23,481	$	5,664	$	-	$	28,146

At June 30, 2014 and December 31, 2013, we had approximately $670.9 million and $763.4 million, respectively, of credit facilities granted to the Puerto Rico government, including its instrumentalities, public corporations and municipalities, of which $655.4 million and $696.0, respectively, were outstanding as of such dates. A substantial portion of our credit exposure to the government of Puerto Rico consists of collateralized loans or obligations that have a specific source of income or revenues identified for its repayment. Some of these obligations consist of senior and subordinated loans to public corporations that obtain revenues from rates charged for services, such as water and electric power utilities. Public corporations have varying degrees of independence from the central government and many have received appropriations or are due other payments from it. We also have loans to various municipalities for which the good faith, credit and unlimited taxing power of the applicable municipality has been pledged to their repayment. These municipalities are required by law to levy special property taxes in such amounts as shall be required for the payment of all their general obligation bonds and notes. Another portion of these loans consists of special obligations of various municipalities that are payable from the basic real and personal property taxes collected within such municipalities. The good faith and credit obligations of the municipalities have a first lien on the basic property taxes.

In the second quarter of 2014, the government enacted the Puerto Rico Public Corporation Debt Enforcement and Recovery Act (the “Recovery Act”), which establishes procedures for the adjustment of certain public corporations' debts. The Recovery Act states in its preamble that it further promotes the central government's public policy objectives of no longer providing financial support to public corporations and promoting their economic independence. The Recovery Act, which is without precedent and is being challenged in federal court on constitutional grounds, has increased the level of uncertainty as to the rights of the affected public corporation's creditors. As of June 30, 2014, we had approximately $382.9 million of credit facilities granted to public corporations authorized to initiate proceedings under the Recovery Act.

Oriental Bank is part of a four bank syndicate providing a $550 million dollar revolving line of credit to finance the purchase of fuel for the day to day power generation activities of the Puerto Rico Electric Power Authority (“PREPA”), a public corporation authorized to seek relief under the Recovery Act. The Bank's participation in the line of credit has an unpaid principal balance of $200.0 million as of June 30, 2014, which matures on August 14, 2014 and is currently accruing. The bank syndicate and PREPA have executed a short term forbearance agreement that expires at the maturity of the line of credit pursuant to which the bank syndicate agreed to not exercise remedies in connection with certain defaults under the loan agreement to facilitate a dialogue with PREPA, which is actively ongoing, regarding the future of the line of credit. As of June 30, 2014, this credit facility has a rating of special mention.

For residential and consumer loan classes, the Company evaluates credit quality based on the delinquency status of the loan. As of June 30, 2014 and December 31, 2013, and based on the most recent analysis performed, the risk category of non-covered gross originated and other loans and acquired loans accounted for under ASC 310-20 not subject to risk rating by class of loans is as follows:

	June 30, 2014
	Delinquency
															Individually
	Balance														Measured for
	Outstanding		0-29 days		30-59 days		60-89 days		90-119 days		120-364 days		365+ days		Impairment
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year)
Up to the year 2002	$	70,373	$	59,428	$	5,181	$	2,498	$	693	$	649	$	1,840	$	84
Years 2003 and 2004		62,282		51,929		5,503		1,905		232		1,267		1,126		320
Year 2005		85,869		69,305		6,611		2,959		775		3,029		2,806		384
Year 2006		114,386		94,669		10,562		3,781		1,561		1,813		1,808		192
Years 2007, 2008 and 2009		94,343		82,470		3,962		2,051		1,130		2,186		2,143		401
Years 2010, 2011, 2012 2013 and 2014		195,672		173,113		1,979		1,515		246		1,843		1,344		15,632
		622,925		530,914		33,798		14,709		4,637		10,787		11,067		17,013
Non-traditional		38,034		32,254		1,997		1,128		263		1,270		1,073		49
Loss mitigation program		87,964		8,100		1,255		471		223		932		691		76,292
		748,923		571,268		37,050		16,308		5,123		12,989		12,831		93,354
Home equity secured personal loans		749		611		-		-		-		126		12		-
GNMA's buy-back option program		38,329		-		-		-		7,258		16,835		14,236		-
		788,001		571,879		37,050		16,308		12,381		29,950		27,079		93,354
Consumer
Credit cards		15,886		15,034		345		236		61		210		-		-
Overdrafts		318		295		19		3		-		1		-		-
Unsecured personal lines of credit		1,976		1,789		57		1		90		29		10		-
Unsecured personal loans		126,420		123,520		1,206		535		521		123		11		504
Cash collateral personal loans		16,938		16,516		280		94		48		-		-		-
		161,538		157,154		1,907		869		720		363		21		504
Auto and Leasing		508,034		450,414		37,047		13,620		4,588		2,365		-		-
		1,457,573		1,179,447		76,004		30,797		17,689		32,678		27,100		93,858
Acquired loans (accounted for under ASC 310-20)
Consumer
Credit cards		45,938		42,265		1,520		835		465		853		-		-
Personal loans		3,666		3,335		218		82		10		21		-		-
		49,604		45,600		1,738		917		475		874		-		-
Auto		238,399		220,905		11,603		4,325		965		601		-		-
		288,003		266,505		13,341		5,242		1,440		1,475		-		-
Total	$	1,745,576	$	1,445,952	$	89,345	$	36,039	$	19,129	$	34,153	$	27,100	$	93,858

	December 31, 2013
	Delinquency
															Individually
	Balance														Measured for
	Outstanding		0-29 days		30-59 days		60-89 days		90-119 days		120-364 days		365+ days		Impairment
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year)
Up to the year 2002	$	76,512	$	64,743	$	6,594	$	1,634	$	868	$	1,082	$	1,458	$	133
Years 2003 and 2004		65,117		56,283		4,722		1,938		56		1,437		352		329
Year 2005		89,541		74,016		8,414		2,119		1,198		3,037		573		184
Year 2006		120,322		99,243		12,055		4,312		1,148		2,755		515		294
Years 2007, 2008 and 2009		101,150		91,920		3,464		1,104		1,264		2,844		554		-
Years 2010, 2011, 2012 and 2013		149,546		134,577		3,192		1,609		115		974		989		8,090
		602,188		520,782		38,441		12,716		4,649		12,129		4,441		9,030
Non-traditional		42,102		35,168		3,217		1,162		-		1,324		833		398
Loss mitigation program		86,318		7,762		1,376		149		624		312		1,029		75,066
		730,608		563,712		43,034		14,027		5,273		13,765		6,303		84,494
Home equity secured personal loans		736		598		-		-		-		126		12		-
GNMA's buy-back option program		34,921		-		-		-		7,670		14,425		12,826		-
		766,265		564,310		43,034		14,027		12,943		28,316		19,141		84,494
Consumer
Credit cards		15,241		14,555		287		168		118		113		-		-
Overdrafts		372		322		46		4		-		-		-		-
Unsecured personal lines of credit		1,981		1,844		33		38		25		34		7		-
Unsecured personal loans		94,560		92,102		1,272		399		300		39		13		435
Cash collateral personal loans		15,590		15,223		324		43		-		-		-		-
		127,744		124,046		1,962		652		443		186		20		435
Auto and Leasing		379,874		339,817		25,532		9,437		3,397		1,691		-		-
		1,273,883		1,028,173		70,528		24,116		16,783		30,193		19,161		84,929
Acquired loans (accounted for under ASC 310-20)
Consumer
Credit cards		52,199		46,713		2,217		1,200		828		1,241		-		-
Personal loans		3,975		3,681		196		7		60		31		-		-
		56,174		50,394		2,413		1,207		888		1,272		-		-
Auto		301,584		283,825		12,534		3,616		1,095		514		-		-
		357,758		334,219		14,947		4,823		1,983		1,786		-		-
Total	$	1,631,641	$	1,362,392	$	85,475	$	28,939	$	18,766	$	31,979	$	19,161	$	84,929

For covered loans, as part of the evaluation of actual versus expected cash flows, the Company assesses on a quarterly basis the credit quality of these loans based on delinquency, severity factors and risk ratings, among other assumptions. Migration and credit quality trends are assessed at the pool level, by comparing information from the latest evaluation period through the end of the reporting period.

The changes in the allowance for loan and lease losses on covered loans for the quarters and six-month periods ended June 30, 2014 and 2013 were as follows:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
	(In thousands)
Balance at beginning of the period	$	54,398	$	52,974	$	52,729	$	54,124
Provision for covered loan and lease losses, net		1,595		1,211		3,224		1,883
FDIC shared-loss portion of provision for (recapture of)
covered loan and lease losses, net		3,522		(192)		3,562		(2,014)
Balance at end of the period	$	59,515	$	53,993	$	59,515	$	53,993

FDIC shared-loss portion of provision for (recapture of) covered loans and lease losses net, represents the credit impairment losses to be covered under the FDIC loss-share agreement which is increasing (decreasing) the FDIC loss-share indemnification asset.

Net provision for covered loans includes both additional reserves and reserve releases for different pools. The pools for which there were releases are also subject to a reduction to the FDIC shared-loss indemnification asset because of lower expected losses which are recognized as recaptures.

The Company's recorded investment in covered loan pools that have recorded impairments and their related allowance for covered loan and lease losses as of June 30, 2014 and December 31, 2013 are as follows:

	June 30, 2014

	Unpaid		Recorded
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired covered loan pools:
Loans secured by 1-4 family residential properties	$	141,951	$	108,884	$	14,923	14%
Construction and development secured by 1-4 family residential properties		63,615		18,566		7,799	42%
Commercial and other construction		124,506		77,980		36,178	46%
Consumer		9,184		4,912		615	13%
Total investment in impaired covered loan pools	$	339,256	$	210,342	$	59,515	28%

	December 31, 2013

	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired covered loan pools with specific allowance
Loans secured by 1-4 family residential properties	$	52,142	$	38,179	$	12,495	33%
Construction and development secured by 1-4 family residential properties		66,037		17,304		6,866	40%
Commercial and other construction		209,566		111,946		32,753	29%
Consumer		10,512		5,857		615	11%
Total investment in impaired covered loan pools	$	338,257	$	173,286	$	52,729	30%