Loans Receivable

9 Months Ended

Sep. 30, 2015

NOTE 4 - LOANS

The Company’s loan portfolio is composed of two segments, loans initially accounted for under the amortized cost method (referred as "originated and other" loans) and loans acquired (referred as "acquired" loans). Acquired loans are further segregated between acquired BBVAPR loans and acquired Eurobank loans. Acquired Eurobank loans were purchased subject to loss-sharing agreements with the FDIC. The FDIC loss sharing agreement, related to commercial and other-non single family acquired Eurobank loans expired on June 30, 2015. Notwithstanding the expiration of loss share coverage of non-single family loans, on July 2, 2015, the Company entered into an agreement with the FDIC pursuant to which the FDIC concurred with a potential sale of a pool of loss share assets covered under the non-single family loss share agreement. Pursuant to such agreement, the FDIC agreed to pay up to $20 million in loss share coverage with respect to the aggregate loss resulting from any portfolio sale within 120 days of the agreement. This sale was completed on September 28, 2015 and a $20 million receivable from the FDIC was included in other assets in the unaudited statement of financial condition related to this reimbursement. The coverage for the single family residential loans will expire on June 30, 2020. At September 30, 2015, the remaining covered loans amounting to $ 60.1 million, net carrying amount, are included as part of acquired Eurobank loans under the name "loans secured by 1-4 family residential properties". At December 31, 2014, covered loans amounted to $298.9 million, net carrying amount. Covered loans are no longer a material amount. Therefore, the Company changed its current and prior year loan disclosures during the quarter ended September 30, 2015.

The composition of the Company’s loan portfolio at September 30, 2015 and December 31, 2014 was as follows:

	September 30,		December 31,
	2015		2014
	(In thousands)
Originated and other loans and leases held for investment:
Mortgage	$	762,636	$	791,751
Commercial		1,389,353		1,289,732
Consumer		227,756		186,760
Auto and leasing		647,544		575,582
		3,027,289		2,843,825
Allowance for loan and lease losses on originated and other loans and leases		(80,351)		(51,439)
		2,946,938		2,792,386
Deferred loan costs, net		4,571		4,282
Total originated and other loans loans held for investment, net		2,951,509		2,796,668

Acquired loans:
Acquired BBVAPR loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		7,736		12,675
Consumer		39,774		45,344
Auto		124,120		184,782
		171,630		242,801
Allowance for loan and lease losses on acquired BBVAPR loans accounted for under ASC 310-20		(5,473)		(4,597)
		166,157		238,204

Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Mortgage		617,268		656,122
Commercial		395,637		452,201
Construction		-		106,361
Consumer		15,072		29,888
Auto		173,979		247,233
		1,201,956		1,491,805
Allowance for loan and lease losses on acquired BBVAPR loans accounted for under ASC 310-30		(19,986)		(13,481)
		1,181,970		1,478,324
Total acquired BBVAPR loans, net		1,348,127		1,716,528
Acquired Eurobank loans:
Loans secured by 1-4 family residential properties		92,757		102,162
Commercial		144,704		256,488
Consumer		2,708		4,506
Total acquired Eurobank loans		240,169		363,156
Allowance for loan and lease losses on Eurobank loans		(90,332)		(64,245)
Total acquired Eurobank loans, net		149,837		298,911
Total acquired loans, net		1,497,964		2,015,439
Total held for investment, net		4,449,473		4,812,107
Mortgage loans held for sale		19,203		14,539
Total loans, net	$	4,468,676	$	4,826,646

On September 28, 2015, the Company sold a portion of covered non-performing commercial loans amounting to $197.1 million unpaid principal balance or UPB ($100.0 million carrying amount). The sales price was 18.44% of UPB, or $36.3 million. The FDIC agreed to cover $20.0 million of losses as part of its loss-share agreement with the Company. As a result, a $20.0 million reimbursement was recorded in the statement of operations. The Company also recorded a $32.9 million provision for loan and lease losses for acquired Eurobank loans, which was partially offset by $4.6 million in cost recoveries. Also, as part of this transaction, the Company sold certain non-performing commercial loans and real estate owned from the BBVAPR acquisition amounting to $38.1 million unpaid principal balance ($9.9 million carrying amount). The sales price was $5.2 million. As a result, a $5.2 million provision for loan and lease losses was recorded for BBVAPR acquired loans, which was partially offset by $2.4 million in cost recoveries. In addition, certain additional real estate owned with a carrying amount of $11.0 million was sold for $1.7 million. At September 30, 2015, the Company had a $13.0 million receivable related to this sale and a $20.0 million receivable from the FDIC reimbursement

Originated and Other Loans and Leases Held for Investment

The Company’s originated and other loans held for investment are encompassed within four portfolio segments: mortgage, commercial, consumer, and auto and leasing.

The following tables present the aging of the recorded investment in gross originated and other loans held for investment as of September 30, 2015 and December 31, 2014 by class of loans. Mortgage loans past due included delinquent loans in the GNMA buy-back option program. Servicers of loans underlying GNMA mortgage-backed securities must report as their own assets the defaulted loans that they have the option (but not the obligation) to repurchase, even when they elect not to exercise that option.

	September 30, 2015
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	81	$	2,270	$	3,900	$	6,251	$	-	$	53,330	$	59,581	$	73
Years 2003 and 2004		364		4,723		5,826		10,913		-		90,950		101,863		-
Year 2005		-		2,525		3,686		6,211		-		49,389		55,600		-
Year 2006		97		2,853		8,133		11,083		137		69,207		80,427		-
Years 2007, 2008 and 2009		539		2,320		15,442		18,301		-		76,017		94,318		666
Years 2010, 2011, 2012, 2013		599		1,249		10,337		12,185		-		142,346		154,531		74
Years 2014 and 2015		-		96		185		281		-		76,111		76,392		-
		1,680		16,036		47,509		65,225		137		557,350		622,712		813
Non-traditional		-		1,918		3,468		5,386		14		26,849		32,249		-
Loss mitigation program		11,696		5,981		16,001		33,678		4,786		61,703		100,167		3,757
		13,376		23,935		66,978		104,289		4,937		645,902		755,128		4,570
Home equity secured personal loans		64		-		-		64		-		451		515		-
GNMA's buy-back option program		-		-		6,993		6,993		-		-		6,993		-
		13,440		23,935		73,971		111,346		4,937		646,353		762,636		4,570
Commercial
Commercial secured by real estate:
Corporate		-		-		-		-		-		224,110		224,110		-
Institutional		-		-		-		-		-		34,342		34,342		-
Middle market		-		-		6,212		6,212		7,889		193,154		207,255		-
Retail		516		350		7,222		8,088		1,139		202,534		211,761		-
Floor plan		-		-		-		-		-		2,925		2,925		-
Real estate		-		-		-		-		-		16,766		16,766		-
		516		350		13,434		14,300		9,028		673,831		697,159		-
Other commercial and industrial:
Corporate		-		-		-		-		-		71,714		71,714		-
Institutional		-		-		-		-		193,904		189,882		383,786		-
Middle market		20		-		223		243		2,046		105,554		107,843		-
Retail		276		255		1,204		1,735		944		89,989		92,668		-
Floor plan		178		83		475		736		-		35,447		36,183		-
		474		338		1,902		2,714		196,894		492,586		692,194		-
		990		688		15,336		17,014		205,922		1,166,417		1,389,353		-

	September 30, 2015
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Consumer
Credit cards		436		182		344		962		-		20,186		21,148		-
Overdrafts		15		-		-		15		-		260		275		-
Personal lines of credit		31		27		39		97		21		2,066		2,184		-
Personal loans		1,798		822		862		3,482		641		183,703		187,826		-
Cash collateral personal loans		171		103		2		276		-		16,047		16,323		-
		2,451		1,134		1,247		4,832		662		222,262		227,756		-
Auto and leasing		52,412		19,215		8,986		80,613		282		566,649		647,544		-
Total	$	69,293	$	44,972	$	99,540	$	213,805	$	211,803	$	2,601,681	$	3,027,289	$	4,570

	December 31, 2014
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002	$	4,128	$	3,157	$	4,395	$	11,680	$	-	$	54,064	$	65,744	$	134
Years 2003 and 2004		10,484		4,735		6,489		21,708		455		87,506		109,669		-
Year 2005		3,824		2,205		4,454		10,483		131		49,858		60,472		-
Year 2006		5,706		3,298		8,667		17,671		548		67,331		85,550		89
Years 2007, 2008 and 2009		5,283		1,809		7,646		14,738		761		77,990		93,489		-
Years 2010, 2011, 2012, 2013		3,394		2,992		6,900		13,286		-		149,030		162,316		365
Year 2014		290		-		-		290		-		41,818		42,108		-
		33,109		18,196		38,551		89,856		1,895		527,597		619,348		588
Non-traditional		1,477		584		3,223		5,284		-		30,916		36,200		-
Loss mitigation program		8,199		7,106		14,114		29,419		6,358		57,666		93,443		2,766
		42,785		25,886		55,888		124,559		8,253		616,179		748,991		3,354
Home equity secured personal loans		-		-		-		-		-		517		517		-
GNMA's buy-back option program		-		-		42,243		42,243		-		-		42,243		-
		42,785		25,886		98,131		166,802		8,253		616,696		791,751		3,354
Commercial
Commercial secured by real estate:
Corporate		-		-		-		-		-		133,076		133,076		-
Institutional		-		-		-		-		-		36,611		36,611		-
Middle market		-		645		396		1,041		8,494		154,515		164,050		-
Retail		330		561		7,275		8,166		1,445		166,017		175,628		-
Floor plan		-		-		-		-		-		1,650		1,650		-
Real estate		-		-		-		-		-		12,628		12,628		-
		330		1,206		7,671		9,207		9,939		504,497		523,643		-
Other commercial and industrial:
Corporate		-		-		-		-		-		63,746		63,746		-
Institutional		-		-		-		-		-		478,935		478,935		-
Middle market		-		-		618		618		-		91,716		92,334		-
Retail		866		412		1,061		2,339		1,047		86,785		90,171		-
Floor plan		-		-		-		-		-		40,903		40,903		-
		866		412		1,679		2,957		1,047		762,085		766,089		-
		1,196		1,618		9,350		12,164		10,986		1,266,582		1,289,732		-

	December 31, 2014
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Consumer
Credit cards		360		139		375		874		-		18,197		19,071		-
Overdrafts		20		-		-		20		-		287		307		-
Personal lines of credit		102		25		102		229		9		1,962		2,200		-
Personal loans		1,822		743		678		3,243		337		144,359		147,939		-
Cash collateral personal loans		275		39		9		323		-		16,920		17,243		-
		2,579		946		1,164		4,689		346		181,725		186,760		-
Auto and leasing		47,658		16,916		7,420		71,994		145		503,443		575,582		-
Total	$	94,218	$	45,366	$	116,065	$	255,649	$	19,730	$	2,568,446	$	2,843,825	$	3,354

During the quarter ended September 30, 2015, the Company changed its early delinquency reporting on mortgage loans from one scheduled payment due to two scheduled payments due in order to comply with regulatory reporting instructions and be comparable with local peers, except for troubled debt restructured loans which remain using one scheduled payment due.

At September 30, 2015 and December 31, 2014, the Company had $338.3 million and $450.2 million, respectively, in loans granted to the Puerto Rico government, including its instrumentalities, public corporations and municipalities as part of the institutional commercial loan segment. All loans granted to Puerto Rico government were current at September 30, 2015 and December 31, 2014. We, as part of a bank syndicate, have granted various extensions to the Puerto Rico Electric Power Authority (“PREPA”) and on November 5, 2015 entered into a Restructuring Support Agreement with a view towards restructuring the debt on terms that provide for full repayment of the debt to the Bank. After the first extension in the third quarter of 2014, the Company classified the credit as substandard and a troubled-debt restructuring. The Company conducted an impairment analysis considering the probability of collection of principal and interest, which included a financial model to project the future liquidity status of PREPA under various scenarios and its capacity to service its financial obligations, and concluded that PREPA had sufficient cash flows for the repayment of the line of credit. Despite the Company’s analysis showing PREPA’s capacity to repay the line of credit, the Company placed its participation in non-accrual and recorded a $24 million provision during the first quarter of 2015, based on management’s concerns regarding PREPA’s willingness to repay the debt. At September 30, 2015, the allowance for loan and lease losses to PREPA was $23.4 million. Since it was placed in non-accrual, interest payments have been applied to principal.

Acquired Loans

Acquired loans were initially measured at fair value and subsequently accounted for under either Accounting Standards Codification Topic ("ASC") 310-30 (Loans and Debt Securities Acquired with Deteriorated Credit Quality) or ASC 310-20 (Non-refundable fees and Other Costs). We have acquired loans in two acquisitions, BBVAPR and Eurobank.

Acquired BBVAPR Loans

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

Credit cards, retail and commercial revolving lines of credits, floor plans and performing auto loans with FICO scores over 660 acquired at a premium, excluding the acquired Eurobank loan portfolio, are accounted for under the guidance of ASC 310-20, which requires that any contractually required loan payment receivable in excess of the Company’s initial investment in the loans be accreted into interest income on a level-yield basis over the life of the loan. Loans accounted for under ASC 310-20 are placed on non-accrual status when past due in accordance with the Company’s non-accrual policy, and any accretion of discount or amortization of premium is discontinued. Acquired BBVAPR loans that were accounted for under the provisions of ASC 310-20 are removed from the acquired loan category at the end of the reporting period upon refinancing, renewal or normal re-underwriting.

The following tables present the aging of the recorded investment in gross acquired BBVAPR loans accounted for under ASC 310-20 as of September 30, 2015 and December 31, 2014, by class of loans:

	September 30, 2015
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Commercial
Commercial secured by real estate
Retail	$	-	$	-	$	279	$	279	$	47	$	-	$	326	$	-
Floor plan		-		-		478		478		-		2,470		2,948		-
		-		-		757		757		47		2,470		3,274		-
Other commercial and industrial
Retail		228		24		61		313		-		3,475		3,788		-
Floor plan		-		10		7		17		1		656		674		-
		228		34		68		330		1		4,131		4,462		-
		228		34		825		1,087		48		6,601		7,736		-
Consumer
Credit cards		825		422		769		2,016		-		34,510		36,526		-
Personal loans		89		14		41		144		-		3,104		3,248		-
		914		436		810		2,160		-		37,614		39,774		-
Auto		9,010		2,921		1,040		12,971		49		111,100		124,120		-
Total	$	10,152	$	3,391	$	2,675	$	16,218	$	97	$	155,315	$	171,630	$	-

	December 31, 2014
															Loans 90+
															Days Past
									Current						Due and
	30-59 Days		60-89 Days		90+ Days		Total Past		in Non-		Current				Still
	Past Due		Past Due		Past Due		Due		Accrual		Accruing		Total Loans		Accruing
	(In thousands)
Commercial
Commercial secured by real estate
Retail	$	-	$	-	$	351	$	351	$	-	$	-	$	351	$	-
Floor plan		-		62		345		407		-		3,724		4,131		-
		-		62		696		758		-		3,724		4,482		-
Other commercial and industrial
Retail		155		67		192		414		2		3,705		4,121		-
Floor plan		202		134		223		559		10		3,503		4,072		-
		357		201		415		973		12		7,208		8,193		-
		357		263		1,111		1,731		12		10,932		12,675		-
Consumer
Credit cards		1,376		654		1,399		3,429		-		38,419		41,848		-
Personal loans		151		47		77		275		-		3,221		3,496		-
		1,527		701		1,476		3,704		-		41,640		45,344		-
Auto		11,003		3,453		1,262		15,718		76		168,988		184,782		-
Total	$	12,887	$	4,417	$	3,849	$	21,153	$	88	$	221,560	$	242,801	$	-

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

Acquired BBVAPR loans, except for credit cards, retail and commercial revolving lines of credits, floor plans and performing auto loans with FICO scores over 660 acquired at a premium, are accounted for by the Company in accordance with ASC 310-30.

The carrying amount corresponding to acquired BBVAPR loans with deteriorated credit quality, including those accounted under ASC 310-30 by analogy, in the statements of financial condition at September 30, 2015 and December 31, 2014 is as follows:

	September 30,	December 31,
	2015	2014
	(In thousands)
Contractual required payments receivable	$2,022,672	$2,394,378
Less: Non-accretable discount	$442,103	$456,627
Cash expected to be collected	1,580,569	1,937,751
Less: Accretable yield	378,613	445,946
Carrying amount, gross	1,201,956	1,491,805
Less: allowance for loan and lease losses	19,986	13,481
Carrying amount, net	$1,181,970	$1,478,324

At September 30, 2015 and December 31, 2014, the Company had $80.2 million and $168.8 million, respectively, in loans granted to the Puerto Rico government, including its instrumentalities, public corporations and municipalities as part of its acquired BBVAPR loans accounted for under ASC 310-30. This entire amount was current at September 30, 2015 and December 31, 2014.

The following tables describe the accretable yield and non-accretable discount activity of acquired BBVAPR loans accounted for under ASC 310-30 for the quarters and nine-month periods ended September 30, 2015 and 2014

	Quarter Ended September 30, 2015
	Mortgage		Commercial		Construction		Auto		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	275,880	$	71,563	$	24,613	$	31,531	$	8,461	$	412,048
Accretion		(8,614)		(12,693)		(2,719)		(5,463)		(1,207)		(30,696)
Change in expected cash flows		-		6,134		1,396		(1)		(1)		7,528
Transfer (to) from non-accretable discount		75		(6,450)		(4,075)		148		35		(10,267)
Balance at end of period	$	267,341	$	58,554	$	19,215	$	26,215	$	7,288	$	378,613

Non-Accretable Discount Activity:
Balance at beginning of period	$	389,107	$	10,770	$	6,994	$	23,690	$	19,356	$	449,917
Change in actual and expected losses		(2,184)		(12,090)		(2,937)		(555)		(315)		(18,081)
Transfer from (to) accretable yield		(75)		6,450		4,075		(148)		(35)		10,267
Balance at end of period	$	386,848	$	5,130	$	8,132	$	22,987	$	19,006	$	442,103

	Nine-Month Period Ended September 30, 2015
	Mortgage		Commercial		Construction		Auto		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	298,364	$	61,196	$	25,829	$	53,998	$	6,559	$	445,946
Accretion		(26,414)		(33,049)		(8,672)		(18,614)		(3,420)		(90,169)
Change in expected cash flows		-		6,134		1,396		(1)		(1)		7,528
Transfer (to) from non-accretable discount		(4,609)		24,273		662		(9,168)		4,150		15,308
Balance at end of period	$	267,341	$	58,554	$	19,215	$	26,215	$	7,288	$	378,613

Non-Accretable Discount Activity:
Balance at beginning of period	$	389,839	$	23,069	$	3,486	$	16,215	$	24,018	$	456,627
Change in actual and expected losses		(7,600)		6,334		5,308		(2,396)		(862)		784
Transfer from (to) accretable yield		4,609		(24,273)		(662)		9,168		(4,150)		(15,308)
Balance at end of period	$	386,848	$	5,130	$	8,132	$	22,987	$	19,006	$	442,103

	Quarter Ended September 30, 2014
	Mortgage		Commercial		Construction		Auto		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	269,105	$	70,491	$	30,672	$	64,620	$	9,718	$	444,606
Accretion		(9,627)		(12,575)		(5,929)		(8,825)		(1,384)		(38,340)
Transfer (to) from non-accretable discount		-		1,137		(3,550)		237		40		(2,136)
Balance at end of period	$	259,478	$	59,053	$	21,193	$	56,032	$	8,374	$	404,130

Non-Accretable Discount Activity:
Balance at beginning of period	$	455,789	$	41,050	$	5,388	$	27,279	$	25,218	$	554,724
Change in actual and expected losses		(15,802)		(4,215)		(8,937)		(2,800)		(1,119)		(32,873)
Transfer from (to) accretable yield		-		(1,137)		3,550		(237)		(40)		2,136
Balance at end of period	$	439,987	$	35,698	$	1	$	24,242	$	24,059	$	523,987

	Nine-Month Period September 30, 2014
	Mortgage		Commercial		Construction		Auto		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	287,841		96,139		42,993		77,845		12,735		517,553
Accretion		(28,359)		(37,509)		(16,388)		(31,243)		(4,824)		(118,323)
Transfer (to) from non-accretable discount		(4)		423		(5,412)		9,430		463		4,900
Balance at end of period	$	259,478		59,053		21,193		56,032		8,374		404,130

Non-Accretable Discount Activity:
Balance at beginning of period	$	463,166		42,515		5,851		39,645		28,410		579,587
Change in actual and expected losses		(23,183)		(6,394)		(11,262)		(5,973)		(3,888)		(50,700)
Transfer from (to) accretable yield		4		(423)		5,412		(9,430)		(463)		(4,900)
Balance at end of period	$	439,987		35,698		1		24,242		24,059		523,987

Acquired Eurobank Loans

The carrying amount of acquired Eurobank loans at September 30, 2015 and December 31, 2014 is as follows:

	September 30		December 31
	2015		2014
	(In thousands)
Contractual required payments receivable	$	357,702	$	535,425
Less: Non-accretable discount		21,675		62,410
Cash expected to be collected		336,027		473,015
Less: Accretable yield		95,858		109,859
Carrying amount, gross		240,169		363,156
Less: Allowance for covered loan and lease losses		90,332		64,245
Carrying amount, net	$	149,837	$	298,911

The following tables describe the accretable yield and non-accretable discount activity of acquired Eurobank loans for the quarters and nine-month periods periods ended September 30, 2015 and 2014:

	Quarter Ended September 30, 2015
	Loans Secured by 1-4 Family Residential Properties		Commercial and Other Construction		Construction & Development Secured by 1-4 Family Residential Properties		Leasing		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	55,806	$	27,473	$	18,349	$	1,103	$	1,910	$	104,641
Accretion		(3,543)		(10,100)		(1,446)		(711)		(214)		(16,014)
Change in expected cash flows		4,320		43,775		(10,749)		270		118		37,734
Transfer from (to) non-accretable discount		(2,188)		(30,400)		175		307		1,603		(30,503)
Balance at end of period	$	54,395	$	30,748	$	6,329	$	969	$	3,417	$	95,858

Non-Accretable Discount Activity:
Balance at beginning of period	$	11,402	$	-	$	-	$	-	$	9,730	$	21,132
Change in actual and expected losses		(8)		(30,400)		175		307		(34)		(29,960)
Transfer from (to) accretable yield		2,188		30,400		(175)		(307)		(1,603)		30,503
Balance at end of period	$	13,582	$	-	$	-	$	-	$	8,093	$	21,675

	Nine-Month Period Ended September 30, 2015
	Loans Secured by 1-4 Family Residential Properties		Commercial and Other Construction		Construction & Development Secured by 1-4 Family Residential Properties		Leasing		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	47,636	$	37,919	$	20,753	$	2,479	$	1,072	$	109,859
Accretion		(10,337)		(28,002)		(2,470)		(3,040)		(427)		(44,276)
Change in expected cash flows		4,320		43,775		(10,749)		270		118		37,734
Transfer from (to) non-accretable discount		12,776		(22,944)		(1,205)		1,260		2,654		(7,459)
Balance at end of period	$	54,395	$	30,748	$	6,329	$	969	$	3,417	$	95,858

Non-Accretable Discount Activity:
Balance at beginning of period	$	27,348	$	24,464	$	-	$	-	$	10,598	$	62,410
Change in actual and expected losses		(990)		(47,408)		(1,205)		1,260		149		(48,194)
Transfer from (to) accretable yield		(12,776)		22,944		1,205		(1,260)		(2,654)		7,459
Balance at end of period	$	13,582	$	-	$	-	$	-	$	8,093	$	21,675

	Quarter Ended September 30, 2014
	Loans Secured by 1-4 Family Residential Properties		Commercial and Other Construction		Construction & Development Secured by 1-4 Family Residential Properties		Leasing		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	50,586	$	70,227	$	-	$	5,100	$	2,148	$	128,061
Accretion		(3,882)		(13,044)		(1,056)		(2,500)		(404)		(20,886)
Transfer from (to) non-accretable discount		-		698		1,056		305		750		2,809
Balance at end of period	$	46,704	$	57,881	$	-	$	2,905	$	2,494	$	109,984

Non-Accretable Discount Activity:
Balance at beginning of period	$	29,859	$	46,596	$	-	$	-	$	8,769	$	85,224
Change in actual and expected losses		(888)		(5,648)		1,056		305		700		(4,475)
Transfer (to) from accretable yield		-		(698)		(1,056)		(305)		(750)		(2,809)
Balance at end of period	$	28,971	$	40,250	$	-	$	-	$	8,719	$	77,940

	Nine-Month Period Ended September 30, 2014
	Loans Secured by 1-4 Family Residential Properties		Commercial and Other Construction		Construction & Development Secured by 1-4 Family Residential Properties		Leasing		Consumer		Total
	(In thousands)
Accretable Yield Activity:
Balance at beginning of period	$	53,250	$	95,093	$	1,690	$	10,238	$	2,688	$	162,959
Accretion		(12,079)		(45,037)		(3,206)		(7,888)		(944)		(69,154)
Transfer from (to) non-accretable discount		5,533		7,825		1,516		555		750		16,179
Balance at end of period	$	46,704	$	57,881	$	-	$	2,905	$	2,494	$	109,984

Non-Accretable Discount Activity:
Balance at beginning of period	$	39,182	$	81,092	$	-	$	-	$	9,203	$	129,477
Change in actual and expected losses		(4,678)		(33,017)		1,516		555		266		(35,358)
Transfer (to) from accretable yield		(5,533)		(7,825)		(1,516)		(555)		(750)		(16,179)
Balance at end of period	$	28,971	$	40,250	$	-	$	-	$	8,719	$	77,940

At September 30, 2015, $92.8 million in gross loans continue subject to the loss-sharing agreements with the FDIC and are disclosed under the name "loans secured by 1-4 family residential properties." At September 30, 2015, the net carrying amount of these loans was $60.1 million.

Non-accrual Loans

The following table presents the recorded investment in loans in non-accrual status by class of loans as of September 30, 2015 and December 31, 2014:

	September 30,		December 31,
	2015		2014
	(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year):
Up to the year 2002	$	3,827	$	4,427
Years 2003 and 2004		6,275		7,042
Year 2005		3,686		4,585
Year 2006		8,270		9,274
Years 2007, 2008 and 2009		14,949		8,579
Years 2010, 2011, 2012, 2013		10,264		7,365
Years 2014 and 2015		185		-
		47,456		41,272
Non-traditional		3,482		3,224
Loss mitigation program		19,227		20,934
		70,165		65,430
Commercial
Commercial secured by real estate
Middle market		14,101		9,534
Retail		8,958		9,000
		23,059		18,534
Other commercial and industrial
Institutional		193,904		-
Middle market		2,270		618
Retail		2,364		2,527
Floor plan		475		-
		199,013		3,145
		222,072		21,679
Consumer
Credit cards		344		375
Personal lines of credit		60		110
Personal loans		1,598		1,092
Cash collateral personal loans		2		13
		2,004		1,590
Auto and leasing		10,076		8,668
Total non-accrual originated loans	$	304,317	$	97,367

	September 30,		December 31,
	2015		2014
	(In thousands)
Acquired BBVAPR loans accounted for under ASC 310-20
Commercial
Commercial secured by real estate
Retail	$	326	$	351
Floor plan		477		407
		803		758
Other commercial and industrial
Retail		61		195
Floor plan		9		234
		70		429
		873		1,187
Consumer
Credit cards		769		1,399
Personal loans		41		77
		810		1,476
Auto		1,244		1,512
Total non-accrual acquired BBVAPR loans accounted for under ASC 310-20		2,927		4,175
Total non-accrual loans	$	307,244	$	101,542

Loans accounted for under ASC 310-30 are excluded from the above table as they are considered to be performing due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analyses.

Delinquent residential mortgage loans insured or guaranteed under applicable FHA and VA programs are classified as non-performing loans when they become 90 days or more past due, but are not placed in non-accrual status until they become 18 months or more past due, since they are insured loans. Therefore, these loans are included as non-performing loans but excluded from non-accrual loans.

During the quarter ended March 31, 2015, the revolving line of credit to PREPA was classified as non-accrual. At September 30, 2015, this line of credit had an unpaid principal balance of $193.9 million. For the second and third quarter of 2015, interest payments received were applied to principal. As of September 30, 2015, the specific reserve was $23.4 million.

At September 30, 2015 and December 31, 2014, loans whose terms have been extended and which are classified as troubled-debt restructurings that are not included in non-accrual loans amounted to $91.2 million and $274.4 million, respectively, as they are performing under their new terms. At December 31, 2014, the balance included the revolving line of credit to PREPA.

Impaired Loans

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 $233.6 million and $236.9 million at September 30, 2015 and December 31, 2014, respectively. Impaired commercial loans at September 30, 2015 and December 31, 2014 included the PREPA line of credit with an unpaid principal balance of $193.9 million and $200.0 million, 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 $26.8 million and $841 thousand at September 30, 2015 and December 31, 2014, respectively. The valuation allowance for impaired commercial loans at September 30, 2015 includes $23.4 million of specific allowance for PREPA recorded during the quarter ended March 31, 2015.The total investment in impaired mortgage loans was $90.5 million and $94.2 million at September 30, 2015 and December 31, 2014, 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 $8.2 million and $9.0 million at September 30, 2015 and December 31, 2014, respectively.

Originated and Other Loans and Leases Held for Investment

The Company’s recorded investment in commercial and mortgage loans, excluding acquired Eurobank 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 September 30, 2015 and December 31, 2014 are as follows:

	September 30, 2015
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance:
Commercial	$	213,930	$	206,227	$	26,809	13%
Residential troubled-debt restructuring		97,203		90,530		8,249	9%
Impaired loans with no specific allowance:
Commercial		30,464		26,887		N/A	N/A
Total investment in impaired loans	$	341,597	$	323,644	$	35,058	11%

	December 31, 2014
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with specific allowance
Commercial	$	6,349	$	6,226	$	841	14%
Residential troubled-debt restructuring		99,947		94,185		8,968	10%
Impaired loans with no specific allowance
Commercial		237,806		230,044		N/A	N/A
Total investment in impaired loans	$	344,102	$	330,455	$	9,809	3%

Acquired BBVAPR Loans

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

The Company’s recorded investment in acquired BBVAPR commercial loans accounted for under ASC 310-20 that were individually evaluated for impairment and the related allowance for loan and lease losses at September 30, 2015 and December 31, 2014 are as follows:


	September 30, 2015
	Unpaid		Recorded		Related
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial	$	494	$	485		N/A	N/A
Total investment in impaired loans	$	494	$	485	$	-	-


	December 31, 2014
	Unpaid		Recorded		Specific
	Principal		Investment		Allowance		Coverage
	(In thousands)
Impaired loans with no specific allowance
Commercial	$	672	$	672		N/A	N/A
Total investment in impaired loans	$	672	$	672	$	-	-

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

The Company’s recorded investment in acquired BBVAPR loan pools accounted for under ASC 310-30 and their related allowance for loan and lease losses at September 30, 2015 and December 31, 2014 are as follows:

	September 30, 2015
							Coverage
	Unpaid		Recorded				to Recorded
	Principal		Investment		Allowance		Investment
	(In thousands)
Impaired loan pools:
Mortgage	$	617,268	$	22,762	$	557	2%
Commercial		307,271		185,274		11,780	6%
Construction		88,365		88,202		4,787	5%
Auto		173,979		173,979		2,862	2%
Total investment in impaired loan pools	$	1,186,883	$	470,217	$	19,986	4%

	December 31 , 2014
							Coverage
	Unpaid		Recorded				to Recorded
	Principal		Investment		Allowance		Investment
	(In thousands)
Impaired loan pools:
Commercial		289,228		255,619		5,506	2%
Construction		90,786		83,751		7,970	10%
Consumer		35,812		29,888		5	0%
Total investment in impaired loan pools	$	415,826	$	369,258	$	13,481	4%

The tables above only present information with respect to acquired BBVAPR loans and pools accounted for under ASC 310-30 if there is a recorded impairment to such loans or loan pools and a specific allowance for loan losses. As of September 30, 2015, the Company eliminated the specific allowance of $5 thousand maintained on impaired acquired BBVAPR consumer loan pool accounted under ASC 310-30 because there was an increase in the net present value of cash flows expected to be collected from such pool when compared with the recorded investment. Likewise, the increase in mortgage and auto loan pools from December 31, 2014 to September 30, 2015 was caused by the establishment of a specific reserve with respect to impaired mortgage and auto loan pools that were required based on the net present value of the cash flows expected to be collected.

Acquired Eurobank Loans

The Company’s recorded investment in acquired Eurobank loan pools that have recorded impairments and their related allowance for loan and lease losses as of September 30, 2015 and December 31, 2014 are as follows:

	September 30, 2015
							Coverage
	Unpaid		Recorded				to Recorded
	Principal		Investment		Allowance		Investment
	(In thousands)
Impaired loan pools:
Loans secured by 1-4 family residential properties	$	108,537	$	105,734	$	32,685	31%
Construction and development secured by 1-4 family residential properties		11,506		3,185		2,707	85%
Commercial and other construction		137,163		128,543		54,697	43%
Consumer		6,935		2,708		243	9%
Total investment in impaired loan pools	$	264,141	$	240,170	$	90,332	38%

	December 31, 2014
							Coverage
	Unpaid		Recorded		Specific		to Recorded
	Principal		Investment		Allowance		Investment
	(In thousands)
Impaired loan pools with specific allowance
Loans secured by 1-4 family residential properties	$	134,579	$	106,116	$	15,522	15%
Construction and development secured by 1-4 family residential properties		57,123		19,562		10,724	55%
Commercial and other construction		93,894		74,069		37,610	51%
Consumer		7,992		4,506		389	9%
Total investment in impaired loan pools	$	293,588	$	204,253	$	64,245	31%

The decrease in construction loan pools from December 31, 2014 to September 30, 2015 was mostly caused by the sale of covered commercial loans during the quarter ended September 30, 2015. The increase in loans secured by 1-4 family residential properties, commercial and other construction loan pools from December 31, 2014 to September 30, 2015 was caused by the establishment of a specific reserve with respect to impaired commercial and other construction loan pools that were required based on the net present value of the cash flows expected to be collected.

The following table presents the interest recognized on commercial and mortgage loans that were individually evaluated for impairment, excluding loans accounted for under ASC 310-30, for the quarters and nine-month periods ended September 30, 2015 and 2014:

	Quarter Ended September 30,
	2015				2014
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)
Originated and other loans held for investment:
Impaired loans with specific allowance
Commercial	$	37	$	207,610	$	28	$	5,103
Residential troubled-debt restructuring		788		90,278		666		91,293
Impaired loans with no specific allowance
Commercial		365		31,159		1,728		89,029
		1,190		329,047		2,422		185,425
Acquired loans accounted for under ASC 310-20:
Impaired loans with no specific allowance
Commercial		-		1,077		-		-
Total interest income from impaired loans	$	1,190	$	330,124	$	2,422	$	185,425

	Nine-Month Period Ended September 30,
	2015				2014
	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
	(In thousands)
Originated and other loans held for investment:
Impaired loans with specific allowance
Commercial	$	73	$	166,633	$	83	$	6,187
Residential troubled-debt restructuring		2,381		90,903		1,876		89,597
Impaired loans with no specific allowance
Commercial		727		74,247		5,185		44,203
	$	3,181	$	331,783	$	7,144	$	139,987
Acquired loans accounted for under ASC 310-20:
Impaired loans with no specific allowance
Commercial		-		1,641		-		-
Total interest income from impaired loans	$	3,181	$	333,424	$	7,144	$	139,987

Modifications

The following tables present the troubled-debt restructurings during the quarters and nine-month periods ended September 30, 2015 and 2014:

	Quarter Ended September 30, 2015
	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	30	$	3,846	6.34%	338	$	3,992	4.45%	180
Commercial	3		1,001	6.50%	12		8,511	3.19%	12
Consumer	27		170	12.41%	70		400	12.32%	52


	Nine-Month Period Ended September 30, 2015
	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	127	$	15,455	5.07%	346	$	15,586	4.21%	306
Commercial	7		5,534	6.77%	67		13,045	4.52%	57
Consumer	59		567	13.87%	71		840	13.33%	60
Auto	1		64	12.95%	72		65	12.95%	72

	Quarter Ended September 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	26	$	3,016	5.62%	347	$	2,965	4.22%	393
Commercial	20		200,007	7.25%	3		200,007	7.25%	10
Consumer	6		58	10.00%	61		68	9.66%	55


	Nine-Month Period Ended September 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	113	$	14,562	5.99%	349	$	14,162	4.21%	389
Commercial	21		200,080	7.25%	3		200,080	7.25%	10
Consumer	13		123	11.77%	55		139	11.48%	62

The following table presents troubled-debt restructurings for which there was a payment default during the twelve-month periods ended September 30, 2015 and 2014:

	Twelve-Month Period Ended September 30,
	2015			2014
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Mortgage	49	$	5,396	15	$	1,739
Consumer	8	$	177	2	$	5
Auto	1	$	64	-	$	-

Credit Quality Indicators

The Company categorizes originated commercial loans and acquired BBVAPR commercial 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, and prior loss experience, and the results of periodic credit reviews of individual loans.

The Company uses the following definitions for risk ratings:

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 September 30, 2015 and December 31, 2014, and based on the most recent analysis performed, the risk category of gross originated and other loans and BBVAPR acquired loans accounted for under ASC 310-20 subject to risk rating by class of loans is as follows:

	September 30, 2015
	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	$	224,110	$	206,678	$	15,227	$	-	$	-	$	2,205
Institutional		34,342		26,101		8,023		-		-		218
Middle market		207,255		182,617		9,368		-		-		15,270
Retail		211,761		191,523		4,633		4,821		-		10,784
Floor plan		2,925		2,925		-		-		-		-
Real estate		16,766		16,766		-		-		-		-
		697,159		626,610		37,251		4,821		-		28,477
Other commercial and industrial:
Corporate		71,714		66,054		-		-		-		5,660
Institutional		383,786		189,882		-		-		-		193,904
Middle market		107,843		102,757		2,395		-		-		2,691
Retail		92,668		87,839		673		2,110		-		2,046
Floor plan		36,183		33,453		2,169		225		-		336
		692,194		479,985		5,237		2,335		-		204,637
Total		1,389,353		1,106,595		42,488		7,156		-		233,114

Commercial - acquired loans (under ASC 310-20)
Commercial secured by real estate:
Retail		326		-		-		326		-		-
Floor plan		2,948		1,641		829		-		-		478
		3,274		1,641		829		326		-		478
Other commercial and industrial:
Retail		3,788		3,777		-		11		-		-
Floor plan		674		666		-		1		-		7
		4,462		4,443		-		12		-		7
Total		7,736		6,084		829		338		-		485
Total	$	1,397,089	$	1,112,679	$	43,317	$	7,494	$	-	$	233,599

	December 31, 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	$	133,076	$	109,282	$	15,615	$	-	$	-	$	8,179
Institutional		36,611		27,089		9,284		-		-		238
Middle market		164,050		148,360		2,817		-		-		12,873
Retail		175,628		159,209		3,690		2,637		-		10,092
Floor plan		1,650		692		958		-		-		-
Real estate		12,628		12,628		-		-		-		-
		523,643		457,260		32,364		2,637		-		31,382
Other commercial and industrial:
Corporate		63,746		63,746		-		-		-		-
Institutional		478,935		278,953		-		-		-		199,982
Middle market		92,334		87,126		2,815		-		-		2,393
Retail		90,171		85,941		259		2,575		-		1,396
Floor plan		40,903		38,413		1,247		126		-		1,117
		766,089		554,179		4,321		2,701		-		204,888
Total		1,289,732		1,011,439		36,685		5,338		-		236,270

Commercial - acquired loans (under ASC 310-20)
Commercial secured by real estate:
Retail		351		-		-		351		-		-
Floor plan		4,131		3,724		-		-		-		407
		4,482		3,724		-		351		-		407
Other commercial and industrial:
Retail		4,121		4,080		8		33		-		-
Floor plan		4,072		3,807		-		-		-		265
		8,193		7,887		8		33		-		265
Total		12,675		11,611		8		384		-		672
Total	$	1,302,407	$	1,023,050	$	36,693	$	5,722	$	-	$	236,942

All loans individually measured for impairment are classified as substandard at September 30, 2015 and December 31, 2014.

At September 30, 2015 and December 31, 2014, the Company had outstanding credit facilities of approximately $418.5 million and $619.0 million, respectively, granted to the Puerto Rico government, including its instrumentalities, public corporations and municipalities. A substantial portion of the Company’s credit exposure to Puerto Rico’s government consists of collateralized loans or obligations that have a specific source of income or revenues identified for their repayment. Approximately $203 million of these loans are general obligations debt of municipalities secured by ad valorem taxation, without limitation as to rate or amount, on all taxable property within the issuing municipalities. The good faith, credit and unlimited taxing power of each issuing municipality are pledged for the payment of its general obligations debt.

In addition, some of these obligations consist of senior and subordinated loans to public corporations that obtain revenues from rates charged for services or products, such as the Puerto Rico Electric Power Authority (“PREPA”) and the State Insurance Fund Corporation. The Commonwealth’s instrumentalities or public corporations have varying degrees of independence from the central government. Some instrumentalities or public corporations that provide essential or important government services, such as the University of Puerto Rico, the Puerto Rico Medical Services Administration and the Puerto Rico Metropolitan Bus Authority, are supported by the Commonwealth through budget appropriations, while others, such as PREPA, are owed substantial amounts for utility services rendered to the Commonwealth.

At September 30, 2015, we had approximately $215.6 million of credit facilities to central government and public corporations of the Commonwealth, including:

PREPA with an outstanding balance of $193.9 million; and
The Puerto Rico Housing Finance Authority with an outstanding balance of $20.9 million to be repaid from abandoned or unclaimed funds at financial institutions that revert to the government under a Puerto Rico escheat law.

The outstanding balance of credit facilities to public corporations decreased during the second quarter as a result of a repayment in full of a $75 million loan by the Puerto Rico Aqueduct and Sewer Authority and in the third quarter as a result of a repayment in full of a $78 million loan by the State Insurance Fund Corporation.

Oriental Bank is part of a four bank syndicate providing a $550 million revolving line of credit to finance the purchase of fuel for PREPA’s day-to-day power generation activities. Our participation in the line of credit has an unpaid principal balance of $193.9 million as of September 30, 2015. As part of the bank syndicate, the Bank entered into a forbearance agreement with PREPA, which was extended several times until the execution of a Restructuring Support Agreement on November 5, 2015 with PREPA and certain other creditors. The Restructuring Support Agreement provides for the restructuring of the fuel line of credit subject to the accomplishment of several milestones, including some milestones that depend on the actions of third parties to the agreement, such as the negotiation of agreements with other creditors and legislative action. The Company has classified the credit facility to PREPA as substandard and on non-accrual status. The Company conducted an impairment analysis considering the probability of collection of principal and interest, which included a financial model to project the future liquidity status of PREPA under various scenarios and its capacity to service its financial obligations, and concluded that PREPA had sufficient cash flows for the repayment of the line of credit. Despite the Company’s analysis showing PREPA’s capacity to repay the line of credit, the Company placed its participation in non-accrual and recorded a $24 million provision during the first quarter of 2015. Since April 1, 2015, interest payments have been applied to principal. At September 30, 2015, the specific allowance for PREPA amounted to $23.4 million.

PREPA’s enabling act provides for local receivership upon request to any Puerto Rico court of competent jurisdiction in the event of a default in debt-service payments or other obligations in connection with PREPA’s bonds. The receiver so appointed would be empowered, directly or through its agents and attorneys, to take possession of the undertakings, income and revenues pledged to the payment of the bonds in default; to have, hold, use, operate, manage and control the same; and to exercise all of PREPA’s rights and powers with respect to such undertakings. However, any such receiver would not have the power to sell, assign, mortgage or otherwise dispose of PREPA’s assets, and its powers would be limited to the operation and maintenance of such undertakings and the collection and application of the income and revenues therefrom. Although the Puerto Rico government is actively seeking the right to bankruptcy relief for some of its public instrumentalities, including PREPA, both through an amendment to the federal bankruptcy code and the enactment of a local debt restructuring law, such efforts have thus far been unsuccessful.

For residential and consumer loan classes, the Company evaluates credit quality based on the delinquency status of the loan. As of September 30, 2015 and December 31, 2014, and based on the most recent analysis performed, the risk category of gross originated and other loans and acquired BBVAPR loans accounted for under ASC 310-20 not subject to risk rating by class of loans is as follows:

	September 30, 2015
	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	$	59,581	$	52,550	$	82	$	2,267	$	999	$	1,083	$	1,818	$	782
Years 2003 and 2004		101,863		89,211		364		4,723		1,763		1,064		2,999		1,739
Year 2005		55,600		48,517		-		2,525		287		1,192		2,208		871
Year 2006		80,427		65,839		97		2,854		1,070		1,708		5,354		3,505
Years 2007, 2008 and 2009		94,318		72,491		281		2,151		1,447		3,926		9,984		4,038
Years 2010, 2011, 2012 2013		154,531		139,927		538		1,248		139		4,007		4,338		4,334
Years 2014 and 2015		76,392		76,111		-		96		-		185		-		-
		622,712		544,646		1,362		15,864		5,705		13,165		26,701		15,269
Non-traditional		32,249		26,863		-		1,918		375		1,362		1,731		-
Loss mitigation program		100,167		16,289		2,479		1,530		1,194		1,723		1,691		75,261
		755,128		587,798		3,841		19,312		7,274		16,250		30,123		90,530
Home equity secured personal loans		515		451		64		-		-		-		-		-
GNMA's buy-back option program		6,993		-		-		-		973		3,840		2,180		-
		762,636		588,249		3,905		19,312		8,247		20,090		32,303		90,530
Consumer
Credit cards		21,148		20,186		436		182		123		221		-		-
Overdrafts		275		260		15		-		-		-		-		-
Unsecured personal lines of credit		2,184		2,087		31		27		39		-		-		-
Unsecured personal loans		187,826		184,441		1,737		786		835		27		-		-
Cash collateral personal loans		16,323		16,047		171		103		-		2		-		-
		227,756		223,021		2,390		1,098		997		250		-		-
Auto and Leasing		647,544		566,993		52,350		19,215		6,668		2,318		-		-
		1,637,936		1,378,263		58,645		39,625		15,912		22,658		32,303		90,530
Acquired loans (accounted for under ASC 310-20)
Consumer
Credit cards		36,526		34,511		825		422		351		417		-		-
Personal loans		3,248		3,102		89		14		11		32		-		-
		39,774		37,613		914		436		362		449		-		-
Auto		124,120		111,149		9,010		2,921		752		288		-		-
		163,894		148,762		9,924		3,357		1,114		737		-		-
Total	$	1,801,830	$	1,527,025	$	68,569	$	42,982	$	17,026	$	23,395	$	32,303	$	90,530

	December 31, 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	$	65,744	$	53,432	$	3,963	$	3,083	$	1,044	$	1,360	$	1,975	$	887
Years 2003 and 2004		109,669		86,941		10,391		4,362		1,657		3,215		1,330		1,773
Year 2005		60,472		49,275		3,824		2,205		389		1,673		1,893		1,213
Year 2006		85,550		65,113		5,263		2,967		1,242		2,801		4,624		3,540
Years 2007, 2008 and 2009		93,489		76,246		4,230		1,809		337		3,986		2,813		4,068
Years 2010, 2011, 2012 2013		162,316		148,832		2,698		2,490		938		1,397		1,296		4,665
Year 2014		42,108		41,818		290		-		-		-		-		-
		619,348		521,657		30,659		16,916		5,607		14,432		13,931		16,146
Non-traditional		36,200		30,916		1,477		584		478		600		2,096		49
Loss mitigation program		93,443		10,882		995		1,123		802		405		1,246		77,990
		748,991		563,455		33,131		18,623		6,887		15,437		17,273		94,185
Home equity secured personal loans		517		517		-		-		-		-		-		-
GNMA's buy-back option program		42,243		-		-		-		6,416		20,729		15,098		-
		791,751		563,972		33,131		18,623		13,303		36,166		32,371		94,185
Consumer
Credit cards		19,071		18,198		360		139		171		203		-		-
Overdrafts		307		287		20		-		-		-		-		-
Unsecured personal lines of credit		2,200		1,970		102		25		38		62		3		-
Unsecured personal loans		147,939		144,696		1,822		743		623		55		-		-
Cash collateral personal loans		17,243		16,920		275		39		9		-		-		-
		186,760		182,071		2,579		946		841		320		3		-
Auto and Leasing		575,582		503,588		47,658		16,916		5,196		2,224		-		-
		1,554,093		1,249,631		83,368		36,485		19,340		38,710		32,374		94,185
Acquired loans (accounted for under ASC 310-20)
Consumer
Credit cards		41,848		38,419		1,376		654		589		810		-		-
Personal loans		3,496		3,221		151		47		39		38		-		-
		45,344		41,640		1,527		701		628		848		-		-
Auto		184,782		169,064		11,003		3,453		767		495		-		-
		230,126		210,704		12,530		4,154		1,395		1,343		-		-
Total	$	1,784,219	$	1,460,335	$	95,898	$	40,639	$	20,735	$	40,053	$	32,374	$	94,185

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

+ References + Details