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Allowance for Loan and Lease Losses | 12 Months Ended
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Dec. 31, 2015
Loans Receivable [Abstract] |
Allowance For Credit Losses Text Block | NOTE 6 – ALLOWANCE FOR LOAN AND LEASE LOSSES The composition of the Company’s allowance for loan and lease losses at December 31, 2015 and 2014 was as follows:
| December 31, |  | December 31,
| 2015 |  | 2014
| (In thousands)
Allowance for loans and lease losses on non-acquired loans: |  |  |  |  |
Originated and other loans and leases held for investment: |  |  |  |  |
Mortgage | $ | 18,352 |  | $ | 19,679
Commercial |  | 64,791 |  |  | 8,432
Consumer |  | 11,197 |  |  | 9,072
Auto and leasing |  | 18,261 |  |  | 14,255
Unallocated |  | 25 |  |  | 1
Total allowance for originated and other loans and lease losses |  | 112,626 |  |  | 51,439
Acquired loans: |  |  |  |  |
Acquired BBVAPR loans: |  |  |  |  |
Accounted for under ASC 310-20 (Loans with revolving feature and/or |  |  |  |  |
acquired at a premium) |  |  |  |  |
Commercial |  | 26 |  |  | 65
Consumer |  | 3,429 |  |  | 1,211
Auto |  | 2,087 |  |  | 3,321
|  | 5,542 |  |  | 4,597
Accounted for under ASC 310-30 (Loans acquired with deteriorated |  |  |  |  |
credit quality, including those by analogy) |  |  |  |  |
Mortgage |  | 1,678 |  |  | -
Commercial |  | 21,161 |  |  | 13,476
Consumer |  | 84 |  |  | 5
Auto |  | 2,862 |  |  | -
|  | 25,785 |  |  | 13,481
Total allowance for acquired BBVAPR loans and lease losses |  | 143,953 |  |  | 69,517
Acquired Eurobank loans: |  |  |  |  |
Loans secured by 1-4 family residential properties |  | 32,624 |  |  | 15,522
Commercial and other construction |  | 57,187 |  |  | 48,334
Consumer |  | 367 |  |  | 389
Total allowance for acquired Eurobank loan and lease losses |  | 90,178 |  |  | 64,245
Total allowance for loan and lease losses | $ | 234,131 |  | $ | 133,762
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. Whi le 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 loan s 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 acquisiti on. As part of the Company’s continuous enhancement to the allowance for loan and lease losses methodology, during the year 2015 the following assumptions were reviewed: An assessment of the look-back period and historical loss factor was performed for all portfolio segments. The analysis was based on the trends observed and their relation with the economic cycle as of the period of the analysis. As a result, for the commercial portfolio, the look-back period was changed to 36 months from the previous ly determined 12 months. For auto, leasing and consumer, a look-back period of 24 months was maintained. The residential mortgages portfolio, was evaluated during the fourth quarter of 2015. For this portfolio, a 12-month look-back period was maintained a s management concluded that given the charge off evolution, a shorter period of losses is more representative of the recent trends and more accurate in predicting future losses. During the quarter ended June 30, 2015, an annual assessment of environmental factors was performed for commercial, auto, and consumer portfolios. As a result, the environmental factors continue to reflect our assessment of the impact to our portfolio, taking into consideration the current evolution of the portfolio and expected im pact, due to recent economic developments, changes in values of collateral and delinquencies, among others. During fourth quarter the loss realization period was revised to 1.60 years for commercial real estate, other portfolios remained at 1 year. The se changes in the allowance for loan and lease losses’ look-back period and loss emergence period for the commercial portfolios are considered a change in accounting estimate as per ASC 250-10 provisions, where adjustments are made prospectively. Allowanc e for Originated and Other Loan and Lease Losses Held for Investment The following tables present s the activity in our allowance for loan and lease losses and the related recorded investment of the originated and other loans held for investment portfolio by segment for the periods indicated:
| Year Ended December 31, 2015
| Mortgage |  | Commercial |  | Consumer |  | Auto and Leasing |  | Unallocated |  | Total
| (In thousands)
Allowance for loan and lease losses for originated and other loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of year | $ | 19,679 |  | $ | 8,432 |  | $ | 9,072 |  | $ | 14,255 |  | $ | 1 |  | $ | 51,439
Charge-offs |  | (5,397) |  |  | (5,546) |  |  | (8,683) |  |  | (33,375) |  |  | - |  |  | (53,001)
Recoveries |  | 391 |  |  | 432 |  |  | 871 |  |  | 13,158 |  |  | - |  |  | 14,852
Provision for originated and other loans and lease losses |  | 3,679 |  |  | 61,473 |  |  | 9,937 |  |  | 24,223 |  |  | 24 |  |  | 99,336
Balance at end of year | $ | 18,352 |  | $ | 64,791 |  | $ | 11,197 |  | $ | 18,261 |  | $ | 25 |  | $ | 112,626
| Year Ended December 31, 2014
| Mortgage |  | Commercial |  | Consumer |  | Auto and Leasing |  | Unallocated |  | Total
| (In thousands)
Allowance for loan and lease losses for originated and other loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of year | $ | 19,937 |  | $ | 14,897 |  | $ | 6,006 |  | $ | 7,866 |  | $ | 375 |  | $ | 49,081
Charge-offs |  | (5,011) |  |  | (2,424) |  |  | (5,782) |  |  | (26,041) |  |  | - |  |  | (39,258)
Recoveries |  | 428 |  |  | 333 |  |  | 570 |  |  | 8,858 |  |  | - |  |  | 10,189
Provision (recapture) for originated and other loans and lease losses |  | 4,325 |  |  | (4,374) |  |  | 8,278 |  |  | 23,572 |  |  | (374) |  |  | 31,427
Balance at end of period | $ | 19,679 |  | $ | 8,432 |  | $ | 9,072 |  | $ | 14,255 |  | $ | 1 |  | $ | 51,439
| Year Ended December 31, 2013
| Mortgage |  | Commercial |  | Consumer |  | Auto and Leasing |  | Unallocated |  | Total
| (In thousands)
Allowance for loan and lease losses for originated and other loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period | $ | 21,092 |  | $ | 17,072 |  | $ | 856 |  | $ | 533 |  | $ | 368 |  | $ | 39,921
Charge-offs |  | (36,566) |  |  | (5,889) |  |  | (1,485) |  |  | (4,601) |  |  | - |  |  | (48,541)
Recoveries |  | 6 |  |  | 383 |  |  | 165 |  |  | 1,568 |  |  | - |  |  | 2,122
Provision for originated and other loans and lease losses |  | 35,405 |  |  | 3,331 |  |  | 6,470 |  |  | 10,366 |  |  | 7 |  |  | 55,579
Balance at end of period | $ | 19,937 |  | $ | 14,897 |  | $ | 6,006 |  | $ | 7,866 |  | $ | 375 |  | $ | 49,081
| December 31, 2015
| Mortgage |  | Commercial |  | Consumer |  | Auto and Leasing |  | Unallocated |  | Total
| (In thousands)
Allowance for loan and lease losses on originated and other loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 9,233 |  | $ | 55,947 |  | $ | - |  | $ | - |  | $ | - |  | $ | 65,180
Collectively evaluated for impairment |  | 9,119 |  |  | 8,844 |  |  | 11,197 |  |  | 18,261 |  |  | 25 |  |  | 47,446
Total ending allowance balance | $ | 18,352 |  | $ | 64,791 |  | $ | 11,197 |  | $ | 18,261 |  | $ | 25 |  | $ | 112,626
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 89,973 |  | $ | 235,294 |  | $ | - |  | $ | - |  | $ | - |  | $ | 325,267
Collectively evaluated for impairment |  | 667,855 |  |  | 1,206,355 |  |  | 242,950 |  |  | 669,163 |  |  | - |  |  | 2,786,323
Total ending loan balance | $ | 757,828 |  | $ | 1,441,649 |  | $ | 242,950 |  | $ | 669,163 |  | $ | - |  | $ | 3,111,590
| December 31, 2014
| Mortgage |  | Commercial |  | Consumer |  | Auto and Leasing |  | Unallocated |  | Total
| (In thousands)
Allowance for loan and lease losses on originated and other loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 8,968 |  | $ | 841 |  | $ | - |  | $ | - |  | $ | - |  | $ | 9,809
Collectively evaluated for impairment |  | 10,711 |  |  | 7,591 |  |  | 9,072 |  |  | 14,255 |  |  | 1 |  |  | 41,630
Total ending allowance balance | $ | 19,679 |  | $ | 8,432 |  | $ | 9,072 |  | $ | 14,255 |  | $ | 1 |  | $ | 51,439
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 94,185 |  | $ | 236,270 |  | $ | - |  | $ | - |  | $ | - |  | $ | 330,455
Collectively evaluated for impairment |  | 697,566 |  |  | 1,053,462 |  |  | 186,760 |  |  | 575,582 |  |  | - |  |  | 2,513,370
Total ending loan balance | $ | 791,751 |  | $ | 1,289,732 |  | $ | 186,760 |  | $ | 575,582 |  | $ | - |  | $ | 2,843,825
Allowance for BBVAPR Acquired Loan Losses 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 BBVAPR acquired loan portfolio, excluding loans accounted for under ASC 310-30, for the periods indicated:
| Year Ended December 31, 2015
| Commercial |  | Consumer |  | Auto |  | Unallocated |  | Total
| (In thousands)
Allowance for loan and lease losses for acquired BBVAPR loans accounted for under ASC 310-20: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of year | $ | 65 |  | $ | 1,211 |  | $ | 3,321 |  | $ | - |  | $ | 4,597
Charge-offs |  | (42) |  |  | (4,755) |  |  | (4,548) |  |  | - |  |  | (9,345)
Recoveries |  | 31 |  |  | 680 |  |  | 2,110 |  |  | - |  |  | 2,821
Provision (recapture) for acquired BBVAPR loan and lease losses accounted for under ASC 310-20 |  | (28) |  |  | 6,293 |  |  | 1,204 |  |  | - |  |  | 7,469
Balance at end of year | $ | 26 |  | $ | 3,429 |  | $ | 2,087 |  | $ | - |  | $ | 5,542
| Year Ended December 31, 2014
| Commercial |  | Consumer |  | Auto |  | Unallocated |  | Total
| (In thousands)
Allowance for loan and lease losses for acquired BBVAPR loans accounted for under ASC 310-20: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of year | $ | 926 |  | $ | - |  | $ | 1,428 |  | $ | - |  | $ | 2,354
Charge-offs |  | (532) |  |  | (6,902) |  |  | (6,011) |  |  | - |  |  | (13,445)
Recoveries |  | 73 |  |  | 531 |  |  | 2,169 |  |  | - |  |  | 2,773
Provision (recapture) for acquired BBVAPR loan and lease losses accounted for under ASC 310-20 |  | (402) |  |  | 7,582 |  |  | 5,735 |  |  | - |  |  | 12,915
Balance at end of year | $ | 65 |  | $ | 1,211 |  | $ | 3,321 |  | $ | - |  | $ | 4,597
| Year Ended December 31, 2013
| Commercial |  | Consumer |  | Auto |  | Unallocated |  | Total
| (In thousands)
Allowance for loan and lease losses for acquired BBVAPR loans accounted for under ASC 310-20: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of year | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | -
Charge-offs |  | (25) |  |  | (5,530) |  |  | (5,650) |  |  | - |  |  | (11,205)
Recoveries |  | 9 |  |  | 1,035 |  |  | 3,398 |  |  | - |  |  | 4,442
Provision for acquired BBVAPR loan and lease losses accounted for under ASC 310-20 |  | 942 |  |  | 4,495 |  |  | 3,680 |  |  | - |  |  | 9,117
Balance at end of year | $ | 926 |  | $ | - |  | $ | 1,428 |  | $ | - |  | $ | 2,354
| December 31, 2015
| Commercial |  | Consumer |  | Auto |  | Unallocated |  | Total
| (In thousands)
Allowance for loan and lease losses for acquired BBVAPR loans accounted for under ASC 310-20: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated for impairment | $ | 26 |  | $ | 3,429 |  | $ | 2,087 |  | $ | - |  | $ | 5,542
Total ending allowance balance | $ | 26 |  | $ | 3,429 |  | $ | 2,087 |  | $ | - |  | $ | 5,542
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 474 |  | $ | - |  | $ | - |  | $ | - |  | $ | 474
Collectively evaluated for impairment |  | 6,983 |  |  | 38,385 |  |  | 106,911 |  |  | - |  |  | 152,279
Total ending loan balance | $ | 7,457 |  | $ | 38,385 |  | $ | 106,911 |  | $ | - |  | $ | 152,753
| December 31, 2014
| Commercial |  | Consumer |  | Auto |  | Unallocated |  | Total
| (In thousands)
Allowance for loan and lease losses for acquired BBVAPR loans accounted for under ASC 310-20: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated for impairment | $ | 65 |  | $ | 1,211 |  | $ | 3,321 |  | $ | - |  | $ | 4,597
Total ending allowance balance | $ | 65 |  | $ | 1,211 |  | $ | 3,321 |  | $ | - |  | $ | 4,597
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 672 |  | $ | - |  | $ | - |  | $ | - |  | $ | 672
Collectively evaluated for impairment |  | 12,003 |  |  | 45,344 |  |  | 184,782 |  |  | - |  |  | 242,129
Total ending loan balance | $ | 12,675 |  | $ | 45,344 |  | $ | 184,782 |  | $ | - |  | $ | 242,801
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 acquired BBVAPR loan portfolio accounted for under ASC 310-30, for the periods indicated:
| Year Ended December 31, 2015
| Mortgage |  | Commercial |  | Consumer |  | Auto |  | Total
| (In thousands)
Allowance for loan and lease losses for acquired BBVAPR loans accounted for under ASC 310-30: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of year | $ | - |  | $ | 13,476 |  | $ | 5 |  | $ | - |  | $ | 13,481
Provision for BBVAPR loans and lease losses accounted for under ASC 310-30 |  | 1,678 |  |  | 12,037 |  |  | 79 |  |  | 2,862 |  |  | 16,656
Loan pools fully charged-off |  | - |  |  | (4,352) |  |  | - |  |  | - |  |  | (4,352)
Balance at end of year | $ | 1,678 |  | $ | 21,161 |  | $ | 84 |  | $ | 2,862 |  | $ | 25,785
| Year Ended December 31, 2014
| Mortgage |  | Commercial |  | Consumer |  | Auto |  | Total
| (In thousands)
Allowance for loan and lease losses for acquired BBVAPR loans accounted for under ASC 310-30: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of year | $ | - |  | $ | 1,713 |  | $ | 418 |  | $ | 732 |  | $ | 2,863
Provision (recapture) for BBVAPR loans and lease losses accounted for under ASC 310-30 |  | - |  |  | 11,763 |  |  | (413) |  |  | (732) |  |  | 10,618
Balance at end of year | $ | - |  | $ | 13,476 |  | $ | 5 |  | $ | - |  | $ | 13,481
| Year Ended December 31, 2013
| Mortgage |  | Commercial |  | Consumer |  | Auto |  | Total
| (In thousands)
Allowance for loan and lease losses for acquired BBVAPR loans accounted for under ASC 310-30: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of year | $ | - |  |  | - |  |  | - |  |  | - |  |  | -
Provision for BBVAPR loans and lease losses accounted for under ASC 310-30 |  | - |  |  | 1,713 |  |  | 418 |  |  | 732 |  |  | 2,863
Balance at end of year | $ | - |  | $ | 1,713 |  | $ | 418 |  | $ | 732 |  | $ | 2,863
Allowance for Acquired Eurobank Loan Losses For loans accounted for under ASC 310- 30, 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 tr ends 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 acquired Eurobank loans for the years ended D ecember 31, 2015, 2014 and 2013 were as follows:
| Year Ended December 31, 2015
| Loans Secured by 1-4 Family Residential Properties |  | Commercial and Construction |  | Consumer |  | Leasing |  | Total
| (In thousands)
Allowance for loan and lease losses for acquired Eurobank loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of year | $ | 15,523 |  | $ | 48,333 |  | $ | 389 |  | $ | - |  | $ | 64,245
Provision for acquired Eurobank loans and lease losses, net |  | 17,718 |  | $ | 20,043 |  |  | 279 |  |  | - |  |  | 38,040
Loan pools fully charged-off |  | (722) |  |  | (13,587) |  |  | (301) |  |  | - |  |  | (14,610)
FDIC shared-loss portion of provision for loan and lease losses, net |  | 105 |  |  | 2,398 |  |  | - |  |  | - |  |  | 2,503
Balance at end of year | $ | 32,624 |  | $ | 57,187 |  | $ | 367 |  | $ | - |  | $ | 90,178
| Year Ended December 31, 2014
| Mortgage |  | Commercial and Construction |  | Consumer |  | Leasing |  | Total
| (In thousands)
Allowance for loan and lease losses for acquired Eurobank loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of year | $ | 12,495 |  | $ | 39,619 |  | $ | 615 |  | $ | - |  | $ | 52,729
Provision for (recapture of) acquired Eurobank loans and lease losses, net |  | 2,144 |  |  | 3,717 |  |  | (181) |  |  | - |  |  | 5,680
FDIC shared-loss portion of provision for loan and lease losses, net |  | 884 |  |  | 4,997 |  |  | (45) |  |  | - |  |  | 5,836
Balance at end of year | $ | 15,523 |  | $ | 48,333 |  | $ | 389 |  | $ | - |  | $ | 64,245
| Year Ended December 31, 2013
| Mortgage |  | Commercial and Construction |  | Consumer |  | Leasing |  | Total
| (In thousands)
Allowance for loan and lease losses for Eurobank loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of year | $ | 4,986 |  | $ | 48,460 |  | $ | 678 |  | $ | - |  | $ | 54,124
Provision for Eurobank loans and lease losses, net |  | 9,461 |  |  | (4,110) |  |  | (16) |  |  | - |  |  | 5,335
FDIC shared-loss portion of provision for Eurobank loans and lease losses, net |  | (1,952) |  |  | (4,731) |  |  | (47) |  |  | - |  |  | (6,730)
Balance at end of year | $ | 12,495 |  | $ | 39,619 |  | $ | 615 |  | $ | - |  | $ | 52,729
The FDIC shared-loss portion of provision for acquired Eurobank loans and lease losses, net, represents the credit impairment losses to be covered under the FDIC loss-share agreement which is increasing the FDIC loss-share indemnification asset. The FDIC loss sharing obligations, related to commercial and other-non single family acquired Eurobank loans expired on June 30, 2015. The coverage for the single family residential loans will expire on June 30, 2020. The remaining covered loans are includ ed as part of acquired Eurobank loans under the name "loans secured by 1-4 family residential properties." At December 31, 2015 and 2014, allowance for loan losses on loans covered by the FDIC shared-loss agreement amounted $32.6 million and $64.3 million, respectively, the provision for covered loan and lease losses for the year s ended December 31, 2015, 2014, and 2013 was $1 7.7 million and $5.7 million, and $5.3 million, respectively.

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