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Allowance for Loan and Lease Losses

3 Months Ended

Mar. 31, 2017

Loans Receivable [Abstract]

Allowance For Credit Losses Text Block

NOTE 5 – ALLOWANCE FOR LOAN AND LEASE LOSSES

The composition of the Company’s allowance for loan and lease losses at March 31, 2017 and December 31, 2016 was as follows:

	March 31,			December 31,
	2017			2016
	(In thousands)
Allowance for loans and lease losses:
Originated and other loans and leases held for investment:
Mortgage	$	18,578		$	17,344
Commercial		9,888			8,995
Consumer		13,394			13,067
Auto and leasing		18,621			19,463
Unallocated		2			431
Total allowance for originated and other loans and lease losses		60,483			59,300
Acquired BBVAPR loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		183			169
Consumer		2,591			3,028
Auto		841			1,103
		3,615			4,300
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Mortgage		3,573			2,682
Commercial		23,528			23,452
Auto		7,829			4,922
		34,930			31,056
Total allowance for acquired BBVAPR loans and lease losses		38,545			35,356
Acquired Eurobank loans:
Loans secured by 1-4 family residential properties		14,168			11,947
Commercial		7,833			9,328
Consumer		5			6
Total allowance for acquired Eurobank loan and lease losses		22,006			21,281
Total allowance for loan and lease losses	$	121,034		$	115,937

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.

Allowance for Originated and Other Loan and Lease Losses Held for Investment

The following tables presents 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:

	Quarter Ended March 31, 2017
	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	$	17,344		$	8,995		$	13,067		$	19,463		$	431		$	59,300
Charge-offs		(2,379)			(856)			(3,358)			(7,563)			-			(14,156)
Recoveries		56			89			165			3,294			-			3,604
Provision for originated and other loans and lease losses		3,557			1,660			3,520			3,427			(429)			11,735
Balance at end of period	$	18,578		$	9,888		$	13,394		$	18,621		$	2		$	60,483

	Quarter Ended March 31, 2016
	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	$	18,352		$	64,791		$	11,197		$	18,261		$	25		$	112,626
Charge-offs		(1,662)			(1,011)			(2,327)			(8,362)			-			(13,362)
Recoveries		145			88			102			2,979			-			3,314
Provision for originated and other loans and lease losses		1,949			338			2,442			5,838			93			10,660
Balance at end of period	$	18,784		$	64,206		$	11,414		$	18,716		$	118		$	113,238

	March 31, 2017
	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	$	8,156		$	1,475		$	-		$	-		$	-		$	9,631
Collectively evaluated for impairment		10,422			8,413			13,394			18,621			2			50,852
Total ending allowance balance	$	18,578		$	9,888		$	13,394		$	18,621		$	2		$	60,483
Loans:
Individually evaluated for impairment	$	88,820		$	58,707		$	-		$	-		$	-		$	147,527
Collectively evaluated for impairment		621,043			1,195,005			300,412			786,606			-			2,903,066
Total ending loan balance	$	709,863		$	1,253,712		$	300,412		$	786,606		$	-		$	3,050,593

	December 31, 2016
	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	$	7,761		$	1,626		$	-		$	-		$	-		$	9,387
Collectively evaluated for impairment		9,583			7,369			13,067			19,463			431			49,913
Total ending allowance balance	$	17,344		$	8,995		$	13,067		$	19,463		$	431		$	59,300
Loans:
Individually evaluated for impairment	$	91,650		$	53,139		$	-		$	-		$	-		$	144,789
Collectively evaluated for impairment		629,844			1,224,727			290,515			756,395			-			2,901,481
Total ending loan balance	$	721,494		$	1,277,866		$	290,515		$	756,395		$	-		$	3,046,270

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 accounted for under ASC 310-20, for the periods indicated:

	Quarter Ended March 31, 2017
	Commercial			Consumer			Auto				Total
	(In thousands)
Allowance for loan and lease losses for acquired BBVAPR loans accounted for under ASC 310-20:
Balance at beginning of period	$	169		$	3,028		$	1,103			$	4,300
Charge-offs		(6)			(885)			(278)				(1,169)
Recoveries		1			64			452				517
Provision (recapture) for acquired BBVAPR loan and lease losses accounted for under ASC 310-20		19			384			(436)				-33
Balance at end of period	$	183		$	2,591		$	841			$	3,615

	March 31, 2017
	Commercial			Consumer			Auto			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:
Individually evaluated for impairment	$	149		$	-		$	-		$	149
Collectively evaluated for impairment		34			2,591			841			3,466
Total ending allowance balance	$	183		$	2,591		$	841		$	3,615
Loans:
Individually evaluated for impairment	$	911		$	-		$	-		$	911
Collectively evaluated for impairment		4,525			31,001			42,523			78,049
Total ending loan balance	$	5,436		$	31,001		$	42,523		$	78,960

	Quarter Ended March 31, 2016
	Commercial			Consumer			Auto			Total
	(In thousands)
Allowance for loan and lease losses for acquired BBVAPR loans accounted for under ASC 310-20:
Balance at beginning of period	$	26		$	3,429		$	2,087		$	5,542
Charge-offs		(7)			(812)			(737)			(1,556)
Recoveries		32			81			598			711
Provision (recapture) for acquired loan and lease losses accounted for under ASC 310-20		(28)			545			(221)			296
Balance at end of period	$	23		$	3,243		$	1,727		$	4,993

	December 31, 2016
	Commercial			Consumer			Auto			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:
Individually evaluated for impairment	$	141		$	-		$	-		$	141
Collectively evaluated for impairment		28			3,028			1,103			4,159
Total ending allowance balance	$	169		$	3,028		$	1,103		$	4,300
Loans:
Individually evaluated for impairment	$	1,150		$	-		$	-		$	1,150
Collectively evaluated for impairment		4,412			32,862			53,026			90,300
Total ending loan balance	$	5,562		$	32,862		$	53,026		$	91,450

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

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 trends are assessed at the pool level, by comparing information from the latest evaluation period through the end of the reporting period.

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:

	Quarter Ended March 31, 2017
	Mortgage			Commercial			Auto			Total
	(In thousands)
Allowance for loan and lease losses for acquired BBVAPR loans accounted for under ASC 310-30:
Balance at beginning of period	$	2,682		$	23,452		$	4,922		$	31,056
Provision for BBVAPR loans and lease losses accounted for under ASC 310-30		923			223			3,186			4,332
Allowance de-recognition		(32)			(147)			(279)			(458)
Balance at end of period	$	3,573		$	23,528		$	7,829		$	34,930
	Quarter Ended March 31, 2016
	Mortgage			Commercial			Auto			Total
	(In thousands)
Allowance for loan and lease losses for acquired BBVAPR loans accounted for under ASC 310-30:
Balance at beginning of period	$	1,678		$	21,245		$	2,862		$	25,785
Provision (recapture) for BBVAPR loans and lease losses accounted for under ASC 310-30		84			(749)			2,693			2,028
Loan pools fully charged-off		-			(66)			-			(66)
Balance at end of period	$	1,762		$	20,430		$	5,555		$	27,747

Allowance for Acquired Eurobank Loan Losses

The changes in the allowance for loan and lease losses on acquired Eurobank loans for the quarters ended March 31, 2017 and 2016 were as follows:

	Quarter Ended March 31, 2017
	Loans Secured by 1-4 Family Residential Properties			Commercial			Consumer			Total
	(In thousands)
Allowance for loan and lease losses for acquired Eurobank loans:
Balance at beginning of period	$	11,947		$	9,328		$	6		$	21,281
Provision for acquired Eurobank loans and lease losses, net		2,398			(778)			-			1,620
Allowance de-recognition from new policy		(177)			(717)			(1)			(895)
Balance at end of period	$	14,168		$	7,833		$	5		$	22,006

	Quarter Ended March 31, 2016
	Loans secured by 1-4 Family Residential Properties			Commercial			Consumer			Total
	(In thousands)
Allowance for loan and lease losses for acquired Eurobank loans:
Balance at beginning of period	$	22,570		$	67,365		$	243		$	90,178
Provision for covered loan and lease losses, net		(53)			858			-			805
Loan pools fully charged-off		-			(134)			-			(134)
FDIC shared-loss portion of provision for covered loan and lease losses, net		1,444			-			-			1,444
Balance at end of period	$	23,961		$	68,089		$	243		$	92,293

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