XML 28 R13.htm IDEA: XBRL DOCUMENT v3.10.0.1
Loans
 12 Months Ended
Dec. 31, 2018
Loans [Abstract]  
Loans

NOTE 6 - LOANS

Oriental’s loan portfolio is composed of two segments, loans initially accounted for under the amortized cost method (referred to as "originated and other" loans) and loans acquired (referred to as "acquired" loans). Acquired loans are further segregated between acquired BBVAPR loans and acquired Eurobank loans.

The composition of Oriental’s loan portfolio at December 31, 2018 and 2017 was as follows:

December 31,
20182017
(In thousands)
Originated and other loans and leases held for investment:
Mortgage $668,809$683,607
Commercial1,597,5881,307,261
Consumer348,980330,039
Auto and leasing1,129,695883,985
3,745,0723,204,892
Allowance for loan and lease losses on originated and other loans and leases(95,188)(92,718)
3,649,8843,112,174
Deferred loan costs, net7,7406,695
Total originated and other loans held for investment, net3,657,6243,118,869
Acquired loans:
Acquired BBVAPR loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial2,5464,380
Consumer23,98828,915
Auto4,43521,969
30,96955,264
Allowance for loan and lease losses on acquired BBVAPR loans accounted for under ASC 310-20(2,062)(3,862)
28,90751,402
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Mortgage 492,890532,053
Commercial 182,319243,092
Consumer-1,431
Auto14,40343,696
689,612820,272
Allowance for loan and lease losses on acquired BBVAPR loans accounted for under ASC 310-30(42,010)(45,755)
647,602774,517
Total acquired BBVAPR loans, net676,509825,919
Acquired Eurobank loans:
Loans secured by 1-4 family residential properties63,39269,538
Commercial47,82653,793
Consumer8461,112
Total acquired Eurobank loans112,064124,443
Allowance for loan and lease losses on Eurobank loans(24,971)(25,174)
Total acquired Eurobank loans, net87,09399,269
Total acquired loans, net763,602925,188
Total held for investment, net4,421,2264,044,057
Mortgage loans held-for-sale10,36812,272
Total loans, net$4,431,594$4,056,329

As a result of the devastation caused by hurricanes Irma and Maria, Oriental offered an automatic three-month moratorium for the payment due on certain loans. The level of delinquencies for mortgage and auto loans as of December 31, 2017 was impacted by the loan moratorium. Aging of current and early delinquent loans in moratorium were frozen at September 30, 2017, throughout the moratorium period. In addition, although the repayment schedule was modified as part of the moratorium, certain borrowers continued to make payments shortly after the moratorium, having an impact on the respective delinquency status at December 31, 2017. At December 31, 2018, all of the loan moratoriums have expired, and total delinquency levels have returned to pre-hurricane levels with some improvements.

Originated and Other Loans and Leases Held for Investment

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

The tables below present the aging of the recorded investment in gross originated and other loans held for investment at December 31, 2018 and 2017, by class of loans. Mortgage loans past due include 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.

December 31, 2018
Loans 90+
Days Past
Due and
30-59 Days60-89 Days90+ DaysTotal PastStill
Past DuePast DuePast DueDueCurrentTotal LoansAccruing
(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002$77$1,516$2,707$4,300$36,344$40,644$168
Years 2003 and 2004912,4125,6328,13567,70775,842-
Year 2005-5523,5314,08335,00439,087-
Year 20062551,6935,0747,02249,21356,235-
Years 2007, 2008 and 20092551,0596,6777,99152,78160,77256
Years 2010, 2011, 2012, 20132533288,6979,278104,429113,707270
Years 2014, 2015, 2016, 2017 and 2018-4831,4621,945139,500141,445-
9318,04333,78042,754484,978527,732494
Non-traditional-1163,0853,20111,07214,273-
Loss mitigation program10,7936,25819,38936,44070,393106,8332,223
11,72414,41756,25482,395566,443648,8382,717
Home equity secured personal loans9--9241250-
GNMA's buy-back option program--19,72119,721-19,721-
11,73314,41775,975102,125566,684668,8092,717
Commercial
Commercial secured by real estate:
Corporate----289,052289,052-
Institutional--1,2001,20068,41369,613-
Middle market-1,4305,2026,632200,831207,463-
Retail1,6414638,57010,674213,440224,114-
Floor plan----4,1844,184-
Real estate----19,00919,009-
1,6411,89314,97218,506794,929813,435-
Other commercial and industrial:
Corporate----179,885179,885-
Institutional----156,410156,410-
Middle market917-6,0206,93781,03087,967-
Retail5715468171,934308,278310,212-
Floor plan--464649,63349,679-
1,4885466,8838,917775,236784,153-
3,1292,43921,85527,4231,570,1651,597,588-

December 31, 2018
Loans 90+
Days Past
Due and
30-59 Days60-89 Days90+ DaysTotal PastStill
Past DuePast DuePast DueDueCurrentTotal LoansAccruing
(In thousands)
Consumer
Credit cards$725$363$411$1,499$26,535$28,034$-
Overdrafts10--10204214-
Personal lines of credit571122901,8271,917-
Personal loans3,9661,7401,2626,968296,151303,119-
Cash collateral personal loans74339341615,28015,696-
4,8322,4531,6988,983339,997348,980-
Auto and leasing58,09427,94513,49499,5331,030,1621,129,695-
Total$77,788$47,254$113,022$238,064$3,507,008$3,745,072$2,717

December 31, 2017
Loans 90+
Days Past
Due and
30-59 Days60-89 Days90+ DaysTotal PastStill
Past DuePast DuePast DueDueCurrentTotal LoansAccruing
(In thousands)
Mortgage
Traditional (by origination year):
Up to the year 2002$86$938$3,537$4,561$41,579$46,140$467
Years 2003 and 2004921,0776,3047,47375,75883,231-
Year 20051013833,3483,83240,66944,50168
Year 20062426045,9716,81755,96662,78366
Years 2007, 2008 and 20093581,2588,56110,17758,50568,682577
Years 2010, 2011, 2012, 20132339787,3938,604116,674125,2781,202
Years 2014, 2015, 2016 and 2017-751,6491,724121,194122,918-
1,1125,31336,76343,188510,345553,5332,380
Non-traditional-3263,5433,86914,40118,270-
Loss mitigation program7,2333,33118,92329,48773,793103,2804,981
8,3458,97059,22976,544598,539675,0837,361
Home equity secured personal loans----256256-
GNMA's buy-back option program--8,2688,268-8,268-
8,3458,97067,49784,812598,795683,6077,361
Commercial
Commercial secured by real estate:
Corporate----235,426235,426-
Institutional--11811844,64844,766-
Middle market765-3,5274,292225,649229,941-
Retail3529369,69510,983235,084246,067-
Floor plan----3,9983,998-
Real estate----17,55617,556-
1,11793613,34015,393762,361777,754-
Other commercial and industrial:
Corporate----170,015170,015-
Institutional----125,591125,591-
Middle market--88188184,48285,363-
Retail4551031,6162,174111,078113,252-
Floor plan9-516035,22635,286-
4641032,5483,115526,392529,507-
1,5811,03915,88818,5081,288,7531,307,261-

December 31, 2017
Loans 90+
Days Past
Due and
30-59 Days60-89 Days90+ DaysTotal PastStill
Past DuePast DuePast DueDueCurrentTotal LoansAccruing
(In thousands)
Consumer
Credit cards$246$130$1,227$1,603$26,827$28,430$-
Overdrafts2063157157214-
Personal lines of credit25954874001,8202,220-
Personal loans3,7781,4942235,495278,982284,477-
Cash collateral personal loans1035931247414,22414,698-
4,4061,7431,8808,029322,010330,039-
Auto and leasing21,76010,3994,23236,391847,594883,985-
Total$36,092$22,151$89,497$147,740$3,057,152$3,204,892$7,361

At December 31, 2018 and 2017, Oriental had a carrying balance of $91.4 million and $94.9 million, respectively, in originated and other loans held for investment granted to the Puerto Rico government, including its instrumentalities, public corporations and municipalities as part of the institutional commercial loan segment. All originated and other loans granted to the Puerto Rico government are general obligations 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.

Acquired Loans

Acquired loans were initially measured at fair value and subsequently accounted for under either ASC 310-30 or ASC 310-20 (Non-refundable fees and Other Costs). We have acquired loans in the acquisitions of 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 are accounted for under the guidance of ASC 310-20, which requires that any contractually required loan payment receivable in excess of Oriental’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 Oriental’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 December 31, 2018 and 2017, by class of loans:

December 31, 2018
Loans 90+
Days Past
Due and
30-59 Days60-89 Days90+ DaysTotal PastStill
Past DuePast DuePast DueDueCurrentTotal LoansAccruing
(In thousands)
Commercial
Commercial secured by real estate
Retail$-$-$54$54$-$54$-
Floor plan--88888894982-
--942942941,036-
Other commercial and industrial
Retail30118491,4611,510-
30118491,4611,510-
30119509911,5552,546-
Consumer
Credit cards4991473801,02620,79621,822-
Personal loans6432181142,0522,166-
5631793981,14022,84823,988-
Auto4052412008463,5894,435-
Total $998$431$1,548$2,977$27,992$30,969$-

December 31, 2017
Loans 90+
Days Past
Due and
30-59 Days60-89 Days90+ DaysTotal PastStill
Past DuePast DuePast DueDueCurrentTotal LoansAccruing
(In thousands)
Commercial
Commercial secured by real estate
Retail$-$-$119$119$-$119$-
Floor plan--9289283931,321-
--1,0471,0473931,440-
Other commercial and industrial
Retail36-2212572,6812,938-
Floor plan--22-2-
36-2232592,6812,940-
36-1,2701,3063,0744,380-
Consumer
Credit cards2081271,3101,64524,82226,467-
Personal loans13961452452,2032,448-
3471881,3551,89027,02528,915-
Auto6022481791,02920,94021,969-
Total $985$436$2,804$4,225$51,039$55,264$-

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 Oriental 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 December 31, 2018 and 2017 is as follows:

December 31,
20182017
(In thousands)
Contractual required payments receivable:$1,304,545 $ 1,481,616
Less: Non-accretable discount345,423352,431
Cash expected to be collected959,1221,129,185
Less: Accretable yield269,510308,913
Carrying amount, gross689,612820,272
Less: allowance for loan and lease losses42,01045,755
Carrying amount, net$647,602 $ 774,517

At December 31, 2018 and 2017, Oriental had $44.5 million and $50.3 million, respectively, in loans granted to Puerto Rico municipalities as part of its acquired BBVAPR loans accounted for under ASC 310-30. These loans are primarily secured municipal general obligations.

The following tables describe the accretable yield and non-accretable discount activity of acquired BBVAPR loans accounted for under ASC 310-30 for the years ended December 31, 2018, 2017 and 2016

Year Ended December 31, 2018
MortgageCommercialAutoConsumerTotal
(In thousands)
Accretable Yield Activity:
Balance at beginning of year$258,498$46,764$2,766$885$308,913
Accretion(27,248)(14,160)(2,360)(871)(44,639)
Change in expected cash flows-7,8958904849,269
Transfer (to) non-accretable discount949(3,991)(1,053)62(4,033)
Balance at end of year$232,199$36,508$243$560$269,510
Non-Accretable Discount Activity:
Balance at beginning of year$299,501$10,596$23,050$19,284$352,431
Change in actual and expected losses(6,665)(4,241)142(277)(11,041)
Transfer from accretable yield(949)3,9911,053(62)4,033
Balance at end of year$291,887$10,346$24,245$18,945$345,423

Year Ended December 31, 2017
MortgageCommercialAutoConsumerTotal
(In thousands)
Accretable Yield Activity:
Balance at beginning of year$292,115$50,366$8,538$3,682$354,701
Accretion(30,205)(20,572)(6,339)(1,841)(58,957)
Change in actual and expected losses222,25017014322,565
Transfer (to) from non-accretable discount(3,414)(5,280)397(1,099)(9,396)
Balance at end of year$258,498$46,764$2,766$885$308,913
Non-Accretable Discount Activity:
Balance at beginning of year$305,615$16,965$22,407$18,120$363,107
Change in actual and expected losses(9,528)(11,649)1,04065(20,072)
Transfer from (to) accretable yield3,4145,280(397)1,0999,396
Balance at end of year$299,501$10,596$23,050$19,284$352,431

Year Ended December 31, 2016
MortgageCommercialAutoConsumerTotal
(In thousands)
Accretable Yield Activity:
Balance at beginning of year$268,794$65,026$21,578$6,290$361,688
Accretion(32,834)(26,254)(13,567)(2,982)(75,637)
Change in actual and expected losses(1)14,2591,251(242)15,267
Transfer (to) from non-accretable discount56,156(2,665)(724)61653,383
Balance at end of year$292,115$50,366$8,538$3,682$354,701
Non-Accretable Discount Activity:
Balance at beginning of year$374,772$18,545$22,039$18,834$434,190
Change in actual and expected losses(13,001)(4,245)(356)(98)(17,700)
Transfer from (to) accretable yield(56,156)2,665724(616)(53,383)
Balance at end of year$305,615$16,965$22,407$18,120$363,107

Acquired Eurobank Loans

The carrying amount of acquired Eurobank loans at December 31, 2018 and 2017 is as follows:

December 31
20182017
(In thousands)
Contractual required payments receivable:$156,722$179,960
Less: Non-accretable discount2,9595,845
Cash expected to be collected153,763174,115
Less: Accretable yield41,69949,672
Carrying amount, gross112,064124,443
Less: Allowance for loan and lease losses24,97125,174
Carrying amount, net$87,093$99,269

The following tables describe the accretable yield and non-accretable discount activity of acquired Eurobank loans for the years ended December 31, 2018, 2017 and 2016:

Year Ended December 31, 2018
Loans Secured by 1-4 Family Residential PropertiesCommercialConstruction & Development Secured by 1-4 Family Residential PropertiesLeasingConsumerTotal
(In thousands)
Accretable Yield Activity:
Balance at beginning of year$41,474$6,751$1,447$-$-$49,672
Accretion(5,964)(6,430)-(52)(389)(12,835)
Change in expected cash flows(1,129)5,023-(329)7004,265
Transfer from (to) non-accretable discount3,353(2,034)(792)381(311)597
Balance at end of year$37,734$3,310$655$-$-$41,699
Non-Accretable Discount Activity:
Balance at beginning of year$4,576$276$758$-$235$5,845
Change in actual and expected losses53(2,310)-381(413)(2,289)
Transfer from (to) accretable yield(3,353)2,034792(381)311(597)
Balance at end of year$1,276$-$1,550$-$133$2,959

Year Ended December 31, 2017
Loans Secured by 1-4 Family Residential PropertiesCommercialConstruction & Development Secured by 1-4 Family Residential PropertiesLeasingConsumerTotal
(In thousands)
Accretable Yield Activity:
Balance at beginning of year$45,839$16,475$2,194-$-$64,508
Accretion(7,180)(12,985)(82)(30)(283)(20,560)
Change in actual and expected losses1211,881121(217)7592,665
Transfer from (to) non-accretable discount2,6941,380(786)247(476)3,059
Balance at end of year$41,474$6,751$1,447$-$-$49,672
Non-Accretable Discount Activity:
Balance at beginning of year$8,441$3,880$11$-$8$12,340
Change in actual and expected losses(1,171)(2,224)(39)247(249)(3,436)
Transfer (to) from accretable yield(2,694)(1,380)786(247)476(3,059)
Balance at end of year$4,576$276$758$-$235$5,845

Year Ended December 31, 2016
Loans Secured by 1-4 Family Residential PropertiesCommercialConstruction & Development Secured by 1-4 Family Residential PropertiesLeasingConsumerTotal
(In thousands)
Accretable Yield Activity:
Balance at beginning of period$51,954$26,970$2,255$-$3,212$84,391
Accretion(8,942)(19,593)(90)(60)(1,813)(30,498)
Change in expected cash flows2,13413,7221(15)(1,386)14,456
Transfer from (to) non-accretable discount693(4,624)2875(13)(3,841)
Balance at end of period$45,839$16,475$2,194$-$-$64,508
Non-Accretable Discount Activity:
Balance at beginning of period$12,869$-$-$-$8,287$21,156
Change in actual and expected cash flows(3,735)(744)3975(8,292)(12,657)
Transfer (to) from accretable yield(693)4,624(28)(75)133,841
Balance at end of period$8,441$3,880$11$-$8$12,340

Non-accrual Loans

The following table presents the recorded investment in loans in non-accrual status by class of loans as of December 31, 2018 and 2017:

December 31,
20182017
(In thousands)
Originated and other loans and leases held for investment
Mortgage
Traditional (by origination year):
Up to the year 2002$2,538$3,070
Years 2003 and 20045,8186,380
Year 20053,6003,280
Year 20065,1405,905
Years 2007, 2008 and 20096,6977,984
Years 2010, 2011, 2012, 20138,4276,259
Years 2014, 2015, 2016, 2017 and 20181,4621,649
33,68234,527
Non-traditional3,0853,543
Loss mitigation program22,10716,783
58,87454,853
Commercial
Commercial secured by real estate
Institutional9,911118
Middle market7,26611,394
Retail16,12314,438
33,30025,950
Other commercial and industrial
Middle market6,4816,323
Retail2,6292,929
Floor plan4651
9,1569,303
42,45635,253
Consumer
Credit cards4111,227
Overdrafts-31
Personal lines of credit31102
Personal loans2,909900
Cash collateral personal loans3312
3,3542,572
Auto and leasing13,4944,232
Total non-accrual originated loans$118,178$96,910

December 31,
20182017
(In thousands)
Acquired BBVAPR loans accounted for under ASC 310-20
Commercial
Commercial secured by real estate
Retail$54$119
Floor plan888928
9421,047
Other commercial and industrial
Retail8221
Floor plan-2
8223
9501,270
Consumer
Credit cards3801,310
Personal loans1845
3981,355
Auto 200179
Total non-accrual acquired BBVAPR loans accounted for under ASC 310-201,5482,804
Total non-accrual loans$119,726$99,714

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 or are accounted under the cost recovery method.

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 12 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. In addition, these loans are excluded from the impairment analysis.

At December 31, 2018 and 2017, loans whose terms have been extended and which are classified as troubled-debt restructurings that are not included in non-accrual loans amounted to $112.9 million and $109.2 million, respectively, as they are performing under their new terms.

At December 31, 2018 and 2017, loans that are current in their monthly payments, but placed in non-accrual due to credit deterioration amounted to $21.2 million and $20.1 million, respectively.

Impaired Loans

Oriental evaluates all loans, some individually and others as homogeneous groups, for purposes of determining impairment. The total investment in impaired commercial loans that were individually evaluated for impairment was $82.0 million and $72.3 million at December 31, 2018 and 2017, respectively. The impairments on these 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 allowance for loan and lease losses for these impaired commercial loans amounted to $8.4 million and $10.6 million at December 31, 2018 and 2017, respectively. The total investment in impaired mortgage loans that were individually evaluated for impairment was $84.2 million and $85.4 million at December 31, 2018 and 2017, respectively. Impairment on mortgage loans assessed as troubled-debt restructurings was measured using the present value of cash flows. The allowance for loan losses for these impaired mortgage loans amounted to $10.2 million and $9.1 million at December 31, 2018 and 2017, respectively.

Originated and Other Loans and Leases Held for Investment

Oriental’s recorded investment in 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 December 31, 2018 and 2017 are as follows:

December 31, 2018
UnpaidRecordedRelated
PrincipalInvestment Allowance Coverage
(In thousands)
Impaired loans with specific allowance:
Commercial$54,636 $ 49,092 $ 8,43417%
Residential impaired and troubled-debt restructuring95,65984,17410,18612%
Impaired loans with no specific allowance:
Commercial38,24132,137N/A0%
Total investment in impaired loans$188,536$165,403$18,62011%

December 31, 2017
UnpaidRecordedRelated
PrincipalInvestment Allowance Coverage
(In thousands)
Impaired loans with specific allowance:
Commercial$57,922$52,585$10,57320%
Residential impaired and troubled-debt restructuring94,97185,4039,12111%
Impaired loans with no specific allowance
Commercial22,02218,953N/A0%
Total investment in impaired loans$174,915$156,941$19,69413%

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

Oriental’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 December 31, 2018 and 2017 are as follows:

December 31, 2018
UnpaidRecordedRelated
PrincipalInvestment Allowance Coverage
(In thousands)
Impaired loans with specific allowance
Commercial$926$747$142%
Impaired loans with no specific allowance
Commercial$-$-N/A0%
Total investment in impaired loans$926$747$142%
December 31, 2017
UnpaidRecordedSpecific
PrincipalInvestment Allowance Coverage
(In thousands)
Impaired loans with specific allowance
Commercial$926$747$203%
Impaired loans with no specific allowance
Commercial$-$-N/A0%
Total investment in impaired loans$926$747$203%

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

Oriental’s recorded investment in acquired BBVAPR loan pools accounted for under ASC 310-30 that have recorded impairments and their related allowance for loan and lease losses at December 31, 2018 and 2017 are as follows:

December 31, 2018
Coverage
UnpaidRecordedto Recorded
PrincipalInvestment Allowance Investment
(In thousands)
Impaired loan pools with specific allowance:
Mortgage$498,537$492,890$15,2253%
Commercial 188,413180,79020,64111%
Auto14,55114,4036,14443%
Total investment in impaired loan pools$701,501$688,083$42,0106%

December 31 , 2017
Coverage
UnpaidRecordedto Recorded
PrincipalInvestment Allowance Investment
(In thousands)
Impaired loan pools with specific allowance:
Mortgage$547,064$532,052$14,0853%
Commercial 250,451241,12423,69110%
Consumer 2,4681,431181%
Auto43,44043,6967,96118%
Total investment in impaired loan pools$843,423$818,303$45,7556%

The tables above only present information with respect to acquired BBVAPR loan pools accounted for under ASC 310-30 if there is a recorded impairment to such loan pools and a specific allowance for loan losses.

Acquired Eurobank Loans

Oriental’s recorded investment in acquired Eurobank loan pools that have recorded impairments and their related allowance for loan and lease losses as of December 31, 2018 and 2017 are as follows:

December 31, 2018
Coverage
UnpaidRecordedto Recorded
PrincipalInvestment Allowance Investment
(In thousands)
Impaired loan pools with specific allowance:
Loans secured by 1-4 family residential properties$70,153$63,406$15,38224%
Commercial47,34247,8209,58520%
Consumer1544100%
Total investment in impaired loan pools$117,510$111,230$24,97122%

December 31, 2017
Coverage
UnpaidRecordedSpecificto Recorded
PrincipalInvestment Allowance Investment
(In thousands)
Impaired loan pools with specific allowance
Loans secured by 1-4 family residential properties$81,132$69,538$15,18722%
Commercial58,09953,7939,98319%
Consumer1544100%
Total investment in impaired loan pools$139,246$123,335$25,17420%

The tables above only present information with respect to acquired Eurobank loan pools accounted for under ASC 310-30 if there is a recorded impairment to such loan pools and a specific allowance for loan losses.

The following table presents the interest recognized in commercial and mortgage loans that were individually evaluated for impairment, which excludes loans accounted for under ASC 310-30, for the years ended December 31, 2018, 2017 and 2016:

Year Ended December 31,
201820172016
Interest Income RecognizedAverage Recorded InvestmentInterest Income RecognizedAverage Recorded InvestmentInterest Income RecognizedAverage Recorded Investment
(In thousands)
Originated and other loans held for investment:
Impaired loans with specific allowance
Commercial$1,624$44,727$1,538$25,797$452$118,980
Residential troubled-debt restructuring 2,55684,4943,30187,4143,19091,139
Impaired loans with no specific allowance
Commercial 1,09126,19987536,6661,94140,443
Total interest income from impaired loans$5,271$155,420$5,714$149,877$5,583$250,562
Acquired loans accounted for under ASC 310-20:
Impaired loans with specific allowance
Commercial$-$747$-$794$-$319
Impaired loans with no specific allowance
Commercial-----608
Total interest income from impaired loans$5,271$156,167$5,714$150,671$5,583$251,489

Modifications

The following tables present the troubled-debt restructurings in all loan portfolios during the years ended December 31, 2018, 2017 and 2016.

Year Ended December 31, 2018
Number of contractsPre-Modification Outstanding Recorded InvestmentPre-Modification Weighted Average RatePre-Modification Weighted Average Term (in Months)Post-Modification Outstanding Recorded InvestmentPost-Modification Weighted Average RatePost-Modification Weighted Average Term (in Months)
(Dollars in thousands)
Mortgage 143 $ 19,0295.09%342 $ 18,2374.41%314
Commercial 2326,0195.75%11825,9735.64%136
Consumer 1742,31313.24%512,3329.86%61
Auto24010.42%374010.28%32
Year Ended December 31, 2017
Number of contractsPre-Modification Outstanding Recorded InvestmentPre-Modification Weighted Average RatePre-Modification Weighted Average Term (in Months)Post-Modification Outstanding Recorded InvestmentPost-Modification Weighted Average RatePost-Modification Weighted Average Term (in Months)
(Dollars in thousands)
Mortgage 85$10,4416.23%390$10,3434.40%384
Commercial 2413,8286.05%5713,8295.73%62
Consumer 1071,39111.68%621,43010.85%69
Auto91347.24%6613511.75%37
Year Ended December 31, 2016
Number of contractsPre-Modification Outstanding Recorded InvestmentPre-Modification Weighted Average RatePre-Modification Weighted Average Term (in Months)Post-Modification Outstanding Recorded InvestmentPost-Modification Weighted Average RatePost-Modification Weighted Average Term (in Months)
(Dollars in thousands)
Mortgage 90 $ 11,6846.05%351 $ 11,6254.77%439
Commercial 209,8335.73%6410,1515.93%116
Consumer 7581713.60%7390211.23%66

The following table presents troubled-debt restructurings for which there was a payment default during the years ended December 31, 2018, 2017 and 2016:

Year Ended December 31,
201820172016
Number of ContractsRecorded InvestmentNumber of ContractsRecorded InvestmentNumber of ContractsRecorded Investment
(Dollars in thousands)
Mortgage 23 $ 3,26234 $ 3,12919 $ 2,241
Commercial4$2,1415$4522$157
Consumer28 $ 34120 $ 24911 $ 126

Credit Quality Indicators

Oriental categorizes 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.

Oriental 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 December 31, 2018 and 2017, 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:

December 31, 2018
Risk Ratings
BalanceSpecial
OutstandingPassMentionSubstandardDoubtfulLoss
(In thousands)
Commercial - originated and other loans held for investment
Commercial secured by real estate:
Corporate$289,052$246,711$26,544$15,797$-$-
Institutional69,61359,509-10,104--
Middle market207,463151,63832,63823,187--
Retail224,114198,4023,99621,716--
Floor plan4,1842,890-1,294--
Real estate19,00919,009----
813,435678,15963,17872,098--
Other commercial and industrial:
Corporate179,885154,62925,256---
Institutional156,410156,410----
Middle market87,96763,87613,73710,354--
Retail310,212307,1603182,734--
Floor plan49,67947,0922,54146--
784,153729,16741,85213,134--
Total1,597,5881,407,326105,03085,232--
Commercial - acquired loans (under ASC 310-20)
Commercial secured by real estate:
Retail54--54--
Floor plan98294-888--
1,03694-942--
Other commercial and industrial:
Retail1,5101,510----
1,5101,510----
Total2,5461,604-942--

December 31, 2018
Risk Ratings
BalanceSpecial
OutstandingPassMentionSubstandardDoubtfulLoss
(In thousands)
Retail - originated and other loans held for investment
Mortgage:
Traditional527,732493,952-33,780--
Non-traditional14,27311,188-3,085--
Loss mitigation program106,83387,444-19,389--
Home equity secured personal loans250250----
GNMA's buy-back option program19,721--19,721--
668,809592,834-75,975--
Consumer:
Credit cards28,03427,623-411--
Overdrafts214204-10--
Unsecured personal lines of credit1,9171,895-22--
Unsecured personal loans303,119301,857-1,262--
Cash collateral personal loans15,69615,693-3--
348,980347,272-1,708--
Auto and Leasing1,129,6951,116,201-13,494--
Total2,147,4842,056,307-91,177--
Retail - acquired loans (accounted for under ASC 310-20)
Consumer:
Credit cards21,82221,442-380--
Personal loans2,1662,148-18--
23,98823,590-398--
Auto4,4354,235-200--
28,42327,825-598--
$3,776,041$3,493,062$105,030$177,949$-$-

December 31, 2017
Risk Ratings
BalanceSpecial
OutstandingPassMentionSubstandardDoubtfulLoss
(In thousands)
Commercial - originated and other loans held for investment
Commercial secured by real estate:
Corporate$235,426$200,395$33,094$1,937$- $ -
Institutional44,76633,856-10,910--
Middle market229,941196,0584,74929,134--
Retail246,067215,1218,05822,888--
Floor plan3,9982,6781,320---
Real estate17,55617,556----
777,754665,66447,22164,869--
Other commercial and industrial:
Corporate170,015157,68312,332---
Institutional125,591125,591----
Middle market85,36371,2226,3867,755--
Retail113,252109,4775623,213--
Floor plan35,28632,1653,07051--
529,507496,13822,35011,019--
Total1,307,2611,161,80269,57175,888--
Commercial - acquired loans (under ASC 310-20)
Commercial secured by real estate:
Retail119--119--
Floor plan1,321393-928--
1,440393-1,047--
Other commercial and industrial:
Retail2,9382,933-5--
Floor plan2--2--
2,9402,933-7--
Total4,3803,326-1,054--

December 31, 2017
Risk Ratings
BalanceSpecial
OutstandingPassMentionSubstandardDoubtfulLoss
(In thousands)
Retail - originated and other loans held for investment
Mortgage:
Traditional553,533516,770-36,763--
Non-traditional18,27014,727-3,543--
Loss mitigation program103,28084,357-18,923--
Home equity secured personal loans256256----
GNMA's buy-back option program8,268--8,268--
683,607616,110-67,497--
Consumer:
Credit cards28,43027,203-1,227--
Overdrafts214158-56--
Unsecured personal lines of credit2,2202,133-87--
Unsecured personal loans284,477284,255-222--
Cash collateral personal loans14,69814,386-312--
330,039328,135-1,904--
Auto and Leasing883,985879,753-4,232--
Total1,897,6311,823,998-73,633--
Retail - acquired loans (under ASC 310-20)
Consumer:
Credit cards26,46725,156-1,311--
Personal loans2,4482,402-46--
28,91527,558-1,357--
Auto21,96921,790-179--
Total50,88449,348-1,536--
$3,260,156$3,038,474$69,571$152,111$-$-