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Allowance for Loan and Lease Losses

3 Months Ended

Mar. 31, 2019

Allowance for Loan and Lease Losses [Abstract]

Allowance For Loan and Lease Losses

NOTE 5 – ALLOWANCE FOR LOAN AND LEASE LOSSES

The composition of Oriental’s allowance for loan and lease losses at March 31, 2019 and December 31, 2018 was as follows:

	March 31,			December 31,
	2019			2018
	(In thousands)
Allowance for loans and lease losses:
Originated and other loans and leases held for investment:
Mortgage	$	16,689		$	19,783
Commercial		32,154			30,326
Consumer		16,085			15,571
Auto and leasing		29,107			29,508
Total allowance for originated and other loans and lease losses		94,035			95,188
Acquired BBVAPR loans:
Accounted for under ASC 310-20 (Loans with revolving feature and/or
acquired at a premium)
Commercial		32			22
Consumer		1,869			1,905
Auto		67			135
		1,968			2,062
Accounted for under ASC 310-30 (Loans acquired with deteriorated
credit quality, including those by analogy)
Mortgage		17,901			15,225
Commercial		20,733			20,641
Auto		3,499			6,144
		42,133			42,010
Total allowance for acquired BBVAPR loans and lease losses		44,101			44,072
Acquired Eurobank loans:
Loans secured by 1-4 family residential properties		15,110			15,382
Commercial		9,242			9,585
Consumer		-			4
Total allowance for acquired Eurobank loan and lease losses		24,352			24,971
Total allowance for loan and lease losses	$	162,488		$	164,231

Oriental 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. Oriental’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 Oriental’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 present 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, 2019
	Mortgage			Commercial			Consumer			Auto and Leasing			Total
	(In thousands)
Allowance for loan and lease losses for originated and other loans:
Balance at beginning of period	$	19,783		$	30,326		$	15,571		$	29,508		$	95,188
Charge-offs		(587)			(1,086)			(4,121)			(11,371)			(17,165)
Recoveries		287			147			263			3,982			4,679
(Recapture) provision for loan and lease losses		(2,794)			2,767			4,372			6,988			11,333
Balance at end of period	$	16,689		$	32,154		$	16,085		$	29,107		$	94,035

	March 31, 2019
	Mortgage			Commercial			Consumer			Auto and Leasing			Total
	(In thousands)
Allowance for loan and lease losses on originated and other loans:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	11,135		$	10,828		$	-		$	-		$	21,963
Collectively evaluated for impairment		5,554			21,326			16,085			29,107			72,072
Total ending allowance balance	$	16,689		$	32,154		$	16,085		$	29,107		$	94,035
Loans:
Individually evaluated for impairment	$	83,406		$	88,615		$	-		$	-		$	172,021
Collectively evaluated for impairment		568,017			1,480,936			350,543			1,167,482			3,566,978
Total ending loan balance	$	651,423		$	1,569,551		$	350,543		$	1,167,482		$	3,738,999

	Quarter Ended March 31, 2018
	Mortgage			Commercial			Consumer			Auto and Leasing			Total
	(In thousands)
Allowance for loan and lease losses for originated and other loans:
Balance at beginning of period	$	20,439		$	30,258		$	16,454		$	25,567		$	92,718
Charge-offs		(968)			(1,149)			(4,258)			(8,982)			(15,357)
Recoveries		314			182			240			3,777			4,513
(Recapture) provision for originated and other loan and lease losses		(802)			3,883			5,587			6,290			14,958
Balance at end of period	$	18,983		$	33,174		$	18,023		$	26,652		$	96,832

	December 31, 2018
	Mortgage			Commercial			Consumer			Auto and Leasing			Total
	(In thousands)
Allowance for loan and lease losses on originated and other loans:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	10,186		$	8,434		$	-		$	-		$	18,620
Collectively evaluated for impairment		9,597			21,892			15,571			29,508			76,568
Total ending allowance balance	$	19,783		$	30,326		$	15,571		$	29,508		$	95,188
Loans:
Individually evaluated for impairment	$	84,174		$	81,229		$	-		$	-		$	165,403
Collectively evaluated for impairment		584,635			1,516,359			348,980			1,129,695			3,579,669
Total ending loan balance	$	668,809		$	1,597,588		$	348,980		$	1,129,695		$	3,745,072

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, 2019
	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	$	22		$	1,905		$	135			$	2,062
Charge-offs		-			(440)			(85)				(525)
Recoveries		3			40			90				133
Provision (recapture) for acquired BBVAPR loan and lease losses accounted for under ASC 310-20		7			364			(73)				298
Balance at end of period	$	32		$	1,869		$	67			$	1,968

	March 31, 2019
	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	$	24		$	-		$	-		$	24
Collectively evaluated for impairment		8			1,869			67			1,944
Total ending allowance balance	$	32		$	1,869		$	67		$	1,968
Loans:
Individually evaluated for impairment	$	747		$	-		$	-		$	747
Collectively evaluated for impairment		1,658			22,768			2,336			26,762
Total ending loan balance	$	2,405		$	22,768		$	2,336		$	27,509

	Quarter Ended March 31, 2018
	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	$	42		$	3,225		$	595		$	3,862
Charge-offs		-			(1,022)			(125)			(1,147)
Recoveries		3			54			228			285
Provision (recapture) for acquired loan and lease losses accounted for under ASC 310-20		(8)			402		-	(210)			184
Balance at end of period	$	37		$	2,659		$	488		$	3,184

	December 31, 2018
	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	$	14		$	-		$	-		$	14
Collectively evaluated for impairment		8			1,905			135			2,048
Total ending allowance balance	$	22		$	1,905		$	135		$	2,062
Loans:
Individually evaluated for impairment	$	747		$	-		$	-		$	747
Collectively evaluated for impairment		1,799			23,988			4,435			30,222
Total ending loan balance	$	2,546		$	23,988		$	4,435		$	30,969

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, Oriental 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, 2019
	Mortgage			Commercial			Consumer			Auto		Total
	(In thousands)
Allowance for loan and lease losses foracquired BBVAPR loans accounted for underASC 310-30:
Balance at beginning of period	$	15,225		$	20,641		$	-	$	6,144		42,010
Provision (recapture) for acquired BBVAPRloans and lease losses accounted for underASC 310-30		2,733			850			-		(2,314)		1,269
Allowance de-recognition		(57)			(758)			-		(331)		(1,146)
Balance at end of period	$	17,901		$	20,733		$	-	$	3,499		42,133

	Quarter Ended March 31, 2018
	Mortgage			Commercial			Consumer			Auto			Total
	(In thousands)
Allowance for loan and lease losses foracquired BBVAPR loans accounted for underASC 310-30:
Balance at beginning of period	$	14,085		$	23,691		$	18		$	7,961		$	45,755
Provision (recapture) for acquired BBVAPR loans andlease losses accounted for under ASC 310-30		314			752			-			(887)			179
Allowance de-recognition		(68)			(2,396)			-			(304)			(2,768)
Balance at end of period	$	14,331		$	22,047		$	18		$	6,770		$	43,166

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, 2019 and 2018 were as follows:

	Quarter Ended March 31, 2019
	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	$	15,382		$	9,585		$	4		$	24,971
(Recapture) for loan and lease losses, net		(202)			(449)			-			(651)
Allowance de-recognition		(70)		$	106		$	(4)			32
Balance at end of period	$	15,110		$	9,242		$	-		$	24,352

	Quarter Ended March 31, 2018
	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	$	15,187		$	9,983		$	4		$	25,174
Provision (recapture) for acquired Eurobank loan and lease losses, net		179			(40)			-			139
Allowance de-recognition		48			49			-			97
Balance at end of period	$	15,414		$	9,992		$	4		$	25,410

X

- Definition

The entire disclosure for allowance for credit losses.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-URI http://asc.fasb.org/topic&trid=2196771

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- References

No definition available.

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