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Allowance for Loan and Lease Losses | 6 Months Ended
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Jun. 30, 2019
Allowance for Loan and Lease Losses [Abstract] |
Allowance For Loan and Lease Losses | NOTE 6 – ALLOWANCE FO R LOAN AND LEASE LOSSES The composition of Oriental’s allowance for loan and lease losses at June 30, 2019 and December 31, 2018 was as follows:
| June 30, |  | December 31,
| 2019 |  | 2018
| (In thousands)
Allowance for loans and lease losses: |  |  |  |  |
Originated and other loans and leases held for investment: |  |  |  |  |
Mortgage | $ | 15,361 |  | $ | 19,783
Commercial |  | 29,234 |  |  | 30,326
Consumer |  | 15,831 |  |  | 15,571
Auto and leasing |  | 29,526 |  |  | 29,508
Total allowance for originated and other loans and lease losses |  | 89,952 |  |  | 95,188
Acquired BBVAPR loans: |  |  |  |  |
Accounted for under ASC 310-20 (Loans with revolving feature and/or |  |  |  |  |
acquired at a premium) |  |  |  |  |
Commercial |  | 31 |  |  | 22
Consumer |  | 1,617 |  |  | 1,905
Auto |  | 37 |  |  | 135
|  | 1,685 |  |  | 2,062
Accounted for under ASC 310-30 (Loans acquired with deteriorated |  |  |  |  |
credit quality, including those by analogy) |  |  |  |  |
Mortgage |  | 25,208 |  |  | 15,225
Commercial |  | 17,083 |  |  | 20,641
Auto |  | 3,136 |  |  | 6,144
|  | 45,427 |  |  | 42,010
Total allowance for acquired BBVAPR loans and lease losses |  | 47,112 |  |  | 44,072
Acquired Eurobank loans: |  |  |  |  |
Loans secured by 1-4 family residential properties |  | 17,213 |  |  | 15,382
Commercial |  | 8,365 |  |  | 9,585
Consumer |  | - |  |  | 4
Total allowance for acquired Eurobank loan and lease losses |  | 25,578 |  |  | 24,971
Total allowance for loan and lease losses | $ | 162,642 |  | $ | 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 f or 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 s egment for the periods indicated:
| Quarter Ended June 30, 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 | $ | 16,689 |  | $ | 32,154 |  | $ | 16,085 |  | $ | 29,107 |  | $ | 94,035
Charge-offs |  | (604) |  |  | (2,146) |  |  | (4,839) |  |  | (10,672) |  |  | (18,261)
Recoveries |  | 316 |  |  | 177 |  |  | 327 |  |  | 4,877 |  |  | 5,697
Provision for loan and lease losses |  | (1,040) |  |  | (951) |  |  | 4,258 |  |  | 6,214 |  |  | 8,481
Balance at end of period | $ | 15,361 |  | $ | 29,234 |  | $ | 15,831 |  | $ | 29,526 |  | $ | 89,952
| Six-Month Period Ended June 30, 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 |  | (1,191) |  |  | (3,232) |  |  | (8,958) |  |  | (22,044) |  |  | (35,425)
Recoveries |  | 603 |  |  | 323 |  |  | 590 |  |  | 8,858 |  |  | 10,374
Provision for loan and lease losses |  | (3,834) |  |  | 1,817 |  |  | 8,628 |  |  | 13,204 |  |  | 19,815
Balance at end of period | $ | 15,361 |  | $ | 29,234 |  | $ | 15,831 |  | $ | 29,526 |  | $ | 89,952
| June 30, 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 | $ | 10,615 |  | $ | 9,168 |  | $ | - |  | $ | - |  | $ | 19,783
Collectively evaluated for impairment |  | 4,746 |  |  | 20,066 |  |  | 15,831 |  |  | 29,526 |  |  | 70,169
Total ending allowance balance | $ | 15,361 |  | $ | 29,234 |  | $ | 15,831 |  | $ | 29,526 |  | $ | 89,952
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 83,093 |  | $ | 83,102 |  | $ | - |  | $ | - |  | $ | 166,195
Collectively evaluated for impairment |  | 552,523 |  |  | 1,533,871 |  |  | 356,110 |  |  | 1,218,070 |  |  | 3,660,574
Total ending loan balance | $ | 635,616 |  | $ | 1,616,973 |  | $ | 356,110 |  | $ | 1,218,070 |  | $ | 3,826,769
| Quarter Ended June 30, 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 | $ | 18,983 |  | $ | 33,174 |  | $ | 18,023 |  | $ | 26,652 |  | $ | 96,832
Charge-offs |  | (1,328) |  |  | (1,998) |  |  | (4,588) |  |  | (13,748) |  |  | (21,662)
Recoveries |  | 466 |  |  | 227 |  |  | 240 |  |  | 5,280 |  |  | 6,213
(Recapture) provision for originated and other loan and lease losses |  | 1,202 |  |  | 77 |  |  | 2,517 |  |  | 9,039 |  |  | 12,835
Balance at end of period | $ | 19,323 |  | $ | 31,480 |  | $ | 16,192 |  | $ | 27,223 |  | $ | 94,218
| Six-Month Period Ended June 30, 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 |  | (2,298) |  |  | (3,147) |  |  | (8,847) |  |  | (22,731) |  |  | (37,023)
Recoveries |  | 786 |  |  | 409 |  |  | 479 |  |  | 9,056 |  |  | 10,730
Provision for originated and other loan and lease losses |  | 396 |  |  | 3,960 |  |  | 8,106 |  |  | 15,331 |  |  | 27,793
Balance at end of period | $ | 19,323 |  | $ | 31,480 |  | $ | 16,192 |  | $ | 27,223 |  | $ | 94,218
| 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 June 30, 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 | $ | 32 |  | $ | 1,869 |  | $ | 67 |  |  | $ | 1,968
Charge-offs |  | (80) |  |  | (433) |  |  | (56) |  |  |  | (569)
Recoveries |  | 2 |  |  | 78 |  |  | 71 |  |  |  | 151
Provision (recapture) for acquired BBVAPR loan and lease losses accounted for under ASC 310-20 |  | 77 |  |  | 103 |  |  | (45) |  |  |  | 135
Balance at end of period | $ | 31 |  | $ | 1,617 |  | $ | 37 |  |  | $ | 1,685
| Six-Month Period Ended June 30, 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 |  | (80) |  |  | (873) |  |  | (141) |  |  | (1,094)
Recoveries |  | 5 |  |  | 118 |  |  | 161 |  |  | 284
Provision (recapture) for acquired BBVAPR loan and lease losses accounted for under ASC 310-20 |  | 84 |  |  | 467 |  |  | (118) |  |  | 433
Balance at end of period | $ | 31 |  | $ | 1,617 |  | $ | 37 |  | $ | 1,685
| June 30, 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 | $ | 27 |  | $ | - |  | $ | - |  | $ | 27
Collectively evaluated for impairment |  | 4 |  |  | 1,617 |  |  | 37 |  |  | 1,658
Total ending allowance balance | $ | 31 |  | $ | 1,617 |  | $ | 37 |  | $ | 1,685
Loans: |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 678 |  | $ | - |  | $ | - |  | $ | 678
Collectively evaluated for impairment |  | 1,571 |  |  | 21,966 |  |  | 996 |  |  | 24,533
Total ending loan balance | $ | 2,249 |  | $ | 21,966 |  | $ | 996 |  | $ | 25,211
| Quarter Ended June 30, 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 | $ | 37 |  | $ | 2,659 |  | $ | 488 |  | $ | 3,184
Charge-offs |  | (5) |  |  | (420) |  |  | (88) |  |  | (513)
Recoveries |  | 12 |  |  | 94 |  |  | 244 |  |  | 350
Provision (recapture) for acquired loan and lease losses accounted for under ASC 310-20 |  | 42 |  |  | 24 |  |  | (361) |  |  | (295)
Balance at end of period | $ | 86 |  | $ | 2,357 |  | $ | 283 |  | $ | 2,726
| Six-Month Period Ended June 30, 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 |  | (5) |  |  | (1,442) |  |  | (213) |  |  |  | (1,660)
Recoveries |  | 15 |  |  | 148 |  |  | 472 |  |  |  | 635
Provision (recapture) for acquired loan and lease losses accounted for under ASC 310-20 |  | 34 |  |  | 426 |  |  | (571) |  |  |  | (111)
Balance at end of period | $ | 86 |  | $ | 2,357 |  | $ | 283 |  |  | $ | 2,726
| 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. During the second quarter of 2019, Oriental adjusted to fair value several mortgage loans accounted under ASC 310-30, which are expected to be sold during 2019, with a net increment in provision for acquired BBVAPR and Eurobank lo ans by $8.5 million. 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 June 30, 2019
| 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 period | $ | 17,901 |  | $ | 20,733 |  | $ | - | $ | 3,499 |  | 42,133
Provision (recapture) for acquired BBVAPR loans and lease losses accounted for under ASC 310-30 |  | 7,390 |  |  | (79) |  |  | - |  | - |  | 7,311
Allowance de-recognition |  | (83) |  |  | (3,571) |  |  | - |  | (363) |  | (4,017)
Balance at end of period | $ | 25,208 |  | $ | 17,083 |  | $ | - | $ | 3,136 |  | 45,427
| Six-Month Period Ended June 30, 2019
| 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 period | $ | 15,225 |  | $ | 20,641 |  | $ | - | $ | 6,144 |  | 42,010
Provision (recapture) for acquired BBVAPR loans and lease losses accounted for under ASC 310-30 |  | 10,123 |  |  | 771 |  |  | - |  | (2,314) |  | 8,580
Allowance de-recogntion |  | (140) |  |  | (4,329) |  |  | - |  | (694) |  | (5,163)
Balance at end of period | $ | 25,208 |  | $ | 17,083 |  | $ | - | $ | 3,136 |  | 45,427
| Quarter Ended June 30, 2018
| 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 period | $ | 14,331 |  | $ | 22,047 |  | $ | 18 |  | $ | 6,770 |  | $ | 43,166
Provision for acquired BBVAPR loans and lease losses accounted for under ASC 310-30 |  | 236 |  |  | 1,306 |  |  | - |  |  | - |  |  | 1,542
Allowance de-recognition |  | - |  |  | (334) |  |  | - |  |  | (198) |  |  | (532)
Balance at end of period | $ | 14,567 |  | $ | 23,019 |  | $ | 18 |  | $ | 6,572 |  | $ | 44,176
| Six-Month Period Ended June 30, 2018
| 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 period | $ | 14,085 |  | $ | 23,691 |  | $ | 18 |  | $ | 7,961 |  | $ | 45,755
Provision for acquired BBVAPR loans and lease losses accounted for under ASC 310-30 |  | 550 |  |  | 2,058 |  |  | - |  |  | (887) |  |  | 1,721
Allowance de-recognition |  | (68) |  |  | (2,730) |  |  | - |  |  | (502) |  |  | (3,300)
Balance at end of period | $ | 14,567 |  | $ | 23,019 |  | $ | 18 |  | $ | 6,572 |  | $ | 44,176
Allowance for Acquired Eurobank Loan Losses The changes in the allowance for loan and lease losses on acquired Eurobank loans for the quarters ended June 30, 2019 and 2018 were as follows:
| Quarter Ended June 30, 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 | $ | 15,110 |  | $ | 9,242 |  | $ | - |  | $ | 24,352
Provision (recapture) for loan and lease losses, net |  | 2,502 |  |  | (724) |  |  | - |  |  | 1,778
Allowance de-recognition |  | (399) |  | $ | (153) |  | $ | - |  |  | (552)
Balance at end of period | $ | 17,213 |  | $ | 8,365 |  | $ | - |  | $ | 25,578
| Six-Month Period Ended June 30, 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
Provision (recapture) for loan and lease losses, net |  | 2,300 |  |  | (1,174) |  |  | - |  |  | 1,126
Allowance de-recognition |  | (469) |  |  | (46) |  |  | (4) |  |  | (519)
Balance at end of period | $ | 17,213 |  | $ | 8,365 |  | $ | - |  | $ | 25,578
| Quarter Ended June 30, 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 | $ | 15,414 |  | $ | 9,992 |  | $ | 4 |  | $ | 25,410
Provision (recapture) for acquired Eurobank loan and lease losses, net |  | 605 |  |  | 60 |  |  | - |  |  | 665
Allowance de-recognition |  | (849) |  |  | (912) |  |  | - |  |  | (1,761)
Balance at end of period | $ | 15,170 |  | $ | 9,140 |  | $ | 4 |  | $ | 24,314
| Six-Month Period Ended June 30, 2018
| Loans secured by 1-4 Family Residential Properties |  | Commercial |  | Consumer |  | Total
| (In thousands)
Allowance for loan and lease losses for Eurobank loans: |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period | $ | 15,187 |  | $ | 9,983 |  | $ | 4 |  | $ | 25,174
Provision (recapture) for acquired Eurobank loan and lease losses, net |  | 784 |  |  | 21 |  |  | - |  |  | 805
Allowance de-recognition |  | (801) |  |  | (864) |  |  | - |  |  | (1,665)
Balance at end of period | $ | 15,170 |  | $ | 9,140 |  | $ | 4 |  | $ | 24,314

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- 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 + Details
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