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Allowance for Loan and Lease Losses | 12 Months Ended
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Dec. 31, 2019
Allowance for Loan and Lease Losses [Abstract] |
Allowance For Loan and Lease Losses | NOTE 7 – ALLOWANCE FO R LOAN AND LEASE LOSSES The composition of Oriental’s allowance for loan and lease losses at December 31, 2019 and 2018 was as follows:
| December 31,
| 2019 |  | 2018
| (In thousands)
Allowance for loans and lease losses: |  |  |  |  |
Originated and other loans and leases held for investment: |  |  |  |  |
Mortgage | $ | 8,727 |  | $ | 19,783
Commercial |  | 25,989 |  |  | 30,326
Consumer |  | 16,882 |  |  | 15,571
Auto and leasing |  | 31,873 |  |  | 29,508
Total allowance for originated and other loans and lease losses |  | 83,471 |  |  | 95,188
Acquired BBVAPR loans: |  |  |  |  |
Accounted for under ASC 310-20 (Loans with revolving feature and/or |  |  |  |  |
acquired at a premium) |  |  |  |  |
Commercial |  | 4 |  |  | 22
Consumer |  | 1,564 |  |  | 1,905
Auto |  | 5 |  |  | 135
|  | 1,573 |  |  | 2,062
Accounted for under ASC 310-30 (Loans acquired with deteriorated |  |  |  |  |
credit quality, including those by analogy) |  |  |  |  |
Mortgage |  | 9,376 |  |  | 15,225
Commercial |  | 6,713 |  |  | 20,641
Auto |  | 947 |  |  | 6,144
|  | 17,036 |  |  | 42,010
Total allowance for acquired BBVAPR loans and lease losses |  | 18,609 |  |  | 44,072
Acquired Eurobank loans: |  |  |  |  |
Mortgage |  | 12,279 |  |  | 15,382
Commercial |  | 2,180 |  |  | 9,585
Consumer |  | - |  |  | 4
Total allowance for acquired Eurobank loan and lease losses |  | 14,459 |  |  | 24,971
Total allowance for loan and lease losses | $ | 116,539 |  | $ | 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. Whi le 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 a ccounted 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. Loans acquired in the Scotiabank PR & USVI Acquisition accounted for under ASC 310-30 were recognized at fair value as of December 31, 201 9, which included the impact of expected credit losses, and therefore, no allowance for credit losses was recorded a t acquisition date. To the extent credit deterioration occurs after the date of acquisition, Oriental would record an allowance for loan and lease losses. Management determined that there was no need to record an allowance for loan and lease losses on loan s acquired in the Scotiabank PR & USVI Acquisition accounted for under ASC 310-30 as of December 31, 201 9. Considering the short period elapsed from the acquisition date, Oriental does not believe that the difference between cash flows expected to be colle cted on the loans acquired in the Scotiabank PR & USVI Acquisition accounted for under ASC 310-30 and those anticipated at December 31, 201 9 need further assessment. 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:
| Year Ended December 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 year | $ | 19,783 |  | $ | 30,326 |  | $ | 15,571 |  | $ | 29,508 |  | $ | 95,188
Charge-offs |  | (18,564) |  |  | (12,073) |  |  | (18,910) |  |  | (47,278) |  |  | (96,825)
Recoveries |  | 1,533 |  |  | 1,104 |  |  | 2,014 |  |  | 18,694 |  |  | 23,345
Provision for loan and lease losses |  | 5,975 |  |  | 6,632 |  |  | 18,207 |  |  | 30,949 |  |  | 61,763
Balance at end of year | $ | 8,727 |  | $ | 25,989 |  | $ | 16,882 |  | $ | 31,873 |  | $ | 83,471
| Year Ended December 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 year | $ | 20,439 |  | $ | 30,258 |  | $ | 16,454 |  | $ | 25,567 |  | $ | 92,718
Charge-offs |  | (5,297) |  |  | (6,782) |  |  | (17,629) |  |  | (42,685) |  |  | (72,393)
Recoveries |  | 1,047 |  |  | 654 |  |  | 1,757 |  |  | 19,344 |  |  | 22,802
Provision for originated and other loan and lease losses |  | 3,594 |  |  | 6,196 |  |  | 14,989 |  |  | 27,282 |  |  | 52,061
Balance at end of year | $ | 19,783 |  | $ | 30,326 |  | $ | 15,571 |  | $ | 29,508 |  | $ | 95,188
| Year Ended December 31, 2017
| Mortgage |  | Commercial |  | Consumer |  | Auto and Leasing |  | Total
| (In thousands)
Allowance for loan and lease losses for originated and other loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of year | $ | 17,344 |  | $ | 8,995 |  | $ | 13,067 |  | $ | 19,463 |  | $ | 58,869
Charge-offs |  | (6,623) |  |  | (7,684) |  |  | (13,641) |  |  | (33,908) |  |  | (61,856)
Recoveries |  | 585 |  |  | 1,281 |  |  | 1,209 |  |  | 12,314 |  |  | 15,389
Provision for originated and other loan and lease losses |  | 9,133 |  |  | 27,666 |  |  | 15,819 |  |  | 27,698 |  |  | 80,316
Balance at end of year | $ | 20,439 |  | $ | 30,258 |  | $ | 16,454 |  | $ | 25,567 |  | $ | 92,718
| December 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 | $ | 6,874 |  | $ | 8,215 |  | $ | - |  | $ | - |  | $ | 15,089
Collectively evaluated for impairment |  | 1,853 |  |  | 17,774 |  |  | 16,882 |  |  | 31,873 |  |  | 68,382
Total ending allowance balance | $ | 8,727 |  | $ | 25,989 |  | $ | 16,882 |  | $ | 31,873 |  | $ | 83,471
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 71,196 |  | $ | 60,450 |  | $ | - |  | $ | - |  | $ | 131,646
Collectively evaluated for impairment |  | 506,220 |  |  | 1,607,044 |  |  | 361,638 |  |  | 1,277,732 |  |  | 3,752,634
Total ending loan balance | $ | 577,416 |  | $ | 1,667,494 |  | $ | 361,638 |  | $ | 1,277,732 |  | $ | 3,884,280
| 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:
| Year Ended December 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 year | $ | 22 |  | $ | 1,905 |  | $ | 135 |  | $ | 2,062
Charge-offs |  | (123) |  |  | (1,525) |  |  | (220) |  |  | (1,868)
Recoveries |  | 6 |  |  | 353 |  |  | 250 |  |  | 609
Provision (recapture) for acquired BBVAPR loan and lease losses accounted for under ASC 310-20 |  | 99 |  |  | 831 |  |  | (160) |  |  | 770
Balance at end of year | $ | 4 |  | $ | 1,564 |  | $ | 5 |  | $ | 1,573
| Year Ended 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: |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of year | $ | 42 |  | $ | 3,225 |  | $ | 595 |  | $ | 3,862
Charge-offs |  | (6) |  |  | (2,459) |  |  | (372) |  |  | (2,837)
Recoveries |  | 23 |  |  | 480 |  |  | 831 |  |  | 1,334
(Recapture) provision for acquired loan and lease losses accounted for under ASC 310-20 |  | (37) |  |  | 659 |  |  | (919) |  |  | (297)
Balance at end of year | $ | 22 |  | $ | 1,905 |  | $ | 135 |  | $ | 2,062
| Year Ended December 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 year | $ | 169 |  | $ | 3,028 |  | $ | 1,103 |  |  | $ | 4,300
Charge-offs |  | (132) |  |  | (3,048) |  |  | (976) |  |  |  | (4,156)
Recoveries |  | 5 |  |  | 446 |  |  | 1,420 |  |  |  | 1,871
Provision (recapture) for acquired loan and lease losses accounted for under ASC 310-20 |  | - |  |  | 2,799 |  |  | (952) |  |  |  | 1,847
Balance at end of year | $ | 42 |  | $ | 3,225 |  | $ | 595 |  |  | $ | 3,862
| December 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 | $ | 2 |  | $ | - |  | $ | - |  | $ | 2
Collectively evaluated for impairment |  | 2 |  |  | 1,564 |  |  | 5 |  |  | 1,571
Total ending allowance balance | $ | 4 |  | $ | 1,564 |  | $ | 5 |  | $ | 1,573
Loans: |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 678 |  | $ | - |  | $ | - |  | $ | 678
Collectively evaluated for impairment |  | 1,463 |  |  | 20,794 |  |  | 135 |  |  | 22,392
Total ending loan balance | $ | 2,141 |  | $ | 20,794 |  | $ | 135 |  | $ | 23,070
| 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 loan grading s, among other assumpti ons. 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 and third quarter of 2019, Oriental decided to sell mostly non-performing loans increasing the provision of acquired BBVAPR loans accounted under ASC 310-30 by $20.8 million and $8.7 million, respectively. The following tables present the activity in our allowance for loan losses and related recorded investment of th e acquired BBVAPR loan portfolio accounted for under ASC 310-30 for the periods indicated:
| Year Ended December 31, 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 year | $ | 15,225 |  | $ | 20,641 |  | $ | - | $ | 6,144 |  | 42,010
Provision (recapture) for acquired BBVAPR loans and lease losses accounted for under ASC 310-30 |  | 20,115 |  |  | 14,719 |  |  | - |  | (2,928) |  | 31,906
Allowance de-recognition |  | (25,964) |  |  | (28,647) |  |  | - |  | (2,269) |  | (56,880)
Balance at end of year | $ | 9,376 |  | $ | 6,713 |  | $ | - | $ | 947 |  | 17,036
| Year Ended December 31, 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 year | $ | 14,085 |  | $ | 23,691 |  | $ | 18 |  | $ | 7,961 |  | $ | 45,755
Provision (recapture) for acquired BBVAPR loans and lease losses accounted for under ASC 310-30 |  | 1,331 |  |  | 1,360 |  |  | (18) |  |  | (887) |  |  | 1,786
Allowance de-recognition |  | (191) |  |  | (4,410) |  |  | - |  |  | (930) |  |  | (5,531)
Balance at end of year | $ | 15,225 |  | $ | 20,641 |  | $ | - |  | $ | 6,144 |  | $ | 42,010
| Year Ended December 31, 2017
| 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 | $ | 2,682 |  | $ | 23,452 |  | $ | - |  | $ | 4,922 |  | $ | 31,056
Provision for acquired BBVAPR loans and lease losses accounted for under ASC 310-30 |  | 11,497 |  |  | 9,758 |  |  | 18 |  |  | 3,408 |  |  | 24,681
Allowance de-recognition |  | (94) |  |  | (9,519) |  |  | - |  |  | (369) |  |  | (9,982)
Balance at end of year | $ | 14,085 |  | $ | 23,691 |  | $ | 18 |  | $ | 7,961 |  | $ | 45,755
Allowance for Acquired Eurobank Loan Losses The changes in the allowance for loan and lease losses on acquired Eurobank loans for the years ended December 31, 2019, 2018 and 2017 were as follows:
| Year Ended December 31, 2019
| Mortgage |  | Commercial |  | Consumer |  | Total
| (In thousands)
Allowance for loan and lease losses for acquired Eurobank loans: |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of year | $ | 15,382 |  | $ | 9,585 |  | $ | 4 |  | $ | 24,971
Provision (recapture) for loan and lease losses |  | 3,588 |  |  | (1,235) |  |  | - |  |  | 2,353
Allowance de-recognition |  | (6,691) |  | $ | (6,170) |  | $ | (4) |  |  | (12,865)
Balance at end of year | $ | 12,279 |  | $ | 2,180 |  | $ | - |  | $ | 14,459
| Year Ended December 31, 2018
| Mortgage |  | Commercial |  | Consumer |  | Total
| (In thousands)
Allowance for loan and lease losses for acquired Eurobank loans: |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of year | $ | 15,187 |  | $ | 9,983 |  | $ | 4 |  | $ | 25,174
Provision for acquired Eurobank loan and lease losses |  | 1,806 |  |  | 761 |  |  | - |  |  | 2,567
Allowance de-recognition |  | (1,611) |  |  | (1,159) |  |  | - |  |  | (2,770)
Balance at end of year | $ | 15,382 |  | $ | 9,585 |  | $ | 4 |  | $ | 24,971
| Year Ended December 31, 2017
| 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 year | $ | 11,947 |  | $ | 9,328 |  | $ | 6 |  | $ | 21,281
Provision for acquired Eurobank loan and lease losses |  | 5,045 |  |  | 1,680 |  |  | - |  |  | 6,725
Allowance de-recognition |  | (1,805) |  |  | (1,025) |  |  | (2) |  |  | (2,832)
Balance at end of year | $ | 15,187 |  | $ | 9,983 |  | $ | 4 |  | $ | 25,174

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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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