LOANS RECEIVABLE | NOTE 5 - 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 March 31 , 2018 and December 31 , 2017 was as follows : March 31, December 31, 2018 2017 (In thousands) Originated and other loans and leases held for investment: Mortgage $ 682,564 $ 683,607 Commercial 1,346,404 1,307,261 Consumer 334,865 330,039 Auto and leasing 957,197 883,985 3,321,030 3,204,892 Allowance for loan and lease losses on originated and other loans and leases (96,832) (92,718) 3,224,198 3,112,174 Deferred loan costs, net 7,125 6,695 Total originated and other loans loans held for investment, net 3,231,323 3,118,869 Acquired loans: Acquired BBVAPR loans: Accounted for under ASC 310-20 (Loans with revolving feature and/or acquired at a premium) Commercial 4,222 4,380 Consumer 27,235 28,915 Auto 16,171 21,969 47,628 55,264 Allowance for loan and lease losses on acquired BBVAPR loans accounted for under ASC 310-20 (3,184) (3,862) 44,444 51,402 Accounted for under ASC 310-30 (Loans acquired with deteriorated credit quality, including those by analogy) Mortgage 526,089 532,053 Commercial 230,988 243,092 Consumer 932 1,431 Auto 35,006 43,696 793,015 820,272 Allowance for loan and lease losses on acquired BBVAPR loans accounted for under ASC 310-30 (43,166) (45,755) 749,849 774,517 Total acquired BBVAPR loans, net 794,293 825,919 Acquired Eurobank loans: Loans secured by 1-4 family residential properties 69,328 69,538 Commercial 52,418 53,793 Consumer 972 1,112 Total acquired Eurobank loans 122,718 124,443 Allowance for loan and lease losses on Eurobank loans (25,410) (25,174) Total acquired Eurobank loans, net 97,308 99,269 Total acquired loans, net 891,601 925,188 Total held for investment, net 4,122,924 4,044,057 Mortgage loans held-for-sale 10,505 12,272 Total loans, net $ 4,133,429 $ 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. At December 31 , 2017 , Oriental had $ 2.6 billion loans under the moratorium program. 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, a lthough 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 March 31 , 2018 , most of the loan morat oriums ha ve expired, and delinquency levels are returning to pre-hurricane levels . Originated and Other Loans and Leases Held for Investment Oriental’s originated and other loans held for investment are encompassed within four portfolio segments: mortga ge, commercial, consumer, and auto and leasing. The following tables present the aging of the recorded investment in gross originated and other loans held for investment a t March 31 , 2018 and December 31 , 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. March 31, 2018 Loans 90+ Days Past Due and 30-59 Days 60-89 Days 90+ Days Total Past Still Past Due Past Due Past Due Due Current Total Loans Accruing (In thousands) Mortgage Traditional (by origination year): Up to the year 2002 $ 168 $ 1,697 $ 3,696 $ 5,561 $ 39,752 $ 45,313 $ 197 Years 2003 and 2004 235 1,612 6,989 8,836 73,203 82,039 - Year 2005 - 1,235 3,303 4,538 38,610 43,148 68 Year 2006 78 2,486 5,069 7,633 53,279 60,912 - Years 2007, 2008 and 2009 - 2,075 7,683 9,758 57,173 66,931 336 Years 2010, 2011, 2012, 2013 205 1,422 8,346 9,973 112,977 122,950 459 Years 2014, 2015, 2016, 2017 and 2018 - 318 1,499 1,817 125,289 127,106 - 686 10,845 36,585 48,116 500,283 548,399 1,060 Non-traditional - 43 3,415 3,458 13,498 16,956 - Loss mitigation program 12,921 4,695 20,062 37,678 66,767 104,445 4,439 13,607 15,583 60,062 89,252 580,548 669,800 5,499 Home equity secured personal loans - - - - 249 249 - GNMA's buy-back option program - - 12,515 12,515 - 12,515 - 13,607 15,583 72,577 101,767 580,797 682,564 5,499 Commercial Commercial secured by real estate: Corporate - - - - 237,751 237,751 - Institutional - - - - 46,955 46,955 - Middle market 4,839 560 2,454 7,853 208,697 216,550 - Retail 939 640 9,113 10,692 231,981 242,673 - Floor plan - - - - 4,078 4,078 - Real estate - - - - 17,666 17,666 - 5,778 1,200 11,567 18,545 747,128 765,673 - Other commercial and industrial: Corporate - - - - 168,490 168,490 - Institutional - - - - 115,034 115,034 - Middle market 249 - 881 1,130 91,148 92,278 - Retail 759 140 919 1,818 176,225 178,043 - Floor plan - - 51 51 26,835 26,886 - 1,008 140 1,851 2,999 577,732 580,731 - 6,786 1,340 13,418 21,544 1,324,860 1,346,404 - March 31, 2018 Loans 90+ Days Past Due and 30-59 Days 60-89 Days 90+ Days Total Past Still Past Due Past Due Past Due Due Current Total Loans Accruing (In thousands) Consumer Credit cards $ 1,144 $ 61 $ 260 $ 1,465 $ 26,049 $ 27,514 $ - Overdrafts 22 14 42 78 168 246 - Personal lines of credit 125 67 50 242 1,791 2,033 - Personal loans 3,310 2,410 1,278 6,998 283,137 290,135 - Cash collateral personal loans 238 87 21 346 14,591 14,937 - 4,839 2,639 1,651 9,129 325,736 334,865 - Auto and leasing 45,003 16,555 13,594 75,152 882,045 957,197 - Total $ 70,235 $ 36,117 $ 101,240 $ 207,592 $ 3,113,438 $ 3,321,030 $ 5,499 December 31, 2017 Loans 90+ Days Past Due and 30-59 Days 60-89 Days 90+ Days Total Past Still Past Due Past Due Past Due Due Current Total Loans Accruing (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 2004 92 1,077 6,304 7,473 75,758 83,231 - Year 2005 101 383 3,348 3,832 40,669 44,501 68 Year 2006 242 604 5,971 6,817 55,966 62,783 66 Years 2007, 2008 and 2009 358 1,258 8,561 10,177 58,505 68,682 577 Years 2010, 2011, 2012, 2013 233 978 7,393 8,604 116,674 125,278 1,202 Years 2014, 2015, 2016 and 2017 - 75 1,649 1,724 121,194 122,918 - 1,112 5,313 36,763 43,188 510,345 553,533 2,380 Non-traditional - 326 3,543 3,869 14,401 18,270 - Loss mitigation program 7,233 3,331 18,923 29,487 73,793 103,280 4,981 8,345 8,970 59,229 76,544 598,539 675,083 7,361 Home equity secured personal loans - - - - 256 256 - GNMA's buy-back option program - - 8,268 8,268 - 8,268 - 8,345 8,970 67,497 84,812 598,795 683,607 7,361 Commercial Commercial secured by real estate: Corporate - - - - 235,426 235,426 - Institutional - - 118 118 44,648 44,766 - Middle market 765 - 3,527 4,292 225,649 229,941 - Retail 352 936 9,695 10,983 235,084 246,067 - Floor plan - - - - 3,998 3,998 - Real estate - - - - 17,556 17,556 - 1,117 936 13,340 15,393 762,361 777,754 - Other commercial and industrial: Corporate - - - - 170,015 170,015 - Institutional - - - - 125,591 125,591 - Middle market - - 881 881 84,482 85,363 - Retail 455 103 1,616 2,174 111,078 113,252 - Floor plan 9 - 51 60 35,226 35,286 - 464 103 2,548 3,115 526,392 529,507 - 1,581 1,039 15,888 18,508 1,288,753 1,307,261 - December 31, 2017 Loans 90+ Days Past Due and 30-59 Days 60-89 Days 90+ Days Total Past Still Past Due Past Due Past Due Due Current Total Loans Accruing (In thousands) Consumer Credit cards $ 246 $ 130 $ 1,227 $ 1,603 $ 26,827 $ 28,430 $ - Overdrafts 20 6 31 57 157 214 - Personal lines of credit 259 54 87 400 1,820 2,220 - Personal loans 3,778 1,494 223 5,495 278,982 284,477 - Cash collateral personal loans 103 59 312 474 14,224 14,698 - 4,406 1,743 1,880 8,029 322,010 330,039 - Auto and leasing 21,760 10,399 4,232 36,391 847,594 883,985 - Total $ 36,092 $ 22,151 $ 89,497 $ 147,740 $ 3,057,152 $ 3,204,892 $ 7,361 At both March 31 , 2018 and December 31 , 2017 , Oriental had a carrying balance of $ 94.9 million 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 r ate 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 t he 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 3 10-20, 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 ar e 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 re moved 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 March 31 , 2018 and December 31 , 2017 , by class of loans: March 31, 2018 Loans 90+ Days Past Due and 30-59 Days 60-89 Days 90+ Days Total Past Still Past Due Past Due Past Due Due Current Total Loans Accruing (In thousands) Commercial Commercial secured by real estate Retail $ - $ - $ 119 $ 119 $ - $ 119 $ - Floor plan - - 921 921 363 1,284 - - - 1,040 1,040 363 1,403 - Other commercial and industrial Retail 161 16 46 223 2,594 2,817 - Floor plan - - 2 2 - 2 - 161 16 48 225 2,594 2,819 - 161 16 1,088 1,265 2,957 4,222 - Consumer Credit cards 767 105 270 1,142 23,719 24,861 - Personal loans 84 7 61 152 2,222 2,374 - 851 112 331 1,294 25,941 27,235 - Auto 798 402 154 1,354 14,817 16,171 - Total $ 1,810 $ 530 $ 1,573 $ 3,913 $ 43,715 $ 47,628 $ - December 31, 2017 Loans 90+ Days Past Due and 30-59 Days 60-89 Days 90+ Days Total Past Still Past Due Past Due Past Due Due Current Total Loans Accruing (In thousands) Commercial Commercial secured by real estate Retail $ - $ - $ 119 $ 119 $ - $ 119 $ - Floor plan - - 928 928 393 1,321 - - - 1,047 1,047 393 1,440 - Other commercial and industrial Retail 36 - 221 257 2,681 2,938 - Floor plan - - 2 2 - 2 - 36 - 223 259 2,681 2,940 - 36 - 1,270 1,306 3,074 4,380 - Consumer Credit cards 208 127 1,310 1,645 24,822 26,467 - Personal loans 139 61 45 245 2,203 2,448 - 347 188 1,355 1,890 27,025 28,915 - Auto 602 248 179 1,029 20,940 21,969 - 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 March 31 , 2018 and December 31 , 2017 is as follows: March 31, December 31, 2018 2017 (In thousands) Contractual required payments receivable: $ 1,444,070 $ 1,481,616 Less: Non-accretable discount 354,590 352,431 Cash expected to be collected 1,089,480 1,129,185 Less: Accretable yield 296,465 308,913 Carrying amount, gross 793,015 820,272 Less: allowance for loan and lease losses 43,166 45,755 Carrying amount, net $ 749,849 $ 774,517 At March 31 , 2018 and December 31 , 2017 , Oriental had $ 50.2 million an d $ 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 secure d municipal general obligations. T he following tables describe the accretable yield and non-accretable discount activity of acquired BBVAPR loans accounted for under ASC 310-30 for the quarters ended March 31 , 2018 and 2017 Quarter Ended March 31, 2018 Mortgage Commercial Auto Consumer Total (In thousands) Accretable Yield Activity: Balance at beginning of period $ 258,498 $ 46,764 $ 2,766 $ 885 $ 308,913 Accretion (7,073) (3,685) (869) (256) (11,883) Change in expected cash flows - 3,156 426 58 3,640 Transfer (to) non-accretable discount (3,046) (524) (597) (38) (4,205) Balance at end of period $ 248,379 $ 45,711 $ 1,726 $ 649 $ 296,465 Non-Accretable Discount Activity: Balance at beginning of period $ 299,501 $ 10,596 $ 23,050 $ 19,284 $ 352,431 Change in actual and expected losses (1,440) (389) (204) (13) (2,046) Transfer from accretable yield 3,046 524 597 38 4,205 Balance at end of period $ 301,107 $ 10,731 $ 23,443 $ 19,309 $ 354,590 Quarter Ended March 31, 2017 Mortgage Commercial Auto Consumer Total (In thousands) Accretable Yield Activity: Balance at beginning of period $ 292,115 $ 50,366 $ 8,538 $ 3,682 $ 354,701 Accretion (7,890) (4,981) (2,147) (602) (15,620) Change in actual and expected losses 1 198 52 36 287 Transfer (to) from non-accretable discount (7,409) 1,319 140 (58) (6,008) Balance at end of period $ 276,817 $ 46,902 $ 6,583 $ 3,058 $ 333,360 Non-Accretable Discount Activity: Balance at beginning of period $ 305,615 $ 16,965 $ 22,407 $ 18,120 $ 363,107 Change in actual and expected losses (3,031) (843) 297 (19) (3,596) Transfer from (to) accretable yield 7,409 (1,319) (140) 58 6,008 Balance at end of period $ 309,993 $ 14,803 $ 22,564 $ 18,159 $ 365,519 Acquired Eurobank Loans The carrying amount of acquired Eurobank loans at March 31 , 2018 and December 31 , 2017 is as follows: March 31 December 31 2018 2017 (In thousands) Contractual required payments receivable: $ 174,859 $ 179,960 Less: Non-accretable discount 5,547 5,845 Cash expected to be collected 169,312 174,115 Less: Accretable yield 46,594 49,672 Carrying amount, gross 122,718 124,443 Less: Allowance for loan and lease losses 25,410 25,174 Carrying amount, net $ 97,308 $ 99,269 The following tables describe the accretable yield and non-accretable discount activity of acquired Eurobank loans for the quarter s ended March 31 , 2018 and 2017 : Quarter Ended March 31, 2018 Loans Secured by 1-4 Family Residential Properties Commercial Construction & Development Secured by 1-4 Family Residential Properties Leasing Consumer Total (In thousands) Accretable Yield Activity: Balance at beginning of period $ 41,474 $ 6,751 $ 1,447 $ - $ - $ 49,672 Accretion (1,605) (1,606) - (34) (96) (3,341) Change in expected cash flows (144) 898 - (63) 178 869 Transfer (to) from non-accretable discount (103) (427) (91) 97 (82) (606) Balance at end of period $ 39,622 $ 5,616 $ 1,356 $ - $ - $ 46,594 Non-Accretable Discount Activity: Balance at beginning of period $ 4,576 $ 276 $ 758 $ - $ 235 $ 5,845 Change in actual and expected losses (200) (703) - 97 (98) (904) Transfer from (to) accretable yield 103 427 91 (97) 82 606 Balance at end of period $ 4,479 $ - $ 849 $ - $ 219 $ 5,547 Quarter Ended March 31, 2017 Loans Secured by 1-4 Family Residential Properties Commercial Construction & Development Secured by 1-4 Family Residential Properties Leasing Consumer Total (In thousands) Accretable Yield Activity: Balance at beginning of period $ 45,839 $ 16,475 $ 2,194 - $ - $ 64,508 Accretion (1,904) (4,510) (38) - (158) (6,610) Change in actual and expected losses 81 778 37 (143) 310 1,063 Transfer from (to) non-accretable discount 681 - (322) 143 (152) 350 Balance at end of period $ 44,697 $ 12,743 $ 1,871 $ - $ - $ 59,311 Non-Accretable Discount Activity: Balance at beginning of period $ 8,441 $ 3,880 $ 11 $ - $ 8 $ 12,340 Change in actual and expected losses (334) (1,409) - 143 (154) (1,754) Transfer (to) from accretable yield (681) - 322 (143) 152 (350) Balance at end of period $ 7,426 $ 2,471 $ 333 $ - $ 6 $ 10,236 Non-accrual Loans The following table presents the recorded investment in loans in non-accrual status by class of loans as of March 31 , 2018 and December 31 , 2017 : March 31, December 31, 2018 2017 (In thousands) Originated and other loans and leases held for investment Mortgage Traditional (by origination year): Up to the year 2002 $ 3,394 $ 3,070 Years 2003 and 2004 6,852 6,380 Year 2005 3,235 3,280 Year 2006 5,069 5,905 Years 2007, 2008 and 2009 7,347 7,984 Years 2010, 2011, 2012, 2013 7,652 6,259 Years 2014, 2015, 2016 and 2017 1,383 1,649 34,932 34,527 Non-traditional 3,415 3,543 Loss mitigation program 17,456 16,783 55,803 54,853 Commercial Commercial secured by real estate Institutional 10,548 118 Middle market 10,128 11,394 Retail 16,638 14,438 37,314 25,950 Other commercial and industrial Middle market 6,829 6,323 Retail 2,850 2,929 Floor plan 51 51 9,730 9,303 47,044 35,253 Consumer Credit cards 260 1,227 Overdrafts 42 31 Personal lines of credit 63 102 Personal loans 1,877 900 Cash collateral personal loans 21 312 2,263 2,572 Auto and leasing 13,594 4,232 Total non-accrual originated loans $ 118,704 $ 96,910 March 31, December 31, 2018 2017 (In thousands) Acquired BBVAPR loans accounted for under ASC 310-20 Commercial Commercial secured by real estate Retail $ 119 $ 119 Floor plan 921 928 1,040 1,047 Other commercial and industrial Retail 46 221 Floor plan 2 2 48 223 1,088 1,270 Consumer Credit cards 270 1,310 Personal loans 61 45 331 1,355 Auto 154 179 Total non-accrual acquired BBVAPR loans accounted for under ASC 310-20 1,573 2,804 Total non-accrual loans $ 120,277 $ 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 1 2 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 fr om the impairment analysis. At March 31 , 2018 and December 31 , 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 $ 98.2 million and $ 109.2 million, respectively, as they are performing under their new term s. At March 31 , 2018 and December 31 , 2017 , loans that are current in their monthly payments, but placed in non-accrual due to credit deterioration amounted to $ 28.0 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 $ 68.6 million and $ 72 .3 million at March 31 , 2018 and December 31 , 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 restr ucturings . The allowance for loan and lease losses for these impaired commercial loans amounted to $ 13.3 million and $ 1 0 . 6 million at March 31 , 2018 and December 31 , 2017 , respectively. The total investment in impaired mortgage loans that were individu ally evaluated for impairment was $ 84.3 million and $ 85.4 million at March 31 , 2018 and December 31 , 2017 , respectively. Impairment on mortgage loans assessed as troubled-debt restructurings was measured using the present value of cash flows. The allow ance for loan losses for these impaired mortgage loans amounted to $ 9.0 million and $ 9.1 million at March 31 , 2018 and December 31 , 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 March 31 , 2018 and 2017 are as follows: March 31, 2018 Unpaid Recorded Related Principal Investment Allowance Coverage (In thousands) Impaired loans with specific allowance: Commercial $ 57,169 $ 52,049 $ 13,274 26% Residential impaired and troubled-debt restructuring 94,405 84,283 9,022 11% Impaired loans with no specific allowance: Commercial 19,020 15,784 N/A 0% Total investment in impaired loans $ 170,594 $ 152,116 $ 22,296 15% December 31, 2017 Unpaid Recorded Related Principal Investment Allowance Coverage (In thousands) Impaired loans with specific allowance: Commercial $ 57,922 $ 52,585 $ 10,573 20% Residential impaired and troubled-debt restructuring 94,971 85,403 9,121 11% Impaired loans with no specific allowance Commercial 22,022 18,953 N/A 0% Total investment in impaired loans $ 174,915 $ 156,941 $ 19,694 13% 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 March 31 , 2018 and December 31 , 2017 are as follows: March 31, 2018 Unpaid Recorded Related Principal Investment Allowance Coverage (In thousands) Impaired loans with specific allowance Commercial $ 926 $ 747 $ 21 3% Impaired loans with no specific allowance Commercial $ - $ - N/A 0% Total investment in impaired loans $ 926 $ 747 $ 21 3% December 31, 2017 Unpaid Recorded Specific Principal Investment Allowance Coverage (In thousands) Impaired loans with specific allowance Commercial $ 926 $ 747 $ 20 3% Impaired loans with no specific allowance Commercial $ - $ - N/A 0% Total investment in impaired loans $ 926 $ 747 $ 20 3% 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 March 31 , 2018 and December 31 , 2017 are as follows: March 31, 2018 Coverage Unpaid Recorded to Recorded Principal Investment Allowance Investment (In thousands) Impaired loan pools with specific allowance: Mortgage $ 536,514 $ 526,089 $ 14,331 3% Commercial 239,976 229,216 22,045 10% Consumer 1,892 932 21 2% Auto 35,560 35,006 6,769 19% Total investment in impaired loan pools $ 813,942 $ 791,243 $ 43,166 5% December 31 , 2017 Coverage Unpaid Recorded to Recorded Principal Investment Allowance Investment (In thousands) Impaired loan pools with specific allowance: Mortgage $ 547,064 $ 532,052 $ 14,085 3% Commercial 250,451 241,124 23,691 10% Consumer 2,468 1,431 18 1% Auto 43,440 43,696 7,961 18% Total investment in impaired loan pools $ 843,423 $ 818,303 $ 45,755 6% 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 March 31 , 2018 and December 31 , 2017 are as follows : March 31, 2018 Coverage Unpaid Recorded to Recorded Principal Investment Allowance Investment (In thousands) Impaired loan pools with specific allowance: Loans secured by 1-4 family residential properties $ 79,633 $ 69,328 $ 15,414 22% Commercial 56,087 52,418 9,992 19% Consumer 14 4 4 100% Total investment in impaired loan pools $ 135,734 $ 121,750 $ 25,410 21% December 31, 2017 Coverage Unpaid Recorded Specific to Recorded Principal Investment Allowance Investment (In thousands) Impaired loan pools with specific allowance Loans secured by 1-4 family residential properties $ 81,132 $ 69,538 $ 15,187 22% Commercial 58,099 53,793 9,982 19% Consumer 15 4 5 125% Total investment in impaired loan pools $ 139,246 $ 123,335 $ 25,174 20% 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 quarte rs ended March 31 , 2018 and 2017 : Quarter Ended March 31, 2018 2017 Interest Income Recognized Average Recorded Investment Interest Income Recognized Average Recorded Investment (In thousands) Originated and other loans held for investment: Impaired loans with specific allowance Commercial $ 263 $ 51,331 $ 125 $ 12,809 Residential troubled-debt restructuring 720 84,754 766 89,543 Impaired loans with no specific allowance Commercial 176 17,764 532 43,895 1,159 153,849 1,423 146,247 Acquired loans accounted for under ASC 310-20: Impaired loans with specific allowance Commercial - 747 - 917 Total interest income from impaired loans $ 1,159 $ 154,596 $ 1,423 $ 147,164 Modifications The following tables present the troubled-debt restructurings in all loan portfolios during the quarters ended March 31 , 2018 and 2017 . Quarter Ended March 31, 2018 Number of contracts Pre-Modification Outstanding Recorded Investment Pre-Modification Weighted Average Rate Pre-Modification Weighted Average Term (in Months) Post-Modification Outstanding Recorded Investment Post-Modification Weighted Average Rate Post-Modification Weighted Average Term (in Months) (Dollars in thousands) Mortgage 38 $ 5,747 5.69% 397 $ 5,339 5.08% 363 Commercial 3 1,559 4.75% 72 1,555 4.75% 72 Consumer 28 354 15.75% 47 355 11.60% 69 Quarter Ended March 31, 2017 Number of contracts Pre-Modification Outstanding Recorded Investment Pre-Modification Weighted Average Rate Pre-Modification Weighted Average Term (in Months) Post-Modification Outstanding Recorded Investment Post-Modification Weighted Average Rate Post-Modification Weighted Average Term (in Months) (Dollars in thousands) Mortgage 32 $ 4,004 6.53% 391 $ 4,015 4.86% 387 Commercial 9 1,218 7.29% 55 1,219 5.93% 64 Consumer 25 392 10.94% 64 430 10.33% 74 Auto 3 45 8.90% 75 47 11.88% 39 The following table presents troubled-debt restructurings for which there was a payment default during the twelve month periods ended March 31, 2018 and 2017 : Twelve Month Period Ended March 31, 2018 2017 Number of Contracts Recorded Investment Number of Contracts Recorded Investment (Dollars in thousands) Mortgage 36 $ 3,310 14 $ 2,051 Commercial 4 $ 398 1 $ 50 Consumer 23 $ 243 15 $ 188 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 s ource 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” h ave 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 . Substanda rd: 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 liquidatio n 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 substanda rd, 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 worthl ess 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 March 31 , 2018 and December 31 , 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: March 31, 2018 Risk Ratings Balance Special Outstanding Pass Mention Substandard Doubtful Loss (In thousands) Commercial - originated and other loans held for investment Commercial secured by real estate: Corporate $ 237,751 $ 203,090 $ 32,790 $ 1,871 $ - $ - Institutional 46,955 36,206 - 10,749 - - Middle market 216,550 180,511 13,389 22,650 - - Retail 242,673 213,262 4,178 25,233 - - Floor plan 4,078 2,771 - 1,307 - - Real estate 17,666 17,666 - - - - 765,673 653,506 50,357 61,810 - - Other commercial and industrial: Corporate 168,490 156,581 11,909 - - - Institutional 115,034 115,034 - - - - Middle market 92,278 78,493 5,425 8,360 - - Retail 178,043 174,727 333 2,983 - - Floor plan 26,886 24,439 2,396 51 - - 580,731 549,274 20,063 11,394 - - Total 1,346,404 1,202,780 70,420 73,204 - - Commercial - acquired loans (under ASC 310-20) Commercial secured by real estate: Retail 119 - - 119 - - Floor plan 1,284 363 - 921 - - 1,403 363 - 1,040 - - Other commercial and industrial: Retail 2,817 2,812 - 5 - - Floor plan 2 - - 2 - - 2,819 2,812 - 7 - - Total 4,222 3,175 - 1,047 - - March 31, 2018 Risk Ratings Balance Special Outstanding Pass Mention Substandard Doubtful Loss (In thousands) Retail - originated and other loans held for investment Mortgage: Traditional 548,399 511,814 - 36,585 - - Non-traditional 16,956 13,541 - 3,415 - - Loss mitigation program 104,445 84,383 - 20,062 - - Home equity secured personal loans 249 249 - - - - GNMA's buy-back option program 12,515 - - 12,515 - - 682,564 609,987 - 72,577 - - Consumer: Credit cards 27,514 27,254 - 260 - - Overdrafts 246 168 - 78 - - Unsecured personal lines of credit 2,033 1,983 - 50 - - Unsecured personal loans 290,135 288,857 - 1,278 - - Cash collateral personal loans 14,937 14,916 - 21 - - 334,865 333,178 - 1,687 - - Auto and Leasing 957,197 943,603 - 13,594 - - Total 1,974,626 1,886,768 - 87,858 - - Retail - acquired loans (accounted for under ASC 310-20) Consumer: Credit cards 24,861 24,591 - 270 - - Personal loans 2,374 2,313 - 61 - - 27,235 26,904 - 331 - - Auto 16,171 16,017 - 154 - - 43,406 42,921 - 485 - - $ 3,368,658 $ |