Loans | NOTE 4 - 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 , 2019 and December 31 , 2018 was as follows : March 31, December 31, 2019 2018 (In thousands) Originated and other loans and leases held for investment: Mortgage $ 651,423 $ 668,809 Commercial 1,569,551 1,597,588 Consumer 350,543 348,980 Auto and leasing 1,167,482 1,129,695 3,738,999 3,745,072 Allowance for loan and lease losses on originated and other loans and leases (94,035) (95,188) 3,644,964 3,649,884 Deferred loan costs, net 8,254 7,740 Total originated and other loans held for investment, net 3,653,218 3,657,624 Acquired loans: Acquired BBVAPR loans: Accounted for under ASC 310-20 (Loans with revolving feature and/or acquired at a premium) Commercial 2,405 2,546 Consumer 22,768 23,988 Auto 2,336 4,435 27,509 30,969 Allowance for loan and lease losses on acquired BBVAPR loans accounted for under ASC 310-20 (1,968) (2,062) 25,541 28,907 Accounted for under ASC 310-30 (Loans acquired with deteriorated credit quality, including those by analogy) Mortgage 484,578 492,890 Commercial 176,908 182,319 Auto 9,866 14,403 671,352 689,612 Allowance for loan and lease losses on acquired BBVAPR loans accounted for under ASC 310-30 (42,133) (42,010) 629,219 647,602 Total acquired BBVAPR loans, net 654,760 676,509 Acquired Eurobank loans: Loans secured by 1-4 family residential properties 62,649 63,392 Commercial 46,588 47,826 Consumer 856 846 Total acquired Eurobank loans 110,093 112,064 Allowance for loan and lease losses on Eurobank loans (24,352) (24,971) Total acquired Eurobank loans, net 85,741 87,093 Total acquired loans, net 740,501 763,602 Total held for investment, net 4,393,719 4,421,226 Mortgage loans held-for-sale 7,682 10,368 Total loans, net $ 4,401,401 $ 4,431,594 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 t ables below present the aging of the recorded investment in gross originated and other loans held for investment a t March 31 , 2019 and December 31 , 2018 , by class of loans. Mortgage loans past due include delinquent loans in the GNMA buy-back option program. Servicers of loa ns 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, 2019 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 $ 243 $ 972 $ 2,695 $ 3,910 $ 35,619 $ 39,529 $ 164 Years 2003 and 2004 144 2,715 4,934 7,793 66,079 73,872 - Year 2005 86 1,668 3,098 4,852 33,355 38,207 - Year 2006 228 1,658 4,729 6,615 47,844 54,459 - Years 2007, 2008 and 2009 - 810 5,832 6,642 51,783 58,425 55 Years 2010, 2011, 2012, 2013 286 722 7,001 8,009 103,092 111,101 307 Years 2014, 2015, 2016, 2017 and 2018 - 707 1,844 2,551 139,629 142,180 - 987 9,252 30,133 40,372 477,401 517,773 526 Non-traditional - 364 2,617 2,981 10,225 13,206 - Loss mitigation program 11,639 4,533 19,026 35,198 72,059 107,257 1,645 12,626 14,149 51,776 78,551 559,685 638,236 2,171 Home equity secured personal loans - - 9 9 236 245 - GNMA's buy-back option program - - 12,942 12,942 - 12,942 - 12,626 14,149 64,727 91,502 559,921 651,423 2,171 Commercial Commercial secured by real estate: Corporate - - - - 272,698 272,698 - Institutional - - 1,167 1,167 67,759 68,926 - Middle market 9,966 - 6,510 16,476 189,673 206,149 - Retail 593 522 8,036 9,151 221,814 230,965 - Floor plan - - - - 4,098 4,098 - Real estate - - - - 18,664 18,664 - 10,559 522 15,713 26,794 774,706 801,500 - Other commercial and industrial: Corporate 150 - - 150 148,258 148,408 - Institutional - - - - 146,380 146,380 - Middle market 464 298 5,982 6,744 85,771 92,515 - Retail 743 89 1,200 2,032 330,094 332,126 - Floor plan - - 17 17 48,605 48,622 - 1,357 387 7,199 8,943 759,108 768,051 - 11,916 909 22,912 35,737 1,533,814 1,569,551 - March 31, 2019 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 $ 803 $ 281 $ 732 $ 1,816 $ 26,110 $ 27,926 $ - Overdrafts 35 - - 35 137 172 - Personal lines of credit 89 3 29 121 1,808 1,929 - Personal loans 4,566 1,746 1,025 7,337 297,271 304,608 - Cash collateral personal loans 261 11 292 564 15,344 15,908 - 5,754 2,041 2,078 9,873 340,670 350,543 - Auto and leasing 65,490 22,010 12,163 99,663 1,067,819 1,167,482 - Total $ 95,786 $ 39,109 $ 101,880 $ 236,775 $ 3,502,224 $ 3,738,999 $ 2,171 December 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 $ 77 $ 1,516 $ 2,707 $ 4,300 $ 36,344 $ 40,644 $ 168 Years 2003 and 2004 91 2,412 5,632 8,135 67,707 75,842 - Year 2005 - 552 3,531 4,083 35,004 39,087 - Year 2006 255 1,693 5,074 7,022 49,213 56,235 - Years 2007, 2008 and 2009 255 1,059 6,677 7,991 52,781 60,772 56 Years 2010, 2011, 2012, 2013 253 328 8,697 9,278 104,429 113,707 270 Years 2014, 2015, 2016 and 2017 - 483 1,462 1,945 139,500 141,445 - 931 8,043 33,780 42,754 484,978 527,732 494 Non-traditional - 116 3,085 3,201 11,072 14,273 - Loss mitigation program 10,793 6,258 19,389 36,440 70,393 106,833 2,223 11,724 14,417 56,254 82,395 566,443 648,838 2,717 Home equity secured personal loans 9 - - 9 241 250 - GNMA's buy-back option program - - 19,721 19,721 - 19,721 - 11,733 14,417 75,975 102,125 566,684 668,809 2,717 Commercial Commercial secured by real estate: Corporate - - - - 289,052 289,052 - Institutional - - 1,200 1,200 68,413 69,613 - Middle market - 1,430 5,202 6,632 200,831 207,463 - Retail 1,641 463 8,570 10,674 213,440 224,114 - Floor plan - - - - 4,184 4,184 - Real estate - - - - 19,009 19,009 - 1,641 1,893 14,972 18,506 794,929 813,435 - Other commercial and industrial: Corporate - - - - 179,885 179,885 - Institutional - - - - 156,410 156,410 - Middle market 917 - 6,020 6,937 81,030 87,967 - Retail 571 546 817 1,934 308,278 310,212 - Floor plan - - 46 46 49,633 49,679 - 1,488 546 6,883 8,917 775,236 784,153 - 3,129 2,439 21,855 27,423 1,570,165 1,597,588 - December 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 $ 725 $ 363 $ 411 $ 1,499 $ 26,535 $ 28,034 $ - Overdrafts 10 - - 10 204 214 - Personal lines of credit 57 11 22 90 1,827 1,917 - Personal loans 3,966 1,740 1,262 6,968 296,151 303,119 - Cash collateral personal loans 74 339 3 416 15,280 15,696 - 4,832 2,453 1,698 8,983 339,997 348,980 - Auto and leasing 58,094 27,945 13,494 99,533 1,030,162 1,129,695 - Total $ 77,788 $ 47,254 $ 113,022 $ 238,064 $ 3,507,008 $ 3,745,072 $ 2,717 At both March 31 , 2019 , and December 31 , 2018 , Oriental had a carrying balanc e of $ 91.4 million in current status, 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, w ithout 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 Acqu ired loans were initially measured at fair value and subsequently accounted for under either ASC 310-30 or ASC 310-20. 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 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 place d 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 f rom 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 , 2019 and December 31 , 2018 , by class of loans: March 31, 2019 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 $ - $ - $ 54 $ 54 $ - $ 54 $ - Floor plan - - 878 878 77 955 - - - 932 932 77 1,009 - Other commercial and industrial Retail 17 50 - 67 1,329 1,396 - 17 50 - 67 1,329 1,396 - 17 50 932 999 1,406 2,405 - Consumer Credit cards 486 137 391 1,014 19,608 20,622 - Personal loans 55 21 35 111 2,035 2,146 - 541 158 426 1,125 21,643 22,768 - Auto 210 150 100 460 1,876 2,336 - Total $ 768 $ 358 $ 1,458 $ 2,584 $ 24,925 $ 27,509 $ - December 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 $ - $ - $ 54 $ 54 $ - $ 54 $ - Floor plan - - 888 888 94 982 - - - 942 942 94 1,036 - Other commercial and industrial Retail 30 11 8 49 1,461 1,510 - 30 11 8 49 1,461 1,510 - 30 11 950 991 1,555 2,546 - Consumer Credit cards 499 147 380 1,026 20,796 21,822 - Personal loans 64 32 18 114 2,052 2,166 - 563 179 398 1,140 22,848 23,988 - Auto 405 241 200 846 3,589 4,435 - Total $ 998 $ 431 $ 1,548 $ 2,977 $ 27,992 $ 30,969 $ - 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 , 2019 and December 31 , 2018 is as follows: March 31, December 31, 2019 2018 (In thousands) Contractual required payments receivable: $ 1,279,147 $ 1,304,545 Less: Non-accretable discount 342,902 345,423 Cash expected to be collected 936,245 959,122 Less: Accretable yield 264,893 269,510 Carrying amount, gross 671,352 689,612 Less: allowance for loan and lease losses 42,133 42,010 Carrying amount, net $ 629,219 $ 647,602 At March 31 , 2019 and December 31 , 2018 , Orien tal had $ 44.1 million an d $ 44.5 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 , 2019 an d 2018 Quarter Ended March 31, 2019 Mortgage Commercial Auto Consumer Total (In thousands) Accretable Yield Activity: Balance at beginning of period $ 232,199 $ 36,508 $ 243 $ 560 $ 269,510 Accretion (6,350) (2,656) (216) (298) (9,520) Change in expected cash flows - 3,265 3 298 3,566 Transfer from (to) non-accretable discount 1,058 262 150 (133) 1,337 Balance at end of period $ 226,907 $ 37,379 $ 180 $ 427 $ 264,893 Non-Accretable Discount Activity: Balance at beginning of period $ 291,887 $ 10,346 $ 24,245 $ 18,945 $ 345,423 Change in actual and expected losses (729) (173) (39) (243) (1,184) Transfer from accretable yield (1,058) (262) (150) 133 (1,337) Balance at end of period $ 290,100 $ 9,911 $ 24,056 $ 18,835 $ 342,902 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) from 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 Acquired Eurobank Loans The carrying amount of acquired Eurobank loans at March 31 , 2019 and December 31 , 2018 is as follows: March 31 December 31, 2019 2018 (In thousands) Contractual required payments receivable $ 151,917 $ 156,722 Less: Non-accretable discount 2,542 2,959 Cash expected to be collected 149,375 153,763 Less: Accretable yield 39,282 41,699 Carrying amount, gross 110,093 112,064 Less: Allowance for loan and lease losses 24,352 24,971 Carrying amount, net $ 85,741 $ 87,093 The following tables describe the accretable yield and non-accretable discount activity of acquired Eurobank loans for the quarters en ded March 31 , 2019 and 2018 : Quarter Ended March 31, 2019 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 $ 37,734 3,310 655 - - 41,699 Accretion (1,351) (1,165) - (12) (46) (2,574) Change in expected cash flows (423) (44) - (31) 87 (411) Transfer (to) from non-accretable discount 408 159 (1) 43 (41) 568 Balance at end of period $ 36,368 $ 2,260 $ 654 $ - $ - $ 39,282 Non-Accretable Discount Activity: Balance at beginning of period $ 1,276 - 1,550 - 133 2,959 Change in actual and expected losses 7 159 - 43 (58) 151 Transfer from (to) accretable yield (408) (159) 1 (43) 41 (568) Balance at end of period $ 875 $ - $ 1,551 $ - $ 116 $ 2,542 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 from (to) 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 (to) from accretable yield 103 427 91 (97) 82 606 Balance at end of period $ 4,479 $ - $ 849 $ - $ 219 $ 5,547 Non-accrual Loans The following table presents the recorded investment in loans in non-accrual status by class of loans as of March 31 , 2019 and December 31 , 2018 : March 31, December 31 2019 2018 (In thousands) Originated and other loans and leases held for investment Mortgage Traditional (by origination year): Up to the year 2002 $ 2,529 $ 2,538 Years 2003 and 2004 5,217 5,818 Year 2005 3,098 3,600 Year 2006 4,729 5,140 Years 2007, 2008 and 2009 5,850 6,697 Years 2010, 2011, 2012, 2013 6,694 8,427 Years 2014, 2015, 2016, 2017 and 2018 1,844 1,462 29,961 33,682 Non-traditional 2,617 3,085 Loss mitigation program 22,170 22,107 54,748 58,874 Home equity loans, secured personal loans 9 - 54,757 58,874 Commercial Commercial secured by real estate Institutional 9,760 9,911 Middle market 7,114 7,266 Retail 15,950 16,123 32,824 33,300 Other commercial and industrial Middle market 6,401 6,481 Retail 2,251 2,629 Floor plan 17 46 8,669 9,156 41,493 42,456 Consumer Credit cards 732 411 Personal lines of credit 38 31 Personal loans 2,907 2,909 Cash collateral personal loans 294 3 3,971 3,354 Auto and leasing 12,163 13,494 Total non-accrual originated loans $ 112,384 $ 118,178 March 31, December 31, 2019 2018 (In thousands) Acquired BBVAPR loans accounted for under ASC 310-20 Commercial Commercial secured by real estate Retail $ 54 $ 54 Floor plan 878 888 932 942 Other commercial and industrial Retail - 8 - 8 932 950 Consumer Credit cards 391 380 Personal loans 35 18 426 398 Auto 100 200 Total non-accrual acquired BBVAPR loans accounted for under ASC 310-20 1,458 1,548 Total non-accrual loans $ 113,842 $ 119,726 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 m ortgage 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 March 31 , 2019 and December 31 , 2018 , loans whose terms have been e xtended and which are classified as troubled-debt restructurings that are not included in non-accrual loans amounted to $ 113.1 million and $ 112.9 million, respectively, as they are performing under their new terms. At March 31 , 2019 and December 31 , 2018 , loans that are current in their monthly payments, but placed in non-accrual due to credit deterioration amounted to $ 30.6 million and $ 2 1.2 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 $ 89.4 million and $ 82.0 million at March 31 , 2019 and December 31 , 2018 , 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 all owance for loan and lease losses for these impaired commercial loans amounted to $ 10.9 million and $ 8.4 million at March 31 , 2019 and December 31 , 2018 , respectively. The total investment in impaired mortgage loans that were individually evaluated for i mpairment was $ 83.4 million and $ 8 4.2 million at March 31 , 2019 and December 31 , 2018 , 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 $ 11.1 million and $ 10.2 million at March 31 , 2019 and December 31 , 2018 , 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 , 2019 and December 31 , 2018 are as follows: March 31, 2019 Unpaid Recorded Related Principal Investment Allowance Coverage (In thousands) Impaired loans with specific allowance: Commercial $ 61,854 $ 56,408 $ 10,828 19% Residential impaired and troubled-debt restructuring 94,964 83,406 11,135 13% Impaired loans with no specific allowance: Commercial 38,512 32,207 N/A 0% Total investment in impaired loans $ 195,330 $ 172,021 $ 21,963 13% December 31, 2018 Unpaid Recorded Related Principal Investment Allowance Coverage (In thousands) Impaired loans with specific allowance: Commercial $ 54,636 $ 49,092 $ 8,434 17% Residential impaired and troubled-debt restructuring 95,659 84,174 10,186 12% Impaired loans with no specific allowance Commercial 38,241 32,137 N/A 0% Total investment in impaired loans $ 188,536 $ 165,403 $ 18,620 11% 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 , 2019 and December 31 , 2018 are as follows: March 31, 2019 Unpaid Recorded Related Principal Investment Allowance Coverage (In thousands) Impaired loans with specific allowance Commercial $ 926 $ 747 $ 24 3% Impaired loans with no specific allowance Commercial $ - $ - N/A 0% Total investment in impaired loans $ 926 $ 747 $ 24 3% December 31, 2018 Unpaid Recorded Specific Principal Investment Allowance Coverage (In thousands) Impaired loans with specific allowance Commercial $ 926 $ 747 $ 14 2% Impaired loans with no specific allowance Commercial $ - $ - N/A 0% Total investment in impaired loans $ 926 $ 747 $ 14 2% 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 , 2019 and December 31 , 2018 are as follows: March 31, 2019 Coverage Unpaid Recorded to Recorded Principal Investment Allowance Investment (In thousands) Impaired loan pools with specific allowance: Mortgage $ 489,638 $ 484,577 $ 17,901 4% Commercial 162,612 156,682 20,733 13% Auto 10,336 9,866 3,499 35% Total investment in impaired loan pools $ 662,586 $ 651,125 $ 42,133 6% December 31 , 2018 Coverage Unpaid Recorded to Recorded Principal Investment Allowance Investment (In thousands) Impaired loan pools with specific allowance: Mortgage $ 498,537 $ 492,890 $ 15,225 3% Commercial 188,413 180,790 20,641 11% Auto 14,551 14,403 6,144 43% Total investment in impaired loan pools $ 701,501 $ 688,083 $ 42,010 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 , 2019 and December 31 , 2018 are as follows : March 31, 2019 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 $ 66,713 $ 60,642 $ 15,110 25% Commercial 38,447 39,319 9,242 24% Total investment in impaired loan pools $ 105,160 $ 99,961 $ 24,352 24% December 31, 2018 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 $ 70,153 $ 63,406 $ 15,382 24% Commercial 47,342 47,820 9,585 20% Consumer 15 4 4 100% Total investment in impaired loan pools $ 117,510 $ 111,230 $ 24,971 22% 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 quarters ended March 31 , 2019 and 2018 : Quarter Ended March 31, 2019 2018 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 $ 399 $ 50,890 $ 263 $ 51,331 Residential troubled-debt restructuring 667 83,657 720 84,754 Impaired loans with no specific allowance Commercial 305 32,246 176 17,764 1,371 166,793 1,159 153,849 Acquired loans accounted for under ASC 310-20: Impaired loans with specific allowance Commercial - 747 - 747 Impaired loans with no specific allowance Commercial - - - - Total interest income from impaired loans $ 1,371 $ 167,540 $ 1,159 $ 154,596 Modifications The following tables present the troubled-debt restructurings in all loan portfolios during the quarters ended March 31 , 2019 and 2018 . Quarter Ended March 31, 2019 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 $ 4,494 5.52% 387 $ 4,242 4.60% 353 Commercial 1 7 11.50% 36 7 11.50% 24 Consumer 71 963 15.20% 65 967 11.86% 73 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 The following table presents troubled-debt restructurings for which there was a payment default during the twelve month periods ended March 31 , 2019 and 2018 : Twelve month Period Ended March 31, 2019 2018 Number of Contracts Recorded Investment Number of Contracts Recorded Investment (Dollars in thousands) Mortgage 27 $ 3,011 36 $ 3,310 Commercial 4 $ 1,981 4 $ 398 Consumer 43 $ 587 23 $ 243 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 , 2019 and December 31 , 2018 , 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, 2019 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 $ 272,698 $ 230,648 $ 17,502 $ 24,548 $ - $ - Institutional 68,926 58,976 - 9,950 - - Middle market 206,149 149,873 33,394 22,882 - - Retail 230,965 205,603 3,902 21,460 - - Floor plan 4,098 2,817 - 1,281 - - Real estate 18,664 18,664 - - - - 801,500 666,581 54,798 80,121 - - Other commercial and industrial: Corporate 148,408 123,288 25,120 - - - Institutional 146,380 146,380 - - - - Middle market 92,515 81,395 3,711 7,409 - - Retail 332,126 322,540 304 9,282 - - Floor plan 48,622 45,463 2,959 200 - - 768,051 719,066 32,094 16,891 - - Total 1,569,551 1,385,647 86,892 97,012 - - Commercial - acquired loans (under ASC 310-20) Commercial secured by real estate: Retail 54 - - 54 - - Floor plan 955 77 - 878 - - 1,009 77 - 932 - - Other commercial and industrial: Retail 1,396 1,396 - - - - 1,396 1,396 - - - - Total 2,405 1,473 - 932 - - March 31, 2019 Risk Ratings Balance Special Outstanding Pass Mention Substandard Doubtful Loss (In thousands) Retail - originated and other loans held for investment Mortgage: Traditional 517,773 487,640 - 30,133 - - Non-traditional 13,206 10,589 - 2,617 - - Loss mitigation program 107,257 88,231 - 19,026 - - Home equity secured personal loans 245 236 - 9 - - GNMA's buy-back option program 12,942 - - 12,942 - - 651,423 586,696 - 64,727 - - Consumer: Credit cards 27,926 27,194 - 732 - - Overdrafts 172 137 - 35 - - Unsecured personal lines of credit 1,929 1,900 - 29 - - Unsecured personal loans 304,608 303,582 - 1,026 - - Cash collateral personal loans 15,908 15,616 - 292 - - 350,543 348,429 - 2,114 - - Auto and Leasing 1,167,482 1,155,319 - 12,163 - - Total 2,169,448 2,090,444 - 79,004 - - Retail - acquired loans (accounted for under ASC 310-20) Consumer: Credit cards 20,622 20,232 - 390 - - Personal loans 2,146 2,111 - 35 - - 22,768 22,343 - 425 - - Auto 2,336 2,236 - 100 - - 25,104 24,579 - 525 - - $ 3,766,508 $ 3,502,143 $ 86,892 $ 177,473 $ - $ - December 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 $ 289,052 $ 246,711 $ 26,544 $ 15,797 $ - $ - Institutional 69,613 59,509 - 10,104 - - Middle market 207,463 151,638 32,638 23,187 - - Retail 224,114 198,402 3,996 21,716 - - Floor plan 4,184 2,890 - 1,294 - - Real estate 19,009 19,009 - - - - 813,435 678,159 63,178 72,098 - - Other commercial and industrial: Corporate 179,885 154,629 25,256 - - - Institutional 156,410 156,410 - - - - Middle market 87,967 63,876 13,737 10,354 - - Retail 310,212 307,160 318 2,734 - - Floor plan 49,679 47,092 2,541 46 - - 784,153 729,167 41,852 13,134 - - Total 1,597,588 1,407,326 105,030 85,232 - - Commercial - acquired loans (under ASC 310-20) Commercial secured by real estate: Retail 54 - - 54 - - Floor plan 982 94 - 888 - - 1,036 94 - 942 - - Other commercial and industrial: Retail 1,510 1,510 - - - - 1,510 1,510 - - - - Total 2,546 1,604 - 942 - |