Loan Portfolio

6 Months Ended

Jun. 30, 2011

6 — LOAN PORTFOLIO

The following is a detail of the loan portfolio held for investment:


	June 30,			December 31,
	2011			2010
	(In thousands)
Residential mortgage loans, mainly secured by first mortgages	$	2,880,989		$	3,417,417


Commercial loans:
Construction loans		515,934			700,579
Commercial mortgage loans		1,590,633			1,670,161
Commercial and Industrial loans⁽¹⁾		3,883,645			3,861,545
Loans to local financial institutions collateralized by real estate mortgages		282,003			290,219

Commercial loans		6,272,215			6,522,504

Finance leases		263,223			282,904

Consumer loans		1,349,098			1,432,611

Loans receivable		10,765,525			11,655,436
Allowance for loan and lease losses		(540,878	)		(553,025	)

Loans receivable, net	$	10,224,647		$	11,102,411


1	-	As of June 30, 2011, includes $1.7 billion of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.

Loans held for investment on which accrual of interest income had been discontinued as of June 30, 2011 and December 31, 2010 were as follows:


	June 30,		December 31,
(Dollars in thousands)	2011		2010
Non-performing loans:
Residential mortgage	$	380,165	$	392,134
Commercial mortgage		196,037		217,165
Commercial and Industrial		309,888		317,243
Construction		280,286		263,056
Consumer:
Auto loans		19,884		25,350
Finance leases		3,208		3,935
Other consumer loans		18,973		20,106

Total non-performing loans held for investment ⁽¹⁾	$	1,208,441	$	1,238,989


1	-	As of June 30, 2011 and December 31, 2010, excludes $5.1 million and $159.3 million, respectively, in non-performing loans held for sale.

The Corporation’s aging of the loans held for investment portfolio as of June 30, 2011 and December 31, 2010, follows:


			30-89 days		90 days or more		Total		90 days and
As of June 30, 2011	Current		Past Due		Past Due ⁽¹⁾		Portfolio		still accruing
					(in thousands)
Residential Mortgage:
FHA/VA and other government guaranteed loans ⁽²⁾	$	152,149	$	14,934	$	82,898	$	249,981	$	82,898
Other residential mortage loans		2,144,643		94,145		392,220		2,631,008		12,055
Commercial:
Commercial & Industrial Loans		3,742,437		73,477		349,734		4,165,648		39,846
Commercial Mortgage Loans		1,341,080		47,101		202,452		1,590,633		6,415
Construction Loans		208,159		11,784		295,991		515,934		15,705
Consumer:
Auto		848,961		91,530		19,884		960,375		—
Finance Leases		242,695		17,320		3,208		263,223		—
Other Consumer Loans		353,906		15,844		18,973		388,723		—

Total Loans Receivable	$	9,034,030	$	366,135	$	1,365,360	$	10,765,525	$	156,919


(1)		Includes non-performing loans and accruing loans which are contractually delinquent 90 days or more (i.e. FHA/VA and other guaranteed loans).

(2)		As of June 30, 2011, includes $53.3 million of defaulted loans collateralizing Ginnie Mae (“GNMA”) securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.


			30-89 days		90 days or more		Total		90 days and
As of December 31, 2010	Current		Past Due		Past Due ⁽¹⁾		Portfolio		still accruing
					(in thousands)
Residential Mortgage:
FHA/VA and other government guaranteed loans ⁽²⁾	$	136,412	$	14,780	$	81,330	$	232,522	$	81,330
Other residential mortage loans		2,654,430		116,438		414,027		3,184,895		21,893
Commercial:
Commercial & Industrial Loans		3,701,788		98,790		351,186		4,151,764		33,943
Commercial Mortgage Loans		1,412,943		40,053		217,165		1,670,161		—
Construction Loans		418,339		12,236		270,004		700,579		6,948
Consumer:
Auto		888,720		94,906		25,350		1,008,976		—
Finance Leases		258,990		19,979		3,935		282,904		—
Other Consumer Loans		379,566		23,963		20,106		423,635		—

Total Loans Receivable	$	9,851,188	$	421,145	$	1,383,103	$	11,655,436	$	144,114


(1)		Includes non-performing loans and accruing loans which are contractually delinquent 90 days or more (i.e. FHA/VA and other guaranteed loans).

(2)		As of December 31, 2010, includes $54.2 million of defaulted loans collateralizing GNMA securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.

The Corporation’s primary lending area is Puerto Rico. The Corporation’s Puerto Rico banking subsidiary, FirstBank, also lends in the U.S. and British Virgin Islands markets and in the United States (principally in the state of Florida). Of the total gross loans held for investment portfolio of $10.8 billion as of June 30, 2011, approximately 84% have credit risk concentration in Puerto Rico, 8% in the United States and 8% in the Virgin Islands.

The largest loan to one borrower as of June 30, 2011 in the amount of $282.0 million is with one mortgage originator in Puerto Rico, Doral Financial Corporation. This commercial loan is secured by individual real-estate loans, mostly 1-4 family residential mortgage loans.

As of June 30, 2011, the Corporation had $216.4 million outstanding of credit facilities granted to the Puerto Rico Government and/or its political subdivisions, down from $325.1 million as of December 31, 2010, and $113.2 million granted to the Virgin Islands government, up from $84.3 million as of December 31, 2010. A substantial portion of these credit facilities are obligations that have a specific source of income or revenues identified for their repayment, such as property taxes collected by the central Government and/or municipalities. Another portion of these obligations consists of loans to public corporations that obtain revenues from rates charged for services or products, such as electric power and water utilities. Public corporations have varying degrees of independence from the central Government and many receive appropriations or other payments from it. The Corporation also has loans to various municipalities in Puerto Rico for which the good faith, credit and unlimited taxing power of the applicable municipality have been pledged to their repayment.