ALLOWANCE FOR CREDIT LOSSES ON LOANS AND FINANCE LEASES

12 Months Ended

Dec. 31, 2020

Allowance for Credit Loss [Abstract]

Allowance For Credit Losses [Text Block]

NOTE 9 – ALLOWANCE FOR CREDIT LOSSES FOR LOANS AND FINANCE LEASES

The following table presents the activity in the ACL on loans and finance leases by portfolio segment for the indicated periods:
	Residential Mortgage Loans		Construction Loans		Commercial Mortgage		Commercial & Industrial Loans		Consumer Loans		Total
Year Ended December 31,2020
(In thousands)
Allowance for credit losses:
Beginning balance, prior to adoption ASC 326	$	44,806	$	2,370	$	39,194	$	15,198	$	53,571	$	155,139
Impact of adopting ASC 326		49,837		797		(19,306)		14,731		35,106		81,165
Allowance established for acquired PCD loans		12,739		-		9,723		1,830		4,452		28,744
Provision for credit losses (1)		22,427		2,105		81,125		6,627		56,433		168,717
Charge-offs		(11,017)		(76)		(3,330)		(3,634)		(46,483)		(64,540)
Recoveries		1,519		184		1,936		3,192		9,831		16,662
Ending balance	$	120,311	$	5,380	$	109,342	$	37,944	$	112,910	$	385,887

	Residential Mortgage Loans		Construction Loans		Commercial Mortgage		Commercial & Industrial Loans		Consumer Loans		Total
Year Ended December 31,2019
(In thousands)
Allowance for credit losses:
Beginning balance	$	50,794	$	3,592	$	55,581	$	32,546	$	53,849	$	196,362
Provision (release) for credit losses		14,091		(1,496)		(1,697)		(13,696)		43,023		40,225
Charge-offs		(22,742)		(391)		(15,088)		(7,206)		(52,160)		(97,587)
Recoveries		2,663		665		398		3,554		8,859		16,139
Ending balance	$	44,806	$	2,370	$	39,194	$	15,198	$	53,571	$	155,139

	Residential Mortgage Loans		Construction Loans		Commercial Mortgage		Commercial & Industrial Loans		Consumer Loans		Total
Year Ended December 31, 2018
(In thousands)
Allowance for credit losses:
Beginning balance	$	58,975	$	4,522	$	48,493	$	48,871	$	70,982	$	231,843
Provision (release) for credit losses (2)		13,202		7,032		23,074		(8,440)		24,385		59,253
Charge-offs (2)		(24,775)		(8,296)		(23,911)		(9,704)		(50,106)		(116,792)
Recoveries		3,392		334		7,925		1,819		8,588		22,058
Ending balance	$	50,794	$	3,592	$	55,581	$	32,546	$	53,849	$	196,362

Includes a $37.5 million charge related to the establishment of the initial reserves for non-PCD loans acquired in conjunction with the BSPR acquisition consisting of (i) a $13.6 million charge related to non-PCD residential mortgage loans; (ii) a $9.2 million charge related to non-PCD commercial mortgage loans; (iii) a $4.6 million charge related to non-PCD commercial and industrial loans; and (iv) a $10.2 million charge related to non-PCD consumer loans.During 2018, the Corporation transferred to held for sale $74.4 million (net of fair value write downs of $22.2 million) in nonaccrual loans. Approximately $6.5 million of the $22.2 million in charge-offs recorded on the transfer was taken against previously-established reserves for credit losses, resulting in a charge to the provision of $15.7 million for the year ended December 31, 2018. Loans transferred to held for sale in 2018 consisted of $33.0 million in nonaccrual construction loans (net of fair value write downs of $6.7 million), $39.6 million in nonaccrual commercial mortgage loans (net of fair value write downs of $13.8 million), and $1.8 million in nonaccrual commercial and industrial loans (net of fair value write-downs of $1.7 million). The Corporation estimates the ACL following the methodologies described in Note 1, – Nature of Business and Summary of Significant Accounting Policies, above for each portfolio segment. The ACL for loans and finance leases was $155.1 million as of December 31, 2019. Upon adoption of CECL on January 1, 2020, the Corporation recognized an increase in the ACL for loans and finance leases of approximately $81.2 million, as a cumulative effect adjustment from the adoption of ASC 326, with a corresponding decrease in retained earnings, net of applicable income taxes. As of December 31, 2020, the ACL for loans and finance leases was $385.9 million, up $230.8 million from December 31, 2019, driven by the $81.2 million increase as a result of adopting CECL, a $168.7 million provision for credit losses on loans, and the establishment of a $28.7 million ACL for PCD loans acquired in conjunction with the BSPR acquisition. The $168.7 million provision for credit losses on loans and finance leases recorded for the year ended December 31, 2020, was $128.5 million higher than the $40.2 million provision recorded for the year ended December 31, 2019. The increase was driven by the adverse effect of the COVID-19 pandemic on the economic forecast utilized by the Corporation in its CECL model, in particular during the first half of 2020, and the $37.5 million charge to the provision related to the initial establishment of reserves for non-PCD loans required by the CECL methodology in connection with the closing of the BSPR acquisition in the third quarter of 2020. The Corporation recorded net charge-offs of $47.9 million for the year ended December 31, 2020, compared to $81.4 million for the year ended December 31, 2019. The decrease compared to the year ended December 31, 2019, primarily reflects a $10.6 million decrease in residential mortgage loans net charge-offs, loan loss recoveries of $3.9 million in connection with the repayment and cancellation of two nonaccrual commercial loans during the fourth quarter of 2020, the effect in 2019 of an $11.4 million charge-off taken on a commercial mortgage loan in the Florida region, and a $6.6 million decrease in consumer loans net charge-offs. The decrease in residential mortgage and consumer loans net charge-offs, as compared to 2019, reflects, in part, the effect of the deferred repayment arrangements provided to borrowers affected by the COVID-19 pandemic that maintained the delinquency status that existed at the date of the event until the end of the deferral period. For those loans where the ACL was determined based on a discounted cash flow model, as indicated in Note 1 – Nature of Business and Summary of Significant Accounting Policies, above, the change in the ACL due to the passage of time is recorded as part of the provision for credit losses.

The tables below present the ACL related to loans and finance leases and the carrying values of loans by portfolio segment as of December 31, 2020 and December 31, 2019:
As of December 31,2020	Residential Mortgage Loans			Construction Loans			Commercial Mortgage						Consumer Loans
										Commercial and Industrial Loans (1)
(Dollars in thousands)																Total
Total loans held for investment:
Amortized cost of loans	$	3,521,954		$	212,500		$	2,230,602		$	3,202,590		$	2,609,643		$	11,777,289
Allowance for credit losses		120,311			5,380			109,342			37,944			112,910			385,887
Allowance for credit losses to
amortized cost		3.42	%		2.53	%		4.90	%		1.18	%		4.33	%		3.28	%

As of December 31, 2019	Residential Mortgage Loans			Construction Loans			Commercial Mortgage Loans						Consumer Loans
										Commercial and Industrial Loans
(Dollars in thousands)																Total
Total loans held for investment:
Amortized cost of loans	$	2,933,773		$	111,317		$	1,444,586		$	2,230,876		$	2,281,653		$	9,002,205
Allowance for credit losses		44,806			2,370			39,194			15,198			53,571			155,139
Allowance for credit losses to
amortized cost		1.53	%		2.13	%		2.71	%		0.68	%		2.35	%		1.72	%
____________

As of December 31, 2020, includes $406.0 million of SBA PPP loans, which require no ACL as these loans are 100% guaranteed by the SBA.

In addition, the Corporation estimates expected credit losses over the contractual period in which the Corporation is exposed to credit risk via a contractual obligation to extend credit, such as unfunded loan commitments and standby letters of credit for commercial and construction loans, unless the obligation is unconditionally cancellable by the Corporation. The Corporation estimates the ACL for these off-balance sheet exposures following the methodology described in Note 1 – Nature of Business and Summary of Significant Accounting Policies, above. Upon adoption of CECL on January 1, 2020, the Corporation recognized an increase in the ACL for off-balance sheet exposures of approximately $3.9 million as a cumulative effect adjustment from the adoption of ASC 326, with a corresponding decrease in retained earnings, net of applicable income taxes. As of December 31, 2020, the ACL for off-balance sheet credit exposures was $5.1 million, including the $3.9 million effect of adopting CECL and a $1.2 million charge to the provision during 2020.

The following table presents the activity in the ACL for unfunded loan commitments and standby letters of credit for the years ended December 31, 2020, 2019 and 2018:

	Year Ended
	December 31,
	2020		2019		2018
(In thousands)
Beginning Balance	$	-	$	412	$	676
Impact of adopting ASC 326		3,922		-		-
Provision (release) for credit losses		1,183		(412)		(264)
Ending balance	$	5,105	$	-	$	412