Exhibit 99.1
First
BanCorp. Announces Earnings for the Quarter Ended September 30, 2013
2013
Third Quarter Highlights and Comparison with Second Quarter
SAN JUAN, Puerto Rico--(BUSINESS WIRE)--October 23, 2013--First BanCorp.
(NYSE: FBP):
-
Net income of $15.9 million, or $0.08 per diluted share, compared to a
net loss of $122.6 million, or $0.60 per diluted share, for the second
quarter of 2013. The results for the second quarter included a $72.9
million loss on the bulk sale of non-performing residential assets and
a $66.6 million loss related to the write-off of assets pledged as
collateral to Lehman Brothers, Inc. (“Lehman”).
-
Adjusted net income of $19.3 million, or $0.09 per diluted share,
excluding $1.7 million in costs associated with the secondary offering
of the Corporation’s common stock by certain of the existing
stockholders and $1.7 million in costs associated with the conversion
of the credit card processing platform, compared to an adjusted net
income of $16.8 million, or $0.08 per diluted share, for the second
quarter of 2013, excluding the effects of the bulk sale of
non-performing residential assets and the Lehman collateral write-off.
-
Pre-tax, pre-provision income of $50.9 million, compared to $35.9
million for the second quarter of 2013.
-
Adjusted net interest income, excluding fair value adjustments of
derivative instruments, increased by $4.5 million to $130.7 million,
and the related adjusted net interest margin expanded to 4.19% from
4.02% in the second quarter of 2013.
-
Non-interest income of $10.1 million, compared to a non-interest loss
of $51.7 million for the second quarter of 2013. The non-interest
income for the third quarter was adversely impacted by the equity in
loss of unconsolidated entity of $5.9 million. The non-interest loss
for the second quarter included the $66.6 million impact of the Lehman
collateral write-off.
-
Non-interest expenses of $99.2 million, compared to $111.3 million for
the second quarter of 2013. Adjusted non-interest expenses of $95.8
million, excluding costs associated with the secondary offering and
the conversion of the credit card processing platform, compared to
adjusted non-interest expenses of $104.7 million for the second
quarter of 2013, excluding $5.0 million of expenses specifically
related to the bulk sale of non-performing residential assets and the
$1.7 million retroactive effect of the national gross receipts tax
that corresponded to the first quarter of 2013.
-
Credit quality remained stable:
-
Non-performing assets decreased for the 14th
consecutive quarter, declining by $25.9 million, or 3%, from the
second quarter of 2013 to $726.0 million.
-
Non-performing loans, including non-performing loans held for
sale, declined by $22.5 million, or 4%, from the second quarter of
2013 to $578.6 million.
-
Inflows of non-performing loans held for investment declined by
$20.3 million, or 21%, compared to inflows for the second quarter
of 2013.
-
Provision for loan and lease losses of $22.2 million compared to
$87.5 million in the second quarter of 2013. The results for the
second quarter included a provision of $67.9 million associated
with the bulk sale of non-performing residential assets.
-
Net charge-offs of $33.9 million, or an annualized 1.41% of
average loans, compared to $128.9 million in the second quarter of
2013. Net charge-offs in the second quarter included $98.0 million
related to the bulk sale of non-performing residential assets.
-
Income tax expense of $3.7 million, compared to an income tax benefit
of $1.0 million for the second quarter of 2013, mainly related to the
increase in reserves for uncertain tax positions.
-
Total capital, Tier 1 capital, and leverage ratios of 16.89%, 15.61%,
and 11.65%, respectively, as of September 30, 2013. Common equity Tier
1 capital ratio of 12.55% and Tangible common equity ratio of 8.65% as
of September 30, 2013.
-
Non-brokered deposits increased by $78.6 million to $6.8 billion as of
September 30, 2013 from $6.7 billion as of June 30, 2013.
-
Total loan originations (excluding credit cards utilization activity)
of $836.7 million for the third quarter of 2013.
First BanCorp. (the “Corporation”) (NYSE: FBP), the bank holding company
for FirstBank Puerto Rico (“FirstBank” or “the Bank”), today reported
net income of $15.9 million for the third quarter of 2013, or $0.08 per
diluted share, compared to a net loss of $122.6 million, or $0.60 per
diluted share, for the second quarter of 2013 and net income of $19.1
million, or $0.09 per diluted share, for the third quarter of 2012.
This press release includes certain non-GAAP financial measures,
including adjusted pre-tax, pre-provision income, adjusted net interest
income and margin, certain capital ratios, non-interest income adjusted
to exclude the Lehman collateral write-off and equity in (loss) earnings
of unconsolidated entity, and certain other financial measures adjusted
to exclude the effects of the secondary offering costs, the credit card
processing platform conversion costs, and the bulk sale of
non-performing residential assets, and should be read in conjunction
with the accompanying tables (Exhibit A), which are an integral part of
this press release.
Aurelio Alemán, President and Chief Executive Officer of First BanCorp.,
commented, “The results for the third quarter continue to show
improvements associated with the execution of our business strategies.
Net income for the quarter amounted to $15.9 million, including $3.4
million in non-recurring expenses related to the secondary stock
offering and the conversion of the credit card processing platform, both
completed during the quarter. Excluding these items, net income amounted
to $19.3 million. Furthermore, the results were impacted by a $5.9
million loss in the equity of the unconsolidated entity to which we sold
loans in 2011 and a $3 million increase in the tax reserve for uncertain
tax positions. The quarter showed improvement in pre-tax pre-provision
income, which increased to $50 million, expansion of the net interest
margin to 4.19% and growth of $78.6 million in non-brokered deposits and
$63 million in loans held in portfolio. Loan originations were
approximately $836 million for the quarter.
Mr. Alemán continued, “Despite the negative market headwinds, we have
stayed the course in the execution of our strategies. We are pleased
with the steps taken by the Puerto Rico government with regard to the
fiscal situation and their efforts to address investor concerns and
remain unwavering in our commitment to the Puerto Rico market. We will
continue to focus on enhancing franchise value through the organic
reduction of nonperforming loans and earnings generation.”
RECENT EVENTS
Secondary Offering
On August 16, 2013, a secondary offering of the Corporation’s common
stock was completed by certain of the Corporation’s existing
stockholders. The United States Department of the Treasury (“Treasury”)
sold 12 million shares of common stock, funds affiliated with Thomas H.
Lee Partners (“THL”) sold 8 million shares of common stock, and funds
managed by Oaktree Capital Management, L.P. (“Oaktree”) sold 8 million
shares of common stock. On September 11, 2013, the underwriters
exercised their option to purchase an additional 2.9 million shares of
common stock from the selling stockholders. The Corporation did not
receive any proceeds from the offering. Non-interest expenses for the
third quarter of 2013 included approximately $1.7 million in costs
associated with the secondary offering, including $1.1 million paid by
the Corporation for underwriting discounts and commissions. As of
September 30, 2013, each of THL and Oaktree owns 20.22% of the
Corporation’s outstanding common stock and the U.S. Treasury owns 9.51%
of such stock.
ADJUSTED PRE-TAX, PRE-PROVISION INCOME TRENDS
One metric that management believes is useful in analyzing performance
is the level of earnings adjusted to exclude tax expense, the provision
for loan and lease losses, securities gains or losses, fair value
adjustments on derivatives measured at fair value and equity in earnings
or loss of unconsolidated entity, which is a non-GAAP financial measure.
In addition, from time to time, earnings are adjusted also for items
judged by management to be outside of ordinary banking activities and/or
for items that, while these may be associated with ordinary banking
activities, are so unusually large that management believes that a
complete analysis of the Corporation’s performance requires
consideration also of results that exclude such amounts (for additional
information about these non-GAAP financial measure, see “Adjusted
Pre-Tax, Pre-Provision Income” in “Basis of Presentation”).
The following table shows adjusted pre-tax, pre-provision income of
$50.9 million in the third quarter of 2013, up $15.0 million from the
prior quarter:
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|
|
|
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|
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|
(Dollars in thousands)
|
|
Quarter Ended
|
|
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
|
|
2013
|
|
2013
|
|
2013
|
|
2012
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$
|
19,616
|
|
|
$
|
(123,562
|
)
|
|
$
|
(71,011
|
)
|
|
$
|
16,028
|
|
|
$
|
19,834
|
|
|
Add: Provision for loan and lease losses
|
|
|
22,195
|
|
|
|
87,464
|
|
|
|
111,123
|
|
|
|
30,466
|
|
|
|
28,952
|
|
|
Add: Net loss on investments and impairments
|
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|
-
|
|
|
|
42
|
|
|
|
117
|
|
|
|
69
|
|
|
|
547
|
|
|
Less: Unrealized gain on derivative instruments and liabilities
measured at fair value
|
|
|
(232
|
)
|
|
|
(708
|
)
|
|
|
(400
|
)
|
|
|
(432
|
)
|
|
|
(170
|
)
|
|
Add: Bulk sales related expenses and other professional fees
related to the terminated preferred stock exchange offer
|
|
|
-
|
|
|
|
3,198
|
|
|
|
5,096
|
|
|
|
-
|
|
|
|
-
|
|
|
Add: Loss on certain OREO properties sold as part of the bulk sale
of non-performing residential mortgage assets
|
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|
-
|
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|
|
1,879
|
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|
|
-
|
|
|
|
-
|
|
|
|
-
|
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|
Add: Secondary offering costs
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1,669
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|
-
|
|
|
|
-
|
|
|
|
-
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|
|
-
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Add: Credit card processing platform conversion costs
|
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|
1,715
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|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Add: National gross receipt tax (1)
|
|
|
-
|
|
|
|
1,656
|
|
|
|
-
|
|
|
|
-
|
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|
|
-
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|
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Add: Write-off collateral pledged to Lehman
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-
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66,574
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|
|
-
|
|
|
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-
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|
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-
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Add/Less: Equity in loss (earnings) of unconsolidated entity
|
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|
5,908
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|
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(648
|
)
|
|
|
5,538
|
|
|
|
8,330
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|
|
|
2,199
|
|
|
Adjusted pre-tax, pre-provision income (2)
|
|
$
|
50,871
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|
|
$
|
35,895
|
|
|
$
|
50,463
|
|
|
$
|
54,461
|
|
|
$
|
51,362
|
|
|
|
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|
|
|
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|
|
|
|
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Change from most recent prior quarter-amount
|
|
$
|
14,976
|
|
|
$
|
(14,568
|
)
|
|
$
|
(3,998
|
)
|
|
$
|
3,099
|
|
|
$
|
13,449
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|
|
Change from most recent prior quarter-percentage
|
|
|
41.7
|
%
|
|
|
-28.9
|
%
|
|
|
-7.3
|
%
|
|
|
6.0
|
%
|
|
|
35.5
|
%
|
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|
|
|
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(1) Represents the impact of the national gross receipts tax
corresponding to the first quarter of 2013, recorded during the
second quarter after enactment.
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(2) See "Basis of Presentation" for definition.
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The increase in adjusted pre-tax, pre-provision income from the 2013
second quarter primarily reflected:
-
An $8.9 million decrease in adjusted non-interest expenses mainly due
to lower losses on other real estate owned (“OREO”) operations. This
reduction reflects a $4.9 million decrease in write-downs on OREO
properties, as the prior quarter was impacted by a $5.3 million charge
against the value of certain commercial OREO properties in the Virgin
Islands, and a $1.7 million decrease in operating costs of the
Corporation’s OREO properties. See Non-Interest Expenses
section below for additional information.
Adjusted non-interest expenses exclude costs associated with the
secondary offering and the conversion of the credit card processing
platform completed in the third quarter as well as expenses related to
the bulk sale of non-performing residential assets completed in the
second quarter, and the impact of the national gross receipts tax that
corresponded to the first quarter of 2013 but was recorded in the second
quarter after enactment of the 2013 Tax Burden Adjustment and
Redistribution Act (“Act 40”). See Basis of Presentation
section below for reconciliation of this non-GAAP financial measure to
the corresponding GAAP measure.
-
A $4.5 million increase in net interest income, excluding fair value
adjustments, mainly due to further reductions in the cost of funding
as well as the decrease in mortgage-backed securities (“MBS”)
prepayment activity levels that resulted in a higher yield on U.S.
agency MBS held by the Corporation. See Net Interest Income discussion
below for additional information.
-
A $1.7 million increase in adjusted non-interest income reflecting the
adverse impact in the previous quarter of a $3.4 million loss related
to the restructuring of a commercial mortgage loan held for sale in
which the Corporation entered into an agreement to receive foreclosed
real estate in partial satisfaction of a debt arrangement and modified
the terms of the remaining balance. This was partially offset by a
$1.3 million decrease in revenues from the mortgage banking business.
Adjusted non-interest income excludes the Lehman collateral write-off
recorded in the second quarter and equity in earnings (loss) of
unconsolidated entity. See Basis of Presentation section below
for reconciliation of this non-GAAP financial measure to the
corresponding GAAP measure.
NET INTEREST INCOME
Net interest income, excluding fair value adjustments on derivatives and
financial liabilities measured at fair value (“valuations”), and net
interest income on a tax-equivalent basis are non-GAAP measures. (See “Basis
of Presentation – Net Interest Income, Excluding Valuations and on a
Tax-Equivalent Basis” below for additional information.)
The following table reconciles net interest income in accordance with
GAAP to net interest income, excluding valuations, and net interest
income on a tax-equivalent basis. The table also reconciles net interest
spread and net interest margin on a GAAP basis to these items excluding
valuations and on a tax-equivalent basis.
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(Dollars in thousands)
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Quarter Ended
|
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|
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September 30,
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|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
|
|
2013
|
|
2013
|
|
2013
|
|
2012
|
|
2012
|
|
Net Interest Income
|
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Interest Income - GAAP
|
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$
|
162,203
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|
|
$
|
160,670
|
|
|
$
|
160,225
|
|
|
$
|
165,054
|
|
|
$
|
166,964
|
|
|
Unrealized (gain) loss on derivative instruments
|
|
|
(232
|
)
|
|
|
(708
|
)
|
|
|
(400
|
)
|
|
|
(432
|
)
|
|
|
(170
|
)
|
|
Interest income excluding valuations
|
|
|
161,971
|
|
|
|
159,962
|
|
|
|
159,825
|
|
|
|
164,622
|
|
|
|
166,794
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|
|
Tax-equivalent adjustment
|
|
|
4,420
|
|
|
|
3,038
|
|
|
|
1,595
|
|
|
|
1,451
|
|
|
|
1,463
|
|
|
Interest income on a tax-equivalent basis excluding valuations
|
|
|
166,391
|
|
|
|
163,000
|
|
|
|
161,420
|
|
|
|
166,073
|
|
|
|
168,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
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|
|
Interest Expense - GAAP
|
|
|
31,298
|
|
|
|
33,782
|
|
|
|
35,732
|
|
|
|
39,423
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|
|
|
41,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
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|
|
Net interest income - GAAP
|
|
$
|
130,905
|
|
|
$
|
126,888
|
|
|
$
|
124,493
|
|
|
$
|
125,631
|
|
|
$
|
125,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income excluding valuations
|
|
$
|
130,673
|
|
|
$
|
126,180
|
|
|
$
|
124,093
|
|
|
$
|
125,199
|
|
|
$
|
125,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income on a tax-equivalent basis excluding valuations
|
|
$
|
135,093
|
|
|
$
|
129,218
|
|
|
$
|
125,688
|
|
|
$
|
126,650
|
|
|
$
|
126,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Average Balances
|
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|
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|
|
|
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|
|
|
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|
Loans and leases
|
|
$
|
9,639,612
|
|
|
$
|
9,820,781
|
|
|
$
|
10,077,907
|
|
|
$
|
10,199,808
|
|
|
$
|
10,297,835
|
|
|
Total securities and other short-term investments
|
|
|
2,719,973
|
|
|
|
2,768,659
|
|
|
|
2,675,755
|
|
|
|
2,576,421
|
|
|
|
2,238,701
|
|
|
Average Interest-Earning Assets
|
|
$
|
12,359,585
|
|
|
$
|
12,589,440
|
|
|
$
|
12,753,662
|
|
|
$
|
12,776,229
|
|
|
$
|
12,536,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Interest-Bearing Liabilities
|
|
$
|
10,409,792
|
|
|
$
|
10,583,702
|
|
|
$
|
10,652,144
|
|
|
$
|
10,700,868
|
|
|
$
|
10,518,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Yield/Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average yield on interest-earning assets - GAAP
|
|
|
5.21
|
%
|
|
|
5.12
|
%
|
|
|
5.10
|
%
|
|
|
5.14
|
%
|
|
|
5.30
|
%
|
|
Average rate on interest-bearing liabilities - GAAP
|
|
|
1.19
|
%
|
|
|
1.28
|
%
|
|
|
1.36
|
%
|
|
|
1.47
|
%
|
|
|
1.57
|
%
|
|
Net interest spread - GAAP
|
|
|
4.02
|
%
|
|
|
3.84
|
%
|
|
|
3.74
|
%
|
|
|
3.67
|
%
|
|
|
3.73
|
%
|
|
Net interest margin - GAAP
|
|
|
4.20
|
%
|
|
|
4.04
|
%
|
|
|
3.96
|
%
|
|
|
3.91
|
%
|
|
|
3.98
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average yield on interest-earning assets excluding valuations
|
|
|
5.20
|
%
|
|
|
5.10
|
%
|
|
|
5.08
|
%
|
|
|
5.13
|
%
|
|
|
5.29
|
%
|
|
Average rate on interest-bearing liabilities excluding valuations
|
|
|
1.19
|
%
|
|
|
1.28
|
%
|
|
|
1.36
|
%
|
|
|
1.47
|
%
|
|
|
1.57
|
%
|
|
Net interest spread excluding valuations
|
|
|
4.01
|
%
|
|
|
3.82
|
%
|
|
|
3.72
|
%
|
|
|
3.66
|
%
|
|
|
3.72
|
%
|
|
Net interest margin excluding valuations
|
|
|
4.19
|
%
|
|
|
4.02
|
%
|
|
|
3.95
|
%
|
|
|
3.90
|
%
|
|
|
3.98
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average yield on interest-earning assets on a tax-equivalent basis
and excluding valuations
|
|
|
5.34
|
%
|
|
|
5.19
|
%
|
|
|
5.13
|
%
|
|
|
5.17
|
%
|
|
|
5.34
|
%
|
|
Average rate on interest-bearing liabilities excluding valuations
|
|
|
1.19
|
%
|
|
|
1.28
|
%
|
|
|
1.36
|
%
|
|
|
1.47
|
%
|
|
|
1.57
|
%
|
|
Net interest spread on a tax-equivalent basis and excluding
valuations
|
|
|
4.15
|
%
|
|
|
3.91
|
%
|
|
|
3.77
|
%
|
|
|
3.70
|
%
|
|
|
3.77
|
%
|
|
Net interest margin on a tax-equivalent basis and excluding
valuations
|
|
|
4.34
|
%
|
|
|
4.12
|
%
|
|
|
4.00
|
%
|
|
|
3.94
|
%
|
|
|
4.02
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income, excluding valuations, amounted to $130.7 million,
an increase of $4.5 million when compared to the second quarter of 2013.
Net interest margin expanded to 4.19% for the third quarter of 2013 from
4.02% for the second quarter of 2013. The increase in net interest
income and margin was mainly due to:
-
A decrease of $2.5 million, or 9 basis points, in total interest
expense, of which approximately $2.4 million was due to a reduction in
the average cost of total deposits with the remaining decrease
primarily related to the maturities of Federal Home Loan Bank
advances. The average cost and balance of brokered certificates of
deposit (“CDs”) decreased 23 basis points during the third quarter of
2013 as the Corporation repaid approximately $743.8 million of matured
brokered CDs with an all-in cost of 1.86% and new issuances amounted
to $641.8 million with an all-in cost of 0.82%. The Corporation
expects its cost of funding to remain stable for the remainder of 2013.
-
A $2.2 million increase in interest income on investment securities
mainly due to the decrease in MBS prepayment activity levels that
resulted in a higher yield on U.S. agency MBS bought at a premium.
-
The net interest margin also improved due to the $71.3 million
reduction in the average balance of low-yielding cash balances, mainly
balances maintained at the Federal Reserve, as the Corporation
deployed some of its liquidity into higher yielding U.S. agency MBS
investments and used cash balances to repay maturing brokered CDs.
Also contributing to the expanded margin was the decrease in the
average balance of non-performing loans due to, among other things,
the full effect of the sale of non-performing residential mortgage
loans completed in the second quarter.
These increases were partially offset by:
-
A $0.2 million decrease in interest income on loans.
PROVISION FOR LOAN AND LEASE LOSSES
The provision for loan and lease losses for the third quarter of 2013
was $22.2 million, compared to $87.5 million for the second quarter of
2013, which includes $67.9 million related to the bulk sale of
non-performing residential assets. Excluding the impact of the bulk sale
of non-performing residential assets, the provision for loan and lease
losses of $22.2 million for the third quarter was $2.6 million higher
than the provision recorded for the second quarter of 2013. The increase
was mainly related to the construction and consumer loan portfolios. The
provision for construction loans in the third quarter amounted to $1.3
million compared to a reserve release of $6.7 million for the second
quarter that was driven by updated appraisals for certain collateral
dependent loans. The provision for consumer loans increased by $3.1
million, compared to the provision for the second quarter, mainly
related to the increase in the general reserve for auto and credit card
loans. These increases were partially offset by lower provisions for
commercial loans reflecting a lower migration of loans into adversely
classified categories and lower underlying losses on these portfolios.
See Credit Quality discussion below for additional information
regarding the allowance for loan and lease losses.
NON-INTEREST INCOME (LOSS)
|
|
Quarter Ended
|
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
(In thousands)
|
2013
|
|
2013
|
|
2013
|
|
2012
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts
|
$
|
3,157
|
|
|
$
|
3,098
|
|
|
$
|
3,380
|
|
|
$
|
3,228
|
|
|
$
|
3,267
|
|
|
Mortgage banking activities
|
|
3,521
|
|
|
|
4,823
|
|
|
|
4,580
|
|
|
|
6,700
|
|
|
|
4,728
|
|
|
Net loss on investments and impairments
|
|
-
|
|
|
|
(42
|
)
|
|
|
(117
|
)
|
|
|
(69
|
)
|
|
|
(547
|
)
|
|
Broker-dealer income
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20
|
|
|
Impairment - collateral pledged to Lehman
|
|
-
|
|
|
|
(66,574
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Other operating income
|
|
9,290
|
|
|
|
6,384
|
|
|
|
11,324
|
|
|
|
10,239
|
|
|
|
9,857
|
|
|
Equity in (loss) earnings of unconsolidated entity
|
|
(5,908
|
)
|
|
|
648
|
|
|
|
(5,538
|
)
|
|
|
(8,330
|
)
|
|
|
(2,199
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income (loss)
|
$
|
10,060
|
|
|
$
|
(51,663
|
)
|
|
$
|
13,629
|
|
|
$
|
11,768
|
|
|
$
|
15,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income for the third quarter of 2013 amounted to $10.1
million, compared to non-interest loss of $51.7 million for the second
quarter of 2013. The results for the second quarter included the $66.6
million write-off of the collateral pledged to Lehman. Non-interest
income, excluding the Lehman collateral write-off, decreased $4.9
million from the 2013 second quarter primarily due to:
-
A $6.6 million negative variance in the equity in earnings (loss) of
unconsolidated entity. The Corporation recorded a loss of $5.9 million
on its investment in unconsolidated entity for the third quarter
compared to earnings of $0.6 million for the second quarter of 2013.
This adjustment is related to the Bank’s investment in CPG/GS PR NPL,
LLC (“CPG/GS”), the entity that purchased $269.2 million of loans from
FirstBank in 2011. The Bank holds a 35% subordinated ownership
interest in CPG/GS. This investment is accounted for under the equity
method and following the hypothetical liquidation book value method to
determine the Bank’s share of CPG/GS earnings or losses.
-
A $1.3 million decrease in revenues from the mortgage banking business
mainly related to: (i) a decrease of $1.2 million in the net realized
gain on loan sales and securitization activities, and (ii) a $0.2
million decrease in servicing fees due to the expiration of the
interim servicing on loans included in the bulk sales of assets
completed in the first half of 2013.
-
A $0.2 million decrease in revenues from the insurance agency
activities, included as part of “Other operating income” in the table
above.
These decreases were partially offset by:
-
The impact in the previous quarter of a $3.4 million loss related to
the restructuring of a commercial mortgage loan held for sale in which
the Corporation received foreclosed real estate in partial
satisfaction of a debt arrangement and modified the terms of the
remaining balance. This loss was included as part of “Other operating
income” in the table above.
NON-INTEREST EXPENSES
|
|
|
Quarter Ended
|
|
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
(In thousands)
|
|
2013
|
|
2013
|
|
2013
|
|
2012
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees' compensation and benefits
|
|
$
|
32,823
|
|
$
|
33,116
|
|
$
|
33,554
|
|
$
|
31,840
|
|
$
|
31,058
|
|
Occupancy and equipment
|
|
|
15,134
|
|
|
14,946
|
|
|
15,070
|
|
|
14,972
|
|
|
15,208
|
|
Deposit insurance premium
|
|
|
10,479
|
|
|
11,430
|
|
|
11,517
|
|
|
11,897
|
|
|
11,657
|
|
Other insurance and supervisory fees
|
|
|
1,034
|
|
|
1,269
|
|
|
1,289
|
|
|
1,366
|
|
|
1,366
|
|
Taxes, other than income taxes
|
|
|
4,693
|
|
|
6,239
|
|
|
2,989
|
|
|
3,013
|
|
|
3,499
|
|
Professional fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collections, appraisals and other credit related fees
|
|
|
2,780
|
|
|
2,520
|
|
|
1,924
|
|
|
1,127
|
|
|
2,250
|
|
Outsourcing technology services
|
|
|
4,338
|
|
|
4,258
|
|
|
1,346
|
|
|
1,557
|
|
|
1,311
|
|
Bulk sales professional fees
|
|
|
-
|
|
|
3,060
|
|
|
3,878
|
|
|
-
|
|
|
-
|
|
Terminated preferred stock exchange offer professional fees
|
|
|
-
|
|
|
115
|
|
|
1,081
|
|
|
-
|
|
|
-
|
|
Secondary offering professional fees
|
|
|
390
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Other professional fees
|
|
|
4,332
|
|
|
3,782
|
|
|
2,903
|
|
|
4,275
|
|
|
3,908
|
|
Business promotion
|
|
|
3,478
|
|
|
3,831
|
|
|
3,357
|
|
|
4,067
|
|
|
4,004
|
|
Net loss on OREO operations
|
|
|
7,052
|
|
|
14,829
|
|
|
7,310
|
|
|
6,201
|
|
|
8,686
|
|
Secondary offering other costs
|
|
|
1,279
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Other
|
|
|
11,342
|
|
|
11,928
|
|
|
11,792
|
|
|
10,590
|
|
|
8,896
|
|
Total
|
|
$
|
99,154
|
|
$
|
111,323
|
|
$
|
98,010
|
|
$
|
90,905
|
|
$
|
91,843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses in the third quarter of 2013 amounted to $99.2
million, a decrease of $12.2 million from $111.3 million for the second
quarter of 2013. Non-interest expenses for the third quarter included
approximately $1.7 million in costs associated with the secondary
offering and $1.7 million in costs associated with the conversion of the
credit card processing platform. Results for the second quarter included
$5.0 million of expenses specifically related to the bulk sale of
non-performing residential assets ($3.1 million of professional fees and
$1.9 million as part of OREO losses) as well as $1.7 million of the
national gross receipts tax that corresponded to the first quarter of
2013 but was recorded in the second quarter after enactment of Act 40
which amended the Puerto Rico Internal Revenue Code of 2011 (the “2011
PR Code”).
Adjusted non-interest expenses, which exclude the aforementioned items,
amounted to $95.8 million for the third quarter of 2013, down $8.9
million compared to the second quarter. The main drivers of the decrease
were:
-
A lower net loss on OREO operations, mainly reflecting a $4.9 million
decrease in write-downs on OREO properties. The previous quarter was
adversely impacted by $5.3 million in write-downs to the value of
certain commercial OREO properties in the Virgin Islands region. Also
contributing to the lower net loss on OREO operations was a $1.7
million decrease in operating expenses for, among other things,
repairs and maintenance costs as well as legal-related fees.
-
A $0.3 million reduction in employees’ compensation and benefit
expenses as the previous quarter included certain non-periodic
employee compensation-related expenses such as employees’ lump-sum and
severance payments.
-
A $1.2 million decrease in the Federal Deposit Insurance Corporation
(“FDIC”) insurance premium and other local regulatory fees included as
part of “Other insurance and supervisory fees” in the table above.
-
A $0.3 million increase to legal reserves in the previous quarter,
included as part of “Other” in the table above.
INCOME TAXES
The income tax expense for the third quarter of 2013 amounted to $3.7
million compared to an income tax benefit of $1.0 million for the second
quarter of 2013, primarily reflecting an increase in reserves for
uncertain tax positions and the impact in the previous quarter of
amendments to the 2011 PR Code enacted on June 30, 2013. The increase in
the reserve for uncertain tax positions was mainly related to changes in
management judgment given the lengthy administrative appeals process and
expectations as to resolution resulting in an increase of $3.0 million
to current Unrecognized Tax Positions.
Some of the amendments of Act 40 were retroactive to January 1, 2013,
including the new national gross receipt tax. In the case of financial
institutions, the national gross receipts tax was imposed as an
additional tax at a flat rate of 1%. This charge was recorded as part of
non-interest expenses in the Corporation’s Statement of Income. However,
financial institutions may claim a credit equal to 50% of the national
gross receipts tax against their regular tax liabilities or AMT
liabilities. During the second quarter of 2013, after enactment of Act
40, the Corporation recorded $1.6 million as a credit against its
provision for income taxes, of which $0.8 million corresponded to the
first quarter of 2013.
In addition, Act 40 effectively increased the maximum statutory tax rate
of corporations from 30% to 39%. This provision was also retroactive to
January 1, 2013, and resulted in a net benefit of approximately $0.5
million recorded in the second quarter mainly due to the increase in the
deferred tax asset of profitable subsidiaries. As of September 30, 2013,
the deferred tax asset, net of a valuation allowance of $519.8 million,
amounted to $7.4 million.
CREDIT QUALITY
Non-Performing Assets
|
(Dollars in thousands)
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
|
|
2013
|
|
2013
|
|
2013
|
|
2012
|
|
2012
|
|
Non-performing loans held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
$
|
142,002
|
|
|
$
|
133,937
|
|
|
$
|
311,495
|
|
|
$
|
313,626
|
|
|
$
|
320,913
|
|
|
Commercial mortgage
|
|
|
127,374
|
|
|
|
136,737
|
|
|
|
136,708
|
|
|
|
214,780
|
|
|
|
231,163
|
|
|
Commercial and Industrial
|
|
|
127,584
|
|
|
|
131,906
|
|
|
|
141,045
|
|
|
|
230,090
|
|
|
|
230,459
|
|
|
Construction
|
|
|
64,241
|
|
|
|
68,204
|
|
|
|
59,810
|
|
|
|
178,190
|
|
|
|
189,458
|
|
|
Consumer and Finance leases
|
|
|
37,184
|
|
|
|
35,416
|
|
|
|
33,652
|
|
|
|
38,875
|
|
|
|
36,051
|
|
|
Total non-performing loans held for investment
|
|
|
498,385
|
|
|
|
506,200
|
|
|
|
682,710
|
|
|
|
975,561
|
|
|
|
1,008,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REO
|
|
|
133,284
|
|
|
|
139,257
|
|
|
|
181,479
|
|
|
|
185,764
|
|
|
|
177,001
|
|
|
Other repossessed property
|
|
|
14,125
|
|
|
|
11,503
|
|
|
|
9,913
|
|
|
|
10,107
|
|
|
|
9,775
|
|
|
Other assets (1)
|
|
|
-
|
|
|
|
-
|
|
|
|
64,543
|
|
|
|
64,543
|
|
|
|
64,543
|
|
|
Total non-performing assets, excluding loans held for sale
|
|
$
|
645,794
|
|
|
$
|
656,960
|
|
|
$
|
938,645
|
|
|
$
|
1,235,975
|
|
|
$
|
1,259,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans held for sale
|
|
|
80,234
|
|
|
|
94,951
|
|
|
|
147,995
|
|
|
|
2,243
|
|
|
|
-
|
|
|
Total non-performing assets, including loans held for sale (2)
|
|
$
|
726,028
|
|
|
$
|
751,911
|
|
|
$
|
1,086,640
|
|
|
$
|
1,238,218
|
|
|
$
|
1,259,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past-due loans 90 days and still accruing
|
|
$
|
127,735
|
|
|
$
|
113,061
|
|
|
$
|
125,384
|
|
|
$
|
142,012
|
|
|
$
|
141,028
|
|
|
Non-performing loans held for investment to total loans held for
investment
|
|
|
5.24
|
%
|
|
|
5.36
|
%
|
|
|
7.14
|
%
|
|
|
9.70
|
%
|
|
|
9.89
|
%
|
|
Non-performing loans to total loans
|
|
|
6.01
|
%
|
|
|
6.21
|
%
|
|
|
8.45
|
%
|
|
|
9.64
|
%
|
|
|
9.83
|
%
|
|
Non-performing assets, excluding non-performing loans held for
sale, to total assets, excluding non-performing loans held for sale
|
|
|
5.08
|
%
|
|
|
5.17
|
%
|
|
|
7.30
|
%
|
|
|
9.44
|
%
|
|
|
9.58
|
%
|
|
Non-performing assets to total assets
|
|
|
5.68
|
%
|
|
|
5.87
|
%
|
|
|
8.35
|
%
|
|
|
9.45
|
%
|
|
|
9.58
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Collateral pledged to Lehman Brothers, Inc.
|
|
(2)Amount excludes purchased credit impaired loans with a carrying
value as of September 30, 2013, of approximately $6.0 million
acquired as part of the credit card portfolio acquired from FIA
Card Services ("FIA").
|
|
|
Credit quality metrics remained relatively stable:
-
Total non-performing assets decreased by $25.9 million, or 3%, from
the second quarter of 2013 to $726.0 million. Total non-performing
loans, including non-performing loans held for sale, decreased by
$22.5 million, or 4%, from the second quarter of 2013. The decrease
was primarily due to charge-offs of $7.8 million against two
non-performing commercial loan relationships, the completion of the
transfer to OREO of one of the properties amounting to $6.7 million in
connection with the aforementioned commercial mortgage loan held for
sale relationship restructured in the second quarter on which the
Corporation received foreclosed real estate in partial satisfaction of
a debt arrangement, $6.4 million related to construction loan held for
sale participations paid off during the third quarter, and a $6.8
million commercial mortgage troubled debt restructured loan restored
to accrual status.
-
Inflows of non-performing loans decreased by $20.3 million, or 21%,
compared to inflows in the second quarter. This reduction was
primarily reflected in the residential mortgage loans portfolio. The
largest individual relationship that entered into non-performing
status during the third quarter amounted to $2.3 million.
-
Adversely classified commercial and construction loans held for
investment decreased by $32.1 million to $632.5 million, or 5%, from
the second quarter of 2013. Non-performing commercial and construction
loans held for sale decreased by $14.7 million.
-
The OREO balance decreased by $6.0 million, driven by sales and fair
value adjustments.
-
Total troubled debt restructured loans (“TDRs”) held for investment
were $636.9 million at September 30, 2013, up $23.8 million, or 4%,
from June 30, 2013. Approximately $427.1 million of total TDRs held
for investment were in accrual status as of September 30, 2013.
Allowance for Loan and Lease Losses
The following table sets forth an analysis of the allowance for loan and
lease losses during the periods indicated:
|
|
|
Quarter Ended
|
|
(Dollars in thousands)
|
|
September 30,
|
|
June 30,
|
|
|
|
March 31,
|
|
|
|
December 31,
|
|
September 30,
|
|
|
|
2013
|
|
2013
|
|
|
|
2013
|
|
|
|
2012
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses, beginning of period
|
|
$
|
301,047
|
|
|
$
|
342,531
|
|
|
|
|
$
|
435,414
|
|
|
|
|
$
|
445,531
|
|
|
$
|
457,153
|
|
|
Provision for loan and lease losses
|
|
|
22,195
|
|
|
|
87,464
|
|
(1
|
)
|
|
|
111,123
|
|
(5
|
)
|
|
|
30,466
|
|
|
|
28,952
|
|
|
Net charge-offs of loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
(8,457
|
)
|
|
|
(103,418
|
)
|
(2
|
)
|
|
|
(11,580
|
)
|
(6
|
)
|
|
|
(9,555
|
)
|
|
|
(7,358
|
)
|
|
Commercial mortgage
|
|
|
(5,918
|
)
|
|
|
(3,253
|
)
|
|
|
|
|
(56,036
|
)
|
(7
|
)
|
|
|
(6,101
|
)
|
|
|
(5,002
|
)
|
|
Commercial and Industrial
|
|
|
(5,718
|
)
|
|
|
(5,520
|
)
|
|
|
|
|
(84,829
|
)
|
(8
|
)
|
|
|
(12,601
|
)
|
|
|
(12,261
|
)
|
|
Construction
|
|
|
71
|
|
|
|
(2,368
|
)
|
(3
|
)
|
|
|
(38,515
|
)
|
(9
|
)
|
|
|
(1,837
|
)
|
|
|
(8,326
|
)
|
|
Consumer and finance leases
|
|
|
(13,841
|
)
|
|
|
(14,389
|
)
|
|
|
|
|
(13,046
|
)
|
|
|
|
|
(10,489
|
)
|
|
|
(7,627
|
)
|
|
Net charge-offs
|
|
|
(33,863
|
)
|
|
|
(128,948
|
)
|
(4
|
)
|
|
|
(204,006
|
)
|
(10
|
)
|
|
|
(40,583
|
)
|
|
|
(40,574
|
)
|
|
Allowance for loan and lease losses, end of period
|
|
$
|
289,379
|
|
|
$
|
301,047
|
|
|
|
|
$
|
342,531
|
|
|
|
|
$
|
435,414
|
|
|
$
|
445,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses to period end total loans held
for investment
|
|
|
3.04
|
%
|
|
|
3.19
|
%
|
|
|
|
|
3.58
|
%
|
|
|
|
|
4.23
|
%
|
|
|
4.37
|
%
|
|
Net charge-offs (annualized) to average loans outstanding during the
period
|
|
|
1.41
|
%
|
|
|
5.25
|
%
|
|
|
|
|
8.10
|
%
|
|
|
|
|
1.59
|
%
|
|
|
1.58
|
%
|
|
Net charge-offs (annualized), excluding charge-offs related to
loans sold and loans transferred to held for sale, to average
loans outstanding during the period
|
|
|
1.41
|
%
|
|
|
1.29
|
%
|
|
|
|
|
2.87
|
%
|
|
|
|
|
1.59
|
%
|
|
|
1.58
|
%
|
|
Provision for loan and lease losses to net charge-offs during the
period
|
|
|
0.66x
|
|
|
|
0.68x
|
|
|
|
|
|
0.54x
|
|
|
|
|
|
0.75x
|
|
|
|
0.71x
|
|
|
Provision for loan and lease losses to net charge-offs during the
period, excluding impact of loans sold and loans transferred to
held for sale
|
|
|
0.66x
|
|
|
|
0.63x
|
|
|
|
|
|
0.68x
|
|
|
|
|
|
0.75x
|
|
|
|
0.71x
|
|
|
|
|
(1) Includes provision of $67.9 million associated with the bulk
sale of non-performing residential assets.
|
|
(2) Includes net charge-offs totaling $97.9 million associated with
the bulk sale of non-performing residential assets.
|
|
(3) Includes net charge-offs totaling $31 thousand associated with
the bulk sale of non-performing residential assets.
|
|
(4) Includes net charge-offs totaling $98.0 million associated with
the bulk sale of non-performing residential assets.
|
|
(5) Includes provision of $64.1 million associated with the bulk
sale of adversely classified commercial assets and the transfer of
loans to held for sale.
|
|
(6) Includes net charge-offs totaling $1.0 million associated with
the bulk sale of adversely classified commercial assets.
|
|
(7) Includes net charge-offs of $54.6 million associated with the
bulk sale of adversely classified commercial assets and the transfer
of loans to held for sale.
|
|
(8) Includes net charge-offs totaling $44.7 million associated with
the bulk sale of adversely classified commercial assets.
|
|
(9) Includes net charge-offs of $34.2 million associated with the
bulk sale of adversely classified commercial assets and the transfer
of loans to held for sale.
|
|
(10) Includes net charge-offs of $134.5 million associated with the
bulk sale of adversely classified commercial assets and the transfer
of loans to held for sale.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
The ratio of the allowance for loan and lease losses to loans held for
investment was 3.04% as of September 30, 2013, compared to 3.19% as of
June 30, 2013, primarily due to charge-offs of impaired commercial
loans with previously established adequate reserves and lower
underlying losses on commercial mortgage loans. The ratio of the
allowance to non-performing loans held for investment of 58.06% as of
September 30, 2013 decreased from 59.47% as of June 30, 2013.
The following table sets forth information concerning the composition of
the Corporation’s allowance for loan and lease losses as of September
30, 2013 and June 30, 2013 by loan category and by whether the allowance
and related provisions were calculated individually for impairment
purposes or through a general valuation allowance:
|
(Dollars in thousands)
|
|
Residential Mortgage Loans
|
|
Commercial (including Commercial Mortgage, C&I, and Construction
loans)
|
|
Consumer and Finance Leases
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans, net of charge-offs
|
|
$
|
397,025
|
|
|
$
|
479,421
|
|
|
$
|
28,063
|
|
|
$
|
904,509
|
|
|
Allowance for loan and lease losses
|
|
|
17,982
|
|
|
|
84,539
|
|
|
|
3,655
|
|
|
|
106,176
|
|
|
Allowance for loan and lease losses to principal balance
|
|
|
4.53
|
%
|
|
|
17.63
|
%
|
|
|
13.02
|
%
|
|
|
11.74
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PCI loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value of PCI loans
|
|
|
-
|
|
|
|
-
|
|
|
|
5,963
|
|
|
|
5,963
|
|
|
Allowance for PCI loans
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Allowance for PCI loans to carrying value
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans with general allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans
|
|
|
2,122,432
|
|
|
|
4,450,330
|
|
|
|
2,025,400
|
|
|
|
8,598,162
|
|
|
Allowance for loan and lease losses
|
|
|
13,805
|
|
|
|
116,649
|
|
|
|
52,749
|
|
|
|
183,203
|
|
|
Allowance for loan and lease losses to principal balance
|
|
|
0.65
|
%
|
|
|
2.62
|
%
|
|
|
2.60
|
%
|
|
|
2.13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans
|
|
$
|
2,519,457
|
|
|
$
|
4,929,751
|
|
|
$
|
2,059,426
|
|
|
$
|
9,508,634
|
|
|
Allowance for loan and lease losses
|
|
|
31,787
|
|
|
|
201,188
|
|
|
|
56,404
|
|
|
|
289,379
|
|
|
Allowance for loan and lease losses to principal balance
|
|
|
1.26
|
%
|
|
|
4.08
|
%
|
|
|
2.74
|
%
|
|
|
3.04
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans, net of charge-offs
|
|
$
|
384,062
|
|
|
$
|
496,398
|
|
|
$
|
27,785
|
|
|
$
|
908,245
|
|
|
Allowance for loan and lease losses
|
|
|
20,406
|
|
|
|
91,606
|
|
|
|
2,941
|
|
|
|
114,953
|
|
|
Allowance for loan and lease losses to principal balance
|
|
|
5.31
|
%
|
|
|
18.45
|
%
|
|
|
10.58
|
%
|
|
|
12.66
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PCI loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value of PCI loans
|
|
|
-
|
|
|
|
-
|
|
|
|
8,285
|
|
|
|
8,285
|
|
|
Allowance for PCI loans
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Allowance for PCI loans to carrying value
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans with general allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans
|
|
|
2,127,144
|
|
|
|
4,390,814
|
|
|
|
2,011,298
|
|
|
|
8,529,256
|
|
|
Allowance for loan and lease losses
|
|
|
15,175
|
|
|
|
118,812
|
|
|
|
52,107
|
|
|
|
186,094
|
|
|
Allowance for loan and lease losses to principal balance
|
|
|
0.71
|
%
|
|
|
2.71
|
%
|
|
|
2.59
|
%
|
|
|
2.18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans
|
|
$
|
2,511,206
|
|
|
$
|
4,887,212
|
|
|
$
|
2,047,368
|
|
|
$
|
9,445,786
|
|
|
Allowance for loan and lease losses
|
|
|
35,581
|
|
|
|
210,418
|
|
|
|
55,048
|
|
|
|
301,047
|
|
|
Allowance for loan and lease losses to principal balance
|
|
|
1.42
|
%
|
|
|
4.31
|
%
|
|
|
2.69
|
%
|
|
|
3.19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Charge-Offs
The following table presents annualized net charge-offs to average loans
held-in-portfolio:
|
|
|
Quarter Ended
|
|
|
|
September 30,
|
|
June 30,
|
|
|
March 31,
|
|
|
December 31,
|
|
September 30,
|
|
|
|
2013
|
|
2013
|
|
|
2013
|
|
|
2012
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
1.31
|
%
|
|
14.78
|
%
|
(1
|
)
|
1.65
|
%
|
(4
|
)
|
1.36
|
%
|
|
1.05
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial mortgage
|
|
1.23
|
%
|
|
0.79
|
%
|
|
|
12.06
|
%
|
(5
|
)
|
1.70
|
%
|
|
1.36
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and Industrial
|
|
0.81
|
%
|
|
0.72
|
%
|
|
|
11.16
|
%
|
(6
|
)
|
1.40
|
%
|
|
1.33
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
|
|
-0.11
|
%
|
|
3.43
|
%
|
(2
|
)
|
44.66
|
%
|
(7
|
)
|
2.06
|
%
|
|
9.11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and finance leases
|
|
2.71
|
%
|
|
2.83
|
%
|
|
|
2.59
|
%
|
|
|
2.10
|
%
|
|
1.55
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
1.41
|
%
|
|
5.25
|
%
|
(3
|
)
|
8.10
|
%
|
(8
|
)
|
1.59
|
%
|
|
1.58
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes net charge-offs totaling $97.9 million associated
with the bulk sale of non-performing residential assets. The ratio
of residential mortgage net charge-offs to average loans,
excluding charge-offs associated with the bulk sale of
non-performing residential assets, was 0.84%.
|
|
(2) Includes net charge-offs totaling $31 thousand associated with
the bulk sale of non-performing residential assets. The ratio of
construction net charge-offs to average loans, excluding
charge-offs associated with the bulk sale of non-performing
residential assets, was 3.39%.
|
|
(3) Includes net charge-offs totaling $98.0 million associated
with the bulk sale of non-performing residential assets. The ratio
of total net charge-offs to average loans, excluding charge-offs
associated with the bulk sale of non-performing residential
assets, was 1.29%.
|
|
(4) Includes net charge-offs totaling $1.0 million associated with
the bulk sale of adversely classified commercial assets. The ratio
of residential mortgage net charge-offs to average loans,
excluding charge-offs associated with the bulk sale of adversely
classified commercial assets, was 1.50%.
|
|
(5) Includes net charge-offs of $54.6 million associated with the
bulk sale of adversely classified commercial assets and the
transfer of loans to held for sale in the first quarter of 2013.
The ratio of commercial mortgage net charge-offs to average loans,
excluding charge-offs associated with the bulk sale of adversely
classified commercial assets and the transfer of loans to held for
sale, was 0.34%.
|
|
(6) Includes net charge-offs totaling $44.7 million associated
with the bulk sale of adversely classified commercial assets. The
ratio of commercial and industrial net charge-offs to average
loans, excluding charge-offs associated with the bulk sale of
adversely classified commercial assets, was 5.47%.
|
|
(7) Includes net charge-offs of $34.2 million associated with the
bulk sale of adversely classified commercial assets and the
transfer of loans to held for sale in the first quarter of 2013.
The ratio of construction loans net charge-offs to average loans,
excluding charge-offs associated with the bulk sale of adversely
classified commercial assets and the transfer of loans to held for
sale, was 7.74%.
|
|
(8) Includes net charge-offs of $134.5 million associated with the
bulk sale of adversely classified commercial assets and the
transfer of loans to held for sale in the first quarter of 2013.
The ratio of total net charge-offs to average loans, excluding
charge-offs associated with the bulk sale of adversely classified
commercial assets and the transfer of loans to held for sale, was
2.87%.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The ratios above are based on annualized net charge-offs and are not
necessarily indicative of the results expected in subsequent periods.
-
Net charge-offs for the third quarter of 2013 were $33.9 million, or
an annualized 1.41% of average loans, compared to $128.9 million, or
an annualized 5.25%, in the second quarter of 2013. The bulk sale of
non-performing residential assets added $98.0 million in charge-offs
in the second quarter of 2013. Excluding the impact of the bulk sale
of non-performing residential assets, the net charge-offs for the
third quarter of 2013 were $2.9 million higher than in the second
quarter. The increase was primarily related to residential mortgage
loans in Puerto Rico resulting from the valuations for impairment
purposes of loans considered homogeneous given high delinquency and
loan-to-value levels, and a charge-off of $4.0 million for a
commercial mortgage relationship in Florida. These increases were
partially offset by a decline in net charge-offs of consumer loans and
increased recoveries.
STATEMENT OF FINANCIAL CONDITION
Total assets were approximately $12.8 billion as of September 30, 2013,
down $15.8 million from June 30, 2013.
The decrease was mainly due to:
-
A $123.0 million decrease in loans held for sale driven by sales and
securitizations of residential mortgage conforming loans commensurate
with a lower volume of residential mortgage loan originations.
-
A $10.6 million decrease in cash and cash equivalents, mainly balances
maintained at the Federal Reserve.
-
A $6.0 million decrease in OREO balances.
-
A $5.9 million decrease in the Investment in unconsolidated entity.
These decreases were partially offset by:
-
A $62.8 million increase in loans held for investment mainly
reflecting increases in commercial and industrial loans, including a
$78.6 million increase in the principal balance of loans outstanding
from government entities and a $46.4 million increase in commercial
and industrial loans in Florida. This was partially offset by
decreases in construction and commercial mortgage loans.
Total loan originations, including refinancings and draws from existing
revolving and non-revolving commitments, amounted to approximately
$836.6 million, compared to $924.7 million in the second quarter of
2013. The decrease was mainly related to the decline in residential
mortgage loan originations attributed, in part, to the increase in
market interest rates, partially offset by disbursements on facilities
granted to government entities in both Puerto Rico and the Virgin
Islands, and commercial loan originations in the Florida region.
-
A $56.5 million increase in available-for-sale securities mainly due
to purchases of 15-Year U.S. agency MBS totaling $148.5 million with
an average yield of 2.67%, partially offset by a decrease in the fair
value of Puerto Rico Government obligations and regular MBS repayments.
Total liabilities were approximately $11.6 billion as of September 30,
2013, down $14.0 million from June 30, 2013.
The decrease was mainly due to:
-
A $102.1 million decrease in brokered CDs.
-
A $5.0 million decrease in FHLB advances.
These decreases were partially offset by:
-
A $78.6 million increase in non-brokered deposits mainly due to
increases in government and savings deposits.
-
A $14.5 million increase in accounts payable and other liabilities
mainly due to increases in accrued expenses related to payroll and
benefits, the national gross receipts tax, credit card processing
conversion costs and the increase in reserves for uncertain tax
positions.
Total stockholders’ equity amounted to $1.2 billion as of September 30,
2013, a decrease of $1.7 million from June 30, 2013, driven by:
-
A decrease of $18.3 million in other comprehensive income mainly
attributable to declines in value of Puerto Rico government
obligations held by the Corporation as part of its available for sale
investment securities portfolio. See Exposure to Puerto Rico
Government section below for additional information.
-
The net income of $15.9 million reported in the third quarter.
The Corporation’s total capital, Tier 1 capital, and leverage ratios as
of September 30, 2013 were 16.89%, 15.61%, and 11.65%, respectively,
compared to total capital, Tier 1 capital and leverage ratios of 16.61%,
15.32%, and 11.26%, respectively, as of the end of the second quarter of
2013. Meanwhile, the total capital, Tier 1 capital, and leverage ratios
as of September 30, 2013 of our banking subsidiary, FirstBank Puerto
Rico, were 16.48%, 15.20%, and 11.35%, respectively, compared to total
capital, Tier 1 capital, and leverage ratios of 16.16%, 14.87%, and
10.94%, respectively, as of the end of the prior quarter. All of the
regulatory capital ratios for the Bank are well above the minimum
required under the consent order entered into with the FDIC and the
Office of the Commissioner of Financial Institutions of the Commonwealth
of Puerto Rico. Given such consent order, however, the Bank cannot be
considered to be a well-capitalized institution.
Based on our current interpretation of the international regulatory
capital requirements adopted by the Basel Committee on Banking
Supervision (known as “Basel 3”), we anticipate that we will exceed the
fully phased-in minimum capital ratios these rules establish.
Tangible Common Equity
The Corporation’s tangible common equity ratio increased to 8.65% as of
September 30, 2013, from 8.64% as of June 30, 2013, and the Tier 1
common equity to risk-weighted assets ratio increased to 12.55% as of
September 30, 2013, from 12.28% as of June 30, 2013.
The following table is a reconciliation of the Corporation’s tangible
common equity and tangible assets over the last five quarters to the
comparable GAAP items:
|
(In thousands, except ratios and per share information)
|
|
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
|
|
2013
|
|
2013
|
|
2013
|
|
2012
|
|
2012
|
|
Tangible Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity - GAAP
|
|
$
|
1,220,593
|
|
|
$
|
1,222,328
|
|
|
$
|
1,403,999
|
|
|
$
|
1,485,023
|
|
|
$
|
1,484,117
|
|
|
Preferred equity
|
|
|
(63,047
|
)
|
|
|
(63,047
|
)
|
|
|
(63,047
|
)
|
|
|
(63,047
|
)
|
|
|
(63,047
|
)
|
|
Goodwill
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
Purchased credit card relationship
|
|
|
(20,718
|
)
|
|
|
(21,649
|
)
|
|
|
(22,580
|
)
|
|
|
(23,511
|
)
|
|
|
(23,920
|
)
|
|
Core deposit intangible
|
|
|
(7,570
|
)
|
|
|
(8,158
|
)
|
|
|
(8,746
|
)
|
|
|
(9,335
|
)
|
|
|
(9,923
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity
|
|
$
|
1,101,160
|
|
|
$
|
1,101,376
|
|
|
$
|
1,281,528
|
|
|
$
|
1,361,032
|
|
|
$
|
1,359,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets - GAAP
|
|
$
|
12,787,450
|
|
|
$
|
12,803,169
|
|
|
$
|
13,005,876
|
|
|
$
|
13,099,741
|
|
|
$
|
13,139,747
|
|
|
Goodwill
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
Purchased credit card relationship
|
|
|
(20,718
|
)
|
|
|
(21,649
|
)
|
|
|
(22,580
|
)
|
|
|
(23,511
|
)
|
|
|
(23,920
|
)
|
|
Core deposit intangible
|
|
|
(7,570
|
)
|
|
|
(8,158
|
)
|
|
|
(8,746
|
)
|
|
|
(9,335
|
)
|
|
|
(9,923
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible assets
|
|
$
|
12,731,064
|
|
|
$
|
12,745,264
|
|
|
$
|
12,946,452
|
|
|
$
|
13,038,797
|
|
|
$
|
13,077,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding
|
|
|
207,043
|
|
|
|
206,982
|
|
|
|
206,228
|
|
|
|
206,235
|
|
|
|
206,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity ratio
|
|
|
8.65
|
%
|
|
|
8.64
|
%
|
|
|
9.90
|
%
|
|
|
10.44
|
%
|
|
|
10.39
|
%
|
|
Tangible book value per common share
|
|
$
|
5.32
|
|
|
$
|
5.32
|
|
|
$
|
6.21
|
|
|
$
|
6.60
|
|
|
$
|
6.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles stockholders’ equity (GAAP) to Tier 1
common equity based on current applicable bank regulatory requirements
(known as “Basel 1”):
|
(Dollars in thousands)
|
|
As of
|
|
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
|
|
2013
|
|
2013
|
|
2013
|
|
2012
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Common Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity - GAAP
|
|
$
|
1,220,593
|
|
|
$
|
1,222,328
|
|
|
$
|
1,403,999
|
|
|
$
|
1,485,023
|
|
|
$
|
1,484,117
|
|
|
Qualifying preferred stock
|
|
|
(63,047
|
)
|
|
|
(63,047
|
)
|
|
|
(63,047
|
)
|
|
|
(63,047
|
)
|
|
|
(63,047
|
)
|
|
Unrealized loss (gain) on available-for-sale securities (1)
|
|
|
58,485
|
|
|
|
40,142
|
|
|
|
(19,868
|
)
|
|
|
(28,476
|
)
|
|
|
(42,528
|
)
|
|
Disallowed deferred tax asset (2)
|
|
|
(43
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(40
|
)
|
|
Goodwill
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
Core deposit intangible
|
|
|
(7,570
|
)
|
|
|
(8,158
|
)
|
|
|
(8,746
|
)
|
|
|
(9,335
|
)
|
|
|
(9,923
|
)
|
|
Other disallowed assets
|
|
|
(410
|
)
|
|
|
(569
|
)
|
|
|
(2,515
|
)
|
|
|
(4,032
|
)
|
|
|
(4,155
|
)
|
|
Tier 1 common equity
|
|
$
|
1,179,910
|
|
|
$
|
1,162,598
|
|
|
$
|
1,281,725
|
|
|
$
|
1,352,035
|
|
|
$
|
1,336,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total risk-weighted assets
|
|
$
|
9,402,910
|
|
|
$
|
9,467,699
|
|
|
$
|
9,721,502
|
|
|
$
|
9,933,719
|
|
|
$
|
10,026,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 common equity to risk-weighted assets ratio
|
|
|
12.55
|
%
|
|
|
12.28
|
%
|
|
|
13.18
|
%
|
|
|
13.61
|
%
|
|
|
13.33
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1- Tier 1 capital excludes net unrealized gains (losses) on
available-for-sale debt securities and net unrealized gains on
available-for-sale equity securities with readily determinable fair
values, in accordance with regulatory risk-based capital guidelines.
In arriving at Tier 1 capital, institutions are required to deduct
net unrealized losses on available-for-sale equity securities with
readily determinable fair values, net of tax.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2- Approximately $7.7 million of the Corporation's deferred tax
assets as of September 30, 2013 (June 30, 2013 - $10 million; March
31, 2013 - $10 million; December 31, 2012 - $11 million; September
30, 2012 - $12 million) was included without limitation in
regulatory capital pursuant to the risk-based capital guidelines,
while approximately $43 thousand of such assets as of September 30,
2013 (June 30, 2013 - $0; March 31, 2013 - $0; December 31, 2012 -
$0; September 30, 2012 - $40 thousand) exceeded the limitation
imposed by these guidelines and, as "disallowed deferred tax
assets," was deducted in arriving at Tier 1 capital. According to
regulatory capital guidelines, the deferred tax assets that are
dependent upon future taxable income are limited for inclusion in
Tier 1 capital to the lesser of: (i) the amount of such deferred tax
asset that the entity expects to realize within one year of the
calendar quarter-end date, based on its projected future taxable
income for that year, or (ii) 10% of the amount of the entity's Tier
1 capital. Approximately $0.3 million of the Corporation's other net
deferred tax liability as of September 30, 2013 (June 30, 2013 - $3
million; March 31, 2013 - $6 million; December 31, 2012 - $6
million; September 30, 2012 - $7 million) represented primarily the
deferred tax effects of unrealized gains and losses on
available-for-sale debt securities, which are permitted to be
excluded prior to deriving the amount of net deferred tax assets
subject to limitation under the guidelines.
|
|
|
Exposure to Puerto Rico Government
As of September 30, 2013, the Corporation had $326.7 million outstanding
in credit facilities granted to the Puerto Rico Government, its
municipalities and public corporations, compared to $250.4 million as of
June 30, 2013. Approximately $199.0 million of the granted credit
facilities consists of loans to municipalities in Puerto Rico for which,
in most cases, the good faith, credit and unlimited taxing power of the
applicable municipality has been pledged to their repayment.
Approximately $79.6 million consists of loans to public corporations
that obtain revenues from rates charged for services or products, such
as electric power, and approximately $48.1 million consists of loans to
units of the central government. Furthermore, the Corporation had $198.9
million outstanding in financings to the hotel industry in Puerto Rico
guaranteed by the Puerto Rico Tourism Development Fund.
In addition, the Corporation had outstanding $71.0 million in
obligations of the Puerto Rico government as part of its available for
sale investment securities portfolio carried in books at its fair value
of $49.2 million as of September 30, 2013, compared to $67.4 million as
of June 30, 2013.
As of September 30, 2013, the Corporation had $584.1 million of public
sector deposits in Puerto Rico. Approximately 25% come from
municipalities in Puerto Rico and 75% come from public corporations and
the central government.
Conference Call / Webcast Information
First BanCorp’s senior management will host an earnings conference call
and live webcast on Wednesday, October 23, 2013, at 11:00 a.m. (Eastern
Time). The call may be accessed via a live Internet webcast through the
investor relations section of the Corporation’s web site: www.firstbankpr.com
or through a dial-in telephone number at (888) 317-6016 or (412)
317–6016 for international callers. Listeners are recommended to go to
the web site at least 15 minutes prior to the call to download and
install any necessary software. Following the webcast presentation, a
question and answer session will be made available to research analysts
and institutional investors. A replay of the webcast will be archived in
the investor relations section of First BanCorp’s web site, www.firstbankpr.com,
until October 23, 2014. A telephone replay will be available one hour
after the end of the conference call through 9:00 a.m. Eastern time
November 25, 2013, at (877) 344-7529 or (412) 317-0088 for international
callers. The conference number is 10035905.
Safe Harbor
This press release may contain “forward-looking statements” concerning
the Corporation’s future economic performance. The words or phrases
“expect,” “anticipate,” “look forward,” “should,” “believes” and similar
expressions are meant to identify “forward-looking statements” within
the meaning of Section 27A of the Private Securities Litigation Reform
Act of 1995, and are subject to the safe harbor created by such section.
The Corporation wishes to caution readers not to place undue reliance on
any such “forward-looking statements,” which speak only as of the date
made, and to advise readers that various factors, including, but not
limited to, the following could cause actual results to differ
materially from those expressed in, or implied by such forward-looking
statements: uncertainty about whether the Corporation and FirstBank will
be able to fully comply with the written agreement dated June 3, 2010
that the Corporation entered into with the Federal Reserve Bank of New
York (the “New York Fed”) and the consent order dated June 2, 2010 that
FirstBank entered into with the FDIC and the Office of the Commissioner
of Financial Institutions of the Commonwealth of Puerto Rico (the “FDIC
Order”) that, among other things, require FirstBank to maintain certain
capital levels and reduce its special mention, classified, delinquent,
and non-performing assets; the risk of being subject to possible
additional regulatory actions; uncertainty as to the availability of
certain funding sources, such as retail brokered CDs; the Corporation’s
reliance on brokered CDs and its ability to obtain, on a periodic basis,
approval from the FDIC to issue brokered CDs to fund operations and
provide liquidity in accordance with the terms of the FDIC Order; the
risk of not being able to fulfill the Corporation’s cash obligations or
resume paying dividends to the Corporation’s stockholders in the future
due to the Corporation’s inability to receive approval from the New York
Fed or the Board of Governors of the Federal Reserve System (“Federal
Reserve Board”) to receive dividends from FirstBank or FirstBank’s
failure to generate sufficient cash flow to make a dividend payment to
the Corporation; the strength or weakness of the real estate markets and
of the consumer and commercial credit sectors and their impact on the
credit quality of the Corporation’s loans and other assets, which has
contributed and may continue to contribute to, among other things, the
high levels of non-performing assets, charge-offs, and the provision
expense and may subject the Corporation to further risk from loan
defaults and foreclosures; the ability of FirstBank to realize the
benefit of the deferred tax asset; adverse changes in general economic
conditions in Puerto Rico, the U.S., and the U.S. Virgin Islands and
British Virgin Islands, including the interest rate environment, market
liquidity, housing absorption rates, real estate prices, and disruptions
in the U.S. capital markets, which may reduce interest margins, impact
funding sources, and affect demand for all of the Corporation’s products
and services and reduce the Corporation’s revenues, earnings, and the
value of the Corporation’s assets; an adverse change in the
Corporation’s ability to attract new clients and retain existing ones; a
decrease in demand for the Corporation’s products and services and lower
revenues and earnings because of the continued recession in Puerto Rico,
the current fiscal problems and budget deficit of the Puerto Rico
government and recent credit downgrades of the Puerto Rico government;
the risk that any portion of the unrealized losses in the Corporation’s
investment portfolio is determined to be other-than-temporary, including
unrealized losses on Puerto Rico government obligations; uncertainty
about regulatory and legislative changes for financial services
companies in Puerto Rico, the U.S., and the U.S. and British Virgin
Islands, which could affect the Corporation’s financial condition or
performance and could cause the Corporation’s actual results for future
periods to differ materially from prior results and anticipated or
projected results; uncertainty about the effectiveness of the various
actions undertaken to stimulate the U.S. economy and stabilize the U.S.
financial markets, and the impact such actions may have on the
Corporation's business, financial condition and results of operations;
changes in the fiscal and monetary policies and regulations of the
federal government, including those determined by the Federal Reserve
Board, the New York Fed, the FDIC, government-sponsored housing
agencies, and regulators in Puerto Rico and the U.S. and British Virgin
Islands; the risk of possible failure or circumvention of controls and
procedures and the risk that the Corporation’s risk management policies
may not be adequate; the risk that the FDIC may further increase the
deposit insurance premium and/or require special assessments to
replenish its insurance fund, causing an additional increase in the
Corporation’s non-interest expenses; the impact on the Corporation’s
results of operations and financial condition of acquisitions and
dispositions; a need to recognize additional impairments on financial
instruments, goodwill, or other intangible assets relating to
acquisitions; the risks that downgrades in the credit ratings of the
Corporation’s long-term senior debt will adversely affect the
Corporation’s ability to access necessary external funds; the impact of
the Dodd-Frank Wall Street Reform and Consumer Protection Act on the
Corporation’s businesses, business practices, and cost of operations;
the risk of losses in the value of investments in unconsolidated
entities that the Corporation does not control; and general competitive
factors and industry consolidation. The Corporation does not undertake,
and specifically disclaims any obligation, to update any
“forward-looking statements” to reflect occurrences or unanticipated
events or circumstances after the date of such statements except as
required by the federal securities laws.
Basis of Presentation
Use of Non-GAAP Financial Measures
This press release contains non-GAAP financial measures. Non-GAAP
financial measures are set forth when management believes they will be
helpful to an understanding of the Corporation’s results of operations
or financial position. Where non-GAAP financial measures are used, the
comparable GAAP financial measure, as well as the reconciliation to the
comparable GAAP financial measure, can be found in the text or in the
attached tables to this earnings release.
Tangible Common Equity Ratio and Tangible Book Value per Common Share
The tangible common equity ratio and tangible book value per common
share are non-GAAP measures generally used by the financial community to
evaluate capital adequacy. Tangible common equity is total equity less
preferred equity, goodwill, core deposit intangibles, and other
intangibles, such as the purchased credit card relationship intangible.
Tangible assets are total assets less goodwill, core deposit
intangibles, and other intangibles, such as the purchased credit card
relationship intangible. Management and many stock analysts use the
tangible common equity ratio and tangible book value per common share in
conjunction with more traditional bank capital ratios to compare the
capital adequacy of banking organizations with significant amounts of
goodwill or other intangible assets, typically stemming from the use of
the purchase method of accounting for mergers and acquisitions. Neither
tangible common equity nor tangible assets, or the related measures
should be considered in isolation or as a substitute for stockholders’
equity, total assets, or any other measure calculated in accordance with
GAAP. Moreover, the manner in which the Corporation calculates its
tangible common equity, tangible assets, and any other related measures
may differ from that of other companies reporting measures with similar
names.
Tier 1 Common Equity to Risk-Weighted Assets Ratio
The Tier 1 common equity to risk-weighted assets ratio is calculated by
dividing (a) Tier 1 capital less non-common elements including
qualifying perpetual preferred stock and qualifying trust preferred
securities by (b) risk-weighted assets, which assets are calculated in
accordance with current applicable bank regulatory requirements (Basel
1). The Tier 1 common equity ratio is not required by GAAP or on a
recurring basis by applicable bank regulatory requirements. Management
is currently monitoring this ratio, along with the other ratios
discussed above, in evaluating the Corporation’s capital levels and
believes that, at this time, the ratio may be of interest to investors.
Adjusted Pre-Tax, Pre-Provision Income
A non-GAAP performance metric that management believes is useful in
analyzing underlying performance trends, particularly in times of
economic stress, is adjusted pre-tax, pre-provision income. Adjusted
pre-tax, pre-provision income, as defined by management, represents net
(loss) income excluding income tax expense (benefit), the provision for
loan and lease losses, gains on sale and other than temporary impairment
(OTTI) of investment securities, fair value adjustments on derivatives,
and liabilities measured at fair value, equity in earnings or loss of
unconsolidated entity as well as certain items identified as unusual,
non-recurring or non-operating.
From time to time, revenue and expenses are impacted by items judged by
management to be outside of ordinary banking activities and/or by items
that, while they may be associated with ordinary banking activities, are
so unusually large that management believes that a complete analysis of
the Corporation’s performance requires consideration also of results
that exclude such amounts.
Net Interest Income, Excluding Valuations and on a Tax-Equivalent
Basis
Net interest income, interest rate spread, and net interest margin are
reported excluding the changes in the fair value of derivative
instruments and financial liabilities elected to be measured at fair
value and on a tax-equivalent basis. The presentation of net interest
income excluding valuations provides additional information about the
Corporation’s net interest income and facilitates comparability and
analysis. The changes in the fair value of derivative instruments and
unrealized gains and losses on liabilities measured at fair value have
no effect on interest due or interest earned on interest-bearing
liabilities or interest-earning assets, respectively. The tax-equivalent
adjustment to net interest income recognizes the income tax savings when
comparing taxable and tax-exempt assets and assumes a marginal income
tax rate. Income from tax-exempt earning assets is increased by an
amount equivalent to the taxes that would have been paid if this income
had been taxable at statutory rates. Management believes that it is a
standard practice in the banking industry to present net interest
income, interest rate spread, and net interest margin on a fully
tax-equivalent basis. This adjustment puts all earning assets, most
notably tax-exempt securities and certain loans, on a common basis that
facilitates comparison of results to results of peers.
Financial measures adjusted to exclude the effect of the secondary
offering costs, the credit card processing platform conversion costs,
the bulk sales of assets and loans transferred to held for sale and the
write-off of the collateral pledged to Lehman
To supplement the Corporation’s financial statements presented in
accordance with GAAP, the Corporation provides additional measures of
adjusted provision for loan and lease losses, adjusted non-interest
income, adjusted non-interest expenses, adjusted provision for loan and
lease losses to net charge-offs, adjusted net charge-offs, and adjusted
net charge-offs to average loans to exclude the impact of the bulk sales
of assets completed in each of the first two quarters of 2013, and the
transfer of non-performing loans to held for sale in the first quarter
of 2013. In addition, the Corporation discloses adjusted non-interest
income excluding the write-off of the collateral pledged to Lehman
recorded in the second quarter of 2013 and the loss related to the
Corporation’s investment in unconsolidated entity, adjusted non-interest
expenses excluding the costs associated with the secondary offering of
the Corporation’s common stock by certain of the Corporation’s existing
stockholders recorded in the third quarter of 2013, the costs associated
with the conversion of the credit card processing platform, the expenses
specifically related to the bulk sale of residential non-performing
assets completed in the second quarter of 2013 and the impact of the
national gross receipts tax that corresponded to the first quarter of
2013 but was recorded in the second quarter after enactment of Act 40. A
measure of adjusted net income is also presented excluding the
aforementioned adjustments related to the secondary offering and credit
card processing platform conversion costs incurred in the third quarter
as well as expenses specifically related to the bulk sale of assets in
the second quarter and the Lehman collateral write-off recorded in the
second quarter. Management believes that these non-GAAP measures enhance
the ability of analysts and investors to analyze trends in the
Corporation’s business and to better understand the performance of the
Corporation. In addition, the Corporation may utilize these non-GAAP
financial measures as a guide in its budgeting and long-term planning
process. Any analysis of these non-GAAP financial measures should be
used only in conjunction with results presented in accordance with GAAP.
The following table shows reconciliations of these non-GAAP financial
measures to the corresponding measures calculated and presented in
accordance with GAAP.
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 Third Quarter
|
|
As Reported (GAAP)
|
|
Secondary Offering Costs Impact
|
|
Credit Cards Processing Platform Conversion Costs
|
|
Equity in Loss of Unconsolidated Entity
|
|
Adjusted (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income
|
|
$
|
10,060
|
|
$
|
-
|
|
$
|
-
|
|
$
|
5,908
|
|
$
|
15,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses
|
|
$
|
99,154
|
|
$
|
1,669
|
|
$
|
1,715
|
|
$
|
-
|
|
$
|
95,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
15,940
|
|
$
|
1,669
|
|
$
|
1,715
|
|
$
|
-
|
|
$
|
19,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share
|
|
$
|
0.08
|
|
$
|
0.005
|
|
$
|
0.005
|
|
$
|
-
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 Second Quarter
|
|
As Reported (GAAP)
|
|
Bulk Sale Transaction Impact
|
|
Write-off of collateral pledged to Lehman
|
|
Equity in Earnings of Unconsolidated Entity
|
|
National gross receipts tax (2)
|
|
Adjusted (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net charge-offs (1)
|
|
$
|
128,948
|
|
|
$
|
97,972
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
30,976
|
|
|
Total net charge-offs to average loans
|
|
|
5.25
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.29
|
%
|
|
Residential mortgage
|
|
|
103,418
|
|
|
|
97,941
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,477
|
|
|
Residential mortgage loans net charge-offs to average loans
|
|
|
14.78
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.84
|
%
|
|
Construction
|
|
|
2,368
|
|
|
|
31
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,337
|
|
|
Construction loans net charge-offs to average loans
|
|
|
3.43
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.39
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan and lease losses
|
|
$
|
87,464
|
|
|
$
|
67,890
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
19,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest (loss) income
|
|
$
|
(51,663
|
)
|
|
$
|
-
|
|
|
$
|
66,574
|
|
|
$
|
(648
|
)
|
|
$
|
-
|
|
|
$
|
14,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses
|
|
$
|
111,323
|
|
|
$
|
4,962
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,656
|
|
|
$
|
104,705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(122,583
|
)
|
|
$
|
(72,852
|
)
|
|
$
|
(66,574
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
16,843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per common share
|
|
$
|
(0.60
|
)
|
|
$
|
0.36
|
|
|
$
|
0.32
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 - Charge-off percentages annualized.
|
|
2 -Represents the impact of the national gross receipts tax
corresponding to the first quarter of 2013, recorded during the
second quarter after enactment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIRST BANCORP
|
|
Condensed Consolidated Statements of Financial Condition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
(In thousands, except for share information)
|
|
September 30,
2013
|
|
June 30,
2013
|
|
December 31,
2012
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
$
|
623,019
|
|
|
$
|
618,593
|
|
|
$
|
730,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time deposits with other financial institutions
|
|
|
300
|
|
|
|
300
|
|
|
|
505
|
|
|
Other short-term investments
|
|
|
201,065
|
|
|
|
216,074
|
|
|
|
216,330
|
|
|
Total money market investments
|
|
|
201,365
|
|
|
|
216,374
|
|
|
|
216,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities available for sale, at fair value
|
|
|
2,047,330
|
|
|
|
1,990,788
|
|
|
|
1,731,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other equity securities
|
|
|
32,096
|
|
|
|
32,321
|
|
|
|
38,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment securities
|
|
|
2,079,426
|
|
|
|
2,023,109
|
|
|
|
1,769,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in unconsolidated entity
|
|
|
13,172
|
|
|
|
19,080
|
|
|
|
23,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net of allowance for loan and lease losses of $289,379
(June 30, 2013 - $301,047; December 31, 2012 - $435,414)
|
|
|
9,219,255
|
|
|
|
9,144,739
|
|
|
|
9,618,700
|
|
|
Loans held for sale, at lower of cost or market
|
|
|
114,592
|
|
|
|
237,583
|
|
|
|
85,394
|
|
|
Total loans, net
|
|
|
9,333,847
|
|
|
|
9,382,322
|
|
|
|
9,704,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premises and equipment, net
|
|
|
172,371
|
|
|
|
174,429
|
|
|
|
181,363
|
|
|
Other real estate owned
|
|
|
133,284
|
|
|
|
139,257
|
|
|
|
185,764
|
|
|
Accrued interest receivable on loans and investments
|
|
|
49,848
|
|
|
|
54,636
|
|
|
|
51,671
|
|
|
Other assets
|
|
|
181,118
|
|
|
|
175,369
|
|
|
|
236,194
|
|
|
Total assets
|
|
$
|
12,787,450
|
|
|
$
|
12,803,169
|
|
|
$
|
13,099,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing deposits
|
|
$
|
845,917
|
|
|
$
|
938,318
|
|
|
$
|
837,387
|
|
|
Interest-bearing deposits
|
|
|
9,108,280
|
|
|
|
9,039,327
|
|
|
|
9,027,159
|
|
|
Total deposits
|
|
|
9,954,197
|
|
|
|
9,977,645
|
|
|
|
9,864,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities sold under agreements to repurchase
|
|
|
900,000
|
|
|
|
900,000
|
|
|
|
900,000
|
|
|
Advances from the Federal Home Loan Bank (FHLB)
|
|
|
353,440
|
|
|
|
358,440
|
|
|
|
508,440
|
|
|
Other borrowings
|
|
|
231,959
|
|
|
|
231,959
|
|
|
|
231,959
|
|
|
Accounts payable and other liabilities
|
|
|
127,261
|
|
|
|
112,797
|
|
|
|
109,773
|
|
|
Total liabilities
|
|
|
11,566,857
|
|
|
|
11,580,841
|
|
|
|
11,614,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, authorized 50,000,000 shares: issued 22,828,174
shares; outstanding 2,521,872; aggregate liquidation value $63,047
|
|
|
63,047
|
|
|
|
63,047
|
|
|
|
63,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.10 par value, authorized 2,000,000,000 shares;
issued 207,588,787 (June 30, 2013 - 207,514,167; December 31, 2012
- 206,730,318 shares issued)
|
|
|
20,759
|
|
|
|
20,751
|
|
|
|
20,673
|
|
|
Less: Treasury stock (at par value)
|
|
|
(55
|
)
|
|
|
(53
|
)
|
|
|
(49
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock outstanding, 207,042,785 shares outstanding (June 30,
2013 - 206,982,105; December 31, 2012 - 206,235,465 shares
outstanding)
|
|
|
20,704
|
|
|
|
20,698
|
|
|
|
20,624
|
|
|
Additional paid-in capital
|
|
|
887,437
|
|
|
|
886,775
|
|
|
|
885,754
|
|
|
Retained earnings
|
|
|
307,890
|
|
|
|
291,950
|
|
|
|
487,166
|
|
|
Accumulated other comprehensive (loss) income
|
|
|
(58,485
|
)
|
|
|
(40,142
|
)
|
|
|
28,432
|
|
|
Total stockholders' equity
|
|
|
1,220,593
|
|
|
|
1,222,328
|
|
|
|
1,485,023
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
12,787,450
|
|
|
$
|
12,803,169
|
|
|
$
|
13,099,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIRST BANCORP
|
|
Condensed Consolidated Statements of Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Nine-Month Period Ended
|
|
(In thousands, except per share information)
|
|
September 30,
2013
|
|
June 30,
2013
|
|
September 30,
2012
|
|
September 30,
2013
|
|
September 30,
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$
|
162,203
|
|
|
$
|
160,670
|
|
|
$
|
166,964
|
|
|
$
|
483,098
|
|
|
$
|
472,723
|
|
|
Interest expense
|
|
|
31,298
|
|
|
|
33,782
|
|
|
|
41,461
|
|
|
|
100,812
|
|
|
|
136,649
|
|
|
Net interest income
|
|
|
130,905
|
|
|
|
126,888
|
|
|
|
125,503
|
|
|
|
382,286
|
|
|
|
336,074
|
|
|
Provision for loan and lease losses
|
|
|
22,195
|
|
|
|
87,464
|
|
|
|
28,952
|
|
|
|
220,782
|
|
|
|
90,033
|
|
|
Net interest income after provision for loan and lease losses
|
|
|
108,710
|
|
|
|
39,424
|
|
|
|
96,551
|
|
|
|
161,504
|
|
|
|
246,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts
|
|
|
3,157
|
|
|
|
3,098
|
|
|
|
3,267
|
|
|
|
9,635
|
|
|
|
9,754
|
|
|
Mortgage banking activities
|
|
|
3,521
|
|
|
|
4,823
|
|
|
|
4,728
|
|
|
|
12,924
|
|
|
|
13,260
|
|
|
Net loss on investments and impairments
|
|
|
-
|
|
|
|
(42
|
)
|
|
|
(547
|
)
|
|
|
(159
|
)
|
|
|
(1,897
|
)
|
|
Equity in (loss) earnings of unconsolidated entity
|
|
|
(5,908
|
)
|
|
|
648
|
|
|
|
(2,199
|
)
|
|
|
(10,798
|
)
|
|
|
(10,926
|
)
|
|
Impairment of collateral pledged to Lehman
|
|
|
-
|
|
|
|
(66,574
|
)
|
|
|
-
|
|
|
|
(66,574
|
)
|
|
|
-
|
|
|
Other non-interest income
|
|
|
9,290
|
|
|
|
6,384
|
|
|
|
9,877
|
|
|
|
26,998
|
|
|
|
27,432
|
|
|
Total non-interest income (loss)
|
|
|
10,060
|
|
|
|
(51,663
|
)
|
|
|
15,126
|
|
|
|
(27,974
|
)
|
|
|
37,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees' compensation and benefits
|
|
|
32,823
|
|
|
|
33,116
|
|
|
|
31,058
|
|
|
|
99,493
|
|
|
|
93,770
|
|
|
Occupancy and equipment
|
|
|
15,134
|
|
|
|
14,946
|
|
|
|
15,208
|
|
|
|
45,150
|
|
|
|
46,065
|
|
|
Business promotion
|
|
|
3,538
|
|
|
|
3,831
|
|
|
|
4,004
|
|
|
|
10,726
|
|
|
|
10,026
|
|
|
Professional fees
|
|
|
11,840
|
|
|
|
13,735
|
|
|
|
7,469
|
|
|
|
36,707
|
|
|
|
19,768
|
|
|
Taxes, other than income taxes
|
|
|
4,693
|
|
|
|
6,239
|
|
|
|
3,499
|
|
|
|
13,921
|
|
|
|
10,350
|
|
|
Insurance and supervisory fees
|
|
|
11,513
|
|
|
|
12,699
|
|
|
|
13,023
|
|
|
|
37,018
|
|
|
|
39,333
|
|
|
Net loss on other real estate owned operations
|
|
|
7,052
|
|
|
|
14,829
|
|
|
|
8,686
|
|
|
|
29,191
|
|
|
|
18,915
|
|
|
Other non-interest expenses
|
|
|
12,561
|
|
|
|
11,928
|
|
|
|
8,896
|
|
|
|
36,281
|
|
|
|
25,751
|
|
|
Total non-interest expenses
|
|
|
99,154
|
|
|
|
111,323
|
|
|
|
91,843
|
|
|
|
308,487
|
|
|
|
263,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
19,616
|
|
|
|
(123,562
|
)
|
|
|
19,834
|
|
|
|
(174,957
|
)
|
|
|
19,686
|
|
|
Income tax (expense) benefit
|
|
|
(3,676
|
)
|
|
|
979
|
|
|
|
(761
|
)
|
|
|
(4,319
|
)
|
|
|
(4,439
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
15,940
|
|
|
$
|
(122,583
|
)
|
|
$
|
19,073
|
|
|
$
|
(179,276
|
)
|
|
$
|
15,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common stockholders
|
|
$
|
15,940
|
|
|
$
|
(122,583
|
)
|
|
$
|
19,073
|
|
|
$
|
(179,276
|
)
|
|
$
|
15,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.08
|
|
|
$
|
(0.60
|
)
|
|
$
|
0.09
|
|
|
$
|
(0.87
|
)
|
|
$
|
0.07
|
|
|
Diluted
|
|
$
|
0.08
|
|
|
$
|
(0.60
|
)
|
|
$
|
0.09
|
|
|
$
|
(0.87
|
)
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
About First BanCorp.
First BanCorp. is the parent corporation of FirstBank Puerto Rico, a
state-chartered commercial bank with operations in Puerto Rico, the
Virgin Islands and Florida, and of FirstBank Insurance Agency. First
BanCorp. and FirstBank Puerto Rico operate within U.S. banking laws and
regulations. The Corporation operates a total of 152 branches,
stand-alone offices, and in-branch service centers throughout Puerto
Rico, the U.S. and British Virgin Islands, and Florida. Among the
subsidiaries of FirstBank Puerto Rico are First Federal Finance Corp., a
small loan company; FirstBank Puerto Rico Securities, a broker-dealer
subsidiary; First Management of Puerto Rico; and FirstMortgage, Inc., a
mortgage origination company. In the U.S. Virgin Islands, FirstBank
operates First Express, a small loan company. First BanCorp’s shares of
common stock trade on the New York Stock Exchange under the symbol FBP.
Additional information about First BanCorp. may be found at www.firstbankpr.com.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXHIBIT A
|
|
Table 1 - Selected Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except for per share and financial ratios)
|
|
Quarter Ended
|
|
Nine Month Period Ended
|
|
|
|
September 30,
|
|
June 30,
|
|
|
September 30,
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2013
|
|
2013
|
|
|
2012
|
|
2013
|
|
|
2012
|
|
Condensed Income Statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income
|
|
$
|
162,203
|
|
|
$
|
160,670
|
|
|
|
$
|
166,964
|
|
|
$
|
483,098
|
|
|
|
$
|
472,723
|
|
|
Total interest expense
|
|
|
31,298
|
|
|
|
33,782
|
|
|
|
|
41,461
|
|
|
|
100,812
|
|
|
|
|
136,649
|
|
|
Net interest income
|
|
|
130,905
|
|
|
|
126,888
|
|
|
|
|
125,503
|
|
|
|
382,286
|
|
|
|
|
336,074
|
|
|
Provision for loan and lease losses
|
|
|
22,195
|
|
|
|
87,464
|
|
|
|
|
28,952
|
|
|
|
220,782
|
|
|
|
|
90,033
|
|
|
Non-interest income (loss)
|
|
|
10,060
|
|
|
|
(51,663
|
)
|
|
|
|
15,126
|
|
|
|
(27,974
|
)
|
|
|
|
37,623
|
|
|
Non-interest expenses
|
|
|
99,154
|
|
|
|
111,323
|
|
|
|
|
91,843
|
|
|
|
308,487
|
|
|
|
|
263,978
|
|
|
Income (loss) before income taxes
|
|
|
19,616
|
|
|
|
(123,562
|
)
|
|
|
|
19,834
|
|
|
|
(174,957
|
)
|
|
|
|
19,686
|
|
|
Income tax (expense) benefit
|
|
|
(3,676
|
)
|
|
|
979
|
|
|
|
|
(761
|
)
|
|
|
(4,319
|
)
|
|
|
|
(4,439
|
)
|
|
Net income (loss)
|
|
|
15,940
|
|
|
|
(122,583
|
)
|
|
|
|
19,073
|
|
|
|
(179,276
|
)
|
|
|
|
15,247
|
|
|
Net income (loss) attributable to common stockholders
|
|
|
15,940
|
|
|
|
(122,583
|
)
|
|
|
|
19,073
|
|
|
|
(179,276
|
)
|
|
|
|
15,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Common Share Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share basic
|
|
$
|
0.08
|
|
|
$
|
(0.60
|
)
|
|
|
$
|
0.09
|
|
|
$
|
(0.87
|
)
|
|
|
$
|
0.07
|
|
|
Net earnings (loss) per share diluted
|
|
$
|
0.08
|
|
|
$
|
(0.60
|
)
|
|
|
$
|
0.09
|
|
|
$
|
(0.87
|
)
|
|
|
$
|
0.07
|
|
|
Cash dividends declared
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
Average shares outstanding
|
|
|
205,579
|
|
|
|
205,490
|
|
|
|
|
205,415
|
|
|
|
205,512
|
|
|
|
|
205,349
|
|
|
Average shares outstanding diluted
|
|
|
207,316
|
|
|
|
205,490
|
|
|
|
|
205,923
|
|
|
|
205,512
|
|
|
|
|
205,697
|
|
|
Book value per common share
|
|
$
|
5.59
|
|
|
$
|
5.60
|
|
|
|
$
|
6.89
|
|
|
$
|
5.59
|
|
|
|
$
|
6.89
|
|
|
Tangible book value per common share (1)
|
|
$
|
5.32
|
|
|
$
|
5.32
|
|
|
|
$
|
6.59
|
|
|
$
|
5.32
|
|
|
|
$
|
6.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Financial Ratios (In Percent):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profitability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on Average Assets
|
|
|
0.50
|
|
|
|
(3.80
|
)
|
|
|
|
0.59
|
|
|
|
(1.86
|
)
|
|
|
|
0.16
|
|
|
Interest Rate Spread (2)
|
|
|
4.15
|
|
|
|
3.91
|
|
|
|
|
3.77
|
|
|
|
3.94
|
|
|
|
|
3.31
|
|
|
Net Interest Margin (2)
|
|
|
4.34
|
|
|
|
4.12
|
|
|
|
|
4.02
|
|
|
|
4.15
|
|
|
|
|
3.59
|
|
|
Return on Average Total Equity
|
|
|
5.19
|
|
|
|
(35.65
|
)
|
|
|
|
5.19
|
|
|
|
(17.65
|
)
|
|
|
|
1.41
|
|
|
Return on Average Common Equity
|
|
|
5.47
|
|
|
|
(37.36
|
)
|
|
|
|
5.43
|
|
|
|
(18.51
|
)
|
|
|
|
1.47
|
|
|
Average Total Equity to Average Total Assets
|
|
|
9.68
|
|
|
|
10.66
|
|
|
|
|
11.37
|
|
|
|
10.56
|
|
|
|
|
11.20
|
|
|
Total capital
|
|
|
16.89
|
|
|
|
16.61
|
|
|
|
|
17.52
|
|
|
|
16.89
|
|
|
|
|
17.52
|
|
|
Tier 1 capital
|
|
|
15.61
|
|
|
|
15.32
|
|
|
|
|
16.20
|
|
|
|
15.61
|
|
|
|
|
16.20
|
|
|
Leverage
|
|
|
11.65
|
|
|
|
11.26
|
|
|
|
|
12.71
|
|
|
|
11.65
|
|
|
|
|
12.71
|
|
|
Tangible common equity ratio (1)
|
|
|
8.65
|
|
|
|
8.64
|
|
|
|
|
10.39
|
|
|
|
8.65
|
|
|
|
|
10.39
|
|
|
Tier 1 common equity to risk-weight assets (1)
|
|
|
12.55
|
|
|
|
12.28
|
|
|
|
|
13.33
|
|
|
|
12.55
|
|
|
|
|
13.33
|
|
|
Dividend payout ratio
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
Efficiency ratio (3)
|
|
|
70.34
|
|
|
|
147.99
|
|
|
|
|
65.31
|
|
|
|
87.07
|
|
|
|
|
70.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses to loans held for investment
|
|
|
3.04
|
|
|
|
3.19
|
|
|
|
|
4.37
|
|
|
|
3.04
|
|
|
|
|
4.37
|
|
|
Net charge-offs (annualized) to average loans
|
|
|
1.41
|
|
|
|
5.25
|
|
(4
|
)
|
|
1.58
|
|
|
|
4.97
|
|
(4
|
)
|
|
1.79
|
|
|
Provision for loan and lease losses to net charge-offs
|
|
|
65.54
|
|
|
|
67.83
|
|
(5
|
)
|
|
71.36
|
|
|
|
60.19
|
|
(5
|
)
|
|
65.04
|
|
|
Non-performing assets to total assets
|
|
|
5.68
|
|
|
|
5.87
|
|
|
|
|
9.58
|
|
|
|
5.68
|
|
|
|
|
9.58
|
|
|
Non-performing loans held for investment to total loans held for
investment
|
|
|
5.24
|
|
|
|
5.36
|
|
|
|
|
9.89
|
|
|
|
5.24
|
|
|
|
|
9.89
|
|
|
Allowance to total non-performing loans held for investment
|
|
|
58.06
|
|
|
|
59.47
|
|
|
|
|
44.20
|
|
|
|
58.06
|
|
|
|
|
44.20
|
|
|
Allowance to total non-performing loans held for investment
excluding residential real estate loans
|
|
|
81.20
|
|
|
|
80.87
|
|
|
|
|
64.84
|
|
|
|
81.20
|
|
|
|
|
64.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock Price: End of period
|
|
$
|
5.68
|
|
|
$
|
7.08
|
|
|
|
$
|
4.42
|
|
|
$
|
5.68
|
|
|
|
$
|
4.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1- Non-GAAP measure. See pages 13-14 for GAAP to Non-GAAP
reconciliations.
|
|
2- On a tax-equivalent basis and excluding fair value valuations
(Non-GAAP measure). See page 4 for GAAP to Non-GAAP
reconciliations and refer to discussions in Tables 2 and 3 below.
|
|
3- Non-interest expenses to the sum of net interest income and
non-interest income. The denominator includes non-recurring income
and changes in the fair value of derivative instruments and
financial liabilities measured at fair value.
|
|
4- The net charge-offs to average loans ratio, excluding the
impact associated with the bulk sales and the transfer of loans to
held for sale, was 1.29% and 1.87% for the quarter ended June 30,
2013 and nine-month period ended September 30, 2013, respectively.
|
|
5- The provision for loan and lease losses to net charge-offs
ratio, excluding the impact associated with the bulk sales and the
transfer of loans to held for sale, was 63.19% and 66.07% for the
quarter ended June 30, 2013 and nine-month period ended September
30, 2013, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 2 - Statement of Average Interest-Earning Assets and
Average Interest-Bearing Liabilities (On a Tax Equivalent Basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average volume
|
|
Interest income (1) / expense
|
|
Average rate (1)
|
|
Quarter ended
|
|
September 30,
|
|
June 30,
|
|
September 30,
|
|
September 30,
|
|
June 30,
|
|
September 30,
|
|
September 30,
|
|
June 30,
|
|
September 30,
|
|
|
2013
|
|
2013
|
|
2012
|
|
2013
|
|
2013
|
|
2012
|
|
2013
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market & other short-term investments
|
|
$
|
639,285
|
|
$
|
710,561
|
|
$
|
553,283
|
|
$
|
456
|
|
$
|
499
|
|
$
|
395
|
|
0.28
|
%
|
|
0.28
|
%
|
|
0.28
|
%
|
|
Government obligations (2)
|
|
|
342,739
|
|
|
342,708
|
|
|
336,598
|
|
|
2,008
|
|
|
1,988
|
|
|
1,069
|
|
2.32
|
%
|
|
2.33
|
%
|
|
1.26
|
%
|
|
Mortgage-backed securities
|
|
|
1,705,745
|
|
|
1,682,682
|
|
|
1,313,353
|
|
|
14,847
|
|
|
11,571
|
|
|
10,705
|
|
3.45
|
%
|
|
2.76
|
%
|
|
3.24
|
%
|
|
Corporate bonds
|
|
|
-
|
|
|
-
|
|
|
959
|
|
|
-
|
|
|
-
|
|
|
16
|
|
0.00
|
%
|
|
0.00
|
%
|
|
6.64
|
%
|
|
FHLB stock
|
|
|
30,884
|
|
|
31,348
|
|
|
33,131
|
|
|
311
|
|
|
322
|
|
|
318
|
|
4.00
|
%
|
|
4.12
|
%
|
|
3.82
|
%
|
|
Equity securities
|
|
|
1,320
|
|
|
1,360
|
|
|
1,377
|
|
|
-
|
|
|
-
|
|
|
-
|
|
0.00
|
%
|
|
0.00
|
%
|
|
0.00
|
%
|
|
Total investments (3)
|
|
|
2,719,973
|
|
|
2,768,659
|
|
|
2,238,701
|
|
|
17,622
|
|
|
14,380
|
|
|
12,503
|
|
2.57
|
%
|
|
2.08
|
%
|
|
2.22
|
%
|
|
Residential mortgage loans
|
|
|
2,580,758
|
|
|
2,799,369
|
|
|
2,815,261
|
|
|
37,273
|
|
|
37,411
|
|
|
37,897
|
|
5.73
|
%
|
|
5.36
|
%
|
|
5.36
|
%
|
|
Construction loans
|
|
|
257,188
|
|
|
276,128
|
|
|
365,656
|
|
|
2,141
|
|
|
2,274
|
|
|
2,480
|
|
3.30
|
%
|
|
3.30
|
%
|
|
2.70
|
%
|
|
C&I and commercial mortgage loans
|
|
|
4,755,518
|
|
|
4,710,448
|
|
|
5,151,641
|
|
|
48,971
|
|
|
48,551
|
|
|
52,514
|
|
4.09
|
%
|
|
4.13
|
%
|
|
4.06
|
%
|
|
Finance leases
|
|
|
241,256
|
|
|
239,677
|
|
|
237,986
|
|
|
5,188
|
|
|
5,122
|
|
|
5,222
|
|
8.53
|
%
|
|
8.57
|
%
|
|
8.73
|
%
|
|
Consumer loans
|
|
|
1,804,892
|
|
|
1,795,159
|
|
|
1,727,291
|
|
|
55,196
|
|
|
55,262
|
|
|
57,641
|
|
12.13
|
%
|
|
12.35
|
%
|
|
13.28
|
%
|
|
Total loans (4) (5)
|
|
|
9,639,612
|
|
|
9,820,781
|
|
|
10,297,835
|
|
|
148,769
|
|
|
148,620
|
|
|
155,754
|
|
6.12
|
%
|
|
6.07
|
%
|
|
6.02
|
%
|
|
Total interest-earning assets
|
|
$
|
12,359,585
|
|
$
|
12,589,440
|
|
$
|
12,536,536
|
|
$
|
166,391
|
|
$
|
163,000
|
|
$
|
168,257
|
|
5.34
|
%
|
|
5.19
|
%
|
|
5.34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokered CDs
|
|
$
|
3,149,417
|
|
$
|
3,311,165
|
|
$
|
3,400,984
|
|
$
|
8,295
|
|
$
|
10,473
|
|
$
|
15,435
|
|
1.04
|
%
|
|
1.27
|
%
|
|
1.81
|
%
|
|
Other interest-bearing deposits
|
|
|
5,773,400
|
|
|
5,774,995
|
|
|
5,589,449
|
|
|
13,158
|
|
|
13,445
|
|
|
14,516
|
|
0.90
|
%
|
|
0.93
|
%
|
|
1.03
|
%
|
|
Other borrowed funds
|
|
|
1,131,959
|
|
|
1,131,959
|
|
|
1,131,959
|
|
|
8,321
|
|
|
8,233
|
|
|
8,557
|
|
2.92
|
%
|
|
2.92
|
%
|
|
3.01
|
%
|
|
FHLB advances
|
|
|
355,016
|
|
|
365,583
|
|
|
395,777
|
|
|
1,524
|
|
|
1,631
|
|
|
2,953
|
|
1.70
|
%
|
|
1.79
|
%
|
|
2.97
|
%
|
|
Total interest-bearing liabilities (6)
|
|
$
|
10,409,792
|
|
$
|
10,583,702
|
|
$
|
10,518,169
|
|
$
|
31,298
|
|
$
|
33,782
|
|
$
|
41,461
|
|
1.19
|
%
|
|
1.28
|
%
|
|
1.57
|
%
|
|
Net interest income
|
|
|
|
|
|
|
|
|
|
|
$
|
135,093
|
|
$
|
129,218
|
|
$
|
126,796
|
|
|
|
|
|
|
|
|
|
|
Interest rate spread
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.15
|
%
|
|
3.91
|
%
|
|
3.77
|
%
|
|
Net interest margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.34
|
%
|
|
4.12
|
%
|
|
4.02
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1- On a tax-equivalent basis. The tax-equivalent yield was
estimated by dividing the interest rate spread on exempt assets by
1 less the Puerto Rico statutory tax rate (39% for 2013; 30% for
2012) and adding to it the cost of interest-bearing liabilities.
When adjusted to a tax-equivalent basis, yields on taxable and
exempt assets are comparable. Changes in the fair value of
derivative instruments and unrealized gains or losses on
liabilities measured at fair value are excluded from interest
income and interest expense because the changes in valuation do
not affect interest paid or received.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2- Government obligations include debt issued by
government-sponsored agencies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3- Unrealized gains and losses on available-for-sale securities are
excluded from the average volumes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4- Average loan balances include the average of total non-performing
loans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5- Interest income on loans includes $3.7 million, $3.5 million
and $3.7 million for the quarters ended September 30, 2013, June
30, 2013, and September 30, 2012, respectively, of income from
prepayment penalties and late fees related to the Corporation's
loan portfolio.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6- Unrealized gains and losses on liabilities measured at fair value
are excluded from the average volumes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 3 - Year-To-Date Statement of Average Interest-Earning
Assets and Average Interest-Bearing Liabilities (On a Tax Equivalent
Basis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average volume
|
|
Interest income (1) / expense
|
|
Average rate (1)
|
|
Nine-Month Period Ended
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market & other short-term investments
|
|
$
|
709,240
|
|
$
|
570,639
|
|
$
|
1,494
|
|
$
|
1,220
|
|
0.28
|
%
|
|
0.29
|
%
|
|
Government obligations (2)
|
|
|
337,156
|
|
|
655,056
|
|
|
5,847
|
|
|
8,238
|
|
2.32
|
%
|
|
1.68
|
%
|
|
Mortgage-backed securities
|
|
|
1,642,080
|
|
|
1,099,082
|
|
|
35,933
|
|
|
26,506
|
|
2.93
|
%
|
|
3.22
|
%
|
|
Corporate bonds
|
|
|
-
|
|
|
1,609
|
|
|
-
|
|
|
76
|
|
0.00
|
%
|
|
6.31
|
%
|
|
FHLB stock
|
|
|
31,775
|
|
|
34,057
|
|
|
1,048
|
|
|
1,072
|
|
4.41
|
%
|
|
4.20
|
%
|
|
Equity securities
|
|
|
1,348
|
|
|
1,377
|
|
|
-
|
|
|
-
|
|
0.00
|
%
|
|
0.00
|
%
|
|
Total investments (3)
|
|
|
2,721,599
|
|
|
2,361,820
|
|
|
44,322
|
|
|
37,112
|
|
2.18
|
%
|
|
2.10
|
%
|
|
Residential mortgage loans
|
|
|
2,730,842
|
|
|
2,796,850
|
|
|
112,688
|
|
|
113,459
|
|
5.52
|
%
|
|
5.42
|
%
|
|
Construction loans
|
|
|
292,594
|
|
|
399,078
|
|
|
7,032
|
|
|
7,695
|
|
3.21
|
%
|
|
2.58
|
%
|
|
C&I and commercial mortgage loans
|
|
|
4,787,841
|
|
|
5,358,916
|
|
|
145,371
|
|
|
163,478
|
|
4.06
|
%
|
|
4.07
|
%
|
|
Finance leases
|
|
|
239,407
|
|
|
240,415
|
|
|
15,396
|
|
|
15,760
|
|
8.60
|
%
|
|
8.76
|
%
|
|
Consumer loans
|
|
|
1,793,811
|
|
|
1,494,873
|
|
|
166,002
|
|
|
139,588
|
|
12.37
|
%
|
|
12.47
|
%
|
|
Total loans (4) (5)
|
|
|
9,844,495
|
|
|
10,290,132
|
|
|
446,489
|
|
|
439,980
|
|
6.06
|
%
|
|
5.71
|
%
|
|
Total interest-earning assets
|
|
$
|
12,566,094
|
|
$
|
12,651,952
|
|
$
|
490,811
|
|
$
|
477,092
|
|
5.22
|
%
|
|
5.04
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokered CDs
|
|
$
|
3,298,338
|
|
$
|
3,503,304
|
|
$
|
30,566
|
|
$
|
52,971
|
|
1.24
|
%
|
|
2.02
|
%
|
|
Other interest-bearing deposits
|
|
|
5,740,514
|
|
|
5,550,100
|
|
|
40,349
|
|
|
47,203
|
|
0.94
|
%
|
|
1.14
|
%
|
|
Other borrowed funds
|
|
|
1,131,959
|
|
|
1,184,930
|
|
|
24,717
|
|
|
27,743
|
|
2.92
|
%
|
|
3.13
|
%
|
|
FHLB advances
|
|
|
376,847
|
|
|
368,137
|
|
|
5,180
|
|
|
9,222
|
|
1.84
|
%
|
|
3.35
|
%
|
|
Total interest-bearing liabilities (6)
|
|
$
|
10,547,658
|
|
$
|
10,606,471
|
|
$
|
100,812
|
|
$
|
137,139
|
|
1.28
|
%
|
|
1.73
|
%
|
|
Net interest income
|
|
|
|
|
|
|
|
$
|
389,999
|
|
$
|
339,953
|
|
|
|
|
|
|
|
Interest rate spread
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.94
|
%
|
|
3.31
|
%
|
|
Net interest margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.15
|
%
|
|
3.59
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1- On a tax-equivalent basis. The tax-equivalent yield was
estimated by dividing the interest rate spread on exempt assets by
1 less the Puerto Rico statutory tax rate (39% for 2013; 30% for
2012) and adding to it the cost of interest-bearing liabilities.
When adjusted to a tax-equivalent basis, yields on taxable and
exempt assets are comparable. Changes in the fair value of
derivative instruments and unrealized gains or losses on
liabilities measured at fair value are excluded from interest
income and interest expense because the changes in valuation do
not affect interest paid or received.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2- Government obligations include debt issued by
government-sponsored agencies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3- Unrealized gains and losses on available-for-sale securities are
excluded from the average volumes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4- Average loan balances include the average of total non-performing
loans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5- Interest income on loans includes $10.8 million, and $9.0
million for the nine-month periods ended September 30, 2013 and
2012, respectively, of income from prepayment penalties and late
fees related to the Corporation's loan portfolio.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6- Unrealized gains and losses on liabilities measured at fair value
are excluded from the average volumes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 4 - Non-Interest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Nine-Month Period Ended
|
|
|
|
September 30,
|
|
June 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
(In thousands)
|
|
2013
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts
|
|
|
3,157
|
|
|
|
3,098
|
|
|
|
3,267
|
|
|
$
|
9,635
|
|
|
$
|
9,754
|
|
|
Mortgage banking activities
|
|
|
3,521
|
|
|
|
4,823
|
|
|
|
4,728
|
|
|
|
12,924
|
|
|
|
13,260
|
|
|
Insurance income
|
|
|
1,303
|
|
|
|
1,508
|
|
|
|
1,429
|
|
|
|
4,831
|
|
|
|
4,221
|
|
|
Broker-dealer income
|
|
|
-
|
|
|
|
-
|
|
|
|
20
|
|
|
|
-
|
|
|
|
2,630
|
|
|
Other operating income
|
|
|
7,987
|
|
|
|
4,876
|
|
|
|
8,428
|
|
|
|
22,167
|
|
|
|
20,581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income before net loss on investments, equity in
(loss) earnings of unconsolidated entity, and write-off of
collateral pledged to Lehman
|
|
|
15,968
|
|
|
|
14,305
|
|
|
|
17,872
|
|
|
|
49,557
|
|
|
|
50,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from securities litigation settlement and other proceeds
|
|
|
-
|
|
|
|
-
|
|
|
|
10
|
|
|
|
-
|
|
|
|
36
|
|
|
OTTI on equity securities
|
|
|
-
|
|
|
|
(42
|
)
|
|
|
-
|
|
|
|
(42
|
)
|
|
|
-
|
|
|
OTTI on debt securities
|
|
|
-
|
|
|
|
-
|
|
|
|
(557
|
)
|
|
|
(117
|
)
|
|
|
(1,933
|
)
|
|
Net loss on investments
|
|
|
-
|
|
|
|
(42
|
)
|
|
|
(547
|
)
|
|
|
(159
|
)
|
|
|
(1,897
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment - collateral pledged to Lehman
|
|
|
-
|
|
|
|
(66,574
|
)
|
|
|
-
|
|
|
|
(66,574
|
)
|
|
|
-
|
|
|
Equity in (loss) earnings of unconsolidated entity
|
|
|
(5,908
|
)
|
|
|
648
|
|
|
|
(2,199
|
)
|
|
|
(10,798
|
)
|
|
|
(10,926
|
)
|
|
|
|
$
|
10,060
|
|
|
$
|
(51,663
|
)
|
|
$
|
15,126
|
|
|
$
|
(27,974
|
)
|
|
$
|
37,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 5 - Non-Interest Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Nine-Month Period Ended
|
|
|
|
September 30,
|
|
June 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
(In thousands)
|
|
2013
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees' compensation and benefits
|
|
$
|
32,823
|
|
|
$
|
33,116
|
|
|
$
|
31,058
|
|
|
$
|
99,493
|
|
|
$
|
93,770
|
|
|
Occupancy and equipment
|
|
|
15,134
|
|
|
|
14,946
|
|
|
|
15,208
|
|
|
|
45,150
|
|
|
|
46,065
|
|
|
Deposit insurance premium
|
|
|
10,479
|
|
|
|
11,430
|
|
|
|
11,657
|
|
|
|
33,426
|
|
|
|
35,626
|
|
|
Other insurance and supervisory fees
|
|
|
1,034
|
|
|
|
1,269
|
|
|
|
1,366
|
|
|
|
3,592
|
|
|
|
3,707
|
|
|
Taxes, other than income taxes
|
|
|
4,693
|
|
|
|
6,239
|
|
|
|
3,499
|
|
|
|
13,921
|
|
|
|
10,350
|
|
|
Professional fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collections, appraisals and other credit related fees
|
|
|
2,780
|
|
|
|
2,520
|
|
|
|
2,250
|
|
|
|
7,224
|
|
|
|
5,670
|
|
|
Outsourcing technology services
|
|
|
4,338
|
|
|
|
4,258
|
|
|
|
1,311
|
|
|
|
9,942
|
|
|
|
3,390
|
|
|
Bulk sales professional fees
|
|
|
-
|
|
|
|
3,060
|
|
|
|
-
|
|
|
|
6,938
|
|
|
|
-
|
|
|
Terminated preferred stock professional fees
|
|
|
-
|
|
|
|
115
|
|
|
|
-
|
|
|
|
1,196
|
|
|
|
-
|
|
|
Secondary offering professional fees
|
|
|
390
|
|
|
|
-
|
|
|
|
-
|
|
|
|
390
|
|
|
|
-
|
|
|
Other professional fees
|
|
|
4,332
|
|
|
|
3,782
|
|
|
|
3,908
|
|
|
|
11,017
|
|
|
|
10,708
|
|
|
Credit and debit card processing expenses
|
|
|
2,682
|
|
|
|
2,281
|
|
|
|
2,574
|
|
|
|
8,040
|
|
|
|
3,516
|
|
|
Business promotion
|
|
|
3,478
|
|
|
|
3,831
|
|
|
|
4,004
|
|
|
|
10,666
|
|
|
|
10,026
|
|
|
Communications
|
|
|
1,866
|
|
|
|
1,885
|
|
|
|
1,797
|
|
|
|
5,565
|
|
|
|
5,276
|
|
|
Net loss on REO operations
|
|
|
7,052
|
|
|
|
14,829
|
|
|
|
8,686
|
|
|
|
29,191
|
|
|
|
18,915
|
|
|
Secondary offering other costs
|
|
|
1,279
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,279
|
|
|
|
-
|
|
|
Other
|
|
|
6,794
|
|
|
|
7,762
|
|
|
|
4,525
|
|
|
|
21,457
|
|
|
|
16,959
|
|
|
Total
|
|
$
|
99,154
|
|
|
$
|
111,323
|
|
|
$
|
91,843
|
|
|
$
|
308,487
|
|
|
$
|
263,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 6 - Selected Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
As of
|
|
|
|
September 30,
|
|
June 30,
|
|
December 31,
|
|
|
|
2013
|
|
2013
|
|
2012
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including loans held for sale
|
|
$
|
9,623,226
|
|
|
$
|
9,683,369
|
|
|
$
|
10,139,508
|
|
Allowance for loan and lease losses
|
|
|
289,379
|
|
|
|
301,047
|
|
|
|
435,414
|
|
Money market and investment securities
|
|
|
2,280,790
|
|
|
|
2,239,483
|
|
|
|
1,986,669
|
|
Intangible assets
|
|
|
56,386
|
|
|
|
57,905
|
|
|
|
60,944
|
|
Deferred tax asset, net
|
|
|
7,436
|
|
|
|
6,598
|
|
|
|
4,867
|
|
Total assets
|
|
|
12,787,450
|
|
|
|
12,803,169
|
|
|
|
13,099,741
|
|
Deposits
|
|
|
9,954,197
|
|
|
|
9,977,645
|
|
|
|
9,864,546
|
|
Borrowings
|
|
|
1,485,399
|
|
|
|
1,490,399
|
|
|
|
1,640,399
|
|
Total preferred equity
|
|
|
63,047
|
|
|
|
63,047
|
|
|
|
63,047
|
|
Total common equity
|
|
|
1,216,031
|
|
|
|
1,199,423
|
|
|
|
1,393,546
|
|
Accumulated other comprehensive income, net of tax
|
|
|
(58,485
|
)
|
|
|
(40,142
|
)
|
|
|
28,430
|
|
Total equity
|
|
|
1,220,593
|
|
|
|
1,222,328
|
|
|
|
1,485,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 7 - Consolidated Loan Portfolio
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
As of
|
|
|
|
September 30,
|
|
June 30,
|
|
December 31,
|
|
|
|
2013
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
|
$
|
2,519,457
|
|
$
|
2,511,206
|
|
$
|
2,747,217
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans:
|
|
|
|
|
|
|
|
|
|
|
Construction loans (1)
|
|
|
163,610
|
|
|
194,912
|
|
|
361,875
|
|
Commercial mortgage loans (1)
|
|
|
1,857,794
|
|
|
1,916,509
|
|
|
1,883,798
|
|
Commercial and Industrial loans (1)
|
|
|
2,663,793
|
|
|
2,527,431
|
|
|
2,793,157
|
|
Loans to local financial institutions collateralized by real estate
mortgages
|
|
|
244,554
|
|
|
248,360
|
|
|
255,390
|
|
Commercial loans
|
|
|
4,929,751
|
|
|
4,887,212
|
|
|
5,294,220
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance leases
|
|
|
243,553
|
|
|
241,675
|
|
|
236,926
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer loans
|
|
|
1,815,873
|
|
|
1,805,693
|
|
|
1,775,751
|
|
Loans held for investment
|
|
|
9,508,634
|
|
|
9,445,786
|
|
|
10,054,114
|
|
Loans held for sale
|
|
|
114,592
|
|
|
237,583
|
|
|
85,394
|
|
Total loans
|
|
$
|
9,623,226
|
|
$
|
9,683,369
|
|
$
|
10,139,508
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) During the second quarter of 2013, after a comprehensive
review of substantially all of the loans in our commercial
portfolios, the classification of certain loans was revised to
more accurately depict the nature of the underlying loans. This
reclassification resulted in a net increase of $269.0 million in
commercial mortgage loans, since the principal source of repayment
for such loans is derived primarily from the operation of the
underlying real estate, with a corresponding decrease of $246.8
million in commercial and industrial loans and a $22.2 million
decrease in construction loans. The Corporation evaluated the
impact of this reclassification on the provision for loan losses
and determined that the effect of this adjustment was not material
to any previously reported results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 8 - Loan Portfolio by Geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
As of September 30, 2013
|
|
|
|
Puerto Rico
|
|
Virgin Islands
|
|
United States
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
|
$
|
1,883,682
|
|
$
|
351,176
|
|
$
|
284,599
|
|
$
|
2,519,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction loans
|
|
|
100,946
|
|
|
35,121
|
|
|
27,543
|
|
|
163,610
|
|
Commercial mortgage loans
|
|
|
1,471,657
|
|
|
75,199
|
|
|
310,938
|
|
|
1,857,794
|
|
Commercial and Industrial loans
|
|
|
2,388,848
|
|
|
105,847
|
|
|
169,098
|
|
|
2,663,793
|
|
Loans to a local financial institution collateralized by real estate
mortgages
|
|
|
244,554
|
|
|
-
|
|
|
-
|
|
|
244,554
|
|
Commercial loans
|
|
|
4,206,005
|
|
|
216,167
|
|
|
507,579
|
|
|
4,929,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance leases
|
|
|
243,553
|
|
|
-
|
|
|
-
|
|
|
243,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer loans
|
|
|
1,736,052
|
|
|
49,616
|
|
|
30,205
|
|
|
1,815,873
|
|
Loans held for investment
|
|
|
8,069,292
|
|
|
616,959
|
|
|
822,383
|
|
|
9,508,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for sale
|
|
|
74,012
|
|
|
40,580
|
|
|
-
|
|
|
114,592
|
|
Total loans
|
|
$
|
8,143,304
|
|
$
|
657,539
|
|
$
|
822,383
|
|
$
|
9,623,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 9 - Non-Performing Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
September 30,
|
|
June 30,
|
|
December 31,
|
|
|
|
2013
|
|
2013
|
|
2012
|
|
Non-performing loans held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
$
|
142,002
|
|
|
$
|
133,937
|
|
|
$
|
313,626
|
|
|
Commercial mortgage
|
|
|
127,374
|
|
|
|
136,737
|
|
|
|
214,780
|
|
|
Commercial and Industrial
|
|
|
127,584
|
|
|
|
131,906
|
|
|
|
230,090
|
|
|
Construction
|
|
|
64,241
|
|
|
|
68,204
|
|
|
|
178,190
|
|
|
Consumer and Finance leases
|
|
|
37,184
|
|
|
|
35,416
|
|
|
|
38,875
|
|
|
Total non-performing loans held for investment
|
|
|
498,385
|
|
|
|
506,200
|
|
|
|
975,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REO
|
|
|
133,284
|
|
|
|
139,257
|
|
|
|
185,764
|
|
|
Other repossessed property
|
|
|
14,125
|
|
|
|
11,503
|
|
|
|
10,107
|
|
|
Other assets (1)
|
|
|
-
|
|
|
|
-
|
|
|
|
64,543
|
|
|
Total non-performing assets, excluding loans held for sale
|
|
$
|
645,794
|
|
|
$
|
656,960
|
|
|
$
|
1,235,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans held for sale
|
|
|
80,234
|
|
|
|
94,951
|
|
|
|
2,243
|
|
|
Total non-performing assets, including loans held for sale (2)
|
|
$
|
726,028
|
|
|
$
|
751,911
|
|
|
$
|
1,238,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past-due loans 90 days and still accruing
|
|
$
|
127,735
|
|
|
$
|
113,061
|
|
|
$
|
142,012
|
|
|
Allowance for loan and lease losses
|
|
$
|
289,379
|
|
|
$
|
301,047
|
|
|
$
|
435,414
|
|
|
Allowance to total non-performing loans held for investment
|
|
|
58.06
|
%
|
|
|
59.47
|
%
|
|
|
44.63
|
%
|
|
Allowance to total non-performing loans held for investment,
excluding residential real estate loans
|
|
|
81.20
|
%
|
|
|
80.87
|
%
|
|
|
65.78
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Collateral pledged to Lehman Brothers, Inc.
|
|
(2)Amount excludes purchased credit impaired loans with a carrying
value as of September 30, 2013 of approximately $6.0 million
acquired as part of the credit card portfolio acquired from FIA.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 10 - Non-Performing Assets by Geography
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
September 30,
|
|
June 30,
|
|
December 31,
|
|
|
|
2013
|
|
2013
|
|
2012
|
|
Puerto Rico:
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans held for investment:
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
$
|
119,763
|
|
$
|
110,929
|
|
$
|
281,086
|
|
Commercial mortgage
|
|
|
93,593
|
|
|
100,459
|
|
|
172,534
|
|
Commercial and Industrial
|
|
|
121,646
|
|
|
124,596
|
|
|
215,985
|
|
Construction
|
|
|
45,016
|
|
|
46,273
|
|
|
99,383
|
|
Finance leases
|
|
|
2,603
|
|
|
2,801
|
|
|
3,182
|
|
Consumer
|
|
|
31,547
|
|
|
28,953
|
|
|
32,529
|
|
Total non-performing loans held for investment
|
|
|
414,168
|
|
|
414,011
|
|
|
804,699
|
|
|
|
|
|
|
|
|
|
|
|
|
REO
|
|
|
104,574
|
|
|
108,507
|
|
|
145,683
|
|
Other repossessed property
|
|
|
14,037
|
|
|
11,417
|
|
|
10,070
|
|
Investment securities
|
|
|
-
|
|
|
-
|
|
|
64,543
|
|
Total non-performing assets, excluding loans held for sale
|
|
$
|
532,779
|
|
$
|
533,935
|
|
$
|
1,024,995
|
|
Non-performing loans held for sale
|
|
|
40,229
|
|
|
54,946
|
|
|
2,243
|
|
Total non-performing assets, including loans held for sale (1)
|
|
$
|
573,008
|
|
$
|
588,881
|
|
$
|
1,027,238
|
|
Past-due loans 90 days and still accruing
|
|
$
|
123,848
|
|
$
|
111,331
|
|
$
|
137,288
|
|
|
|
|
|
|
|
|
|
|
|
|
Virgin Islands:
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans held for investment:
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
$
|
8,821
|
|
$
|
9,465
|
|
$
|
18,054
|
|
Commercial mortgage
|
|
|
8,136
|
|
|
5,651
|
|
|
11,232
|
|
Commercial and Industrial
|
|
|
5,938
|
|
|
7,310
|
|
|
12,905
|
|
Construction
|
|
|
15,063
|
|
|
17,271
|
|
|
72,648
|
|
Consumer
|
|
|
811
|
|
|
753
|
|
|
804
|
|
Total non-performing loans held for investment
|
|
|
38,769
|
|
|
40,450
|
|
|
115,643
|
|
|
|
|
|
|
|
|
|
|
|
|
REO
|
|
|
18,166
|
|
|
18,624
|
|
|
24,260
|
|
Other repossessed property
|
|
|
25
|
|
|
45
|
|
|
17
|
|
Total non-performing assets, excluding loans held for sale
|
|
$
|
56,960
|
|
$
|
59,119
|
|
$
|
139,920
|
|
Non-performing loans held for sale
|
|
|
40,005
|
|
|
40,005
|
|
|
-
|
|
Total non-performing assets, including loans held for sale
|
|
$
|
96,965
|
|
$
|
99,124
|
|
$
|
139,920
|
|
Past-due loans 90 days and still accruing
|
|
$
|
3,887
|
|
$
|
1,730
|
|
$
|
4,068
|
|
|
|
|
|
|
|
|
|
|
|
|
United States:
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans held for investment:
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
$
|
13,418
|
|
$
|
13,543
|
|
$
|
14,486
|
|
Commercial mortgage
|
|
|
25,645
|
|
|
30,627
|
|
|
31,014
|
|
Commercial and Industrial
|
|
|
-
|
|
|
-
|
|
|
1,200
|
|
Construction
|
|
|
4,162
|
|
|
4,660
|
|
|
6,159
|
|
Consumer
|
|
|
2,223
|
|
|
2,909
|
|
|
2,360
|
|
Total non-performing loans held for investment
|
|
|
45,448
|
|
|
51,739
|
|
|
55,219
|
|
|
|
|
|
|
|
|
|
|
|
|
REO
|
|
|
10,544
|
|
|
12,126
|
|
|
15,821
|
|
Other repossessed property
|
|
|
63
|
|
|
41
|
|
|
20
|
|
Total non-performing assets, excluding loans held for sale
|
|
$
|
56,055
|
|
$
|
63,906
|
|
$
|
71,060
|
|
Non-performing loans held for sale
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Total non-performing assets, including loans held for sale
|
|
$
|
56,055
|
|
$
|
63,906
|
|
$
|
71,060
|
|
Past-due loans 90 days and still accruing
|
|
$
|
-
|
|
$
|
-
|
|
$
|
656
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amount excludes purchased credit impaired loans with a carrying
value as of September 30, 2013 of approximately $6.0 million
acquired as part of the credit card portfolio acquired from FIA.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 11 – Allowance for Loan and Lease Losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Nine-Month Period Ended
|
|
(Dollars in thousands)
|
|
September 30,
|
|
June 30,
|
|
|
September 30,
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2013
|
|
2013
|
|
|
2012
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses, beginning of period
|
|
$
|
301,047
|
|
|
$
|
342,531
|
|
|
|
$
|
457,153
|
|
|
$
|
435,414
|
|
|
|
$
|
493,917
|
|
|
Provision for loan and lease losses
|
|
|
22,195
|
|
|
|
87,464
|
|
(1
|
)
|
|
28,952
|
|
|
|
220,782
|
|
(5
|
)
|
|
90,033
|
|
|
Net charge-offs of loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
(8,457
|
)
|
|
|
(103,418
|
)
|
(2
|
)
|
|
(7,358
|
)
|
|
|
(123,455
|
)
|
(6
|
)
|
|
(27,300
|
)
|
|
Commercial mortgage
|
|
|
(5,918
|
)
|
|
|
(3,253
|
)
|
|
|
|
(5,002
|
)
|
|
|
(65,207
|
)
|
(7
|
)
|
|
(14,867
|
)
|
|
Commercial and Industrial
|
|
|
(5,718
|
)
|
|
|
(5,520
|
)
|
|
|
|
(12,261
|
)
|
|
|
(96,067
|
)
|
(8
|
)
|
|
(33,315
|
)
|
|
Construction
|
|
|
71
|
|
|
|
(2,368
|
)
|
(3
|
)
|
|
(8,326
|
)
|
|
|
(40,812
|
)
|
(9
|
)
|
|
(38,904
|
)
|
|
Consumer and finance leases
|
|
|
(13,841
|
)
|
|
|
(14,389
|
)
|
|
|
|
(7,627
|
)
|
|
|
(41,276
|
)
|
|
|
|
(24,033
|
)
|
|
Net charge-offs
|
|
|
(33,863
|
)
|
|
|
(128,948
|
)
|
(4
|
)
|
|
(40,574
|
)
|
|
|
(366,817
|
)
|
(10
|
)
|
|
(138,419
|
)
|
|
Allowance for loan and lease losses, end of period
|
|
$
|
289,379
|
|
|
$
|
301,047
|
|
|
|
$
|
445,531
|
|
|
$
|
289,379
|
|
|
|
$
|
445,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses to period end total loans held
for investment
|
|
|
3.04
|
%
|
|
|
3.19
|
%
|
|
|
|
4.37
|
%
|
|
|
3.04
|
%
|
|
|
|
4.37
|
%
|
|
Net charge-offs (annualized) to average loans outstanding during the
period
|
|
|
1.41
|
%
|
|
|
5.25
|
%
|
|
|
|
1.58
|
%
|
|
|
4.97
|
%
|
|
|
|
1.79
|
%
|
|
Net charge-offs (annualized), excluding charge-offs related to
loans sold and loans transferred to held for sale, to average
loans outstanding during the period
|
|
|
1.41
|
%
|
|
|
1.29
|
%
|
|
|
|
1.58
|
%
|
|
|
1.87
|
%
|
|
|
|
1.79
|
%
|
|
Provision for loan and lease losses to net charge-offs during the
period
|
|
|
0.66x
|
|
|
|
0.68x
|
|
|
|
|
0.71x
|
|
|
|
0.60x
|
|
|
|
|
0.65x
|
|
|
Provision for loan and lease losses to net charge-offs during the
period, excluding impact of loans sold and the transfer of loans
to held for sale
|
|
|
0.66x
|
|
|
|
0.63x
|
|
|
|
|
0.71x
|
|
|
|
0.66x
|
|
|
|
|
0.65x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes provision of $67.9 million associated with the bulk
sale of non-performing residential assets.
|
|
(2) Includes net charge-offs totaling $97.9 million associated with
the bulk sale of non-performing residential assets.
|
|
(3) Includes net charge-offs totaling $31 thousand associated with
the bulk sale of non-performing residential assets.
|
|
(4) Includes net charge-offs totaling $98.0 million associated with
the bulk sale of non-performing residential assets.
|
|
(5) Includes provision of $132.0 million associated with the bulk
sales and the transfer of loans to held for sale.
|
|
(6) Includes net charge-offs totaling $99.0 million associated with
the bulk sales.
|
|
(7) Includes net charge-offs of $54.6 million associated with the
bulk sale of adversely classified commercial assets and the transfer
of loans to held for sale.
|
|
(8) Includes net charge-offs totaling $44.7 million associated with
the bulk sale of adversely classified commercial assets.
|
|
(9) Includes net charge-offs of $34.2 million associated with the
bulk sales and the transfer of loans to held for sale.
|
|
(10) Includes net charge-offs of $232.4 million associated with the
bulk sales and the transfer of loans to held for sale.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 12 – Net Charge-Offs to Average Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine-Month Period Ended
|
|
|
|
|
Year ended
|
|
|
|
September 30,
|
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
|
December 31,
|
|
|
|
2013
|
|
|
|
2012
|
|
2011
|
|
2010
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
6.03
|
%
|
(1
|
)
|
|
1.40
|
%
|
|
1.32
|
%
|
|
1.80
|
%
|
(6
|
)
|
|
0.82
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial mortgage
|
|
4.80
|
%
|
(2
|
)
|
|
3.43
|
%
|
|
3.21
|
%
|
|
5.02
|
%
|
(7
|
)
|
|
1.64
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and Industrial
|
|
4.30
|
%
|
(3
|
)
|
|
1.62
|
%
|
|
1.57
|
%
|
|
2.16
|
%
|
(8
|
)
|
|
0.72
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
|
|
18.60
|
%
|
(4
|
)
|
|
23.29
|
%
|
|
16.33
|
%
|
|
23.80
|
%
|
(9
|
)
|
|
11.54
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and finance leases
|
|
2.71
|
%
|
|
|
|
2.43
|
%
|
|
2.33
|
%
|
|
2.98
|
%
|
|
|
|
3.05
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
4.97
|
%
|
(5
|
)
|
|
2.84
|
%
|
|
2.68
|
%
|
|
4.76
|
%
|
(10
|
)
|
|
2.48
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes net charge-offs totaling $99.0 million associated with
the bulk loan sales. The ratio of residential mortgage net
charge-offs to average loans, excluding charge-offs associated with
the bulk loan sales, was 1.26%.
|
|
(2) Includes net charge-offs of $54.6 million associated with the
bulk sale of adversely classified commercial assets and the
transfer of loans to held for sale in the first quarter of 2013.
The ratio of commercial mortgage net charge-offs to average loans,
excluding charge-offs associated with the bulk sale of adversely
classified commercial assets and the transfer of loans to held for
sale, was 0.81%.
|
|
(3) Includes net charge-offs totaling $44.7 million associated with
the bulk sale of adversely classified commercial assets. The ratio
of commercial and industrial net charge-offs to average loans,
excluding charge-offs associated with the bulk sale of adversely
classified commercial assets, was 2.33%.
|
|
(4) Includes net charge-offs of $34.2 million associated with the
bulk loan sales and the transfer of loans to held for sale. The
ratio of construction loans net charge-offs to average loans,
excluding charge-offs associated with the bulk loan sales and the
transfer of loans to held for sale, was 3.50%.
|
|
(5) Includes net charge-offs of $232.4 million associated with the
bulk loan sales and the transfer of loans to held for sale. The
ratio of total net charge-offs to average loans, excluding
charge-offs associated with the bulk loan sales and the transfer of
loans to held for sale, was 1.87%.
|
|
(6) Includes net charge-offs totaling $7.8 million associated with
non-performing residential mortgage loans sold in a bulk sale.
|
|
(7) Includes net charge-offs totaling $29.5 million associated with
the transfer of loans to held for sale in the fourth quarter of
2010. The ratio of commercial mortgage net charge-offs to average
loans, excluding charge-offs associated with the transfer of loans
to held for sale, was 3.38%.
|
|
(8) Includes net charge-offs totaling $8.6 million associated with
the transfer of loans to held for sale in the fourth quarter of
2010. The ratio of commercial and industrial net charge-offs to
average loans, excluding charge-offs associated with the transfer of
loans to held for sale, was 1.98%.
|
|
(9) Includes net charge-offs totaling $127.0 million associated with
the transfer of loans to held for sale in the fourth quarter of
2010.The ratio of construction net charge-offs to average loans,
excluding charge-offs associated with the transfer of loans to held
for sale, was 18.93%.
|
|
(10) Includes net charge-offs totaling $165.1 million associated
with the tranfer of loans to held for sale in the fourth quarter of
2010. The ratio of total net charge-offs to average loans, excluding
charge-offs associated with the transfer of loans to held for sale,
was 3.60%.
|
CONTACT:
First BanCorp.
John B. Pelling III, 305-577-6000,
ext. 162
Investor Relations Officer
john.pelling@firstbankpr.com
