[April 27, 2018] |
|
First BanCorp. Announces Earnings for the Quarter Ended March 31, 2018
First BanCorp. (the "Corporation") (NYSE: FBP), the bank holding company
for FirstBank Puerto Rico ("FirstBank" or "the Bank"), today reported
net income of $33.1 million for the first quarter of 2018, or $0.15 per
diluted share, compared to $24.2 million, or $0.11 per diluted share,
for the fourth quarter of 2017 and $25.5 million, or $0.11 per diluted
share, for the first quarter of 2017.
Aurelio Alemán, President and Chief Executive Officer of First BanCorp.,
commented: "We are quite pleased with our results for the first
quarter. We generated $33.1 million of net income or $0.15/share and our
pre-tax pre-provision income was a record $60.7 million. Net interest
income and margin improved nicely due to higher yields and a more
favorable funding mix and we continued our job of closely managing
expenses. Non-interest income increased, driven by seasonal insurance
commissions and increased mortgage banking revenues and transaction
fees, which is a positive sign. We continue to closely monitor the storm
impact on our customers and the timing of insurance proceeds.
The recovery in Puerto Rico following the impact of the hurricanes last
year is underway and we continue to deal with a fragile electrical grid.
Not surprisingly, our loan portfolio declined this quarter by $96
million, most of this reduction was distributed in the major loan
categories in Puerto Rico with small growth in Florida. Credit quality
moved in the right direction; non-performing loans, non-performing
assets, and inflows to nonperforming all declined this quarter and our
Special Assets Group is focused on driving further improvement in this
regard. Core deposit growth was strong again this quarter. Total
deposits, excluding government and brokered CDs, increased $195 million
in the first quarter. The most significant growth was non-interest
bearing demand deposits which increased 10%, or $186 million. We saw a
further reduction in brokered CDs, which decreased $194 million this
quarter.
On the capital front, we were able to repurchase and cancel $23.8
million of trust preferred securities at a slight discount. Our earnings
continue to drive growth in our capital base. Our tangible book value
per share was $8.32 at the end of the quarter. We will continue to look
for growth opportunities across our three regions as rebuilding efforts
strengthen in our main market."
SPECIAL ITEMS
The financial results for the first quarter of 2018 and the fourth and
first quarters of 2017 include the following items that management
believes are not reflective of core operating performance, are not
expected to reoccur with any regularity or may reoccur at uncertain
times and in uncertain amounts (the "Special Items"):
Quarter ended March 31, 2018
-
A $4.8 million ($2.9 million after-tax) positive effect in earnings
related to a $6.4 million net loan loss reserve release in connection
with revised estimates of the reserves associated with the effects of
Hurricanes Irma and Maria, partially offset by $1.6 million of
storm-related expenses recorded in the first quarter.
-
A $5.6 million ($3.4 million after-tax) charge to the provision for
loan and lease losses associated with three non-performing commercial
and construction loans totaling $57.2 million that were transferred to
held for sale during the first quarter.
-
A $2.3 million gain on the repurchase and cancellation of $23.8
million in trust preferred securities reflected in the statement of
income set forth below as "Gain on early extinguishment of debt." The
Corporation repurchased and cancelled the repurchased trust preferred
securities, resulting in a commensurate reduction in the related
Floating Rate Junior Subordinated Debenture. The Corporation's
purchase price equated to 90% of the $23.8 million par value. The 10%
discount resulted in the gain of $2.3 million. The gain, realized at
the holding company level, has no effect on the income tax expense in
2018.
Quarter ended December 31, 2017
-
A $6.8 million ($4.1 million after-tax) adverse effect in earnings
related to a $4.8 million charge to increase the storm-related
allowance for loan losses and approximately $1.9 million of
non-interest expenses associated with insurance deductibles related to
damages assessed on certain OREO properties and other storm-related
costs. The $6.8 million effect was partially offset in the
consolidated financial results by expected insurance recoveries of
$0.2 million for rental costs that the Corporation incurred when
Hurricanes Irma and Maria precluded the utilization of certain
facilities during the fourth quarter.
Quarter ended March 31, 2017
-
A $13.2 million tax benefit related to the change in tax status of
certain subsidiaries from taxable corporations to limited liability
companies that make an election to be treated as partnerships for
income tax purposes in Puerto Rico.
-
A $12.2 million other-than-temporary impairment charge ("OTTI") on
Puerto Rico government debt securities, specifically bonds of the
Government Development Bank for Puerto Rico (the "GDB") and the Puerto
Rico Public Buildings Authority. No tax benefit was recognized for the
OTTI charge.
-
A $0.6 million ($0.3 million after-tax) charge to the provision for
loan and lease losses related to the sale of the Corporation's
participation in the Puerto Rico Electric Power Authority ("PREPA")
credit line with a book value of $64 million at the time of sale.
-
Costs of $0.3 million associated with a secondary offering of the
Corporation's common stock by certain of the existing stockholders
completed in the first quarter of 2017. The costs, incurred at the
holding company level, had no effect on the income tax expense in 2017.
The following table reconciles for the first quarter of 2018 and the
fourth and first quarters of 2017 the reported net income to adjusted
net income, a non-GAAP financial measure that excludes the Special Items
identified above:
|
|
|
|
|
Quarter Ended
|
|
|
Quarter Ended
|
|
|
Quarter Ended
|
(In thousands)
|
|
|
|
March 31, 2018
|
|
|
December 31, 2017
|
|
|
March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
Net income, as reported (GAAP)
|
|
|
|
$
|
33,148
|
|
|
|
$
|
24,169
|
|
|
|
$
|
25,541
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Storm-related loan loss reserve (release)/charge to the provision
|
|
|
|
|
(6,407
|
)
|
|
|
|
4,814
|
|
|
|
|
-
|
|
Storm-related expenses
|
|
|
|
|
1,596
|
|
|
|
|
1,945
|
|
|
|
|
-
|
|
Storm-related idle time rental costs insurance recovery
|
|
|
|
|
-
|
|
|
|
|
(157
|
)
|
|
|
|
-
|
|
Charge to the provision related to loans transferred to held for sale
|
|
|
|
|
5,645
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Other-than-temporary impairment on debt securities
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
12,231
|
|
Gain on repurchase and cancellation of trust preferred securities
|
|
|
|
|
(2,316
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
Income tax benefit related to change in tax-status of certain
subsidiaries
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(13,161
|
)
|
Charge to the provision related to the sale of the PREPA credit line
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
569
|
|
Secondary offering costs
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
274
|
|
Income tax impact of adjustments (1)
|
|
|
|
|
(324
|
)
|
|
|
|
(2,636
|
)
|
|
|
|
(222
|
)
|
Adjusted net income (Non-GAAP)
|
|
|
|
$
|
31,342
|
|
|
|
$
|
28,135
|
|
|
|
$
|
25,232
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See Basis of Presentation for the individual tax impact
for each reconciling item.
|
|
This press release includes certain non-GAAP financial measures,
including adjusted net income, adjusted provision for loan and lease
losses, adjusted net charge-offs, adjusted non-interest income, adjusted
non-interest expenses, adjusted pre-tax, pre-provision income, adjusted
net interest income and margin, certain capital ratios, and certain
other financial measures that exclude the effect of items that
management identifies as Special Items because they are not reflective
of core operating performance, are not expected to reoccur with any
regularity or may reoccur at uncertain times and in uncertain amounts,
and should be read in conjunction with the discussion below in Basis
of Presentation - Use of Non-GAAP Financial Measures and the
accompanying tables (Exhibit A), which are an integral part of this
press release.
INCOME BEFORE INCOME TAXES AND RECONCILIATION TO ADJUSTED PRE-TAX,
PRE-PROVISION INCOME (NON-GAAP)
Income before income taxes for the first quarter of 2018 amounted to
$40.9 million, compared to $26.4 million for the fourth quarter of 2017.
The following table reconciles income before income taxes to adjusted
pre-tax, pre-provision income for the last five quarters. Adjusted
pre-tax, pre-provision income for the first quarter of 2018 amounted to
$60.7 million, up $6.9 million from the fourth quarter of 2017:
|
(Dollars in thousands)
|
|
|
|
Quarter Ended
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
September 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
|
$
|
40,906
|
|
|
|
$
|
26,377
|
|
|
|
$
|
(19,150
|
)
|
|
|
$
|
37,288
|
|
|
|
$
|
17,468
|
|
Add: Provision for loan and lease losses
|
|
|
|
|
20,544
|
|
|
|
|
25,703
|
|
|
|
|
75,013
|
|
|
|
|
18,096
|
|
|
|
|
25,442
|
|
(Less)/Add: Net (gain) loss on investments and impairments
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(371
|
)
|
|
|
|
12,231
|
|
Less: Gain on early extinguishment of debt
|
|
|
|
|
(2,316
|
)
|
|
|
|
-
|
|
|
|
|
(1,391
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
Less: Storm-related idle time payroll and rental costs insurance
recovery
|
|
|
|
|
-
|
|
|
|
|
(157
|
)
|
|
|
|
(1,662
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
Add: Storm-related expenses
|
|
|
|
|
1,596
|
|
|
|
|
1,945
|
|
|
|
|
599
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Add/(Less): Unrealized loss (gain) on derivative instruments
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
1
|
|
Add: Secondary offering costs
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
118
|
|
|
|
|
-
|
|
|
|
|
274
|
|
Adjusted pre-tax, pre-provision income (1)
|
|
|
|
$
|
60,730
|
|
|
|
$
|
53,868
|
|
|
|
$
|
53,527
|
|
|
|
$
|
55,013
|
|
|
|
$
|
55,416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change from most recent prior quarter (amount)
|
|
|
|
$
|
6,862
|
|
|
|
$
|
341
|
|
|
|
$
|
(1,486
|
)
|
|
|
$
|
(403
|
)
|
|
|
$
|
409
|
|
Change from most recent prior quarter (percentage)
|
|
|
|
|
12.7
|
%
|
|
|
|
0.6
|
%
|
|
|
|
-2.7
|
%
|
|
|
|
-0.7
|
%
|
|
|
|
0.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See Basis of Presentation for additional information.
|
Adjusted pre-tax, pre-provision income is a non-GAAP financial measure
that management believes is useful to investors in analyzing the
Corporation's performance and trends. This metric is income (loss)
before income taxes adjusted to exclude the provision for loan and lease
losses, gains or losses on sales of investment securities and
impairments, and fair value adjustments on derivatives. In addition,
from time to time, earnings are adjusted also for Special Items because
management believes these items are not reflective of core operating
performance, are not expected to reoccur with any regularity or may
reoccur at uncertain times and in uncertain amounts (for additional
information about this non-GAAP financial measure, see Basis of
Presentation - Adjusted Pre-Tax, Pre-Provision Income).
NET INTEREST INCOME
Net interest income, excluding fair value adjustments on derivatives
("valuations"), and net interest income on a tax-equivalent basis are
non-GAAP financial 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 for the
last five quarters. 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.
|
(Dollars in thousands)
|
|
|
|
|
Quarter Ended
|
|
|
|
|
March 31, 2018
|
|
|
December 31, 2017
|
|
|
September 30, 2017
|
|
|
June 30, 2017
|
|
|
March 31, 2017
|
Net Interest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income - GAAP
|
|
|
|
$
|
149,418
|
|
|
|
$
|
147,826
|
|
|
|
$
|
147,995
|
|
|
|
$
|
147,374
|
|
|
|
$
|
145,228
|
|
Unrealized loss (gain) on derivative instruments
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
1
|
|
Interest income excluding valuations
|
|
|
|
|
149,418
|
|
|
|
|
147,826
|
|
|
|
|
147,995
|
|
|
|
|
147,374
|
|
|
|
|
145,229
|
|
Tax-equivalent adjustment
|
|
|
|
|
4,778
|
|
|
|
|
2,850
|
|
|
|
|
3,147
|
|
|
|
|
4,128
|
|
|
|
|
3,610
|
|
Interest income on a tax-equivalent basis and excluding valuations
|
|
|
|
$
|
154,196
|
|
|
|
$
|
150,676
|
|
|
|
$
|
151,142
|
|
|
|
$
|
151,502
|
|
|
|
$
|
148,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense - GAAP
|
|
|
|
|
24,725
|
|
|
|
|
25,560
|
|
|
|
|
25,163
|
|
|
|
|
23,470
|
|
|
|
|
22,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income - GAAP
|
|
|
|
$
|
124,693
|
|
|
|
$
|
122,266
|
|
|
|
$
|
122,832
|
|
|
|
$
|
123,904
|
|
|
|
$
|
122,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income excluding valuations
|
|
|
|
$
|
124,693
|
|
|
|
$
|
122,266
|
|
|
|
$
|
122,832
|
|
|
|
$
|
123,904
|
|
|
|
$
|
122,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income on a tax-equivalent basis and excluding
valuations
|
|
|
|
$
|
129,471
|
|
|
|
$
|
125,116
|
|
|
|
$
|
125,979
|
|
|
|
$
|
128,032
|
|
|
|
$
|
126,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Balances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases
|
|
|
|
$
|
8,778,968
|
|
|
|
$
|
8,806,036
|
|
|
|
$
|
8,855,406
|
|
|
|
$
|
8,863,529
|
|
|
|
$
|
8,862,271
|
|
Total securities, other short-term investments and
interest-bearing cash balances
|
|
|
|
|
2,720,438
|
|
|
|
|
2,593,716
|
|
|
|
|
2,395,298
|
|
|
|
|
2,336,986
|
|
|
|
|
2,375,060
|
|
Average interest-earning assets
|
|
|
|
$
|
11,499,406
|
|
|
|
$
|
11,399,752
|
|
|
|
$
|
11,250,704
|
|
|
|
$
|
11,200,515
|
|
|
|
$
|
11,237,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average interest-bearing liabilities
|
|
|
|
$
|
8,194,442
|
|
|
|
$
|
8,411,399
|
|
|
|
$
|
8,404,242
|
|
|
|
$
|
8,327,615
|
|
|
|
$
|
8,456,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Yield/Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average yield on interest-earning assets - GAAP
|
|
|
|
|
5.27
|
%
|
|
|
|
5.14
|
%
|
|
|
|
5.22
|
%
|
|
|
|
5.28
|
%
|
|
|
|
5.24
|
%
|
Average rate on interest-bearing liabilities - GAAP
|
|
|
|
|
1.22
|
%
|
|
|
|
1.21
|
%
|
|
|
|
1.19
|
%
|
|
|
|
1.13
|
%
|
|
|
|
1.09
|
%
|
Net interest spread - GAAP
|
|
|
|
|
4.05
|
%
|
|
|
|
3.93
|
%
|
|
|
|
4.03
|
%
|
|
|
|
4.15
|
%
|
|
|
|
4.15
|
%
|
Net interest margin - GAAP
|
|
|
|
|
4.40
|
%
|
|
|
|
4.26
|
%
|
|
|
|
4.33
|
%
|
|
|
|
4.44
|
%
|
|
|
|
4.42
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average yield on interest-earning assets excluding valuations
|
|
|
|
|
5.27
|
%
|
|
|
|
5.14
|
%
|
|
|
|
5.22
|
%
|
|
|
|
5.28
|
%
|
|
|
|
5.24
|
%
|
Average rate on interest-bearing liabilities excluding valuations
|
|
|
|
|
1.22
|
%
|
|
|
|
1.21
|
%
|
|
|
|
1.19
|
%
|
|
|
|
1.13
|
%
|
|
|
|
1.09
|
%
|
Net interest spread excluding valuations
|
|
|
|
|
4.05
|
%
|
|
|
|
3.93
|
%
|
|
|
|
4.03
|
%
|
|
|
|
4.15
|
%
|
|
|
|
4.15
|
%
|
Net interest margin excluding valuations
|
|
|
|
|
4.40
|
%
|
|
|
|
4.26
|
%
|
|
|
|
4.33
|
%
|
|
|
|
4.44
|
%
|
|
|
|
4.42
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average yield on interest-earning assets on a tax-equivalent basis
and excluding valuations
|
|
|
|
|
5.44
|
%
|
|
|
|
5.24
|
%
|
|
|
|
5.33
|
%
|
|
|
|
5.43
|
%
|
|
|
|
5.37
|
%
|
Average rate on interest-bearing liabilities excluding valuations
|
|
|
|
|
1.22
|
%
|
|
|
|
1.21
|
%
|
|
|
|
1.19
|
%
|
|
|
|
1.13
|
%
|
|
|
|
1.09
|
%
|
Net interest spread on a tax-equivalent basis and excluding
valuations
|
|
|
|
|
4.22
|
%
|
|
|
|
4.03
|
%
|
|
|
|
4.14
|
%
|
|
|
|
4.30
|
%
|
|
|
|
4.28
|
%
|
Net interest margin on a tax-equivalent basis and excluding
valuations
|
|
|
|
|
4.57
|
%
|
|
|
|
4.35
|
%
|
|
|
|
4.44
|
%
|
|
|
|
4.58
|
%
|
|
|
|
4.55
|
%
|
Net interest income for the first quarter of 2018 amounted to $124.7
million, an increase of $2.4 million when compared to net interest
income of $122.3 million for the fourth quarter of 2017. The increase in
net interest income was mainly due to:
-
A $2.2 million increase in interest income on investment securities,
primarily related to both the full-quarter effect of purchases of U.S.
agency debt securities executed in the latter part of December 2017
amounting to $212.2 million (average yield of 2.70%), and a $0.8
million decrease in the premium amortization expense of U.S. agency
mortgage-backed securities ("MBS") resulting from lower prepayment
speeds.
-
A $0.8 million decrease in interest expense related to an improved
funding mix resulting from a reduction of $217.0 million in the
average balance of total interest-bearing liabilities, commensurate
with an increase of $243.5 million in the average balance of
non-interest-bearing deposits. The Corporation used liquidity to pay
off maturing brokered CDs and a short-term repurchase agreement, and
to repurchase and cancel $23.8 million of trust preferred securities
which was noted above. A reduction of $0.5 million in interest expense
associated with two fewer days in the first quarter was offset by the
effect of higher market interest rates on the cost of retail CDs,
commercial money market accounts tied to short-term interest rates,
and the upward repricing of variable rate repurchase agreements.
-
A $0.5 million increase in interest income on commercial and
construction loans primarily due to the upward repricing of variable
rate loans, partially offset by the adverse effect of two fewer days
in the first quarter that resulted in a decrease of approximately $1.0
million in interest income on commercial and construction loans.
Partially offset by:
-
A $1.1 million decrease in interest income on consumer loans,
including the adverse effect of two fewer days in the first quarter
that resulted in a decrease of approximately $0.9 million in interest
income on consumer loans and the adverse effect of higher inflows of
loans to non-performing status.
Net interest margin was 4.40%, up 14 basis points from the fourth
quarter of 2017. The increase in the net interest margin was related to
various factors including the upward repricing of variable rate
commercial loans, the aforementioned improved funding mix driven by the
increase in the proportion of interest-earning assets funded by the
growth in non-interest-bearing deposits, the decrease in the premium
amortization expense on U.S. agency MBS, and liquidity invested in
higher-yielding investment securities.
PROVISION FOR LOAN AND LEASE LOSSES
The provision for loan and lease losses for the first quarter of 2018
was $20.5 million, compared to $25.7 million for the fourth quarter of
2017. As mentioned above, a net loan loss reserve release of
approximately $6.4 million was recorded in the first quarter of 2018 in
connection with revised estimates of the reserves associated with the
effects of Hurricanes Maria and Irma, compared to a $4.8 million charge
to the provision recorded in the fourth quarter of 2017. Relationship
officers continued to closely monitor the performance of storm-affected
customers during the first quarter of 2018, and data became available on
the performance of consumer and residential credits that had been under
payment deferral programs. The reserve release recorded in the first
quarter was primarily attributable to the updated assessments of
financial performance and repayment prospects of certain
individually-assessed commercial credits and lower reserve requirements
resulting from payments received during the first quarter that reduced
the balance of the consumer loan portfolio outstanding on the dates of
the hurricanes. As of March 31, 2018, the storm-related allowance
amounted to $62.1 million (net of a $2.8 million charge-off taken on a
storm-affected credit during the fourth quarter of 2017).
During the first quarter of 2018, the Corporation transferred to held
for sale three non-performing commercial and construction loans. The
aggregate recorded investment in these loans was written down to $57.2
million, which resulted in charge-offs of $9.7 million and an
incremental loss of $5.6 million reflected in the provision for loan and
lease losses for the first quarter of 2018.
On a non-GAAP basis (excluding the storm-related adjustments and charges
related to the loans transferred to held for sale), the adjusted
provision for loan and lease losses for the first quarter of 2018 of
$21.3 million increased $0.4 million, compared to the adjusted provision
of $20.9 million for the fourth quarter of 2017. The $0.4 million
increase in the adjusted provision for loan and lease losses was driven
by the following variances:
-
A $5.7 million increase in the adjusted provision for commercial and
construction loans, primarily related to the downgrade in the credit
risk classification of a commercial mortgage loan in the Florida
region, and higher specific reserve requirements for certain
commercial and industrial impaired loans.
-
A $0.5 million increase in the adjusted provision for consumer loans,
mainly related to higher charge-offs and non-performing loan levels of
auto and personal loans.
Partially offset by:
-
A $5.8 million decrease in the adjusted provision for residential
mortgage loans, primarily related to lower delinquency and charge-off
levels.
See Credit Quality and Basis of Presentation below for
additional information regarding the allowance for loan and lease
losses, including variances in net charge-offs, and the reconciliation
of the provision for loan and lease losses in accordance with GAAP to
the adjusted provision for loan and lease losses that excludes the
storm-related adjustments and charges to the provision for loan and
lease losses related to loans transferred to held for sale.
|
NON-INTEREST INCOME
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
September 30,
|
|
|
June 30,
|
|
|
March 31,
|
(In thousands)
|
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts
|
|
|
|
$
|
5,088
|
|
|
$
|
4,924
|
|
|
$
|
5,797
|
|
|
$
|
5,803
|
|
|
$
|
5,790
|
|
Mortgage banking activities
|
|
|
|
|
4,165
|
|
|
|
1,912
|
|
|
|
3,117
|
|
|
|
4,846
|
|
|
|
3,616
|
|
Net gain (loss) on investments and impairments
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
371
|
|
|
|
(12,231
|
)
|
Gain on early extinguishment of debt
|
|
|
|
|
2,316
|
|
|
|
-
|
|
|
|
1,391
|
|
|
|
-
|
|
|
|
-
|
|
Other operating income
|
|
|
|
|
11,215
|
|
|
|
8,114
|
|
|
|
8,340
|
|
|
|
9,529
|
|
|
|
11,068
|
|
Non-interest income
|
|
|
|
$
|
22,784
|
|
|
$
|
14,950
|
|
|
$
|
18,645
|
|
|
$
|
20,549
|
|
|
$
|
8,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income for the first quarter of 2018 amounted to $22.8
million, compared to $15.0 million for the fourth quarter of 2017.
Non-interest income for the first quarter of 2018 includes the $2.3
million gain on the repurchase and cancellation of $23.8 million in
trust preferred securities.
On a non-GAAP basis, excluding the effect of the repurchase and
cancellation of trust preferred securities, adjusted non-interest income
of $20.5 million for the first quarter increased by $5.5 million,
compared to the GAAP non-interest income of $15.0 million for the fourth
quarter of 2017. The $5.5 million increase in adjusted non-interest
income was primarily due to:
-
A $2.1 million increase related to seasonal contingent commissions
received by the insurance agency based on the prior year's production
of insurance policies, included as part of "Other operating income" in
the table above.
-
A $2.3 million increase in revenues from mortgage banking activities
driven by the reversal in the first quarter of $0.8 million of the
valuation allowance for mortgage servicing rights, compared to a $0.6
million charge to the valuation allowance recorded in the fourth
quarter of 2017. In addition, net gains on the sale of residential
mortgage loans in the first quarter increased by $0.5 million,
reflecting a higher volume of loan originations and sales compared to
the initial drop in business activity experienced after the storms
that affected volumes for the fourth quarter of 2017. Total loans sold
in the secondary market to U.S. government-sponsored entities amounted
to $74.5 million with a related net gain of $1.9 million, including
gains of $0.6 million on To-Be-Announced MBS ("TBA") hedges, in the
first quarter of 2018, compared to $52.8 million with a related net
gain of $1.4 million, net of TBA hedge losses of $54 thousand, in the
fourth quarter of 2017. Further, the amount of servicing fees
collected in the first quarter increased by $0.4 million compared to
the fourth quarter of 2017.
-
A $0.8 million gain on the sale of fixed assets of a closed banking
branch in Florida, included as part of "Other operating income" in the
table above.
-
A $0.6 million increase in transaction fee income from credit and
debit cards, POS, and ATMs, included as part of "Other operating
income" in the table above.
-
A $0.2 million increase in service charge on deposits, primarily
related to an increase in the number of cash management transactions
of commercial clients.
Partially offset by:
-
A $0.6 million lower of cost or market adjustment recorded in the
first quarter to reduce the carrying value of a construction loan held
for sale.
|
NON-INTEREST EXPENSES
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
September 30,
|
|
|
June 30,
|
|
|
March 31,
|
(In thousands)
|
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees' compensation and benefits
|
|
|
|
$
|
40,684
|
|
|
$
|
37,655
|
|
|
$
|
37,128
|
|
|
$
|
38,409
|
|
|
$
|
38,653
|
Occupancy and equipment
|
|
|
|
|
15,105
|
|
|
|
15,067
|
|
|
|
13,745
|
|
|
|
13,759
|
|
|
|
14,088
|
Deposit insurance premium
|
|
|
|
|
2,649
|
|
|
|
3,054
|
|
|
|
3,179
|
|
|
|
3,721
|
|
|
|
3,771
|
Other insurance and supervisory fees
|
|
|
|
|
1,206
|
|
|
|
1,363
|
|
|
|
1,174
|
|
|
|
1,134
|
|
|
|
1,138
|
Taxes, other than income taxes
|
|
|
|
|
3,856
|
|
|
|
3,366
|
|
|
|
3,763
|
|
|
|
3,745
|
|
|
|
3,676
|
Professional fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collections, appraisals and other credit related fees
|
|
|
|
|
1,599
|
|
|
|
2,341
|
|
|
|
2,295
|
|
|
|
2,452
|
|
|
|
2,072
|
Outsourcing technology services
|
|
|
|
|
5,123
|
|
|
|
5,088
|
|
|
|
5,403
|
|
|
|
5,398
|
|
|
|
5,354
|
Other professional fees
|
|
|
|
|
3,338
|
|
|
|
3,721
|
|
|
|
4,325
|
|
|
|
3,950
|
|
|
|
3,530
|
Credit and debit card processing expenses
|
|
|
|
|
3,537
|
|
|
|
3,078
|
|
|
|
3,737
|
|
|
|
3,566
|
|
|
|
2,831
|
Business promotion
|
|
|
|
|
2,576
|
|
|
|
2,768
|
|
|
|
3,244
|
|
|
|
3,192
|
|
|
|
3,281
|
Communications
|
|
|
|
|
1,482
|
|
|
|
1,374
|
|
|
|
1,603
|
|
|
|
1,628
|
|
|
|
1,543
|
Net loss on OREO operations
|
|
|
|
|
190
|
|
|
|
2,201
|
|
|
|
1,351
|
|
|
|
3,369
|
|
|
|
4,076
|
Other
|
|
|
|
|
4,682
|
|
|
|
4,060
|
|
|
|
4,667
|
|
|
|
4,746
|
|
|
|
3,869
|
Total
|
|
|
|
$
|
86,027
|
|
|
$
|
85,136
|
|
|
$
|
85,614
|
|
|
$
|
89,069
|
|
|
$
|
87,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses in the first quarter of 2018 amounted to $86.0
million, an increase of $0.9 million from $85.1 million in the fourth
quarter of 2017. Non-interest expenses for the first quarter of 2018
include storm-related costs totaling $1.6 million, substantially all
included as part of "Occupancy and equipment" in the above table.
For the fourth quarter of 2017, non-interest expenses include insurance
deductibles related to damages assessed on certain OREO properties
damaged by Hurricane Maria and other storm-related costs totaling $1.9
million, of which $0.9 million, $0.6 million, and $0.4 million are
included as part of "Net loss on OREO operations," "Occupancy and
equipment," and "Business promotion," respectively, in the above table.
Furthermore, expected insurance recoveries of $0.2 million related to
rental costs that the Corporation incurred when Hurricanes Irma and
Maria precluded the use of certain facilities during the fourth quarter
of 2017 were recognized as an offset to "Occupancy and equipment"
expenses in the above table.
The Corporation has incurred a variety of costs to operate in disaster
response mode, and some facilities and their contents were damaged by
the storms. The Corporation maintains insurance for casualty losses as
well as for reasonable and necessary disaster response costs and certain
revenue lost through business interruption. Most of the significant
disaster response costs had been incurred by the end of the first
quarter of 2018 and included where appropriate in an insurance claim
receivable based on management's understanding of the underlying
coverage. An insurance claim receivable of $5.3 million was included in
other assets as of March 31, 2018, and the Corporation has incurred $9.4
million of storm-related disaster response costs and casualty losses,
including the aforementioned $1.6 million charge to operations in the
first quarter of 2018.
On a non-GAAP basis, excluding the effect of the aforementioned
storm-related items, adjusted non-interest expenses of $84.4 million for
the first quarter of 2018 increased $1.1 million, compared to adjusted
non-interest expenses of $83.3 million for the fourth quarter of 2017.
The $1.1 million increase in adjusted non-interest expenses was
primarily due to:
-
A $3.0 million increase in employees' compensation and benefits
expenses, primarily reflecting higher seasonal payroll taxes and bonus
expenses.
-
A $0.5 million increase in credit and debit card processing expenses,
primarily associated with a higher volume of transactions.
-
A $0.5 million increase in "Taxes, other than income taxes" in the
above table primarily related to an increase in the sales and use tax
expense recorded in the first quarter.
-
A $0.6 million increase in "other non-interest expenses' in the table
above primarily reflecting a lower net reserve release related to
unfunded loan commitments, and increases in data processing fees and
expenses and losses related to non-real estate repossessed properties.
Partially offset by:
-
A $1.1 million decrease in the adjusted net loss on OREO operations,
primarily due to a $1.2 million decrease in write-downs to the value
of OREO properties.
-
A $1.1 million decrease in professional service fees, including a
decrease of $0.8 million in attorneys' collection fees and a $0.5
million decrease in consulting fees, mainly associated with
implementation costs for new technology systems incurred in the fourth
quarter of 2017.
-
A $1.1 million decrease in adjusted occupancy and equipment costs,
primarily reflecting the effect in the previous quarter of
approximately $0.8 million in lease-termination costs associated with
the closing of a Bank branch in Puerto Rico.
-
A $0.4 million decrease in the FDIC insurance premium assessment
reflecting, among other things, the effect of reduced reliance on
brokered deposits, and higher liquidity levels maintained at the end
of the first quarter of 2018.
INCOME TAXES
The Corporation recorded an income tax expense of $7.8 million for the
first quarter of 2018 compared to $2.2 million for the fourth quarter of
2017. The increase was mainly related to higher pre-tax earnings, a
higher estimated effective tax rate for 2018, and the effect in the
prior quarter of final year-end tax accounting that resulted in a lower
than previously estimated effective tax rate for the 2017 year. The
effective tax rate, excluding entities with pre-tax losses from which a
tax benefit cannot be recognized and the tax benefit associated with the
change in the tax status of certain subsidiaries, increased to 27%
compared to the effective tax rate of 15% as of the end of the fourth
quarter of 2017. As of March 31, 2018, the Corporation had a net
deferred tax asset of $289.3 million (net of a valuation allowance of
$186.1 million, including a valuation allowance of $150.0 million
against the deferred tax assets of the Corporation's banking subsidiary,
FirstBank).
|
CREDIT QUALITY
|
|
Non-Performing Assets
|
|
(Dollars in thousands)
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
September 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
Non-performing loans held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
|
$
|
171,380
|
|
|
|
$
|
178,291
|
|
|
|
$
|
178,530
|
|
|
|
$
|
155,330
|
|
|
|
$
|
154,893
|
|
Commercial mortgage
|
|
|
|
|
115,179
|
|
|
|
|
156,493
|
|
|
|
|
137,059
|
|
|
|
|
122,035
|
|
|
|
|
174,908
|
|
Commercial and Industrial
|
|
|
|
|
85,325
|
|
|
|
|
85,839
|
|
|
|
|
84,317
|
|
|
|
|
65,575
|
|
|
|
|
77,972
|
|
Construction
|
|
|
|
|
16,236
|
|
|
|
|
52,113
|
|
|
|
|
46,720
|
|
|
|
|
47,391
|
|
|
|
|
48,468
|
|
Consumer and Finance leases
|
|
|
|
|
23,857
|
|
|
|
|
16,818
|
|
|
|
|
26,506
|
|
|
|
|
21,082
|
|
|
|
|
21,325
|
|
Total non-performing loans held for investment
|
|
|
|
|
411,977
|
|
|
|
|
489,554
|
|
|
|
|
473,132
|
|
|
|
|
411,413
|
|
|
|
|
477,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OREO
|
|
|
|
|
154,639
|
|
|
|
|
147,940
|
|
|
|
|
152,977
|
|
|
|
|
150,045
|
|
|
|
|
137,784
|
|
Other repossessed property
|
|
|
|
|
5,646
|
|
|
|
|
4,802
|
|
|
|
|
6,320
|
|
|
|
|
5,588
|
|
|
|
|
6,235
|
|
Other assets (1)
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
17,531
|
|
Total non-performing assets, excluding loans held for sale
|
|
|
|
$
|
572,262
|
|
|
|
$
|
642,296
|
|
|
|
$
|
632,429
|
|
|
|
$
|
567,046
|
|
|
|
$
|
639,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans held for sale
|
|
|
|
|
64,945
|
|
|
|
|
8,290
|
|
|
|
|
8,290
|
|
|
|
|
8,079
|
|
|
|
|
8,079
|
|
Total non-performing assets, including loans held for sale (2)
|
|
|
|
$
|
637,207
|
|
|
|
$
|
650,586
|
|
|
|
$
|
640,719
|
|
|
|
$
|
575,125
|
|
|
|
$
|
647,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past-due loans 90 days and still accruing (3)
|
|
|
|
$
|
163,045
|
|
|
|
$
|
160,725
|
|
|
|
$
|
140,656
|
|
|
|
$
|
131,246
|
|
|
|
$
|
143,089
|
|
Non-performing loans held for investment to total loans held for
investment
|
|
|
|
|
4.74
|
%
|
|
|
|
5.53
|
%
|
|
|
|
5.33
|
%
|
|
|
|
4.64
|
%
|
|
|
|
5.41
|
%
|
Non-performing loans to total loans
|
|
|
|
|
5.43
|
%
|
|
|
|
5.60
|
%
|
|
|
|
5.41
|
%
|
|
|
|
4.71
|
%
|
|
|
|
5.48
|
%
|
Non-performing assets, excluding non-performing loans held for
sale, to total assets, excluding non-performing loans held for sale
|
|
|
|
|
4.72
|
%
|
|
|
|
5.24
|
%
|
|
|
|
5.20
|
%
|
|
|
|
4.76
|
%
|
|
|
|
5.38
|
%
|
Non-performing assets to total assets
|
|
|
|
|
5.22
|
%
|
|
|
|
5.31
|
%
|
|
|
|
5.26
|
%
|
|
|
|
4.83
|
%
|
|
|
|
5.44
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Fair market value of bonds of the GDB and the Puerto Rico Public
Buildings Authority prior to the sale completed during the second
quarter of 2017.
(2) Purchased credit impaired ("PCI") loans of $155.3 million accounted
for under ASC 310-30 as of March 31, 2018, primarily mortgage loans
acquired from Doral Bank in the first quarter of 2015 and from Doral
Financial in the second quarter of 2014, are excluded and not considered
non-performing due to the application of the accretion method, under
which these loans will accrete interest income over the remaining life
of the loans using estimated cash flow analysis.
(3) Amount includes PCI loans with individual delinquencies over 90 days
and still accruing with a carrying value as of March 31, 2018 of
approximately $30.3 million, primarily related to the loans acquired
from Doral Bank in the first quarter of 2015 and from Doral Financial in
the second quarter of 2014.
Variances in credit quality metrics:
-
Total non-performing assets decreased by $13.4 million to $637.2
million as of March 31, 2018, compared to $650.6 million as of
December 31, 2017. Total non-performing loans, including
non-performing loans held for sale, decreased by $20.9 million from
$497.8 million as of the end of the fourth quarter of 2017 to $476.9
million as of March 31, 2018. The decrease in non-performing assets
was primarily attributable to charge-offs totaling $11.4 million taken
on four commercial and construction loans, including $9.7 million
associated with the aforementioned loans transferred to held for sale
during the first quarter, and payments totaling $4.0 million received
in the first quarter that reduced the outstanding balance of
non-performing commercial mortgage loans that were previously
guaranteed by the TDF. The cash payments released the TDF from its
liability as a guarantor of these loans. Non-performing residential
mortgage loans decreased by $6.9 million, driven by loans transferred
to the OREO portfolio, loans brought current, and charge-offs recorded
in the first quarter, partially offset by inflows of loans that
already had delinquent payments before the storms and failed to resume
their payments after the expiration of the three-month payment
deferral program. Non-performing consumer loans increased by $7.0
million during the first quarter of 2018.
-
Inflows to non-performing loans held for investment were $49.8
million, a decrease of $8.5 million, compared to inflows of $58.3
million in the fourth quarter of 2017. The variance primarily reflects
the effect in the previous quarter of inflows related to identified
storm-affected commercial credits, partially offset by higher inflows
of residential mortgage and consumer loans after the expiration of the
three-month payment deferral programs in the first quarter. Inflows to
non-performing commercial and construction loans were $6.5 million in
the first quarter of 2018, a decrease of $33.9 million, compared to
inflows of $40.5 million in the fourth quarter of 2017. Inflows to
non-performing residential mortgage loans were $27.0 million in the
first quarter of 2018, an increase of $14.2 million, compared to
inflows of $12.8 million in the fourth quarter of 2017. Inflows to
non-performing consumer loans were $16.3 million, an increase of $11.3
million, compared to inflows of $5.1 million in the fourth quarter of
2017.
-
Adversely classified commercial and construction loans, including
loans held for sale, increased by $24.9 million to $507.3 million as
of March 31, 2018, driven by the downgrade in the credit risk
classification of a $46.8 million commercial mortgage loan in the
Florida region, partially offset by the sale of a $5.6 million
commercial and industrial loan, collections, and charge-offs.
-
The OREO balance increased by $6.7 million, driven by additions of
$15.9 million, primarily residential properties, partially offset by
sales of $8.3 million and adjustments to the OREO value of $0.9
million in the first quarter.
-
Total troubled debt restructuring ("TDR") loans held for investment
were $572.4 million as of March 31, 2018, down $14.8 million from
December 31, 2017. Approximately $366.4 million of total TDR loans
held for investment were in accrual status as of March 31, 2018.
Early Delinquency
Total loans in early delinquency (i.e., 30-89 days past due loans, as
defined in regulatory report instructions) amounted to $202.5 million as
of March 31, 2018, a decrease of $42.2 million compared to $244.7
million as of the end of the fourth quarter of 2017. The variances by
major portfolio categories follow:
-
Consumer loans in early delinquency decreased in the first quarter by
$44.5 million to $66.7 million as of March 31, 2018, and residential
mortgage loans in early delinquency decreased in the first quarter by
$46.4 million to $69.5 million as of March 31, 2018. These variances
reflect a combination of clients that resumed their payments after the
expiration of the three-month payment deferral programs and loans
classified as non-performing during the first quarter. When compared
to pre-storm levels, consumer loans in early delinquency decreased by
$16.2 million to $66.7 million from $82.9 million as of June 30, 2017,
and residential mortgage loans in early delinquency decreased by $35.2
million to $69.5 million from $104.7 million as of June 30, 2017.
-
Commercial and construction loans in early delinquency increased in
the first quarter by $48.7 million to $66.4 million as of March 31,
2018, primarily related to the aforementioned $46.8 million commercial
mortgage loan adversely classified in the Florida region during the
first quarter. When compared to pre-storm levels, commercial and
construction loans in early delinquency increased by $60.4 million to
$66.4 million from $6.0 million as of June 30, 2017.
Allowance for Loan and Lease Losses
The following table sets forth information concerning the allowance for
loan and lease losses during the periods indicated:
|
|
|
|
|
|
Quarter Ended
|
(Dollars in thousands)
|
|
|
|
March 31,
|
|
|
|
|
December 31,
|
|
|
|
|
September 30,
|
|
|
|
|
June 30,
|
|
|
March 31,
|
|
|
|
|
|
|
2017
|
|
|
|
|
2017
|
|
|
|
|
2017
|
|
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses, beginning of period
|
|
|
|
$
|
231,843
|
|
|
|
|
|
$
|
230,870
|
|
|
|
|
|
$
|
173,485
|
|
|
|
|
|
$
|
203,231
|
|
|
|
$
|
205,603
|
|
|
|
Provision for loan and lease losses
|
|
|
|
|
20,544
|
|
|
(1
|
) (2)
|
|
|
|
25,703
|
|
|
(6
|
)
|
|
|
|
75,013
|
|
|
(7
|
)
|
|
|
|
18,096
|
|
|
|
|
25,442
|
|
|
(8)
|
Net (charge-offs) recoveries of loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
|
|
(3,036
|
)
|
|
|
|
|
|
(5,341
|
)
|
|
|
|
|
|
(6,856
|
)
|
|
|
|
|
|
(6,076
|
)
|
|
|
|
(7,476
|
)
|
|
|
Commercial mortgage
|
|
|
|
|
(6,761
|
)
|
|
(3
|
)
|
|
|
|
(6,850
|
)
|
|
|
|
|
|
(223
|
)
|
|
|
|
|
|
(30,417
|
)
|
|
|
|
(1,332
|
)
|
|
|
Commercial and Industrial
|
|
|
|
|
(1,868
|
)
|
|
|
|
|
|
(545
|
)
|
|
|
|
|
|
(624
|
)
|
|
|
|
|
|
(1,754
|
)
|
|
|
|
(11,177
|
)
|
|
(9)
|
Construction
|
|
|
|
|
(5,164
|
)
|
|
(4
|
)
|
|
|
|
(2,764
|
)
|
|
|
|
|
|
(31
|
)
|
|
|
|
|
|
(462
|
)
|
|
|
|
382
|
|
|
|
Consumer and finance leases
|
|
|
|
|
(9,702
|
)
|
|
|
|
|
|
(9,230
|
)
|
|
|
|
|
|
(9,894
|
)
|
|
|
|
|
|
(9,133
|
)
|
|
|
|
(8,211
|
)
|
|
|
Net charge-offs
|
|
|
|
|
(26,531
|
)
|
|
(5
|
)
|
|
|
|
(24,730
|
)
|
|
|
|
|
|
(17,628
|
)
|
|
|
|
|
|
(47,842
|
)
|
|
|
|
(27,814
|
)
|
|
(10)
|
Allowance for loan and lease losses, end of period
|
|
|
|
$
|
225,856
|
|
|
|
|
|
$
|
231,843
|
|
|
|
|
|
$
|
230,870
|
|
|
|
|
|
$
|
173,485
|
|
|
|
$
|
203,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses to period end total loans held
for investment (11)
|
|
|
|
|
2.60
|
%
|
|
|
|
|
|
2.62
|
%
|
|
|
|
|
|
2.60
|
%
|
|
|
|
|
|
1.96
|
%
|
|
|
|
2.30
|
%
|
|
|
Net charge-offs (annualized) to average loans outstanding during the
period
|
|
|
|
|
1.21
|
%
|
|
|
|
|
|
1.12
|
%
|
|
|
|
|
|
0.80
|
%
|
|
|
|
|
|
2.16
|
%
|
|
|
|
1.26
|
%
|
|
|
Net charge-offs (annualized), excluding charge-offs of $9.7
million related to loans transferred to held for sale in the first
quarter of 2018 and the charge-off of $10.7 million related to the
sale of the PREPA credit line in the first quarter of 2017, to
average loans outstanding during the period
|
|
|
|
|
0.77
|
%
|
|
|
|
|
|
1.12
|
%
|
|
|
|
|
|
0.80
|
%
|
|
|
|
|
|
2.16
|
%
|
|
|
|
0.78
|
%
|
|
|
Provision for loan and lease losses to net charge-offs during the
period
|
|
|
|
0.77x
|
|
|
|
|
1.04x
|
|
|
|
|
4.26x
|
|
|
|
|
0.38x
|
|
|
0.91x
|
|
|
Provision for loan and lease losses to net charge-offs during the
period, excluding effect of the storm-related reserve release and
loans transferred to held for sale in the first quarter of 2018
and the storm-related provision in the third and fourth quarters
of 2017, and the effect of the sale of the PREPA credit line in
the first quarter of 2017
|
|
|
|
1.26x
|
|
|
|
|
0.96x
|
|
|
|
|
0.48x
|
|
|
|
|
0.38x
|
|
|
1.46x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net of a $6.4 million net loan loss reserve release associated with
the effect of Hurricanes Irma and Maria.
(2) Includes a provision of $5.6 million associated with $57.2 million
in loans transferred to held for sale.
(3) Includes charge-offs totaling $4.6 million associated with $27.2
million in commercial mortgage loans transferred to held for sale.
(4) Includes a charge-off of $5.1 million associated with a $30.0
million construction loan transferred to held for sale.
(5) Includes charge-offs totaling $9.7 million associated with $57.2
million in loans transferred to held for sale.
(6) Includes a provision of $4.8 million associated with the effect of
Hurricanes Irma and Maria.
(7) Includes a provision of $66.5 million associated with the effect of
Hurricanes Irma and Maria.
(8) Includes a provision of $0.6 million associated with the sale of the
PREPA credit line.
(9) Includes a charge-off of $10.7 million associated with the sale of
the PREPA credit line.
(10) Includes the charge-off of $10.7 million associated with the sale
of the PREPA credit line.
(11) The ratio of allowance for loan and lease losses to total loans
held for investment, excluding the storm-related allowance, was 1.88%
and 1.85% as of March 31, 2018 and as of both December 31, 2017 and
September 30, 2017, respectively.
-
The ratio of the allowance for loan and lease losses to total loans
held for investment was 2.60% as of March 31, 2018, compared to 2.62%
as of December 31, 2017. The ratio of the total allowance to
non-performing loans held for investment was 54.82% as of March 31,
2018, compared to 47.36% as of December 31, 2017, reflecting the
effect of the aforementioned transfer to held for sale of
non-performing commercial and construction loans totaling $57.2
million.
The following table sets forth information concerning the composition of
the Corporation's allowance for loan and lease losses as of March 31,
2018 and December 31, 2017 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 Loans (including Commercial Mortgage,
C&I, and Construction)
|
|
|
Consumer and Finance Leases
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans, net of charge-offs
|
|
|
|
$
|
417,610
|
|
|
|
$
|
293,971
|
|
|
|
$
|
34,699
|
|
|
|
$
|
746,280
|
|
Allowance for loan and lease losses
|
|
|
|
|
22,546
|
|
|
|
|
29,310
|
|
|
|
|
5,074
|
|
|
|
|
56,930
|
|
Allowance for loan and lease losses to principal balance
|
|
|
|
|
5.40
|
%
|
|
|
|
9.97
|
%
|
|
|
|
14.62
|
%
|
|
|
|
7.63
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PCI loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value of PCI loans
|
|
|
|
|
151,067
|
|
|
|
|
4,214
|
|
|
|
|
-
|
|
|
|
|
155,281
|
|
Allowance for PCI loans
|
|
|
|
|
10,873
|
|
|
|
|
378
|
|
|
|
|
-
|
|
|
|
|
11,251
|
|
Allowance for PCI loans to carrying value
|
|
|
|
|
7.20
|
%
|
|
|
|
8.97
|
%
|
|
|
|
-
|
|
|
|
|
7.25
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans with general allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans
|
|
|
|
|
2,699,191
|
|
|
|
|
3,395,241
|
|
|
|
|
1,699,897
|
|
|
|
|
7,794,329
|
|
Allowance for loan and lease losses
|
|
|
|
|
22,967
|
|
|
|
|
72,486
|
|
|
|
|
62,222
|
|
|
|
|
157,675
|
|
Allowance for loan and lease losses to principal balance
|
|
|
|
|
0.85
|
%
|
|
|
|
2.13
|
%
|
|
|
|
3.66
|
%
|
|
|
|
2.02
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans
|
|
|
|
$
|
3,267,868
|
|
|
|
$
|
3,693,426
|
|
|
|
$
|
1,734,596
|
|
|
|
$
|
8,695,890
|
|
Allowance for loan and lease losses
|
|
|
|
|
56,386
|
|
|
|
|
102,174
|
|
|
|
|
67,296
|
|
|
|
|
225,856
|
|
Allowance for loan and lease losses to principal balance
|
|
|
|
|
1.73
|
%
|
|
|
|
2.77
|
%
|
|
|
|
3.88
|
%
|
|
|
|
2.60
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans, net of charge-offs
|
|
|
|
$
|
433,434
|
|
|
|
$
|
318,480
|
|
|
|
$
|
38,394
|
|
|
|
$
|
790,308
|
|
Allowance for loan and lease losses
|
|
|
|
|
22,086
|
|
|
|
|
24,159
|
|
|
|
|
5,165
|
|
|
|
|
51,410
|
|
Allowance for loan and lease losses to principal balance
|
|
|
|
|
5.10
|
%
|
|
|
|
7.59
|
%
|
|
|
|
13.45
|
%
|
|
|
|
6.51
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PCI loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value of PCI loans
|
|
|
|
|
153,991
|
|
|
|
|
4,183
|
|
|
|
|
-
|
|
|
|
|
158,174
|
|
Allowance for PCI loans
|
|
|
|
|
10,873
|
|
|
|
|
378
|
|
|
|
|
-
|
|
|
|
|
11,251
|
|
Allowance for PCI loans to carrying value
|
|
|
|
|
7.06
|
%
|
|
|
|
9.04
|
%
|
|
|
|
-
|
|
|
|
|
7.11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans with general allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans
|
|
|
|
|
2,703,532
|
|
|
|
|
3,486,959
|
|
|
|
|
1,711,503
|
|
|
|
|
7,901,994
|
|
Allowance for loan and lease losses
|
|
|
|
|
26,016
|
|
|
|
|
77,349
|
|
|
|
|
65,817
|
|
|
|
|
169,182
|
|
Allowance for loan and lease losses to principal balance
|
|
|
|
|
0.96
|
%
|
|
|
|
2.22
|
%
|
|
|
|
3.85
|
%
|
|
|
|
2.14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans
|
|
|
|
$
|
3,290,957
|
|
|
|
$
|
3,809,622
|
|
|
|
$
|
1,749,897
|
|
|
|
$
|
8,850,476
|
|
Allowance for loan and lease losses
|
|
|
|
|
58,975
|
|
|
|
|
101,886
|
|
|
|
|
70,982
|
|
|
|
|
231,843
|
|
Allowance for loan and lease losses to principal balance
|
|
|
|
|
1.79
|
%
|
|
|
|
2.67
|
%
|
|
|
|
4.06
|
%
|
|
|
|
2.62
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Charge-Offs
The following table presents annualized net charge-offs to average loans
held-in-portfolio:
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
March 31,
|
|
|
|
|
December 31,
|
|
|
September 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
|
0.38
|
%
|
|
|
|
|
0.66
|
%
|
|
|
0.84
|
%
|
|
|
0.74
|
%
|
|
|
0.92
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial mortgage
|
|
|
|
1.69
|
%
|
|
(1
|
)
|
|
|
1.73
|
%
|
|
|
0.06
|
%
|
|
|
7.42
|
%
|
|
|
0.33
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and Industrial
|
|
|
|
0.36
|
%
|
|
|
|
|
0.10
|
%
|
|
|
0.12
|
%
|
|
|
0.34
|
%
|
|
|
2.07
|
%
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
|
|
|
|
17.37
|
%
|
|
(2
|
)
|
|
|
7.86
|
%
|
|
|
0.09
|
%
|
|
|
1.19
|
%
|
|
|
-1.17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and finance leases
|
|
|
|
2.22
|
%
|
|
|
|
|
2.13
|
%
|
|
|
2.29
|
%
|
|
|
2.13
|
%
|
|
|
1.92
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
|
|
1.21
|
%
|
|
(3
|
)
|
|
|
1.12
|
%
|
|
|
0.80
|
%
|
|
|
2.16
|
%
|
|
|
1.26
|
%
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes net charge-offs totaling $4.6 million associated with $27.2
million in commercial mortgage loans transferred to held for sale. The
ratio of commercial mortgage net charge-offs to average loans, excluding
the charge-offs associated with commercial mortgage loans transferred to
held for sale, was 0.55%.
(2) Includes a net charge-off of $5.1 million associated with a $30.0
million construction loan transferred to held for sale. The ratio of
construction net charge-offs to average loans, excluding the charge-offs
associated with the construction loan transferred to held for sale, was
0.22%.
(3) Includes net charge-offs totaling $9.7 million associated with $57.2
million in loans transferred to held for sale. The ratio of total loans
net charge-offs to average loans, excluding the charge-offs associated
with loans transferred to held for sale, was 0.77%.
(4) Includes the charge-off of $10.7 million associated with the sale of
the PREPA credit line. The ratio of commercial and industrial net
charge-offs to average loans, excluding the charge-off associated with
the sale of the PREPA credit line, was 0.08%.
(5) Includes the charge-off of $10.7 million associated with the sale of
the PREPA credit line. The ratio of total net charge-offs to average
loans, excluding the charge-off associated with the sale of the PREPA
credit line, was 0.78%.
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 first quarter of 2018 were $26.5 million, or an
annualized 1.21% of average loans, compared to $24.7 million, or an
annualized 1.12% of average loans, in the fourth quarter of 2017. On a
non-GAAP basis, excluding charge-offs of $9.7 million taken on loans
transferred to held for sale, adjusted net charge-offs of $16.9 million
for the first quarter of 2017 decreased by $7.9 million, compared to net
charge-offs of $24.7 million for the fourth quarter of 2017. The
decrease of $7.9 million in adjusted net charge-offs was mainly related
to:
-
A $6.0 million decrease in adjusted commercial and construction loan
net charge-offs, primarily related to the effect in the previous
quarter of charge-offs totaling $8.3 million taken on two
collateral-dependent loans in Puerto Rico. Commercial and construction
loan adjusted net charge-offs were $4.1 million for the first quarter
of 2018.
-
A $2.3 million decrease in residential mortgage loan net charge-offs,
primarily related to a lower amount of charge-offs for loans evaluated
for impairment purposes based on their respective delinquency status
and loan-to-value ratio.
Partially offset by:
-
A $0.5 million increase in consumer loan net charge-offs, primarily
related to auto loans.
STATEMENT OF FINANCIAL CONDITION
Total assets were approximately $12.2 billion as of March 31, 2018, down
$60.9 million from December 31, 2017.
The decrease was mainly due to:
-
A $96.2 million decrease in total loans. The decrease consisted of
reductions of $83.8 million and $15.5 million in the Puerto Rico and
the Virgin Island regions, respectively, partially offset by a $3.1
million increase in the Florida region. The decrease was mainly
related to a $59.5 million decline in the commercial and construction
loan portfolio driven by three large loans totaling $28.3 million that
were paid off during the first quarter, two large loans totaling $14.8
million sold in the first quarter, and significant payments received
in the first quarter, including payments that reduced the outstanding
balance of three revolving commercial lines of credit in Puerto Rico
by $24.2 million.
The decrease in total loans in the Puerto Rico region was reflected in
all major loan categories, including a reduction of $45.1 million in
commercial and construction loans, and decreases of $23.3 million and
$15.4 million in residential mortgage and consumer loans, respectively.
The decrease in commercial and construction loans was driven by a $7.7
million commercial mortgage loan paid off during the first quarter, the
aforementioned sale of a $5.6 million adversely classified loan,
payments of $4.0 million that reduced the outstanding balance of loans
that were previously guaranteed by the TDF, significant repayments that
reduced the balance of certain commercial loans, including payments
totaling $24.2 million that reduced the outstanding balance of three
revolving commercial lines of credit, and charge-offs. The decrease in
residential mortgage loans in Puerto Rico reflects the effect of
collections, charge-offs and $12.9 million of foreclosures recorded in
the first quarter. Loans previously sold to GNMA that meet GNMA's
specified delinquency criteria and are eligible for repurchase increased
from $62.1 million as of December 31, 2017 to $73.3 million as of March
31, 2018. The Corporation has the right but not the obligation to
repurchase such loans and the accounting guidelines require the
Corporation to bring those loans back to its books and record a
corresponding liability.
The reduction in total loans in the Virgin Islands primarily reflects a
$9.5 million decrease in residential mortgage loans and a charge-off of
$5.1 million related to a $30.0 million construction loan transferred to
held for sale.
The increase in total loans in the Florida region consisted of increases
of $11.5 million and $1.3 million in residential mortgage and consumer
loans, respectively, partially offset by a $9.7 million decrease in the
commercial and construction loan portfolio driven by the sale of a $9.2
million commercial loan participation and certain commercial and
industrial loans paid off during the first quarter, including two large
relationships individually in excess of $5 million totaling $20.6
million.
Total loan originations, including refinancings, renewals and draws from
existing commitments (excluding credit card utilization activity)
increased by $60.3 million to $606.3 million for the first quarter of
2018, compared to $546.0 million for the fourth quarter of 2017,
primarily due to increases in residential mortgage and consumer loans
originations that reflect higher levels of business activity compared to
the initial drop experienced after the hurricanes.
Total loan originations in Puerto Rico increased by $99.2 million to
$452.1 million in the first quarter of 2018, compared to $352.9 million
in the fourth quarter of 2017. The increase in the Puerto Rico region
consisted of a $42.6 million increase in commercial and construction
loan originations, primarily three commercial mortgage loans refinanced
during the first quarter totaling $37.6 million, a $29.9 million
increase in consumer loan originations, and a $26.7 million increase in
residential mortgage loan originations, primarily conforming loan
originations.
Total loan originations in the Virgin Islands of $24.4 million in the
first quarter of 2018 increased by $19.0 million, compared to $5.3
million in the fourth quarter of 2017. The increase in the Virgin
Islands region consisted of a $15.6 million increase in commercial and
construction loan originations, driven by the utilization of an arranged
overdraft line of credit of a government entity, a $1.6 million increase
in residential mortgage loan originations, and a $1.8 million increase
in consumer loan originations.
Total loan originations in the Florida region decreased by $57.9 million
to $129.9 million in the first quarter of 2018, compared to $187.8
million in the fourth quarter of 2017. The decrease in the Florida
region consisted of a $56.8 million decrease in commercial and
construction loan originations, a $0.7 million decrease in consumer loan
originations, and a $0.4 million decrease in residential mortgage loan
originations.
-
A $75.2 million decrease in investment securities driven by
prepayments of $42.3 million of U.S. agency MBS and a $24.1 million
decrease in the fair value of available-for-sale investment
securities, primarily U.S. agency MBS due to changes in market
interest rates.
-
A $13.1 million decrease in accrued interest receivables, primarily
related to interest payments collected on loans after the expiration
of the three-month payment deferral program in the first quarter.
Partially offset by:
-
A $127.4 million increase in cash and cash equivalents, largely driven
by the growth in non-interest-bearing deposits during the first
quarter and the above mentioned proceeds from U.S. agency MBS and loan
repayments, partially offset by liquidity used to pay off maturing
brokered CDs and a $100 million short-term repurchase agreement as
well as for the repurchase of $23.8 million of trust preferred
securities.
Total liabilities were approximately $10.3 billion as of March 31, 2018,
down $68.9 million from December 31, 2017.
The decrease was mainly due to:
-
The repayment at maturity of a $100 million short-term repurchase
agreement carried at a cost of 1.53%.
-
The repurchase and cancellation of $23.8 million in trust preferred
securities, resulting in a commensurate reduction in the related
Floating Rate Junior Subordinated Debentures.
-
A $194.4 million decrease in brokered CDs, as the Corporation used
liquidity to pay off maturing brokered CDs with an all-in cost of
1.22%.
Partially offset by:
-
A $194.6 million increase in total deposits, excluding brokered CDs
and government deposits, reflecting increases of $137.2 million and
$72.5 million in Puerto Rico and the Virgin Island regions,
respectively, partially offset by a decrease of $15.2 million in the
Florida region. The most significant increase was in
noninterest-bearing demand deposits, which grew 10%, or $186.2
million, during the first quarter of 2018. Storm-related factors, such
as the effect of payment deferral programs, disaster relief funds, and
settlements of insurance claims continued to contribute to this
accumulation.
-
A $43.7 million increase in government deposits, reflecting an
increase of $51.1 million in Puerto Rico, primarily related to an
increase in the balance of a Puerto Rico government-owned
corporation's transactional deposit account, partially offset by a
$7.4 million decrease in the Virgin Islands region.
-
An $11.8 million increase in accounts payable and other liabilities,
primarily related to the accounting for the above mentioned rebooked
GNMA delinquent loans.
Total stockholders' equity amounted to $1.9 billion as of March 31,
2018, an increase of $8.0 million from December 31, 2017, mainly driven
by the earnings generated in the first quarter, partially offset by a
decrease in the fair value of available-for-sale investment securities
recorded as part of other comprehensive income.
The Corporation's common equity tier 1 capital, tier 1 capital, total
capital and leverage ratios under the Basel III rules as of March 31,
2018 were 19.24%, 19.66%, 22.98% and 14.18%, respectively, compared to
common equity tier 1 capital, tier 1 capital, total capital and leverage
ratios of 18.96%, 18.97%, 22.53%, and 14.03%, respectively, as of the
end of the fourth quarter of 2017. After receipt of regulatory approval,
the Corporation paid interest for the first quarter of 2018 on the
subordinated debt associated with its trust preferred securities and
continued to pay monthly dividends on its non-cumulative perpetual
monthly income preferred stock. As of March 31, 2018, the Corporation is
current on all interest payments related to its subordinated debt.
Meanwhile, the common equity tier 1 capital, tier 1 capital, total
capital and leverage ratios as of March 31, 2018 of our banking
subsidiary, FirstBank Puerto Rico, were 17.70%, 21.26%, 22.52%, and
15.35%, respectively, compared to common equity tier 1 capital, tier 1
capital, total capital and leverage ratios of 17.70%, 20.79%, 22.06% and
15.39%, respectively, as of the end of the fourth quarter of 2017.
Tangible Common Equity
The Corporation's tangible common equity ratio increased to 14.80% as of
March 31, 2018 from 14.65% as of December 31, 2017.
The following table presents 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)
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
September 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
Tangible Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity - GAAP
|
|
|
|
$
|
1,877,104
|
|
|
|
$
|
1,869,097
|
|
|
|
$
|
1,853,751
|
|
|
|
$
|
1,859,910
|
|
|
|
$
|
1,823,017
|
|
Preferred equity
|
|
|
|
|
(36,104
|
)
|
|
|
|
(36,104
|
)
|
|
|
|
(36,104
|
)
|
|
|
|
(36,104
|
)
|
|
|
|
(36,104
|
)
|
Goodwill
|
|
|
|
|
(28,098
|
)
|
|
|
|
(28,098
|
)
|
|
|
|
(28,098
|
)
|
|
|
|
(28,098
|
)
|
|
|
|
(28,098
|
)
|
Purchased credit card relationship intangible
|
|
|
|
|
(7,426
|
)
|
|
|
|
(8,000
|
)
|
|
|
|
(8,633
|
)
|
|
|
|
(9,266
|
)
|
|
|
|
(9,899
|
)
|
Core deposit intangible
|
|
|
|
|
(5,084
|
)
|
|
|
|
(5,478
|
)
|
|
|
|
(5,885
|
)
|
|
|
|
(6,297
|
)
|
|
|
|
(6,747
|
)
|
Insurance customer relationship intangible
|
|
|
|
|
(737
|
)
|
|
|
|
(775
|
)
|
|
|
|
(813
|
)
|
|
|
|
(851
|
)
|
|
|
|
(889
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity
|
|
|
|
$
|
1,799,655
|
|
|
|
$
|
1,790,642
|
|
|
|
$
|
1,774,218
|
|
|
|
$
|
1,779,294
|
|
|
|
$
|
1,741,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets - GAAP
|
|
|
|
$
|
12,200,386
|
|
|
|
$
|
12,261,268
|
|
|
|
$
|
12,173,648
|
|
|
|
$
|
11,913,800
|
|
|
|
$
|
11,890,398
|
|
Goodwill
|
|
|
|
|
(28,098
|
)
|
|
|
|
(28,098
|
)
|
|
|
|
(28,098
|
)
|
|
|
|
(28,098
|
)
|
|
|
|
(28,098
|
)
|
Purchased credit card relationship intangible
|
|
|
|
|
(7,426
|
)
|
|
|
|
(8,000
|
)
|
|
|
|
(8,633
|
)
|
|
|
|
(9,266
|
)
|
|
|
|
(9,899
|
)
|
Core deposit intangible
|
|
|
|
|
(5,084
|
)
|
|
|
|
(5,478
|
)
|
|
|
|
(5,885
|
)
|
|
|
|
(6,297
|
)
|
|
|
|
(6,747
|
)
|
Insurance customer relationship intangible
|
|
|
|
|
(737
|
)
|
|
|
|
(775
|
)
|
|
|
|
(813
|
)
|
|
|
|
(851
|
)
|
|
|
|
(889
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible assets
|
|
|
|
$
|
12,159,041
|
|
|
|
$
|
12,218,917
|
|
|
|
$
|
12,130,219
|
|
|
|
$
|
11,869,288
|
|
|
|
$
|
11,844,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding (1)
|
|
|
|
|
216,390
|
|
|
|
|
216,278
|
|
|
|
|
216,175
|
|
|
|
|
215,964
|
|
|
|
|
218,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity ratio
|
|
|
|
|
14.80
|
%
|
|
|
|
14.65
|
%
|
|
|
|
14.63
|
%
|
|
|
|
14.99
|
%
|
|
|
|
14.70
|
%
|
Tangible book value per common share
|
|
|
|
$
|
8.32
|
|
|
|
$
|
8.28
|
|
|
|
$
|
8.21
|
|
|
|
$
|
8.24
|
|
|
|
$
|
7.97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) In May 2017, the U.S. Treasury sold its remaining shares of common
stock in First BanCorp. As a result, approximately 2.4 million of
restricted shares outstanding were forfeited.
Exposure to Puerto Rico Government
As of March 31, 2018, the Corporation had $213.4 million of direct
exposure to the Puerto Rico Government, its municipalities and public
corporations, compared to $214.5 million as of December 31, 2017.
Approximately $183.5 million of the exposure consisted of loans and
obligations of municipalities in Puerto Rico that are supported by
assigned property tax revenues and for which, in most cases, the good
faith, credit and unlimited taxing power of the applicable municipality
have been pledged to their repayment. Approximately $6.7 million
consisted of a loan to a unit of the central government, and
approximately $15.0 million consisted of a loan to an affiliate of a
public corporation. The Corporation's total direct exposure also
includes obligations of the Puerto Rico Government, specifically bonds
of the Puerto Rico Housing Finance Authority, at an amortized cost of
$8.1 million as part of its available-for-sale investment securities
portfolio recorded on its books at a fair value of $6.8 million as of
March 31, 2018.
The exposure to municipalities in Puerto Rico includes $150.5 million of
financing arrangements with Puerto Rico municipalities that were issued
in bond form, but underwritten as loans with features that are typically
found in commercial loans. These bonds are accounted for as
held-to-maturity investment securities.
In addition, as of March 31, 2018, the Corporation had three loans
granted to the hotel industry in Puerto Rico that were previously
guaranteed by the TDF with a book value of $61.6 million. Historically,
the TDF, which is a subsidiary of the GDB, provided a secondary
guarantee for payment performance. As part of agreements executed in the
second quarter of 2017 and the first quarter of 2018, the TDF paid $7.6
million and $4.0 million, respectively, to honor a portion of its
guarantee on these loans. As provided in the agreements, the cash
payments received by the Corporation released the TDF from its liability
as a guarantor of these loans. In addition, the GDB agreed to issue to
the Bank a fixed income financial instrument pursuant to the GDB's
Restructuring Support Agreement approved by the oversight board
established by the Puerto Rico Oversight, Management, and Economic
Stability Act (PROMESA). All of the three commercial mortgage loans
previously guaranteed by the TDF have been classified as non-performing
and impaired since the first quarter of 2016, and interest payments have
been applied against principal since then. Two of these three commercial
mortgage loans with an aggregate outstanding principal balance of $50.4
million (book value of $27.2 million) were transferred to held for sale
during the first quarter of 2018.
As of March 31, 2018, the Corporation had $541.4 million of public
sector deposits in Puerto Rico, compared to $490.3 million as of
December 31, 2017. Approximately 24% is from municipalities and
municipal agencies in Puerto Rico and 76% is from public corporations
and the central government and agencies in Puerto Rico.
Conference Call / Webcast Information
First BanCorp's senior management will host an earnings conference call
and live webcast on Friday, April 27, 2018, 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.1firstbank.com
or through a dial-in telephone number at (877) 506-6537 or (412)
380-2001 for international callers. The Corporation recommends that
listeners 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.1firstbank.com,
until April 27, 2019. A telephone replay will be available one hour
after the end of the conference call through May 27, 2018 at (877)
344-7529 or (412) 317-0088 for international callers. The replay access
code is 10119577.
Safe Harbor
This press release may contain "forward-looking statements" concerning
the Corporation's future economic, operational and financial
performance. The words or phrases "expect," "anticipate," "intend,"
"look forward," "should," "would," "believes" and similar expressions
are meant to identify "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended, and are subject to
the safe harbor created by such sections. The Corporation cautions
readers not to place undue reliance on any such "forward-looking
statements," which speak only as of the date made, and advises 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: the actual pace and
magnitude of economic recovery in the regions affected by the two
hurricanes that affected the Corporation's service areas during 2017
compared to management's current views on the economic recovery;
uncertainties about how and when rebuilding will take place in the
regions affected by the storms, including the rebuilding of the public
infrastructure, such as Puerto Rico's power grid, how and when
government, private or philanthropic funds will be invested in the
affected communities, how many displaced individuals will return to
their homes in both the short- and long-term, and what other demographic
changes will take place, if any; uncertainty as to the ultimate outcomes
of actions taken, or those that may be taken, by the Puerto Rico
government, or the oversight board established by PROMESA to address
Puerto Rico's financial problems, including the filing of a form of
bankruptcy under Title III of PROMESA, which provides a court debt
restructuring process similar to U.S. bankruptcy protection, and the
effects of measures included in the Puerto Rico government fiscal plan,
or any revisions to it, on our clients and loan portfolios; the ability
of the Puerto Rico government or any of its public corporations or other
instrumentalities to repay its respective debt obligations, including
the effect of payment defaults on the Puerto Rico government general
obligations, bonds of the GDB and certain bonds of government public
corporations, and recent and any future downgrades of the long-term and
short-term debt ratings of the Puerto Rico government, which could
exacerbate Puerto Rico's adverse economic conditions and, in turn,
further adversely impact the Corporation; uncertainty about whether the
Federal Reserve Bank of New York (the "New York FED" or "Federal
Reserve") will provide approvals for receiving dividends from FirstBank,
or for continuing to make payments of dividends on non-cumulative
perpetual preferred stock, or payments on trust preferred securities or
subordinated debt, incurring, increasing or guaranteeing debt or
repurchasing any capital securities, despite the consents that have
enabled the Corporation to receive quarterly dividends from FirstBank
since the second quarter of 2016, to pay quarterly interest payments on
the Corporation's subordinated debentures associated with its trust
preferred securities since the second quarter of 2016, and to pay
monthly dividends on the non-cumulative perpetual preferred stock since
December 2016; a decrease in demand for the Corporation's products and
services and lower revenues and earnings because of the continued
recession in Puerto Rico; uncertainty as to the availability of certain
funding sources, such as brokered CDs; the Corporation's reliance on
brokered CDs to fund operations and provide liquidity; the risk of not
being able to fulfill the Corporation's cash obligations or resume
paying dividends to the Corporation's common stockholders in the future
due to the Corporation's need to receive regulatory approvals to declare
or pay any dividends and to take dividends or any other form of payment
representing a reduction in capital from FirstBank or FirstBank's
failure to generate sufficient cash flow to make a dividend payment to
the Corporation; the weakness of the real estate markets and of the
consumer and commercial sectors and their impact on the credit quality
of the Corporation's loans and other assets, which have contributed and
may continue to contribute to, among other things, high levels of
non-performing assets, charge-offs and provisions for loan and lease
losses, and may subject the Corporation to further risk from loan
defaults and foreclosures; the ability of FirstBank to realize the
benefits of its net deferred tax assets; adverse changes in general
economic conditions in Puerto Rico, the U.S., the U.S. Virgin Islands,
and the 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 reduced interest margins
and affected funding sources, and have affected demand for all of the
Corporation's products and services and reduced the Corporation's
revenues and earnings and the value of the Corporation's assets, and may
continue to have these effects; an adverse change in the Corporation's
ability to attract new clients and retain existing ones; the risk that
additional portions of the unrealized losses in the Corporation's
investment portfolio are determined to be other-than-temporary,
including additional impairments on the Corporation's remaining $8.1
million of the Puerto Rico government's debt securities; 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; changes in the fiscal and monetary policies and
regulations of the U.S. federal government and Puerto Rico and other
governments, including those determined by the Federal Reserve Board,
the New York FED, the Federal Deposit Insurance Corporation ("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 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
impairments on the Corporation's financial instruments, goodwill or
other intangible assets relating to acquisitions; the risk 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 on the Corporation's businesses, business
practices and results of operations of a potential higher interest rate
environment; uncertainty as to whether FirstBank will be able to
continue to satisfy its regulators regarding, among other things, its
asset quality, liquidity plans, maintenance of capital levels and
compliance with applicable laws, regulations and related requirements;
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 used when management believes they will be
helpful to an investor's 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 of the non-GAAP financial measure to the comparable GAAP
financial measure, can be found in the text or in the attached tables to
this earnings release. Any analysis of these non-GAAP financial measures
should be used only in conjunction with results presented in accordance
with GAAP.
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 financial 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 and the insurance customer relationship intangible. Tangible
assets are total assets less goodwill, core deposit intangibles, and
other intangibles, such as the purchased credit card relationship
intangible and the insurance customer 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. Accordingly, the
Corporation believes that disclosure of these financial measures may be
useful to investors. 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.
Adjusted Pre-Tax, Pre-Provision Income
Adjusted pre-tax, pre-provision income is a non-GAAP performance metric
that management uses and believes that investors may find useful in
analyzing underlying performance trends, particularly in times of
economic stress, including as a result of natural catastrophes such as
the recent hurricanes. Adjusted pre-tax, pre-provision income, as
defined by management, represents net income (loss) excluding income tax
expense (benefit) and the provision for loan and lease losses, as well
as Special Items that management believes are not reflective of core
operating performance, are not expected to reoccur with any regularity
or may reoccur at uncertain times and in uncertain 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 on a tax-equivalent basis in order to provide to
investors additional information about the Corporation's net interest
income that management uses and believes should facilitate comparability
and analysis. The changes in the fair value of derivative instruments
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 tax-exempt loans, on a common basis
that facilitates comparison of results to the results of peers.
Financial measures adjusted to exclude the effect of Special Items
because they are not reflective of core operating performance, are not
expected to reoccur with any regularity or may reoccur at uncertain
times and in uncertain amounts.
To supplement the Corporation's financial statements presented in
accordance with GAAP, the Corporation uses, and believes that investors
would benefit from disclosure of, non-GAAP financial measures that
reflect adjustments to the provision for loan and lease losses, net
charge-offs, non-interest income, non-interest expenses and net income
to exclude items that management identifies as Special Items because
management believes they are not reflective of core operating
performance, are not expected to reoccur with any regularity or may
reoccur at uncertain times and in uncertain amounts. This press release
includes the following non-GAAP financial measures for the first quarter
of 2018, and the fourth and first quarters of 2017 that reflect the
described items that were excluded for one of those reasons:
-
Adjusted provision for loan and lease losses excluded for the first
quarter of 2018 and the fourth and first quarters of 2017 the
following:
-
The $6.4 million net loan loss reserve release recorded in the
first quarter of 2018 related to revised estimates associated with
the effects of Hurricanes Maria and Irma.
-
The $5.6 million charge to the provision related to the $57.2
million in loans transferred to held for sale in the first quarter
of 2018.
-
The $4.8 million incremental charge recorded in the fourth quarter
of 2017 related to the allowance established for inherent losses
resulting from the impact of Hurricanes Irma and Maria.
-
The $0.6 million charge to the provision related to the sale of
the Corporation's participation in the PREPA credit line in the
first quarter of 2017.
-
Adjusted net charge-offs excluded for the first quarter of 2018 and
2017 the following:
-
Net charge-offs totaling $9.7 million associated with loans
transferred to held for sale in the first quarter of 2018.
-
Charge-off of $10.7 million associated with the sale of the
Corporation's participation in the PREPA credit line in the first
quarter of 2017.
-
Adjusted non-interest income excluded for the first quarter of 2018
and 2017 the following:
-
Gain of $2.3 million on the repurchase and cancellation of $23.8
million in trust preferred securities in the first quarter of 2018.
-
OTTI charges on debt securities of $12.2 million recorded in the
first quarter of 2017.
-
Adjusted non-interest expenses reflected for the first quarter of
2018, and the fourth and first quarters of 2017, the following:
-
Exclusion of storm-related costs of $1.6 million in the first
quarter of 2018.
-
Exclusion of costs of $1.9 million in the fourth quarter of 2017
related to insurance deductibles with respect to damages assessed
on certain OREO properties and other storm-related costs.
-
Inclusion of $0.2 million in the fourth quarter of 2017 of
expected insurance recoveries for rental costs that the
Corporation incurred when Hurricanes Irma and Maria precluded
employees from working during October 2017.
-
Exclusion of costs of $0.3 million in the first quarter of 2017
associated with a secondary offering of the Corporation's common
stock by certain of the existing stockholders.
-
Adjusted net income excluding the effect of a $13.2 million tax
benefit recorded in the first quarter of 2017 related to the change in
tax status of certain subsidiaries from taxable corporations to
limited liability, and the effect of all of the items mentioned in the
above bullets for the first quarter of 2018 and the fourth and first
quarters of 2017 and their tax related impacts as follows:
-
Tax expense of $2.5 million in the first quarter of 2018 related
to the net loan loss reserve release resulting from the revised
estimates of the reserves associated with the effects of
Hurricanes Maria and Irma (calculated based on the statutory tax
rate of 39%).
-
Tax benefit of $2.2 million in the first quarter of 2018 related
to the charges to the provision for loan and lease losses recorded
in connection with the $57.2 million in loans transferred to held
for sale (calculated based on the statutory tax rate of 39%).
-
Tax benefit of $0.6 million in the first quarter of 2018 related
to storm-related costs (calculated based on the statutory tax rate
of 39%).
-
Tax benefit of $1.9 million in the fourth quarter of 2017 related
to charges to the storm-related allowance for loan and lease
losses (calculated based on the statutory tax rate of 39%).
-
Tax benefit of $0.2 million in the first quarter of 2017 related
to the charge to the provision for loan and lease losses in
connection with the sale of the Corporation's participation in the
PREPA credit line (calculated based on the statutory tax rate of
39%).
-
No tax expense/benefit was recorded for the gain on repurchase and
cancellation of trust preferred securities and for costs related
to the secondary offering that was recorded at the holding company
level in the first quarter of 2018 and the first quarter of 2017,
respectively.
-
No tax benefit was recognized for the OTTI charges recorded in the
first quarter of 2017 on tax-exempt bonds of the GDB and the
Puerto Rico Public Buildings Authority.
Management believes that the presentations of the adjusted provision for
loan and lease losses, adjusted net charge-offs, adjusted non-interest
income, adjusted non-interest expenses, and adjusted net income enhance
the ability of analysts and investors to analyze trends in the
Corporation's business and understand the performance of the
Corporation. In addition, the Corporation may utilize these non-GAAP
financial measures as guides in its budgeting and long-term planning
process.
The following table reconciles these non-GAAP financial measures to the
corresponding measures presented in accordance with GAAP.
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 First Quarter
|
|
|
|
As Reported (GAAP)
|
|
|
Loans Transferred to Held for Sale
|
|
|
Storm-related allowance
|
|
|
Storm-related expenses and related
adjustments
|
|
|
Repurchase and Cancellation of Trust
Preferred Securities
|
|
|
Tax effect (2)
|
|
|
Adjusted (Non- GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net charge-offs (1)
|
|
|
|
$
|
26,531
|
|
|
|
$
|
9,673
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
16,858
|
|
Total net charge-offs to average loans
|
|
|
|
|
1.21
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.77
|
%
|
Commercial mortgage
|
|
|
|
|
6,761
|
|
|
|
|
4,573
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
2,188
|
|
Commercial mortgage net charge-offs to average loans
|
|
|
|
|
1.69
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.55
|
%
|
Construction
|
|
|
|
|
5,164
|
|
|
|
|
5,100
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
64
|
|
Construction net charge-offs to average loans
|
|
|
|
|
17.37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Loan and Lease Losses
|
|
|
|
$
|
20,544
|
|
|
|
$
|
(5,645
|
)
|
|
|
$
|
6,407
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
21,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income
|
|
|
|
$
|
22,784
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
(2,316
|
)
|
|
|
$
|
-
|
|
|
|
$
|
20,468
|
|
Gain on early extinguishment of debt
|
|
|
|
|
2,316
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(2,316
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses
|
|
|
|
$
|
86,027
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
(1,596
|
)
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
84,431
|
|
Employees' compensation and benefits
|
|
|
|
|
40,684
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(5
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
40,679
|
|
Occupancy and Equipment
|
|
|
|
|
15,105
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(1,549
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
13,556
|
|
Business Promotion
|
|
|
|
|
2,576
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(31
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
2,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
33,148
|
|
|
|
$
|
5,645
|
|
|
|
$
|
(6,407
|
)
|
|
|
$
|
1,596
|
|
|
|
$
|
(2,316
|
)
|
|
|
$
|
(324
|
)
|
|
|
$
|
31,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net charge-offs percentages annualized
|
(2) See Basis of Presentation for the individual tax impact
for each reconciling item.
|
|
|
2017 Fourth Quarter
|
|
|
|
As Reported (GAAP)
|
|
|
Storm-related allowance
|
|
|
Storm-related expenses and related adjustments
|
|
|
Tax effect (1)
|
|
|
Adjusted (Non- GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Loan and Lease Losses
|
|
|
|
$
|
25,703
|
|
|
$
|
(4,814
|
)
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
20,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses
|
|
|
|
$
|
85,136
|
|
|
$
|
-
|
|
|
|
$
|
(1,788
|
)
|
|
|
$
|
-
|
|
|
|
$
|
83,348
|
Occupancy and Equipment
|
|
|
|
|
15,067
|
|
|
|
-
|
|
|
|
|
(441
|
)
|
|
|
|
-
|
|
|
|
|
14,626
|
Business Promotion
|
|
|
|
|
2,768
|
|
|
|
-
|
|
|
|
|
(393
|
)
|
|
|
|
-
|
|
|
|
|
2,375
|
Net loss on OREO operations
|
|
|
|
|
2,201
|
|
|
|
-
|
|
|
|
|
(936
|
)
|
|
|
|
-
|
|
|
|
|
1,265
|
Other non-interest expenses
|
|
|
|
|
8,512
|
|
|
|
-
|
|
|
|
|
(18
|
)
|
|
|
|
-
|
|
|
|
|
8,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
24,169
|
|
|
$
|
4,814
|
|
|
|
$
|
1,788
|
|
|
|
$
|
(2,636
|
)
|
|
|
$
|
28,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See Basis of Presentation for the individual tax impact
for each reconciling item.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 First Quarter
|
|
|
|
As Reported (GAAP)
|
|
|
Sale of PREPA credit line
|
|
|
Secondary Offering Costs
|
|
|
OTTI on debt securities
|
|
|
Change in tax status of certain subsidiaries
|
|
|
Tax effect (2)
|
|
|
Adjusted (Non- GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net charge-offs (1)
|
|
|
|
$
|
27,814
|
|
|
|
$
|
10,734
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
17,080
|
|
Total net charge-offs to average loans
|
|
|
|
|
1.26
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.78
|
%
|
Commercial and Industrial
|
|
|
|
|
11,177
|
|
|
|
|
10,734
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
443
|
|
Commercial and Industrial loans net charge-offs to average loans
|
|
|
|
|
2.07
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.08
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan and lease losses
|
|
|
|
$
|
25,442
|
|
|
|
$
|
(569
|
)
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
24,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income
|
|
|
|
$
|
8,243
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
12,231
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
20,474
|
|
(Loss) gain on investments and impairments
|
|
|
|
|
(12,231
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
12,231
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses
|
|
|
|
$
|
87,882
|
|
|
|
$
|
-
|
|
|
|
$
|
(274
|
)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
87,608
|
|
Professional fees
|
|
|
|
|
10,956
|
|
|
|
|
-
|
|
|
|
|
(254
|
)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
10,702
|
|
Business promotion
|
|
|
|
|
3,281
|
|
|
|
|
-
|
|
|
|
|
(20
|
)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
3,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
25,541
|
|
|
|
$
|
569
|
|
|
|
$
|
274
|
|
|
|
$
|
12,231
|
|
|
$
|
(13,161
|
)
|
|
|
$
|
(222
|
)
|
|
|
$
|
25,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net charge-offs percentages annualized
|
(2) See Basis of Presentation for the individual tax impact
for each reconciling item.
|
|
|
FIRST BANCORP
|
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
|
|
|
|
|
|
As of
|
|
|
|
|
March 31,
|
|
|
December 31,
|
(In thousands, except for share information)
|
|
|
|
2018
|
|
|
2017
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
|
|
$
|
743,409
|
|
|
|
$
|
705,980
|
|
|
|
|
|
|
|
|
|
Money market investments:
|
|
|
|
|
|
|
|
Time deposits with other financial institutions
|
|
|
|
|
3,126
|
|
|
|
|
3,126
|
|
Other short-term investments
|
|
|
|
|
97,289
|
|
|
|
|
7,289
|
|
Total money market investments
|
|
|
|
|
100,415
|
|
|
|
|
10,415
|
|
|
|
|
|
|
|
|
|
Investment securities available for sale, at fair value
|
|
|
|
|
1,815,504
|
|
|
|
|
1,891,016
|
|
|
|
|
|
|
|
|
|
Investment securities held to maturity, at amortized cost
|
|
|
|
|
150,486
|
|
|
|
|
150,627
|
|
|
|
|
|
|
|
|
|
Other equity securities
|
|
|
|
|
43,532
|
|
|
|
|
43,119
|
|
|
|
|
|
|
|
|
|
Total investment securities
|
|
|
|
|
2,009,522
|
|
|
|
|
2,084,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net of allowance for loan and lease losses of $225,856
(December 31, 2017 - $231,843)
|
|
|
|
|
8,470,034
|
|
|
|
|
8,618,633
|
|
Loans held for sale, at lower of cost or market
|
|
|
|
|
91,375
|
|
|
|
|
32,980
|
|
Total loans, net
|
|
|
|
|
8,561,409
|
|
|
|
|
8,651,613
|
|
|
|
|
|
|
|
|
|
Premises and equipment, net
|
|
|
|
|
143,115
|
|
|
|
|
141,895
|
|
Other real estate owned
|
|
|
|
|
154,639
|
|
|
|
|
147,940
|
|
Accrued interest receivable on loans and investments
|
|
|
|
|
44,093
|
|
|
|
|
57,172
|
|
Other assets
|
|
|
|
|
443,784
|
|
|
|
|
461,491
|
|
Total assets
|
|
|
|
$
|
12,200,386
|
|
|
|
$
|
12,261,268
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
Non-interest-bearing deposits
|
|
|
|
$
|
2,019,823
|
|
|
|
$
|
1,833,665
|
|
Interest-bearing deposits
|
|
|
|
|
7,046,642
|
|
|
|
|
7,188,966
|
|
Total deposits
|
|
|
|
|
9,066,465
|
|
|
|
|
9,022,631
|
|
|
|
|
|
|
|
|
|
Securities sold under agreements to repurchase
|
|
|
|
|
200,000
|
|
|
|
|
300,000
|
|
Advances from the Federal Home Loan Bank (FHLB)
|
|
|
|
|
715,000
|
|
|
|
|
715,000
|
|
Other borrowings
|
|
|
|
|
184,150
|
|
|
|
|
208,635
|
|
Accounts payable and other liabilities
|
|
|
|
|
157,667
|
|
|
|
|
145,905
|
|
Total liabilities
|
|
|
|
|
10,323,282
|
|
|
|
|
10,392,171
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, authorized 50,000,000 shares; issued 22,828,174
shares; outstanding 1,444,146 shares; aggregate liquidation value
of $36,104
|
|
|
|
|
36,104
|
|
|
|
|
36,104
|
|
|
|
|
|
|
|
|
|
Common stock, $0.10 par value, authorized 2,000,000,000 shares;
issued, 220,877,719 shares (December 31, 2017 - 220,382,343 shares
issued)
|
|
|
|
|
22,088
|
|
|
|
|
22,038
|
|
Less: Treasury stock (at par value)
|
|
|
|
|
(449
|
)
|
|
|
|
(410
|
)
|
|
|
|
|
|
|
|
|
Common stock outstanding, 216,390,329 shares outstanding (December
31, 2017 - 216,278,040 shares outstanding)
|
|
|
|
|
21,639
|
|
|
|
|
21,628
|
|
Additional paid-in capital
|
|
|
|
|
936,342
|
|
|
|
|
936,772
|
|
Retained earnings
|
|
|
|
|
927,681
|
|
|
|
|
895,208
|
|
Accumulated other comprehensive loss
|
|
|
|
|
(44,662
|
)
|
|
|
|
(20,615
|
)
|
Total stockholders' equity
|
|
|
|
|
1,877,104
|
|
|
|
|
1,869,097
|
|
Total liabilities and stockholders' equity
|
|
|
|
$
|
12,200,386
|
|
|
|
$
|
12,261,268
|
|
|
|
|
|
|
|
|
|
|
FIRST BANCORP
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
March 31,
|
(In thousands, except per share information)
|
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income:
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
|
$
|
149,418
|
|
|
|
$
|
147,826
|
|
|
|
$
|
145,228
|
|
Interest expense
|
|
|
|
|
24,725
|
|
|
|
|
25,560
|
|
|
|
|
22,679
|
|
Net interest income
|
|
|
|
|
124,693
|
|
|
|
|
122,266
|
|
|
|
|
122,549
|
|
Provision for loan and lease losses
|
|
|
|
|
20,544
|
|
|
|
|
25,703
|
|
|
|
|
25,442
|
|
Net interest income after provision for loan and lease losses
|
|
|
|
|
104,149
|
|
|
|
|
96,563
|
|
|
|
|
97,107
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income:
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts
|
|
|
|
|
5,088
|
|
|
|
|
4,924
|
|
|
|
|
5,790
|
|
Mortgage banking activities
|
|
|
|
|
4,165
|
|
|
|
|
1,912
|
|
|
|
|
3,616
|
|
Net (loss) gain on investments and impairments
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(12,231
|
)
|
Gain on early extinguishment of debt
|
|
|
|
|
2,316
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Other non-interest income
|
|
|
|
|
11,215
|
|
|
|
|
8,114
|
|
|
|
|
11,068
|
|
Total non-interest income
|
|
|
|
|
22,784
|
|
|
|
|
14,950
|
|
|
|
|
8,243
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
|
|
|
|
Employees' compensation and benefits
|
|
|
|
|
40,684
|
|
|
|
|
37,655
|
|
|
|
|
38,653
|
|
Occupancy and equipment
|
|
|
|
|
15,105
|
|
|
|
|
15,067
|
|
|
|
|
14,088
|
|
Business promotion
|
|
|
|
|
2,576
|
|
|
|
|
2,768
|
|
|
|
|
3,281
|
|
Professional fees
|
|
|
|
|
10,060
|
|
|
|
|
11,150
|
|
|
|
|
10,956
|
|
Taxes, other than income taxes
|
|
|
|
|
3,856
|
|
|
|
|
3,366
|
|
|
|
|
3,676
|
|
Insurance and supervisory fees
|
|
|
|
|
3,855
|
|
|
|
|
4,417
|
|
|
|
|
4,909
|
|
Net loss on other real estate owned operations
|
|
|
|
|
190
|
|
|
|
|
2,201
|
|
|
|
|
4,076
|
|
Other non-interest expenses
|
|
|
|
|
9,701
|
|
|
|
|
8,512
|
|
|
|
|
8,243
|
|
Total non-interest expenses
|
|
|
|
|
86,027
|
|
|
|
|
85,136
|
|
|
|
|
87,882
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
|
40,906
|
|
|
|
|
26,377
|
|
|
|
|
17,468
|
|
Income tax (expense) benefit
|
|
|
|
|
(7,758
|
)
|
|
|
|
(2,208
|
)
|
|
|
|
8,073
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
33,148
|
|
|
|
$
|
24,169
|
|
|
|
$
|
25,541
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common stockholders
|
|
|
|
$
|
32,479
|
|
|
|
$
|
23,500
|
|
|
|
$
|
24,872
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
0.15
|
|
|
|
$
|
0.11
|
|
|
|
$
|
0.12
|
|
Diluted
|
|
|
|
$
|
0.15
|
|
|
|
$
|
0.11
|
|
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
About First BanCorp.
First BanCorp. is the parent corporation of FirstBank Puerto Rico, a
state-chartered commercial bank with operations in Puerto Rico, the U.S.
and the British Virgin Islands and Florida, and of FirstBank Insurance
Agency. Among the subsidiaries of FirstBank Puerto Rico are First
Federal Finance Corp. and First Express, both small loan companies, and
FirstBank Puerto Rico Securities, a broker-dealer subsidiary. 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.1firstbank.com.
|
EXHIBIT A
|
|
Table 1 - Selected Financial Data
|
|
(In thousands, except per share amounts and financial ratios)
|
|
|
|
Quarter Ended
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
March 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
Condensed Income Statements:
|
|
|
|
|
|
|
|
|
|
|
Total interest income
|
|
|
|
$
|
149,418
|
|
|
|
$
|
147,826
|
|
|
|
$
|
145,228
|
Total interest expense
|
|
|
|
|
24,725
|
|
|
|
|
25,560
|
|
|
|
|
22,679
|
Net interest income
|
|
|
|
|
124,693
|
|
|
|
|
122,266
|
|
|
|
|
122,549
|
Provision for loan and lease losses
|
|
|
|
|
20,544
|
|
|
|
|
25,703
|
|
|
|
|
25,442
|
Non-interest income
|
|
|
|
|
22,784
|
|
|
|
|
14,950
|
|
|
|
|
8,243
|
Non-interest expenses
|
|
|
|
|
86,027
|
|
|
|
|
85,136
|
|
|
|
|
87,882
|
Income before income taxes
|
|
|
|
|
40,906
|
|
|
|
|
26,377
|
|
|
|
|
17,468
|
Income tax (expense) benefit
|
|
|
|
|
(7,758
|
)
|
|
|
|
(2,208
|
)
|
|
|
|
8,073
|
Net income
|
|
|
|
|
33,148
|
|
|
|
|
24,169
|
|
|
|
|
25,541
|
Net income attributable to common stockholders
|
|
|
|
|
32,479
|
|
|
|
|
23,500
|
|
|
|
|
24,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Common Share Results:
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share - basic
|
|
|
|
$
|
0.15
|
|
|
|
$
|
0.11
|
|
|
|
$
|
0.12
|
Net earnings per share - diluted
|
|
|
|
$
|
0.15
|
|
|
|
$
|
0.11
|
|
|
|
$
|
0.11
|
Cash dividends declared
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
Average shares outstanding
|
|
|
|
|
214,646
|
|
|
|
|
214,412
|
|
|
|
|
213,340
|
Average shares outstanding diluted
|
|
|
|
|
216,214
|
|
|
|
|
216,069
|
|
|
|
|
217,373
|
Book value per common share
|
|
|
|
$
|
8.51
|
|
|
|
$
|
8.48
|
|
|
|
$
|
8.18
|
Tangible book value per common share (1)
|
|
|
|
$
|
8.32
|
|
|
|
$
|
8.28
|
|
|
|
$
|
7.97
|
|
|
|
|
|
|
|
|
|
|
|
Selected Financial Ratios (In Percent):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profitability:
|
|
|
|
|
|
|
|
|
|
|
Return on Average Assets
|
|
|
|
|
1.10
|
|
|
|
|
0.79
|
|
|
|
|
0.87
|
Interest Rate Spread (2)
|
|
|
|
|
4.22
|
|
|
|
|
4.03
|
|
|
|
|
4.28
|
Net Interest Margin (2)
|
|
|
|
|
4.57
|
|
|
|
|
4.35
|
|
|
|
|
4.55
|
Return on Average Total Equity
|
|
|
|
|
7.22
|
|
|
|
|
5.16
|
|
|
|
|
5.77
|
Return on Average Common Equity
|
|
|
|
|
7.37
|
|
|
|
|
5.27
|
|
|
|
|
5.88
|
Average Total Equity to Average Total Assets
|
|
|
|
|
15.27
|
|
|
|
|
15.29
|
|
|
|
|
15.12
|
Total capital
|
|
|
|
|
22.98
|
|
|
|
|
22.53
|
|
|
|
|
21.85
|
Common equity Tier 1 capital
|
|
|
|
|
19.24
|
|
|
|
|
18.96
|
|
|
|
|
18.22
|
Tier 1 capital
|
|
|
|
|
19.66
|
|
|
|
|
18.97
|
|
|
|
|
18.22
|
Leverage
|
|
|
|
|
14.18
|
|
|
|
|
14.03
|
|
|
|
|
13.83
|
Tangible common equity ratio (1)
|
|
|
|
|
14.80
|
|
|
|
|
14.65
|
|
|
|
|
14.70
|
Dividend payout ratio
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
Efficiency ratio (3)
|
|
|
|
|
58.33
|
|
|
|
|
62.05
|
|
|
|
|
67.19
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality:
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses to loans held for investment (4)
|
|
|
|
|
2.60
|
|
|
|
|
2.62
|
|
|
|
|
2.30
|
Net charge-offs (annualized) to average loans (5)(6)
|
|
|
|
|
1.21
|
|
|
|
|
1.12
|
|
|
|
|
1.26
|
Provision for loan and lease losses to net charge-offs (7)(8)(9)
|
|
|
|
|
77.43
|
|
|
|
|
103.94
|
|
|
|
|
91.47
|
Non-performing assets to total assets
|
|
|
|
|
5.22
|
|
|
|
|
5.31
|
|
|
|
|
5.44
|
Non-performing loans held for investment to total loans held for
investment
|
|
|
|
|
4.74
|
|
|
|
|
5.53
|
|
|
|
|
5.41
|
Allowance to total non-performing loans held for investment (10)
|
|
|
|
|
54.82
|
|
|
|
|
47.36
|
|
|
|
|
42.56
|
Allowance to total non-performing loans held for investment
excluding residential real estate loans (11)
|
|
|
|
|
93.87
|
|
|
|
|
74.48
|
|
|
|
|
62.98
|
|
|
|
|
|
|
|
|
|
|
|
Other Information:
|
|
|
|
|
|
|
|
|
|
|
Common Stock Price: End of period
|
|
|
|
$
|
6.02
|
|
|
|
$
|
5.10
|
|
|
|
$
|
5.65
|
|
|
|
|
|
|
|
|
|
|
|
1 - Non-GAAP financial measure. See page 18 for GAAP to Non-GAAP
reconciliations.
2 - On a tax-equivalent basis and excluding changes in the fair value of
derivative instruments (Non-GAAP financial measure). See page 6 for GAAP
to Non-GAAP reconciliations and refer to discussion in Table 2 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.
4 - The ratio of the allowance for loan and lease losses to loans held
for investment, excluding the storm-related allowance, was 1.88% and
1.85% as of March 31, 2018 and December 31, 2017, respectively.
5 - The ratio of net charge-offs to average loans, excluding charge-offs
associated with loans transferred to held for sale, was 0.77% for the
quarter ended March 31, 2018.
6 - The ratio of net charge-offs to average loans, excluding charge-offs
associated with the sale of the PREPA credit line, was 0.78% for the
quarter ended March 31, 2017.
7 - The ratio of the provision for loan and lease losses to net
charge-offs, excluding the storm-related reserve release and the
provision for loans transferred to held for sale, was 126.39% for the
quarter ended March 31, 2018.
8 - The ratio of the provision for loan and lease losses to net
charge-offs, excluding the storm-related provision, was 95.82%, for the
quarter ended December 31, 2017.
9 - The ratio of the provision for loan and lease losses to net
charge-offs, excluding the effect of the sale of the PREPA credit line,
was 145.63% for the quarter ended March 31, 2017.
10 - The ratio of the allowance for loan and lease losses to
non-performing loans held for investment, excluding the storm-related
allowance, was 39.74% and 33.39% as of March 31, 2018 and December 31,
2017, respectively.
11 - The ratio of allowance for loan and lease losses to non-performing
loans held for investment excluding residential real estate and the
storm-related allowance, was 68.05% and 52.52% as of March 31, 2018 and
December 31, 2017, respectively.
Table 2 - Quarterly Statement of Average Interest-Earning Assets and
Average Interest-Bearing Liabilities (On a Tax-Equivalent Basis and
Excluding Valuations)
(Dollars in thousands)
|
|
|
|
|
Average volume
|
|
|
Interest income (1) / expense
|
|
|
Average rate (1)
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
December 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
December 31,
|
|
|
March 31,
|
Quarter ended
|
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market & other short-term investments
|
|
|
|
$
|
618,468
|
|
|
$
|
658,760
|
|
|
$
|
268,934
|
|
|
$
|
2,256
|
|
|
$
|
2,110
|
|
|
$
|
484
|
|
|
1.48
|
%
|
|
|
1.27
|
%
|
|
|
0.73
|
%
|
Government obligations (2)
|
|
|
|
|
798,186
|
|
|
|
664,449
|
|
|
|
729,307
|
|
|
|
6,193
|
|
|
|
4,502
|
|
|
|
4,360
|
|
|
3.15
|
%
|
|
|
2.69
|
%
|
|
|
2.42
|
%
|
Mortgage-backed securities
|
|
|
|
|
1,260,142
|
|
|
|
1,225,520
|
|
|
|
1,334,560
|
|
|
|
10,625
|
|
|
|
8,779
|
|
|
|
11,614
|
|
|
3.42
|
%
|
|
|
2.84
|
%
|
|
|
3.53
|
%
|
FHLB stock
|
|
|
|
|
40,937
|
|
|
|
42,282
|
|
|
|
39,560
|
|
|
|
693
|
|
|
|
645
|
|
|
|
461
|
|
|
6.87
|
%
|
|
|
6.05
|
%
|
|
|
4.73
|
%
|
Other investments
|
|
|
|
|
2,705
|
|
|
|
2,705
|
|
|
|
2,699
|
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
|
0.30
|
%
|
|
|
0.29
|
%
|
|
|
0.30
|
%
|
Total investments (3)
|
|
|
|
|
2,720,438
|
|
|
|
2,593,716
|
|
|
|
2,375,060
|
|
|
|
19,769
|
|
|
|
16,038
|
|
|
|
16,921
|
|
|
2.95
|
%
|
|
|
2.45
|
%
|
|
|
2.89
|
%
|
Residential mortgage loans
|
|
|
|
|
3,227,222
|
|
|
|
3,247,910
|
|
|
|
3,260,885
|
|
|
|
43,350
|
|
|
|
43,434
|
|
|
|
44,280
|
|
|
5.45
|
%
|
|
|
5.31
|
%
|
|
|
5.51
|
%
|
Construction loans
|
|
|
|
|
118,907
|
|
|
|
140,660
|
|
|
|
130,494
|
|
|
|
922
|
|
|
|
1,077
|
|
|
|
1,144
|
|
|
3.14
|
%
|
|
|
3.04
|
%
|
|
|
3.56
|
%
|
C&I and commercial mortgage loans
|
|
|
|
|
3,688,415
|
|
|
|
3,682,659
|
|
|
|
3,760,594
|
|
|
|
45,189
|
|
|
|
44,008
|
|
|
|
41,110
|
|
|
4.97
|
%
|
|
|
4.74
|
%
|
|
|
4.43
|
%
|
Finance leases
|
|
|
|
|
260,119
|
|
|
|
250,867
|
|
|
|
234,729
|
|
|
|
4,660
|
|
|
|
4,545
|
|
|
|
4,314
|
|
|
7.27
|
%
|
|
|
7.19
|
%
|
|
|
7.45
|
%
|
Consumer loans
|
|
|
|
|
1,484,305
|
|
|
|
1,483,940
|
|
|
|
1,475,569
|
|
|
|
40,306
|
|
|
|
41,574
|
|
|
|
41,070
|
|
|
11.01
|
%
|
|
|
11.12
|
%
|
|
|
11.29
|
%
|
Total loans (4) (5)
|
|
|
|
|
8,778,968
|
|
|
|
8,806,036
|
|
|
|
8,862,271
|
|
|
|
134,427
|
|
|
|
134,638
|
|
|
|
131,918
|
|
|
6.21
|
%
|
|
|
6.07
|
%
|
|
|
6.04
|
%
|
Total interest-earning assets
|
|
|
|
$
|
11,499,406
|
|
|
$
|
11,399,752
|
|
|
$
|
11,237,331
|
|
|
$
|
154,196
|
|
|
$
|
150,676
|
|
|
$
|
148,839
|
|
|
5.44
|
%
|
|
|
5.24
|
%
|
|
|
5.37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokered CDs
|
|
|
|
$
|
1,043,255
|
|
|
$
|
1,221,183
|
|
|
$
|
1,413,667
|
|
|
$
|
4,355
|
|
|
$
|
4,963
|
|
|
$
|
4,805
|
|
|
1.69
|
%
|
|
|
1.61
|
%
|
|
|
1.38
|
%
|
Other interest-bearing deposits
|
|
|
|
|
6,021,699
|
|
|
|
5,936,146
|
|
|
|
5,884,772
|
|
|
|
12,616
|
|
|
|
12,356
|
|
|
|
11,167
|
|
|
0.85
|
%
|
|
|
0.83
|
%
|
|
|
0.77
|
%
|
Other borrowed funds
|
|
|
|
|
414,488
|
|
|
|
508,635
|
|
|
|
516,187
|
|
|
|
4,382
|
|
|
|
4,724
|
|
|
|
4,585
|
|
|
4.29
|
%
|
|
|
3.68
|
%
|
|
|
3.60
|
%
|
FHLB advances
|
|
|
|
|
715,000
|
|
|
|
745,435
|
|
|
|
642,222
|
|
|
|
3,372
|
|
|
|
3,517
|
|
|
|
2,122
|
|
|
1.91
|
%
|
|
|
1.87
|
%
|
|
|
1.34
|
%
|
Total interest-bearing liabilities
|
|
|
|
$
|
8,194,442
|
|
|
$
|
8,411,399
|
|
|
$
|
8,456,848
|
|
|
$
|
24,725
|
|
|
$
|
25,560
|
|
|
$
|
22,679
|
|
|
1.22
|
%
|
|
|
1.21
|
%
|
|
|
1.09
|
%
|
Net interest income
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
129,471
|
|
|
$
|
125,116
|
|
|
$
|
126,160
|
|
|
|
|
|
|
|
|
|
Interest rate spread
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.22
|
%
|
|
|
4.03
|
%
|
|
|
4.28
|
%
|
Net interest margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.57
|
%
|
|
|
4.35
|
%
|
|
|
4.55
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 of 39% 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 are excluded from interest income
because the changes in valuation do not affect interest paid or
received. See page 6 for GAAP to Non-GAAP reconciliations.
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 non-performing loans.
5 - Interest income on loans includes $1.8 million, $0.9 million and
$2.1 million for the quarters ended March 31, 2018, December 31, 2017,
and March 31, 2017, respectively, of income from prepayment penalties
and late fees related to the Corporation's loan portfolio.
|
Table 3 - Non-Interest Income
|
|
|
|
|
Quarter Ended
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
March 31,
|
(In thousands)
|
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts
|
|
|
|
$
|
5,088
|
|
|
$
|
4,924
|
|
|
$
|
5,790
|
|
Mortgage banking activities
|
|
|
|
|
4,165
|
|
|
|
1,912
|
|
|
|
3,616
|
|
Insurance income
|
|
|
|
|
3,355
|
|
|
|
1,378
|
|
|
|
3,587
|
|
Other operating income
|
|
|
|
|
7,860
|
|
|
|
6,736
|
|
|
|
7,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income before net gain (loss) on investments and gain
on early extinguishment of debt
|
|
|
|
|
20,468
|
|
|
|
14,950
|
|
|
|
20,474
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain on sale of investments
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
OTTI on debt securities
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(12,231
|
)
|
Net gain (loss) on investments
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(12,231
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Gain on early extinguishment of debt
|
|
|
|
|
2,316
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
$
|
22,784
|
|
|
$
|
14,950
|
|
|
$
|
8,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 4 - Non-Interest Expenses
|
|
|
|
|
Quarter Ended
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
March 31,
|
(In thousands)
|
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
Employees' compensation and benefits
|
|
|
|
$
|
40,684
|
|
|
$
|
37,655
|
|
|
$
|
38,653
|
Occupancy and equipment
|
|
|
|
|
15,105
|
|
|
|
15,067
|
|
|
|
14,088
|
Deposit insurance premium
|
|
|
|
|
2,649
|
|
|
|
3,054
|
|
|
|
3,771
|
Other insurance and supervisory fees
|
|
|
|
|
1,206
|
|
|
|
1,363
|
|
|
|
1,138
|
Taxes, other than income taxes
|
|
|
|
|
3,856
|
|
|
|
3,366
|
|
|
|
3,676
|
Professional fees:
|
|
|
|
|
|
|
|
|
|
|
Collections, appraisals and other credit related fees
|
|
|
|
|
1,599
|
|
|
|
2,341
|
|
|
|
2,072
|
Outsourcing technology services
|
|
|
|
|
5,123
|
|
|
|
5,088
|
|
|
|
5,354
|
Other professional fees
|
|
|
|
|
3,338
|
|
|
|
3,721
|
|
|
|
3,530
|
Credit and debit card processing expenses
|
|
|
|
|
3,537
|
|
|
|
3,078
|
|
|
|
2,831
|
Business promotion
|
|
|
|
|
2,576
|
|
|
|
2,768
|
|
|
|
3,281
|
Communications
|
|
|
|
|
1,482
|
|
|
|
1,374
|
|
|
|
1,543
|
Net loss on OREO operations
|
|
|
|
|
190
|
|
|
|
2,201
|
|
|
|
4,076
|
Other
|
|
|
|
|
4,682
|
|
|
|
4,060
|
|
|
|
3,869
|
Total
|
|
|
|
$
|
86,027
|
|
|
$
|
85,136
|
|
|
$
|
87,882
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 5 - Selected Balance Sheet Data
|
|
|
(In thousands)
|
|
|
|
As of
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
Loans, including loans held for sale
|
|
|
|
$
|
8,787,265
|
|
|
|
$
|
8,883,456
|
|
Allowance for loan and lease losses
|
|
|
|
|
225,856
|
|
|
|
|
231,843
|
|
Money market and investment securities
|
|
|
|
|
2,109,937
|
|
|
|
|
2,095,177
|
|
Intangible assets
|
|
|
|
|
41,345
|
|
|
|
|
42,351
|
|
Deferred tax asset, net
|
|
|
|
|
289,338
|
|
|
|
|
294,809
|
|
Total assets
|
|
|
|
|
12,200,386
|
|
|
|
|
12,261,268
|
|
Deposits
|
|
|
|
|
9,066,465
|
|
|
|
|
9,022,631
|
|
Borrowings
|
|
|
|
|
1,099,150
|
|
|
|
|
1,223,635
|
|
Total preferred equity
|
|
|
|
|
36,104
|
|
|
|
|
36,104
|
|
Total common equity
|
|
|
|
|
1,885,662
|
|
|
|
|
1,853,608
|
|
Accumulated other comprehensive loss, net of tax
|
|
|
|
|
(44,662
|
)
|
|
|
|
(20,615
|
)
|
Total equity
|
|
|
|
|
1,877,104
|
|
|
|
|
1,869,097
|
|
|
|
|
|
|
|
|
|
Table 6 - Loan Portfolio
Composition of the loan portfolio including loans held for sale at
period-end.
|
|
|
|
|
(In thousands)
|
|
|
|
As of
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
|
|
|
$
|
3,267,868
|
|
|
$
|
3,290,957
|
|
|
|
|
|
|
|
|
Commercial loans:
|
|
|
|
|
|
|
|
Construction loans
|
|
|
|
|
79,150
|
|
|
|
111,397
|
Commercial mortgage loans
|
|
|
|
|
1,552,503
|
|
|
|
1,614,972
|
Commercial and Industrial loans
|
|
|
|
|
2,061,773
|
|
|
|
2,083,253
|
Commercial loans
|
|
|
|
|
3,693,426
|
|
|
|
3,809,622
|
|
|
|
|
|
|
|
|
Finance leases
|
|
|
|
|
262,863
|
|
|
|
257,462
|
|
|
|
|
|
|
|
|
Consumer loans
|
|
|
|
|
1,471,733
|
|
|
|
1,492,435
|
Loans held for investment
|
|
|
|
|
8,695,890
|
|
|
|
8,850,476
|
Loans held for sale
|
|
|
|
|
91,375
|
|
|
|
32,980
|
Total loans
|
|
|
|
$
|
8,787,265
|
|
|
$
|
8,883,456
|
|
|
|
|
|
|
|
|
|
Table 7 - Loan Portfolio by Geography
|
|
|
(In thousands)
|
|
|
|
As of March 31, 2018
|
|
|
|
|
Puerto Rico
|
|
|
Virgin Islands
|
|
|
United States
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
|
|
|
$
|
2,396,307
|
|
|
$
|
273,557
|
|
|
$
|
598,004
|
|
|
$
|
3,267,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction loans
|
|
|
|
|
42,148
|
|
|
|
8,309
|
|
|
|
28,693
|
|
|
|
79,150
|
Commercial mortgage loans
|
|
|
|
|
1,062,693
|
|
|
|
90,817
|
|
|
|
398,993
|
|
|
|
1,552,503
|
Commercial and Industrial loans
|
|
|
|
|
1,366,090
|
|
|
|
121,182
|
|
|
|
574,501
|
|
|
|
2,061,773
|
Commercial loans
|
|
|
|
|
2,470,931
|
|
|
|
220,308
|
|
|
|
1,002,187
|
|
|
|
3,693,426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance leases
|
|
|
|
|
262,863
|
|
|
|
-
|
|
|
|
-
|
|
|
|
262,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer loans
|
|
|
|
|
1,368,759
|
|
|
|
45,215
|
|
|
|
57,759
|
|
|
|
1,471,733
|
Loans held for investment
|
|
|
|
|
6,498,860
|
|
|
|
539,080
|
|
|
|
1,657,950
|
|
|
|
8,695,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for sale
|
|
|
|
|
50,814
|
|
|
|
30,000
|
|
|
|
10,561
|
|
|
|
91,375
|
Total loans
|
|
|
|
$
|
6,549,674
|
|
|
$
|
569,080
|
|
|
$
|
1,668,511
|
|
|
$
|
8,787,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
As of December 31, 2017
|
|
|
|
|
Puerto Rico
|
|
|
Virgin Islands
|
|
|
United States
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
|
|
|
$
|
2,413,379
|
|
|
$
|
282,738
|
|
|
$
|
594,840
|
|
|
$
|
3,290,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction loans
|
|
|
|
|
41,511
|
|
|
|
43,314
|
|
|
|
26,572
|
|
|
|
111,397
|
Commercial mortgage loans
|
|
|
|
|
1,127,409
|
|
|
|
95,464
|
|
|
|
392,099
|
|
|
|
1,614,972
|
Commercial and Industrial loans
|
|
|
|
|
1,373,714
|
|
|
|
116,323
|
|
|
|
593,216
|
|
|
|
2,083,253
|
Commercial loans
|
|
|
|
|
2,542,634
|
|
|
|
255,101
|
|
|
|
1,011,887
|
|
|
|
3,809,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance leases
|
|
|
|
|
257,462
|
|
|
|
-
|
|
|
|
-
|
|
|
|
257,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer loans
|
|
|
|
|
1,389,560
|
|
|
|
46,412
|
|
|
|
56,463
|
|
|
|
1,492,435
|
Loans held for investment
|
|
|
|
|
6,603,035
|
|
|
|
584,251
|
|
|
|
1,663,190
|
|
|
|
8,850,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for sale
|
|
|
|
|
30,397
|
|
|
|
325
|
|
|
|
2,258
|
|
|
|
32,980
|
Total loans
|
|
|
|
$
|
6,633,432
|
|
|
$
|
584,576
|
|
|
$
|
1,665,448
|
|
|
$
|
8,883,456
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 8 - Non-Performing Assets
|
|
|
|
|
|
As of
|
(Dollars in thousands)
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
Non-performing loans held for investment:
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
|
$
|
171,380
|
|
|
|
$
|
178,291
|
|
Commercial mortgage
|
|
|
|
|
115,179
|
|
|
|
|
156,493
|
|
Commercial and Industrial
|
|
|
|
|
85,325
|
|
|
|
|
85,839
|
|
Construction
|
|
|
|
|
16,236
|
|
|
|
|
52,113
|
|
Consumer and Finance leases
|
|
|
|
|
23,857
|
|
|
|
|
16,818
|
|
Total non-performing loans held for investment
|
|
|
|
|
411,977
|
|
|
|
|
489,554
|
|
|
|
|
|
|
|
|
|
OREO
|
|
|
|
|
154,639
|
|
|
|
|
147,940
|
|
Other repossessed property
|
|
|
|
|
5,646
|
|
|
|
|
4,802
|
|
Total non-performing assets, excluding loans held for sale
|
|
|
|
$
|
572,262
|
|
|
|
$
|
642,296
|
|
|
|
|
|
|
|
|
|
Non-performing loans held for sale
|
|
|
|
|
64,945
|
|
|
|
|
8,290
|
|
Total non-performing assets, including loans held for sale (1)
|
|
|
|
$
|
637,207
|
|
|
|
$
|
650,586
|
|
|
|
|
|
|
|
|
|
Past-due loans 90 days and still accruing (2)
|
|
|
|
$
|
163,045
|
|
|
|
$
|
160,725
|
|
Allowance for loan and lease losses
|
|
|
|
$
|
225,856
|
|
|
|
$
|
231,843
|
|
Allowance to total non-performing loans held for investment (3)
|
|
|
|
|
54.82
|
%
|
|
|
|
47.36
|
%
|
Allowance to total non-performing loans held for investment,
excluding residential real estate loans (4)
|
|
|
|
|
93.87
|
%
|
|
|
|
74.48
|
%
|
|
|
|
|
|
|
|
|
(1) Purchased credit impaired loans of $155.3 million accounted for
under ASC 310-30 as of March 31, 2018, primarily mortgage loans acquired
from Doral Bank in the first quarter of 2015 and from Doral Financial in
the second quarter of 2014, are excluded and not considered
non-performing due to the application of the accretion method, under
which these loans will accrete interest income over the remaining life
of the loans using estimated cash flow analysis.
(2) Amount includes purchased credit impaired loans with individual
delinquencies over 90 days and still accruing with a carrying value as
of March 31, 2018 of approximately $30.3 million, primarily related to
loans acquired from Doral Bank in the first quarter of 2015 and from
Doral Financial in the second quarter of 2014.
(3) The ratio of allowance for loan and lease losses to non-performing
loans held for investment, excluding the storm-related allowance, was
39.74% and 33.39% as of March 31, 2018 and December 31, 2017,
respectively.
(4) The ratio of allowance for loan and lease losses to non-performing
loans held for investment, excluding residential real estate and the
storm-related allowance, was 68.05% and 52.52% as of March 31, 2018 and
December 31, 2017, respectively.
|
Table 9 - Non-Performing Assets by Geography
|
|
|
|
|
|
As of
|
(In thousands)
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
Puerto Rico:
|
|
|
|
|
|
|
|
Non-performing loans held for investment:
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
|
$
|
141,432
|
|
|
$
|
147,852
|
Commercial mortgage
|
|
|
|
|
89,575
|
|
|
|
128,232
|
Commercial and Industrial
|
|
|
|
|
78,913
|
|
|
|
79,809
|
Construction
|
|
|
|
|
14,458
|
|
|
|
14,506
|
Finance leases
|
|
|
|
|
1,801
|
|
|
|
1,237
|
Consumer
|
|
|
|
|
20,985
|
|
|
|
14,885
|
Total non-performing loans held for investment
|
|
|
|
|
347,164
|
|
|
|
386,521
|
|
|
|
|
|
|
|
|
OREO
|
|
|
|
|
146,128
|
|
|
|
140,063
|
Other repossessed property
|
|
|
|
|
5,501
|
|
|
|
4,723
|
Total non-performing assets, excluding loans held for sale
|
|
|
|
$
|
498,793
|
|
|
$
|
531,307
|
Non-performing loans held for sale
|
|
|
|
|
34,945
|
|
|
|
8,290
|
Total non-performing assets, including loans held for sale (1)
|
|
|
|
$
|
533,738
|
|
|
$
|
539,597
|
Past-due loans 90 days and still accruing (2)
|
|
|
|
$
|
161,281
|
|
|
$
|
151,724
|
|
|
|
|
|
|
|
|
Virgin Islands:
|
|
|
|
|
|
|
|
Non-performing loans held for investment:
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
|
$
|
19,004
|
|
|
$
|
22,110
|
Commercial mortgage
|
|
|
|
|
22,973
|
|
|
|
25,309
|
Commercial and Industrial
|
|
|
|
|
6,412
|
|
|
|
6,030
|
Construction
|
|
|
|
|
1,778
|
|
|
|
37,607
|
Consumer
|
|
|
|
|
729
|
|
|
|
281
|
Total non-performing loans held for investment
|
|
|
|
|
50,896
|
|
|
|
91,337
|
|
|
|
|
|
|
|
|
OREO
|
|
|
|
|
7,015
|
|
|
|
6,306
|
Other repossessed property
|
|
|
|
|
32
|
|
|
|
26
|
Total non-performing assets, excluding loans held for sale
|
|
|
|
$
|
57,943
|
|
|
$
|
97,669
|
Non-performing loans held for sale
|
|
|
|
|
30,000
|
|
|
|
-
|
Total non-performing assets, including loans held for sale
|
|
|
|
$
|
87,943
|
|
|
$
|
97,669
|
Past-due loans 90 days and still accruing
|
|
|
|
$
|
1,764
|
|
|
$
|
9,001
|
|
|
|
|
|
|
|
|
United States:
|
|
|
|
|
|
|
|
Non-performing loans held for investment:
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
|
$
|
10,944
|
|
|
$
|
8,329
|
Commercial mortgage
|
|
|
|
|
2,631
|
|
|
|
2,952
|
Construction
|
|
|
|
|
-
|
|
|
|
-
|
Consumer
|
|
|
|
|
342
|
|
|
|
415
|
Total non-performing loans held for investment
|
|
|
|
|
13,917
|
|
|
|
11,696
|
|
|
|
|
|
|
|
|
OREO
|
|
|
|
|
1,496
|
|
|
|
1,571
|
Other repossessed property
|
|
|
|
|
113
|
|
|
|
53
|
Total non-performing assets, excluding loans held for sale
|
|
|
|
$
|
15,526
|
|
|
$
|
13,320
|
Non-performing loans held for sale
|
|
|
|
|
-
|
|
|
|
-
|
Total non-performing assets, including loans held for sale
|
|
|
|
$
|
15,526
|
|
|
$
|
13,320
|
Past-due loans 90 days and still accruing
|
|
|
|
$
|
-
|
|
|
$
|
-
|
(1) Purchased credit impaired loans of $155.3 million accounted for
under ASC 310-30 as of March 31, 2018, primarily mortgage loans acquired
from Doral Bank in the first quarter of 2015 and from Doral Financial in
the second quarter of 2014, are excluded and not considered
non-performing due to the application of the accretion method, under
which these loans will accrete interest income over the remaining life
of the loans using estimated cash flow analysis.
(2) Amount includes purchased credit impaired loans with individual
delinquencies over 90 days and still accruing with a carrying value as
of March 31, 2018 of approximately $30.3 million, primarily related to
loans acquired from Doral Bank in the first quarter of 2015 and from
Doral Financial in the second quarter of 2014.
|
Table 10 - Allowance for Loan and Lease Losses
|
|
|
|
|
|
Quarter Ended
|
(Dollars in thousands)
|
|
|
|
March 31,
|
|
|
|
|
December 31,
|
|
|
|
|
March 31,
|
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses, beginning of period
|
|
|
|
$
|
231,843
|
|
|
|
|
|
$
|
230,870
|
|
|
|
|
|
$
|
205,603
|
|
|
Provision for loan and lease losses
|
|
|
|
|
20,544
|
|
|
(1
|
) (2)
|
|
|
|
25,703
|
|
|
(6
|
)
|
|
|
|
25,442
|
|
(7
|
)
|
Net (charge-offs) recoveries of loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
|
|
(3,036
|
)
|
|
|
|
|
|
(5,341
|
)
|
|
|
|
|
|
(7,476
|
)
|
|
Commercial mortgage
|
|
|
|
|
(6,761
|
)
|
|
(3
|
)
|
|
|
|
(6,850
|
)
|
|
|
|
|
|
(1,332
|
)
|
|
Commercial and Industrial
|
|
|
|
|
(1,868
|
)
|
|
|
|
|
|
(545
|
)
|
|
|
|
|
|
(11,177
|
)
|
(8
|
)
|
Construction
|
|
|
|
|
(5,164
|
)
|
|
(4
|
)
|
|
|
|
(2,764
|
)
|
|
|
|
|
|
382
|
|
|
Consumer and finance leases
|
|
|
|
|
(9,702
|
)
|
|
|
|
|
|
(9,230
|
)
|
|
|
|
|
|
(8,211
|
)
|
|
Net charge-offs
|
|
|
|
|
(26,531
|
)
|
|
(5
|
)
|
|
|
|
(24,730
|
)
|
|
|
|
|
|
(27,814
|
)
|
(8
|
)
|
Allowance for loan and lease losses, end of period
|
|
|
|
$
|
225,856
|
|
|
|
|
|
$
|
231,843
|
|
|
|
|
|
$
|
203,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses to period end total loans held
for investment (9)
|
|
|
|
|
2.60
|
%
|
|
|
|
|
|
2.62
|
%
|
|
|
|
|
|
2.30
|
%
|
|
Net charge-offs (annualized) to average loans outstanding during the
period
|
|
|
|
|
1.21
|
%
|
|
|
|
|
|
1.12
|
%
|
|
|
|
|
|
1.26
|
%
|
|
Net charge-offs (annualized), excluding charge-offs of $9.7
million related to loans transferred to held for sale in the first
quarter of 2018 and the charge-off of $10.7 million related to the
sale of the PREPA credit line in the first quarter of 2017, to
average loans outstanding during the period
|
|
|
|
|
0.77
|
%
|
|
|
|
|
|
1.12
|
%
|
|
|
|
|
|
0.78
|
%
|
|
Provision for loan and lease losses to net charge-offs during the
period
|
|
|
|
0.77x
|
|
|
|
|
1.04x
|
|
|
|
|
0.91x
|
|
Provision for loan and lease losses to net charge-offs during the
period, excluding effect of the storm-related reserve release and
loans transferred to held for sale in the first quarter of 2018,
the effect of the storm-related provision in the fourth quarter of
2017 and the impact of the sale of the PREPA credit line in the
first quarter of 2017.
|
|
|
|
1.26x
|
|
|
|
|
0.96x
|
|
|
|
|
1.46x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net of a $6.4 million net loan loss reserve release associated with
the effects of Hurricanes Irma and Maria.
(2) Includes a provision of $5.6 million associated with $57.2 million
in loans transferred to held for sale.
(3) Includes charge-offs totaling $4.6 million associated with $27.2
million in commercial mortgage loans transferred to held for sale.
(4) Includes a charge-off of $5.1 million associated with a $30.0
million construction loan transferred to held for sale.
(5) Includes charge-offs totaling $9.7 million associated with $57.2
million in loans transferred to held for sale.
(6) Includes a provision of $4.8 million associated with the effects of
Hurricanes Irma and Maria.
(7) Includes a provision of $0.6 million associated with the sale of the
PREPA credit line.
(8) Includes the charge-off of $10.7 million associated with the sale of
the PREPA credit line.
(9) The ratio of allowance for loan and lease losses to total loans held
for investment, excluding the storm-related allowance, was 1.88% and
1.85% as of March 31, 2018 and December 31, 2017, respectively.
|
Table 11 - Net Charge-Offs to Average Loans
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
Year Ended
|
|
|
|
|
|
March 31, 2018
|
|
|
|
|
December 31,
|
|
|
|
|
December 31,
|
|
|
|
|
December 31,
|
|
|
|
|
December 31,
|
|
|
|
|
|
(annualized)
|
|
|
|
|
2017
|
|
|
|
|
2016
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
|
0.38
|
%
|
|
|
|
|
0.79
|
%
|
|
|
|
|
0.93
|
%
|
|
|
|
|
0.55
|
%
|
|
|
|
|
0.85
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial mortgage
|
|
|
|
1.69
|
%
|
|
(1
|
)
|
|
|
2.42
|
%
|
|
|
|
|
1.28
|
%
|
|
(6
|
)
|
|
|
3.12
|
%
|
|
(9
|
)
|
|
|
0.84
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and Industrial
|
|
|
|
0.36
|
%
|
|
|
|
|
0.66
|
%
|
|
(4
|
)
|
|
|
1.11
|
%
|
|
(7
|
)
|
|
|
1.32
|
%
|
|
(10
|
)
|
|
|
2.27
|
%
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
|
|
|
|
17.37
|
%
|
|
(2
|
)
|
|
|
2.05
|
%
|
|
|
|
|
1.02
|
%
|
|
|
|
|
1.42
|
%
|
|
(11
|
)
|
|
|
2.76
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and finance leases
|
|
|
|
2.22
|
%
|
|
|
|
|
2.12
|
%
|
|
|
|
|
2.63
|
%
|
|
|
|
|
2.85
|
%
|
|
|
|
|
3.46
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
|
|
1.21
|
%
|
|
(3
|
)
|
|
|
1.33
|
%
|
|
(5
|
)
|
|
|
1.37
|
%
|
|
(8
|
)
|
|
|
1.68
|
%
|
|
(12
|
)
|
|
|
1.84
|
%
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes net charge-offs totaling $4.6 million associated with $27.2
million in commercial mortgage loans transferred to held for sale. The
ratio of commercial mortgage net charge-offs to average loans, excluding
the charge-offs associated with commercial mortgage loans transferred to
held for sale, was 0.55%.
(2) Includes a net charge-off of $5.1 million associated with a $30.0
million construction loan transferred to held for sale. The ratio of
construction net charge-offs to average loans, excluding the charge-offs
associated with the construction loan transferred to held for sale, was
0.22%.
(3) Includes net charge-offs totaling $9.7 million associated with $57.2
million in loans transferred to held for sale. The ratio of total loans
net charge-offs to average loans, excluding the charge-offs associated
with loans transferred to held for sale, was 0.77%.
(4) Includes the charge-off of $10.7 million associated with the sale of
the PREPA credit line. The ratio of commercial and industrial net
charge-offs to average loans, excluding charge-offs associated with the
sale of the PREPA credit line, was 0.16%.
(5) Includes the charge-off of $10.7 million associated with the sale of
the PREPA credit line. The ratio of total net charge-offs to average
loans, excluding charge-offs associated with the sale of the PREPA
credit line, was 1.21%.
(6) Includes net charge-offs totaling $3.0 million associated with the
sale of the $16.3 million pool of non-performing assets in 2016. The
ratio of commercial mortgage net charge-offs to average loans, excluding
charge-offs associated with the sale of the $16.3 million pool of
non-performing assets, was 1.09%.
(7) Includes net charge-offs totaling $1.6 million associated with the
sale of the $16.3 million pool of non-performing assets. The ratio of
commercial and industrial net charge-offs to average loans, excluding
charge-offs associated with the sale of the $16.3 million pool of
non-performing assets, was 1.04%.
(8) Includes net charge-offs totaling $4.6 million associated with the
sale of the $16.3 million pool of non-performing assets. The ratio of
total charge-offs to average loans, excluding charge-offs associated
with the sale of the $16.3 million pool of non-performing assets, was
1.32%.
(9) Includes net charge-offs totaling $37.6 million associated with a
bulk sale of assets. The ratio of commercial mortgage net charge-offs to
average loans, excluding charge-offs associated with the bulk sale of
assets, was 0.77%.
(10) Includes net charge-offs totaling $20.6 million associated with the
bulk sale of assets. The ratio of commercial and industrial net
charge-offs to average loans, excluding charge-offs associated with the
bulk sale of assets, was 0.40%.
(11) Includes net charge-offs totaling $3.3 million associated with the
bulk sale of assets. The ratio of construction net charge-offs to
average loans, excluding charge-offs associated with the bulk sale of
assets, was (0.52)%.
(12) Includes net charge-offs totaling $61.4 million associated with the
bulk sale of assets. The ratio of total charge-offs to average loans,
excluding charge-offs associated with the bulk sale of assets, was 1.01%.
(13) Includes net charge-offs totaling $6.9 million associated with an
acquisition of mortgage loans from Doral Financial. The ratio of
commercial and industrial net charge-offs to average loans, excluding
charge-offs associated with the acquisition of mortgage loans from Doral
Financial, was 2.08%.
(14) Includes net charge-offs totaling $6.9 million associated with the
acquisition of mortgage loans from Doral Financial. The ratio of total
net charge-offs to average loans, excluding charge-offs associated with
the acquisition of mortgage loans from Doral Financial, was 1.77%.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180427005212/en/
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