First BanCorp., the bank holding company for FirstBank Puerto Rico, on Thursday reported net income of $26.3 million for the fourth quarter of 2014, or $0.12 per diluted share, compared to $23.2 million, or $0.11 per diluted share, for the third quarter of 2014 and $14.8 million, or $0.07 per diluted share, for the fourth quarter of 2013.
For the year ended Dec. 31, 2014, the corporation reported net income of $87.8 million, or $0.42 per diluted share, compared to a net loss of $164.5 million, or $0.80 loss per diluted share, for the year ended Dec. 31, 2013.
“We just completed a turnaround year for First BanCorp achieving net income of $87.8 million for the year, almost twice the adjusted net income of $45 million achieved in 2013. Our annual pre-tax, pre-provision income improved to $205.9 million compared to $183.6 million in 2013,” said Aurelio Alemán, CEO of First BanCorp.
“Results for the quarter were also strong, reaching $26.3 million, our highest net income quarter since returning to profitability and 13 percent higher than last quarter. We achieved a $28 million reduction in non-performing assets for the quarter and will continue to look at all options to accelerate the reduction of our non-performing assets and improve our asset quality ratios,” he said.
Net interest income increased by $1.5 million to $129.2 million. Adjusted net interest income, excluding fair value adjustments on derivative instruments of $0.3 million and a $2.5 million prepayment penalty collected on a commercial mortgage loan paid off in the fourth quarter, decreased by $0.9 million to $126.3 million driven by declines in the size of the commercial portfolios, the financial institution said.
The related net interest margin decreased by 3 basis points in the fourth quarter of 2014 to 4.09 percent compared to 4.12 percent in the third quarter of 2014.
“While we have continued to face margin pressures, we have been able to maintain healthy margins reaching 4.09 percent for the quarter,” Alemán said.
The results for the year ended Dec. 31, 2013 were negatively impacted by two significant items: an aggregate loss of $140.8 million on two separate bulk sales of adversely classified and non-performing assets and valuation adjustments to certain loans transferred to held for sale, and a $66.6 million loss related to the write-off of assets pledged as collateral to Lehman Brothers Inc. together with an additional $2.5 million for a loss contingency of attorneys’ fees awarded to the counter-party related to this matter.
Excluding these items, net income for the year ended Dec. 31, 2013 was $45.4 million.
Meanwhile, FirstBank has continued to evaluate its deferred tax assets valuation allowance position on a regular basis and is currently analyzing several scenarios, the company said.
Saying the Puerto Rico economic situation continues to “face hurdles,” Alemán noted the recent decline in oil prices should be positive for the local consumer, but it is still too early to determine the direct impact on the bank’s clients.
“Also, the possible implications of the proposed comprehensive tax reform and any restructuring of the public authorities are yet to be seen. That said, we are confident of our capabilities to continue to execute our business plans under this scenario and of the strength of our franchise,” he said.
“The decline in our loan portfolio this quarter was related to lower origination volumes and de-risking activities including the sale of participations, note sales and a further reduction in our government exposure. Given the challenging environment in Puerto Rico, we will look to our Florida region and non-organic opportunities to rebuild our loan portfolio,” Alemán concluded.
To read the full quarterly report, click HERE.