First BanCorp. garners $23.3M in 1st quarter net income

Written by  //  April 26, 2016  //  Banking, Financial District  //  No comments

The uncertainty related to Puerto Rico’s economy and the recently adopted “Puerto Rico Emergency Moratorium and Financial Rehabilitation Act,” prompted the financial institution to place its hotel commercial loan relationships guaranteed by the Tourism Development Fund in nonaccrual status.

The uncertainty related to Puerto Rico’s economy and the recently adopted “Puerto Rico Emergency Moratorium and Financial Rehabilitation Act,” prompted the financial institution to place its hotel commercial loan relationships guaranteed by the Tourism Development Fund in nonaccrual status.

First BanCorp., the parent company for FirstBank Puerto Rico, reported Monday net income of $23.3 million for the first quarter of 2016, or $0.11 per diluted share, compared to $15 million, or $0.07 per diluted share, for the fourth quarter of 2015 and $25.6 million, or $0.12 per diluted share, for the first quarter of 2015.

On a non-GAAP basis, adjusted net income for the first quarter of 2016 was $25.8 million compared to $15.1 million for the fourth quarter of 2015 and $18.9 million for the first quarter of 2015.

During the first quarter of this year, the bank recorded the following “unusual and/or non-recurring items:”

  • A $6.7 million other-than-temporary impairment charge on debt securities, including a $6.3 million OTTI on Puerto Rico government debt securities and a $0.4 million OTTI on private label mortgage-backed securities. No tax benefit was recognized for the OTTI charges.
  • A $4.2 million gain on the repurchase and cancellation of $10 million in trust preferred securities, reflected in the statement of income set forth below as “Gain on early extinguishment of debt.” The gain, realized at the holding company level, has no effect on the income tax expense for the first quarter.

“We’re quite pleased with our results for the first quarter. We achieved improvement in most of our core metrics this quarter. Our core deposits, net of government and brokered, grew nicely this quarter to $6.8 billion, an increase of $137 million,” said First BanCorp. President Aurelio Alemán

Most of the growth occurred in demand and savings account in Puerto Rico and the U.S. Virgin Islands.

The bank further reduced its reliance on brokered CDs by $91 million. Meanwhile, loan originations and renewals, including credit card activity, reached $731 million.

“We experienced a decline in our loan book in Puerto Rico, with lower origination volumes in certain categories, a portion of this decline is seasonal in nature. On the other hand, we continue to increase our Florida loan book, which grew $54 million, or 5 percent compared to the fourth quarter,” he said.

“We are very pleased with the opening of a new branch on Brickell Avenue in Miami that will provide access to a new and vibrant market for the Florida franchise. We also continue making progress in our initiatives to lower our operating expenses,” Alemán added.

Still, despite the accomplishments mentioned, the uncertainty related to Puerto Rico’s economy and the recently adopted “Puerto Rico Emergency Moratorium and Financial Rehabilitation Act,” prompted the financial institution to place its hotel commercial loan relationships guaranteed by the Tourism Development Fund in nonaccrual status.

“Excluding this negative migration, our asset quality would have slightly improved, non-performing assets would have declined by $1.2 million. We remain cautiously optimistic that Puerto Rico and its creditors will continue to work toward a resolution,” he said.

“We care deeply about the outcome and will continue to be involved in the ongoing discussions. Our strong capital position and diverse business model will continue to drive results,” Alemán noted.

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