First BanCorp., the bank holding company for FirstBank Puerto Rico reported net income of $14.8 million for the fourth quarter of 2013, or $0.07 per diluted share, compared to $15.9 million, or $0.08 per diluted share, for the third quarter of 2013 and net income of $14.5 million, or $0.07 per diluted share, for the fourth quarter of 2012.
However, for the year ended Dec. 31, 2013, the bank reported a net loss of $164.5 million, compared to net income of $29.8 million for the year ended Dec. 31, 2012.
“Results for 2013 reflect year-over-year improvements in our franchise in a number of key areas, in spite of the challenges still present in our economic environment,” said First BanCorp President Aurelio Alemán. “We made significant progress in financial metrics achieving pre-tax, pre-provision income of $184 million, up from the prior year; net interest income of $515 million, an increase of $53 million from the prior year; net interest margin of 4.11 percent, up significantly from 3.64 percent in the prior year.”
Meanwhile, he said the financial institution grew its total deposits, excluding brokered CDs, by $247.8 million and loan origination activity increased over $600 million to $3.7 billion.
“Also, our credit-risk profile improved considerably as total non-performing assets decreased 41 percent from last year, or $513 million, to $725 million,” he said.
The bank’s profitability in the fourth quarter was affected by various extraordinary items, such as charges related to the Lehman litigation and additional credit-related expenses associated with managing its legacy portfolio.
“We also incurred some restructuring charges as we consolidate several branches and operations. Our net interest margin expanded to 4.25 percent, and loan originations increased to $972 million. Our non-performing assets decreased slightly, as we continue moving our troubled legacy loans into a better disposition state. Our capital levels remain strong,” he said.
Alemán said the bank is prepared to continue managing the challenging economic environment in its main market of Puerto Rico. That said, the financial institution “remains encouraged by the proactive steps taken by the Puerto Rico government to address the fiscal situation and look forward to more stable market conditions. We remain focused on improving profitability as we effectively execute our strategic plan.”
The adjusted net income of $18.5 million for the fourth quarter of 2013, compared to $19.3 million for the third quarter of 2013, excludes:
- A $2.5 million loss contingency for attorneys’ fees awarded to the counterparty on the Lehman litigation recorded in the fourth quarter of 2013.
- Expenses related to branch consolidations and other restructuring efforts, and related valuation adjustments, amounting to $1.4 million recorded in the fourth quarter of 2013.
- The net reversal of $200,000 in expenses and related income tax credit in connection with the national gross receipts tax previously accrued for the Corporation’s trade or business outside of Puerto Rico. The reversal was recorded in the fourth quarter of 2013.
- Costs associated with the common stock offering by certain of the Corporation’s existing stockholders amounting to $1.7 million recorded in the third quarter of 2013.
- Costs associated with the conversion of the credit card processing platform amounting to $1.7 million recorded in the third quarter of 2013.