First BanCorp reports $28.4M 1Q loss
First BanCorp continued its path of negative quarterly growth, reporting a net loss of $28.4 million for the first quarter of 2011. However, the result for the period ended March 31 reflected a marked improvement from the $251.4 million net loss reported for the fourth quarter of 2010 and the $107 million net loss for the first quarter of 2010.
Two events accounted for the lift, bank officials said, mentioning a reduction of $107.6 million in the provision for loan and lease losses as the previous quarter included a $102.9 million charge to the provision for loan and lease losses associated with the loans transferred to held for sale and a reduction of $89.8 million in the income tax expense related to a $93.7 million incremental charge to the valuation allowance of its deferred tax asset recorded in the fourth quarter of 2010.
“Our first quarter results demonstrated progress in executing our capital plan and implementing the corporation’s key operating strategies; improving asset quality, reducing loan exposure on riskier loan categories, managing operating expenses and improving the mix of deposits,” said Aurelio Alemán, CEO of First BanCorp, holding company of First Bank.
The financial institution, which unconfirmed reports point to be in talks for a possible sale to a group of local investors, has been making operational changes for the better part of the last year to address its financial troubles. Included in that is a stock exchange agreement with the U.S. Treasury, which owns about $425 million of the bank’s Series G stock. FirstBanCorp has until July 7, 2011 to complete raising the capital it needs, or about $350 million, to meet the federal agency’s conditions.
“…the Corporation continued its discussions with a number of entities, including private equity firms, in order to complete a capital raise,” Alemán said, referring to its pending obligation with the U.S. Treasury.
In its quarterly report, First BanCorp said it has made investments in First Bank’s institutional brand and commercial banking network that has contributed to a growth in consumer deposits by more than 2 percent and a $177.3 million increase in core deposits since December 2010, while reducing overall deposit cost.
“We continued focusing our efforts in enhancing our core banking business. Core deposits grew as the bank reduced brokered deposit balances,” Alemán said. “We experienced further loan demand, providing the bank opportunities to lend both profitably and prudently, and we continue to proactively manage expenses and implement initiatives towards achievement of additional operational efficiencies.”
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