First BanCorp moving forward on integrating Santander operations in Puerto Rico
In the 45 days since it completed its acquisition of Banco Santander de Puerto Rico’s assets, First BanCorp has made strides in the integration of both operations, having already completed the conversion of the mortgage business, the insurance agency, and several administrative duties.
The plan is to complete the integration process by the end of the second quarter of 2021, said Aurelio Alemán, CEO of First BanCorp, during a call with analysts to discuss the bank’s third quarter results.
During that period, First BanCorp — parent company of FirstBank — also announced a voluntary separation program that provides an opportunity for early retirement to about 160 employees of the combined institution. This program will be executed over the next three quarters, starting in the fourth quarter of this year, Alemán said.
The analysis post-acquisition also revealed the possibility of closing between eight and 10 branches, while depending more on the use of data channels to drive efficiencies, Alemán said.
“But…we don’t want to hamper our potential to grow our market share within our expanded market distribution that we have,” he said.
For the third quarter of 2020, First BanCorp reported net income of $28.6 million, or $0.13 per diluted share, compared to $21.3 million, or $0.09 per diluted share, for the second quarter of 2020.
The corporation’s financial statements reflected $5.6 billion in total assets, $2.6 billion in gross loans, and $4.2 billion in total deposits that it added as part of the Banco Santander transaction that closed on Sept. 1, 2020.
“This transaction not only solidifies our position in the island, but strengthens our competitiveness in commercial, retail, as well as residential,” Alemán said. “We’re very pleased to welcome our 150,000 new customers. We look forward to support them, to support their plans with unexpanded branch network, expanded service channels and enhanced technological offerings.”
In all, the unified financial corporation will achieve an estimated $48 million in savings, initially, he said.
“We’ll definitely work harder to see if there are areas that we are going to achieve more. But we’re also focused on growing the franchise. So, it’s a balancing act as we move forward and achieve our goals of being more efficient and increase market share,” Alemán said.
As for the ongoing effects of the COVID-19 pandemic and the government-imposed restrictions to curb the spread, Alemán said although the island is still “operating under certain lockdowns…I think the market has reacted very well to the situation and getting used to operating under that scenario.”
He said funding is flowing into the economy, boosting liquidity and activity.
COVID related expenses for First BanCorp were about $1 million during the third quarter, down about $2 million from the prior quarter. However, the bank saw higher expenses related with a volume in debit and credit card transactions generated during the quarter, said Orlando Berges, First BanCorp’s CFO during the call.