First BanCorp., parent company of FirstBank Puerto Rico, announced results for the second quarter and six months ended June 30, reporting net income of $21.3 million and $41.2 million for the periods, respectively.
The second quarter result reflects a growth from the $2.2 million reported for the three-month period ended March 30, and a 48% drop from the $41.2 million on record for the same period in 2019. For the six-month period ended June 2020, the financial institution reported $23.5 million in net income, versus $84.6 million on record for the first half of 2019.
The financial institution attributed the most recent drop to a number of expenses related to its acquisition of Banco Santander de Puerto Rico and addressing the COVID-19 pandemic, among other items.
“In the second quarter, we generated net income of $21.3 million, or $0.09 per share. Deteriorating trends in economic forecasts required an additional reserve build of $29.1 million this quarter, which impacted our bottom-line results,” First BanCorp. President Aurelio Alemán said, adding that its Puerto Rico operations were hampered by the government-mandated lockdown in mid-March to fight the spread of COVID-19.
One of the effects seemed to be a direct hit to loan payments, which were reduced by moratoriums the bank offered customers affected by the pandemic. As of June 30, First BanCorp had under deferred repayment arrangements 76,205 residential, commercial and consumer loans, totaling $3.4 billion, or 36% of its total loan portfolio, it stated.
“A lot of them were moratoriums extended for that three-months timeframe. And in July, many of the borrowers have started to meet their scheduled payments and the moratorium, as of July 24 have been reduced to approximate 18% of the portfolios and that includes reductions on all the components,” said First BanCorp CFO Orlando Berges.
As of July 24, 2020, approximately $1.7 billion, or 18%, of the total loan portfolio held for investment balance continues to be under deferment programs, the bank stated.
Bank officials explained that as a certified U.S. Small Business Administration lender, the financial institution is participating in the agency’s Paycheck Protection Program. During the second quarter of 2020, the corporation originated 5,423 loans under this program, totaling approximately $375.2 million, of which $368.7 million (book value as of June 30, 2020 of $359.6 million) was still outstanding as of June 30, 2020.
Furthermore, as of July 24, 2020, the corporation has received approvals for 630 additional client applications and funded $14.9 million during the month of July, it confirmed.
Net interest income for the current quarter reached $135.2 million, a slight drop from the $142.5 million reported for the second quarter in 2019. For the first half of 2020, the financial institution reported $142.5 million, a drop in comparison to the $273.9 million for the first half of last year.
Net interest income dropped “primarily due to the downward repricing of variable-rate commercial loans, and interest-bearing cash balances maintained at the Federal Reserve Bank of New York, as well as an increase in the premium amortization expense on U.S. agencies MBS, all affected by significantly lower market interest rates,” the bank said in its financial report.
During the quarter ended June 30, 2020, the bank had $14 billion in total assets. Total deposits, excluding brokered deposits and government deposits, increased by $1 billion to $8.9 billion as of June 30, 2020, consisting of a growth of $962.5 million in the Puerto Rico region, as well as increases of $59.9 million and $26.1 million in the U.S. Virgin Islands and Florida regions, respectively.