First BanCorp. reported net income of $28 million for the second quarter of 2017, or $0.13 per diluted share, compared to $25.5 million, or $0.11 per diluted share, for the first quarter of 2017 and $22 million, or $0.10 per diluted share, for the second quarter of 2016.
Net interest income increased by $1.4 million to $123.9 million, compared to $122.5 million for the first quarter of 2017, primarily due to a decrease in the premium amortization expense on U.S. agency mortgage-backed securities associated with lower prepayment speeds, the upward re-pricing of variable rate commercial loans, the increased average volume of performing commercial and construction loans, and the effect of one additional day in the second quarter, the bank said.
Meanwhile, non-interest income increased by $12.3 million to $20.5 million compared to $8.2 million for the first quarter of 2017, primarily due to the impact in the previous quarter of a $12.2 million other-than-temporary impairment (“OTTI”) charge on Puerto Rico government debt securities, and higher revenues from mortgage banking activities.
“As previously reported, we sold our nonperforming Puerto Rico government securities [$23 million] for a slight recovery. We also resolved a $28 million nonperforming commercial relationship in Puerto Rico,” said First BanCorp President Aurelio Alemán.
“We’re pleased with our asset quality improvement during the quarter but remain cautious of the economic environment and the potential effects of the fiscal plan to our clients and loan portfolios,” he said.
As of June 30, 2017, FirstBanCorp had $221.5 million of direct exposure to loans and obligations of the Commonwealth of Puerto Rico government and instrumentalities, of which $190.9 million, or 86 percent, represented exposure to municipalities, which is supported by assigned property tax revenues, compared to total exposure of $245.0 million as of March 31, 2017, of which $190.9 million, or 78 percent, represented exposure to municipalities.
Meanwhile, Alemán highlighted the beneficial aspects of its Florida operations, which showed “an increase in deposits and was quite stable.
“The Florida region continues to be an important contributor to growth. Coordination and activity increased about $47 million if we compare that to the prior quarter,” Alemán said.
“Florida growth was mostly concentrated in commercial and residential portfolio. In Puerto Rico, we’re recovering some of the market share that we have lost in the consumer book in auto, personal loans and credit cards, which definitely should help our margin going forward,” he said.
With regards to the island’s economic scenario, Alemán said “we definitely would like to see more transparency from both the government and the Fiscal [Oversight and Management] Board.”
“Again, we have to remain attentive and cautious to this economic environment and the potential effects including our portfolios but we’re ready to manage that challenge,” he said.