First BanCorp., the bank holding company for FirstBank Puerto Rico on Monday reported net income of $25.6 million for the first quarter of 2015, or $0.12 per diluted share, compared to $330.8 million, or $1.56 per diluted share, for the fourth quarter of 2014 and $17.1 million, or $0.08 per diluted share, for the first quarter of 2014.
Net income for the fourth quarter of 2014 included a $302.9 million tax benefit related to the partial reversal of the deferred tax assets valuation allowance, the bank informed in its quarterly statement.
Pre-tax earnings of $33.7 million for the first quarter of 2015, compared to $29.5 million for the fourth quarter of 2014 and $18.0 million for the first quarter of 2014. Adjusted pre-tax earnings of $22.3 million for the first quarter of 2015, excluding a $13.4 million bargain purchase gain on assets acquired and liabilities assumed from Doral Bank and $2.1 million of related acquisition and conversion non-recurring costs, compared to adjusted pre-tax earnings of $26.9 million for the fourth quarter of 2014, excluding a $2.5 million prepayment penalty income on a large commercial mortgage loan paid-off.
The bank completed its annual Dodd-Frank Act Stress Test, or DFAST, process in the first quarter of 2015 and submitted its result to regulators before the March 31, 2015 deadline, the bank said.
Public disclosure of the results for the severely adverse economic scenario is expected to be made during the second quarter of 2015, the bank said.
On Feb. 27, 2015, FirstBank acquired 10 Doral Bank branches, assuming $522.7 million in deposits related to such branches, acquired approximately $324.8 million in principal balance of loans, primarily residential mortgage loans, $5.5 million of property, plant and equipment and received $217.7 million of cash, through an alliance with other co-bidders.
“This was an exciting and busy quarter for our company. Our participation in the acquisition of a former competitor, our timely submission of DFAST and the recent news of our Consent Order being lifted by the FDIC bodes well for the future of our franchise,” said First BanCorp. President Aurelio Alemán.
“We are pleased with the results for the quarter and the positive impact of our acquisition as we continue penetrating new markets and growing new customers,” he said.
During the first quarter, First BanCorp expanded its Puerto Rico branch network with the acquisition of 10 branches from the now-defunct Doral Bank. The transaction also contributed $321 million in residential mortgage loans and more than $500 million of the $672 million growth in non-brokered deposits.
“Organic core deposit growth was also very strong this quarter. Our core deposit base reached $6.8 billion as of March 31, 2015, solidifying our position as the second largest bank in Puerto Rico,” he said.
“Our loan portfolio grew due to the residential portfolio acquired and we achieved healthy origination and renewal volume of $777 million. Most franchise metrics continue to show positive trends as we reduced expenses, increased non-interest income and increased our pre-tax pre-provision earnings,” Alemán added.
On the asset quality side, the financial institution made the decision to move a $75 million credit facility held by the Puerto Rico Electric Power Authority to nonaccrual status. This was the second bank on the island affected by PREPA’s fiscal problems, as Oriental Financial Group also took a $24 million hit for a credit line pending payment.
“Excluding this $75 million adverse migration, our inflows of non-performing loans were lower compared to the fourth quarter. Improving asset quality metrics under a challenging macro environment continues to be our top priority for 2015,” Alemán said.
The Doral purchase should contribute to First BanCorp.’s bottom line and expand its sales channels. Meanwhile, the bank’s Florida franchise continues to show growth opportunities under a positive economic environment, during the quarter we opened our new branch in Miami-Dade’s Doral neighborhood.
“Despite the continuous political and fiscal headwinds affecting our island economy, our improved core metrics fueling our growing capital base will allow us to continue improving our risk profile and strengthening our market position across all regions,” he said.