First BanCorp, the bank holding company for FirstBank Puerto Rico reported Wednesday a net loss of $34.1 million for the second quarter of 2015, or $0.16 per diluted share, compared to net income of $25.6 million, or $0.12 per diluted share, for the first quarter of 2015 and net income of $21.2 million, or $0.11 per diluted share, for the second quarter of 2014.
For the second quarter of 2015, the pre-tax loss was $43.9 million compared to pre-tax income of $33.7 million for the first quarter of 2015 and pre-tax income of $20.9 million for the second quarter of 2014.
The pre-tax loss for the second quarter of 2015 includes:
- A $48.7 million pre-tax loss on a bulk sale of assets, mostly comprised of non-performing and adversely classified commercial loans, including transaction expenses;
- A $12.9 million other-than-temporary impairment on Puerto Rico government securities;
- Pre-tax costs of $2.6 million related to the conversion of loan and deposit accounts acquired from Doral to the FirstBank systems completed in the second quarter.
Adjusted pre-tax income for the second quarter of 2015 was $20.2 million, excluding the aforementioned items, compared to adjusted pre-tax income of $22.3 million for the first quarter of 2015, excluding the $13.4 million pre-tax bargain purchase gain on assets acquired and liabilities assumed from Doral and the $2.1 million of pre-tax acquisition and conversion costs incurred in the first quarter.
“Throughout the quarter we updated the market on several important accomplishments: our consent order which had been in place with the FDIC for five years was lifted; and, we executed an accelerated de-risking transaction that improved our asset quality metrics to levels we have not seen since 2009,” said Aurelio Alemán, CEO of First BanCorp.
“We also posted our results for the Dodd-Frank Act Stress Test which show that even in a severely adverse economic environment, which we are not currently in, our capital ratios exceed the well-capitalized thresholds throughout the nine-quarter horizon. In addition, during the quarter we successfully completed the integration and rebranding of the acquired Doral branches and mortgage portfolio,” he said.
First BanCorp posted a net loss for the quarter of $34.1 million due largely to the bulk sale transaction.
“Our profitability was also impacted this quarter by an OTTI charge of $12.9 million that we took on our government securities. Our deposit base remains stable and our cost of deposits are at their lowest level in recent years, our loan originations improved and delinquencies are stable across all of our portfolios,” he said.
Meanwhile, he said Puerto Rico’s economic situation continues to be challenging, but “we know how to operate in an adverse economy and have been doing so for years.”
“We are prepared to manage through more challenging economic conditions and as our stress tests reflect we have the capital strength and market position to not only do so but to take advantage of opportunities that also appear in challenging times,” Alemán said.
“The reality is that the franchise has never been stronger and poised to increase shareholder value. We encourage our government officials to work together with the private industry and provide more clarity to the market in order to remove uncertainty and avoid further economic deterioration,” he said.
As of June 30, 2015, the corporation had $378.5 million of exposure to loans and obligations of the Commonwealth of Puerto Rico central government and instrumentalities, of which $204.3 million, or 53 percent, represents exposure to municipalities, the bank said.