- Net income of $70.7 million, or $0.39 per diluted share, for
the first quarter of 2023, compared to $73.2 million, or $0.40 per
diluted share, for the fourth quarter of 2022. Income before income
taxes of $102.6 million for the first quarter of 2023, compared to
$106.5 million for the fourth quarter of 2022. Return on average
assets for the first quarter of 2023 remains strong at 1.55%.
- On a non-GAAP basis, pre-tax, pre-provision income of $118.1
million for the first quarter of 2023, compared to pre-tax,
pre-provision income of $122.2 million for the fourth quarter of
2022.
- Net interest income of $200.9 million for the first quarter of
2023, compared to $205.6 million for the fourth quarter of 2022.
The results for the first quarter of 2023 include a reduction of
approximately $2.5 million in net interest income associated to the
effect of two fewer days. In addition, there was an increase in
interest expense as a result of a higher cost of deposits combined
with a higher level of borrowings, partially offset by the upward
repricing of variable-rate commercial loans, higher yields in the
consumer loan portfolios, and higher average loan balances.
- Net interest margin of 4.34% for the first quarter of 2023,
compared to 4.37% for the fourth quarter of 2022, reflecting, among
other things, the effect of the increase in borrowings in the first
quarter and a 38 basis points increase in the average cost of
interest-bearing deposits. These factors were partially offset by
the upward repricing of variable-rate commercial loans, and the
growth in higher yielding loans, primarily consumer loans.
- Provision for credit losses of $15.5 million for the first
quarter of 2023, relatively flat compared to $15.7 million for the
fourth quarter of 2022. The ratio of the ACL for loans and finance
leases to total loans held for investment was 2.29% as of March 31,
2023, compared to 2.25% as of December 31, 2022.
- Non-interest income increased to $32.5 million for the first
quarter of 2023, compared to $29.6 million for the fourth quarter
of 2022, mainly driven by seasonal contingent insurance commissions
recorded in the first quarter of 2023.
- Non-interest expenses increased by $2.4 million to $115.3
million for the first quarter of 2023, compared to $112.9 million
for the fourth quarter of 2022, mainly driven by an increase in
employees’ compensation and benefits expense. The efficiency ratio
for the first quarter of 2023 was 49.39%, compared to 48.02% for
the fourth quarter of 2022.
- Income tax expense of $31.9 million for the first quarter of
2023, a decrease of $1.5 million, compared to $33.4 million for the
fourth quarter of 2022, mainly related to lower pre-tax income when
compared to the prior quarter.
- Credit quality variances:
- Non-performing assets decreased by $0.2 million to $129.0
million as of March 31, 2023, mainly due to a $0.8 million decrease
in non-performing loans. The decline in non-performing loans was
mainly related to a $6.3 million decrease in nonaccrual residential
mortgage loans mainly due to loans restored to accrual status,
partially offset by an increase of $4.4 million in nonaccrual
commercial and construction loans, mainly due to the inflow of a
$7.1 million commercial and industrial loan in the Florida region
in the power generation industry.
- Annualized net charge-offs to average loans ratio remained flat
at 0.46% for both the first quarter of 2023 and fourth quarter of
2022.
- Total loans increased $28.0 million from the prior quarter to
$11.6 billion as of March 31, 2023. The increase consisted of $79.5
million growth in consumer loans, primarily auto loans and leases,
partially offset by decreases of $32.9 million in residential
mortgage loans and $18.6 million in commercial and construction
loans. The increase consisted of a $141.5 million growth in the
Puerto Rico region, partially offset by decreases of $108.6 million
in the Florida region and $4.9 million in the Virgin Islands
region.
- Total loan originations, including refinancings, renewals, and
draws from existing commitments (other than credit card utilization
activity), amounted to $1.1 billion in the first quarter of 2023, a
decrease of $237.8 million compared to the fourth quarter of 2022.
The decline in total loan originations consisted of: (i) a $188.3
million decrease in commercial and construction loan originations;
(ii) a $38.3 million decrease in residential mortgage loan
originations; and (iii) an $11.2 million decrease in consumer loan
originations.
- Total deposits, excluding brokered certificates of deposit
(“brokered CDs”) and government deposits, decreased by $142.7
million to $13.1 billion as of March 31, 2023, reflecting
reductions of $139.4 million in the Florida region and $14.6
million in the Virgin Islands region, partially offset by an
increase of $11.3 million in the Puerto Rico region.
- Government deposits, which are fully collateralized, decreased
in the first quarter of 2023 by $95.9 million and totaled $2.7
billion as of March 31, 2023, or 16.7% of total deposits. The
decrease in government deposits reflect reductions of $114.7
million in the Puerto Rico region and $0.3 million in the Florida
region, partially offset by an increase of $19.1 million in the
Virgin Islands region.
- Brokered CDs increased by $147.1 million during the first
quarter of 2023 to $252.9 million as of March 31, 2023, or 1.6% of
total deposits.
- Borrowings increased by $347.8 million during the first quarter
of 2023 to $1.3 billion as of March 31, 2023, due to an increase of
$250.0 million in Federal Home Loan Bank (“FHLB”) advances and an
increase of $97.8 million in securities sold under agreements to
repurchase (“repurchase agreements”). The increase in borrowings
was mostly a precautionary measure to increase available cash as a
result of the recent runoff in bank deposits at some banking
institutions in the United States.
- Cash and cash equivalents amounted to $823.6 million as of
March 31, 2023. When adding $2.4 billion of free high-quality
liquid securities that could be liquidated or pledged within one
day, the total core liquidity amounted to $3.2 billion as of March
31, 2023, or 16.77% of total assets, compared to 19.02% as of
December 31, 2022. Including the $882.5 million in available
lending capacity at the FHLB, available liquidity increases to
21.42% as of March 31, 2023, compared to 22.48% as of December 31,
2022.
- During the first quarter of 2023, First BanCorp. repurchased
approximately 3.6 million shares of common stock for a total
purchase price of $50.0 million and increased quarterly dividends
from $0.12 per share to $0.14 per share.
- Capital ratios exceed required regulatory levels for bank
holding companies and well-capitalized banks. Estimated total
capital, common equity tier 1 (“CET1”) capital, tier 1 capital, and
leverage ratios were 19.02%, 16.33%, 16.33%, and 10.57%,
respectively, as of March 31, 2023. On a non-GAAP basis, the
tangible common equity ratio was 7.12% as of March 31, 2023,
compared to 6.81% as of December 31, 2022.
First BanCorp. (the “Corporation” or “First BanCorp.”) (NYSE:
FBP), the bank holding company for FirstBank Puerto Rico
(“FirstBank” or “the Bank”), today reported a net income of $70.7
million, or $0.39 per diluted share, for the first quarter of 2023,
compared to $73.2 million, or $0.40 per diluted share, for the
fourth quarter of 2022, and $82.6 million, or $0.41 per diluted
share, for the first quarter of 2022.
Aurelio Alemán, President and Chief Executive Officer of First
BanCorp., commented: “We begin 2023 with very encouraging financial
results for the franchise which once again prove the resiliency of
our business model amidst changing market conditions. We delivered
a strong Return on Average Assets of 1.55%, further strengthened
our liquidity position, and registered our fifth consecutive
quarter of loan growth. We generated $70.7 million in net income
and achieved a pre-tax pre-provision income of $118.1 million, up
6% when compared to the first quarter of 2022 and slightly down
when compared to the previous quarter.
We registered healthy loan originations driven by steady
consumer and commercial credit demand, particularly in Puerto Rico
where commercial and consumer loans grew by $92.3 million and $78.9
million, respectively, during the quarter. Our credit metrics
continued to improve with early delinquency indicators decreasing
across most portfolios and non-performing assets registering a
decrease to 0.68% of total assets. Core deposits, which exclude
brokered and government deposits, decreased by $142.7 million
during the quarter reflecting reductions of $139.4 million in
Florida and $14.6 million in the Virgin Islands, partially offset
by an increase of $11.3 million registered in Puerto Rico. Over two
thirds of the deposit reduction took place in the first two months
of the quarter and was primarily driven by Florida customers
looking for higher yielding deposit alternatives outside the
traditional banking sector. Our deposit base remained very stable
following the March industry events as we opened more new deposit
accounts during March than any of the prior twelve months. Our
diversified deposit franchise is strategically distributed between
retail and commercial customers, with low average balances per
deposit account, and with over 70% of deposits insured or fully
collateralized.
Finally, we continued to execute our capital deployment strategy
by repurchasing approximately $50.0 million in shares of common
stock and raising the common stock dividend by 17% to $0.14 per
share during the quarter. Considering the industry-wide uncertain
environment, we opted to pause share buybacks during the second
quarter and we expect to resume share repurchases during the second
half of the year. We believe that our robust capital and liquidity
position coupled with our unwavering commitment to meet the banking
needs of our customers will enable us to continue delivering
shareholder value for the foreseeable future. We operate a
well-diversified organization that serves as a vital source of
credit to small businesses and consumers across multiple industries
and are very fortunate to have their support and that of the
communities we serve.”
NON-GAAP DISCLOSURES
This press release contains GAAP financial measures and non-GAAP
financial measures. Non-GAAP financial measures are used when
management believes that the presentation of these non-GAAP
financial measures enhances the ability of analysts and investors
to analyze trends in the Corporation’s business and understand the
performance of the Corporation. The Corporation may utilize these
non-GAAP financial measures as guides in its budgeting and
long-term planning process. Where non-GAAP financial measures are
used, the most comparable GAAP financial measure, as well as the
reconciliation of the non-GAAP financial measure to the most
comparable GAAP financial measure, can be found in the text or in
the tables in or attached to this press release. Any analysis of
these non-GAAP financial measures should be used only in
conjunction with results presented in accordance with GAAP.
Non-GAAP financial measures include adjusted pre-tax,
pre-provision income, adjusted net interest income and margin,
tangible common equity, tangible book value per common share, and
certain capital ratios. These measures should be read in
conjunction with the accompanying tables (Exhibit A), which are an
integral part of this press release, and the Corporation’s other
financial information that is presented in accordance with
GAAP.
Special Items
The financial results for the first quarter of 2023 and fourth
and first quarters of 2022 did not include any significant Special
Items.
Non-GAAP Financial Measures
Adjusted Pre-Tax, Pre-Provision Income
Adjusted pre-tax, pre-provision income is a non-GAAP performance
metric that management uses and believes that investors may find
useful in analyzing underlying performance trends, particularly in
times of economic stress, including as a result of natural
catastrophes or health epidemics. Adjusted pre-tax, pre-provision
income, as defined by management, represents income before income
taxes adjusted to exclude the provisions for credit losses on
loans, unfunded loan commitments and debt securities and any gains
or losses on sales of investment securities. In addition, from time
to time, earnings are also adjusted for certain items that
management believes are not reflective of core operating
performance regarded as Special Items.
Tangible Common Equity Ratio and Tangible Book Value per Common
Share
The tangible common equity ratio and tangible book value per
common share are non-GAAP financial measures that management
believes are generally used by the financial community to evaluate
capital adequacy. Tangible common equity is total common equity
less goodwill and other intangibles. Tangible assets are total
assets less goodwill and other intangibles. Management uses and
believes that many stock analysts use the tangible common equity
ratio and tangible book value per common share in conjunction with
other more traditional bank capital ratios to compare the capital
adequacy of banking organizations with significant amounts of
goodwill or other intangible assets, typically stemming from the
use of the purchase method of accounting for mergers and
acquisitions. Accordingly, the Corporation believes that disclosure
of these financial measures may be useful to investors. Neither
tangible common equity nor tangible assets, or the related
measures, should be considered in isolation or as a substitute for
stockholders’ equity, total assets, or any other measure calculated
in accordance with GAAP. Moreover, the manner in which the
Corporation calculates its tangible common equity, tangible assets,
and any other related measures may differ from that of other
companies reporting measures with similar names.
Net Interest Income Excluding Valuations, and on a
Tax-Equivalent Basis
Net interest income, interest rate spread, and net interest
margin are reported excluding the changes in the fair value of
derivative instruments and on a tax-equivalent basis in order to
provide to investors additional information about the Corporation’s
net interest income that management uses and believes should
facilitate comparability and analysis of the periods presented. The
changes in the fair value of derivative instruments have no effect
on interest due or interest earned on interest-bearing liabilities
or interest-earning assets, respectively. The tax-equivalent
adjustment to net interest income recognizes the income tax savings
when comparing taxable and tax-exempt assets and assumes a marginal
income tax rate. Income from tax-exempt earning assets is increased
by an amount equivalent to the taxes that would have been paid if
this income had been taxable at statutory rates. Management
believes that it is a standard practice in the banking industry to
present net interest income, interest rate spread, and net interest
margin on a fully tax-equivalent basis. This adjustment puts all
earning assets, most notably tax-exempt securities and tax-exempt
loans, on a common basis that management believes facilitates
comparison of results to the results of peers.
INCOME BEFORE INCOME TAXES AND RECONCILIATION TO PRE-TAX,
PRE-PROVISION INCOME (NON-GAAP)
Income before income taxes was $102.6 million for the first
quarter of 2023, compared to $106.5 million for the fourth quarter
of 2022. Pre-tax, pre-provision income was $118.1 million for the
first quarter of 2023, compared to $122.2 million for the fourth
quarter of 2022. Compared to the first quarter of 2022, pre-tax,
pre-provision income increased 5.7%. The following table reconciles
income before income taxes to pre-tax, pre-provision income for the
last five quarters:
Quarter Ended
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
(Dollars in thousands)
Income before income taxes
$
102,633
$
106,530
$
106,631
$
108,798
$
125,625
Add/Less: Provision for credit losses
expense (benefit)
15,502
15,712
15,783
10,003
(13,802
)
Pre-tax, pre-provision income (1)
$
118,135
$
122,242
$
122,414
$
118,801
$
111,823
Change from most recent prior quarter
(amount)
$
(4,107
)
$
(172
)
$
3,613
$
6,978
$
6,915
Change from most recent prior quarter
(percentage)
-3.4
%
-0.1
%
3.0
%
6.2
%
6.6
%
(1)
Non-GAAP financial measure. See Non-GAAP
Disclosures above for the definition and additional information
about this non-GAAP financial measure.
NET INTEREST INCOME
The following table sets forth information concerning net
interest income for the last five quarters:
Quarter Ended
(Dollars in thousands)
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
Net Interest Income
Interest income
$
242,396
$
233,452
$
222,683
$
208,625
$
197,854
Interest expense
41,511
27,879
14,773
12,439
12,230
Net interest income
$
200,885
$
205,573
$
207,910
$
196,186
$
185,624
Average Balances
Loans and leases
$
11,519,399
$
11,364,963
$
11,218,864
$
11,102,310
$
11,106,855
Total securities, other short-term
investments and interest-bearing cash balances
7,232,347
7,314,293
7,938,530
8,568,022
8,647,087
Average interest-earning assets
$
18,751,746
$
18,679,256
$
19,157,394
$
19,670,332
$
19,753,942
Average interest-bearing liabilities
$
10,957,892
$
10,683,776
$
11,026,975
$
11,567,228
$
11,211,780
Average Yield/Rate
Average yield on interest-earning assets -
GAAP
5.24
%
4.96
%
4.61
%
4.25
%
4.06
%
Average rate on interest-bearing
liabilities - GAAP
1.54
%
1.04
%
0.53
%
0.43
%
0.44
%
Net interest spread - GAAP
3.70
%
3.92
%
4.08
%
3.82
%
3.62
%
Net interest margin - GAAP
4.34
%
4.37
%
4.31
%
4.00
%
3.81
%
Net interest income amounted to $200.9 million for the first
quarter of 2023, a decrease of $4.7 million, compared to $205.6
million for the fourth quarter of 2022, which includes a net
reduction of approximately $2.5 million associated to the effect of
two fewer days. The decrease in net interest income reflects the
following:
- An $8.8 million increase in interest expense on
interest-bearing deposits, including:
- A $4.7 million increase in interest expense on time deposits,
excluding brokered CDs, mainly associated with higher rates being
paid in the first quarter of 2023 on new issuances and renewals,
and the increase of $161.4 million in the average balance,
partially offset by the effect of two fewer days in the first
quarter of 2023. The average cost of time deposits in the first
quarter of 2023, excluding brokered CDs, increased 77 basis points
to 1.87% as compared to the previous quarter.
- A $2.8 million increase in interest expense on interest-bearing
checking and saving accounts, of which approximately $4.0 million
was driven by the increase in average rates paid in the first
quarter, partially offset by a reduction of $364.9 million in the
average balance of interest-bearing checking and saving accounts,
which resulted in a decrease of approximately $0.8 million in
interest expense, and the effect of two fewer days in the first
quarter of 2023, which resulted in a reduction of approximately
$0.4 million in interest expense.
- A $1.3 million increase in interest expense on brokered CDs,
mainly driven by the increase of $119.4 million in the average
balance of brokered CDs, which resulted in additional interest
expense of approximately $1.0 million, and the effect of higher
rates paid in the first quarter of 2023.
- A $4.7 million increase in interest expense on FHLB advances
mainly associated with an increase of $408.5 million in the average
balance to provide for additional liquidity. Partially offset
by:
- A $4.8 million increase in interest income on commercial and
construction loans, of which approximately $6.3 million was related
to the effect of higher interest rates in the upward repricing of
variable-rate loans and new loan originations, and approximately
$1.0 million was related to the $57.9 million increase in the
average balance of this portfolio. These variances were partially
offset by the effects of two fewer days in the first quarter of
2023, which resulted in a reduction of approximately $1.9 million
in interest income and a $0.6 million reduction in interest income
from Small Business Administration Paycheck Protection Program
loans.
- A $2.1 million increase in interest income on consumer loans
and finance leases, primarily due to an increase of approximately
$100.6 million in the average balance of this portfolio, which
increased interest income by approximately $2.3 million, and a $1.2
million increase mainly due to the effects of higher yields in the
auto loans and finance leases and credit card portfolios, partially
offset by the effect of two fewer days in the first quarter of
2023, which resulted in a reduction of approximately $1.4 million
in interest income.
- A $1.2 million increase in interest income from
interest-bearing cash balances, primarily cash balances deposited
at the Federal Reserve Bank (“FED”), mainly due to the effect of
higher market interest rates.
- A $0.6 million increase in interest income on residential
mortgage loans, primarily due to higher average yields in the
residential portfolio, mainly driven by higher interest rates on
new loan originations associated with higher market interest
rates.
Net interest margin for the first quarter of 2023 decreased to
4.34%, compared to 4.37% for the fourth quarter of 2022,
reflecting, among other things, the effect of the increase in
borrowings in the first quarter of 2023 and a 38 basis points
increase in the average cost of interest-bearing deposits. These
factors were partially offset by the upward repricing of
variable-rate commercial loans and the growth in higher yielding
loans, primarily consumer loans. In addition, the mix of average
non-interest bearing deposits to average total funding sources
decreased from 37% in the fourth quarter of 2022 to 35% in the
first quarter of 2023, while the ratio of average borrowings to
average total funding sources increased from 3% in the fourth
quarter of 2022 to 5% in the first quarter of 2023.
NON-INTEREST INCOME
The following table sets forth information concerning
non-interest income for the last five quarters:
Quarter Ended
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
(In thousands)
Service charges and fees on deposit
accounts
$
9,541
$
9,174
$
9,820
$
9,466
$
9,363
Mortgage banking activities
2,812
2,572
3,400
4,082
5,206
Insurance commission income
4,847
2,898
2,624
2,946
5,275
Card and processing income
10,918
10,601
9,834
10,300
9,681
Other operating income
4,400
4,355
4,015
4,147
3,333
Non-interest income
$
32,518
$
29,600
$
29,693
$
30,941
$
32,858
Non-interest income amounted to $32.5 million for the first
quarter of 2023, compared to $29.6 million for the fourth quarter
of 2022. The $2.9 million increase in non-interest income was
mainly due to:
- A $ 2.0 million increase in insurance commission income mainly
driven by $2.3 million in seasonal contingent commissions recorded
in the first quarter of 2023 based on the prior year’s production
of insurance policies.
- A $0.4 million increase in service charges and fees on deposit
accounts, mainly due to the effect in the fourth quarter of 2022 of
an adjustment to reverse previously recognized fees on
non-sufficient funds as part of changes in the fees structure.
- A $0.3 million increase in card and processing income mainly
related to merchant-related referral fees received during the first
quarter of 2023.
- A $0.2 million increase in revenues from mortgage banking
activities, mainly driven by a $0.3 million net decrease in
mark-to-market losses from to-be-announced mortgage-backed
securities (“MBS”) forward contracts and interest rate lock
commitments.
NON-INTEREST EXPENSES
The following table sets forth information concerning
non-interest expenses for the last five quarters:
Quarter Ended
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
(In thousands)
Employees' compensation and benefits
$
56,422
$
52,241
$
52,939
$
51,304
$
49,554
Occupancy and equipment
21,186
21,843
22,543
21,505
22,386
Business promotion
3,975
5,590
5,136
4,042
3,463
Professional service fees:
Collections, appraisals and other
credit-related fees
848
1,483
1,261
1,075
909
Outsourcing technology services
8,141
7,806
7,564
7,636
6,905
Other professional fees
2,984
3,380
3,724
3,325
2,780
Taxes, other than income taxes
5,112
5,211
5,349
4,689
5,018
FDIC deposit insurance
2,133
1,544
1,466
1,466
1,673
Other insurance and supervisory fees
2,368
2,429
2,387
2,303
2,235
Net gain on OREO operations
(1,996
)
(2,557
)
(1,064
)
(1,485
)
(720
)
Credit and debit card processing
expenses
5,318
6,362
6,410
5,843
4,121
Communications
2,216
2,322
2,272
1,978
2,151
Other non-interest expenses
6,561
5,277
5,202
4,645
6,184
Total non-interest expenses
$
115,268
$
112,931
$
115,189
$
108,326
$
106,659
Non-interest expenses amounted to $115.3 million in the first
quarter of 2023, an increase of $2.4 million from $112.9 million in
the fourth quarter of 2022. The $2.4 million increase reflects,
among other things, the following significant variances:
- A $4.2 million increase in employees’ compensation and benefits
expense, mainly driven by a seasonal increase in payroll taxes,
bonuses, and stock-based compensation expense.
- A $1.3 million increase in other non-interest expenses, in the
table above, in part due to an increase in charges for legal and
operational reserves.
- A $0.6 million increase in Federal Deposit Insurance
Corporation (“FDIC”) deposit insurance cost, driven by the two
basis points increase on the initial base deposit insurance
assessment rate that came into effect during the first quarter of
2023. Partially offset by:
- A $1.6 million decrease in business promotion expenses, mainly
related to a $1.1 million decrease in advertising, sponsorship, and
public relations activities.
- A $1.1 million decrease in credit and debit card processing
expenses, mainly as a result of incentives received during the
first quarter of 2023.
- A $0.7 million decrease in professional service fees, mainly
related to a decrease in collections, appraisals, and other
credit-related fees.
- A $0.7 million decrease in occupancy and equipment expenses,
primarily reflecting reductions in depreciation, rental and
electricity expenses.
INCOME TAXES
The Corporation recorded an income tax expense of $31.9 million
for the first quarter of 2023, compared to $33.4 million for the
fourth quarter of 2022. The decrease was mainly related to lower
pre-tax income when compared to the prior quarter.
The Corporation’s effective tax rate, excluding entities with
pre-tax losses from which a tax benefit cannot be recognized and
discrete items, remained flat at 31.2% for the first quarter of
2023 and fourth quarter of 2022. As of March 31, 2023, the
Corporation had a deferred tax asset of $154.8 million, net of a
valuation allowance of $176.0 million against the deferred tax
assets. The Corporation’s banking subsidiary, FirstBank, had a
deferred tax asset of $147.7 million, net of a valuation allowance
of $139.1 million.
CREDIT QUALITY
Non-Performing Assets
The following table sets forth information concerning
non-performing assets for the last five quarters:
(Dollars in thousands)
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
Nonaccrual loans held for investment:
Residential mortgage
$
36,410
$
42,772
$
43,036
$
44,588
$
48,818
Commercial mortgage
21,598
22,319
23,741
24,753
26,576
Commercial and Industrial
13,404
7,830
15,715
17,079
18,129
Construction
1,794
2,208
2,237
2,375
2,543
Consumer and finance leases
15,936
14,806
12,787
10,315
10,964
Total nonaccrual loans held for
investment
$
89,142
$
89,935
$
97,516
$
99,110
$
107,030
OREO
32,862
31,641
38,682
41,706
42,894
Other repossessed property
4,743
5,380
4,936
3,840
3,823
Other assets (1)
2,203
2,202
2,193
2,809
2,727
Total non-performing assets (2)
$
128,950
$
129,158
$
143,327
$
147,465
$
156,474
Past due loans 90 days and still accruing
(3)
$
74,380
$
80,517
$
81,790
$
94,485
$
118,798
Nonaccrual loans held for investment to
total loans held for investment
0.77
%
0.78
%
0.86
%
0.88
%
0.96
%
Nonaccrual loans to total loans
0.77
%
0.78
%
0.86
%
0.88
%
0.96
%
Non-performing assets to total assets
0.68
%
0.69
%
0.78
%
0.76
%
0.79
%
(1)
Residential pass-through MBS issued by the
Puerto Rico Housing Finance Authority ("PRHFA") held as part of the
available-for-sale debt securities portfolio.
(2)
Excludes purchased-credit deteriorated
("PCD") loans previously accounted for under Accounting Standards
Codification ("ASC") Subtopic 310-30 for which the Corporation made
the accounting policy election of maintaining pools of loans as
“units of account” both at the time of adoption of current expected
credit losses ("CECL") on January 1, 2020 and on an ongoing basis
for credit loss measurement. These loans will continue to be
excluded from nonaccrual loan statistics as long as the Corporation
can reasonably estimate the timing and amount of cash flows
expected to be collected on the loan pools. The portion of such
loans contractually past due 90 days or more amounted to $10.4
million as of March 31, 2023 (December 31, 2022 - $12.0 million;
September 30, 2022 - $12.8 million; June 30, 2022 - $15.3 million;
March 31, 2022 - $18.0 million).
(3)
These include rebooked loans, which were
previously pooled into Government National Mortgage Association
("GNMA") securities, amounting to $7.1 million as of March 31, 2023
(December 31, 2022 - $10.3 million; September 30, 2022 - $8.0
million; June 30, 2022 - $10.8 million; March 31, 2022 - $9.5
million). Under the GNMA program, the Corporation has the option
but not the obligation to repurchase loans that meet GNMA’s
specified delinquency criteria. For accounting purposes, the loans
subject to the repurchase option are required to be reflected on
the financial statements with an offsetting liability.
Variances in credit quality metrics:
- Total non-performing assets decreased by $0.2 million to $129.0
million as of March 31, 2023, compared to $129.2 million as of
December 31, 2022. Total nonaccrual loans held for investment
decreased by $0.8 million to $89.1 million as of March 31, 2023,
compared to $89.9 million as of December 31, 2022. The decrease in
non-performing assets was mainly driven by:
- A $6.3 million decrease in nonaccrual residential mortgage
loans, mainly related to $3.9 million of loans restored to accrual
status, $2.7 million of loans transferred to other real estate
owned (“OREO”), and $1.6 million of collections, partially offset
by inflows of $2.1 million.
Partially offset by:
- A $4.4 million increase in nonaccrual
commercial and construction loans, mainly related to the inflow of
a $7.1 million commercial and industrial participated loan in the
Florida region in the power generation industry, partially offset
by $2.3 million of collections, including the payoff of a $1.0
million commercial and industrial loan in the Puerto Rico
region.
- A $1.2 million increase in the OREO
portfolio balance.
- A $1.1 million increase in nonaccrual
consumer loans, mainly auto loans and finance leases.
- Inflows to nonaccrual loans held for investment were $29.7
million in the first quarter of 2023, an increase of $5.6 million
compared to inflows of $24.1 million in the fourth quarter of 2022.
Inflows to nonaccrual consumer loans were $19.5 million, an
increase of $1.6 million compared to inflows of $17.9 million in
the fourth quarter of 2022. Inflows to nonaccrual commercial and
construction loans were $8.1 million in the first quarter of 2023,
an increase of $7.7 million compared to inflows of $0.4 million in
the fourth quarter of 2022 due to the aforementioned inflow of a
$7.1 million commercial and industrial participated loan in the
Florida region. Inflows to nonaccrual residential mortgage loans
were $2.1 million in the first quarter of 2023, a decrease of $3.7
million compared to inflows of $5.8 million in the fourth quarter
of 2022. See Early Delinquency below for additional
information.
- Adversely classified commercial and construction loans
decreased by $23.6 million to $70.0 million as of March 31, 2023.
The decrease was mostly driven by the payoff of a $24.3 million
commercial and industrial participated loan in the Florida region
in the leisure and hospitality industry.
Early Delinquency
Total loans held for investment in early delinquency (i.e.,
30-89 days past due accruing loans, as defined in regulatory
reporting instructions) amounted to $94.5 million as of March 31,
2023, a decrease of $10.4 million, compared to $104.9 million as of
December 31, 2022. The variances by major portfolio categories are
as follows:
- Consumer loans in early delinquency decreased in the first
quarter of 2023 by $4.5 million to $66.4 million, mainly in the
auto loan portfolio.
- Residential mortgage loans in early delinquency decreased by
$3.0 million to $25.2 million.
- Commercial and construction loans in early delinquency
decreased by $2.9 million, mainly due to the migration to past due
90 days and still accruing of a $2.3 million commercial mortgage
loan that matured and is in the process of renewal but for which
the Corporation continues to receive interest and principal
payments from the borrower.
Allowance for Credit Losses
The following table summarizes the activity of the allowance for
credit losses (“ACL”) for on-balance sheet and off-balance sheet
exposures during the first quarter of 2023 and fourth quarter of
2022:
Quarter ended March
31,2023
Loans and Finance
Leases
Debt Securities
Residential Mortgage
Loans
Commercial and Construction
Loans
Consumer Loans and Finance
Leases
Total Loans and Finance
Leases
Unfunded Loans
Commitments
Held-to- Maturity
Available- for-Sale
Total ACL
Allowance for Credit Losses
(Dollars in thousands)
Allowance for credit losses, beginning
balance
$
62,760
$
70,278
$
127,426
$
260,464
$
4,273
$
8,286
$
458
$
273,481
Impact of adoption of ASU 2022-02
2,056
7
53
2,116
-
-
-
2,116
Provision for credit losses - expense
(benefit)
73
456
15,727
16,256
(105
)
(640
)
(9
)
15,502
Net (charge-offs) recoveries
(486
)
185
(12,968
)
(13,269
)
-
-
-
(13,269
)
Allowance for credit losses, end of
period
$
64,403
$
70,926
$
130,238
$
265,567
$
4,168
$
7,646
$
449
$
277,830
Amortized cost of loans and finance
leases
$
2,811,528
$
5,359,512
$
3,406,945
$
11,577,985
Allowance for credit losses on loans to
amortized cost
2.29
%
1.32
%
3.82
%
2.29
%
Quarter ended December 31,
2022
Loans and Finance
Leases
Debt Securities
Residential Mortgage
Loans
Commercial and Construction
Loans
Consumer Loans and Finance
Leases
Total Loans and Finance
Leases
Unfunded Loans
Commitments
Held-to- Maturity
Available- for-Sale
Total ACL
Allowance for Credit Losses
(Dollars in thousands)
Allowance for credit losses, beginning
balance
$
65,079
$
67,572
$
125,208
$
257,859
$
4,242
$
8,257
$
664
$
271,022
Provision for credit losses - (benefit)
expense
(1,821
)
3,469
14,003
15,651
31
29
1
15,712
Net charge-offs
(498
)
(763
)
(11,785
)
(13,046
)
-
-
(207
)
(13,253
)
Allowance for credit losses, end of
period
$
62,760
$
70,278
$
127,426
$
260,464
$
4,273
$
8,286
$
458
$
273,481
Amortized cost of loans and finance
leases
$
2,847,290
$
5,378,067
$
3,327,468
$
11,552,825
Allowance for credit losses on loans to
amortized cost
2.20
%
1.31
%
3.83
%
2.25
%
The main variances of the total ACL by main categories are
discussed below:
Allowance for Credit Losses for Loans and Finance Leases
As of March 31, 2023, the ACL for loans and finance leases was
$265.6 million, an increase of $5.1 million, from $260.5 million as
of December 31, 2022. The ACL for commercial and construction loans
remained relatively flat when compared to the previous quarter as a
result of the following offsetting factors: reserve increases of
$5.0 million for a new nonacccrual commercial and industrial
participated loan in the Florida region in the power generation
industry, and $1.1 million due to a less favorable economic outlook
in the projection of certain forecasted macroeconomic variables,
such as the commercial real estate price index (“CRE price index”);
partially offset by reserve decreases of $6.1 million associated
with the receipt of updated financial information of certain
borrowers and the repayment of a $24.3 million adversely classified
commercial and industrial participated loan in the Florida region.
The ACL for consumer loans increased by $2.9 million, primarily
reflecting the effect of the increase in the size of the consumer
loan portfolios and the increase in historical charge-off levels.
The ACL for residential mortgage loans increased by $1.6 million,
in part related to a $2.1 million cumulative increase in the ACL,
due to the adoption of Accounting Standards Update (“ASU”) 2022-02,
“Financial Instruments – Credit Losses (Topic 326): Troubled Debt
Restructurings and Vintage Disclosures,” for which the Corporation
elected to discontinue the use of a discounted cash flow
methodology for restructured accruing loans. This adjustment had a
corresponding decrease, net of applicable taxes, in beginning
retained earnings as of January 1, 2023.
- The provision for credit losses on loans and finance leases was
$16.3 million for the first quarter of 2023, compared to $15.6
million in the fourth quarter of 2022.
- Provision for credit losses for the residential mortgage loan
portfolio was an expense of $0.1 million for the first quarter of
2023, compared to a net benefit of $1.8 million in the fourth
quarter of 2022. The net benefit recorded in the fourth quarter of
2022 was primarily related to the decrease in qualitative
adjustments due to improvements in underlying portfolio
metrics.
- Provision for credit losses for the consumer loans and finance
leases portfolio was $15.7 million for the first quarter of 2023,
compared to $14.0 million in the fourth quarter of 2022, primarily
reflecting the increase in the size of the consumer loan portfolios
and the increase in historical charge-off levels in all major
portfolio classes.
- Provision for credit losses for the commercial and construction
loan portfolio was $0.5 million for the first quarter of 2023,
compared to $3.4 million in the fourth quarter of 2022. The expense
recognized during the first quarter of 2023 was impacted by the
aforementioned offsetting factors. Meanwhile, the expense
recognized during the fourth quarter of 2022 was mostly related to
the increase in the size of the loan portfolio and a less favorable
economic outlook in the projection of certain forecasted
macroeconomic variables, such as the CRE price index.
- The ratio of the ACL for loans and finance leases to total
loans held for investment was 2.29% as of March 31, 2023, compared
to 2.25% as of December 31, 2022. The ratio of the total ACL for
loans and finance leases to nonaccrual loans held for investment
was 298% as of March 31, 2023, compared to 290% as of December 31,
2022.
Net Charge-Offs
The following table presents ratios of annualized net
charge-offs (recoveries) to average loans held-in-portfolio for the
last five quarters:
Quarter Ended
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
Residential mortgage
0.07%
0.07%
0.13%
0.11%
0.15%
Commercial mortgage
-0.03%
0.00%
-0.01%
-0.22%
0.00%
Commercial and Industrial
0.00%
0.19%
-0.07%
-0.07%
-0.10%
Construction
-0.17%
-1.82%
0.07%
-0.09%
-0.03%
Consumer loans and finance leases
1.54%
1.44%
1.05%
0.91%
0.85%
Total loans
0.46%
0.46%
0.31%
0.21%
0.24%
The ratios above are based on annualized net charge-offs and are
not necessarily indicative of the results expected in subsequent
periods.
Net charge-offs were $13.3 million for the first quarter of
2023, or an annualized 0.46% of average loans, compared to $13.0
million, or an annualized 0.46% of average loans, in the fourth
quarter of 2022. The increase of $0.3 million in net charge-offs
included the following:
- A $1.1 million increase in consumer loan net charge-offs,
reflected across all major portfolio classes. Partially offset
by:
- A $0.8 million decrease in commercial and construction loans
net charge-offs mainly related to a $1.7 million charge-off
recorded during the fourth quarter of 2022 in connection with the
sale of an adversely classified commercial and industrial
participated loan in the Florida region, partially offset by a $0.5
million recovery recorded on a construction loan in the Puerto Rico
region also during the fourth quarter of 2022.
Allowance for Credit Losses for Unfunded Loan Commitments
The Corporation estimates expected credit losses over the
contractual period during which the Corporation is exposed to
credit risk as a result of a contractual obligation to extend
credit, such as pursuant to unfunded loan commitments and standby
letters of credit for commercial and construction loans, unless the
obligation is unconditionally cancellable by the Corporation. The
ACL for off-balance sheet credit exposures is adjusted as a
provision for credit loss expense. As of March 31, 2023, the ACL
for off-balance sheet credit exposures was $4.2 million, compared
to $4.3 million as of December 31, 2022.
Allowance for Credit Losses for Held-to-Maturity Debt
Securities
As of March 31, 2023, the ACL for held-to-maturity debt
securities, which relates only to Puerto Rico municipal bonds, was
$7.6 million, compared to $8.3 million as of December 31, 2022. The
decrease on the ACL was mostly related to a reduction in
qualitative reserves driven by updated financial information of
certain bond issuers received during the first quarter of 2023.
LIQUIDITY
Cash and cash equivalents amounted to $823.6 million as of March
31, 2023, compared to $480.5 million as of December 31, 2022. When
adding $2.4 billion of free high-quality liquid securities that
could be liquidated or pledged within one day, the total core
liquidity amounted to $3.2 billion as of March 31, 2023, or 16.77%
of total assets, compared to $3.5 billion, or 19.02% of total
assets as of December 31, 2022. In addition, as of March 31, 2023,
the Corporation had $882.5 million available for credit with the
FHLB based on the value of collateral pledged with the FHLB. As
such, the basic liquidity ratio (which includes cash, free
high-quality liquid assets such as U.S. government and GSEs
obligations that could be liquidated or pledged within one day, and
available secured lines of credit with the FHLB to total assets)
was approximately 21.42% of total assets as of March 31, 2023,
compared to 22.48% of total assets as of December 31, 2022.
In addition to the aforementioned available credit from the
FHLB, the Corporation also maintains borrowing capacity at the FED
Discount Window Program. The Corporation does not consider
borrowing capacity from the FED Discount Window as a primary source
of liquidity but had approximately $1.4 billion available for
funding under the FED’s Borrower-In-Custody (“BIC”) Program as of
March 31, 2023. Also, the Corporation has access to financing with
other counterparties through repurchase agreements and is enrolled
in the FED’s Bank Term Funding Program. Combined, as of March 31,
2023, the Corporation had $5.5 billion available to meet liquidity
needs.
The Corporation’s total deposits, excluding brokered CDs,
amounted to $15.8 billion as of March 31, 2023, compared to $16.0
billion as of December 31, 2022, including government deposits
amounting to $2.7 billion and $2.8 billion, respectively, which are
fully collateralized. As of March 31, 2023, $4.8 billion of these
deposits are uninsured, which represent 30.13% of total deposits,
compared to $4.9 billion, or 30.65% of total deposits, as of
December 31, 2022. Brokered CDs amounted to $252.9 million as of
March 31, 2023, compared to $105.8 million as of December 31, 2022.
Refer to Table 10 below for additional information about the
deposits composition.
STATEMENT OF FINANCIAL CONDITION
Total assets were approximately $19.0 billion as of March 31,
2023, up $342.6 million from December 31, 2022.
The following variances within the main components of total
assets are noted:
- A $343.1 million increase in cash and cash equivalents mainly
related to the $347.8 million increase in borrowings to enhance
available cash as a precautionary measure, as discussed above.
- A $4.3 million decrease in investment securities, mainly driven
by repayments of approximately $102.3 million primarily on U.S.
agencies MBS, partially offset by an $87.2 million increase in the
fair value of available-for-sale debt securities attributable to
changes in market interest rates and an $11.3 million increase in
investments on FHLB stock.
- A $28.0 million increase in total loans. The increase consisted
of a $141.5 million growth in the Puerto Rico region, partially
offset by decreases of $108.6 million in the Florida region and
$4.9 million in the Virgin Islands region. On a portfolio basis,
the increase consisted of a $79.5 million growth in consumer loans,
primarily auto loans and finance leases, partially offset by
decreases of $32.9 million in residential mortgage loans and $18.6
million in commercial and construction loans. The decrease in
commercial and construction loans mainly reflected $93.3 million in
payoffs and paydowns of five commercial and industrial
relationships in the Florida region, each in excess of $10 million,
partially offset by loan originations. Total loan originations,
including refinancings, renewals, and draws from existing
commitments (excluding credit card utilization activity), amounted
to $1.1 billion in the first quarter of 2023, a decrease of $237.8
million compared to the fourth quarter of 2022. The decline in
total loan originations consisted of: (i) a $188.3 million decrease
in commercial and construction loan originations; (ii) a $38.3
million decrease in residential mortgage loan originations; and
(iii) an $11.2 million decrease in consumer loan originations,
primarily on finance leases. Total loan originations in the Puerto
Rico region amounted to $909.7 million in the first quarter of
2023, a decrease of $139.3 million when compared to the fourth
quarter of 2022. The $139.3 million decline in total loan
originations consisted of: (i) a $107.1 million decrease in
commercial and construction loan originations mainly due to certain
large financings originated in the previous quarter related to
borrowers engaged in the health, hotel, and information processing
sectors; (ii) a $20.2 million decrease in residential mortgage loan
originations; and (iii) a $12.0 million decrease in consumer loan
originations. Total loan originations in the Virgin Islands region
amounted to $19.0 million in the first quarter of 2023, compared to
$21.1 million in the fourth quarter of 2022. The $2.1 million net
decline in total loan originations consisted of: (i) a $7.2 million
decrease in residential mortgage loan originations; (ii) a $4.9
million increase in commercial and construction loan originations;
and (iii) a $0.2 million increase in consumer loan originations.
Total loan originations in the Florida region amounted to $145.7
million in the first quarter of 2023, compared to $242.1 million in
the fourth quarter of 2022. The $96.4 million net decline in total
loan originations consisted of (i) an $86.1 million decrease in
commercial and construction loan originations, reflecting both
lower new originations and lower utilization of credit lines; (ii)
a $10.9 million decrease in residential mortgage loan originations;
and (iii) an $0.6 million increase in consumer loan
originations.
Total liabilities were approximately $17.6 billion as of March
31, 2023, an increase of $262.5 million from December 31, 2022.
The increase in total liabilities was mainly due to:
- A $347.8 million increase in borrowings, reflecting increases
of $250.0 million in FHLB advances and $97.8 million in repurchase
agreements. During the first quarter of 2023, the Corporation added
$425.0 million of short-term FHLB advances at an average cost of
5.04% and $300.0 million of long-term FHLB advances at an average
cost of 4.59%, and repaid upon maturity $475.0 million of
short-term FHLB advances at an average cost of 4.56%. In addition,
the Corporation added $173.0 million of short-term repurchase
agreements at an average cost of 5.08%, and repaid upon maturity
$75.1 million of short-term repurchase agreements at an average
cost of 4.55%.
- A $147.1 million increase in brokered CDs, as the Corporation
continues to diversify its funding sources. The increase reflects
the effect of new issuances amounting to $189.7 million with an
all-in cost of 4.70%, partially offset by approximately $42.6
million of maturing brokered CDs, with an all-in cost of 4.06%,
that were paid off during the first quarter of 2023. Partially
offset by:
- A $142.7 million decrease in total deposits, excluding brokered
CDs and government deposits, reflecting reductions of $139.4
million in the Florida region and $14.6 million in the Virgin
Islands region, partially offset by an increase of $11.3 million in
the Puerto Rico region. Most of the decrease was related to saving
and checking accounts in the Florida region used for loan
repayments, as well as customers continuing to reallocate cash into
higher-yielding alternatives. Notwithstanding, these reductions
were partially offset by an increase in time deposits, including
the shift from non-interest bearing or low-interest bearing
products to time deposits, driven by higher rates offered.
- A $95.9 million decrease in government deposits, consisting of
decreases of $114.7 million in the Puerto Rico region and $0.3
million in the Florida region, partially offset by an increase of
$19.1 million in the Virgin Islands region. Most of the decrease in
the Puerto Rico region was related to reductions in the balance of
operational accounts of a public corporation.
Total stockholders’ equity amounted to $1.4 billion as of March
31, 2023, an increase of $80.1 million from December 31, 2022. The
growth was driven by the $87.2 million increase in the fair value
of available-for-sale debt securities due to changes in market
interest rates recognized as part of accumulated other
comprehensive loss and the earnings generated in the first quarter
of 2023, partially offset by the repurchase of approximately 3.6
million shares of common stock for a total purchase price of
approximately $50.0 million, $25.4 million in quarterly dividends
declared to common stock shareholders, and the $1.3 million
decrease related to the adoption of ASU 2022-02.
As of March 31, 2023, capital ratios exceeded the required
regulatory levels for bank holding companies and well-capitalized
banks. The Corporation’s estimated CET1 capital, tier 1 capital,
total capital and leverage ratios under the Basel III rules were
16.33%, 16.33%, 19.02%, and 10.57%, respectively, as of March 31,
2023, compared to CET1 capital, tier 1 capital, total capital, and
leverage ratios of 16.53%, 16.53%, 19.21%, and 10.70%,
respectively, as of December 31, 2022.
Meanwhile, estimated CET1 capital, tier 1 capital, total capital
and leverage ratios of our banking subsidiary, FirstBank, were
16.65%, 17.45%, 18.71%, and 11.29%, respectively, as of March 31,
2023, compared to CET1 capital, tier 1 capital, total capital and
leverage ratios of 16.84%, 17.65%, 18.90%, and 11.43%,
respectively, as of December 31, 2022.
Tangible Common Equity (Non-GAAP)
On a non-GAAP basis, the Corporation’s tangible common equity
ratio increased to 7.12% as of March 31, 2023, compared to 6.81% as
of December 31, 2022. The increase in tangible common equity
includes the effect of an $87.2 million increase in the fair value
of available-for-sale debt securities due to changes in market
interest rates recognized as part of accumulated other
comprehensive loss, partially offset by capital return that
consisted of $50.0 million in common stock repurchases and $25.4
million in common stock quarterly dividends declared during the
first quarter of 2023.
The following table presents a reconciliation of the
Corporation’s tangible common equity and tangible assets to the
most comparable GAAP items as of the indicated dates:
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
(In thousands, except ratios and per share
information)
Tangible Equity:
Total equity - GAAP
$
1,405,593
$
1,325,540
$
1,265,333
$
1,557,916
$
1,781,102
Goodwill
(38,611
)
(38,611
)
(38,611
)
(38,611
)
(38,611
)
Purchased credit card relationship
intangible
(86
)
(205
)
(376
)
(599
)
(873
)
Core deposit intangible
(18,987
)
(20,900
)
(22,818
)
(24,736
)
(26,648
)
Insurance customer relationship
intangible
-
(13
)
(51
)
(89
)
(127
)
Tangible common equity
$
1,347,909
$
1,265,811
$
1,203,477
$
1,493,881
$
1,714,843
Tangible Assets:
Total assets - GAAP
$
18,977,114
$
18,634,484
$
18,442,034
$
19,531,635
$
19,929,037
Goodwill
(38,611
)
(38,611
)
(38,611
)
(38,611
)
(38,611
)
Purchased credit card relationship
intangible
(86
)
(205
)
(376
)
(599
)
(873
)
Core deposit intangible
(18,987
)
(20,900
)
(22,818
)
(24,736
)
(26,648
)
Insurance customer relationship
intangible
-
(13
)
(51
)
(89
)
(127
)
Tangible assets
$
18,919,430
$
18,574,755
$
18,380,178
$
19,467,600
$
19,862,778
Common shares outstanding
179,789
182,709
186,258
191,626
198,701
Tangible common equity ratio
7.12
%
6.81
%
6.55
%
7.67
%
8.63
%
Tangible book value per common
share
$
7.50
$
6.93
$
6.46
$
7.80
$
8.63
Exposure to Puerto Rico Government
As of March 31, 2023, the Corporation had $340.0 million of
direct exposure to the Puerto Rico government, its municipalities,
and public corporations, an increase of $1.1 million when compared
to $338.9 million as of December 31, 2022. As of March 31, 2023,
approximately $183.4 million of the exposure consisted of loans and
obligations of municipalities in Puerto Rico that are supported by
assigned property tax revenues and for which, in most cases, the
good faith, credit, and unlimited taxing power of the applicable
municipality have been pledged to their repayment, and $113.1
million consisted of loans and obligations which are supported by
one or more specific sources of municipal revenues. The
Corporation’s total direct exposure to the Puerto Rico government
also included $10.2 million in a loan extended to an affiliate of
the Puerto Rico Electric Power Authority and $30.0 million in loans
to agencies of Puerto Rico public corporations. In addition, the
total direct exposure included obligations of the Puerto Rico
government, specifically a residential pass-through MBS issued by
the PRHFA, at an amortized cost of $3.3 million (fair value of $2.2
million as of March 31, 2023), included as part of the
Corporation’s available-for-sale debt securities portfolio. This
residential pass-through MBS issued by the PRHFA is collateralized
by certain second mortgages and had an unrealized loss of $1.1
million as of March 31, 2023, of which $0.4 million is due to
credit deterioration.
The aforementioned exposure to municipalities in Puerto Rico
included $165.8 million of financing arrangements with Puerto Rico
municipalities that were issued in bond form but underwritten as
loans with features that are typically found in commercial loans.
These bonds are accounted for as held-to-maturity debt securities.
As of March 31, 2023, the ACL for these securities was $7.6
million, compared to $8.3 million as of December 31, 2022.
As of March 31, 2023, the Corporation had $2.2 billion of public
sector deposits in Puerto Rico, compared to $2.3 billion as of
December 31, 2022. Approximately 25% of the public sector deposits
as of March 31, 2023, were from municipalities and municipal
agencies in Puerto Rico, and 75% were from public corporations, the
Puerto Rico central government and agencies, and U.S. federal
government agencies in Puerto Rico.
Conference Call / Webcast Information
First BanCorp.’s senior management will host an earnings
conference call and live webcast on Tuesday, April 25, 2023, at
10:00 a.m. (Eastern Time). The call may be accessed via a live
Internet webcast through the investor relations section of the
Corporation’s web site, fbpinvestor.com, or through a dial-in
telephone number at (833) 470-1428 or (404) 975-4839 for
international callers. The participant access code is 842558. The
Corporation recommends that listeners go to the web site at least
15 minutes prior to the call to download and install any necessary
software. Following the webcast presentation, a question and answer
session will be made available to research analysts and
institutional investors. A replay of the webcast will be archived
in the investor relations section of First BanCorp.’s website,
fbpinvestor.com, until April 25, 2024. A telephone replay will be
available one hour after the end of the conference call through May
25, 2023, at (866) 813-9403. The replay access code is 342184.
Safe Harbor
This press release may contain “forward-looking statements”
concerning the Corporation’s future economic, operational, and
financial performance. The words or phrases “expect,” “anticipate,”
“intend,” “should,” “would,” “will,” “plans,” “forecast,”
“believe,” and similar expressions are meant to identify
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and are subject to the
safe harbor created by such sections. The Corporation cautions
readers not to place undue reliance on any such forward-looking
statements, which speak only as of the date hereof, and advises
readers that any such forward-looking statements are not guarantees
of future performance and involve certain risks, uncertainties,
estimates, and assumptions by us that are difficult to predict.
Various factors, some of which are beyond our control, including,
but not limited to, the uncertainties more fully discussed in Part
I, Item 1A, “Risk Factors” of the Corporation’s Annual Report on
Form 10-K for the year ended December 31, 2022 and the following,
could cause actual results to differ materially from those
expressed in, or implied by, such forward-looking statements: the
impacts of rising interest rates and inflation on the Corporation,
including a decrease in demand for new loan originations and
refinancings, increased competition for borrowers, attrition in
deposits, a reduction in the fair value of the Corporation’s debt
securities portfolio, and an increase in non-interest expenses
which would impact the Corporation’s earnings and may adversely
impact origination volumes, liquidity, and financial performance;
volatility in the financial services industry, including failures
or rumored failures of other depository institutions, and actions
taken by governmental agencies to stabilize the financial system;
the effect of continued changes in the fiscal and monetary policies
and regulations of the U.S. federal government and the Puerto Rico
and other governments, including those determined by the Federal
Reserve Board, the Federal Reserve Bank of New York, the FDIC,
government-sponsored housing agencies and regulators in Puerto Rico
and the U.S. and British Virgin Islands; uncertainty as to the
ability of FirstBank to retain its core deposits and generate
sufficient cash flow through its wholesale funding sources, such as
securities sold under agreements to repurchase, FHLB advances, and
brokered CDs, which in turn affects its ability to make dividend
payments to the Corporation; adverse changes in general economic
conditions in Puerto Rico, the U.S., and the U.S. and British
Virgin Islands, including in the interest rate environment,
unemployment rates, market liquidity, housing absorption rates,
real estate markets, and U.S. capital markets, which may affect
funding sources, loan portfolio performance and credit quality,
market prices of investment securities, and demand for the
Corporation’s products and services, and which may reduce the
Corporation’s revenues and earnings and the value of the
Corporation’s assets; the impact of government financial assistance
for hurricane recovery and other disaster relief on economic
activity in Puerto Rico, and the timing and pace of disbursements
of funds earmarked for disaster relief; the long-term economic and
other effects of the COVID-19 pandemic and their impact on the
Corporation’s business, operations, and financial condition; the
Corporation’s ability to identify and prevent cyber-security
incidents, such as data security breaches, ransomware, malware,
“denial of service” attacks, “hacking,” identity theft, and
state-sponsored cyberthreats, and the occurrence of any, which may
result in misuse or misappropriation of confidential or proprietary
information, disruption, or damage to our systems, increased costs,
and losses or an adverse effect to our reputation; general
competitive factors and other market risks as well as the
implementation of strategic growth opportunities, including risks,
uncertainties, and other factors or events related to any business
acquisitions or dispositions; uncertainty as to the implementation
of the debt restructuring plan of Puerto Rico and the fiscal plan
for Puerto Rico as certified on April 3, 2023, by the oversight
board established by the Puerto Rico Oversight, Management, and
Economic Stability Act, or any revisions to it, on our clients and
loan portfolios, and any potential impact from future economic or
political developments and tax regulations in Puerto Rico; the
impact of changes in accounting standards, or assumptions in
applying those standards, on forecasts of economic variables
considered for the determination of the ACL; the ability of
FirstBank to realize the benefits of its net deferred tax assets;
environmental, social, and governance matters, including our
climate-related initiatives and commitments; the impacts of natural
or man-made disasters, widespread health emergencies, geopolitical
conflicts (including the ongoing conflict in Ukraine), terrorist
attacks, or other catastrophic external events, including impacts
of such events on general economic conditions and on the
Corporation’s assumptions regarding forecasts of economic
variables; the effect of changes in the interest rate environment,
including uncertainty about the effect of the cessation of the
London Interbank Offered Rate; any adverse change in the
Corporation’s ability to attract and retain clients and gain
acceptance from current and prospective customers for new products
and services, including those related to the offering of digital
banking and financial services; the risk that additional portions
of the unrealized losses in the Corporation’s debt securities
portfolio are determined to be credit-related, resulting in
additional charges to the provision for credit losses on the
Corporation’s available-for-sale debt securities portfolio; the
impacts of applicable legislative, tax, or regulatory changes on
the Corporation’s financial condition or performance; the risk of
possible failure or circumvention of the Corporation’s internal
controls and procedures and the risk that the Corporation’s risk
management policies may not be adequate; the risk that the FDIC may
further increase the deposit insurance premium and/or require
special assessments, causing an additional increase in the
Corporation’s non-interest expenses; any need to recognize
impairments on the Corporation’s financial instruments, goodwill,
and other intangible assets; the risk that the impact of the
occurrence of any of these uncertainties on the Corporation’s
capital would preclude further growth of FirstBank and preclude the
Corporation’s Board of Directors from declaring dividends; and
uncertainty as to whether FirstBank will be able to continue to
satisfy its regulators regarding, among other things, its asset
quality, liquidity plans, maintenance of capital levels, and
compliance with applicable laws, regulations and related
requirements. The Corporation does not undertake, and specifically
disclaims any obligation to update any “forward-looking statements”
to reflect occurrences or unanticipated events or circumstances
after the date of such statements, except as required by the
federal securities laws.
About First BanCorp.
First BanCorp. is the parent corporation of FirstBank Puerto
Rico, a state-chartered commercial bank with operations in Puerto
Rico, the U.S., and the British Virgin Islands and Florida, and of
FirstBank Insurance Agency. Among the subsidiaries of FirstBank
Puerto Rico are First Federal Finance Corp. and First Express, both
small loan companies. First BanCorp.’s shares of common stock trade
on the New York Stock Exchange under the symbol FBP. Additional
information about First BanCorp. may be found at
www.1firstbank.com.
EXHIBIT A
Table 1 – Condensed Consolidated Statements of Financial
Condition
As of
March 31, 2023
December 31, 2022
(In thousands, except for share
information)
ASSETS
Cash and due from banks
$
822,542
$
478,480
Money market investments:
Time deposits with other financial
institutions
300
300
Other short-term investments
759
1,725
Total money market investments
1,059
2,025
Debt securities available for sale, at
fair value (ACL of $449 as of March 31, 2023;
$458 as of December 31, 2022)
5,589,256
5,599,520
Debt securities held to maturity, at
amortized cost, net of ACL of $7,646 as of March 31, 2023
and $8,286 as of December 31, 2022 (fair
value 2023 - $419,752; 2022 - $427,115)
423,749
429,251
Total debt securities
6,013,005
6,028,771
Equity securities
66,714
55,289
Total investment securities
6,079,719
6,084,060
Loans, net of ACL (March 31, 2023 -
$265,567; December 31, 2022 - $260,464)
11,312,418
11,292,361
Loans held for sale, at lower of cost or
market
15,183
12,306
Total loans, net
11,327,601
11,304,667
Accrued interest receivable on loans and
investments
63,841
69,730
Premises and equipment, net
137,580
142,935
OREO
32,862
31,641
Deferred tax asset, net
154,780
155,584
Goodwill
38,611
38,611
Other intangible assets
19,073
21,118
Other assets
299,446
305,633
Total assets
$
18,977,114
$
18,634,484
LIABILITIES
Deposits:
Non-interest-bearing deposits
$
6,024,304
$
6,112,884
Interest-bearing deposits
10,027,661
10,030,583
Total deposits
16,051,965
16,143,467
Securities sold under agreements to
repurchase
172,982
75,133
Advances from the FHLB
925,000
675,000
Other borrowings
183,762
183,762
Accounts payable and other liabilities
237,812
231,582
Total liabilities
17,571,521
17,308,944
STOCKHOLDERSʼ EQUITY
Common stock, $0.10 par value, 223,663,116
shares issued (March 31, 2023 - 179,788,698 shares outstanding;
December 31, 2022 - 182,709,059 shares
outstanding)
22,366
22,366
Additional paid-in capital
959,912
970,722
Retained earnings
1,688,176
1,644,209
Treasury stock, at cost (March 31, 2023 -
43,874,418 shares; December 31, 2022 - 40,954,057 shares)
(547,311
)
(506,979
)
Accumulated other comprehensive loss
(717,550
)
(804,778
)
Total stockholdersʼ equity
1,405,593
1,325,540
Total liabilities and stockholdersʼ
equity
$
18,977,114
$
18,634,484
Table 2 – Condensed Consolidated Statements of Income
Quarter Ended
March 31, 2023
December 31, 2022
March 31, 2022
(In thousands, except per share
information)
Net interest income:
Interest income
$
242,396
$
233,452
$
197,854
Interest expense
41,511
27,879
12,230
Net interest income
200,885
205,573
185,624
Provision for credit losses - expense
(benefit):
Loans
16,256
15,651
(16,989
)
Unfunded loan commitments
(105
)
31
(178
)
Debt securities
(649
)
30
3,365
Provision for credit losses - expense
(benefit)
15,502
15,712
(13,802
)
Net interest income after provision for
credit losses
185,383
189,861
199,426
Non-interest income:
Service charges and fees on deposit
accounts
9,541
9,174
9,363
Mortgage banking activities
2,812
2,572
5,206
Card and processing income
10,918
10,601
9,681
Other non-interest income
9,247
7,253
8,608
Total non-interest income
32,518
29,600
32,858
Non-interest expenses:
Employees’ compensation and benefits
56,422
52,241
49,554
Occupancy and equipment
21,186
21,843
22,386
Business promotion
3,975
5,590
3,463
Professional service fees
11,973
12,669
10,594
Taxes, other than income taxes
5,112
5,211
5,018
Insurance and supervisory fees
4,501
3,973
3,908
Net gain on OREO operations
(1,996
)
(2,557
)
(720
)
Credit and debit card processing
expenses
5,318
6,362
4,121
Other non-interest expenses
8,777
7,599
8,335
Total non-interest expenses
115,268
112,931
106,659
Income before income taxes
102,633
106,530
125,625
Income tax expense
31,935
33,356
43,025
Net income
$
70,698
$
73,174
$
82,600
Net income attributable to common
stockholders
$
70,698
$
73,174
$
82,600
Earnings per common share:
Basic
$
0.39
$
0.40
$
0.42
Diluted
$
0.39
$
0.40
$
0.41
Table 3 – Selected Financial Data
Quarter Ended
March 31, 2023
December 31, 2022
March 31, 2022
(Shares in thousands)
Per Common Share Results:
Net earnings per share - basic
$
0.39
$
0.40
$
0.42
Net earnings per share - diluted
$
0.39
$
0.40
$
0.41
Cash dividends declared
$
0.14
$
0.12
$
0.10
Average shares outstanding
180,215
183,649
198,130
Average shares outstanding diluted
181,236
184,847
199,537
Book value per common share
$
7.82
$
7.25
$
8.96
Tangible book value per common share
(1)
$
7.50
$
6.93
$
8.63
Common Stock Price: End of period
$
11.42
$
12.72
$
13.12
Selected Financial Ratios (In
Percent):
Profitability:
Return on Average Assets
1.55
1.58
1.65
Return on Average Common Equity
21.00
22.37
16.64
Interest Rate Spread (2)
3.84
4.08
3.77
Net Interest Margin (2)
4.48
4.52
3.96
Efficiency ratio (3)
49.39
48.02
48.82
Capital and Other:
Average Total Equity to Average Total
Assets
7.36
7.05
9.94
Total capital
19.02
19.21
20.44
Common equity Tier 1 capital
16.33
16.53
17.71
Tier 1 capital
16.33
16.53
17.71
Leverage
10.57
10.70
10.35
Tangible common equity ratio (1)
7.12
6.81
8.63
Dividend payout ratio
35.69
30.12
23.81
Basic liquidity ratio (4)
21.42
22.48
32.55
Core liquidity ratio (5)
16.77
19.02
26.50
Loan to deposit ratio
72.22
71.64
64.18
Uninsured deposits, excluding fully
collateralized deposits, to total deposits
30.13
30.86
32.72
Asset Quality:
Allowance for credit losses for loans and
finance leases to total loans
held for investment
2.29
2.25
2.21
Net charge-offs (annualized) to average
loans outstanding
0.46
0.46
0.24
Provision for credit losses for loans and
finance leases - expense (benefit)
to net charge-offs
122.51
119.97
(257.64
)
Non-performing assets to total assets
0.68
0.69
0.79
Nonaccrual loans held for investment to
total loans held for investment
0.77
0.78
0.96
Allowance for credit losses for loans and
finance leases to total nonaccrual loans
held for investment
297.91
289.61
229.33
Allowance for credit losses for loans and
finance leases to total nonaccrual loans
held for investment, excluding residential
estate loans
503.62
552.26
421.64
(1)
Non-GAAP financial measures (as defined
above). Refer to Statement of Financial Condition above and Table 4
below for additional information about the components and a
reconciliation of these measures.
(2)
On a tax-equivalent basis and excluding
changes in the fair value of derivative instruments (non-GAAP
financial measure). Refer to Non-GAAP Disclosures above for
additional information and a reconciliation of these measures.
(3)
Non-interest expenses to the sum of net
interest income and non-interest income.
(4)
Defined as the sum of cash and cash
equivalents, free high quality liquid assets that could be
liquidated within one day, and available secured lines of credit
with the FHLB to total assets.
(5)
Defined as the sum of cash and cash
equivalents and free high quality liquid assets that could be
liquidated within one day to total assets.
Table 4 – Reconciliation of Net Interest Income to Net
Interest Income Excluding Valuations and on a Tax-Equivalent
Basis
The following table reconciles net interest income in accordance
with GAAP to net interest income excluding valuations, and net
interest income on a tax-equivalent basis for the first quarter of
2023 and fourth and first quarters of 2022. The table also
reconciles net interest spread and net interest margin to these
items excluding valuations, and on a tax-equivalent basis.
Quarter Ended
(Dollars in thousands)
March 31, 2023
December 31, 2022
March 31, 2022
Net Interest Income
Interest income - GAAP
$
242,396
$
233,452
$
197,854
Unrealized loss (gain) on derivative
instruments
6
5
(15
)
Interest income excluding valuations
242,402
233,457
197,839
Tax-equivalent adjustment
6,347
7,391
7,219
Interest income on a tax-equivalent basis
and excluding valuations
$
248,749
$
240,848
$
205,058
Interest expense - GAAP
$
41,511
$
27,879
$
12,230
Net interest income - GAAP
$
200,885
$
205,573
$
185,624
Net interest income excluding
valuations
$
200,891
$
205,578
$
185,609
Net interest income on a tax-equivalent
basis and excluding valuations
$
207,238
$
212,969
$
192,828
Average Balances
Loans and leases
$
11,519,399
$
11,364,963
$
11,106,855
Total securities, other short-term
investments and interest-bearing cash balances
7,232,347
7,314,293
8,647,087
Average Interest-Earning Assets
$
18,751,746
$
18,679,256
$
19,753,942
Average Interest-Bearing Liabilities
$
10,957,892
$
10,683,776
$
11,211,780
Average Yield/Rate
Average yield on interest-earning assets -
GAAP
5.24
%
4.96
%
4.06
%
Average rate on interest-bearing
liabilities - GAAP
1.54
%
1.04
%
0.44
%
Net interest spread - GAAP
3.70
%
3.92
%
3.62
%
Net interest margin - GAAP
4.34
%
4.37
%
3.81
%
Average yield on interest-earning assets
excluding valuations
5.24
%
4.96
%
4.06
%
Average rate on interest-bearing
liabilities excluding valuations
1.54
%
1.04
%
0.44
%
Net interest spread excluding
valuations
3.70
%
3.92
%
3.62
%
Net interest margin excluding
valuations
4.34
%
4.37
%
3.81
%
Average yield on interest-earning assets
on a tax-equivalent basis
and excluding valuations
5.38
%
5.12
%
4.21
%
Average rate on interest-bearing
liabilities
1.54
%
1.04
%
0.44
%
Net interest spread on a tax-equivalent
basis and excluding valuations
3.84
%
4.08
%
3.77
%
Net interest margin on a tax-equivalent
basis and excluding valuations
4.48
%
4.52
%
3.96
%
Table 5 – Quarterly Statement of Average Interest-Earning
Assets and Average Interest-Bearing Liabilities (On a
Tax-Equivalent Basis)
Average Volume
Interest income (1) /
expense
Average Rate (1)
Quarter Ended
March 31,
December 31,
March 31,
March 31,
December 31,
March 31,
March 31,
December 31,
March 31,
2023
2022
2022
2023
2022
2022
2023
2022
2022
(Dollars in thousands)
Interest-earning assets:
Money market and other short-term
investments
$
404,249
$
394,471
$
1,835,766
$
4,650
$
3,444
$
820
4.67
%
3.46
%
0.18
%
Government obligations (2)
2,909,976
2,910,733
2,736,095
10,765
10,386
8,232
1.50
%
1.42
%
1.22
%
Mortgage-backed securities
3,864,145
3,973,307
4,041,975
19,396
20,838
19,420
2.04
%
2.08
%
1.95
%
FHLB stock
40,838
22,292
21,465
421
284
287
4.18
%
5.05
%
5.42
%
Other investments
13,139
13,490
11,786
139
48
21
4.29
%
1.41
%
0.72
%
Total investments (3)
7,232,347
7,314,293
8,647,087
35,371
35,000
28,780
1.98
%
1.90
%
1.35
%
Residential mortgage loans
2,835,240
2,839,268
2,961,456
39,794
39,225
40,687
5.69
%
5.48
%
5.57
%
Construction loans
146,041
128,845
114,732
2,676
2,227
1,524
7.43
%
6.86
%
5.39
%
C&I and commercial mortgage loans
5,167,727
5,127,028
5,103,870
85,885
81,464
62,004
6.74
%
6.30
%
4.93
%
Finance leases
735,500
691,585
588,200
13,809
12,769
10,912
7.61
%
7.33
%
7.52
%
Consumer loans
2,634,891
2,578,237
2,338,597
71,214
70,163
61,151
10.96
%
10.80
%
10.60
%
Total loans (4) (5)
11,519,399
11,364,963
11,106,855
213,378
205,848
176,278
7.51
%
7.19
%
6.44
%
Total interest-earning assets
$
18,751,746
$
18,679,256
$
19,753,942
$
248,749
$
240,848
$
205,058
5.38
%
5.12
%
4.21
%
Interest-bearing liabilities:
Time deposits
$
2,342,360
$
2,180,928
$
2,363,045
$
10,782
$
6,055
$
4,421
1.87
%
1.10
%
0.76
%
Brokered CDs
166,698
47,304
91,713
1,587
286
477
3.86
%
2.40
%
2.11
%
Other interest-bearing deposits
7,544,901
7,909,759
8,132,149
17,516
14,696
2,754
0.94
%
0.74
%
0.14
%
Securities sold under agreements to
repurchase
91,004
139,740
241,111
1,069
1,407
2,182
4.76
%
3.99
%
3.67
%
Advances from the FHLB
629,167
220,652
200,000
7,176
2,469
1,063
4.63
%
4.44
%
2.16
%
Other borrowings
183,762
185,393
183,762
3,381
2,966
1,333
7.46
%
6.35
%
2.94
%
Total interest-bearing liabilities
$
10,957,892
$
10,683,776
$
11,211,780
$
41,511
$
27,879
$
12,230
1.54
%
1.04
%
0.44
%
Net interest income
$
207,238
$
212,969
$
192,828
Interest rate spread
3.84
%
4.08
%
3.77
%
Net interest margin
4.48
%
4.52
%
3.96
%
(1)
On a tax-equivalent basis. The
tax-equivalent yield was estimated by dividing the interest rate
spread on exempt assets by 1 less the Puerto Rico statutory tax
rate of 37.5% and adding to it the cost of interest-bearing
liabilities. When adjusted to a tax-equivalent basis, yields on
taxable and exempt assets are comparable. Changes in the fair value
of derivative instruments are excluded from interest income because
the changes in valuation do not affect interest paid or received.
Refer to Non-GAAP Disclosures and Table 4 above for additional
information and a reconciliation of these measures.
(2)
Government obligations include debt issued
by government-sponsored agencies.
(3)
Unrealized gains and losses on
available-for-sale debt securities are excluded from the average
volumes.
(4)
Average loan balances include the average
of non-performing loans.
(5)
Interest income on loans includes $3.1
million, $2.7 million, and $2.6 million for the quarters ended
March 31, 2023, December 31, 2022, and March 31, 2022,
respectively, of income from prepayment penalties and late fees
related to the Corporation’s loan portfolio.
Table 6 – Loan Portfolio by Geography
As of March 31,2023
Puerto Rico
Virgin Islands
United States
Consolidated
(In thousands)
Residential mortgage loans
$
2,205,659
$
176,123
$
429,746
$
2,811,528
Commercial loans:
Construction loans
44,297
3,898
95,469
143,664
Commercial mortgage loans
1,766,479
62,694
524,486
2,353,659
Commercial and Industrial loans
1,872,215
69,013
920,961
2,862,189
Commercial loans
3,682,991
135,605
1,540,916
5,359,512
Finance leases
755,482
-
-
755,482
Consumer loans
2,579,532
63,231
8,700
2,651,463
Loans held for investment
9,223,664
374,959
1,979,362
11,577,985
Loans held for sale
14,830
-
353
15,183
Total loans
$
9,238,494
$
374,959
$
1,979,715
$
11,593,168
As of December 31,
2022
Puerto Rico
Virgin Islands
United States
Consolidated
(In thousands)
Residential mortgage loans
$
2,237,983
$
179,917
$
429,390
$
2,847,290
Commercial loans:
Construction loans
30,529
4,243
98,181
132,953
Commercial mortgage loans
1,768,890
65,314
524,647
2,358,851
Commercial and Industrial loans
1,791,235
68,874
1,026,154
2,886,263
Commercial loans
3,590,654
138,431
1,648,982
5,378,067
Finance leases
718,230
-
-
718,230
Consumer loans
2,537,840
61,419
9,979
2,609,238
Loans held for investment
9,084,707
379,767
2,088,351
11,552,825
Loans held for sale
12,306
-
-
12,306
Total loans
$
9,097,013
$
379,767
$
2,088,351
$
11,565,131
Table 7 – Non-Performing Assets by Geography
As of March 31,2023
(In thousands)
Puerto Rico
Virgin Islands
United States
Total
Nonaccrual loans held for investment:
Residential mortgage
$
22,924
$
6,069
$
7,417
$
36,410
Commercial mortgage
13,677
7,921
-
21,598
Commercial and Industrial
4,589
1,163
7,652
13,404
Construction
737
1,057
-
1,794
Consumer and finance leases
15,483
306
147
15,936
Total nonaccrual loans held for
investment
57,410
16,516
15,216
89,142
OREO
28,323
4,539
-
32,862
Other repossessed property
4,620
112
11
4,743
Other assets (1)
2,203
-
-
2,203
Total non-performing assets (2)
$
92,556
$
21,167
$
15,227
$
128,950
Past due loans 90 days and still accruing
(3)
$
72,000
$
2,380
$
-
$
74,380
As of December 31,
2022
(In thousands)
Puerto Rico
Virgin Islands
United States
Total
Nonaccrual loans held for investment:
Residential mortgage
$
28,857
$
6,614
$
7,301
$
42,772
Commercial mortgage
14,341
7,978
-
22,319
Commercial and Industrial
5,859
1,179
792
7,830
Construction
831
1,377
-
2,208
Consumer and finance leases
14,142
469
195
14,806
Total nonaccrual loans held for
investment
64,030
17,617
8,288
89,935
OREO
28,135
3,475
31
31,641
Other repossessed property
5,275
76
29
5,380
Other assets (1)
2,202
-
-
2,202
Total non-performing assets (2)
$
99,642
$
21,168
$
8,348
$
129,158
Past due loans 90 days and still accruing
(3)
$
76,417
$
4,100
$
-
$
80,517
(1)
Residential pass-through MBS issued by the
PRHFA held as part of the available-for-sale debt securities
portfolio.
(2)
Excludes PCD loans previously accounted
for under ASC Subtopic 310-30 for which the Corporation made the
accounting policy election of maintaining pools of loans as “units
of account” both at the time of adoption of CECL on January 1, 2020
and on an ongoing basis for credit loss measurement. These loans
will continue to be excluded from nonaccrual loan statistics as
long as the Corporation can reasonably estimate the timing and
amount of cash flows expected to be collected on the loan pools.
The portion of such loans contractually past due 90 days or more
amounted to $10.4 million as of March 31, 2023 (December 31, 2022 -
$12.0 million).
(3)
These include rebooked loans, which were
previously pooled into GNMA securities, amounting to $7.1 million
as of March 31, 2023 (December 31, 2022 - $10.3 million). Under the
GNMA program, the Corporation has the option but not the obligation
to repurchase loans that meet GNMA's specified delinquency
criteria. For accounting purposes, the loans subject to the
repurchase option are required to be reflected on the financial
statements with an offsetting liability.
Table 8 – Allowance for Credit Losses on Loans and Finance
Leases
Quarter Ended
March 31,
December 31,
March 31,
2023
2022
2022
(Dollars in thousands)
Allowance for credit losses on loans and
finance leases, beginning of period
$
260,464
$
257,859
$
269,030
Impact of adoption of ASU 2022-02
2,116
-
-
Provision for credit losses on loans and
finance leases expense (benefit)
16,256
15,651
(16,989
)
Net (charge-offs) recoveries of loans and
finance leases:
Residential mortgage
(486
)
(498
)
(1,146
)
Commercial mortgage
150
10
7
Commercial and Industrial
(28
)
(1,360
)
745
Construction
63
587
8
Consumer loans and finance leases
(12,968
)
(11,785
)
(6,208
)
Net charge-offs
(13,269
)
(13,046
)
(6,594
)
Allowance for credit losses on loans and
finance leases, end of period
$
265,567
$
260,464
$
245,447
Allowance for credit losses on loans and
finance leases to period end total
loans held for investment
2.29%
2.25%
2.21%
Net charge-offs (annualized) to average
loans outstanding during the period
0.46%
0.46%
0.24%
Provision for credit losses on loans and
finance leases expense (benefit) to net charge-offs during the
period
1.23x
1.20x
-2.58x
Table 9 – Annualized Net Charge-Offs (Recoveries) to Average
Loans
Quarter Ended
March 31,2023
December 31, 2022
March 31,2022
Residential mortgage
0.07%
0.07%
0.15%
Commercial mortgage
-0.03%
0.00%
0.00%
Commercial and Industrial
0.00%
0.19%
-0.10%
Construction
-0.17%
-1.82%
-0.03%
Consumer loans and finance leases
1.54%
1.44%
0.85%
Total loans
0.46%
0.46%
0.24%
Table 10 – Deposits
As of
March 31, 2023
December 31, 2022
(In thousands)
Time deposits
$
2,418,611
$
2,250,876
Interest-bearing saving and checking
accounts
7,356,145
7,673,881
Non-interest bearing deposits
6,024,304
6,112,884
Total deposits, excluding brokered CDs
(1)
15,799,060
16,037,641
Brokered CDs
252,905
105,826
Total deposits
$
16,051,965
$
16,143,467
Total deposits, excluding brokered CDs and
government deposits
$
13,125,868
$
13,268,585
(1)
As of March 31, 2023 and December 31,
2022, government deposits amounted to $2.7 billion and $2.8
billion, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230425005389/en/
First BanCorp. Ramon Rodriguez Senior Vice President
Corporate Strategy and Investor Relations
ramon.rodriguez@firstbankpr.com (787) 729-8200 Ext. 82179
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