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 $73.5
million, or $0.44 per diluted share, for the first quarter of 2024,
compared to $79.5 million, or $0.46 per diluted share, for the
fourth quarter of 2023, and $70.7 million, or $0.39 per diluted
share, for the first quarter of 2023.
Aurelio Alemán, President and Chief
Executive Officer of First BanCorp., commented: “We continue to
successfully navigate the challenging interest rate cycle
delivering another quarter of strong operating results. Consistent
with our guidance, we grew the loan portfolio for the ninth
consecutive quarter, prudently managed our expense base, sustained
our profitability profile, and returned over 100% of earnings in
the form of buybacks and dividends during the first quarter.
Core deposit balances stabilized during
the quarter although we continue to see internal migration of
customers seeking higher yields in time deposits, as expected. That
said, we remain well positioned to redeploy investment portfolio
cash flows into higher-yielding assets under a higher-for-longer
interest rate environment which should be margin accretive for the
year. Early delinquency metrics improved and we took advantage of
market opportunities to sell a portfolio of previously charged-off
consumer loans which positively impacted the provision expense for
the quarter.
Multiple technological investments are
planned throughout the year to continue strengthening our
competitive position in the markets we serve, including the
recently announced strategic partnership with nCino which we
believe will simplify our commercial lending operations and allow
for a more seamless and agile interaction with our clients. We have
ample balance sheet flexibility to execute on our business plans
while navigating the current operating environment and look forward
to sharing our progress with all stakeholders over the course of
the year."
Q1
Q4
Q1
2024
2023
2023
(in thousands, except per share and
financial ratios)
Financial Highlights
Net interest income
$196,520
$196,682
$200,885
Provision for credit losses
$12,167
$18,812
$15,502
Non-interest income
$33,983
$33,609
$32,518
Non-interest expenses
$120,923
$126,605
$115,268
Income before income taxes
$97,413
$84,874
$102,633
Income tax expense
$23,955
$5,385
$31,935
Net Income
$73,458
$79,489
$70,698
Selected Financial
Data
Net Interest Margin
4.16%
4.14%
4.34%
Efficiency Ratio
52.46%
54.98%
49.39%
Earnings per share - diluted
$0.44
$0.46
$0.39
Book Value per Share
$8.88
$8.85
$7.82
Tangible Book Value per Share (1)
$8.58
$8.54
$7.50
Return on Average Common Equity
19.56%
23.69%
21.00%
Return on Average Assets
1.56%
1.70%
1.55%
(1) Represents a non-GAAP financial
measure. Refer to “Non-GAAP Financial Measures” for the definition
of and additional information about this non-GAAP financial
measure.
Results for First Quarter of 2024 compared
to Fourth Quarter 2023
Profitability
Net Income – $73.5 million, or
$0.44 per diluted share compared to $79.5 million, or $0.46 per
diluted share. Net income for the respective periods included $0.9
million ($0.6 million after-tax) and $6.3 million ($3.9 million
after-tax, or a decrease of $0.03 per diluted share), respectively,
related to the estimated Federal Deposit Insurance Corporation
(“FDIC”) special assessment expense.
Income before income taxes – $97.4
million compared to $84.9 million.
Adjusted pre-tax, pre-provision income
(Non-GAAP)(1) – $110.5 million, compared to $110.0 million.
Net interest income – $196.5
million compared to $196.7 million. The decrease includes a net
reduction of $1.1 million associated with the effect of one less
day in the first quarter of 2024. Net interest margin increased to
4.16%, compared to 4.14%.
Provision for credit losses – $12.2
million compared to $18.8 million. First quarter of 2024 includes a
$9.5 million recovery associated with a bulk sale of fully
charged-off consumer loans, a $5.0 million recovery of a commercial
and industrial loan and higher volume of loans.
Non-interest expenses – $120.9
million compared to $126.6 million, mainly driven by the
aforementioned $6.3 million FDIC special assessment recognized in
the fourth quarter of 2023. The efficiency ratio was 52.46%,
compared to 54.98%. On a non-GAAP basis, excluding the FDIC special
assessment, the adjusted efficiency ratio(1) was 52.05% and 52.24%,
respectively.
Balance Sheet
Total loans – grew by $130.7
million, primarily attributed to growth in the commercial and
construction loan portfolios in the Puerto Rico and Florida
regions. Total loan originations, other than credit card
utilization activity, of $1.1 billion, down $214.9 million.
Core deposits (other than brokered and
government deposits) – $12.6 billion, decreased by $25.8
million, reflecting a decline of $28.3 million in the Florida
region, partially offset by increases of $1.3 million in the Virgin
Islands region and $1.2 million in the Puerto Rico region. This
decrease is net of a $93.9 million increase in time deposits.
Government deposits (fully
collateralized) – increased by $73.0 million and totaled $3.2
billion. Variance reflects growth of $56.8 million in the Puerto
Rico region, $14.2 million in the Virgin Islands region, and $2.0
million in the Florida region.
Asset
Quality
Allowance for credit losses (“ACL”)
coverage ratio – 2.14%, compared to 2.15%. Annualized net
charge-offs to average loans ratio decreased to 0.37% (31 basis
points decrease due to aforementioned bulk sale), compared to
0.69%.
Non-performing assets – Increased
by $3.7 million to $129.6 million, mainly driven by inflow of a
$10.5 million commercial and industrial loan in the Florida region,
partially offset by lower other real estate owned (“OREO”).
Liquidity
and
Capital
Liquidity – Cash and cash
equivalents increased to $684.5 million, compared to $663.2
million. When adding $2.0 billion of free high-quality liquid
securities that could be liquidated or pledged within one day,
total core liquidity amounted to $2.7 billion, or 14.45% of total
assets, compared to 14.93%. Including the $972.5 million in
available lending capacity at the Federal Home Loan Bank (“FHLB”),
available liquidity amounted to 19.60% of total assets, compared to
19.82%.
Capital – Repurchased $50.0 million
of common stock and paid $26.6 million in common stock dividends.
Capital ratios exceeded required regulatory levels. The
Corporation’s estimated total capital, common equity tier 1
(“CET1”) capital, tier 1 capital, and leverage ratios were 18.36%,
15.90%, 15.90%, and 10.65%, respectively, as of March 31, 2024. On
a non-GAAP basis, the tangible common equity ratio(1) amounted to
7.59% compared to 7.67%.
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.
Certain non-GAAP financial measures, such as adjusted net income
and adjusted earnings per diluted share, adjusted pre-tax,
pre-provision income, adjusted non-interest expenses, and adjusted
efficiency ratio exclude the effect of items that management
believes are not reflective of core operating performance (the
“Special Items”). Other non-GAAP financial measures include
adjusted net interest income and adjusted net interest income
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 2024 and fourth
quarter of 2023 included the following Special Item:
FDIC Special Assessment Expense
On November 16, 2023, the FDIC approved a final rule to
implement a special assessment to recover the loss to the Deposit
Insurance Fund associated with protecting uninsured deposits
following certain financial institution failures during the first
half of 2023. Under the final rule, the FDIC will collect the
special assessment at a quarterly rate of 3.36 basis points to be
applied to the special assessment base during an eight-quarter
collection period. The base for the special assessment is equal to
the estimated uninsured deposits reported for the December 31, 2022
reporting period, adjusted to exclude the first $5 billion of such
amount. As such, during the fourth quarter of 2023, the Corporation
recorded a charge of $6.3 million ($3.9 million after-tax,
calculated based on the statutory tax rate of 37.5%).
Under the final rule, the FDIC retains the ability to cease
collection early, extend the special assessment collection period,
or impose an additional shortfall special assessment on a one-time
basis after the receiverships of the two failed institutions are
terminated. During the first quarter of 2024, the FDIC informed
that the estimated loss attributable to the protection of uninsured
depositors of the financial institution failures increased, when
compared with the estimate described in the final rule. As such,
the Corporation recorded a $0.9 million ($0.6 million after-tax,
calculated based on the statutory tax rate of 37.5%) additional
expense to increase the estimated FDIC special assessment to $7.3
million.
The FDIC special assessment is reflected in the condensed
consolidated statements of income as part of “FDIC deposit
insurance” expenses.
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, which are 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 intangible assets. Tangible assets are
total assets less goodwill and other intangible assets. Tangible
common equity ratio is tangible common equity divided by tangible
assets. Tangible book value per common share is tangible assets
divided by common shares outstanding. Refer to the Tangible Common
Equity section for a reconciliation of the Corporation’s tangible
common equity and tangible assets to the most comparable GAAP
items. 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. Refer to Exhibit A
hereto for a reconciliation of the Corporation’s net interest
income to adjusted net interest income excluding valuations, and on
a tax-equivalent basis. 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.
NET INCOME AND RECONCILIATION TO ADJUSTED NET INCOME
(NON-GAAP)
Net income was $73.5 million for the first quarter of 2024, or
$0.44 per diluted share, compared to $79.5 million, or $0.46 per
diluted share, for the fourth quarter of 2023. The following table
reconciles, for the first quarter of 2024 and fourth quarter of
2023, net income to adjusted net income and adjusted earnings per
diluted share, which are non-GAAP financial measures that exclude
the significant Special Item identified above, and shows, for the
first quarter of 2023, net income and earnings per diluted
share.
Quarter Ended
March 31, 2024
December 31, 2023
March 31, 2023
(In thousands, except per share
information)
Net income, as reported (GAAP)
$
73,458
$
79,489
$
70,698
Adjustments:
FDIC special assessment expense
947
6,311
-
Income tax impact of adjustments (1)
(355
)
(2,367
)
-
Adjusted net income attributable to common
stockholders (non-GAAP)
$
74,050
$
83,433
$
70,698
Weighted-average diluted shares
outstanding
167,798
171,351
181,236
Earnings Per Share - diluted (GAAP)
$
0.44
$
0.46
$
0.39
Adjusted Earnings Per Share - diluted
(non-GAAP)
$
0.44
$
0.49
$
0.39
(1) See Non-GAAP Disclosures - Special
Items - FDIC Special Assessment Expense above for discussion of the
individual tax impact related to the above adjustments.
INCOME BEFORE INCOME TAXES AND RECONCILIATION TO ADJUSTED
PRE-TAX, PRE-PROVISION INCOME (NON-GAAP)
Income before income taxes was $97.4 million for the first
quarter of 2024, compared to $84.9 million for the fourth quarter
of 2023. Adjusted pre-tax, pre-provision income was $110.5 million
for the first quarter of 2024, compared to $110.0 million for the
fourth quarter of 2023. The following table reconciles income
before income taxes to adjusted pre-tax, pre-provision income for
the last five quarters:
Quarter Ended
March 31, 2024
December 31, 2023
September 30, 2023
June 30, 2023
March 31, 2023
(Dollars in thousands)
Income before income taxes
$
97,413
$
84,874
$
108,990
$
100,939
$
102,633
Add: Provision for credit losses
expense
12,167
18,812
4,396
22,230
15,502
Add: FDIC special assessment expense
947
6,311
-
-
-
Less: Gain recognized from legal
settlement
-
-
-
(3,600
)
-
Less: Gain on early extinguishment of
debt
-
-
-
(1,605
)
-
Adjusted pre-tax, pre-provision income
(1)
$
110,527
$
109,997
$
113,386
$
117,964
$
118,135
Change from most recent prior period
(amount)
$
530
$
(3,389
)
$
(4,578
)
$
(171
)
$
(4,107
)
Change from most recent prior period
(percentage)
0.5
%
-3.0
%
-3.9
%
-0.1
%
-3.4
%
(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, 2024
December 31, 2023
September 30, 2023
June 30, 2023
March 31, 2023
Net Interest Income
Interest income
$
268,505
$
265,481
$
263,405
$
252,204
$
242,396
Interest expense
71,985
68,799
63,677
52,389
41,511
Net interest income
$
196,520
$
196,682
$
199,728
$
199,815
$
200,885
Average Balances
Loans and leases
$
12,207,840
$
12,004,881
$
11,783,456
$
11,591,516
$
11,519,399
Total securities, other short-term
investments and interest-bearing cash balances
6,720,395
6,835,407
7,325,226
7,333,989
7,232,347
Average interest-earning assets
$
18,928,235
$
18,840,288
$
19,108,682
$
18,925,505
$
18,751,746
Average interest-bearing liabilities
$
11,838,159
$
11,665,459
$
11,671,938
$
11,176,385
$
10,957,892
Average Yield/Rate
Average yield on interest-earning assets -
GAAP
5.69
%
5.59
%
5.47
%
5.35
%
5.24
%
Average rate on interest-bearing
liabilities - GAAP
2.44
%
2.34
%
2.16
%
1.88
%
1.54
%
Net interest spread - GAAP
3.25
%
3.25
%
3.31
%
3.47
%
3.70
%
Net interest margin - GAAP
4.16
%
4.14
%
4.15
%
4.23
%
4.34
%
Net interest income amounted to $196.5 million for the first
quarter of 2024, a decrease of $0.2 million, compared to $196.7
million for the fourth quarter of 2023, which includes a net
reduction of approximately $1.1 million associated with the effect
of one less day in the first quarter of 2024. The decrease in net
interest income reflects the following:
- A $3.3 million net increase in interest expense on
interest-bearing deposits, consisting of:
-
A $2.2 million increase in interest
expense on brokered CDs, primarily related to a $177.7 million
increase in the average balance of this portfolio.
-
A $2.1 million increase in interest
expense on time deposits, excluding brokered CDs, mainly due to
approximately $1.6 million associated with higher rates paid in the
first quarter of 2024 on new issuances and renewals, and $0.8
million of additional interest expense associated with a $99.5
million increase in the average balance, partially offset by $0.3
million associated with the effect of one less day in the first
quarter of 2024. The average cost of non-brokered time deposits in
the first quarter of 2024 increased 22 basis points to 3.39% when
compared to the previous quarter.
Partially offset by:
-
A $1.0 million decrease in interest
expense on interest-bearing checking and saving accounts, of which
approximately $0.4 million was driven by a decrease in average
rates paid in the first quarter of 2024, primarily on public sector
deposits; $0.3 million was due to a $100.9 million decrease in the
average balance; and $0.3 million was associated with the effect of
one less day in the first quarter of 2024. The average cost of
interest-bearing checking and saving accounts, excluding public
sector deposits, remained stable at 0.75% in the first quarter of
2024, when compared to the previous quarter.
- A $0.5 million net decrease in investment securities, driven by
a $0.3 million decrease in interest income on debt securities
mainly associated with a $146.4 million decrease in the average
balance and a $0.2 million decrease in interest income associated
with dividends received on other equity securities during the
fourth quarter of 2023.
Partially offset by:
- A $3.2 million net increase in interest income on loans,
consisting of:
-
A $2.5 million increase in interest income
on commercial and construction loans, due to a $3.6 million
increase in interest income associated with a $156.9 million
increase in the average balance of this portfolio, which includes
the full effect of the $150.0 million commercial and industrial
participated loan funded late in the fourth quarter of 2023 in
connection with the financial closing of a public-private
partnership (P3) for improvement of infrastructure for toll roads,
and higher market interest rates. This variance was partially
offset by $1.1 million associated with the effect of one less day
in the first quarter of 2024.
-
A $0.9 million increase in interest income
on consumer loans and finance leases, due to a $1.6 million
increase in interest income related to an increase of $48.2 million
in the average balance of this portfolio, mainly in the auto loans
and finance leases portfolios, and higher yields, partially offset
by $0.7 million associated with the effect of one less day in the
first quarter of 2024.
Partially offset by:
-
A $0.2 million decrease in interest income
on residential mortgage loans, mainly driven by higher collections
on nonaccrual loans during the fourth quarter of 2023, including
$0.5 million recognized on the payoff of a nonaccrual loan in the
Puerto Rico region.
- A $0.3 million increase in interest income from
interest-bearing cash balances, driven by a $29.4 million increase
in the average balance of interest-bearing cash balances, primarily
consisting of cash balances deposited at the Federal Reserve Bank
(“FED”).
Net interest margin for the first quarter of 2024 was 4.16%, a 2
basis points increase when compared to the fourth quarter of 2023,
mostly reflecting a change in asset mix from lower-yielding
interest-earning assets to higher-yielding interest-earning assets,
partially offset by an increase in the cost of interest-bearing
deposits.
NON-INTEREST INCOME
The following table sets forth information concerning
non-interest income for the last five quarters:
Quarter Ended
March 31, 2024
December 31, 2023
September 30, 2023
June 30, 2023
March 31, 2023
(In thousands)
Service charges and fees on deposit
accounts
$
9,662
$
9,662
$
9,552
$
9,287
$
9,541
Mortgage banking activities
2,882
2,094
2,821
2,860
2,812
Gain on early extinguishment of debt
-
-
-
1,605
-
Insurance commission income
5,507
2,379
2,790
2,747
4,847
Card and processing income
11,312
11,015
10,841
11,135
10,918
Other non-interest income
4,620
8,459
4,292
8,637
4,400
Non-interest income
$
33,983
$
33,609
$
30,296
$
36,271
$
32,518
Non-interest income increased by $0.4 million to $34.0 million
for the first quarter of 2024, compared to $33.6 million for the
fourth quarter of 2023, mainly due to:
- A $3.1 million increase in insurance commission income mainly
driven by $3.2 million in seasonal contingent commissions recorded
in the first quarter of 2024 based on the prior year’s production
of insurance policies.
- A $0.8 million increase in revenues from mortgage banking
activities, mainly driven by an increase in the net realized gain
on sales of residential mortgage loans in the secondary market due
to a higher volume of sales and higher margins. During the first
quarter of 2024 and fourth quarter of 2023, net realized gains of
$1.1 million and $0.4 million, respectively, were recognized as a
result of Government National Mortgage Association (“GNMA”)
securitization transactions and whole loan sales to U.S.
government-sponsored enterprises amounting to $31.5 million and
$23.7 million respectively.
- A $0.3 million increase in card and processing income, mainly
in merchant-related fees, due to higher transactional volumes.
Partially offset by:
- A $3.8 million decrease in other non-interest income, mainly
driven by a $3.0 million gain recognized on the sale of a banking
premise in the Florida region during the fourth quarter of
2023.
NON-INTEREST EXPENSES
The following table sets forth information concerning
non-interest expenses for the last five quarters:
Quarter Ended
March 31, 2024
December 31, 2023
September 30, 2023
June 30, 2023
March 31, 2023
(In thousands)
Employees' compensation and benefits
$
59,506
$
55,584
$
56,535
$
54,314
$
56,422
Occupancy and equipment
21,381
21,847
21,781
21,097
21,186
Business promotion
3,842
6,725
4,759
4,167
3,975
Professional service fees:
Collections, appraisals and other
credit-related fees
1,366
952
930
1,231
848
Outsourcing technology services
7,469
7,003
7,261
7,278
8,141
Other professional fees
3,841
3,295
2,831
3,087
2,984
Taxes, other than income taxes
5,129
5,535
5,465
5,124
5,112
FDIC deposit insurance
3,102
8,454
2,143
2,143
2,133
Other insurance and supervisory fees
2,293
2,308
2,356
2,352
2,368
Net gain on OREO operations
(1,452
)
(1,005
)
(2,153
)
(1,984
)
(1,996
)
Credit and debit card processing
expenses
5,751
7,360
6,779
6,540
5,318
Communications
2,097
2,134
2,219
1,992
2,216
Other non-interest expenses
6,598
6,413
5,732
5,576
6,561
Total non-interest expenses
$
120,923
$
126,605
$
116,638
$
112,917
$
115,268
Non-interest expenses amounted to $120.9 million in the first
quarter of 2024, a decrease of $5.7 million, from $126.6 million in
the fourth quarter of 2023. Non-interest expenses for the first
quarter of 2024 and fourth quarter of 2023 include the
aforementioned FDIC special assessment expense of $0.9 million and
$6.3 million, respectively. On a non-GAAP basis, excluding the
effect of this Special Item, adjusted non-interest expenses
decreased by $0.3 million mainly due to:
- A $2.9 million decrease in business promotion expenses, mainly
as a result of decreases in advertising and public relations
activities.
- A $1.6 million decrease in credit and debit card processing
expenses, mainly due to $1.3 million in certain credit card expense
reimbursements recognized during the first quarter of 2024.
- A $0.4 million decrease in occupancy and equipment expenses, in
part due to a decrease in depreciation charges.
- A $0.4 million increase in net gain on OREO operations, mainly
driven by an increase in net realized gains on sales of OREO
properties, primarily residential properties in Puerto Rico.
- A $0.4 million decrease in taxes, other than income taxes,
mainly in the municipal tax accrual.
Partially offset by:
- A $3.9 million increase in employees’ compensation and benefits
expense, mainly driven by a seasonal increase in payroll taxes and
bonuses, and stock-based compensation expense of
retirement-eligible employees.
- A $1.4 million increase in professional service fees, mainly in
consulting fees, in part driven to information technology
infrastructure enhancements.
INCOME TAXES
The Corporation recorded an income tax expense of $23.9 million
for the first quarter of 2024, compared to $5.4 million for the
fourth quarter of 2023. The fourth quarter of 2023 included a
reduction in the effective tax rate for the year related to higher
than previously forecasted business activities during the fourth
quarter with preferential tax treatment under the Puerto Rico tax
code, coupled with a lower pre-tax income.
The Corporation’s estimated annual effective tax rate, excluding
entities with pre-tax losses from which a tax benefit cannot be
recognized and discrete items, was 24.3% for the first quarter of
2024, compared to 23.5% for the fourth quarter of 2023. As of March
31, 2024, the Corporation had a deferred tax asset of $147.7
million, net of a valuation allowance of $140.1 million against the
deferred tax assets.
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, 2024
December 31, 2023
September 30, 2023
June 30, 2023
March 31, 2023
Nonaccrual loans held for investment:
Residential mortgage
$
32,685
$
32,239
$
31,946
$
33,252
$
36,410
Construction
1,498
1,569
1,640
1,677
1,794
Commercial mortgage
11,976
12,205
21,632
21,536
21,598
Commercial and Industrial
25,067
15,250
18,809
9,194
13,404
Consumer and finance leases
21,739
22,444
19,137
16,362
15,936
Total nonaccrual loans held for
investment
$
92,965
$
83,707
$
93,164
$
82,021
$
89,142
OREO
28,864
32,669
28,563
31,571
32,862
Other repossessed property
6,226
8,115
7,063
5,404
4,743
Other assets (1)
1,551
1,415
1,448
2,111
2,203
Total non-performing assets (2)
$
129,606
$
125,906
$
130,238
$
121,107
$
128,950
Past due loans 90 days and still accruing
(3)
$
57,515
$
59,452
$
62,892
$
63,211
$
74,380
Nonaccrual loans held for investment to
total loans held for investment
0.76
%
0.69
%
0.78
%
0.70
%
0.77
%
Nonaccrual loans to total loans
0.75
%
0.69
%
0.78
%
0.70
%
0.77
%
Non-performing assets to total assets
0.69
%
0.67
%
0.70
%
0.63
%
0.68
%
(1)
Residential pass-through mortgage-backed
security ("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 $8.6
million as of March 31, 2024 (December 31, 2023- $8.3 million;
September 30, 2023 - $8.9 million; June 30, 2023 - $9.5 million;
March 31, 2023 - $10.4 million).
(3)
These include rebooked loans, which were
previously pooled into GNMA securities, amounting to $8.8 million
as of March 31, 2024 (December 31, 2023- $7.9 million; September
30, 2023 - $8.5 million; June 30, 2023 - $6.5 million; March 31,
2023 - $7.1 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 increased by $3.7 million to $129.6
million as of March 31, 2024, compared to $125.9 million as of
December 31, 2023. Total nonaccrual loans held for investment
increased by $9.3 million to $93.0 million as of March 31, 2024,
compared to $83.7 million as of December 31, 2023.
The increase in non-performing assets was
mainly driven by:
-
The inflow to nonaccrual status of a $10.5
million commercial and industrial loan in the Florida region in the
power generation industry during the first quarter of 2024.
-
A $0.5 million increase in nonaccrual
residential mortgage loans.
Partially offset by:
-
A $3.8 million decrease in the OREO
portfolio balance, mainly attributable to the sale of residential
properties in the Puerto Rico region.
-
A $1.9 million decrease in other
repossessed property, consisting of repossessed automobiles.
-
A $0.7 million decrease in nonaccrual
consumer loans, consisting mainly of auto loans and finance
leases.
- Inflows to nonaccrual loans held for investment were $46.8
million in the first quarter of 2024, an increase of $11.9 million,
compared to inflows of $34.9 million in the fourth quarter of 2023.
The increase was mostly related to the aforementioned inflow of the
$10.5 million commercial and industrial loan in the Florida region.
Inflows to nonaccrual consumer loans were $31.2 million, an
increase of $3.1 million compared to inflows of $28.1 million in
the fourth quarter of 2023. Inflows to nonaccrual residential
mortgage loans were $4.6 million in the first quarter of 2024, a
decrease of $0.7 million compared to inflows of $5.3 million in the
fourth quarter of 2023. See Early Delinquency below for additional
information.
- Adversely classified commercial and construction loans
increased by $9.0 million to $76.5 million as of March 31, 2024,
mainly driven by the aforementioned inflow to nonaccrual status of
a $10.5 million commercial and industrial loan in the Florida
region.
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 $133.7 million as of March 31,
2024, a decrease of $17.1 million, compared to $150.8 million as of
December 31, 2023. The variances by major portfolio categories are
as follows:
- Consumer loans in early delinquency decreased by $15.5 million
to $96.5 million, mainly in the auto loan portfolio.
- Residential mortgage loans in early delinquency decreased by
$4.0 million to $32.5 million.
- Commercial and construction loans in early delinquency
increased by $2.4 million to $4.7 million, mainly due to certain
commercial loans that matured and are 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 ACL for
on-balance sheet and off-balance sheet exposures during the first
quarter of 2024 and fourth quarter of 2023:
Quarter ended March 31,
2024
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
$
57,397
$
71,426
$
133,020
$
261,843
$
4,638
$
2,197
$
511
$
269,189
Provision for credit losses - (benefit)
expense
(464
)
(2,799
)
16,180
12,917
281
(962
)
(69
)
12,167
Net (charge-offs) recoveries
(244
)
4,710
(15,634
)
(11,168
)
-
-
-
(11,168
)
Allowance for credit losses, end of
period
$
56,689
$
73,337
$
133,566
$
263,592
$
4,919
$
1,235
$
442
$
270,188
Amortized cost of loans and finance
leases
$
2,801,587
$
5,830,014
$
3,679,847
$
12,311,448
Allowance for credit losses on loans to
amortized cost
2.02
%
1.26
%
3.63
%
2.14
%
Quarter ended December 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
$
57,200
$
76,875
$
129,540
$
263,615
$
4,761
$
2,250
$
465
$
271,091
Provision for credit losses - (benefit)
expense
(90
)
(4,905
)
23,970
18,975
(123
)
(53
)
13
18,812
Net recoveries (charge-offs)
287
(544
)
(20,490
)
(20,747
)
-
-
33
(20,714
)
Allowance for credit losses, end of
period
$
57,397
$
71,426
$
133,020
$
261,843
$
4,638
$
2,197
$
511
$
269,189
Amortized cost of loans and finance
leases
$
2,821,726
$
5,706,092
$
3,657,665
$
12,185,483
Allowance for credit losses on loans to
amortized cost
2.03
%
1.25
%
3.64
%
2.15
%
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, 2024, the ACL for loans and finance leases was
$263.6 million, an increase of $1.8 million, from $261.8 million as
of December 31, 2023. The ratio of the ACL for loans and finance
leases to total loans held for investment was 2.14% as of March 31,
2024, compared to 2.15% as of December 31, 2023. The ratio of the
total ACL for loans and finance leases to nonaccrual loans held for
investment was 283.54% as of March 31, 2024, compared to 312.81% as
of December 31, 2023.
The ACL for commercial and construction loans increased by $1.9
million to $73.3 million as of March 31, 2024, when compared to
December 31, 2023, mainly due to increased volume, particularly in
the commercial and industrial loan portfolio, coupled with a
deterioration on the economic outlook of certain macroeconomic
variables.
The ACL for consumer loans increased by $0.6 million mainly due
to increases in historical charge-off levels, mainly in credit
cards, and increases in portfolio volumes in the auto loan and
finance leases portfolios. Such increase was partially offset by
updated macroeconomic variables, mainly in the projection of
unemployment rates across all regions.
Meanwhile, the ACL for residential mortgage loans decreased by
$0.7 million, mainly due to updated macroeconomic variables, mainly
in the projection of unemployment rates, partially offset by newly
originated loans that have a longer life.
The provision for credit losses on loans and finance leases was
$12.9 million for the first quarter of 2024, compared to $19.0
million in the fourth quarter of 2023.
-
Provision for credit losses for the
consumer loan and finance lease portfolios was an expense of $16.2
million for the first quarter of 2024, compared to an expense of
$24.0 million for the fourth quarter of 2023. The decrease in
provision expense reflects a $9.5 million recovery associated with
the aforementioned bulk sale during the first quarter of 2024 and
updated macroeconomic variables, partially offset by increases in
charge-off levels, mainly in credit cards, and increases in
portfolio volume.
-
Provision for credit losses for the
residential mortgage loan portfolio was a net benefit of $0.5
million for the first quarter of 2024, compared to a net benefit of
$0.1 million for the fourth quarter of 2023. The net benefit
recorded during the first quarter of 2024 was mainly due to updated
macroeconomic variables, partially offset by newly originated loans
that have a longer life.
-
Provision for credit losses for the
commercial and construction loan portfolios was a net benefit of
$2.8 million for the first quarter of 2024, compared to a net
benefit of $4.9 million for the fourth quarter of 2023. The net
benefit recorded during the first quarter of 2024 was mainly driven
by the aforementioned $5.0 million recovery of a commercial and
industrial loan in the Puerto Rico region, partially offset by a
deterioration on the economic outlook of certain macroeconomic
variables and increased volume. Meanwhile, the net benefit recorded
during the fourth quarter of 2023 was mainly driven by an
improvement on the economic outlook of certain macroeconomic
variables, such as the commercial real estate (“CRE”) price index,
which was partially offset by increased volume particularly in the
commercial and industrial loan portfolio.
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, 2024
December 31, 2023
September 30, 2023
June 30, 2023
March 31, 2023
Residential mortgage
0.03%
-0.04%
-0.01%
0.06%
0.07%
Construction
-0.02%
0.01%
-3.18%
-0.99%
-0.17%
Commercial mortgage
-0.01%
0.09%
-0.01%
0.01%
-0.03%
Commercial and Industrial
-0.59%
0.00%
-0.02%
0.87%
0.00%
Consumer loans and finance leases
1.70%
(1)
2.26%
1.79%
1.51%
1.54%
Total loans
0.37%
(1)
0.69%
0.48%
0.67%
0.46%
(1)
The $9.5 million recovery associated with the bulk sale of fully
charged-off consumer loans during the first quarter of 2024 reduced
the consumer loans and finance leases and total net charge-offs to
related average loans for the quarter ended March 31, 2024 by 104
basis points and 31 basis points, respectively.
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 $11.2 million for the first quarter of
2024, or an annualized 0.37% of average loans, compared to $20.8
million, or an annualized 0.69% of average loans, in the fourth
quarter of 2023. The $9.6 million decrease in net charge-offs was
mainly driven by a $9.5 million recovery associated with the
aforementioned bulk sale of fully charged-off consumer loans during
the first quarter of 2024, which reduced the total net charge-offs
ratio by 31 basis points, and a $5.0 million recovery associated
with a commercial and industrial loan in the Puerto Rico region,
partially offset by an increase in consumer loans charge-offs
reflected in the auto loans, finance leases and credit cards
portfolios.
Allowance for Credit Losses for Unfunded Loan Commitments
As of March 31, 2024, the ACL for off-balance sheet credit
exposures increased to $4.9 million, compared to $4.6 million as of
December 31, 2023
Allowance for Credit Losses for Debt Securities
As of March 31, 2024, the ACL for debt securities was $1.6
million, of which $1.2 million related to Puerto Rico municipal
bonds classified as held-to-maturity, compared to $2.7 million and
$2.2 million, respectively, as of December 31, 2023.
LIQUIDITY
Cash and cash equivalents increased by $21.4 million to $684.5
million as of March 31, 2024. When adding $2.0 billion of free
high-quality liquid securities that could be liquidated or pledged
within one day, total core liquidity amounted to $2.7 billion as of
March 31, 2024, or 14.45% of total assets, compared to $2.8
billion, or 14.93% of total assets as of December 31, 2023. In
addition, as of March 31, 2024, the Corporation had $972.5 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 government-sponsored enterprises’ obligations that
could be liquidated or pledged within one day, and available
secured lines of credit with the FHLB to total assets) was
approximately 19.60% as of March 31, 2024, compared to 19.82% as of
December 31, 2023.
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 $1.6 billion available for
funding under the FED’s Borrower-In-Custody (“BIC”) Program as of
March 31, 2024. Also, the Corporation has access to financing with
other counterparties through repurchase agreements. Combined, as of
March 31, 2024, the Corporation had $5.4 billion, or 121% of
estimated uninsured deposits (excluding fully collateralized
government deposits), available to meet liquidity needs.
The Corporation’s total deposits, excluding brokered CDs,
amounted to $15.8 billion as of each of March 31, 2024 and December
31, 2023, which includes government deposits of $3.2 billion that
are fully collateralized. Excluding fully collateralized government
deposits and FDIC-insured deposits, as of March 31, 2024, the
estimated amount of uninsured deposits amounted to $4.4 billion,
which represent 27.93% of total deposits, compared to $4.4 billion,
or 28.13% of total deposits, as of December 31, 2023. Refer to
Table 10 in the accompanying tables (Exhibit A) for additional
information about the deposits composition.
STATEMENT OF FINANCIAL CONDITION
Total assets were approximately $18.9 billion as of March 31,
2024, down $18.6 million from December 31, 2023.
The following variances within the main components of total
assets are noted:
- A $21.4 million increase in cash and cash equivalents, related
to the cash flows from the investment securities portfolio,
partially offset by loan growth, the repurchases of common stock,
and the payment of common stock dividends.
- A $185.0 million decrease in investment securities, mainly
driven by principal repayments of $171.5 million, which include
scheduled repayments of $91.4 million and maturities of $80.1
million, and a $15.1 million decrease in the fair value of
available-for-sale debt securities attributable to changes in
market interest rates.
- A $130.7 million increase in total loans. The variance
consisted of increases of $80.9 million in the Florida region and
$50.1 million in the Puerto Rico region, partially offset by a
decrease of $0.3 million in the Virgin Islands region. On a
portfolio basis, the variance consisted of increases of $123.9
million in commercial and construction loans, and $22.2 million in
consumer loans, primarily auto loans and finance leases, partially
offset by a $15.4 million decrease in residential mortgage loans.
The growth of $56.8 million in commercial and industrial loans was
mainly in the Puerto Rico region driven by increased lines of
credit utilization and the origination of two term loans, which
includes the origination of a $13.6 million loan to a municipality
in Puerto Rico, partially offset by multiple payoffs and paydowns.
In addition, the growth of $44.6 million in commercial mortgage
loans was driven by the origination of three term loans in the
Florida region, each in excess of $10 million, with an aggregate
balance of $52.3 million. 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 2024, a decrease of $214.9 million
compared to the fourth quarter of 2023. The variances by geography
and portfolio basis follow: Total loan originations in the Puerto
Rico region amounted to $807.5 million in the first quarter of
2024, a decrease of $254.5 million, compared to $1.1 billion in the
fourth quarter of 2023. The $254.5 million decline in total loan
originations consisted of decreases of $209.9 million in commercial
and construction loans, $31.1 million in consumer loans and $13.5
million in residential mortgage loans. The decrease in commercial
and construction loans was mainly driven by the $150.0 million
commercial and industrial participated loan funded in the fourth
quarter of 2023 in connection with the financial closing of a
public-private partnership (P3) for improvement of infrastructure
for toll roads. Total loan originations in the Virgin Islands
region amounted to $19.1 million in the first quarter of 2024,
compared to $19.5 million in the fourth quarter of 2023. The $0.4
million decline in total loan originations consisted of decreases
of $1.3 million in consumer loans and $0.2 million in commercial
and construction loans, partially offset by a $1.1 million increase
in residential mortgage loans. Total loan originations in the
Florida region amounted to $260.4 million in the first quarter of
2024, compared to $220.4 million in the fourth quarter of 2023. The
$40.0 million growth in total loan originations was mainly due to a
$41.4 million increase in commercial and construction loans,
principally in commercial mortgage loans, mainly due to the
aforementioned origination during the first quarter of 2024 of
three large relationships each over $10 million with an aggregate
balance of $52.3 million.
Total liabilities were approximately $17.4 billion as of March
31, 2024, a decrease of $0.7 million from December 31, 2023.
- Total deposits decreased $10.4 million consisting of:
- A $57.6 million decrease in brokered CDs. The decline reflects
maturing short-term brokered CDs amounting to $195.4 million with
an all-in cost of 5.42% that were paid off during the first quarter
of 2024, partially offset by $138.0 million of new issuances with
original average maturities of approximately 2 years and an all-in
cost of 4.79%.
- A $25.8 million decrease in deposits, excluding brokered CDs
and government deposits, reflecting a decline of $28.3 million in
the Florida region, partially offset by increases of $1.3 million
in the Virgin Islands region, and $1.2 million in the Puerto Rico
region. The decrease in such deposits is net of a $93.9 million
increase in time deposits.
- A $73.0 million increase in government deposits, which includes
increases of $56.8 million in the Puerto Rico region, $14.2 million
in the Virgin Islands region, and $2.0 million in the Florida
region.
Total stockholders’ equity amounted to $1.5 billion as of March
31, 2024, a decrease of $17.9 million from December 31, 2023,
mainly driven by a $50.0 million in stock repurchases under the
2023 capital plan authorization of $225 million, $26.9 million in
common stock dividends declared in the first quarter of 2024, and a
$15.1 million decrease 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
net income generated in the first quarter of 2024.
As of March 31, 2024, 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
15.90%, 15.90%, 18.36%, and 10.65%, respectively, as of March 31,
2024, compared to CET1 capital, tier 1 capital, total capital, and
leverage ratios of 16.10%, 16.10%, 18.57%, and 10.78%,
respectively, as of December 31, 2023.
Meanwhile, estimated CET1 capital, tier 1 capital, total capital
and leverage ratios of our banking subsidiary, FirstBank, were
16.12%, 16.89%, 18.15%, and 11.31%, respectively, as of March 31,
2024, compared to CET1 capital, tier 1 capital, total capital and
leverage ratios of 16.33%, 17.11%, 18.36%, and 11.45%,
respectively, as of December 31, 2023.
Tangible Common Equity (Non-GAAP)
On a non-GAAP basis, the Corporation’s tangible common equity
ratio decreased to 7.59% as of March 31, 2024, compared to 7.67% as
of December 31, 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, 2024
December 31, 2023
September 30, 2023
June 30, 2023
March 31, 2023
(In thousands, except ratios and per share
information)
Tangible Equity:
Total common equity - GAAP
$
1,479,717
$
1,497,609
$
1,303,068
$
1,397,999
$
1,405,593
Goodwill
(38,611
)
(38,611
)
(38,611
)
(38,611
)
(38,611
)
Other intangible assets
(11,542
)
(13,383
)
(15,229
)
(17,092
)
(19,073
)
Tangible common equity -
non-GAAP
$
1,429,564
$
1,445,615
$
1,249,228
$
1,342,296
$
1,347,909
Tangible Assets:
Total assets - GAAP
$
18,890,961
$
18,909,549
$
18,594,608
$
19,152,455
$
18,977,114
Goodwill
(38,611
)
(38,611
)
(38,611
)
(38,611
)
(38,611
)
Other intangible assets
(11,542
)
(13,383
)
(15,229
)
(17,092
)
(19,073
)
Tangible assets - non-GAAP
$
18,840,808
$
18,857,555
$
18,540,768
$
19,096,752
$
18,919,430
Common shares outstanding
166,707
169,303
174,386
179,757
179,789
Tangible common equity ratio -
non-GAAP
7.59
%
7.67
%
6.74
%
7.03
%
7.12
%
Tangible book value per common share -
non-GAAP
$
8.58
$
8.54
$
7.16
$
7.47
$
7.50
Exposure to Puerto Rico Government
As of March 31, 2024, the Corporation had $313.7 million of
direct exposure to the Puerto Rico government, its municipalities,
and public corporations, an increase of $15.8 million when compared
to $297.9 million as of December 31, 2023, mainly due to the
origination of a $13.6 million loan to a municipality in Puerto
Rico that is supported by assigned property tax revenues. As of
March 31, 2024, approximately $202.9 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 $59.2 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 $8.9 million in a loan extended to an
affiliate of the Puerto Rico Electric Power Authority and $39.6
million in loans to agencies of Puerto Rico public corporations. In
addition, the total direct exposure included an obligation of the
Puerto Rico government, specifically a residential pass-through MBS
issued by the PRHFA, at an amortized cost of $3.1 million (fair
value of $1.6 million as of March 31, 2024), 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 $1.6 million as of March 31, 2024, of which $0.3 million is
due to credit deterioration.
The aforementioned exposure to municipalities in Puerto Rico
included $107.1 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, 2024, the Corporation had $2.8 billion of public
sector deposits in Puerto Rico, compared to $2.7 billion as of
December 31, 2023. Approximately 20% of the public sector deposits
as of March 31, 2024, were from municipalities and municipal
agencies in Puerto Rico, and 80% 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 23, 2024, at
10:00 a.m. (Eastern Time). The call may be accessed via a live
Internet webcast through the Corporation’s investor relations
website, 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 829649. 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 Corporation’s investor relations website,
fbpinvestor.com, until April 23, 2025.
A telephone replay will be available one hour after the end of the
conference call through May 23, 2024, at (866) 813-9403. The replay
access code is 838187.
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, 2023 (the “2023 Annual
Report on Form 10-K”), and the following, could cause actual
results to differ materially from those expressed in, or implied
by, such forward-looking statements: the effect of the current
interest rate environment and inflation levels or changes in
interest rates on the level, composition and performance of the
Corporation’s assets and liabilities, and corresponding effects on
the Corporation’s net interest income, net interest margin, loan
originations, deposit attrition, overall results of operations, and
liquidity position; the effects of changes in the interest rate
environment, including 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; 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, which could result in, among other
things, bank deposit runoffs, liquidity constraints, and increased
regulatory requirements and costs; the effect of continued changes
in the fiscal and monetary policies and regulations of the U.S.
federal government, the Puerto Rico government 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, the U.S., and the U.S. and British Virgin Islands, that may
affect the future results of the Corporation; 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 may require us to sell investment securities at
a loss; 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
ability of the Corporation, FirstBank, and third-party service
providers 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 and response to any incidents
that occur, which may result in misuse or misappropriation of
confidential or proprietary information, disruption, or damage to
our systems or those of third-party service providers on which we
rely, increased costs and losses and/or adverse effects to our
reputation; general competitive factors and other market risks as
well as the implementation of existent or planned strategic growth
opportunities, including risks, uncertainties, and other factors or
events related to any business acquisitions, dispositions,
strategic partnerships, strategic operational investments and any
anticipated efficiencies or other expected results related thereto;
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, and of
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; the ability of FirstBank to generate
sufficient cash flow to make dividends to the Corporation;
environmental, social, and governance (“ESG”) matters, including
our climate-related initiatives and commitments; the impacts of
natural or man-made disasters, the emergence or continuation of
widespread health emergencies, geopolitical conflicts (including
sanctions, war or armed conflict, such as the ongoing conflict in
Ukraine, the conflict between Israel and Hamas, and the possible
expansion of such conflicts in surrounding areas and potential
geopolitical consequences), 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 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 debt securities portfolio, and the potential for
additional credit losses that could emerge from the downgrade of
the U.S.’s Long-Term Foreign-Currency Issuer Rating to ‘AA+’ from
‘AAA’ in August 2023 and subsequent negative ratings outlooks; the
impacts of applicable legislative, tax, or regulatory changes, as
well as of the 2024 U.S. and Puerto Rico general election, 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
further 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. 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, 2024
December 31, 2023
(In thousands, except for share
information)
ASSETS
Cash and due from banks
$
680,734
$
661,925
Money market investments:
Time deposits with other financial
institutions
300
300
Other short-term investments
3,485
939
Total money market investments
3,785
1,239
Debt securities available for sale, at
fair value (ACL of $442 as of March 31, 2024 and $511 as of
December 31, 2023)
5,047,179
5,229,984
Debt securities held to maturity, at
amortized cost, net of ACL of $1,235 as of March 31, 2024 and
$2,197 as of
December 31, 2023 (fair value of $338,120
as of March 31, 2024 and $346,132 as of December 31, 2023)
348,095
351,981
Total debt securities
5,395,274
5,581,965
Equity securities
51,390
49,675
Total investment securities
5,446,664
5,631,640
Loans, net of ACL of $263,592 as of March
31, 2024 and $261,843 as of December 31, 2023
12,047,856
11,923,640
Loans held for sale, at lower of cost or
market
12,080
7,368
Total loans, net
12,059,936
11,931,008
Accrued interest receivable on loans and
investments
73,154
77,716
Premises and equipment, net
141,471
142,016
OREO
28,864
32,669
Deferred tax asset, net
147,743
150,127
Goodwill
38,611
38,611
Other intangible assets
11,542
13,383
Other assets
258,457
229,215
Total assets
$
18,890,961
$
18,909,549
LIABILITIES
Deposits:
Non-interest-bearing deposits
$
5,346,326
$
5,404,121
Interest-bearing deposits
11,199,185
11,151,864
Total deposits
16,545,511
16,555,985
Advances from the FHLB
500,000
500,000
Other borrowings
161,700
161,700
Accounts payable and other liabilities
204,033
194,255
Total liabilities
17,411,244
17,411,940
STOCKHOLDERSʼ EQUITY
Common stock, $0.10 par value, 223,663,116
shares issued (March 31, 2024 - 166,707,047 shares outstanding;
December 31, 2023 - 169,302,812 shares
outstanding)
22,366
22,366
Additional paid-in capital
959,319
965,707
Retained earnings
1,892,714
1,846,112
Treasury stock, at cost (March 31, 2024 -
56,956,069 shares; December 31, 2023 - 54,360,304 shares)
(740,447
)
(697,406
)
Accumulated other comprehensive loss
(654,235
)
(639,170
)
Total stockholdersʼ equity
1,479,717
1,497,609
Total liabilities and stockholdersʼ
equity
$
18,890,961
$
18,909,549
Table 2 – Condensed Consolidated Statements of Income
Quarter Ended
March 31, 2024
December 31, 2023
March 31, 2023
(In thousands, except per share
information)
Net interest income:
Interest income
$
268,505
$
265,481
$
242,396
Interest expense
71,985
68,799
41,511
Net interest income
196,520
196,682
200,885
Provision for credit losses - expense
(benefit):
Loans
12,917
18,975
16,256
Unfunded loan commitments
281
(123
)
(105
)
Debt securities
(1,031
)
(40
)
(649
)
Provision for credit losses - expense
12,167
18,812
15,502
Net interest income after provision for
credit losses
184,353
177,870
185,383
Non-interest income:
Service charges and fees on deposit
accounts
9,662
9,662
9,541
Mortgage banking activities
2,882
2,094
2,812
Card and processing income
11,312
11,015
10,918
Other non-interest income
10,127
10,838
9,247
Total non-interest income
33,983
33,609
32,518
Non-interest expenses:
Employees’ compensation and benefits
59,506
55,584
56,422
Occupancy and equipment
21,381
21,847
21,186
Business promotion
3,842
6,725
3,975
Professional service fees
12,676
11,250
11,973
Taxes, other than income taxes
5,129
5,535
5,112
FDIC deposit insurance
3,102
8,454
2,133
Net gain on OREO operations
(1,452
)
(1,005
)
(1,996
)
Credit and debit card processing
expenses
5,751
7,360
5,318
Other non-interest expenses
10,988
10,855
11,145
Total non-interest expenses
120,923
126,605
115,268
Income before income taxes
97,413
84,874
102,633
Income tax expense
23,955
5,385
31,935
Net income
$
73,458
$
79,489
$
70,698
Net income attributable to common
stockholders
$
73,458
$
79,489
$
70,698
Earnings per common share:
Basic
$
0.44
$
0.47
$
0.39
Diluted
$
0.44
$
0.46
$
0.39
Table 3 – Selected Financial Data
Quarter Ended
March 31, 2024
December 31, 2023
March 31, 2023
(Shares in thousands)
Per Common Share Results:
Net earnings per share - basic
$
0.44
$
0.47
$
0.39
Net earnings per share - diluted
$
0.44
$
0.46
$
0.39
Cash dividends declared
$
0.16
$
0.14
$
0.14
Average shares outstanding
167,142
170,624
180,215
Average shares outstanding diluted
167,798
171,351
181,236
Book value per common share
$
8.88
$
8.85
$
7.82
Tangible book value per common share
(1)
$
8.58
$
8.54
$
7.50
Common Stock Price: End of period
$
17.54
$
16.45
$
11.42
Selected Financial Ratios (In
Percent):
Profitability:
Return on Average Assets
1.56
1.70
1.55
Return on Average Common Equity
19.56
23.69
21.00
Interest Rate Spread (2)
3.35
3.34
3.84
Net Interest Margin (2)
4.27
4.23
4.48
Efficiency ratio (3)
52.46
54.98
49.39
Capital and Other:
Average Total Equity to Average Total
Assets
7.99
7.16
7.36
Total capital
18.36
18.57
19.02
Common equity Tier 1 capital
15.90
16.10
16.33
Tier 1 capital
15.90
16.10
16.33
Leverage
10.65
10.78
10.57
Tangible common equity ratio (1)
7.59
7.67
7.12
Dividend payout ratio
36.41
30.05
35.69
Basic liquidity ratio (4)
19.60
19.82
21.42
Core liquidity ratio (5)
14.45
14.93
16.77
Loan to deposit ratio
74.48
73.65
72.22
Uninsured deposits, excluding fully
collateralized deposits, to total deposits (6)
27.93
28.13
35.68
Asset Quality:
Allowance for credit losses for loans and
finance leases to total loans
held for investment
2.14
2.15
2.29
Net charge-offs (annualized) to average
loans outstanding
0.37
0.69
0.46
Provision for credit losses for loans and
finance leases
to net charge-offs
115.66
91.46
122.51
Non-performing assets to total assets
0.69
0.67
0.68
Nonaccrual loans held for investment to
total loans held for investment
0.76
0.69
0.77
Allowance for credit losses for loans and
finance leases to total nonaccrual loans
held for investment
283.54
312.81
297.91
Allowance for credit losses for loans and
finance leases to total nonaccrual loans
held for investment, excluding residential
estate loans
437.28
508.75
503.62
(1)
Non-GAAP financial measures (as defined
above). Refer to Non-GAAP Disclosures, 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.
(6)
Exclude insured deposits not covered by
federal deposit insurance.
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
2024 and fourth and first quarters of 2023. 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, 2024
December 31, 2023
March 31, 2023
Net Interest Income
Interest income - GAAP
$
268,505
$
265,481
$
242,396
Unrealized (gain) loss on derivative
instruments
(2
)
8
6
Interest income excluding valuations -
non-GAAP
268,503
265,489
242,402
Tax-equivalent adjustment
4,813
4,262
6,347
Interest income on a tax-equivalent basis
and excluding valuations - non-GAAP
$
273,316
$
269,751
$
248,749
Interest expense - GAAP
$
71,985
$
68,799
$
41,511
Net interest income - GAAP
$
196,520
$
196,682
$
200,885
Net interest income excluding valuations
- non-GAAP
$
196,518
$
196,690
$
200,891
Net interest income on a tax-equivalent
basis and excluding valuations - non-GAAP
$
201,331
$
200,952
$
207,238
Average Balances
Loans and leases
$
12,207,840
$
12,004,881
$
11,519,399
Total securities, other short-term
investments and interest-bearing cash balances
6,720,395
6,835,407
7,232,347
Average Interest-Earning Assets
$
18,928,235
$
18,840,288
$
18,751,746
Average Interest-Bearing Liabilities
$
11,838,159
$
11,665,459
$
10,957,892
Average Assets (1)
$
18,858,299
$
18,581,625
$
18,557,156
Average Non-Interest-Bearing Deposits
$
5,308,531
$
5,384,264
$
5,999,066
Average Yield/Rate
Average yield on interest-earning assets -
GAAP
5.69
%
5.59
%
5.24
%
Average rate on interest-bearing
liabilities - GAAP
2.44
%
2.34
%
1.54
%
Net interest spread - GAAP
3.25
%
3.25
%
3.70
%
Net interest margin - GAAP
4.16
%
4.14
%
4.34
%
Average yield on interest-earning assets
excluding valuations - non-GAAP
5.69
%
5.59
%
5.24
%
Average rate on interest-bearing
liabilities
2.44
%
2.34
%
1.54
%
Net interest spread excluding valuations -
non-GAAP
3.25
%
3.25
%
3.70
%
Net interest margin excluding valuations -
non-GAAP
4.16
%
4.14
%
4.34
%
Average yield on interest-earning assets
on a tax-equivalent basis
and excluding valuations - non-GAAP
5.79
%
5.68
%
5.38
%
Average rate on interest-bearing
liabilities
2.44
%
2.34
%
1.54
%
Net interest spread on a tax-equivalent
basis and excluding valuations - non-GAAP
3.35
%
3.34
%
3.84
%
Net interest margin on a tax-equivalent
basis and excluding valuations - non-GAAP
4.27
%
4.23
%
4.48
%
(1) Includes, among other things, the ACL
on loans and finance leases and debt securities, as well as
unrealized gains and losses on available-for-sale debt
securities.
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,
2024
2023
2023
2024
2023
2023
2024
2023
2023
(Dollars in thousands)
Interest-earning assets:
Money market and other short-term
investments
$
533,747
$
503,293
$
404,249
$
7,254
$
6,933
$
4,650
5.45
%
5.47
%
4.67
%
Government obligations (2)
2,684,169
2,738,478
2,909,976
9,053
9,161
10,765
1.35
%
1.33
%
1.50
%
MBS
3,451,293
3,543,423
3,864,145
15,238
15,481
19,396
1.77
%
1.73
%
2.04
%
FHLB stock
34,635
34,745
40,838
854
830
421
9.89
%
9.48
%
4.18
%
Other investments
16,551
15,468
13,139
66
232
139
1.60
%
5.95
%
4.29
%
Total investments (3)
6,720,395
6,835,407
7,232,347
32,465
32,637
35,371
1.94
%
1.89
%
1.98
%
Residential mortgage loans
2,810,304
2,812,428
2,835,240
40,473
40,711
39,794
5.78
%
5.74
%
5.69
%
Construction loans
218,854
211,641
146,041
4,537
4,295
2,676
8.32
%
8.05
%
7.43
%
C&I and commercial mortgage loans
5,504,782
5,355,145
5,167,727
99,074
96,299
85,885
7.22
%
7.13
%
6.74
%
Finance leases
863,685
844,780
735,500
17,127
16,584
13,809
7.95
%
7.79
%
7.61
%
Consumer loans
2,810,215
2,780,887
2,634,891
79,640
79,225
71,214
11.37
%
11.30
%
10.96
%
Total loans (4) (5)
12,207,840
12,004,881
11,519,399
240,851
237,114
213,378
7.91
%
7.84
%
7.51
%
Total interest-earning assets
$
18,928,235
$
18,840,288
$
18,751,746
$
273,316
$
269,751
$
248,749
5.79
%
5.68
%
5.38
%
Interest-bearing liabilities:
Time deposits
$
2,892,355
$
2,792,843
$
2,342,360
$
24,410
$
22,304
$
10,782
3.39
%
3.17
%
1.87
%
Brokered CDs
749,760
572,105
166,698
9,680
7,452
1,587
5.18
%
5.17
%
3.86
%
Other interest-bearing deposits
7,534,344
7,635,223
7,544,901
28,935
29,918
17,516
1.54
%
1.55
%
0.94
%
Securities sold under agreements to
repurchase
-
925
91,004
-
13
1,069
0.00
%
5.58
%
4.76
%
Advances from the FHLB
500,000
502,446
629,167
5,610
5,709
7,176
4.50
%
4.51
%
4.63
%
Other borrowings
161,700
161,917
183,762
3,350
3,403
3,381
8.31
%
8.34
%
7.46
%
Total interest-bearing liabilities
$
11,838,159
$
11,665,459
$
10,957,892
$
71,985
$
68,799
$
41,511
2.44
%
2.34
%
1.54
%
Net interest income
$
201,331
$
200,952
$
207,238
Interest rate spread
3.35
%
3.34
%
3.84
%
Net interest margin
4.27
%
4.23
%
4.48
%
(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 $3.2
million, $3.0 million, and $3.1 million, for the quarters ended
March 31, 2024, December 31, 2023, and March 31, 2023,
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, 2024
Puerto Rico
Virgin Islands
United States
Consolidated
(In thousands)
Residential mortgage loans
$
2,164,347
$
162,893
$
474,347
$
2,801,587
Commercial loans:
Construction loans
144,094
3,530
89,664
237,288
Commercial mortgage loans
1,705,745
63,502
592,484
2,361,731
Commercial and Industrial loans
2,163,439
126,560
940,996
3,230,995
Commercial loans
4,013,278
193,592
1,623,144
5,830,014
Finance leases
871,927
-
-
871,927
Consumer loans
2,734,347
67,946
5,627
2,807,920
Loans held for investment
9,783,899
424,431
2,103,118
12,311,448
Loans held for sale
12,080
-
-
12,080
Total loans
$
9,795,979
$
424,431
$
2,103,118
$
12,323,528
As of December 31,
2023
Puerto Rico
Virgin Islands
United States
Consolidated
(In thousands)
Residential mortgage loans
$
2,187,875
$
168,131
$
465,720
$
2,821,726
Commercial loans:
Construction loans
111,664
3,737
99,376
214,777
Commercial mortgage loans
1,725,325
65,312
526,446
2,317,083
Commercial and Industrial loans
2,130,368
119,040
924,824
3,174,232
Commercial loans
3,967,357
188,089
1,550,646
5,706,092
Finance leases
856,815
-
-
856,815
Consumer loans
2,726,457
68,498
5,895
2,800,850
Loans held for investment
9,738,504
424,718
2,022,261
12,185,483
Loans held for sale
7,368
-
-
7,368
Total loans
$
9,745,872
$
424,718
$
2,022,261
$
12,192,851
Table 7 – Non-Performing Assets by Geography
As of March 31, 2024
(In thousands)
Puerto Rico
Virgin Islands
United States
Total
Nonaccrual loans held for investment:
Residential mortgage
$
17,521
$
6,693
$
8,471
$
32,685
Construction
531
967
-
1,498
Commercial mortgage
3,037
8,939
-
11,976
Commercial and Industrial
13,431
1,119
10,517
25,067
Consumer and finance leases
21,503
203
33
21,739
Total nonaccrual loans held for
investment
56,023
17,921
19,021
92,965
OREO
24,577
4,287
-
28,864
Other repossessed property
5,916
287
23
6,226
Other assets (1)
1,551
-
-
1,551
Total non-performing assets (2)
$
88,067
$
22,495
$
19,044
$
129,606
Past due loans 90 days and still accruing
(3)
$
51,614
$
5,762
$
139
$
57,515
As of December 31,
2023
(In thousands)
Puerto Rico
Virgin Islands
United States
Total
Nonaccrual loans held for investment:
Residential mortgage
$
18,324
$
6,688
$
7,227
$
32,239
Construction
595
974
-
1,569
Commercial mortgage
3,106
9,099
-
12,205
Commercial and Industrial
13,414
1,169
667
15,250
Consumer and finance leases
21,954
419
71
22,444
Total nonaccrual loans held for
investment
57,393
18,349
7,965
83,707
OREO
28,382
4,287
-
32,669
Other repossessed property
7,857
252
6
8,115
Other assets (1)
1,415
-
-
1,415
Total non-performing assets (2)
$
95,047
$
22,888
$
7,971
$
125,906
Past due loans 90 days and still accruing
(3)
$
53,308
$
6,005
$
139
$
59,452
(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 $8.6 million as of March 31, 2024 (December 31, 2023 -
$8.3 million).
(3)
These include rebooked loans, which were
previously pooled into GNMA securities, amounting to $8.8 million
as of March 31, 2024 (December 31, 2023 - $7.9 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,
2024
2023
2023
(Dollars in thousands)
Allowance for credit losses on loans and finance leases, beginning
of period
$
261,843
$
263,615
$
260,464
Impact of adoption of ASU 2022-02
-
-
2,116
Provision for credit losses on loans and finance leases expense
12,917
18,975
16,256
Net (charge-offs) recoveries of loans and finance leases:
Residential mortgage
(244
)
287
(486
)
Construction
10
(4
)
63
Commercial mortgage
40
(539
)
150
Commercial and Industrial
4,660
(1
)
(28
)
Consumer loans and finance leases
(15,634
)
(1)
(20,490
)
(12,968
)
Net charge-offs
(11,168
)
(1)
(20,747
)
(13,269
)
Allowance for credit losses on loans and finance leases, end of
period
$
263,592
$
261,843
$
265,567
Allowance for credit losses on loans and finance leases to period
end total loans held for investment
2.14
%
2.15
%
2.29
%
Net charge-offs (annualized) to average loans outstanding during
the period
0.37
%
0.69
%
0.46
%
Provision for credit losses on loans and finance leases to net
charge-offs during the period
1.16x
0.91x
1.23x
(1) For the quarter ended March
31, 2024, includes a recovery totaling $9.5 million associated with
the bulk sale of fully charged-off consumer loans.
Table 9 – Annualized Net Charge-Offs (Recoveries) to Average
Loans
Quarter Ended
March 31, 2024
December 31, 2023
March 31, 2023
Residential mortgage
0.03%
-0.04%
0.07%
Construction
-0.02%
0.01%
-0.17%
Commercial mortgage
-0.01%
0.09%
-0.03%
Commercial and Industrial
-0.59%
0.00%
0.00%
Consumer loans and finance leases
1.70%
(1)
2.26%
1.54%
Total loans
0.37%
(1)
0.69%
0.46%
(1) The recovery associated with
the aforementioned bulk sale reduced the consumer loans and finance
leases and total net charge-offs to related average loans for the
quarter ended March 31, 2024 by 104 basis points and 31 basis
points, respectively.
Table 10 – Deposits
As of
March 31, 2024
December 31, 2023
(In thousands)
Time deposits
$
2,961,526
$
2,833,730
Interest-bearing saving and checking
accounts
7,511,973
7,534,800
Non-interest-bearing deposits
5,346,326
5,404,121
Total deposits, excluding brokered CDs
(1)
15,819,825
15,772,651
Brokered CDs
725,686
783,334
Total deposits
$
16,545,511
$
16,555,985
Total deposits, excluding brokered CDs and
government deposits
$
12,574,900
$
12,600,719
(1) As of each March 31, 2024 and
December 31, 2023, government deposits amounted to $3.2
billion.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240422124247/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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