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 $75.8
million, or $0.46 per diluted share, for the second quarter of
2024, compared to $73.5 million, or $0.44 per diluted share, for
the first quarter of 2024, and $70.7 million, or $0.39 per diluted
share, for the second quarter of 2023.
Aurelio Alemán, President and Chief Executive Officer of
First BanCorp, commented: “We closed the first half of the year
with another quarter of solid operating performance across most
franchise metrics and remain highly encouraged by our growth
prospects throughout the rest of the year. Once again, we delivered
a strong return on assets of 1.61%, grew our net interest margin,
registered organic loan growth across all businesses, grew core
deposits and returned 100% of earnings to shareholders in the form
of buybacks and common stock dividends. We continue to generate top
quartile financial results through our proven business model,
ongoing operational efficiency, and commitment to preserve
shareholder value.
Core deposits, other than brokered and government deposits, were
up by $132 million reflecting growth in all regions. More
importantly, this growth includes a $47 million increase in
non-interest-bearing deposits, further expanding our low-cost and
well diversified funding base while reducing our exposure to
higher-cost funding sources. Even though overall asset quality
remained stable, as we have previously mentioned we have continued
to see early-delinquency and charge-off trends within the consumer
lending segment returning to historical levels.
Our balance sheet is uniquely positioned to continue serving our
clients and communities while growing the franchise and without
compromising our strong financial profile. We continue to prudently
manage our capital and expect to capitalize on value-creating
growth opportunities that best serve the long-term interest of the
franchise and its shareholders.
Q2
Q1
Q2
YTD June
2024
2024
2023
2024
2023
Financial Highlights Net interest income
$ 199,628
$ 196,520
$ 199,815
$ 396,148
$ 400,700
Provision for credit losses
11,605
12,167
22,230
23,772
37,732
Non-interest income
32,038
33,983
36,271
66,021
68,789
Non-interest expenses
118,682
120,923
112,917
239,605
228,185
Income before income taxes
101,379
97,413
100,939
198,792
203,572
Income tax expense
25,541
23,955
30,284
49,496
62,219
Net income
$ 75,838
$ 73,458
$ 70,655
$ 149,296
$ 141,353
Selected Financial Data Net interest margin
4.22%
4.16%
4.23%
4.19%
4.29%
Efficiency ratio
51.23%
52.46%
47.83%
51.84%
48.60%
Earnings per share - diluted
$ 0.46
$ 0.44
$ 0.39
$ 0.90
$ 0.78
Book value per share
$ 9.10
$ 8.88
$ 7.78
$ 9.10
$ 7.78
Tangible book value per share (1)
$ 8.81
$ 8.58
$ 7.47
$ 8.81
$ 7.47
Return on average equity
20.80%
19.56%
19.66%
20.17%
20.31%
Return on average assets
1.61%
1.56%
1.51%
1.59%
1.53%
(1) Represents a non-GAAP financial measure. Refer to
Non-GAAP Disclosures - Non-GAAP Financial Measures for the
definition of and additional information about this non-GAAP
financial measure. (In thousands, except per share
information and financial ratios)
Results for Second Quarter of
2024 compared to First Quarter of 2024
Profitability
Net income – $75.8 million, or
$0.46 per diluted share compared to $73.5 million, or $0.44 per
diluted share.
Income before income taxes –
$101.3 million compared to $97.4 million.
Adjusted pre-tax, pre-provision income
(Non-GAAP)(1) – $113.1 million, compared to $110.5
million.
Net interest income – $199.6
million compared to $196.5 million. The increase was mainly in
commercial and construction loans due to higher volume and
refinancings at higher market interest rates and higher average
balances in interest-bearing cash balances. Net interest margin
increased to 4.22%, compared to 4.16%.
Provision for credit losses – $11.6
million compared to $12.2 million. The decrease reflects a $10.1
million reduction in the provision for the residential mortgage
loan portfolio associated with updated historical loss experience,
particularly in the Puerto Rico region, and a $1.4 million
reduction in the provision for the commercial and construction loan
portfolios as a result of improvements in projections of
macroeconomic variables, primarily in the commercial mortgage loan
portfolio in the Puerto Rico region. Such decrease was partially
offset by a $10.5 million increase in provision expense for
consumer loans, in part driven by a $9.5 million recovery in the
first quarter of 2024 associated with a bulk sale of fully
charged-off consumer loans.
Non-interest income – $32.0 million
compared to $34.0 million, mainly driven by $3.2 million in
seasonal contingent commissions recorded in the first quarter of
2024.
Non-interest expenses – $118.7
million compared to $120.9 million, mainly driven by a $2.3 million
realized gain on the sale of a commercial real estate OREO property
in the Puerto Rico region in the second quarter of 2024. The
efficiency ratio was 51.23%, compared to 52.46%.
Balance Sheet
Total loans – grew by $72.4 million
to $12.4 billion, primarily attributed to growth in the commercial
and construction and consumer loan portfolios in the Puerto Rico
region. Total loan originations, other than credit card utilization
activity, of $1.1 billion, up $25.3 million.
Core deposits (other than brokered and
government deposits) –increased by $131.7 million to $12.7
billion, reflecting growth of $70.4 million in the Puerto Rico
region, $41.4 million in the Florida region, and $19.9 million in
the Virgin Islands region. This increase includes a $68.5 million
increase in time deposits and a $46.8 million increase in
non-interest-bearing deposits.
Government deposits (fully
collateralized) – decreased by $47.4 million to $3.2 billion.
Variance mainly reflects a decline of $76.6 million in the Puerto
Rico region, partially offset by an increase of $28.3 million in
the Virgin Islands region.
Asset Quality
Allowance for credit losses (“ACL”)
coverage ratio – amounted to 2.06%, compared to 2.14%.
Annualized net charge-offs to average loans ratio increased
to 0.69%, compared to 0.37%. First quarter of 2024 reflects a 31
basis points decrease due to the $9.5 million recovery associated
with a bulk sale of fully charged-off consumer loans.
Non-performing assets – decreased
by $2.7 million to $126.9 million, mainly driven by the effect
during the second quarter of 2024 of both the restoration to
accrual status of a $10.0 million commercial and industrial
(“C&I”) loan in the Florida region in the power generation
industry and a $7.2 million decrease in the OREO portfolio balance,
partially offset by the inflow of a $16.5 million commercial
relationship in the Puerto Rico region in the food retail
industry.
Liquidity and Capital
Liquidity – Cash and cash
equivalents amounted to $586.3 million, compared to $684.5 million.
When adding $1.9 billion of free high-quality liquid securities
that could be liquidated or pledged within one day, total core
liquidity amounted to $2.5 billion, or 13.37% of total assets,
compared to 14.45%. Including the $968.1 million in available
lending capacity at the Federal Home Loan Bank (“FHLB”), available
liquidity amounted to 18.50% of total assets, compared to
19.60%.
Capital – Repurchased $50.0 million
of common stock and paid $26.3 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 18.21%,
15.77%, 15.77%, and 10.63%, respectively, as of June 30, 2024. On a
non-GAAP basis, the tangible common equity ratio(1) amounted to
7.66% compared to 7.59%.
NET INTEREST INCOME
The following table sets forth information concerning net
interest income for the last five quarters:
Quarter Ended
(Dollars in thousands)
June 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
June 30, 2023
Net Interest Income
Interest income
$
272,245
$
268,505
$
265,481
$
263,405
$
252,204
Interest expense
72,617
71,985
68,799
63,677
52,389
Net interest income
$
199,628
$
196,520
$
196,682
$
199,728
$
199,815
Average Balances
Loans and leases
$
12,272,816
$
12,207,840
$
12,004,881
$
11,783,456
$
11,591,516
Total securities, other short-term
investments and interest-bearing cash balances
6,698,609
6,720,395
6,835,407
7,325,226
7,333,989
Average interest-earning assets
$
18,971,425
$
18,928,235
$
18,840,288
$
19,108,682
$
18,925,505
Average interest-bearing liabilities
$
11,868,658
$
11,838,159
$
11,665,459
$
11,671,938
$
11,176,385
Average Yield/Rate
Average yield on interest-earning assets -
GAAP
5.76
%
5.69
%
5.59
%
5.47
%
5.35
%
Average rate on interest-bearing
liabilities - GAAP
2.45
%
2.44
%
2.34
%
2.16
%
1.88
%
Net interest spread - GAAP
3.31
%
3.25
%
3.25
%
3.31
%
3.47
%
Net interest margin - GAAP
4.22
%
4.16
%
4.14
%
4.15
%
4.23
%
Net interest income amounted to $199.6 million for the second
quarter of 2024, an increase of $3.1 million, compared to $196.5
million for the first quarter of 2024. The increase in net interest
income reflects the following:
- A $2.8 million increase in interest income on loans, driven
by:
- A $2.2 million increase in interest income
on commercial and construction loans, due to a $1.4 million
increase in interest income, which includes refinancings at higher
market interest rates and $0.5 million in interest income
recognized as a result of the repayment of two previously
charged-off loans in the Florida region; and a $0.8 million
increase in interest income mainly associated with a $50.2 million
increase in the average balance of this portfolio.
- A $0.4 million increase in interest income
on consumer loans and finance leases, mainly in the auto loans and
finance leases portfolios.
- A $1.8 million increase in interest income from
interest-bearing cash balances, driven by a $133.8 million increase
in the average balance of interest-bearing cash balances, primarily
consisting of cash balances deposited at the Federal Reserve Bank
(the “FED”).
Partially offset by:
- A $0.8 million net decrease in interest income from investment
securities, driven by a $0.5 million decrease in interest income on
debt securities associated with a $156.1 million decrease in the
average balance and a $0.5 million decrease related to a higher
level of premium amortization expense due to changes in anticipated
prepayments of U.S. agency mortgage-backed securities (“MBS”),
partially offset by a $0.2 million increase in interest income on
other equity securities.
- A $0.7 million net increase in interest expense on
interest-bearing deposits, consisting of:
- A $2.2 million increase in interest expense
on time deposits, excluding brokered CDs, mainly due to
approximately $1.2 million associated with higher rates paid in the
second quarter of 2024 on new issuances and renewals, and $1.0
million of additional interest expense associated with a $109.8
million increase in the average balance. The average cost of
non-brokered time deposits in the second quarter of 2024 increased
16 basis points to 3.55% when compared to the previous quarter.
Partially offset by:
- A $1.1 million decrease in interest expense
on brokered CDs, primarily related to a $73.3 million decrease in
the average balance of this portfolio.
- A $0.4 million decrease in interest expense
on interest-bearing checking and saving accounts, mainly associated
with a decrease in average rates in the second quarter of 2024 due
to a change in mix within public sector deposits. The average cost
of interest-bearing checking and saving accounts, excluding public
sector deposits, remained flat at 0.75% in the second quarter of
2024, when compared to the previous quarter.
Net interest margin for the second quarter of 2024 was 4.22%, a
6 basis points increase when compared to the first quarter of 2024,
mostly reflecting a change in asset mix from lower-yielding
interest-earning assets to higher-yielding interest-earning assets
and higher yields on commercial loans, 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 June 30, 2024 March 31, 2024
December 31, 2023 September 30, 2023 June 30,
2023 (In thousands) Service charges and fees on deposit
accounts $
9,725
$
9,662
$
9,662
$
9,552
$
9,287
Mortgage banking activities
3,419
2,882
2,094
2,821
2,860
Gain on early extinguishment of debt
-
-
-
-
1,605
Insurance commission income
2,786
5,507
2,379
2,790
2,747
Card and processing income
11,523
11,312
11,015
10,841
11,135
Other non-interest income
4,585
4,620
8,459
4,292
8,637
Non-interest income $
32,038
$
33,983
$
33,609
$
30,296
$
36,271
Non-interest income decreased by $2.0 million to $32.0 million
for the second quarter of 2024, compared to $34.0 million for the
first quarter of 2024, mainly due to:
- A $2.7 million decrease 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.
Partially offset by:
- A $0.5 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 a $0.2 million net increase in the
fair value of to-be-announced forward contracts and interest rate
lock commitments. During the second and first quarters of 2024, net
realized gains of $1.5 million and $1.1 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 $43.5 million and
$31.5 million, respectively.
NON-INTEREST EXPENSES
The following table sets forth information concerning
non-interest expenses for the last five quarters:
Quarter Ended June 30, 2024 March 31, 2024
December 31, 2023 September 30, 2023 June 30,
2023 (In thousands) Employees' compensation and benefits
$
57,456
$
59,506
$
55,584
$
56,535
$
54,314
Occupancy and equipment
21,851
21,381
21,847
21,781
21,097
Business promotion
4,359
3,842
6,725
4,759
4,167
Professional service fees:
Collections, appraisals and other credit-related fees
1,149
1,366
952
930
1,231
Outsourcing technology services
7,698
7,469
7,003
7,261
7,278
Other professional fees
3,584
3,841
3,295
2,831
3,087
Taxes, other than income taxes
5,408
5,129
5,535
5,465
5,124
FDIC deposit insurance
2,316
3,102
8,454
2,143
2,143
Other insurance and supervisory fees
2,287
2,293
2,308
2,356
2,352
Net gain on OREO operations
(3,609
)
(1,452
)
(1,005
)
(2,153
)
(1,984
)
Credit and debit card processing expenses
7,607
5,751
7,360
6,779
6,540
Communications
2,261
2,097
2,134
2,219
1,992
Other non-interest expenses
6,315
6,598
6,413
5,732
5,576
Total non-interest expenses
$
118,682
$
120,923
$
126,605
$
116,638
$
112,917
Non-interest expenses amounted to $118.7 million in the second
quarter of 2024, a decrease of $2.2 million, from $120.9 million in
the first quarter of 2024. Non-interest expenses for the second and
first quarters of 2024 include the aforementioned Federal Deposit
Insurance Corporation (“FDIC”) special assessment expense of $0.2
million and $0.9 million, respectively. Refer to Non-GAAP
Disclosures - Special Items for additional information. On a
non-GAAP basis, excluding the effect of this Special Item, adjusted
non-interest expenses decreased by $1.5 million mainly due to:
- A $2.1 million decrease in employees’ compensation and benefits
expense, mainly driven by stock-based compensation expense of
retirement-eligible employees recognized during the first quarter
of 2024 and a decrease in payroll taxes due to employees reaching
maximum taxable amounts.
- A $2.2 million increase in net gain on other real estate owned
(“OREO”) operations, mainly driven by the aforementioned $2.3
million realized gain on sale of a commercial real estate OREO
property in Puerto Rico.
Partially offset by:
- A $1.9 million increase 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 $0.5 million increase in occupancy and equipment
expenses.
- A $0.5 million increase in business promotion expenses as part
of ongoing marketing efforts.
INCOME TAXES
The Corporation recorded an income tax expense of $25.5 million
for the second quarter of 2024, compared to $23.9 million for the
first quarter of 2024.
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 24.1% for the second quarter of
2024. As of June 30, 2024, the Corporation had a deferred tax asset
of $142.7 million, net of a valuation allowance of $141.1 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)
June 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
June 30, 2023
Nonaccrual loans held for investment:
Residential mortgage
$
31,396
$
32,685
$
32,239
$
31,946
$
33,252
Construction
4,742
1,498
1,569
1,640
1,677
Commercial mortgage
11,736
11,976
12,205
21,632
21,536
C&I
27,661
25,067
15,250
18,809
9,194
Consumer and finance leases
20,638
21,739
22,444
19,137
16,362
Total nonaccrual loans held for
investment
$
96,173
$
92,965
$
83,707
$
93,164
$
82,021
OREO
21,682
28,864
32,669
28,563
31,571
Other repossessed property
7,513
6,226
8,115
7,063
5,404
Other assets (1)
1,532
1,551
1,415
1,448
2,111
Total non-performing assets (2)
$
126,900
$
129,606
$
125,906
$
130,238
$
121,107
Past due loans 90 days and still accruing
(3)
$
47,173
$
57,515
$
59,452
$
62,892
$
63,211
Nonaccrual loans held for investment to
total loans held for investment
0.78
%
0.76
%
0.69
%
0.78
%
0.70
%
Nonaccrual loans to total loans
0.78
%
0.75
%
0.69
%
0.78
%
0.70
%
Non-performing assets to total assets
0.67
%
0.69
%
0.67
%
0.70
%
0.63
%
___________________________________________________________________
(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 $7.4
million as of June 30, 2024 (March 31, 2024- $8.6 million; December
31, 2023 - $8.3 million; September 30, 2023 - $8.9 million; June
30, 2023 - $9.5 million).
(3)
These include rebooked loans, which were
previously pooled into GNMA securities, amounting to $6.8 million
as of June 30, 2024 (March 31, 2024- $8.8 million; December 31,
2023 - $7.9 million; September 30, 2023 - $8.5 million; June 30,
2023 - $6.5 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 $2.7 million to $126.9
million as of June 30, 2024, compared to $129.6 million as of March
31, 2024. Total nonaccrual loans held for investment increased by
$3.2 million to $96.2 million as of June 30, 2024, compared to
$93.0 million as of March 31, 2024.
The decrease in non-performing assets was
mainly driven by:
- A $7.2 million decrease in the OREO
portfolio balance, mainly attributable to the aforementioned sale
of a $5.3 million commercial real estate OREO property in Puerto
Rico.
- A $1.3 million decrease in nonaccrual
residential mortgage loans.
- A $1.1 million decrease in nonaccrual
consumer loans, consisting mainly of auto loans and finance
leases.
Partially offset by:
- A $5.6 million increase in nonaccrual
commercial and construction loans, mainly related to the
aforementioned inflow of a $16.5 million commercial relationship in
the Puerto Rico region in the food retail industry, partially
offset by the restoration to accrual status of a $10.0 million
C&I loan in the Florida region in the power generation industry
during the second quarter of 2024.
- A $1.3 million increase in other
repossessed property, consisting of repossessed automobiles.
- Inflows to nonaccrual loans held for investment were $44.0
million in the second quarter of 2024, a decrease of $2.8 million,
compared to inflows of $46.8 million in the first quarter of 2024.
Inflows to nonaccrual consumer loans were $22.5 million in the
second quarter of 2024, a decrease of $8.7 million compared to
inflows of $31.2 million in the first quarter of 2024. Inflows to
nonaccrual residential mortgage loans were $3.4 million in the
second quarter of 2024, a decrease of $1.2 million compared to
inflows of $4.6 million in the first quarter of 2024. Inflows to
nonaccrual commercial and construction loans were $18.1 million in
the second quarter of 2024, an increase of $7.1 million compared to
inflows of $11.0 million in the first quarter of 2024. The net
increase in inflows of commercial and construction loans was mostly
related to the aforementioned $16.5 million commercial relationship
in the Puerto Rico region. See Early Delinquency below for
additional information.
- Adversely classified commercial and construction loans
increased by $10.3 million to $86.8 million as of June 30, 2024,
also driven by the aforementioned inflow of a $16.5 million
commercial relationship in the Puerto Rico region and the downgrade
of a $5.1 million commercial mortgage loan in the Puerto Rico
region, partially offset by an upgrade related to the
aforementioned restoration to accrual status of a $10.0 million
C&I 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 $147.4 million as of June 30,
2024, an increase of $13.7 million, compared to $133.7 million as
of March 31, 2024, mainly due to a $15.2 million increase in
consumer loans, mainly in the auto loan portfolio.
Allowance for Credit Losses
The following table summarizes the activity of the ACL for
on-balance sheet and off-balance sheet exposures during the second
and first quarters of 2024:
Quarter Ended June 30,
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
$
56,689
$
73,337
$
133,566
$
263,592
$
4,919
$
1,235
$
442
$
270,188
Provision for credit losses - (benefit)
expense
(10,593
)
(4,198
)
26,721
11,930
(417
)
32
60
11,605
Net (charge-offs) recoveries
(45
)
1,033
(21,978
)
(20,990
)
-
-
47
(20,943
)
Allowance for credit losses, end of
period
$
46,051
$
70,172
$
138,309
$
254,532
$
4,502
$
1,267
$
549
$
260,850
Amortized cost of loans and finance
leases
$
2,809,666
$
5,863,843
$
3,711,999
$
12,385,508
Allowance for credit losses on loans to
amortized cost
1.64
%
1.20
%
3.73
%
2.06
%
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
%
The main variances of the total ACL by main categories are
discussed below:
Allowance for Credit Losses for Loans and Finance Leases
As of June 30, 2024, the ACL for loans and finance leases was
$254.5 million, a decrease of $9.1 million, from $263.6 million as
of March 31, 2024. The ratio of the ACL for loans and finance
leases to total loans held for investment was 2.06% as of June 30,
2024, compared to 2.14% as of March 31, 2024. The ratio of the
total ACL for loans and finance leases to nonaccrual loans held for
investment was 264.66% as of June 30, 2024, compared to 283.54% as
of March 31, 2024.
The ACL for residential mortgage loans decreased by $10.6
million, mainly driven by updated historical loss experience used
for determining the ACL estimate resulting in a downward revision
of estimated loss severities and lower required reserve levels.
The ACL for commercial and construction loans decreased by $3.1
million, mainly due to an improvement on the economic outlook of
certain macroeconomic variables, particularly in variables
associated with commercial real estate property performance.
Meanwhile, the ACL for consumer loans increased by $4.6 million,
mainly driven by updated historical loss experience used for
determining the ACL estimate resulting in an upward revision of
estimated loss severities and higher required reserve levels in the
auto loans and finance leases portfolios, increases in portfolio
volumes, and increases in historical charge-off levels.
The provision for credit losses on loans and finance leases was
$11.9 million for the second quarter of 2024, compared to $12.9
million in the first quarter of 2024.
- Provision for credit losses for the residential mortgage loan
portfolio was a net benefit of $10.6 million for the second quarter
of 2024, compared to a net benefit of $0.5 million for the first
quarter of 2024. The increase in net benefit during the second
quarter of 2024 was mainly the result of the aforementioned updated
historical loss experience.
- Provision for credit losses for the commercial and construction
loan portfolios was a net benefit of $4.2 million for the second
quarter of 2024, compared to a net benefit of $2.8 million for the
first quarter of 2024. The increase in net benefit during the
second quarter of 2024 was mainly driven by an improvement on the
economic outlook of certain macroeconomic variables, particularly
in variables associated with commercial real estate property
performance, and $1.2 million in recoveries of two commercial loans
in the Florida region during the second quarter of 2024, compared
to a $5.0 million recovery of a C&I loan in the Puerto Rico
region during the first quarter of 2024.
- Provision for credit losses for the consumer loan and finance
lease portfolios was an expense of $26.7 million for the second
quarter of 2024, compared to an expense of $16.2 million for the
first quarter of 2024. The increase in provision expense was mainly
driven by the $9.5 million recovery associated with the
aforementioned bulk sale of fully charged-off consumer loans during
the first quarter of 2024, the upward historical loss experience
resulting in higher required reserve levels in the auto loans and
finance leases portfolios, increases in portfolio volumes, and
increases in historical charge-off levels.
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 June 30, 2024 March 31, 2024
December 31, 2023 September 30, 2023 June 30,
2023 Residential mortgage
0.01
%
0.03
%
-0.04
%
-0.01
%
0.06
%
Construction
-0.02
%
-0.02
%
0.01
%
-3.18
%
-0.99
%
Commercial mortgage
-0.07
%
-0.01
%
0.09
%
-0.01
%
0.01
%
Commercial and Industrial
-0.08
%
-0.59
%
0.00
%
-0.02
%
0.87
%
Consumer loans and finance leases
2.38
%
1.70
%
(1)
2.26
%
1.79
%
1.51
%
Total loans
0.69
%
0.37
%
(1)
0.69
%
0.48
%
0.67
%
(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 ratio 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 $21.0 million for the second quarter of
2024, or an annualized 0.69% of average loans, compared to $11.2
million, or an annualized 0.37% of average loans, in the first
quarter of 2024. The $9.8 million increase in net charge-offs was
mainly driven by the effect during the first quarter of 2024 of
both the $9.5 million recovery associated with the aforementioned
bulk sale of fully charged-off consumer loans and the
aforementioned $5.0 million recovery associated with a C&I loan
in the Puerto Rico region, partially offset by a decrease in
charge-offs in the auto loans and finance leases portfolios and
$1.2 million in recoveries of two commercial loans in the Florida
region during the second quarter of 2024.
Allowance for Credit Losses for Unfunded Loan Commitments
As of June 30, 2024, the ACL for off-balance sheet credit
exposures decreased to $4.5 million, compared to $4.9 million as of
March 31, 2024, mainly driven by an improvement on the economic
outlook of certain macroeconomic variables, particularly in
variables associated with commercial real estate property
performance.
Allowance for Credit Losses for Debt Securities
As of June 30, 2024, the ACL for debt securities was $1.8
million, of which $1.3 million related to Puerto Rico municipal
bonds classified as held-to-maturity, compared to $1.6 million and
$1.2 million, respectively, as of March 31, 2024.
LIQUIDITY
Cash and cash equivalents decreased by $98.2 million to $586.3
million as of June 30, 2024. When adding $1.9 billion of free
high-quality liquid securities that could be liquidated or pledged
within one day, total core liquidity amounted to $2.5 billion as of
June 30, 2024, or 13.37% of total assets, compared to $2.7 billion,
or 14.45% of total assets as of March 31, 2024. In addition, as of
June 30, 2024, the Corporation had $968.1 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 18.50%
as of June 30, 2024, compared to 19.60% as of March 31, 2024.
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 $2.5 billion available for
funding under the FED’s Borrower-In-Custody Program as of June 30,
2024. Combined, as of June 30, 2024, the Corporation had $6.0
billion, or 132% of estimated uninsured deposits (excluding fully
collateralized government deposits), available to meet liquidity
needs. Also, the Corporation has access to financing with other
counterparties through repurchase agreements.
The Corporation’s total deposits, excluding brokered CDs,
amounted to $15.9 billion as of June 30, 2024, compared to $15.8
billion as of March 31, 2024, which includes $3.2 billion in
government deposits that are fully collateralized as of each of
June 30, 2024 and March 31, 2024. Excluding fully collateralized
government deposits and FDIC-insured deposits, as of June 30, 2024,
the estimated amount of uninsured deposits was $4.5 billion, which
represents 28.46% of total deposits, compared to $4.4 billion, or
27.93% of total deposits, as of March 31, 2024. Refer to Table 11
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 June 30,
2024, down $9.6 million from March 31, 2024.
The following variances within the main components of total
assets are noted:
- A $98.2 million decrease in cash and cash equivalents, related
to loan growth, the repurchases of common stock, the payment of
common stock dividends, and repayment of matured brokered CDs,
partially offset by cash inflows from the investment securities
portfolio.
- A $95.1 million decrease in investment securities, mainly
driven by principal repayments of $132.9 million, which include
scheduled repayments of $97.9 million and maturities of $35.0
million, partially offset by $28.0 million in purchases of
Community Reinvestment Act qualified debt securities during the
second quarter of 2024 and a $10.6 million increase in the fair
value of available-for-sale debt securities attributable to changes
in market interest rates.
- A $72.4 million increase in total loans. The variance consisted
of increases of $47.6 million in the Puerto Rico region, $17.7
million in the Florida region, and $7.1 million in the Virgin
Islands region. On a portfolio basis, the variance consisted of
increases of $33.8 million in commercial and construction loans,
$32.2 million in consumer loans, primarily auto loans and finance
leases in the Puerto Rico region, and $6.4 million in residential
mortgage loans. The growth in commercial and construction loans was
mainly in the Puerto Rico region, driven by a $43.1 million
increase in the floor plan lines of credit portfolio and a $9.6
million disbursement of a construction loan, partially offset by
$27.4 million in payoffs associated with two C&I loans. Total
loan originations, including refinancings, renewals, and draws from
existing commitments (excluding credit card utilization activity),
amounted to $1.1 billion in the second quarter of 2024, an increase
of $25.3 million compared to the first quarter of 2024. The
variances by geography and portfolio basis follow: Total loan
originations in the Puerto Rico region amounted to $840.5 million
in the second quarter of 2024, an increase of $33.0 million,
compared to $807.5 million in the first quarter of 2024. The $33.0
million increase in total loan originations consisted of increases
of $24.9 million in residential mortgage loans, $7.2 million in
consumer loans, and $0.9 million in commercial and construction
loans. Total loan originations in the Virgin Islands region
amounted to $20.8 million in the second quarter of 2024, compared
to $19.1 million in the first quarter of 2024. The $1.7 million
increase in total loan originations consisted of increases of $1.5
million in commercial and construction loans and $0.9 million in
consumer loans, partially offset by a $0.7 million decrease in
residential mortgage loans. Total loan originations in the Florida
region amounted to $251.0 million in the second quarter of 2024,
compared to $260.4 million in the first quarter of 2024. The $9.4
million decline in total loan originations was mainly due to a
$21.7 million decrease in commercial and construction loans,
principally in commercial mortgage loans. This variance was
partially offset by increases of $9.8 million in residential
mortgage loans and $2.5 million in consumer loans.
Total liabilities were approximately $17.4 billion as of June
30, 2024, a decrease of $21.3 million from March 31, 2024.
- Total deposits decreased $16.6 million consisting of:
- A $100.9 million decrease in brokered CDs. The decline reflects
maturing short-term brokered CDs amounting to $174.6 million with
an all-in cost of 5.51% that were paid off during the second
quarter of 2024, partially offset by $73.7 million of new issuances
with original average maturities of approximately 1 year and an
all-in cost of 5.18%.
- A $47.4 million decrease in government deposits, which includes
a decline of $76.6 million in the Puerto Rico region, partially
offset by increases of $28.3 million in the Virgin Islands region
and $0.9 million in the Florida region.
- A $131.7 million increase in deposits, excluding brokered CDs
and government deposits, reflecting growth of $70.4 million in the
Puerto Rico region, $41.4 million in the Florida region, and $19.9
million in the Virgin Islands region. The increase in such deposits
includes a $68.5 million increase in time deposits and a $46.8
million increase in non-interest-bearing deposits.
Total stockholders’ equity amounted to $1.5 billion as of June
30, 2024, an increase of $11.7 million from March 31, 2024, mainly
driven by net income generated in the second quarter of 2024 and a
$10.6 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
$50.0 million in stock repurchases under the 2023 capital plan
authorization of $225 million and $26.6 million in common stock
dividends declared in the second quarter of 2024.
As of June 30, 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
15.77%, 15.77%, 18.21%, and 10.63%, respectively, as of June 30,
2024, compared to CET1 capital, tier 1 capital, total capital, and
leverage ratios of 15.90%, 15.90%, 18.36%, and 10.65%,
respectively, as of March 31, 2024.
Meanwhile, estimated CET1 capital, tier 1 capital, total capital
and leverage ratios of our banking subsidiary, FirstBank, were
15.97%, 16.73%, 17.98%, and 11.29%, respectively, as of June 30,
2024, compared to CET1 capital, tier 1 capital, total capital and
leverage ratios of 16.12%, 16.89%, 18.15%, and 11.31%,
respectively, as of March 31, 2024.
Tangible Common Equity (Non-GAAP)
On a non-GAAP basis, the Corporation’s tangible common equity
ratio increased to 7.66% as of June 30, 2024, compared to 7.59% as
of March 31, 2024, mainly driven by the $10.6 million increase in
the fair value of available-for-sale debt securities due to changes
in market interest rates. Refer to Non-GAAP Disclosures- Non-GAAP
Financial Measures for the definition of and additional information
about this non-GAAP financial measure.
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:
June 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
June 30, 2023
(In thousands, except ratios and per share
information)
Tangible Equity:
Total common equity - GAAP
$
1,491,460
$
1,479,717
$
1,497,609
$
1,303,068
$
1,397,999
Goodwill
(38,611
)
(38,611
)
(38,611
)
(38,611
)
(38,611
)
Other intangible assets
(9,700
)
(11,542
)
(13,383
)
(15,229
)
(17,092
)
Tangible common equity -
non-GAAP
$
1,443,149
$
1,429,564
$
1,445,615
$
1,249,228
$
1,342,296
Tangible Assets:
Total assets - GAAP
$
18,881,374
$
18,890,961
$
18,909,549
$
18,594,608
$
19,152,455
Goodwill
(38,611
)
(38,611
)
(38,611
)
(38,611
)
(38,611
)
Other intangible assets
(9,700
)
(11,542
)
(13,383
)
(15,229
)
(17,092
)
Tangible assets - non-GAAP
$
18,833,063
$
18,840,808
$
18,857,555
$
18,540,768
$
19,096,752
Common shares outstanding
163,865
166,707
169,303
174,386
179,757
Tangible common equity ratio -
non-GAAP
7.66
%
7.59
%
7.67
%
6.74
%
7.03
%
Tangible book value per common share -
non-GAAP
$
8.81
$
8.58
$
8.54
$
7.16
$
7.47
Exposure to Puerto Rico Government
As of June 30, 2024, the Corporation had $316.7 million of
direct exposure to the Puerto Rico government, its municipalities,
and public corporations, an increase of $3.0 million when compared
to $313.7 million as of March 31, 2024. As of June 30, 2024,
approximately $203.1 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 $59.4
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 $8.8 million in a loan extended to an affiliate of
the Puerto Rico Electric Power Authority and $42.3 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 $1.5
million as of June 30, 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
June 30, 2024, of which $0.4 million is due to credit
deterioration.
The aforementioned exposure to municipalities in Puerto Rico
included $107.5 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 June 30, 2024, the Corporation had $2.7 billion of public
sector deposits in Puerto Rico, compared to $2.8 billion as of
March 31, 2024. Approximately 23% of the public sector deposits as
of June 30, 2024 were from municipalities and municipal agencies in
Puerto Rico, and 77% were from public corporations, the Puerto Rico
central government and agencies, and U.S. federal government
agencies in Puerto Rico.
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 share, adjusted pre-tax, pre-provision
income, and adjusted non-interest expenses 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 second and first quarters of 2024
and second quarter of 2023 included the following Special
Items:
Quarters Ended June 30, 2024 and March 31,
2024
FDIC Special Assessment Expense
Charges of $0.2 million ($0.1 million after-tax, calculated
based on the statutory tax rate of 37.5%) and $0.9 million ($0.6
million after-tax) were recorded in the second and first quarter of
2024, respectively, to increase the initial estimated FDIC special
assessment resulting from the FDIC’s updates related to the loss
estimate in connection with losses to the Deposit Insurance Fund
associated with protecting uninsured deposits following the
failures of certain financial institutions during the first half of
2023. The aforementioned charges increased the estimated FDIC
special assessment to a total of $7.4 million, which was the
revised estimated loss reflected in the FDIC invoice for the first
quarterly collection period with a payment date of June 28, 2024.
The FDIC deposit special assessment is reflected in the condensed
consolidated statements of income as part of “FDIC deposit
insurance” expenses.
Quarter Ended June 30, 2023
Gain Recognized from Legal Settlement
During the second quarter of 2023, the Corporation recognized a
$3.6 million ($2.3 million after-tax, calculated based on the
statutory tax rate of 37.5%) gain from a legal settlement reflected
in the condensed consolidated statements of income as part of other
non-interest income.
Gain on Early Extinguishment of Debt
During the second quarter of 2023, the Corporation recognized a
$1.6 million gain on the repurchase of $21.4 million in junior
subordinated debentures reflected in the condensed consolidated
statements of income as “Gain on early extinguishment of debt.” The
junior subordinated debentures are reflected in the condensed
consolidated statements of financial condition as “Other
borrowings.” The purchase price equated to 92.5% of the $21.4
million par value. The 7.5% discount resulted in the gain of $1.6
million. The gain, realized at the holding company level, had no
effect on the income tax expense in the second quarter of 2023.
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. 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 Statement of
Financial Condition - Tangible Common Equity (Non-GAAP) for a
reconciliation of the Corporation’s total stockholders’ equity and
total assets in accordance with GAAP to the non-GAAP financial
measures of tangible common equity and tangible assets,
respectively. 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 Table 4
in the accompanying tables (Exhibit A) 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)
The following table reconciles, for the second and first
quarters of 2024, second quarter of 2023, and six-month periods
ended June 30, 2024 and 2023, net income to adjusted net income and
adjusted earnings per diluted share, which are non-GAAP financial
measures that exclude the significant Special Items discussed in
the Non-GAAP Disclosures - Special Items section.
Quarter Ended Six-Month Period Ended June 30,
2024 March 31, 2024 June 30, 2023 June 30,
2024 June 30, 2023 (In thousands, except per share
information) Net income, as reported (GAAP) $
75,838
$
73,458
$
70,655
$
149,296
$
141,353
Adjustments: FDIC special assessment expense
152
947
-
1,099
-
Gain recognized from legal settlement
-
-
(3,600
)
-
(3,600
)
Gain on early extinguishment of debt
-
-
(1,605
)
-
(1,605
)
Income tax impact of adjustments (1)
(57
)
(355
)
1,350
(412
)
1,350
Adjusted net income attributable to common stockholders (non-GAAP)
$
75,933
$
74,050
$
66,800
$
149,983
$
137,498
Weighted-average diluted shares outstanding
165,543
167,798
179,277
166,670
180,253
Earnings Per Share - diluted (GAAP) $
0.46
$
0.44
$
0.39
$
0.90
$
0.78
Adjusted Earnings Per Share - diluted (non-GAAP) $
0.46
$
0.44
$
0.37
$
0.90
$
0.76
(1)
See Non-GAAP Disclosures - Special Items 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)
The following table reconciles income before income taxes to
adjusted pre-tax, pre-provision income for the last five quarters
and for the six-month periods ended June 30, 2024 and 2023:
Quarter Ended Six-Month Period Ended June 30,
2024 March 31, 2024 December 31, 2023
September 30, 2023 June 30, 2023 June 30, 2024
June 30, 2023 (Dollars in thousands) Income before income
taxes $
101,379
$
97,413
$
84,874
$
108,990
$
100,939
$
198,792
$
203,572
Add: Provision for credit losses expense
11,605
12,167
18,812
4,396
22,230
23,772
37,732
Add: FDIC special assessment expense
152
947
6,311
-
-
1,099
-
Less: Gain recognized from legal settlement
-
-
-
-
(3,600
)
-
(3,600
)
Less: Gain on early extinguishment of debt
-
-
-
-
(1,605
)
-
(1,605
)
Adjusted pre-tax, pre-provision income (1) $
113,136
$
110,527
$
109,997
$
113,386
$
117,964
$
223,663
$
236,099
Change from most recent prior period (amount) $
2,609
$
530
$
(3,389
)
$
(4,578
)
$
(171
)
$
(12,436
)
$
5,475
Change from most recent prior period (percentage)
2.4
%
0.5
%
-3.0
%
-3.9
%
-0.1
%
-5.3
%
2.4
%
____________________________________________
(1)
Non-GAAP financial measure. See Non-GAAP Disclosures above for the
definition and additional information about this non-GAAP financial
measure.
Conference Call / Webcast Information
First BanCorp.’s senior management will host an earnings
conference call and live webcast on Tuesday, July 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 715720. 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 July 23, 2025. A
telephone replay will be available one hour after the end of the
conference call through August 22, 2024, at (866) 813-9403. The
replay access code is 306594.
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, 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,
including systems conversions, 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 June 5, 2024, 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 pay dividends to the Corporation; environmental, social,
and governance 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 Default 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 to, 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 June 30, 2024 March 31, 2024 December
31, 2023 (In thousands, except for share information)
ASSETS Cash and due from banks
$
581,843
$
680,734
$
661,925
Money market investments:
Time deposits with other financial institutions
500
300
300
Other short-term investments
3,939
3,485
939
Total money market investments
4,439
3,785
1,239
Debt securities available for sale, at fair value (ACL of $549 as
of June 30, 2024; $442 as of March 31, 2024; and $511 as of
December 31, 2023)
4,957,311
5,047,179
5,229,984
Debt securities held to maturity, at amortized cost, net of ACL of
$1,267 as of June 30, 2024; $1,235 as of March 30, 2024; and $2,197
as of December 31, 2023 (fair value of $333,690 as of June 30,
2024; $338,120 as of March 31, 2024; and $346,132 as of December
31, 2023)
343,168
348,095
351,981
Total debt securities
5,300,479
5,395,274
5,581,965
Equity securities
51,037
51,390
49,675
Total investment securities
5,351,516
5,446,664
5,631,640
Loans, net of ACL of $254,532 as of June 30, 2024; $263,592 as of
March 31, 2024; and $261,843 as of December 31, 2023
12,130,976
12,047,856
11,923,640
Loans held for sale, at lower of cost or market
10,392
12,080
7,368
Total loans, net
12,141,368
12,059,936
11,931,008
Accrued interest receivable on loans and investments
77,895
73,154
77,716
Premises and equipment, net
138,554
141,471
142,016
OREO
21,682
28,864
32,669
Deferred tax asset, net
142,725
147,743
150,127
Goodwill
38,611
38,611
38,611
Other intangible assets
9,700
11,542
13,383
Other assets
373,041
258,457
229,215
Total assets
$
18,881,374
$
18,890,961
$
18,909,549
LIABILITIES
Deposits:
Non-interest-bearing deposits
$
5,406,054
$
5,346,326
$
5,404,121
Interest-bearing deposits
11,122,902
11,199,185
11,151,864
Total deposits
16,528,956
16,545,511
16,555,985
Advances from the FHLB
500,000
500,000
500,000
Other borrowings
161,700
161,700
161,700
Accounts payable and other liabilities
199,258
204,033
194,255
Total liabilities
17,389,914
17,411,244
17,411,940
STOCKHOLDERSʼ EQUITY
Common stock, $0.10 par value, 223,663,116 shares issued (June 30,
2024 - 163,865,453 shares outstanding; March 31, 2024 - 166,707,047
shares outstanding; and December 31, 2023 - 169,302,812 shares
outstanding)
22,366
22,366
22,366
Additional paid-in capital
961,254
959,319
965,707
Retained earnings
1,941,980
1,892,714
1,846,112
Treasury stock, at cost (June 30, 2024 - 59,797,663 shares; March
31, 2024 - 56,956,069 shares; and December 31, 2023 - 54,360,304
shares)
(790,465
)
(740,447
)
(697,406
)
Accumulated other comprehensive loss
(643,675
)
(654,235
)
(639,170
)
Total stockholdersʼ equity
1,491,460
1,479,717
1,497,609
Total liabilities and stockholdersʼ equity
$
18,881,374
$
18,890,961
$
18,909,549
Table 2 – Condensed Consolidated Statements of Income
Quarter Ended Six-Month Period Ended June 30,
2024 March 31, 2024 June 30, 2023 June 30,
2024 June 30, 2023 (In thousands, except per share
information)
Net interest income: Interest income
$
272,245
$
268,505
$
252,204
$
540,750
$
494,600
Interest expense
72,617
71,985
52,389
144,602
93,900
Net interest income
199,628
196,520
199,815
396,148
400,700
Provision for credit losses - expense (benefit):
Loans
11,930
12,917
20,770
24,847
37,026
Unfunded loan commitments
(417
)
281
721
(136
)
616
Debt securities
92
(1,031
)
739
(939
)
90
Provision for credit losses - expense
11,605
12,167
22,230
23,772
37,732
Net interest income after provision for credit losses
188,023
184,353
177,585
372,376
362,968
Non-interest income:
Service charges and fees on deposit accounts
9,725
9,662
9,287
19,387
18,828
Mortgage banking activities
3,419
2,882
2,860
6,301
5,672
Gain on early extinguishment of debt
-
-
1,605
-
1,605
Card and processing income
11,523
11,312
11,135
22,835
22,053
Other non-interest income
7,371
10,127
11,384
17,498
20,631
Total non-interest income
32,038
33,983
36,271
66,021
68,789
Non-interest expenses:
Employees’ compensation and benefits
57,456
59,506
54,314
116,962
110,736
Occupancy and equipment
21,851
21,381
21,097
43,232
42,283
Business promotion
4,359
3,842
4,167
8,201
8,142
Professional service fees
12,431
12,676
11,596
25,107
23,569
Taxes, other than income taxes
5,408
5,129
5,124
10,537
10,236
FDIC deposit insurance
2,316
3,102
2,143
5,418
4,276
Net gain on OREO operations
(3,609
)
(1,452
)
(1,984
)
(5,061
)
(3,980
)
Credit and debit card processing expenses
7,607
5,751
6,540
13,358
11,858
Other non-interest expenses
10,863
10,988
9,920
21,851
21,065
Total non-interest expenses
118,682
120,923
112,917
239,605
228,185
Income before income taxes
101,379
97,413
100,939
198,792
203,572
Income tax expense
25,541
23,955
30,284
49,496
62,219
Net income
$
75,838
$
73,458
$
70,655
$
149,296
$
141,353
Net income attributable to common stockholders
$
75,838
$
73,458
$
70,655
$
149,296
$
141,353
Earnings per common share:
Basic
$
0.46
$
0.44
$
0.39
$
0.90
$
0.79
Diluted
$
0.46
$
0.44
$
0.39
$
0.90
$
0.78
Table 3 – Selected Financial Data
Quarter Ended Six-Month Period Ended June 30,
2024 March 31, 2024 June 30, 2023 June 30,
2024 June 30, 2023 (Shares in thousands) Per
Common Share Results: Net earnings per share - basic
$
0.46
$
0.44
$
0.39
$
0.90
$
0.79
Net earnings per share - diluted
$
0.46
$
0.44
$
0.39
$
0.90
$
0.78
Cash dividends declared
$
0.16
$
0.16
$
0.14
$
0.32
$
0.28
Average shares outstanding
164,945
167,142
178,926
166,043
179,567
Average shares outstanding diluted
165,543
167,798
179,277
166,670
180,253
Book value per common share
$
9.10
$
8.88
$
7.78
$
9.10
$
7.78
Tangible book value per common share (1)
$
8.81
$
8.58
$
7.47
$
8.81
$
7.47
Common stock price: end of period
$
18.29
$
17.54
$
12.22
$
18.29
$
12.22
Selected Financial Ratios (In Percent):
Profitability:
Return on average assets
1.61
1.56
1.51
1.59
1.53
Return on average equity
20.80
19.56
19.66
20.17
20.31
Interest rate spread (2)
3.41
3.35
3.58
3.38
3.71
Net interest margin (2)
4.32
4.27
4.35
4.29
4.42
Efficiency ratio (3)
51.23
52.46
47.83
51.84
48.60
Capital and Other:
Average total equity to average total assets
7.74
7.99
7.67
7.87
7.52
Total capital
18.21
18.36
19.15
18.21
19.15
Common equity Tier 1 capital
15.77
15.90
16.64
15.77
16.64
Tier 1 capital
15.77
15.90
16.64
15.77
16.64
Leverage
10.63
10.65
10.73
10.63
10.73
Tangible common equity ratio (1)
7.66
7.59
7.03
7.66
7.03
Dividend payout ratio
34.80
36.41
35.45
35.59
35.57
Basic liquidity ratio (4)
18.50
19.60
21.82
18.50
21.82
Core liquidity ratio (5)
13.37
14.45
16.70
13.37
16.70
Loan to deposit ratio
75.00
74.48
69.76
75.00
69.76
Uninsured deposits, excluding fully collateralized deposits, to
total deposits (6)
28.46
27.93
27.12
28.46
27.12
Asset Quality:
Allowance for credit losses for loans and finance leases to total
loans held for investment
2.06
2.14
2.28
2.06
2.28
Net charge-offs (annualized) to average loans outstanding
0.69
0.37
0.67
0.53
0.56
Provision for credit losses for loans and finance leases to net
charge-offs
56.84
115.66
107.73
77.27
113.76
Non-performing assets to total assets
0.67
0.69
0.63
0.67
0.63
Nonaccrual loans held for investment to total loans held for
investment
0.78
0.76
0.70
0.78
0.70
Allowance for credit losses for loans and finance leases to total
nonaccrual loans held for investment
264.66
283.54
325.60
264.66
325.60
Allowance for credit losses for loans and finance leases to total
nonaccrual loans held for investment, excluding residential estate
loans
392.94
437.28
547.60
392.94
547.60
_________________________________________________________________
(1)
Non-GAAP financial measures. Refer to Non-GAAP Disclosures and
Statement of Financial Condition - Tangible Common Equity
(Non-GAAP) above for additional information about the components
and a reconciliation of these measures.
(2)
Non-GAAP financial measures reported on a tax-equivalent basis and
excluding changes in the fair value of derivative instruments.
Refer to Non-GAAP Disclosures and Table 4 below 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 second and first
quarters of 2024, the second quarter of 2023, and the six-month
periods ended June 30, 2024 and 2023, respectively. The table also
reconciles net interest spread and net interest margin to these
items excluding valuations, and on a tax-equivalent basis.
Quarter Ended Six-Month Period Ended (Dollars in
thousands)
June 30, 2024 March 31, 2024 June 30,
2023 June 30, 2024 June 30, 2023 Net Interest
Income
Interest income - GAAP
$
272,245
$
268,505
$
252,204
$
540,750
$
494,600
Unrealized (gain) loss on derivative instruments
-
(2
)
(3
)
(2
)
3
Interest income excluding valuations - non-GAAP
272,245
268,503
252,201
540,748
494,603
Tax-equivalent adjustment
4,866
4,813
5,540
9,679
11,887
Interest income on a tax-equivalent basis and excluding valuations
- non-GAAP
$
277,111
$
273,316
$
257,741
$
550,427
$
506,490
Interest expense - GAAP
$
72,617
$
71,985
$
52,389
$
144,602
$
93,900
Net interest income - GAAP
$
199,628
$
196,520
$
199,815
$
396,148
$
400,700
Net interest income excluding valuations
- non-GAAP
$
199,628
$
196,518
$
199,812
$
396,146
$
400,703
Net interest income on a tax-equivalent basis and excluding
valuations - non-GAAP
$
204,494
$
201,331
$
205,352
$
405,825
$
412,590
Average Balances
Loans and leases
$
12,272,816
$
12,207,840
$
11,591,516
$
12,240,328
$
11,555,659
Total securities, other short-term investments and interest-bearing
cash balances
6,698,609
6,720,395
7,333,989
6,709,502
7,283,450
Average Interest-Earning Assets
$
18,971,425
$
18,928,235
$
18,925,505
$
18,949,830
$
18,839,109
Average Interest-Bearing Liabilities
$
11,868,658
$
11,838,159
$
11,176,385
$
11,853,409
$
11,067,741
Average Assets (1)
$
18,884,431
$
18,858,299
$
18,788,578
$
18,871,365
$
18,673,506
Average Non-Interest-Bearing Deposits
$
5,351,308
$
5,308,531
$
5,968,892
$
5,329,920
$
5,983,896
Average Yield/Rate
Average yield on interest-earning assets - GAAP
5.76
%
5.69
%
5.35
%
5.72
%
5.29
%
Average rate on interest-bearing liabilities - GAAP
2.45
%
2.44
%
1.88
%
2.45
%
1.71
%
Net interest spread - GAAP
3.31
%
3.25
%
3.47
%
3.27
%
3.58
%
Net interest margin - GAAP
4.22
%
4.16
%
4.23
%
4.19
%
4.29
%
Average yield on interest-earning assets excluding valuations -
non-GAAP
5.76
%
5.69
%
5.35
%
5.72
%
5.29
%
Average rate on interest-bearing liabilities
2.45
%
2.44
%
1.88
%
2.45
%
1.71
%
Net interest spread excluding valuations - non-GAAP
3.31
%
3.25
%
3.47
%
3.27
%
3.58
%
Net interest margin excluding valuations - non-GAAP
4.22
%
4.16
%
4.23
%
4.19
%
4.29
%
Average yield on interest-earning assets on a tax-equivalent basis
and excluding valuations - non-GAAP
5.86
%
5.79
%
5.46
%
5.83
%
5.42
%
Average rate on interest-bearing liabilities
2.45
%
2.44
%
1.88
%
2.45
%
1.71
%
Net interest spread on a tax-equivalent basis and excluding
valuations - non-GAAP
3.41
%
3.35
%
3.58
%
3.38
%
3.71
%
Net interest margin on a tax-equivalent basis and excluding
valuations - non-GAAP
4.32
%
4.27
%
4.35
%
4.29
%
4.42
%
__________________________________________________________
(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
June 30,
March 31,
June 30,
June 30,
March 31,
June 30,
June 30,
March 31,
June 30,
2024
2024
2023
2024
2024
2023
2024
2024
2023
(Dollars in thousands) Interest-earning assets: Money market and
other short-term investments $
667,564
$
533,747
$
617,356
$
9,060
$
7,254
$
7,880
5.44
%
5.45
%
5.12%
Government obligations (2)
2,619,778
2,684,169
2,909,204
8,947
9,053
10,973
1.37
%
1.35
%
1.51%
MBS
3,359,598
3,451,293
3,757,425
14,339
15,238
17,087
1.71
%
1.77
%
1.82%
FHLB stock
34,032
34,635
36,265
818
854
780
9.64
%
9.89
%
8.63%
Other investments
17,637
16,551
13,739
244
66
58
5.55
%
1.60
%
1.69%
Total investments (3)
6,698,609
6,720,395
7,333,989
33,408
32,465
36,778
2.00
%
1.94
%
2.01%
Residential mortgage loans
2,807,639
2,810,304
2,808,465
40,686
40,473
39,864
5.81
%
5.78
%
5.69%
Construction loans
245,219
218,854
149,783
4,955
4,537
2,903
8.10
%
8.32
%
7.77%
C&I and commercial mortgage loans
5,528,607
5,504,782
5,191,040
100,919
99,074
89,290
7.32
%
7.22
%
6.90%
Finance leases
873,908
863,685
769,316
17,255
17,127
14,714
7.92
%
7.95
%
7.67%
Consumer loans
2,817,443
2,810,215
2,672,912
79,888
79,640
74,192
11.37
%
11.37
%
11.13%
Total loans (4) (5)
12,272,816
12,207,840
11,591,516
243,703
240,851
220,963
7.96
%
7.91
%
7.65%
Total interest-earning assets $
18,971,425
$
18,928,235
$
18,925,505
$
277,111
$
273,316
$
257,741
5.86
%
5.79
%
5.46%
Interest-bearing liabilities: Time deposits $
3,002,159
$
2,892,355
$
2,511,504
$
26,588
$
24,410
$
15,667
3.55
%
3.39
%
2.50%
Brokered CDs
676,421
749,760
333,557
8,590
9,680
3,761
5.09
%
5.18
%
4.52%
Other interest-bearing deposits
7,528,378
7,534,344
7,517,995
28,493
28,935
22,176
1.52
%
1.54
%
1.18%
Securities sold under agreements to repurchase
-
-
101,397
-
-
1,328
0.00
%
0.00
%
5.25%
Advances from the FHLB
500,000
500,000
534,231
5,610
5,610
6,048
4.50
%
4.50
%
4.54%
Other borrowings
161,700
161,700
177,701
3,336
3,350
3,409
8.27
%
8.31
%
7.69%
Total interest-bearing liabilities $
11,868,658
$
11,838,159
$
11,176,385
$
72,617
$
71,985
$
52,389
2.45
%
2.44
%
1.88%
Net interest income $
204,494
$
201,331
$
205,352
Interest rate spread
3.41
%
3.35
%
3.58%
Net interest margin
4.32
%
4.27
%
4.35%
________________________________
(1)
Non-GAAP financial measures reported 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 - Non-GAAP Financial Measures 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, $3.2 million, and
$2.9 million, for the quarters ended June 30, 2024, March 31, 2024,
and June 30, 2023, respectively, of income from prepayment
penalties and late fees related to the Corporation’s loan
portfolio.
Table 6 – Year-to-Date 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)
Six-Month Period Ended June 30, 2024 June 30,
2023 June 30, 2024 June 30, 2023
June 30, 2024
June 30, 2023
(Dollars in thousands)
Interest-earning assets:
Money market and other short-term investments
$
600,655
$
511,392
$
16,314
$
12,530
5.45
%
4.94
%
Government obligations (2)
2,651,974
2,909,587
18,000
21,738
1.36
%
1.51
%
MBS
3,405,445
3,810,491
29,577
36,483
1.74
%
1.93
%
FHLB stock
34,334
38,539
1,672
1,201
9.77
%
6.28
%
Other investments
17,094
13,441
310
197
3.64
%
2.96
%
Total investments (3)
6,709,502
7,283,450
65,873
72,149
1.97
%
2.00
%
Residential mortgage loans
2,808,972
2,821,779
81,159
79,658
5.79
%
5.69
%
Construction loans
232,036
147,923
9,492
5,579
8.20
%
7.61
%
C&I and commercial mortgage loans
5,516,695
5,179,448
199,993
175,175
7.27
%
6.82
%
Finance leases
868,796
752,501
34,382
28,523
7.94
%
7.64
%
Consumer loans
2,813,829
2,654,008
159,528
145,406
11.37
%
11.05
%
Total loans (4) (5)
12,240,328
11,555,659
484,554
434,341
7.94
%
7.58
%
Total interest-earning assets
$
18,949,830
$
18,839,109
$
550,427
$
506,490
5.83
%
5.42
%
Interest-bearing liabilities:
Time deposits
$
2,947,257
$
2,427,399
$
50,998
$
26,449
3.47
%
2.20
%
Brokered CDs
713,091
250,588
18,270
5,348
5.14
%
4.30
%
Other interest-bearing deposits
7,531,361
7,531,374
57,428
39,692
1.53
%
1.06
%
Securities sold under agreements to repurchase
-
96,229
-
2,397
0.00
%
5.02
%
Advances from the FHLB
500,000
581,436
11,220
13,224
4.50
%
4.59
%
Other borrowings
161,700
180,715
6,686
6,790
8.29
%
7.58
%
Total interest-bearing liabilities
$
11,853,409
$
11,067,741
$
144,602
$
93,900
2.45
%
1.71
%
Net interest income
$
405,825
$
412,590
Interest rate spread
3.38
%
3.71
%
Net interest margin
4.29
%
4.42
%
______________________________________________________
(1)
Non-GAAP financial measures reported 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 - Non-GAAP Financial Measures 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 $6.3 million and $6.0 million for
the six-month periods ended June 30, 2024 and 2023, respectively,
of income from prepayment penalties and late fees related to the
Corporation's loan portfolio.
Table 7 – Loan Portfolio by Geography
As of June 30, 2024 Puerto Rico Virgin Islands
United States Consolidated (In thousands) Residential
mortgage loans $
2,163,245
$
161,057
$
485,364
$
2,809,666
Commercial loans: Construction loans
160,093
3,681
22,183
185,957
Commercial mortgage loans
1,697,939
62,821
662,549
2,423,309
Commercial and Industrial loans
2,176,489
135,456
942,632
3,254,577
Commercial loans
4,034,521
201,958
1,627,364
5,863,843
Finance leases
880,312
-
-
880,312
Consumer loans
2,755,077
68,540
8,070
2,831,687
Loans held for investment
9,833,155
431,555
2,120,798
12,385,508
Loans held for sale
10,392
-
-
10,392
Total loans $
9,843,547
$
431,555
$
2,120,798
$
12,395,900
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 8 – Non-Performing Assets by Geography
As of June 30, 2024
(In thousands)
Puerto Rico
Virgin Islands
United States
Total
Nonaccrual loans held for investment: Residential mortgage $
16,895
$
6,446
$
8,055
$
31,396
Construction
3,776
966
-
4,742
Commercial mortgage
2,865
8,871
-
11,736
Commercial and Industrial
26,387
1,274
-
27,661
Consumer and finance leases
20,276
326
36
20,638
Total nonaccrual loans held for investment
70,199
17,883
8,091
96,173
OREO
17,413
4,202
67
21,682
Other repossessed property
7,330
183
-
7,513
Other assets (1)
1,532
-
-
1,532
Total non-performing assets (2) $
96,474
$
22,268
$
8,158
$
126,900
Past due loans 90 days and still accruing (3) $
44,028
$
3,145
$
-
$
47,173
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 $7.4 million as of June 30, 2024 (March 31, 2024 - $8.6
million; December 31, 2023 - $8.3 million).
(3)
These include rebooked loans, which were
previously pooled into GNMA securities, amounting to $6.8 million
as of June 30, 2024 (March 31, 2024 - $8.8 million; 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 9 – Allowance for Credit Losses on Loans and Finance
Leases
Quarter Ended
Six-Month Period Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2024
2024
2023
2024
2023
(Dollars in thousands)
Allowance for credit losses on loans and finance leases,
beginning of period
$
263,592
$
261,843
$
265,567
$
261,843
$
260,464
Impact of adoption of ASU 2022-02
-
-
-
-
2,116
Provision for credit losses on loans and finance leases expense
11,930
12,917
20,770
24,847
37,026
Net (charge-offs) recoveries of loans and finance leases:
Residential mortgage
(45
)
(244
)
(389
)
(289
)
(875
)
Construction
14
10
371
24
434
Commercial mortgage
393
40
(32
)
433
118
Commercial and Industrial
626
4,660
(6,218
)
5,286
(6,246
)
Consumer loans and finance leases
(21,978
)
(15,634
)
(1)
(13,011
)
(37,612
)
(1)
(25,979
)
Net charge-offs
(20,990
)
(11,168
)
(1)
(19,279
)
(32,158
)
(1)
(32,548
)
Allowance for credit losses on loans and finance leases, end of
period
$
254,532
$
263,592
$
267,058
$
254,532
$
267,058
Allowance for credit losses on loans and finance leases to period
end total loans held for investment
2.06
%
2.14
%
2.28
%
2.06
%
2.28
%
Net charge-offs (annualized) to average loans outstanding during
the period
0.69
%
0.37
%
0.67
%
0.53
%
0.56
%
Provision for credit losses on loans and finance leases to net
charge-offs during the period
0.57x
1.16x
1.08x
0.77x
1.14x
(1)
For the quarter ended March 31, 2024 and six-month period ended
June 30 2024, includes a recovery totaling $9.5 million associated
with the aforementioned bulk sale of fully charged-off consumer
loans.
Table 10 – Annualized Net Charge-Offs (Recoveries) to Average
Loans
Quarter Ended
Six-Month Period Ended
June 30, 2024
March 31, 2024
June 30, 2023
June 30, 2024
June 30, 2023
Residential mortgage
0.01%
0.03%
0.06%
0.02%
0.06%
Construction
-0.02%
-0.02%
-0.99%
-0.02%
-0.59%
Commercial mortgage
-0.07%
-0.01%
0.01%
-0.04%
-0.01%
Commercial and Industrial
-0.08%
-0.59%
0.87%
-0.33%
0.44%
Consumer loans and finance leases
2.38%
1.70%
(1)
1.51%
2.04%
(1)
1.53%
Total loans
0.69%
0.37%
(1)
0.67%
0.53%
(1)
0.56%
(1)
The $9.5 million recovery associated with
the aforementioned bulk sale reduced the consumer loans and finance
leases and total net charge-offs to related average loans ratio for
the quarter ended March 31, 2024 by 104 basis points and 31 basis
points, respectively, and for the six-month period ended June 30,
2024 by 52 basis points and 15 basis points, respectively.
Table 11 – Deposits
As of
June 30, 2024
March 31, 2024
December 31, 2023
(In thousands)
Time deposits
$
3,037,120
$
2,961,526
$
2,833,730
Interest-bearing saving and checking
accounts
7,461,003
7,511,973
7,534,800
Non-interest-bearing deposits
5,406,054
5,346,326
5,404,121
Total deposits, excluding brokered CDs
(1)
15,904,177
15,819,825
15,772,651
Brokered CDs
624,779
725,686
783,334
Total deposits
$
16,528,956
$
16,545,511
$
16,555,985
Total deposits, excluding brokered CDs and
government deposits
$
12,706,646
$
12,574,900
$
12,600,719
___________________________________________________________
(1)
As of each of June 30, 2024, 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/20240723074670/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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