Facebank points to credit rating as proof of stability amid pandemic

SAN JUAN — “Even in the midst of the challenges posed by the global COVID-19 pandemic, the most recent report from credit rating agency DBRS Morningstar confirms that FACE BANK International [Facebank] has succeeded in maintaining its solid forecast and rating it was awarded last year,” said General Manager Julio Carbonell.

Facebank was founded and operates in Puerto Rico with a workforce of 40 employees, while the bank’s asset base is in Southern Florida’s real estate market, where the majority of its clients “acquire properties through mortgage loans with minimum down payments of up to 30%,” according to a news release.

“In addition to reducing risk, this lowers the loan-to-value (LTV) ratio. Default rates have also remained low, with fewer than 10% of clients making use of moratoriums due to the COVID-19 pandemic. Mortgages in Southern Florida are originated by the bank’s wholly owned subsidiary, Florida Home Trust Mortgage,” the release explains.

Carbonell said that DBRS considered Facebank’s business structure and “unique status as the only international bank that maintains a real-time (online) connection with the Federal Reserve Bank of New York,” as “key factors that contributed” to the BB rating it has been given for a second year.

In its report, the rating agency highlighted that, even though it is a relatively young international bank, it “has built a profitable banking franchise, helping its international customers transact business in the U.S.”

“FACEBANK has shown improving and strong profitability metrics driven by a high net interest margin (NIM), supported by low funding costs and above average return on its residential mortgage loan portfolio, its primary loan category,” states DBRS’s press release.

Carbonell added: “This is a great moment for the FACEBANK family because the bank has been able to retain its credit rating and its stable trend in spite of all the challenges facing the global economy due to the pandemic and natural disasters. The report confirms that the bank is stable, that our indicators remain strong, and, above all, that the quality of our credit portfolio continues to be excellent.”

Facebank mortgage clients are required to open a deposit account, “which helps keep operations sustainable,” but the bank does not charge any account maintenance fees, the bank’s release says. “On the other hand, a third of the institution’s investments are in agency bonds and low-risk products from the United States Treasury….”

The bank has created an operational structure for international correspondent banking services or international business development facilitators (IBDF) “to facilitate access to the American financial system for foreign banks that wish to expand” their business internationally, Facebank said.

“It’s a new way of facilitating business. International banks that do not have access to the dollar will see it as the best way to expand their local business and strengthen their brand,” CFO Jairo Amaro added.

Facebank has a portfolio of more than 28,000 clients in Central and South America. As of the beginning of this year, it announced the launch of its pipolPay mobile app, a digital payment platform that “makes it possible to request and submit payments in dollars from mobile devices in seconds,” the bank said.

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