First Bancorp Posts $22 Million in 2Q Net Income
SAN JUAN – First BanCorp, the bank holding company for FirstBank Puerto Rico on Tuesday reported net income of $22.0 million for the second quarter of 2016 (2Q16), or $0.10 per diluted share, compared with $23.3 million, or $0.11 per diluted share, for 1Q16 and a net loss of $34.1 million, or $0.16 per diluted share, for 2Q2015.
“We posted $22.0 million of net income, or $0.10 per diluted share, compared with $23.3 million in the first quarter. Our adjusted pre-tax pre-provision income was $50.5 million, down slightly from the first quarter. Our tangible book value increased $0.17 to $7.83 per share. The passing of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) late in the second quarter by U.S. Congress is a positive step toward reducing the uncertainty that has clouded our market over a prolonged period. We are optimistic that PROMESA will provide a more stable and constructive framework for dealing with the Puerto Rico debt restructuring and economic challenges still ahead of us,” Aurelio Alemán, president and CEO of First BanCorp., commented.
The financial results included the following items that management believes are not reflective of core operating performance or that are not expected to reoccur with any regularity or reoccur at uncertain times and amounts:
-OTTI (Other Tan Temporary Impairment) losses on debt securities, primarily Puerto Rico Government debt securities, of $6.7 million and $13.1 million in 1Q2016 and 2Q2015, respectively. No tax benefit was recognized for the OTTI charges.
-Gain of $4.2 million on the repurchase and cancellation of trust preferred securities in 1Q2016. The gain, realized at the holding company level, has no effect on the income tax expense in 2016.
-Loss of $48.7 million ($29.7 million after-tax) on a bulk sale of assets 2Q2015, mostly comprised of non-performing and adversely classified commercial loans, including transaction expenses. A $19.0 million tax benefit related to this transaction was recorded in 2Q2015.
-Costs of $2.6 million ($1.6 million after-tax) in 2Q2015 related to the conversion of loan and deposit accounts acquired from Doral Bank to the FirstBank (FBMI) systems. A $1.0 million tax benefit associated with these costs was recorded in 2Q2015.
FirstBank’s franchise, Alemán added, continues to perform strong in spite of macro challenges, with improved loan origination and renewal volume in all loan categories and in all of our regions.
“Puerto Rico core deposits grew slightly by $11.2 million while overall core deposits remained relatively flat compared to the first quarter, we also reduced our reliance on brokered CDs by $197 million during the quarter. We continue to work hard, in light of tightened credit risk appetite, to sustain our loan portfolio, which closed the quarter at $8.9 billion. Ongoing focus on efficiency efforts has resulted in reduced expenses this quarter, down $3.5 million and below $90 million for the first time since 2012, compensating for the top line revenue reduction,” the First BanCorp top executive said.
During the quarter, FirstBank experienced a $19 million increase in non-performing assets due to a large commercial relationship in Puerto Rico that was moved to nonaccrual status. Despite this migration, early stage delinquencies were down 13% and adversely classified assets declined this quarter, Alemán indicated.
“Our team remains focused on sustaining our balance sheet and driving bottom line results as we continue navigating a challenging economic environment,” Alemán added.
This report has been corrected to reflect First BanCorp’s correct earnings, the earlier report had numbers that were incorrectly generated by a news service.