Sunday, September 23, 2018

First BanCorp reports net-income hike for 4Q of $24.2 million, or 11¢ per diluted share

By on January 29, 2018
Adjusted pretax preprovision income reached $218 million for 2017, a $10 million increase over 2016

SAN JUAN – First BanCorp, the holding company for Puerto Rico, reported Monday a hike in its net income and deposits for the fourth quarter and fiscal year 2017 but a reduction in loans caused by hurricanes Irma and Maria.

Aurelio Alemán, president & chief executive officer of First BanCorp, said in a statement: “We are quite pleased with our results for the fourth quarter and fiscal year-end 2017. Notwithstanding the uncertain macroeconomic backdrop in Puerto Rico, which was further affected by hurricanes Irma and Maria in September, our institution continues to improve performance metrics and demonstrate the strength of its earnings capabilities.

We generated net income for the fourth quarter of $24.2 million, or 11¢ per diluted share, and $67.0 million, or 30¢ per diluted share for the year. Fiscal year results were affected by the hurricanes, including the $66.5 million storm-related provision in the third quarter and $4.8 million in the fourth quarter as well as impact to overall business volumes. Adjusted pretax preprovision income reached $218 million for 2017, a $10 million increase over 2016.”

A summary of the more significant financial repercussions of these natural disasters on the corporation is as follows:

  1. Net income of $24.2 million for the fourth quarter, or 11¢ per diluted share, compared to a net loss of $10.8 million, or 5¢ per diluted share, for the third quarter of 2017. Financial results for the fourth and third quarters of 2017 include charges to the provision for loan and lease losses of $4.8 million ($2.9 million after-tax) and $66.5 million ($40.7 million after-tax), respectively, related to the estimate of inherent losses resulting from the impact of hurricanes Maria and Irma.
  2. On a non-GAAP (generally accepted accounting principles) basis, adjusted net income of $28.1 million (which excludes Special Items discussed below and consist of storm-related charges and other items management believes are not reflective of core operating performance, are not expected to reoccur with any regularity or may reoccur at uncertain times and in uncertain amounts), compared to adjusted net income of $27.4 million for the third quarter of 2017.
  3. Net interest income decreased by $600,000 to $122.3 million, compared to $122.8 million for the third quarter of 2017, primarily due to a reduction in the average balance of commercial loans and a decrease in the average balance and yield of U.S. agency mortgage-backed securities.
  4. Net interest margin was 4.26% compared to 4.33% for the third quarter of 2017, primarily reflecting higher levels of liquidity during the fourth quarter of 2017.
  5. Provision for loan and lease losses decreased by $49.3 million to $25.7 million, compared to $75.0 million for the third quarter of 2017. A $4.8 million incremental provision expense related to the impact of the storms was recorded during the fourth quarter, primarily due to an increase in estimated losses associated with storm events for its commercial and construction loan portfolios. On a non-GAAP basis (excluding storm-related charges), adjusted provision for loan and lease losses of $20.9 million, compared to an adjusted provision of $8.5 million for the third quarter.
  6. Noninterest income decreased by $3.7 million to $15.0 million compared to $18.6 million for the third quarter of 2017, primarily due to the effect in the third quarter of a $1.4 million gain on the repurchase and cancellation of $7.3 million in trust preferred securities. In addition, revenues from mortgage banking activities decreased by $1.2 million and service charges on deposit accounts decreased by $900,000, both adversely affected by the drop in business activity due to the storms.
  7. Noninterest expenses decreased by $500,000 to $85.1 million, compared to $85.6 million for the third quarter of 2017, primarily reflecting reductions in professional service fees and credit- and debit-card processing expenses. Noninterest expenses for the fourth quarter of 2017 include $1.9 million of storm-related expenses, including insurance deductibles related to damages assessed on certain other real-estate owned (OREO) properties and estimated storm-related costs not recoverable under insurance policies, compared to $600,000 for the third quarter of 2017.
  8. Income-tax expense of $2.2 million, compared to income-tax benefit of $8.4 million for the third quarter of 2017, a variance mainly related to the income-tax benefit recorded in the third quarter associated with the aforementioned storm-related charges and a final year-end tax provision that resulted in a lower than previously estimated effective tax rate for the year.

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