First BanCorp (the “Corporation”) (NYSE: FBP), the bank holding company
for FirstBank Puerto Rico (“FirstBank” or “the Bank”), today reported a
net loss of $72.6 million for the first quarter of 2013, or $0.35 per
diluted share, compared to net income of $14.5 million, or $0.07 per
diluted share, for the fourth quarter of 2012 and a net loss of $13.2
million, or $0.06 per diluted share for the first quarter of 2012.
Financial results for the first quarter of 2013 included a loss of $68.0
million related to the previously announced bulk sale of adversely
classified loans and other real estate owned (OREO) properties and
valuation adjustments to certain loans transferred to held for sale.
This press release includes certain non-GAAP financial measures,
including adjusted net loss, adjusted pre-tax, pre-provision income,
adjusted net interest income and margin, certain capital ratios, and
certain other financial measures adjusted to exclude the effect of the
bulk sale of assets and of valuation adjustments to certain loans
transferred to held for sale, and should be read in conjunction with the
accompanying tables (Exhibit A), which are an integral part of this
press release.
2013 First Quarter Highlights and Comparison with 2012 Fourth Quarter:
-
Net loss of $72.6 million, or $0.35 per diluted share, reflecting a
$68.0 million loss related to the bulk sale of assets and, to a lesser
extent, valuation adjustments to certain loans transferred to held for
sale.
-
Adjusted net loss of $4.6 million, or $0.02 per diluted share,
excluding the effects of the bulk sale and valuation adjustments to
certain loans transferred to held for sale.
-
Adjusted pre-tax, pre-provision income of $50.5 million, compared to
$54.5 million in the last quarter.
-
Net interest income relatively flat:
-
Net interest income of $124.1 million, excluding fair value
adjustments of $0.4 million, a decrease of $1.1 million primarily
due to fewer days in the first quarter of 2013.
-
Net interest margin, excluding fair value adjustments, increased
by 5 basis points to 3.95%, driven by further reductions in the
average cost of funding.
-
Bulk sale of adversely classified loans and OREO properties with a
book value of $217.7 million, including $185.0 million of
non-performing assets, for $120.2 million in a cash transaction.
-
In addition to the bulk sale, transfer of $181.6 million of
non-performing loans to held for sale, including $101.4 million with
agreements signed for sale.
-
Credit quality metrics:
-
Total non-performing assets decreased for the 12th consecutive
quarter, declining by $151.6 million to $1.09 billion, mainly
related to the bulk sale of assets and valuation adjustments to
certain loans transferred to held for sale. Non-performing assets
to total assets ratio decreased to 8.35% compared to 9.45% as of
December 31, 2012.
-
The level of non-performing loans, including non-performing loans
held for sale, decreased by $147.1 million from the previous
quarter to $830.7 million.
-
Provision for loan and lease losses of $111.1 million, including
$64.1 million associated with the bulk sale of assets and the
transfer of certain loans to held for sale. Excluding the impact
of the bulk sale and the transfer of certain loans to held for
sale, the provision increased to $47.0 million, up from $30.5
million for the fourth quarter of 2012.
-
Net charge-offs of $204.0 million, including net charge-offs of
$134.5 million related to the bulk sale and the transfer of loans
to held for sale. Excluding the impact of the bulk sale and the
transfer of loans to held for sale, net charge-offs were $69.5
million, or an annualized 2.87% of average loans, up from $40.6
million, or an annualized 1.59%, in the fourth quarter of 2012.
The increase was primarily due to a $25.4 million charge-off
related to a single relationship restructured in the first quarter
of 2013.
-
Non-interest income of $13.6 million, an increase of $1.9 million
-
Non-interest expenses of $98.0 million, including $3.9 million related
to the bulk sale of assets. Excluding the impact of expenses related
to the bulk sale of assets, non-interest expenses amounted to $94.1
million, up from $90.9 million in the fourth quarter of 2012,
including non-recurring expenses of $1.2 million related to the
previously announced not consummated preferred stock exchange offer,
and a loss of $0.7 million related to OREO properties sold to another
company.
-
Strong regulatory capital ratios despite the impact of the loss on the
bulk sale of assets and the transfer of loans to held for sale:
-
Total capital, Tier 1 capital, and leverage ratios of the
Corporation were 17.44%, 16.15%, and 12.06%, respectively, as of
March 31, 2013, compared to 17.82%, 16.51%, and 12.60%,
respectively, as of December 31, 2012.
-
Total capital, Tier 1 capital, and leverage ratios of the
Corporation’s wholly owned banking subsidiary, FirstBank, were
16.98%, 15.69%, and 11.74%, respectively, as of March 31, 2013,
compared to 17.35%, 16.04%, and 12.25%, respectively, as of
December 31, 2012.
-
Tier 1 common risk-based capital ratio of the Corporation of
13.18% as of March 31, 2013, down from 13.61% as of December 31,
2012.
-
Tangible common equity ratio of the Corporation of 9.90% as of
March 31, 2013, down from 10.44% as of December 31, 2012.
-
Growth in total deposits:
-
Non-brokered deposits, excluding government deposits, increased by
$145.6 million.
-
Government deposits decreased by $14.4 million.
-
Brokered certificates of deposit (CDs) decreased by $12.6 million.
Aurelio Alemán, President and Chief Executive Officer of First BanCorp.,
commented: “The first quarter represented a significant step in the
continued execution of our strategic plan. Improving asset quality
remains a top priority as we continue to enhance our core franchise.
Through a bulk loan sale we reduced our nonperforming assets by $152
million to $1.1 billion. Despite the impact to our net income in the
quarter, our core franchise continues to grow stronger delivering solid
pre-tax, pre-provision earnings. Core deposits increased by $146 million
in the quarter, loan originations were $802 million, and our capital
position remains strong. With the Puerto Rico market continuing to show
some signs of stability we expect further reductions in impaired assets.
The accelerated reduction of nonperforming and impaired assets will
further strengthen our core operating metrics.”
Mr. Alemán stated further, “During the first quarter we also announced
that we had formalized our strategic alliance with FIS™ (FIS),
the world’s largest global provider dedicated to banking and payment
technologies. This partnership will give FirstBank the enhanced ability
to achieve technological leadership by providing state of the art
products and services to our clients across the territories. While there
is still more work to do, we have a clear strategy and a strong core
franchise.”
Bulk Sale of Assets and Transfer of Loans to Held For Sale
On April 1, 2013, the Corporation announced that it had entered into
three separate agreements to sell loans. On March 28, 2013, the
Corporation completed the sale of adversely classified loans with a book
value of $211.4 million ($100.1 million of commercial and industrial
(“C&I”) loans, $68.8 million of commercial mortgage loans, $41.3 million
of construction loans, and $1.2 million of residential mortgage loans),
and $6.3 million of OREO properties in a cash transaction. The sales
price of this bulk sale was $120.2 million, or 55% of the book value
before reserves, for the $217.7 million of loans and OREO and $1.3
million of other related receivables. Approximately $39.9 million of
reserves had already been allocated to the loans. This transaction
resulted in total charge-offs of $98.5 million and an incremental loss
of $58.9 million, reflected in the provision for loan and lease losses
for the first quarter of 2013. In addition, the Corporation recorded
$3.9 million of professional fees specifically related to the bulk sale
of assets. This transaction resulted in a total loss of $62.8 million.
The other two agreements consist of a Letter of Intent and a Definitive
Agreement entered into during the first quarter of 2013 for the sale of
non-performing loans with an aggregate book value of $101.4 million.
These two transactions are expected to close in 2013 and the loans were
reclassified to held for sale in the first quarter of 2013. The recorded
investment in these loans was written down to $80.8 million, which
resulted in charge-offs of $20.4 million and an incremental net loss of
$5.2 million reflected in the provision for loan and lease losses for
the first quarter of 2013. The Corporation’s primary goal with respect
to these sales is to accelerate the disposition of non-performing
assets, which is a priority objective of the strategic plan. In
addition, the Corporation reclassified an additional $80.2 million of
commercial mortgage and construction non-performing loans to held for
sale. The transfer of these additional loans to held for sale resulted
in charge-offs of $15.5 million.
Impact of Bulk Sale of Assets and Loans Transferred to Held For Sale
(Dollars in thousands, except per share information)
|
|
|
|
|
|
|
|
Excluding
|
|
|
As
|
|
Bulk Sale
|
|
Loans Transferred
|
|
Bulk Sale and Loans Transferred
|
2013 First Quarter
|
|
Reported (GAAP)
|
|
Transaction Impact
|
|
To Held For Sale Impact
|
|
To Held For Sale Impact (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net charge-offs (1)
|
|
$
|
204,006
|
|
|
$
|
98,519
|
|
|
$
|
35,953
|
|
|
$
|
69,534
|
|
Total net charge-offs to average loans
|
|
|
8.10
|
%
|
|
|
|
|
|
|
2.87
|
%
|
Residential mortgage
|
|
|
11,580
|
|
|
|
1,031
|
|
|
|
-
|
|
|
|
10,549
|
|
Residential mortgage loans net charge-offs to average loans
|
|
|
1.65
|
%
|
|
|
|
|
|
|
1.50
|
%
|
Commercial mortgage
|
|
|
56,036
|
|
|
|
40,057
|
|
|
|
14,553
|
|
|
|
1,426
|
|
Commercial mortgage loans net charge-offs to average loans
|
|
|
12.06
|
%
|
|
|
|
|
|
|
0.34
|
%
|
Commercial and Industrial
|
|
|
84,829
|
|
|
|
44,678
|
|
|
|
-
|
|
|
|
40,151
|
|
Commercial and Industrial loans net charge-offs to average loans
|
|
11.16
|
%
|
|
|
|
|
|
|
5.47
|
%
|
Construction
|
|
|
38,515
|
|
|
|
12,753
|
|
|
|
21,400
|
|
|
|
4,362
|
|
Construction loans net charge-offs to average loans
|
|
|
44.66
|
%
|
|
|
|
|
|
|
7.74
|
%
|
|
|
|
|
|
|
|
|
|
Provision for loan and lease losses
|
|
$
|
111,123
|
|
|
$
|
58,890
|
|
|
$
|
5,222
|
|
|
$
|
47,011
|
|
Residential mortgage
|
|
|
7,948
|
|
|
|
979
|
|
|
|
-
|
|
|
|
6,969
|
|
Commercial mortgage
|
|
|
36,397
|
|
|
|
29,753
|
|
|
|
(1,033
|
)
|
|
|
7,677
|
|
Commercial and Industrial
|
|
|
35,292
|
|
|
|
20,766
|
|
|
|
-
|
|
|
|
14,526
|
|
Construction
|
|
|
21,948
|
|
|
|
7,392
|
|
|
|
6,255
|
|
|
|
8,301
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses
|
|
$
|
98,010
|
|
|
$
|
3,878
|
|
|
$
|
-
|
|
|
$
|
94,132
|
|
Professional fees
|
|
|
9,920
|
|
|
|
3,878
|
|
|
|
-
|
|
|
|
6,042
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(72,633
|
)
|
|
$
|
(62,768
|
)
|
|
$
|
(5,222
|
)
|
|
$
|
(4,643
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per common share
|
|
$
|
(0.35
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
1 - Charge-off percentages annualized
|
|
|
Adjusted Pre-Tax, Pre-Provision Income Trends
One metric that management believes is useful in analyzing performance
is the level of earnings adjusted to exclude tax expense, the provision
for loan and lease losses, securities gains or losses, fair value
adjustments on derivatives and liabilities measured at fair value and
equity in earnings or losses of unconsolidated entities, a non-GAAP
financial measure. In addition, from time to time, earnings are adjusted
also for items judged by management to be outside of ordinary banking
activities and/or for items that, while they may be associated with
ordinary banking activities, are so unusually large that management
believes that a complete analysis of the Corporation’s performance
requires consideration also of results that exclude such amounts (for
additional information about these non-GAAP financial measures, see “Adjusted
Pre-Tax, Pre-Provision Income” in “Basis of Presentation”).
The following table shows adjusted pre-tax, pre-provision income of
$50.5 million in the first quarter of 2013, down from $54.5 million in
the prior quarter:
Pre-Tax, Pre-Provision Income
|
(Dollars in thousands)
|
|
Quarter Ended
|
|
|
March 31,
|
|
December 31,
|
September 30,
|
June 30,
|
|
March 31,
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes
|
|
$
|
(71,011
|
)
|
|
$
|
16,028
|
|
|
$
|
19,834
|
|
|
$
|
10,901
|
|
|
$
|
(11,049
|
)
|
Add: Provision for loan and lease losses
|
|
|
111,123
|
|
|
|
30,466
|
|
|
|
28,952
|
|
|
|
24,884
|
|
|
|
36,197
|
|
Add: Net loss on investments and impairments
|
|
|
117
|
|
|
|
69
|
|
|
|
547
|
|
|
|
143
|
|
|
|
1,207
|
|
Add: Unrealized (gain) loss on derivatives instruments and
liabilities
|
|
|
|
|
|
|
|
|
measured at fair value
|
|
|
(400
|
)
|
|
|
(432
|
)
|
|
|
(170
|
)
|
|
|
(506
|
)
|
|
|
(283
|
)
|
Add: Loans sale transaction related expenses and
|
|
|
|
|
|
|
|
|
|
|
other non-recurring professional fee expenses
|
|
|
5,096
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Add: Contingency adjustment-tax credits
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,489
|
|
Add: Equity in losses of unconsolidated entities
|
|
|
5,538
|
|
|
|
8,330
|
|
|
|
2,199
|
|
|
|
2,491
|
|
|
|
6,236
|
|
Adjusted pre-tax, pre-provision income (1)
|
|
$
|
50,463
|
|
|
$
|
54,461
|
|
|
$
|
51,362
|
|
|
$
|
37,913
|
|
|
$
|
34,797
|
|
|
|
|
|
|
|
|
|
|
|
|
Change from most recent prior quarter-amount
|
|
$
|
(3,998
|
)
|
|
$
|
3,099
|
|
|
$
|
13,449
|
|
|
$
|
3,116
|
|
|
$
|
6,316
|
|
Change from most recent prior quarter-percentage
|
|
|
-7.3
|
%
|
|
|
6.0
|
%
|
|
|
35.5
|
%
|
|
|
9.0
|
%
|
|
|
22.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
(1) See "Basis of Presentation" for definition.
|
As discussed in the sections that follow, the decrease in adjusted
pre-tax, pre-provision income from the 2012 fourth quarter primarily
reflected: (i) an increase in non-interest expenses, including increases
of $1.7 million in employees’ compensation and benefits expenses,
primarily reflecting higher seasonal payroll taxes and incentive
compensation and an increase of $1.1 million in losses on OREO
operations primarily due to higher write-downs and losses on the sale of
OREO properties , (ii) a decrease of $2.1 million in revenues from the
mortgage banking business, driven by a lower volume of residential
mortgage loan sales and lower gains on securitizations and subsequent
sales of GNMA securities, and (iii) a decrease of $1.1 million in net
interest income mainly reflecting the impact of two fewer days in the
first quarter.
Net Interest Income
Net interest income, excluding fair value adjustments on derivatives and
financial liabilities measured at fair value (“valuations”), and net
interest income on a tax-equivalent basis are non-GAAP measures. (See “Basis
of Presentation – Net Interest Income, Excluding Valuations and on a
Tax-Equivalent Basis” below for additional information.) 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. The table also reconciles net interest spread
and net interest margin on a GAAP basis to these items excluding
valuations and on a tax-equivalent basis.
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
March 31, 2013
|
|
December 31, 2012
|
|
September 30, 2012
|
|
June 30, 2012
|
|
March 31, 2012
|
Net Interest Income
|
|
|
|
|
|
|
|
|
|
|
Interest Income - GAAP
|
|
$
|
160,225
|
|
|
$
|
165,054
|
|
|
$
|
166,964
|
|
|
$
|
153,652
|
|
|
$
|
152,107
|
|
Unrealized (gain) loss on
|
|
|
|
|
|
|
|
|
|
|
derivative instruments
|
|
|
(400
|
)
|
|
|
(432
|
)
|
|
|
(170
|
)
|
|
|
33
|
|
|
|
(332
|
)
|
Interest income excluding valuations
|
|
|
159,825
|
|
|
|
164,622
|
|
|
|
166,794
|
|
|
|
153,685
|
|
|
|
151,775
|
|
Tax-equivalent adjustment
|
|
|
1,595
|
|
|
|
1,451
|
|
|
|
1,463
|
|
|
|
1,634
|
|
|
|
1,741
|
|
Interest income on a tax-equivalent basis excluding valuations
|
|
|
161,420
|
|
|
|
166,073
|
|
|
|
168,257
|
|
|
|
155,319
|
|
|
|
153,516
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense - GAAP
|
|
|
35,732
|
|
|
|
39,423
|
|
|
|
41,461
|
|
|
|
44,947
|
|
|
|
50,241
|
|
Unrealized gain (loss) on
|
|
|
|
|
|
|
|
|
|
|
derivative instruments and liabilities measured at fair value
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
539
|
|
|
|
(49
|
)
|
Interest expense excluding valuations
|
|
|
35,732
|
|
|
|
39,423
|
|
|
|
41,461
|
|
|
|
45,486
|
|
|
|
50,192
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income - GAAP
|
|
$
|
124,493
|
|
|
$
|
125,631
|
|
|
$
|
125,503
|
|
|
$
|
108,705
|
|
|
$
|
101,866
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income excluding valuations
|
|
$
|
124,093
|
|
|
$
|
125,199
|
|
|
$
|
125,333
|
|
|
$
|
108,199
|
|
|
$
|
101,583
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income on a tax-equivalent basis excluding valuations
|
|
$
|
125,688
|
|
|
$
|
126,650
|
|
|
$
|
126,796
|
|
|
$
|
109,833
|
|
|
$
|
103,324
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Balances
|
|
|
|
|
|
|
|
|
|
|
Loans and leases
|
|
$
|
10,077,907
|
|
|
$
|
10,199,808
|
|
|
$
|
10,297,835
|
|
|
$
|
10,183,229
|
|
|
$
|
10,389,246
|
|
Total securities and other short-term investments
|
|
|
2,675,755
|
|
|
|
2,576,421
|
|
|
|
2,238,701
|
|
|
|
2,450,198
|
|
|
|
2,397,918
|
|
Average Interest-Earning Assets
|
|
$
|
12,753,662
|
|
|
$
|
12,776,229
|
|
|
$
|
12,536,536
|
|
|
$
|
12,633,427
|
|
|
$
|
12,787,164
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Interest-Bearing Liabilities
|
|
$
|
10,652,144
|
|
|
$
|
10,700,868
|
|
|
$
|
10,518,169
|
|
|
$
|
10,577,054
|
|
|
$
|
10,725,162
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Yield/Rate
|
|
|
|
|
|
|
|
|
|
|
Average yield on interest-earning assets - GAAP
|
|
|
5.10
|
%
|
|
|
5.14
|
%
|
|
|
5.30
|
%
|
|
|
4.89
|
%
|
|
|
4.78
|
%
|
Average rate on interest-bearing liabilities - GAAP
|
|
|
1.36
|
%
|
|
|
1.47
|
%
|
|
|
1.57
|
%
|
|
|
1.71
|
%
|
|
|
1.88
|
%
|
Net interest spread - GAAP
|
|
|
3.74
|
%
|
|
|
3.67
|
%
|
|
|
3.73
|
%
|
|
|
3.18
|
%
|
|
|
2.90
|
%
|
Net interest margin - GAAP
|
|
|
3.96
|
%
|
|
|
3.91
|
%
|
|
|
3.98
|
%
|
|
|
3.46
|
%
|
|
|
3.20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Average yield on interest-earning assets excluding valuations
|
|
|
5.08
|
%
|
|
|
5.13
|
%
|
|
|
5.29
|
%
|
|
|
4.89
|
%
|
|
|
4.77
|
%
|
Average rate on interest-bearing liabilities excluding valuations
|
|
|
1.36
|
%
|
|
|
1.47
|
%
|
|
|
1.57
|
%
|
|
|
1.73
|
%
|
|
|
1.88
|
%
|
Net interest spread excluding valuations
|
|
|
3.72
|
%
|
|
|
3.66
|
%
|
|
|
3.72
|
%
|
|
|
3.16
|
%
|
|
|
2.89
|
%
|
Net interest margin excluding valuations
|
|
|
3.95
|
%
|
|
|
3.90
|
%
|
|
|
3.98
|
%
|
|
|
3.44
|
%
|
|
|
3.20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Average yield on interest-earning assets on a tax-equivalent basis
and excluding valuations
|
|
|
5.13
|
%
|
|
|
5.17
|
%
|
|
|
5.34
|
%
|
|
|
4.94
|
%
|
|
|
4.83
|
%
|
Average rate on interest-bearing liabilities excluding valuations
|
|
|
1.36
|
%
|
|
|
1.47
|
%
|
|
|
1.57
|
%
|
|
|
1.73
|
%
|
|
|
1.88
|
%
|
Net interest spread on a tax-equivalent basis and excluding
valuations
|
|
|
3.77
|
%
|
|
|
3.70
|
%
|
|
|
3.77
|
%
|
|
|
3.21
|
%
|
|
|
2.95
|
%
|
Net interest margin on a tax-equivalent basis and excluding
valuations
|
|
|
4.00
|
%
|
|
|
3.94
|
%
|
|
|
4.02
|
%
|
|
|
3.50
|
%
|
|
|
3.25
|
%
|
Net interest income, excluding valuations, decreased by $1.1 million
when compared to the fourth quarter of 2012. Approximately $1.6 million
of the decrease was related to the impact of two fewer days in the first
quarter as the decrease in interest income on loans and investments with
interest accrued on actual/actual basis offset the decrease in the
interest expense on deposits and other funding sources. Other items
adversely impacting net interest income were: (i) an adverse impact of
approximately $0.9 million, primarily associated with one large
commercial loan placed in non-accrual status during the first quarter,
(ii) the reduction in the average balance of commercial loans, which
resulted in a decrease in interest income of approximately $1.3 million,
and (iii) a decrease of $1.0 million in interest income on U.S. agency
mortgage-backed securities, reflecting lower yields, in part due to the
adverse impact of faster prepayment rates on securities purchased at a
premium.
Partially offsetting the aforementioned items was an increase of 5 basis
points in the net interest margin to 3.95%, driven by the 11 basis
points reduction in the average cost of funding. Approximately $0.8
million of the $3.7 million reduction in total interest expenses was due
to fewer days in the first quarter with the remaining improvement
primarily related to the renewal of brokered CDs at lower current rates
and the repayment of matured FHLB advances. The average cost of brokered
CDs decreased by 21 basis points. During the first quarter of 2013, the
Corporation repaid approximately $564.6 million of matured brokered CDs
with an all-in cost of 1.91% and new issuances amounted to $552.6
million with an all-in cost of 0.84%. Meanwhile, the average rate paid
on non-brokered deposits, including interest-bearing checking accounts,
savings and retail CDs, declined by 3 basis points to 0.98% during the
first quarter of 2013. The Corporation’s strategic focus has remained on
growing non-brokered deposits and improving the overall funding mix.
Average non-brokered interest-bearing deposits increased by $57.8
million compared to the fourth quarter of 2012. In addition, during the
first quarter of 2013, the Corporation repaid $130 million of maturing
Federal Home Loan Bank advances that carried an average cost of 3.39%.
The decrease of $69.1 million in the average cash balances maintained at
the Federal Reserve also contributed to the improvement in net interest
margin.
Provision for Loan and Lease Losses
The provision for loan and lease losses for the first quarter of 2013
was $111.1 million, including $64.1 million related to the bulk sale of
assets and the transfer of loans to held for sale. Excluding the impact
of the bulk sale and the transfer of loans to held for sale, the
provision for loan and lease losses for the first quarter of 2013 was
$47.0 million, up $16.5 million from the fourth quarter of 2012,
primarily reflecting the inflow of certain large commercial
relationships into non-performing and adversely classified categories,
and the impact of the bulk sale on the determination of the general
reserve for the commercial and construction portfolio. The increase was
primarily related to the Puerto Rico portfolio, an increase of $23.2
million, excluding the impact of the bulk sale and loans transferred to
held for sale. A significant portion of the increase in the provision
related to Puerto Rico loans was related to three relationships
downgraded to adversely classified categories that required a provision
of $17.8 million in the first quarter of 2013. The largest one of these
relationships is a Trouble Debt Restructuring less than 90 days past
due. Partially offsetting this increase was a reduction of $5.0 million
in the provision for loan losses related to the Virgin Islands
portfolio, excluding the impact of loans transferred to held for sale,
and a decrease of $1.6 million in the provision for loan losses related
to the Unites States portfolio (see “Credit Quality” section
below for a full discussion).
Non-Interest Income
|
|
Quarter Ended
|
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts
|
|
$
|
3,380
|
|
|
$
|
3,228
|
|
|
$
|
3,267
|
|
|
$
|
3,240
|
|
|
$
|
3,247
|
|
Mortgage banking activities
|
|
|
4,580
|
|
|
|
6,700
|
|
|
|
4,728
|
|
|
|
4,057
|
|
|
|
4,475
|
|
Net loss on investments and impairments
|
|
|
(117
|
)
|
|
|
(69
|
)
|
|
|
(547
|
)
|
|
|
(143
|
)
|
|
|
(1,207
|
)
|
Broker-dealer income
|
|
|
-
|
|
|
|
-
|
|
|
|
20
|
|
|
|
1,347
|
|
|
|
1,263
|
|
Other operating income
|
|
|
11,324
|
|
|
|
10,239
|
|
|
|
9,857
|
|
|
|
8,012
|
|
|
|
6,933
|
|
Equity in losses of unconsolidated entities
|
|
|
(5,538
|
)
|
|
|
(8,330
|
)
|
|
|
(2,199
|
)
|
|
|
(2,491
|
)
|
|
|
(6,236
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income
|
|
$
|
13,629
|
|
|
$
|
11,768
|
|
|
$
|
15,126
|
|
|
$
|
14,022
|
|
|
$
|
8,475
|
|
Non-interest income increased $1.9 million from the 2012 fourth quarter
primarily due to:
-
A decrease in equity in losses of unconsolidated entities of
approximately $2.8 million, to $5.5 million recorded in the first
quarter compared to a charge of $8.3 million for the fourth quarter of
2012. This adjustment is related to the Bank’s investment in CPG/GS PR
NPL, LLC (“CPG/GS”), the entity that purchased $269.2 million of loans
from FirstBank in 2011. The Bank holds a 35% subordinated ownership
interest in CPG/GS. This investment is accounted for under the equity
method and following the hypothetical liquidation book value (“HLBV”)
method to determine the Bank’s share in CPG/GS earnings or losses.
Under the HLBV method, the Bank determines its share in CPG/GS
earnings or losses by determining the difference between its claim on
CPG/GS book value at the end of the period as compared to the
beginning of the period. The positive variance results from changes in
the fair value of loans receivable held by CPG/GS where fair value is
determined on a discounted cash flow basis. At valuation dates, key
inputs and assumptions are updated to reflect changes in the market,
the performance of the underlying assets, and expectations of a market
participant.
-
An increase of $0.7 million in revenues from the insurance agency
activities, primarily reflecting seasonal profit sharing received by
the agency based on the volume of insurance policies production,
included as part of “other operating income” in the table above.
Partially offset by:
-
A $2.1 million decrease in revenues from the mortgage banking
business, including a decrease of approximately $1.7 million in gains
from securitization activities, mainly due to fluctuations in market
prices of GNMA mortgage-backed securities, and a $0.9 million
reduction in gains on sales of residential mortgage loans to
government-sponsored entities attributable to both a lower volume of
sales and lower profit margins. The Corporation sold approximately
$59.6 million of residential mortgage loans to government-sponsored
entities in the first quarter of 2013, realizing gains of $1.3 million
(including the recognition of servicing assets), compared to sales of
$67.0 million and gains of $2.2 million recorded in the fourth quarter
of 2012.
|
|
|
|
|
|
|
|
|
|
|
Non-Interest Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
(In thousands)
|
|
2013
|
|
2012
|
|
2012
|
|
|
2012
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees' compensation and benefits
|
|
$
|
33,554
|
|
$
|
31,840
|
|
$
|
31,058
|
|
$
|
31,101
|
|
$
|
31,611
|
|
Occupancy and equipment
|
|
|
15,070
|
|
|
14,972
|
|
|
15,208
|
|
|
15,181
|
|
|
15,676
|
|
Deposit insurance premium
|
|
|
11,517
|
|
|
11,897
|
|
|
11,657
|
|
|
11,982
|
|
|
11,987
|
|
Other insurance and supervisory fees
|
|
|
1,289
|
|
|
1,366
|
|
|
1,366
|
|
|
1,320
|
|
|
1,021
|
|
Taxes, other than income taxes
|
|
|
2,989
|
|
|
3,013
|
|
|
3,499
|
|
|
3,435
|
|
|
3,416
|
|
Professional fees
|
|
|
9,920
|
|
|
5,557
|
|
|
6,295
|
|
|
5,322
|
|
|
5,179
|
|
Business promotion
|
|
|
3,357
|
|
|
4,067
|
|
|
4,004
|
|
|
3,475
|
|
|
2,547
|
|
Net loss on REO operations
|
|
|
7,310
|
|
|
6,201
|
|
|
8,686
|
|
|
6,786
|
|
|
3,443
|
|
Other
|
|
|
13,004
|
|
|
11,992
|
|
|
10,070
|
|
|
8,340
|
|
|
10,313
|
|
Total
|
|
$
|
98,010
|
|
$
|
90,905
|
|
$
|
91,843
|
|
$
|
86,942
|
|
$
|
85,193
|
Non-interest expenses increased $7.1 million to $98.0 million in the
first quarter of 2013, including non-recurring professional service
costs of $3.9 million recorded in the first quarter in connection with
the bulk sale of assets and non-recurring charges of $1.2 million for
professional fees related to the previously announced not consummated
preferred stock exchange offer. Excluding these non-recurring charges,
non-interest expenses increased by $2.0 million compared to the fourth
quarter of 2012, substantially related to:
-
A $1.7 million increase in employees’ compensation and benefits
expenses primarily reflecting higher seasonal payroll taxes and
incentive compensation.
-
A $1.1 million increase in losses from OREO activities primarily
reflecting both higher write-downs and losses at the time of sale of
OREO properties, including a loss of $0.7 million on the sale of OREO
properties to another company.
-
Other increases include: (i) a negative variance of $0.7 million in
the provision for off-balance sheet exposures (mainly for unfunded
loan commitments), as this quarter reflects a reserve release of $0.1
million compared to a release of $0.8 million in the fourth quarter of
2012, (ii) an increase of $0.5 million in the amortization of the
Purchased credit card relationship intangible assets, and (iii) a $0.3
million increases in losses on the sale of non-real estate repossessed
assets. All of these variances are included as part of “Other” in the
table above.
Partially offset by:
-
A $0.7 million decrease in business promotion expenses, primarily
lower marketing expenses.
-
A $0.4 million decrease in the deposit insurance premium, mainly due
to improvements in the core deposit base, reduction of brokered
deposits, and a decrease in average assets.
Income Taxes
The income tax expense for the first quarter of 2013 amounted to $1.6
million compared to an income tax expense of $1.5 million for the fourth
quarter of 2012, a slight variance driven by higher taxable income of
profitable subsidiaries. As of March 31, 2013, the deferred tax asset,
net of a valuation allowance of $365.7 million, amounted to $4.4 million
compared to $4.9 million as of December 31, 2012. The Corporation’s
banking subsidiary, First Bank, continues to maintain a full valuation
allowance with respect to its net deferred tax asset. Under the Puerto
Rico Internal Revenue Code, the Corporation and its subsidiaries are
treated as separate taxable entities and are not entitled to file
consolidated tax returns; thus, losses of one entity cannot offset
income of another entity.
CREDIT QUALITY
|
Non-Performing Assets
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
2012
|
|
|
Non-performing loans held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
$
|
311,495
|
|
|
$
|
313,626
|
|
|
$
|
320,913
|
|
|
$
|
333,043
|
|
|
$
|
341,188
|
|
|
|
Commercial mortgage
|
|
|
136,708
|
|
|
|
214,780
|
|
|
|
231,163
|
|
|
|
239,881
|
|
|
|
244,391
|
|
|
|
Commercial and Industrial
|
|
|
141,045
|
|
|
|
230,090
|
|
|
|
230,459
|
|
|
|
255,253
|
|
|
|
263,604
|
|
|
|
Construction
|
|
|
59,810
|
|
|
|
178,190
|
|
|
|
189,458
|
|
|
|
202,133
|
|
|
|
231,071
|
|
|
|
Consumer and Finance leases
|
|
|
33,652
|
|
|
|
38,875
|
|
|
|
36,051
|
|
|
|
35,378
|
|
|
|
39,159
|
|
|
|
Total non-performing loans held for investment
|
|
|
682,710
|
|
|
|
975,561
|
|
|
|
1,008,044
|
|
|
|
1,065,688
|
|
|
|
1,119,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REO
|
|
|
181,479
|
|
|
|
185,764
|
|
|
|
177,001
|
|
|
|
167,341
|
|
|
|
135,905
|
|
|
Other repossessed property
|
|
|
9,913
|
|
|
|
10,107
|
|
|
|
9,775
|
|
|
|
10,601
|
|
|
|
12,494
|
|
|
Other assets (1)
|
|
|
64,543
|
|
|
|
64,543
|
|
|
|
64,543
|
|
|
|
64,543
|
|
|
|
64,543
|
|
|
|
Total non-performing assets, excluding loans held for sale
|
|
$
|
938,645
|
|
|
$
|
1,235,975
|
|
|
$
|
1,259,363
|
|
|
$
|
1,308,173
|
|
|
$
|
1,332,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans held for sale
|
|
|
147,995
|
|
|
|
2,243
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
Total non-performing assets, including loans held for sale (2)
|
|
$
|
1,086,640
|
|
|
$
|
1,238,218
|
|
|
$
|
1,259,363
|
|
|
$
|
1,308,173
|
|
|
$
|
1,332,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past-due loans 90 days and still accruing
|
|
$
|
125,384
|
|
|
$
|
142,012
|
|
|
$
|
141,028
|
|
|
$
|
120,585
|
|
|
$
|
133,191
|
|
|
Non-performing loans held for investment to total loans held for
investment
|
|
|
7.14
|
%
|
|
|
9.70
|
%
|
|
|
9.89
|
%
|
|
|
10.35
|
%
|
|
|
10.87
|
%
|
|
Non-performing loans to total loans
|
|
|
8.45
|
%
|
|
|
9.64
|
%
|
|
|
9.83
|
%
|
|
|
10.29
|
%
|
|
|
10.83
|
%
|
|
Non-performing assets, excluding non-performing loans held for sale,
|
|
|
|
|
|
|
|
|
|
|
|
to total assets, excluding non-performing loans held for sale
|
|
|
7.30
|
%
|
|
|
9.44
|
%
|
|
|
9.58
|
%
|
|
|
10.13
|
%
|
|
|
10.18
|
%
|
|
Non-performing assets to total assets
|
|
|
8.35
|
%
|
|
|
9.45
|
%
|
|
|
9.58
|
%
|
|
|
10.13
|
%
|
|
|
10.18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Collateral pledged with Lehman Brothers Special Financing, Inc.
|
(2)
|
Amount excludes purchased credit impaired loans with a carrying
value as of March 31, 2013 of approximately $9.2 million acquired
as part of the credit card portfolio acquired from FIA.
|
The Corporation continues to execute its strategic plan and achieved a
reduction of $151.6 million in non-performing assets driven by the bulk
sale of assets, which included $185.0 million of non-performing assets.
Total non-performing loans, including non-performing loans held for
sale, decreased by $147.1 million. This reduction reflects the impact of
the inclusion in the bulk sale of non-performing loans having a book
value of approximately $178.7 million and charge-offs of $36.0 million
associated with loans transferred to held for sale. This was partially
offset by inflows of loans to non-performing status amounting to $175.9
million, an increase of $64.3 million compared to inflows in the fourth
quarter of 2012. Most of the increase in inflows was associated with two
commercial mortgage relationships in individual amounts that exceed $10
million and aggregate $85.0 million. Excluding these two relationships,
total inflows of loans to non-performing status was $20.7 million lower
than inflows in the fourth quarter of 2012. Total delinquencies, which
include all loans 30 days or more past due and non-accrual loans,
decreased by $146.2 million and the level of adversely classified
commercial and construction loans decreased by $198.2 million to $816.5
million, or a 20% decrease, compared to the prior quarter. The net
charge-off activity increased to $204.0 million, from $40.6 million for
the fourth quarter of 2012. The increase reflects the impact of $98.5
million of charge-offs related to the bulk sale and $36.0 million of
charge-offs related to the transfer of loans to held for sale. Excluding
the impact of the bulk sale and the transfer of loans to held for sale,
net charge-offs were $69.5 million, or an annualized 2.87% of average
loans, up from $40.6 million, or an annualized 1.59%, in the fourth
quarter of 2012. The increase was primarily due to a $25.4 million
charge-off related to a single C&I relationship restructured through a
loan split in the first quarter of 2013 and for which additional
significant reserves were not necessary. Given the prolonged recession
and uncertainties in the economic environment in Puerto Rico, the
Corporation continued to face pressures related to its non-performing
and charge-offs levels. The Corporation continues with its emphasis in
the loan resolution and liquidation strategies.
Non-Performing Loans and Non-Performing Assets
Total non-performing loans, including non-performing loans held for
sale, were $830.7 million at March 31, 2012. This represents a decrease
of $147.1 million, or 15%, from $977.8 million at December 31, 2012.
This reduction reflects the impact of the bulk sale and charge-offs
related to the transfer of loans to held for sale, partially offset by
the increase in inflows of commercial mortgage and construction loans to
non-performing status as described below.
Non-performing C&I loans, including non-performing C&I loans held for
sale, decreased by $90.2 million, or 39%, on a sequential quarter basis
driven by the impact of non-performing C&I loans included in the bulk
sale with a book value of $85.3 million and a charge-off of $25.4
million on a single relationship restructured through a loan split in
the first quarter of 2013. Partially offsetting the aforementioned
decreases were inflows of $20.2 million during the first quarter of
2013, mainly concentrated in Puerto Rico. The largest C&I loan that
entered into non-performing status during the first quarter of 2013
amounted to $6.5 million. Total inflows of non-performing C&I loans
decreased by $14.3 million from $34.5 million for the fourth quarter of
2012 to $20.2 million in the first quarter of 2013.
Non-performing construction loans, including non-performing construction
loans held for sale, decreased by $61.3 million, or 34%, from the end of
the fourth quarter of 2012, primarily reflecting the impact of
non-performing construction loans included in the bulk sale with a book
value of $41.4 million as well as charge-offs of $21.4 million related
to construction loans transferred to held for sale. The decrease in
non-performing construction loans was primarily in Puerto Rico with a
reduction of $46.3 million with the remaining decrease of $15.0 million
related to charge-offs on a single relationship transferred to held for
sale in the Virgin Islands. The inflows of non-performing construction
loans of $6.0 million during the first quarter of 2013 increased by $5.3
million compared to inflows of $0.7 million in the fourth quarter of
2012, an increase primarily associated with one relationship in Puerto
Rico.
Non-performing commercial mortgage loans, including non-performing
commercial mortgage loans held for sale, increased by $11.8 million, or
5%, from the end of the fourth quarter of 2012. The increase was
primarily related to the inflow of two relationships in individual
amounts that exceed $10 million and aggregate $85.0 million. This was
partially offset by the impact of the inclusion in the bulk sale of
non-performing commercial mortgage loans having a book value of $51.5
million and charge-offs of $14.6 million related to the transfer of
commercial mortgage loans to held for sale. Non-performing commercial
mortgage loans increased by $20.9 million in Puerto Rico, led by the
increase in inflows, including the two large relationships mentioned
above. Non-performing commercial mortgage loans in the Virgin Islands
decreased by $7.3 million, driven by the restoration to accrual status
after a sustained period of performance of a $5.8 million modified loan.
The decrease of $1.8 million in the United States portfolio was driven
by a $1.4 million loan paid-in full during the first quarter. Total
inflows of non-performing commercial mortgage loans of $91.1 million
during the first quarter of 2013 increased by $85.2 million compared to
inflows of $5.9 million in the fourth quarter of 2012 primarily
associated with the two relationships mentioned above.
Non-performing residential mortgage loans decreased by $2.1 million, or
1%, from December 31, 2012. The decrease includes approximately $17.0
million of loans with cured delinquencies and also reflects reductions
due to foreclosures of $13.6 million, the restoration to accrual status
of approximately $5.1 million of modified loans that successfully
completed a trial performance period, and $0.9 million of residential
mortgage loans included as part of the bulk sale of assets. Borrowers’
payments and charge-offs also contributed to the decrease.
Non-performing residential mortgage loans decreased by $1.8 million and
$1.0 million in Puerto Rico and the United States, respectively,
compared to the fourth quarter of 2012, and increased by $0.6 million in
the Virgin Islands. The level of inflows of non-performing residential
mortgage loans decreased from $51.0 million for the fourth quarter of
2012 to $45.3 million in the first quarter of 2013. Approximately $190.9
million, or 61% of total non-performing residential mortgage loans, have
been written down to their net realizable value.
The levels of non-performing consumer loans, including finance leases,
showed a $5.2 million decrease during the first quarter of 2013 mainly
related to auto loans and boat financings. The inflows of non-performing
consumer loans decreased from $19.5 million for the fourth quarter of
2012 to $13.3 million for the first quarter of 2013.
As of March 31, 2013, approximately $229.0 million, or 34%, of total
non-performing loans held for investment have been charged-off to their
net realizable value. (See “Allowance for Loan and Lease Losses”
discussion below for additional information.)
The OREO portfolio, which is part of non-performing assets, decreased by
$4.3 million to $181.5 million, mainly reflecting the impact of the
inclusion in the bulk sale of assets of commercial OREO properties
having a book value of $6.3 million and write-downs. We expect to see
continued movement of credits in and out of OREO as we continue to
execute our loan resolution strategies.
The following table shows the activity during the first quarter of 2013
of the OREO portfolio by geographic region and type of property:
(In thousands)
|
|
As of March 31, 2013
|
|
|
|
|
|
Puerto Rico
|
|
Virgin Islands
|
|
United States
|
|
|
|
|
Consolidated
|
|
|
|
Residential
|
|
Commercial
|
|
Construction
|
|
Residential
|
|
Commercial
|
|
Construction
|
|
Residential
|
|
Commercial
|
|
Construction
|
|
|
Beginning Balance
|
|
$
|
66,358
|
|
|
|
$
|
55,804
|
|
|
|
$
|
23,521
|
|
|
|
$
|
3,802
|
|
|
|
$
|
3,018
|
|
|
$
|
17,439
|
|
|
$
|
1,440
|
|
|
|
$
|
11,786
|
|
|
$
|
2,596
|
|
|
$
|
185,764
|
|
Additions
|
|
|
13,686
|
|
|
|
|
4,818
|
|
|
|
|
-
|
|
|
|
|
1,168
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
450
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,122
|
|
Sales
|
|
|
(11,161
|
)
|
|
|
|
(2,735
|
)
|
|
|
|
(287
|
)
|
|
|
|
(180
|
)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(350
|
)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(14,713
|
)
|
Fair value adjustments
|
|
|
(3,226
|
)
|
|
|
|
(3,637
|
)
|
|
|
|
(2,746
|
)
|
|
|
|
(35
|
)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(50
|
)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(9,694
|
)
|
|
Ending balance
|
|
$
|
65,657
|
|
|
|
$
|
54,250
|
|
|
|
$
|
20,488
|
|
|
|
$
|
4,755
|
|
|
|
$
|
3,018
|
|
|
$
|
17,439
|
|
|
$
|
1,490
|
|
|
|
$
|
11,786
|
|
|
$
|
2,596
|
|
|
$
|
181,479
|
|
The over 90-days delinquent, but still accruing loans, excluding loans
guaranteed by the U.S. Government, decreased during the first quarter of
2013 by $8.4 million to $40.3 million, or 0.42% of total loans held for
investment, as of March 31, 2013. Loans 30 to 89 days delinquent
increased by $17.5 million, to $263.6 million, as of March 31, 2013.
Allowance for Loan and Lease Losses
The following table sets forth an analysis of the allowance for loan and
lease losses during the periods indicated:
|
|
|
(Dollars in thousands)
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses, beginning of period
|
|
$
|
435,414
|
|
|
$
|
445,531
|
|
|
$
|
457,153
|
|
|
$
|
483,943
|
|
|
$
|
493,917
|
|
|
Provision (recovery) for loan and lease losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
7,948
|
|
(1
|
)
|
|
8,744
|
|
|
|
9,083
|
|
|
|
16,368
|
|
|
|
2,336
|
|
|
|
Commercial mortgage
|
|
|
36,397
|
|
(2
|
)
|
|
4,119
|
|
|
|
(6,617
|
)
|
|
|
142
|
|
|
|
1,578
|
|
|
|
Commercial and Industrial
|
|
|
35,292
|
|
(3
|
)
|
|
8,071
|
|
|
|
8,117
|
|
|
|
2,427
|
|
|
|
20,158
|
|
|
|
Construction
|
|
|
21,948
|
|
(4
|
)
|
|
(2,474
|
)
|
|
|
6,379
|
|
|
|
(666
|
)
|
|
|
7,716
|
|
|
|
Consumer and finance leases
|
|
|
9,538
|
|
|
|
12,006
|
|
|
|
11,990
|
|
|
|
6,613
|
|
|
|
4,409
|
|
|
Total provision for loan and lease losses
|
|
|
111,123
|
|
(5
|
)
|
|
30,466
|
|
|
|
28,952
|
|
|
|
24,884
|
|
|
|
36,197
|
|
|
Net charge-offs of loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
(11,580
|
)
|
(6
|
)
|
|
(9,555
|
)
|
|
|
(7,358
|
)
|
|
|
(14,211
|
)
|
|
|
(5,731
|
)
|
|
|
Commercial mortgage
|
|
|
(56,036
|
)
|
(7
|
)
|
|
(6,101
|
)
|
|
|
(5,002
|
)
|
|
|
(6,271
|
)
|
|
|
(3,594
|
)
|
|
|
Commercial and Industrial
|
|
|
(84,829
|
)
|
(8
|
)
|
|
(12,601
|
)
|
|
|
(12,261
|
)
|
|
|
(8,385
|
)
|
|
|
(12,669
|
)
|
|
|
Construction
|
|
|
(38,515
|
)
|
(9
|
)
|
|
(1,837
|
)
|
|
|
(8,326
|
)
|
|
|
(15,186
|
)
|
|
|
(15,392
|
)
|
|
|
Consumer and finance leases
|
|
|
(13,046
|
)
|
|
|
(10,489
|
)
|
|
|
(7,627
|
)
|
|
|
(7,621
|
)
|
|
|
(8,785
|
)
|
|
Net charge-offs
|
|
|
(204,006
|
)
|
(10
|
)
|
|
(40,583
|
)
|
|
|
(40,574
|
)
|
|
|
(51,674
|
)
|
|
|
(46,171
|
)
|
|
Allowance for loan and lease losses, end of period
|
|
$
|
342,531
|
|
|
$
|
435,414
|
|
|
$
|
445,531
|
|
|
$
|
457,153
|
|
|
$
|
483,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses to period end total loans held
for investment
|
|
|
3.58
|
%
|
|
|
4.33
|
%
|
|
|
4.37
|
%
|
|
|
4.44
|
%
|
|
|
4.70
|
%
|
|
Net charge-offs (annualized) to average loans outstanding during the
period
|
|
|
8.10
|
%
|
|
|
1.59
|
%
|
|
|
1.58
|
%
|
|
|
2.03
|
%
|
|
|
1.78
|
%
|
|
Net charge-offs (annualized), excluding charge-offs related to loans
sold and loans
|
|
|
|
|
|
|
|
|
|
|
|
transferred to held for sale, to average loans outstanding during
the period
|
|
|
2.87
|
%
|
|
|
1.59
|
%
|
|
|
1.58
|
%
|
|
|
2.03
|
%
|
|
|
1.78
|
%
|
|
Provision for loan and lease losses to net charge-offs during the
period
|
|
0.54x
|
|
0.75x
|
|
0.71x
|
|
0.48x
|
|
0.78x
|
|
Provision for loan and lease losses to net charge-offs during the
period, excluding
|
|
|
|
|
|
|
|
|
|
|
|
impact of loans sold and loans transferred to held for sale
|
|
0.68x
|
|
0.75x
|
|
0.71x
|
|
0.48x
|
|
0.78x
|
(1)
|
Includes provision of $1.0 million associated with the bulk loan
sale.
|
(2)
|
Includes provision of $28.7 million associated with the bulk loan
sale and the transfer of loans to held for sale.
|
(3)
|
Includes provision of $20.8 million associated with the bulk loan
sale.
|
(4)
|
Includes provision of $13.6 million associated with the bulk loan
sale and the transfer of loans to held for sale.
|
(5)
|
Includes provision of $64.1 million associated with the bulk loan
sale and the transfer of loans to held for sale.
|
(6)
|
Includes net charge-offs totaling $1.0 million associated with the
bulk loan sale.
|
(7)
|
Includes net charge-offs of $54.6 million associated with the bulk
loan sale and the transfer of loans to held for sale.
|
(8)
|
Includes net charge-offs totaling $44.7 million associated with
the bulk loan sale.
|
(9)
|
Includes net charge-offs of $34.2 million associated with the bulk
loan sale and the transfer of loans to held for sale.
|
(10)
|
Includes net charge-offs of $134.5 million associated with the
bulk loan sale and the transfer of loans to held for sale.
|
Provision for Loan and Lease Losses
The provision for loan and lease losses of $111.1 million for the first
quarter of 2013 includes $64.1 million related to the bulk sale of
assets and the transfer of loans to held for sale. Excluding the impact
of the bulk sale and the transfer of loans to held for sale, the
provision for loan and lease losses for the first quarter of 2013 was
$47.0 million, or $16.5 million higher than the provision recorded in
the fourth quarter of 2012. The increase was primarily related to the
migration into non-performing and adversely classified categories of
three commercial relationships totaling approximately $132 million that
required a provision of $17.8 million during the first quarter. The
increase was also related to the impact of the bulk sale on the
determination of the general reserve that resulted in an additional
charge of approximately $7 million. Partially offsetting these increases
was a $2.5 million decrease in the provision for consumer loans. The
allowance for loan losses to total non-performing loans held for
investment ratio was 50.17% as of March 31, 2013 compared to 44.63% at
the end of the fourth quarter of 2012.
In Puerto Rico, the Corporation recorded a provision for loan and lease
losses of $104.9 million, including $57.9 million related to the bulk
sale of assets and the transfer of loans to held for sale. Excluding the
impact of the bulk sale and the transfer of loans to held for sale, the
provision for loan and lease losses in Puerto Rico for the first quarter
of 2013 was $47.0 million, or $23.2 million higher than the provision
recorded in the fourth quarter of 2012. The increase was primarily
related to the aforementioned migration of three large relationships to
adversely classified categories and non-performing status that required
a provision of $17.8 million. In addition, the higher provision was
related to the impact of the bulk sale on the general reserve
determination for C&I, commercial mortgage and construction loans.
Excluding the impact of the bulk sale and losses associated with the
transfer of loans to held for sale, the provision for C&I loans,
commercial mortgage loans and construction loans in Puerto Rico
increased by $10.6 million, $5.5 million, and $7.6 million,
respectively, compared to the provision recorded in the fourth quarter
of 2012. These increases were partially offset by a decrease of $1.2
million in the provision for consumer loans.
The Corporation recorded a provision related to loans in the United
States of $1.5 million for the first quarter of 2013 compared to a
provision of $3.2 million for the fourth quarter of 2012. The decrease
in the provision was mainly related to the commercial mortgage loan
portfolio due to lower charge-offs as the previous quarter included the
impact of losses related to certain non-performing loans sold.
With respect to the Virgin Islands portfolio, the Corporation recorded a
provision for loan and lease losses of $4.7 million, including a
provision of $6.3 million related to a construction loan relationship
transferred to held for sale. Excluding the impact of the loans
transferred to held for sale, the Corporation recorded a reserve release
of $1.5 million in the Virgin Islands, compared to a provision of $3.5
million in the fourth quarter of 2012. The variance was primarily
related to the residential mortgage loans portfolio, mainly due to
updated appraisals and lower charge-offs, and consumer loans, due to
improvements in delinquency and charge-offs trends.
The following table sets forth information concerning the ratio of the
allowance to non-performing loans held for investment as of March 31,
2013 and December 31, 2012 by loan category:
(Dollars in thousands)
|
|
Residential Mortgage Loans
|
|
Commercial Mortgage Loans
|
|
C&I Loans
|
|
Construction Loans
|
|
Consumer and Finance Leases
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans held for investment charged-off to realizable
value
|
|
$
|
190,866
|
|
|
|
$
|
1,771
|
|
|
|
$
|
30,894
|
|
|
$
|
3,500
|
|
|
|
$
|
1,928
|
|
|
|
$
|
228,959
|
|
Other non-performing loans held for investment
|
|
|
120,629
|
|
|
|
|
134,937
|
|
|
|
|
110,151
|
|
|
|
56,310
|
|
|
|
|
31,724
|
|
|
|
|
453,751
|
|
Total non-performing loans held for investment
|
|
$
|
311,495
|
|
|
|
$
|
136,708
|
|
|
|
$
|
141,045
|
|
|
$
|
59,810
|
|
|
|
$
|
33,652
|
|
|
|
$
|
682,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance to non-performing loans held for investment
|
|
|
20.78
|
%
|
|
|
|
57.09
|
%
|
|
|
|
69.03
|
%
|
|
|
75.29
|
%
|
|
|
|
170.45
|
%
|
|
|
|
50.17
|
%
|
Allowance to non-performing loans held for investment,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
excluding non-performing loans charged-off to realizable value
|
|
|
53.65
|
%
|
|
|
|
57.84
|
%
|
|
|
|
88.39
|
%
|
|
|
79.97
|
%
|
|
|
|
180.81
|
%
|
|
|
|
75.49
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans held for investment charged-off to realizable
value
|
|
$
|
170,555
|
|
|
|
$
|
7,194
|
|
|
|
$
|
25,925
|
|
|
$
|
43,943
|
|
|
|
$
|
1,219
|
|
|
|
$
|
248,836
|
|
Other non-performing loans held for investment
|
|
|
143,071
|
|
|
|
|
207,586
|
|
|
|
|
204,165
|
|
|
|
134,247
|
|
|
|
|
37,656
|
|
|
|
|
726,725
|
|
Total non-performing loans held for investment
|
|
$
|
313,626
|
|
|
|
$
|
214,780
|
|
|
|
$
|
230,090
|
|
|
$
|
178,190
|
|
|
|
$
|
38,875
|
|
|
|
$
|
975,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance to non-performing loans held for investment
|
|
|
21.79
|
%
|
|
|
|
45.48
|
%
|
|
|
|
63.84
|
%
|
|
|
34.57
|
%
|
|
|
|
156.57
|
%
|
|
|
|
44.63
|
%
|
Allowance to non-performing loans held for investment,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
excluding non-performing loans charged-off to realizable value
|
|
|
47.78
|
%
|
|
|
|
47.06
|
%
|
|
|
|
71.95
|
%
|
|
|
45.89
|
%
|
|
|
|
161.64
|
%
|
|
|
|
59.91
|
%
|
The following table sets forth information concerning the composition of
the Corporation’s allowance for loan and lease losses as of March 31,
2013 and December 31, 2012 by loan category and by whether the allowance
and related provisions were calculated individually for impairment
purposes or through a general valuation allowance.
(Dollars in thousands)
|
|
Residential Mortgage Loans
|
|
Commercial Mortgage Loans
|
|
C&I Loans
|
|
Construction Loans
|
|
Consumer and Finance Leases
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans without specific reserves:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans, net of charge-offs
|
|
$
|
142,984
|
|
|
|
$
|
30,531
|
|
|
|
$
|
31,149
|
|
|
$
|
27,928
|
|
|
|
$
|
3,423
|
|
|
|
$
|
236,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans with specific reserves:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans, net of charge-offs
|
|
|
436,321
|
|
|
|
|
172,642
|
|
|
|
|
191,890
|
|
|
|
42,723
|
|
|
|
|
23,196
|
|
|
|
|
866,772
|
|
Allowance for loan and lease losses
|
|
|
47,495
|
|
|
|
|
36,110
|
|
|
|
|
35,383
|
|
|
|
21,067
|
|
|
|
|
3,327
|
|
|
|
|
143,382
|
|
Allowance for loan and lease losses to principal balance
|
|
|
10.89
|
%
|
|
|
|
20.92
|
%
|
|
|
|
18.44
|
%
|
|
|
49.31
|
%
|
|
|
|
14.34
|
%
|
|
|
|
16.54
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PCI loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value of PCI loans
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
9,224
|
|
|
|
|
9,224
|
|
Allowance for PCI loans
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Allowance for PCI loans to carrying value
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans with general allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans
|
|
|
2,134,778
|
|
|
|
|
1,468,096
|
|
|
|
|
2,709,332
|
|
|
|
152,111
|
|
|
|
|
1,984,218
|
|
|
|
|
8,448,535
|
|
Allowance for loan and lease losses
|
|
|
17,227
|
|
|
|
|
41,943
|
|
|
|
|
61,980
|
|
|
|
23,966
|
|
|
|
|
54,033
|
|
|
|
|
199,149
|
|
Allowance for loan and lease losses to principal balance
|
|
|
0.81
|
%
|
|
|
|
2.86
|
%
|
|
|
|
2.29
|
%
|
|
|
15.76
|
%
|
|
|
|
2.72
|
%
|
|
|
|
2.36
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans
|
|
$
|
2,714,083
|
|
|
|
$
|
1,671,269
|
|
|
|
$
|
2,932,371
|
|
|
$
|
222,762
|
|
|
|
$
|
2,020,061
|
|
|
|
$
|
9,560,546
|
|
Allowance for loan and lease losses
|
|
|
64,722
|
|
|
|
|
78,053
|
|
|
|
|
97,363
|
|
|
|
45,033
|
|
|
|
|
57,360
|
|
|
|
|
342,531
|
|
Allowance for loan and lease losses to principal balance
|
|
|
2.38
|
%
|
|
|
|
4.67
|
%
|
|
|
|
3.32
|
%
|
|
|
20.22
|
%
|
|
|
|
2.84
|
%
|
|
|
|
3.58
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans without specific reserves:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans, net of charge-offs
|
|
$
|
122,056
|
|
|
|
$
|
44,495
|
|
|
|
$
|
35,673
|
|
|
$
|
21,179
|
|
|
|
$
|
2,615
|
|
|
|
$
|
226,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans with specific reserves:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans, net of charge-offs
|
|
|
462,663
|
|
|
|
|
310,030
|
|
|
|
|
284,357
|
|
|
|
159,504
|
|
|
|
|
22,722
|
|
|
|
|
1,239,276
|
|
Allowance for loan and lease losses
|
|
|
47,171
|
|
|
|
|
50,959
|
|
|
|
|
80,167
|
|
|
|
39,572
|
|
|
|
|
3,880
|
|
|
|
|
221,749
|
|
Allowance for loan and lease losses to principal balance
|
|
|
10.20
|
%
|
|
|
|
16.44
|
%
|
|
|
|
28.19
|
%
|
|
|
24.81
|
%
|
|
|
|
17.08
|
%
|
|
|
|
17.89
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PCI loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value of PCI loans
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
10,602
|
|
|
|
|
10,602
|
|
Allowance for PCI loans
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Allowance for PCI loans to carrying value
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans with general allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans
|
|
|
2,162,498
|
|
|
|
|
1,529,273
|
|
|
|
|
2,728,517
|
|
|
|
181,192
|
|
|
|
|
1,976,738
|
|
|
|
|
8,578,218
|
|
Allowance for loan and lease losses
|
|
|
21,183
|
|
|
|
|
46,733
|
|
|
|
|
66,733
|
|
|
|
22,028
|
|
|
|
|
56,988
|
|
|
|
|
213,665
|
|
Allowance for loan and lease losses to principal balance
|
|
|
0.98
|
%
|
|
|
|
3.06
|
%
|
|
|
|
2.45
|
%
|
|
|
12.16
|
%
|
|
|
|
2.88
|
%
|
|
|
|
2.49
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance of loans
|
|
$
|
2,747,217
|
|
|
|
$
|
1,883,798
|
|
|
|
$
|
3,048,547
|
|
|
$
|
361,875
|
|
|
|
$
|
2,012,677
|
|
|
|
$
|
10,054,114
|
|
Allowance for loan and lease losses
|
|
|
68,354
|
|
|
|
|
97,692
|
|
|
|
|
146,900
|
|
|
|
61,600
|
|
|
|
|
60,868
|
|
|
|
|
435,414
|
|
Allowance for loan and lease losses to principal balance
|
|
|
2.49
|
%
|
|
|
|
5.19
|
%
|
|
|
|
4.82
|
%
|
|
|
17.02
|
%
|
|
|
|
3.02
|
%
|
|
|
|
4.33
|
%
|
Net Charge-Offs
Total net charge-offs for the first quarter of 2013 were $204.0 million,
or 8.10% of average loans on an annualized basis, including $134.5
million of charge-offs related to the bulk sale and the transfer of
loans to held for sale. Excluding the impact of charge-offs related to
the bulk sale and the transfer of loans to held for sale, total net
charge-offs for the first quarter of 2013 were $69.5 million, or 2.87%
of average loans, compared to $40.6 million, or an annualized 1.59%, for
the fourth quarter of 2012. The increase was primarily due to a $25.4
million charge-off related to a single commercial relationship
restructured in the first quarter of 2013 into a split Note A/Note B.
C&I loans net charge-offs in the first quarter of 2013 totaled $84.8
million, or an annualized 11.16% of related average loans, including
$44.7 million of charge-offs related to the bulk sale. Excluding the
impact of charge-offs related to the bulk sale, C&I net charge-offs for
the first quarter of 2013 were $40.1 million, or 5.47% of average loans,
up from $12.6 million, or an annualized 1.40% of related loans, for the
fourth quarter of 2012. Substantially all of the charge-offs recorded in
the first quarter were in Puerto Rico, including the aforementioned
$25.4 million charge-off on a single relationship restructured through a
loan split in the first quarter of 2013. The charge-offs for the first
quarter also included an aggregate $12.7 million related to five
relationships in Puerto Rico with individual charge-offs in excess of $1
million.
Commercial mortgage loans net charge-offs in the first quarter of 2013
were $56.0 million, or an annualized 12.06% of related average loans,
including $54.6 million of charge-offs related to the bulk sale and the
transfer of loans to held for sale. Excluding the impact of charge-offs
related to the bulk sale and the transfer of loans to held for sale,
commercial mortgage loans net charge-offs for the first quarter of 2013
were $1.4 million, or 0.34% of average loans, down from $6.1 million, or
an annualized 1.70% of related loans, for the fourth quarter of 2012.
Commercial mortgage loans net charge-offs in the first quarter of 2013
were primarily in Puerto Rico, including $1.0 million related to a
single relationship.
Construction loans net charge-offs in the first quarter of 2013 were
$38.5 million, or an annualized 44.66% of related average loans,
including $34.2 million of charge-offs related to the bulk sale and the
transfer of loans to held for sale. Excluding the impact of charge-offs
related to the bulk sale and the transfer of loans to held for sale,
construction net charge-offs for the first quarter of 2013 were $4.4
million, or 7.74% of average loans, up from $1.8 million, or an
annualized 2.06% of related loans, for the fourth quarter of 2012.
Construction loans net charge-offs in the first quarter included a $2.9
million charge-off on one residential land loan in Puerto Rico that
entered into non-performing status during the first quarter.
Residential mortgage loans net charge-offs in the first quarter of 2013
were $11.6 million, or an annualized 1.65% of related average loans,
including $1.0 million of charge-offs related to the bulk sale.
Excluding the impact of charge-offs related to the bulk sale,
residential mortgage loans net charge-offs for the first quarter of 2013
were $10.5 million, or 1.50% of average loans, up from $9.6 million, or
an annualized 1.36% of related loans, for the fourth quarter of 2012.
Approximately $6.8 million in charge-offs for the first quarter of 2013
resulted from valuations for impairment purposes of residential mortgage
loans considered homogeneous given high delinquency and loan-to-value
levels, compared to $5.7 million in the fourth quarter of 2012. Net
charge-offs on residential mortgage loans also included $2.8 million
related to foreclosures, compared to $2.9 million in the fourth quarter
of 2012.
Net charge-offs of consumer loans and finance leases in the first
quarter of 2013 were $13.0 million, or an annualized 2.59% of related
average loans, compared to $10.5 million, or an annualized 2.10% of
average loans in the fourth quarter of 2012. The decrease reflects lower
recoveries as the previous quarter included a recovery of $1.8 million
related to previously fully charged-off small personal loans that were
sold.
The following table presents annualized net charge-offs to average loans
held-in-portfolio:
|
|
|
|
Quarter Ended
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
September 30,
|
|
June 30,
|
|
|
March 31,
|
|
|
|
|
2013
|
|
|
2012
|
|
|
2012
|
|
2012
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
1.65%
|
(1)
|
|
1.36%
|
|
|
1.05%
|
|
2.04%
|
|
|
0.82%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial mortgage
|
|
12.06%
|
(2)
|
|
1.70%
|
|
|
1.36%
|
|
1.68%
|
|
|
0.92%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and Industrial
|
|
11.16%
|
(3)
|
|
1.40%
|
|
|
1.33%
|
|
0.88%
|
|
|
1.25%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
|
|
44.66%
|
(4)
|
|
2.06%
|
|
|
9.11%
|
|
15.21%
|
|
|
14.23%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and finance leases
|
|
2.59%
|
|
|
2.10%
|
|
|
1.55%
|
|
1.81%
|
|
|
2.26%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
8.10%
|
(5)
|
|
1.59%
|
|
|
1.58%
|
|
2.03%
|
|
|
1.78%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes net charge-offs totaling $1.0 million associated with the
bulk loan sale. The ratio of residential mortgage net charge-offs
to average loans, excluding charge-offs associated with the bulk
loan sale, was 1.50%.
|
(2)
|
Includes net charge-offs of $54.6 million associated with the bulk
loan sale and the transfer of loans to held for sale in the first
quarter of 2013. The ratio of commercial mortgage net charge-offs
to average loans, excluding charge-offs associated with the bulk
loan sale and the transfer of loans to held for sale, was 0.34%.
|
(3)
|
Includes net charge-offs totaling $44.7 million associated with
the bulk loan sale. The ratio of commercial and industrial net
charge-offs to average loans, excluding charge-offs associated
with the bulk loan sale, was 5.47%.
|
(4)
|
Includes net charge-offs of $34.2 million associated with the bulk
loan sale and the transfer of loans to held for sale in the first
quarter of 2013. The ratio of construction loans net charge-offs
to average loans, excluding charge-offs associated with the bulk
loan sale and the transfer of loans to held for sale, was 7.74%.
|
(5)
|
Includes net charge-offs of $134.5 million associated with the
bulk loan sale and the transfer of loans to held for sale in the
first quarter of 2013. The ratio of total net charge-offs to
average loans, excluding charge-offs associated with the bulk loan
sale and the transfer of loans to held for sale, was 2.87%.
|
The ratios above are based on annualized net charge-offs and are not
necessarily indicative of the results expected in subsequent periods.
The following table presents annualized net charge-offs to average loans
by geographic segment:
|
|
|
Quarter Ended
|
|
|
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
|
|
|
2013
|
|
2012
|
|
2012
|
|
2012
|
|
2012
|
|
|
PUERTO RICO:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
2.03%
|
(1)
|
1.61%
|
|
1.33%
|
|
2.42%
|
|
0.95%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial mortgage
|
15.35%
|
(2)
|
1.32%
|
|
2.08%
|
|
1.18%
|
|
0.98%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and Industrial
|
11.68%
|
(3)
|
1.50%
|
|
1.43%
|
|
0.98%
|
|
1.33%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
|
40.80%
|
(4)
|
2.44%
|
|
2.28%
|
|
3.63%
|
|
15.78%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and finance leases
|
2.65%
|
|
2.13%
|
|
1.56%
|
|
1.73%
|
|
2.28%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
8.64%
|
(5)
|
1.67%
|
|
1.53%
|
|
1.58%
|
|
1.80%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VIRGIN ISLANDS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
0.16%
|
|
0.46%
|
|
-0.02%
|
(11)
|
0.08%
|
|
0.08%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial mortgage
|
0.00%
|
|
0.00%
|
|
0.00%
|
|
0.00%
|
|
0.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and Industrial
|
4.13%
|
|
0.00%
|
|
0.00%
|
|
0.00%
|
|
0.03%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
|
62.87%
|
(6)
|
1.71%
|
|
26.04%
|
|
42.57%
|
|
19.29%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and finance leases
|
0.48%
|
|
1.10%
|
|
1.16%
|
|
1.07%
|
|
0.90%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
9.36%
|
(7)
|
0.51%
|
|
3.48%
|
|
6.23%
|
|
3.22%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED STATES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
0.70%
|
|
0.69%
|
|
0.30%
|
|
1.91%
|
|
0.90%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial mortgage
|
-0.02%
|
(8)
|
3.08%
|
|
-0.40%
|
(8)
|
3.32%
|
|
0.93%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and Industrial
|
-0.01%
|
(9)
|
-0.01%
|
(9)
|
-0.01%
|
(9)
|
-3.38%
|
(9)
|
0.72%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
|
-1.59%
|
(10)
|
-0.33%
|
(10)
|
-0.50%
|
(10)
|
-0.76%
|
(10)
|
-33.52%
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and finance leases
|
1.98%
|
|
2.33%
|
|
1.64%
|
|
6.92%
|
|
3.59%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
0.30%
|
|
1.85%
|
|
-0.04%
|
(12)
|
2.45%
|
|
0.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes net charge-offs totaling $1.0 million associated with the
bulk loan sale. The ratio of residential mortgage net charge-offs
to average loans in Puerto Rico, excluding charge-offs associated
with the bulk loan sale, was 1.84%.
|
(2)
|
Includes net charge-offs of $54.6 million associated with the bulk
loan sale and the transfer of loans to held for sale in the first
quarter of 2013. The ratio of commercial mortgage net charge-offs
to average loans in Puerto Rico, excluding charge-offs associated
with the bulk loan sale and the transfer of loans to held for
sale, was 0.45%.
|
(3)
|
Includes net charge-offs totaling $44.7 million associated with
the bulk loan sale. The ratio of commercial and industrial net
charge-offs to average loans in Puerto Rico, excluding charge-offs
associated with the bulk loan sale, was 5.65%.
|
(4)
|
Includes net charge-offs of $19.0 million associated with the bulk
loan sale and the transfer of loans to held for sale in the first
quarter of 2013. The ratio of construction loans net charge-offs
to average loans in Puerto Rico, excluding charge-offs associated
with the bulk loan sale and the transfer of loans to held for
sale, was 10.74%.
|
(5)
|
Includes net charge-offs of $119.3 million associated with the
bulk loan sale and the transfer of loans to held for sale in the
first quarter of 2013. The ratio of total net charge-offs to
average loans in Puerto Rico, excluding charge-offs associated
with the bulk loan sale and the transfer of loans to held for
sale, was 3.25%.
|
(6)
|
Includes net charge-offs of $15.2 million associated with the
transfer of loans to held for sale in the first quarter of 2013.
The ratio of construction loans net charge-offs to average loans
in the Virgin Islands, excluding charge-offs associated with the
transfer of loans to held for sale, was 0.00%.
|
(7)
|
Includes net charge-offs of $15.2 million associated with the
transfer of loans to held for sale in the first quarter of 2013.
The ratio of total net charge-offs to average loans in Puerto
Rico, excluding charge-offs associated with the transfer of loans
to held for sale, was 0.84%.
|
(8)
|
For the first quarter of 2013 and third quarter of 2012,
recoveries in commercial mortgage loans in Florida exceeded
charge-offs.
|
(9)
|
For the first quarter of 2013 and fourth, third, and second
quarter of 2012, recoveries in commercial and industrial loans in
Florida exceeded charge-offs.
|
(10)
|
For the first quarter of 2013 and fourth, third, second, and first
quarter of 2012, recoveries in construction loans in Florida
exceeded charge-offs.
|
(11)
|
For the third quarter of 2012, recoveries in residential mortgage
loans in the Virgin Islands exceeded charge-offs.
|
(12)
|
For the third quarter of 2012, recoveries in total loans in
Florida exceeded charge-offs.
|
Balance Sheet
Total assets were approximately $13.0 billion as of March 31, 2013, down
$93.9 million from December 31, 2012. The decrease was primarily
reflected in total loans, net of allowance, which declined $210.3
million led by the bulk sale of assets. Cash and cash equivalents
decreased by $184.3 million and total investments increased by $314.4
million mainly due to purchases of approximately $395 million of 15-20
Years U.S. agency MBS.
The Corporation is experiencing continued loan demand and has continued
its targeted origination strategy. During the first quarter of 2013,
total loan originations, including refinancings and draws from existing
revolving and non-revolving commitments, amounted to approximately
$715.3 million, compared to $816.4 million in loan originations in the
previous quarter. C&I loan originations (excluding government loans)
amounted to $208.0 million, compared to $303.3 million in the fourth
quarter of 2012; the decrease was mainly related to lower draws from
revolving commitments and floor plan activity. However, the volume of
new C&I loan originations with individual amounts in excess of $1
million increased by $14.2 million primarily in Florida. Government loan
originations amounted to $52.2 million, an increase of $2.7 million
compared to the previous quarter. Residential mortgage loan originations
and purchases amounted to $229.4 million for the first quarter of 2013
compared to $213.7 million for the fourth quarter of 2012. Originations
of auto loans (including finance leases) amounted to $146.1 million for
the first quarter of 2013 compared to $149.9 million for the fourth
quarter of 2012 and other personal loan originations amounted to $46.0
million, compared to $57.5 million for the fourth quarter of 2012. The
aforementioned figures exclude the utilization activity on outstanding
credit cards of approximately $86.9 million for the first quarter of
2013 compared to $97.7 million in the fourth quarter of 2012.
As of December 31, 2012, liabilities totaled $11.6 billion, a decrease
of approximately $12.8 million from December 31, 2012. The decrease in
total liabilities is mainly attributable to the repayment of $130
million of matured FHLB advances, a decline of $14.4 million of
government deposits, and a reduction of $12.6 million in brokered CDs.
Non-brokered deposits, excluding government deposits, increased by
$145.6 million reflecting increases in both commercial and retail
deposits.
The Corporation’s total stockholders’ equity amounted to $1.40 billion
as of March 31, 2013, a decrease of $81.0 million from December 31,
2012, driven by the net loss of $72.6 million and a decrease of $8.6
million in other comprehensive income due to lower unrealized gains on
available-for-sale securities.
The Corporation’s total capital, Tier 1 capital, and leverage ratios as
of March 31, 2013 were 17.44%, 16.15%, and 12.06%, respectively,
compared to total capital, Tier 1 capital and leverage ratios of 17.82%,
16.51%, and 12.60%, respectively, at the end of the fourth quarter of
2012. Meanwhile, the total capital, Tier 1 capital, and leverage ratios
as of March 31, 2013 of its banking subsidiary, FirstBank Puerto Rico,
were 16.98%, 15.69%, and 11.74%, respectively, compared to total
capital, Tier 1 capital, and leverage ratios of 17.35%, 16.04%, and
12.25%, respectively, at the end of the prior quarter. The decrease in
capital ratios was primarily related to the total loss of $68.0 million
on the bulk sale of assets and the transfer of loans to held for sale.
All of the regulatory capital ratios for the Bank are well above the
minimum required under the Consent Order entered into with the Federal
Deposit Insurance Corporation (FDIC) and the Office of the Commissioner
of Financial Institutions of the Commonwealth of Puerto Rico. Given the
Consent Order, however, the Bank cannot be considered to be a
well-capitalized institution.
Although uncertainty exists regarding final capital rules, based on our
current interpretation of the proposed Basel III capital rules we
anticipate to exceed the fully phased-in minimum capital ratios as
established in the current proposal. The proposed Basel III capital
rules and our interpretations used in estimating our Basel III
calculations are subject to change depending on the final Basel III
capital rules.
Tangible Common Equity
The Corporation’s tangible common equity ratio decreased to 9.90% as of
March 31, 2013 from 10.44% as of December 31, 2012 and the Tier 1 common
equity to risk-weighted assets ratio decreased to 13.18% as of March 31,
2013 from 13.61% as of December 31, 2012.
The following table is a reconciliation of the Corporation’s tangible
common equity and tangible assets over the last five quarters to the
comparable GAAP items:
(In thousands, except ratios and per share information)
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
2012
|
|
Tangible Equity:
|
|
|
|
|
|
|
|
|
|
|
|
Total equity - GAAP
|
|
$
|
1,403,999
|
|
|
$
|
1,485,023
|
|
|
$
|
1,484,117
|
|
|
$
|
1,448,959
|
|
|
$
|
1,433,023
|
|
|
Preferred equity
|
|
|
(63,047
|
)
|
|
|
(63,047
|
)
|
|
|
(63,047
|
)
|
|
|
(63,047
|
)
|
|
|
(63,047
|
)
|
|
Goodwill
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
Purchased credit card relationship
|
|
|
(22,580
|
)
|
|
|
(23,511
|
)
|
|
|
(23,920
|
)
|
|
|
(24,342
|
)
|
|
|
-
|
|
|
Core deposit intangible
|
|
|
(8,746
|
)
|
|
|
(9,335
|
)
|
|
|
(9,923
|
)
|
|
|
(10,512
|
)
|
|
|
(11,100
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity
|
|
$
|
1,281,528
|
|
|
$
|
1,361,032
|
|
|
$
|
1,359,129
|
|
|
$
|
1,322,960
|
|
|
$
|
1,330,778
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Total assets - GAAP
|
|
$
|
13,005,876
|
|
|
$
|
13,099,741
|
|
|
$
|
13,139,747
|
|
|
$
|
12,913,650
|
|
|
$
|
13,085,623
|
|
|
Goodwill
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
Purchased credit card relationship
|
|
|
(22,580
|
)
|
|
|
(23,511
|
)
|
|
|
(23,920
|
)
|
|
|
(24,342
|
)
|
|
|
-
|
|
|
Core deposit intangible
|
|
|
(8,746
|
)
|
|
|
(9,335
|
)
|
|
|
(9,923
|
)
|
|
|
(10,512
|
)
|
|
|
(11,100
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible assets
|
|
$
|
12,946,452
|
|
|
$
|
13,038,797
|
|
|
$
|
13,077,806
|
|
|
$
|
12,850,698
|
|
|
$
|
13,046,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding
|
|
|
206,228
|
|
|
|
206,235
|
|
|
|
206,179
|
|
|
|
206,134
|
|
|
|
206,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity ratio
|
|
|
9.90
|
%
|
|
|
10.44
|
%
|
|
|
10.39
|
%
|
|
|
10.29
|
%
|
|
|
10.20
|
%
|
|
Tangible book value per common share
|
|
$
|
6.21
|
|
|
$
|
6.60
|
|
|
$
|
6.59
|
|
|
$
|
6.42
|
|
|
$
|
6.46
|
|
The following table reconciles stockholders’ equity (GAAP) to Tier 1
common equity:
|
(Dollars in thousands)
|
|
As of
|
|
|
|
|
December 31,
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Common Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity - GAAP
|
|
$
|
1,403,999
|
|
|
$
|
1,485,023
|
|
|
$
|
1,484,117
|
|
|
$
|
1,448,959
|
|
|
$
|
1,433,023
|
|
|
|
Qualifying preferred stock
|
|
|
(63,047
|
)
|
|
|
(63,047
|
)
|
|
|
(63,047
|
)
|
|
|
(63,047
|
)
|
|
|
(63,047
|
)
|
|
|
Unrealized gain on available-for-sale securities (1)
|
|
|
(19,868
|
)
|
|
|
(28,476
|
)
|
|
|
(42,528
|
)
|
|
|
(26,623
|
)
|
|
|
(20,233
|
)
|
|
|
Disallowed deferred tax asset (2)
|
|
|
-
|
|
|
|
-
|
|
|
|
(40
|
)
|
|
|
(41
|
)
|
|
|
(25
|
)
|
|
|
Goodwill
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
(28,098
|
)
|
|
|
Core deposit intangible
|
|
|
(8,746
|
)
|
|
|
(9,335
|
)
|
|
|
(9,923
|
)
|
|
|
(10,512
|
)
|
|
|
(11,100
|
)
|
|
|
Cumulative change gain in fair value of liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
accounted for under a fair value option
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,434
|
)
|
|
|
Other disallowed assets
|
|
|
(2,515
|
)
|
|
|
(4,032
|
)
|
|
|
(4,155
|
)
|
|
|
(2,917
|
)
|
|
|
(807
|
)
|
|
|
Tier 1 common equity
|
|
$
|
1,281,725
|
|
|
$
|
1,352,035
|
|
|
$
|
1,336,326
|
|
|
$
|
1,317,721
|
|
|
$
|
1,307,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total risk-weighted assets
|
|
$
|
9,721,502
|
|
|
$
|
9,933,719
|
|
|
$
|
10,026,572
|
|
|
$
|
10,046,284
|
|
|
$
|
9,947,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 common equity to risk-weighted assets ratio
|
|
|
13.18
|
%
|
|
|
13.61
|
%
|
|
|
13.33
|
%
|
|
|
13.12
|
%
|
|
|
13.14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-
|
Tier 1 capital excludes net unrealized gains (losses) on
available-for-sale debt securities and net unrealized gains on
available-for-sale equity securities with readily determinable
fair values, in accordance with regulatory risk-based capital
guidelines. In arriving at Tier 1 capital, institutions are
required to deduct net unrealized losses on available-for-sale
equity securities with readily determinable fair values, net of
tax.
|
|
|
|
2-
|
Approximately $10 million of the Corporation's deferred tax assets
at March 31, 2013 (December 31, 2012 - $11 million; September 30,
2012 - $12 million; June 30, 2012 - $12 million; March 31, 2012 -
$12 million) was included without limitation in regulatory capital
pursuant to the risk-based capital guidelines, while approximately
$0 of such assets at March 31, 2013 (December 31, 2012 - $0;
September 30, 2012 - $40k; June 30, 2012 - $41k; March 31, 2012 -
$25k) exceeded the limitation imposed by these guidelines and, as
"disallowed deferred tax assets," was deducted in arriving at Tier
1 capital. According to regulatory capital guidelines, the
deferred tax assets that are dependent upon future taxable income
are limited for inclusion in Tier 1 capital to the lesser of: (i)
the amount of such deferred tax asset that the entity expects to
realize within one year of the calendar quarter-end date, based on
its projected future taxable income for that year, or (ii) 10% of
the amount of the entity's Tier 1 capital. Approximately $6
million of the Corporation's other net deferred tax liability at
March 31, 2013 (December 31, 2012 - $6 million; September 30, 2012
- $7 million; June 30, 2012 - $7 million; March 31, 2012 - $7
million) represented primarily the deferred tax effects of
unrealized gains and losses on available-for-sale debt securities,
which are permitted to be excluded prior to deriving the amount of
net deferred tax assets subject to limitation under the guidelines.
|
Conference Call / Webcast Information
First BanCorp’s senior management will host an earnings conference call
and live webcast on Friday, May 3, 2013, at 10:00 a.m. (Eastern Time).
The call may be accessed via a live Internet webcast through the
investor relations section of the Corporation’s web site: www.firstbankpr.com
or through a dial-in telephone number at (888) 317-6016 or (412)
317–6016 for international callers. Listeners are recommended to go to
the web site at least 15 minutes prior to the call to download and
install any necessary software. A replay of the webcast will be archived
in the investor relations section of First BanCorp’s web site, www.firstbankpr.com,
until May 3, 2014. A telephone replay will be available one hour after
the end of the conference call through 9:00 a.m. Eastern time June 3,
2013 at (877) 344-7529 or (412) 317-0088 for international callers. The
conference number is 10028420.
Safe Harbor
This press release may contain “forward-looking statements” concerning
the Corporation’s future economic performance. The words or phrases
“expect,” “anticipate,” “look forward,” “should,” “believes” and similar
expressions are meant to identify “forward-looking statements” within
the meaning of Section 27A of the Private Securities Litigation Reform
Act of 1995, and are subject to the safe harbor created by such section.
The Corporation wishes to caution readers not to place undue reliance on
any such “forward-looking statements,” which speak only as of the date
made, and to advise readers that various factors, including, but not
limited to, the following could cause actual results to differ
materially from those expressed in, or implied by such forward-looking
statements: uncertainty about whether the Corporation and FirstBank will
be able to fully comply with the written agreement dated June 3, 2010
that the Corporation entered into with the Federal Reserve Bank of New
York (the “Federal Reserve”) and the order dated June 2, 2010 that
FirstBank entered into with the FDIC and the Office of the Commissioner
of Financial Institutions of the Commonwealth of Puerto Rico (the “FDIC
Order”) that, among other things, require FirstBank to maintain certain
capital levels and reduce its special mention, classified, delinquent,
and non-performing assets; the risk of being subject to possible
additional regulatory actions; uncertainty as to the availability of
certain funding sources, such as retail brokered CDs; the Corporation’s
reliance on brokered CDs and its ability to obtain, on a periodic basis,
approval from the FDIC to issue brokered CDs to fund operations and
provide liquidity in accordance with the terms of the FDIC Order; the
risk of not being able to fulfill the Corporation’s cash obligations or
resume paying dividends to the Corporation’s stockholders in the future
due to the Corporation’s inability to receive approval from the Federal
Reserve to receive dividends from FirstBank or FirstBank’s failure to
generate sufficient cash flow to make a dividend payment to the
Corporation; the strength or weakness of the real estate markets and of
the consumer and commercial credit sectors and their impact on the
credit quality of the Corporation’s loans and other assets, which have
contributed and may continue to contribute to, among other things, the
high levels of non-performing assets, charge-offs, and the provision
expense and may subject the Corporation to further risk from loan
defaults and foreclosures; adverse changes in general economic
conditions in Puerto Rico, the U.S., and the U.S. Virgin Islands and
British Virgin Islands, including the interest rate environment, market
liquidity, housing absorption rates, real estate prices, and disruptions
in the U.S. capital markets, which may reduce interest margins, impact
funding sources, and affect demand for all of the Corporation’s products
and services and reduce the Corporation’s revenues, earnings, and the
value of the Corporation’s assets; an adverse change in the
Corporation’s ability to attract new clients and retain existing ones; a
decrease in demand for the Corporation’s products and services and lower
revenues and earnings because of the continued recession in Puerto Rico,
the current fiscal problems, and budget deficit of the Puerto Rico
government and recent credit downgrades of the Puerto Rico government;
uncertainty about regulatory and legislative changes for financial
services companies in Puerto Rico, the U.S., and the U.S. and British
Virgin Islands, which could affect the Corporation’s financial condition
or performance and could cause the Corporation’s actual results for
future periods to differ materially from prior results and anticipated
or projected results; uncertainty regarding the timing and final
substance of any capital or liquidity standards, including the Final
Basel III requirements and their implementation through rulemaking by
the Federal Reserve, including anticipated requirements to hold higher
levels of regulatory capital and liquidity and meet higher regulatory
capital ratios as a result of Final Basel III or other capital or
liquidity standards; uncertainty about the effectiveness of the various
actions undertaken to stimulate the U.S. economy and stabilize the U.S.
financial markets, and the impact such actions may have on the
Corporation's business, financial condition and results of operations;
changes in the fiscal and monetary policies and regulations of the
federal government, including those determined by the Federal Reserve,
the FDIC, government-sponsored housing agencies, and regulators in
Puerto Rico and the U.S. and British Virgin Islands; the risk of
possible failure or circumvention of 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 special assessments to replenish its
insurance fund, causing an additional increase in the Corporation’s
non-interest expenses; the risks of not being able to recover the assets
pledged to Lehman Brothers Special Financing, Inc.; the impact on the
Corporation’s results of operations and financial condition of
acquisitions and disposition transactions; a need to recognize
additional impairments on financial instruments, goodwill, or other
intangible assets relating to acquisitions; the risks that downgrades in
the credit ratings of the Corporation’s long-term senior debt will
adversely affect the Corporation’s ability to access necessary external
funds; the impact of the Dodd-Frank Wall Street Reform and Consumer
Protection Act on the Corporation’s businesses, business practices, and
cost of operations; the risk of losses in the value of investments in
unconsolidated entities that the Corporation does not control; and
general competitive factors and industry consolidation. The Corporation
does not undertake, and specifically disclaims any obligation, to update
any “forward-looking statements” to reflect occurrences or unanticipated
events or circumstances after the date of such statements except as
required by the federal securities laws.
Basis of Presentation
Use of Non-GAAP Financial Measures
This press release contains non-GAAP financial measures. Non-GAAP
financial measures are set forth when management believes they will be
helpful to an understanding of the Corporation’s results of operations
or financial position. Where non-GAAP financial measures are used, the
comparable GAAP financial measure, as well as the reconciliation to the
comparable GAAP financial measure, can be found in the text or in the
attached tables to this earnings release.
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 measures generally used by the financial community to
evaluate capital adequacy. Tangible common equity is total equity less
preferred equity, goodwill, core deposit intangibles, and other
intangibles, such as the purchased credit card relationship intangible.
Tangible assets are total assets less goodwill, core deposit
intangibles, and other intangibles, such as the purchased credit card
relationship intangible. Management and many stock analysts use the
tangible common equity ratio and tangible book value per common share in
conjunction with 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. 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.
Tier 1 Common Equity to Risk-Weighted Assets Ratio
The Tier 1 common equity to risk-weighted assets ratio is calculated by
dividing (a) Tier 1 capital less non-common elements including
qualifying perpetual preferred stock and qualifying trust preferred
securities by (b) risk-weighted assets, which assets are calculated in
accordance with applicable bank regulatory requirements. The Tier 1
common equity ratio is not required by GAAP or on a recurring basis by
applicable bank regulatory requirements. Management is currently
monitoring this ratio, along with the other ratios discussed above, in
evaluating the Corporation’s capital levels and believes that, at this
time, the ratio may be of interest to investors.
Adjusted Pre-Tax, Pre-Provision Income
A non-GAAP performance metric that management believes is useful in
analyzing underlying performance trends, particularly in times of
economic stress, is adjusted pre-tax, pre-provision income. Adjusted
pre-tax, pre-provision income, as defined by management, represents net
(loss) income excluding income tax expense (benefit), the provision for
loan and lease losses, gains on sale and other than temporary impairment
(OTTI) of investment securities, fair value adjustments on derivatives,
and liabilities measured at fair value, equity in earnings or losses of
unconsolidated entities as well as certain items identified as unusual,
non-recurring or non-operating.
From time to time, revenue and expenses are impacted by items judged by
management to be outside of ordinary banking activities and/or by items
that, while they may be associated with ordinary banking activities, are
so unusually large that management believes that a complete analysis of
its Corporation’s performance requires consideration also of results
that exclude such amounts. These items result from factors originating
outside the Corporation such as regulatory actions/assessments, and may
result from unusual management decisions, such as the early
extinguishment of debt.
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 financial liabilities elected to be measured at fair
value on a tax-equivalent basis. The presentation of net interest income
excluding valuations provides additional information about the
Corporation’s net interest income and facilitates comparability and
analysis. The changes in the fair value of derivative instruments and
unrealized gains and losses on liabilities measured at fair value 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. 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 certain loans, on a common basis that
facilitates comparison of results to results of peers.
Financial measures adjusted to exclude the effect of the bulk sale of
assets and loans transferred to held for sale
To supplement the Corporation’s financial statements presented in
accordance with GAAP, the Corporation provides additional measures of
net loss, net loss per diluted share, provision for loan and lease
losses, provision for loan and lease losses to net charge-offs, net
charge-offs, and net charge-offs to average loans to exclude the impact
of the bulk sale of adversely classified loans and OREO properties with
a book value of $217.7 million, and the transfer of $181.6 million of
non-performing loans to held for sale. In connection with the bulk sale
and the transfer of loans to held for sale, the Corporation recorded
charge-offs of $134.5 million, an additional provision for loan and
lease losses of $64.1 million, and $3.9 million of professional fees
specifically related to the bulk sale. Management believes that these
non-GAAP measures enhance the ability of analysts and investors to
analyze trends in the Corporation’s business and to better understand
the performance of the Corporation. In addition, the Corporation may
utilize these non-GAAP financial measures as a guide in its budgeting
and long-term planning process. Any analysis of these non-GAAP financial
measures should be used only in conjunction with results presented in
accordance with GAAP.
FIRST BANCORP
|
Condensed Consolidated Statements of Financial Condition
|
|
|
|
|
|
|
|
As of
|
|
|
March 31,
|
|
December 31,
|
(In thousands, except for share information)
|
|
|
2013
|
|
|
|
2012
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
$
|
545,719
|
|
|
$
|
730,016
|
|
|
|
|
|
|
Money market investments:
|
|
|
|
|
Federal funds sold
|
|
|
-
|
|
|
|
-
|
|
Time deposits with other financial institutions
|
|
|
300
|
|
|
|
505
|
|
Other short-term investments
|
|
|
216,328
|
|
|
|
216,330
|
|
Total money market investments
|
|
|
216,628
|
|
|
|
216,835
|
|
|
|
|
|
|
Investment securities available for sale, at fair value
|
|
|
2,051,295
|
|
|
|
1,731,077
|
|
|
|
|
|
|
|
|
|
|
|
Other equity securities
|
|
|
32,892
|
|
|
|
38,757
|
|
|
|
|
|
|
Total investment securities
|
|
|
2,084,187
|
|
|
|
1,769,834
|
|
|
|
|
|
|
Investment in unconsolidated entities
|
|
|
18,432
|
|
|
|
23,970
|
|
|
|
|
|
|
Loans, net of allowance for loan and lease losses of $342,531
|
|
|
|
|
(December 31, 2012 - $435,414)
|
|
|
9,218,015
|
|
|
|
9,618,700
|
|
Loans held for sale, at lower of cost or market
|
|
|
275,771
|
|
|
|
85,394
|
|
Total loans, net
|
|
|
9,493,786
|
|
|
|
9,704,094
|
|
|
|
|
|
|
Premises and equipment, net
|
|
|
178,339
|
|
|
|
181,363
|
|
Other real estate owned
|
|
|
181,479
|
|
|
|
185,764
|
|
Accrued interest receivable on loans and investments
|
|
|
51,967
|
|
|
|
51,671
|
|
Other assets
|
|
|
235,339
|
|
|
|
236,194
|
|
Total assets
|
|
$
|
13,005,876
|
|
|
$
|
13,099,741
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
Non-interest-bearing deposits
|
|
$
|
856,563
|
|
|
$
|
837,387
|
|
Interest-bearing deposits
|
|
|
9,127,006
|
|
|
|
9,027,159
|
|
Total deposits
|
|
|
9,983,569
|
|
|
|
9,864,546
|
|
|
|
|
|
|
Securities sold under agreements to repurchase
|
|
|
900,000
|
|
|
|
900,000
|
|
Advances from the Federal Home Loan Bank (FHLB)
|
|
|
378,440
|
|
|
|
508,440
|
|
Notes payable
|
|
|
-
|
|
|
|
-
|
|
Other borrowings
|
|
|
231,959
|
|
|
|
231,959
|
|
Accounts payable and other liabilities
|
|
|
107,909
|
|
|
|
109,773
|
|
Total liabilities
|
|
|
11,601,877
|
|
|
|
11,614,718
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, authorized 50,000,000 shares: issued 22,828,174
shares;
|
|
|
|
|
outstanding 2,521,872; aggregate liquidation value $63,047
|
|
|
63,047
|
|
|
|
63,047
|
|
|
|
|
|
|
Common stock, $0.10 par value, authorized 2,000,000,000 shares;
issued 206,722,833
|
|
|
|
|
(December 31, 2012 - 206,730,318 shares issued)
|
|
|
20,672
|
|
|
|
20,673
|
|
Less: Treasury stock (at par value)
|
|
|
(49
|
)
|
|
|
(49
|
)
|
|
|
|
|
|
|
|
|
|
|
Common stock outstanding, 206,227,980 shares outstanding (December
31, 2012 - 206,235,465 shares outstanding)
|
|
|
20,623
|
|
|
|
20,624
|
|
Additional paid-in capital
|
|
|
885,974
|
|
|
|
885,754
|
|
Retained earnings
|
|
|
414,533
|
|
|
|
487,166
|
|
Accumulated other comprehensive income
|
|
|
19,822
|
|
|
|
28,432
|
|
Total stockholders' equity
|
|
|
1,403,999
|
|
|
|
1,485,023
|
|
Total liabilities and stockholders' equity
|
|
$
|
13,005,876
|
|
|
$
|
13,099,741
|
|
FIRST BANCORP
|
Condensed Consolidated Statements of (Loss) Income
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
(In thousands, except per share information)
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
Net interest income:
|
|
|
|
|
|
|
Interest income
|
|
$
|
160,225
|
|
|
$
|
165,054
|
|
|
$
|
152,107
|
|
Interest expense
|
|
|
35,732
|
|
|
|
39,423
|
|
|
|
50,241
|
|
Net interest income
|
|
|
124,493
|
|
|
|
125,631
|
|
|
|
101,866
|
|
Provision for loan and lease losses
|
|
|
111,123
|
|
|
|
30,466
|
|
|
|
36,197
|
|
Net interest income after provision for loan and lease losses
|
|
|
13,370
|
|
|
|
95,165
|
|
|
|
65,669
|
|
|
|
|
|
|
|
|
Non-interest income:
|
|
|
|
|
|
|
Service charges on deposit accounts
|
|
|
3,380
|
|
|
|
3,228
|
|
|
|
3,247
|
|
Mortgage banking activities
|
|
|
4,580
|
|
|
|
6,700
|
|
|
|
4,475
|
|
Net loss on investments and impairments
|
|
|
(117
|
)
|
|
|
(69
|
)
|
|
|
(1,207
|
)
|
Equity in losses of unconsolidated entities
|
|
|
(5,538
|
)
|
|
|
(8,330
|
)
|
|
|
(6,236
|
)
|
Other non-interest income
|
|
|
11,324
|
|
|
|
10,239
|
|
|
|
8,196
|
|
Total non-interest income
|
|
|
13,629
|
|
|
|
11,768
|
|
|
|
8,475
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
Employees' compensation and benefits
|
|
|
33,554
|
|
|
|
31,840
|
|
|
|
31,611
|
|
Occupancy and equipment
|
|
|
15,070
|
|
|
|
14,972
|
|
|
|
15,676
|
|
Business promotion
|
|
|
3,357
|
|
|
|
4,067
|
|
|
|
2,547
|
|
Professional fees
|
|
|
9,920
|
|
|
|
5,557
|
|
|
|
5,179
|
|
Taxes, other than income taxes
|
|
|
2,989
|
|
|
|
3,013
|
|
|
|
3,416
|
|
Insurance and supervisory fees
|
|
|
12,806
|
|
|
|
13,263
|
|
|
|
13,008
|
|
Net loss on other real estate owned operations
|
|
|
7,310
|
|
|
|
6,201
|
|
|
|
3,443
|
|
Other non-interest expenses
|
|
|
13,004
|
|
|
|
11,992
|
|
|
|
10,313
|
|
Total non-interest expenses
|
|
|
98,010
|
|
|
|
90,905
|
|
|
|
85,193
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes
|
|
|
(71,011
|
)
|
|
|
16,028
|
|
|
|
(11,049
|
)
|
Income tax expense
|
|
|
(1,622
|
)
|
|
|
(1,493
|
)
|
|
|
(2,133
|
)
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(72,633
|
)
|
|
$
|
14,535
|
|
|
$
|
(13,182
|
)
|
|
|
|
|
|
|
|
Net (loss) income attributable to common stockholders
|
|
$
|
(72,633
|
)
|
|
$
|
14,535
|
|
|
$
|
(13,182
|
)
|
|
|
|
|
|
|
|
(Loss) earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.35
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.06
|
)
|
Diluted
|
|
$
|
(0.35
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.06
|
)
|
About First BanCorp.
First BanCorp. is the parent corporation of FirstBank Puerto Rico, a
state-chartered commercial bank with operations in Puerto Rico, the
Virgin Islands and Florida, and of FirstBank Insurance Agency. First
BanCorp. and FirstBank Puerto Rico operate within U.S. banking laws and
regulations. The Corporation operates a total of 153 branches,
stand-alone offices, and in-branch service centers throughout Puerto
Rico, the U.S. and British Virgin Islands, and Florida. Among the
subsidiaries of FirstBank Puerto Rico are First Federal Finance Corp., a
small loan company; FirstBank Puerto Rico Securities, a broker-dealer
subsidiary; First Management of Puerto Rico; and FirstMortgage, Inc., a
mortgage origination company. In the U.S. Virgin Islands, FirstBank
operates First Express, a small loan company. 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.firstbankpr.com.
EXHIBIT A
Table 1 – Selected Financial Data
|
(In thousands, except for per share and financial ratios)
|
|
Quarter Ended
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
March 31,
|
|
|
|
|
|
2013
|
|
|
|
|
2012
|
|
|
|
2012
|
|
|
Condensed Income Statements:
|
|
|
|
|
|
|
|
|
|
Total interest income
|
|
$
|
160,225
|
|
|
|
$
|
165,054
|
|
|
$
|
152,107
|
|
|
|
Total interest expense
|
|
|
35,732
|
|
|
|
|
39,423
|
|
|
|
50,241
|
|
|
|
Net interest income
|
|
|
124,493
|
|
|
|
|
125,631
|
|
|
|
101,866
|
|
|
|
Provision for loan and lease losses
|
|
|
111,123
|
|
|
|
|
30,466
|
|
|
|
36,197
|
|
|
|
Non-interest income
|
|
|
13,629
|
|
|
|
|
11,768
|
|
|
|
8,475
|
|
|
|
Non-interest expenses
|
|
|
98,010
|
|
|
|
|
90,905
|
|
|
|
85,193
|
|
|
|
(Loss) income before income taxes
|
|
|
(71,011
|
)
|
|
|
|
16,028
|
|
|
|
(11,049
|
)
|
|
|
Income tax expense
|
|
|
(1,622
|
)
|
|
|
|
(1,493
|
)
|
|
|
(2,133
|
)
|
|
|
Net (loss) income
|
|
|
(72,633
|
)
|
|
|
|
14,535
|
|
|
|
(13,182
|
)
|
|
|
Net (loss) income attributable to common stockholders
|
|
|
(72,633
|
)
|
|
|
|
14,535
|
|
|
|
(13,182
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Common Share Results:
|
|
|
|
|
|
|
|
|
|
Net (loss) earnings per share basic
|
|
$
|
(0.35
|
)
|
|
|
$
|
0.07
|
|
|
$
|
(0.06
|
)
|
|
|
Net (loss) earnings per share diluted
|
|
$
|
(0.35
|
)
|
|
|
$
|
0.07
|
|
|
$
|
(0.06
|
)
|
|
|
Cash dividends declared
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
Average shares outstanding
|
|
|
205,465
|
|
|
|
|
205,416
|
|
|
|
205,217
|
|
|
|
Average shares outstanding diluted
|
|
|
205,465
|
|
|
|
|
206,220
|
|
|
|
205,217
|
|
|
|
Book value per common share
|
|
$
|
6.50
|
|
|
|
$
|
6.89
|
|
|
$
|
6.65
|
|
|
|
Tangible book value per common share (1)
|
|
$
|
6.21
|
|
|
|
$
|
6.60
|
|
|
$
|
6.46
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Financial Ratios (In Percent):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profitability:
|
|
|
|
|
|
|
|
|
|
Return on Average Assets
|
|
|
(2.25
|
)
|
|
|
|
0.44
|
|
|
|
(0.41
|
)
|
|
|
Interest Rate Spread (2)
|
|
|
3.77
|
|
|
|
|
3.70
|
|
|
|
2.95
|
|
|
|
Net Interest Margin (2)
|
|
|
4.00
|
|
|
|
|
3.94
|
|
|
|
3.25
|
|
|
|
Return on Average Total Equity
|
|
|
(19.82
|
)
|
|
|
|
3.89
|
|
|
|
(3.67
|
)
|
|
|
Return on Average Common Equity
|
|
|
(20.70
|
)
|
|
|
|
4.06
|
|
|
|
(3.84
|
)
|
|
|
Average Total Equity to Average Total Assets
|
|
|
11.37
|
|
|
|
|
11.35
|
|
|
|
11.09
|
|
|
|
Total capital
|
|
|
17.44
|
|
|
|
|
17.82
|
|
|
|
17.36
|
|
|
|
Tier 1 capital
|
|
|
16.15
|
|
|
|
|
16.51
|
|
|
|
16.04
|
|
|
|
Leverage
|
|
|
12.06
|
|
|
|
|
12.60
|
|
|
|
12.31
|
|
|
|
Tangible common equity ratio (1)
|
|
|
9.90
|
|
|
|
|
10.44
|
|
|
|
10.20
|
|
|
|
Tier 1 common equity to risk-weight assets (1)
|
|
|
13.18
|
|
|
|
|
13.61
|
|
|
|
13.14
|
|
|
|
Dividend payout ratio
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
Efficiency ratio (3)
|
|
|
70.96
|
|
|
|
|
66.16
|
|
|
|
77.21
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality:
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses to loans held for investment
|
|
|
3.58
|
|
|
|
|
4.33
|
|
|
|
4.70
|
|
|
|
Net charge-offs (annualized) to average loans
|
|
|
8.10
|
|
(4
|
)
|
|
|
1.59
|
|
|
|
1.78
|
|
|
|
Provision for loan and lease losses to net charge-offs
|
|
|
54.47
|
|
(5
|
)
|
|
|
75.07
|
|
|
|
78.40
|
|
|
|
Non-performing assets to total assets
|
|
|
8.35
|
|
|
|
|
9.45
|
|
|
|
10.18
|
|
|
|
Non-performing loans held for investment to total loans held for
investment
|
|
|
7.14
|
|
|
|
|
9.70
|
|
|
|
10.87
|
|
|
|
Allowance to total non-performing loans held for investment
|
|
|
50.17
|
|
|
|
|
44.63
|
|
|
|
43.23
|
|
|
|
Allowance to total non-performing loans held for investment
|
|
|
|
|
excluding residential real estate loans
|
|
|
92.27
|
|
|
|
|
65.78
|
|
|
|
62.19
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Information:
|
|
|
|
|
|
|
|
|
|
Common Stock Price: End of period
|
|
$
|
6.23
|
|
|
|
$
|
4.58
|
|
|
$
|
4.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-
|
Non-GAAP measure. See pages 19-20 for GAAP to Non-GAAP
reconciliations.
|
2-
|
On a tax-equivalent basis and excluding fair value valuations
(Non-GAAP measure). See page 5 for GAAP to Non-GAAP
reconciliations and refer to discussions in Table 2 below.
|
3-
|
Non-interest expenses to the sum of net interest income and
non-interest income. The denominator includes non-recurring income
and changes in the fair value of derivative instruments and
financial liabilities measured at fair value.
|
4-
|
The net charge-offs to average loans ratio, excluding impact
associated with the bulk loan sale and the transfer of loans to
held for sale, was 2.87% for the quarter ended March 31, 2013.
|
5-
|
The provision for loan and lease losses to net charge-offs ratio,
excluding impact associated with loans sold and the transfer of
loans to held for sale, was 67.61% for the quarter ended March 31,
2013.
|
Table 2 – Quarterly Statement of Average Interest-Earning Assets and
Average Interest-Bearing Liabilities (On a Tax-Equivalent Basis and
Excluding Valuations)
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average volume
|
|
Interest income (1) / expense
|
|
Average rate (1)
|
|
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
Year ended
|
|
|
2013
|
|
|
2012
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
2012
|
|
2013
|
|
|
2012
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market & other short-term investments
|
|
$
|
779,412
|
|
$
|
849,350
|
|
$
|
502,182
|
|
$
|
539
|
|
$
|
607
|
|
$
|
369
|
|
0.28
|
%
|
|
0.28
|
%
|
|
0.30
|
%
|
|
Government obligations (2)
|
|
|
325,835
|
|
|
258,456
|
|
|
956,338
|
|
|
1,851
|
|
|
1,601
|
|
|
4,078
|
|
2.30
|
%
|
|
2.46
|
%
|
|
1.72
|
%
|
|
Mortgage-backed securities
|
|
|
1,536,027
|
|
|
1,429,292
|
|
|
899,370
|
|
|
9,515
|
|
|
10,584
|
|
|
7,435
|
|
2.51
|
%
|
|
2.95
|
%
|
|
3.32
|
%
|
|
Corporate bonds
|
|
|
-
|
|
|
-
|
|
|
2,000
|
|
|
-
|
|
|
-
|
|
|
29
|
|
0.00
|
%
|
|
0.00
|
%
|
|
5.83
|
%
|
|
FHLB stock
|
|
|
33,117
|
|
|
37,946
|
|
|
36,651
|
|
|
415
|
|
|
355
|
|
|
401
|
|
5.08
|
%
|
|
3.72
|
%
|
|
4.40
|
%
|
|
Equity securities
|
|
|
1,364
|
|
|
1,377
|
|
|
1,377
|
|
|
-
|
|
|
6
|
|
|
-
|
|
0.00
|
%
|
|
1.73
|
%
|
|
0.00
|
%
|
|
Total investments (3)
|
|
|
2,675,755
|
|
|
2,576,421
|
|
|
2,397,918
|
|
|
12,320
|
|
|
13,153
|
|
|
12,312
|
|
1.87
|
%
|
|
2.03
|
%
|
|
2.07
|
%
|
|
Residential mortgage loans
|
|
|
2,814,973
|
|
|
2,811,954
|
|
|
2,790,723
|
|
|
38,004
|
|
|
37,395
|
|
|
38,740
|
|
5.48
|
%
|
|
5.29
|
%
|
|
5.58
|
%
|
|
Construction loans
|
|
|
344,983
|
|
|
356,617
|
|
|
432,550
|
|
|
2,617
|
|
|
2,662
|
|
|
2,659
|
|
3.08
|
%
|
|
2.97
|
%
|
|
2.47
|
%
|
|
C&I and commercial mortgage loans
|
|
|
4,899,586
|
|
|
5,035,391
|
|
|
5,611,554
|
|
|
47,849
|
|
|
51,032
|
|
|
56,643
|
|
3.96
|
%
|
|
4.03
|
%
|
|
4.06
|
%
|
|
Finance leases
|
|
|
237,245
|
|
|
237,564
|
|
|
243,344
|
|
|
5,086
|
|
|
5,127
|
|
|
5,312
|
|
8.69
|
%
|
|
8.59
|
%
|
|
8.78
|
%
|
|
Consumer loans
|
|
|
1,781,120
|
|
|
1,758,282
|
|
|
1,311,075
|
|
|
55,544
|
|
|
56,705
|
|
|
37,850
|
|
12.65
|
%
|
|
12.83
|
%
|
|
11.61
|
%
|
|
Total loans (4) (5)
|
|
|
10,077,907
|
|
|
10,199,808
|
|
|
10,389,246
|
|
|
149,100
|
|
|
152,921
|
|
|
141,204
|
|
6.00
|
%
|
|
5.96
|
%
|
|
5.47
|
%
|
|
Total interest-earning assets
|
|
$
|
12,753,662
|
|
$
|
12,776,229
|
|
$
|
12,787,164
|
|
$
|
161,420
|
|
$
|
166,074
|
|
$
|
153,516
|
|
5.13
|
%
|
|
5.17
|
%
|
|
4.83
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokered CDs
|
|
$
|
3,437,601
|
|
$
|
3,443,661
|
|
$
|
3,636,596
|
|
$
|
11,798
|
|
$
|
13,883
|
|
$
|
19,733
|
|
1.39
|
%
|
|
1.60
|
%
|
|
2.18
|
%
|
|
Other interest-bearing deposits
|
|
|
5,672,033
|
|
|
5,614,308
|
|
|
5,473,194
|
|
|
13,746
|
|
|
14,202
|
|
|
17,001
|
|
0.98
|
%
|
|
1.01
|
%
|
|
1.25
|
%
|
|
Other borrowed funds
|
|
|
1,131,959
|
|
|
1,131,959
|
|
|
1,251,580
|
|
|
8,163
|
|
|
8,419
|
|
|
10,217
|
|
2.92
|
%
|
|
2.96
|
%
|
|
3.28
|
%
|
|
FHLB advances
|
|
|
410,551
|
|
|
510,940
|
|
|
363,792
|
|
|
2,025
|
|
|
2,920
|
|
|
3,241
|
|
2.00
|
%
|
|
2.27
|
%
|
|
3.58
|
%
|
|
Total interest-bearing liabilities (6)
|
|
$
|
10,652,144
|
|
$
|
10,700,868
|
|
$
|
10,725,162
|
|
$
|
35,732
|
|
$
|
39,424
|
|
$
|
50,192
|
|
1.36
|
%
|
|
1.47
|
%
|
|
1.88
|
%
|
|
Net interest income
|
|
|
|
|
|
|
|
$
|
125,688
|
|
$
|
126,650
|
|
$
|
103,324
|
|
|
|
|
|
|
|
Interest rate spread
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.77
|
%
|
|
3.70
|
%
|
|
2.95
|
%
|
|
Net interest margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.00
|
%
|
|
3.94
|
%
|
|
3.25
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-
|
On a tax-equivalent basis. The tax-equivalent yield was estimated
by dividing the interest rate spread on exempt assets by 1 less
the Puerto Rico statutory tax rate (30%) 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 and unrealized gains
or losses on liabilities measured at fair value are excluded from
interest income and interest expense because the changes in
valuation do not affect interest paid or received.
|
|
|
2-
|
Government obligations include debt issued by government-sponsored
agencies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3-
|
Unrealized gains and losses on available-for-sale securities are
excluded from the average volumes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4-
|
Average loan balances include the average of total non-performing
loans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5-
|
Interest income on loans includes $3.6 million, $3.7 million and
$2.4 million for the quarters ended March 31, 2013, December 31,
2012, and March 31, 2012, respectively, of income from prepayment
penalties and late fees related to the Corporation's loan
portfolio.
|
|
|
|
|
|
|
|
|
|
|
|
|
6-
|
Unrealized gains and losses on liabilities measured at fair value
are excluded from the average volumes.
|
Table 3 - Non-Interest Income
|
|
|
|
Quarter Ended
|
|
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
(In thousands)
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts
|
|
$
|
3,380
|
|
|
$
|
3,228
|
|
|
$
|
3,247
|
|
|
Mortgage banking activities
|
|
|
4,580
|
|
|
|
6,700
|
|
|
|
4,475
|
|
|
Insurance income
|
|
|
2,020
|
|
|
|
1,328
|
|
|
|
1,480
|
|
|
Broker-dealer income
|
|
|
-
|
|
|
|
-
|
|
|
|
1,263
|
|
|
Other operating income
|
|
|
9,304
|
|
|
|
8,911
|
|
|
|
5,453
|
|
|
|
|
|
|
|
|
|
|
Non-interest income before net loss on investments,
|
|
|
|
|
|
|
|
and equity in losses of unconsolidated entities
|
|
|
19,284
|
|
|
|
20,167
|
|
|
|
15,918
|
|
|
|
|
|
|
|
|
|
|
Proceeds from securities litigation settlement and other proceeds
|
|
|
-
|
|
|
|
-
|
|
|
|
26
|
|
|
OTTI on debt securities
|
|
|
(117
|
)
|
|
|
(69
|
)
|
|
|
(1,233
|
)
|
|
Net loss on investments
|
|
|
(117
|
)
|
|
|
(69
|
)
|
|
|
(1,207
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in losses of unconsolidated entities
|
|
|
(5,538
|
)
|
|
|
(8,330
|
)
|
|
|
(6,236
|
)
|
|
|
|
$
|
13,629
|
|
|
$
|
11,768
|
|
|
$
|
8,475
|
|
|
|
|
|
|
|
|
|
Table 4 - Non-Interest Expenses
|
|
|
|
Quarter Ended
|
|
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
(In thousands)
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
Employees' compensation and benefits
|
|
$
|
33,554
|
|
|
$
|
31,840
|
|
|
$
|
31,611
|
|
|
Occupancy and equipment
|
|
|
15,070
|
|
|
|
14,972
|
|
|
|
15,676
|
|
|
Deposit insurance premium
|
|
|
11,517
|
|
|
|
11,897
|
|
|
|
11,987
|
|
|
Other insurance and supervisory fees
|
|
|
1,289
|
|
|
|
1,366
|
|
|
|
1,021
|
|
|
Taxes, other than income taxes
|
|
|
2,989
|
|
|
|
3,013
|
|
|
|
3,416
|
|
|
Professional fees
|
|
|
9,920
|
|
|
|
5,557
|
|
|
|
5,179
|
|
|
Servicing and processing fees
|
|
|
5,448
|
|
|
|
6,012
|
|
|
|
2,160
|
|
|
Business promotion
|
|
|
3,357
|
|
|
|
4,067
|
|
|
|
2,547
|
|
|
Communications
|
|
|
1,814
|
|
|
|
1,809
|
|
|
|
1,721
|
|
|
Net loss on REO operations
|
|
|
7,310
|
|
|
|
6,201
|
|
|
|
3,443
|
|
|
Other
|
|
|
5,742
|
|
|
|
4,171
|
|
|
|
6,432
|
|
|
Total
|
|
$
|
98,010
|
|
|
$
|
90,905
|
|
|
$
|
85,193
|
|
Table 5 - Selected Balance Sheet Data
|
(In thousands)
|
|
As of
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
|
2013
|
|
|
2012
|
Balance Sheet Data:
|
|
|
|
|
|
Loans, including loans held for sale
|
|
$
|
9,836,317
|
|
$
|
10,139,508
|
|
Allowance for loan and lease losses
|
|
|
342,531
|
|
|
435,414
|
|
Money market and investment securities
|
|
|
2,300,816
|
|
|
1,986,669
|
|
Intangible assets
|
|
|
59,424
|
|
|
60,944
|
|
Deferred tax asset, net
|
|
|
4,446
|
|
|
4,867
|
|
Total assets
|
|
|
13,005,876
|
|
|
13,099,741
|
|
Deposits
|
|
|
9,983,569
|
|
|
9,864,546
|
|
Borrowings
|
|
|
1,510,399
|
|
|
1,640,399
|
|
Total preferred equity
|
|
|
63,047
|
|
|
63,047
|
|
Total common equity
|
|
|
1,321,130
|
|
|
1,393,546
|
|
Accumulated other comprehensive income, net of tax
|
|
|
19,822
|
|
|
28,430
|
|
Total equity
|
|
|
1,403,999
|
|
|
1,485,023
|
Table 6 – Loan Portfolio
|
|
Composition of the loan portfolio including loans held for sale at
period-end.
|
|
(In thousands)
|
As of
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
2,714,083
|
|
$
|
2,747,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans:
|
|
|
|
|
|
|
|
|
Construction loans
|
|
222,762
|
|
|
361,875
|
|
|
|
|
|
Commercial mortgage loans
|
|
1,671,269
|
|
|
1,883,798
|
|
|
|
|
|
Commercial and Industrial loans
|
|
2,680,133
|
|
|
2,793,157
|
|
|
|
|
|
Loans to local financial institutions collateralized by real estate
mortgages
|
|
252,238
|
|
|
255,390
|
|
|
|
|
Commercial loans
|
|
4,826,402
|
|
|
5,294,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance leases
|
|
238,587
|
|
|
236,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer loans
|
|
1,781,474
|
|
|
1,775,751
|
|
|
|
|
|
Loans held for investment
|
|
9,560,546
|
|
|
10,054,113
|
|
|
|
|
Loans held for sale
|
|
275,771
|
|
|
85,394
|
|
|
|
|
|
Total loans
|
$
|
9,836,317
|
|
$
|
10,139,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 7 - Loan Portfolio by Geography
|
|
|
|
|
|
|
|
(In thousands)
|
As of March 31, 2013
|
|
|
Puerto Rico
|
|
Virgin Islands
|
|
United States
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
2,062,771
|
|
$
|
372,917
|
|
$
|
278,395
|
|
$
|
2,714,083
|
|
|
|
|
|
|
|
|
|
Commercial loans:
|
|
|
|
|
|
|
|
|
Construction loans
|
|
153,039
|
|
|
41,146
|
|
|
28,577
|
|
|
222,762
|
|
Commercial mortgage loans
|
|
1,278,184
|
|
|
68,003
|
|
|
325,082
|
|
|
1,671,269
|
|
Commercial and Industrial loans
|
|
2,490,845
|
|
|
106,146
|
|
|
83,142
|
|
|
2,680,133
|
|
Loans to a local financial institution collateralized by real estate
mortgages
|
|
252,238
|
|
|
-
|
|
|
-
|
|
|
252,238
|
Commercial loans
|
|
4,174,306
|
|
|
215,295
|
|
|
436,801
|
|
|
4,826,402
|
|
|
|
|
|
|
|
|
|
Finance leases
|
|
238,587
|
|
|
-
|
|
|
-
|
|
|
238,587
|
|
|
|
|
|
|
|
|
|
Consumer loans
|
|
1,701,042
|
|
|
49,593
|
|
|
30,839
|
|
|
1,781,474
|
Loans held for investment
|
|
8,176,706
|
|
|
637,805
|
|
|
746,035
|
|
|
9,560,546
|
|
|
|
|
|
|
|
|
|
Loans held for sale
|
|
233,418
|
|
|
42,353
|
|
|
-
|
|
|
275,771
|
|
Total loans
|
$
|
8,410,124
|
|
$
|
680,158
|
|
$
|
746,035
|
|
$
|
9,836,317
|
Table 8 - Non-Performing Assets
|
(Dollars in thousands)
|
|
March 31,
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
Non-performing loans held for investment:
|
|
|
|
|
|
Residential mortgage
|
|
$ 311,495
|
|
$ 313,626
|
|
Commercial mortgage
|
|
136,708
|
|
214,780
|
|
Commercial and Industrial
|
|
141,045
|
|
230,090
|
|
Construction
|
|
59,810
|
|
178,190
|
|
Consumer and Finance leases
|
|
33,652
|
|
38,875
|
|
Total non-performing loans held for investment
|
|
682,710
|
|
975,561
|
|
|
|
|
|
|
|
REO
|
|
181,479
|
|
185,764
|
|
Other repossessed property
|
|
9,913
|
|
10,107
|
|
Other assets (1)
|
|
64,543
|
|
64,543
|
|
Total non-performing assets, excluding loans held for sale
|
|
$ 938,645
|
|
$ 1,235,975
|
|
|
|
|
|
|
|
Non-performing loans held for sale
|
|
147,995
|
|
2,243
|
|
Total non-performing assets, including loans held for sale (2)
|
|
$ 1,086,640
|
|
$ 1,238,218
|
|
|
|
|
|
|
|
Past-due loans 90 days and still accruing
|
|
$ 125,384
|
|
$ 142,012
|
|
Allowance for loan and lease losses
|
|
$ 342,531
|
|
$ 435,414
|
|
Allowance to total non-performing loans held for investment
|
|
50.17%
|
|
44.63%
|
|
Allowance to total non-performing loans held for investment,
excluding residential real estate loans
|
|
92.27%
|
|
65.78%
|
|
|
|
|
|
|
(1)
|
Collateral pledged to Lehman Brothers Special Financing, Inc.
|
|
|
|
|
(2)
|
Amount excludes purchased credit impaired loans with a carrying
value as of March 31, 2013 of approximately $9.2 million acquired
as part of the credit card portfolio acquired from FIA.
|
|
|
|
|
|
|
Table 9 - Non-Performing Assets by Geography
|
(In thousands)
|
|
March 31,
|
|
December 31,
|
|
|
|
|
2013
|
|
|
2012
|
Puerto Rico:
|
|
|
|
|
Non-performing loans held for investment:
|
|
|
|
|
|
Residential mortgage
|
|
$
|
279,310
|
|
$
|
281,086
|
|
Commercial mortgage
|
|
|
103,556
|
|
|
172,534
|
|
Commercial and Industrial
|
|
|
127,290
|
|
|
215,985
|
|
Construction
|
|
|
35,986
|
|
|
99,383
|
|
Finance leases
|
|
|
2,656
|
|
|
3,182
|
|
Consumer
|
|
|
27,403
|
|
|
32,529
|
|
Total non-performing loans held for investment
|
|
|
576,201
|
|
|
804,699
|
|
|
|
|
|
|
REO
|
|
|
140,395
|
|
|
145,683
|
Other repossessed property
|
|
|
9,875
|
|
|
10,070
|
Investment securities
|
|
|
64,543
|
|
|
64,543
|
|
Total non-performing assets, excluding loans held for sale
|
|
$
|
791,014
|
|
$
|
1,024,995
|
Non-performing loans held for sale
|
|
|
107,990
|
|
|
2,243
|
|
Total non-performing assets, including loans held for sale (1)
|
|
$
|
899,004
|
|
$
|
1,027,238
|
Past-due loans 90 days and still accruing
|
|
$
|
119,391
|
|
$
|
137,288
|
|
|
|
|
|
|
Virgin Islands:
|
|
|
|
|
Non-performing loans held for investment:
|
|
|
|
|
|
Residential mortgage
|
|
$
|
18,691
|
|
$
|
18,054
|
|
Commercial mortgage
|
|
|
3,915
|
|
|
11,232
|
|
Commercial and Industrial
|
|
|
12,555
|
|
|
12,905
|
|
Construction
|
|
|
17,727
|
|
|
72,648
|
|
Consumer
|
|
|
580
|
|
|
804
|
|
Total non-performing loans held for investment
|
|
|
53,468
|
|
|
115,643
|
|
|
|
|
|
|
REO
|
|
|
25,213
|
|
|
24,260
|
Other repossessed property
|
|
|
11
|
|
|
17
|
|
Total non-performing assets, excluding loans held for sale
|
|
$
|
78,692
|
|
$
|
139,920
|
Non-performing loans held for sale
|
|
|
40,005
|
|
|
-
|
|
Total non-performing assets, including loans held for sale
|
|
$
|
118,697
|
|
$
|
139,920
|
Past-due loans 90 days and still accruing
|
|
$
|
5,993
|
|
$
|
4,068
|
|
|
|
|
|
|
United States:
|
|
|
|
|
Non-performing loans held for investment:
|
|
|
|
|
|
Residential mortgage
|
|
$
|
13,494
|
|
$
|
14,486
|
|
Commercial mortgage
|
|
|
29,237
|
|
|
31,014
|
|
Commercial and Industrial
|
|
|
1,200
|
|
|
1,200
|
|
Construction
|
|
|
6,097
|
|
|
6,159
|
|
Consumer
|
|
|
3,013
|
|
|
2,360
|
|
Total non-performing loans held for investment
|
|
|
53,041
|
|
|
55,219
|
|
|
|
|
|
|
REO
|
|
|
15,871
|
|
|
15,821
|
Other repossessed property
|
|
|
27
|
|
|
20
|
|
Total non-performing assets, excluding loans held for sale
|
|
$
|
68,939
|
|
$
|
71,060
|
Non-performing loans held for sale
|
|
|
-
|
|
|
-
|
|
Total non-performing assets, including loans held for sale
|
|
$
|
68,939
|
|
$
|
71,060
|
Past-due loans 90 days and still accruing
|
|
$
|
-
|
|
$
|
656
|
|
|
|
|
|
|
(1)
|
Amount excludes purchased credit impaired loans with a carrying
value as of March 31, 2013 of approximately $9.2 million acquired
as part of the credit card portfolio acquired from FIA.
|
|
|
Table 10 – Allowance for Loan and Lease Losses
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
(Dollars in thousands)
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
|
|
2013
|
|
2012
|
|
2012
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses, beginning of period
|
|
$ 435,414
|
|
$ 445,531
|
|
$ 493,917
|
|
Provision (recovery) for loan and lease losses:
|
|
|
|
|
|
|
|
Residential mortgage
|
|
7,948
|
(1)
|
8,744
|
|
2,336
|
|
Commercial mortgage
|
|
36,397
|
(2)
|
4,119
|
|
1,578
|
|
Commercial and Industrial
|
|
35,292
|
(3)
|
8,071
|
|
20,158
|
|
Construction
|
|
21,948
|
(4)
|
(2,474)
|
|
7,716
|
|
Consumer and finance leases
|
|
9,538
|
|
12,006
|
|
4,409
|
|
Total provision for loan and lease losses
|
|
111,123
|
(5)
|
30,466
|
|
36,197
|
|
Net charge-offs of loans:
|
|
|
|
|
|
|
|
Residential mortgage
|
|
(11,580)
|
(6)
|
(9,555)
|
|
(5,731)
|
|
Commercial mortgage
|
|
(56,036)
|
(7)
|
(6,101)
|
|
(3,594)
|
|
Commercial and Industrial
|
|
(84,829)
|
(8)
|
(12,601)
|
|
(12,669)
|
|
Construction
|
|
(38,515)
|
(9)
|
(1,837)
|
|
(15,392)
|
|
Consumer and finance leases
|
|
(13,046)
|
|
(10,489)
|
|
(8,785)
|
|
Net charge-offs
|
|
(204,006)
|
(10)
|
(40,583)
|
|
(46,171)
|
|
Allowance for loan and lease losses, end of period
|
|
$ 342,531
|
|
$ 435,414
|
|
$ 483,943
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses to period end total loans held
for investment
|
|
3.58%
|
|
4.33%
|
|
4.70%
|
|
Net charge-offs (annualized) to average loans outstanding during the
period
|
|
8.10%
|
|
1.59%
|
|
1.78%
|
|
Net charge-offs (annualized), excluding charge-offs related to loans
sold and loans
|
|
transferred to held for sale, to average loans outstanding during
the period
|
|
2.87%
|
|
1.59%
|
|
1.78%
|
|
Provision for loan and lease losses to net charge-offs during the
period
|
|
0.54x
|
|
0.75x
|
|
0.78x
|
|
Provision for loan and lease losses to net charge-offs during the
period, excluding
|
|
impact of loans sold and the transfer of loans to held for sale
|
|
0.68x
|
|
0.75x
|
|
0.78x
|
(1)
|
Includes provision of $1.0 million associated with the bulk loan
sale.
|
(2)
|
Includes provision of $28.7 million associated with the bulk loan
sale and the transfer of loans to held for sale.
|
(3)
|
Includes provision of $20.8 million associated with the bulk loan
sale.
|
(4)
|
Includes provision of $13.6 million associated with the bulk loan
sale and the transfer of loans to held for sale.
|
(5)
|
Includes provision of $64.1 million associated with the bulk loan
sale and the transfer of loans to held for sale.
|
(6)
|
Includes net charge-offs totaling $1.0 million associated with the
bulk loan sale.
|
(7)
|
Includes net charge-offs of $54.6 million associated with the bulk
loan sale and the transfer of loans to held for sale.
|
(8)
|
Includes net charge-offs totaling $44.7 million associated with
the bulk loan sale.
|
(9)
|
Includes net charge-offs of $34.2 million associated with the bulk
loan sale and the transfer of loans to held for sale.
|
(10)
|
Includes net charge-offs of $134.5 million associated with the
bulk loan sale and the transfer of loans to held for sale.
|
Table 11 – Net Charge-Offs to Average Loans
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
Year ended
|
|
|
|
|
March 31,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
1.65%
|
(1)
|
1.40%
|
|
1.32%
|
|
1.80%
|
(6)
|
0.82%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial mortgage
|
|
12.06%
|
(2)
|
3.43%
|
|
3.21%
|
|
5.02%
|
(7)
|
1.64%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and Industrial
|
|
11.16%
|
(3)
|
1.62%
|
|
1.57%
|
|
2.16%
|
(8)
|
0.72%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
|
|
44.66%
|
(4)
|
23.29%
|
|
16.33%
|
|
23.80%
|
(9)
|
11.54%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and finance leases
|
|
2.59%
|
|
2.43%
|
|
2.33%
|
|
2.98%
|
|
3.05%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
8.10%
|
(5)
|
2.84%
|
|
2.68%
|
|
4.76%
|
(10)
|
2.48%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes net charge-offs totaling $1.0 million associated with the
bulk loan sale. The ratio of residential mortgage net charge-offs
to average loans, excluding charge-offs associated with the bulk
loan sale, was 1.50%.
|
(2)
|
Includes net charge-offs of $54.6 million associated with the bulk
loan sale and the transfer of loans to held for sale in the first
quarter of 2013. The ratio of commercial mortgage net charge-offs
to average loans, excluding charge-offs associated with the bulk
loan sale and the transfer of loans to held for sale, was 0.34%.
|
(3)
|
Includes net charge-offs totaling $44.7 million associated with
the bulk loan sale. The ratio of commercial and industrial net
charge-offs to average loans, excluding charge-offs associated
with the bulk loan sale, was 5.47%.
|
(4)
|
Includes net charge-offs of $34.2 million associated with the bulk
loan sale and the transfer of loans to held for sale in the first
quarter of 2013. The ratio of construction loans net charge-offs
to average loans, excluding charge-offs associated with the bulk
loan sale and the transfer of loans to held for sale, was 7.74%.
|
(5)
|
Includes net charge-offs of $134.5 million associated with the
bulk loan sale and the transfer of loans to held for sale in the
first quarter of 2013. The ratio of total net charge-offs to
average loans, excluding charge-offs associated with the bulk loan
sale and the transfer of loans to held for sale, was 2.87%.
|
(6)
|
Includes net charge-offs totaling $7.8 million associated with
non-performing residential mortgage loans sold in a bulk sale.
|
(7)
|
Includes net charge-offs totaling $29.5 million associated with
the transfer of loans to held for sale in the fourth quarter of
2010. The ratio of commercial mortgage net charge-offs to average
loans, excluding charge-offs associated with the transfer of loans
to held for sale, was 3.38%.
|
(8)
|
Includes net charge-offs totaling $8.6 million associated with the
transfer of loans to held for sale in the fourth quarter of 2010.
The ratio of commercial and industrial net charge-offs to average
loans, excluding charge-offs associated with the transfer of loans
to held for sale, was 1.98%.
|
(9)
|
Includes net charge-offs totaling $127.0 million associated with
the transfer of loans to held for sale in the fourth quarter of
2010. The ratio of construction net charge-offs to average loans,
excluding charge-offs associated with the transfer of loans to
held for sale, was 18.93%.
|
(10)
|
Includes net charge-offs totaling $165.1 million associated with
the transfer of loans to held for sale in the fourth quarter of
2010. The ratio of total net charge-offs to average loans,
excluding charge-offs associated with the transfer of loans to
held for sale, was 3.60%.
|
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