SAN JUAN, Puerto Rico, Jan. 21 /PRNewswire-FirstCall/ -- First BanCorp (NYSE: FBP), the second largest Puerto Rico Financial Holding company with diversified banking operations in Puerto Rico and the U.S. and British Virgin Islands, reported today record earnings for the fourth quarter and full year 2003.
Net income was $54,954,947 or $1.12 per share basic and $1.09 per share diluted, for the fourth quarter of 2003, as compared to earnings of $27,970,880 or 53 cents per share basic and 52 cents per share diluted, for the fourth quarter of 2002. These results represent an earnings increase of 96.5% for this quarter. Return on Assets (ROA) and Return on Common Equity (ROCE) were 1.84% and 35.00% respectively, for the quarter, as compared to 1.16% and 21.08% respectively, for the same quarter of 2002. Average common shares used to calculate earnings per share for the fourth quarter were 40,018,176 (basic) and 41,212,785 (diluted).
The year ended December 31, 2003 was another record year for First BanCorp, with earnings of $152,338,342 or $3.04 per share (basic) and $2.98 per share (diluted), as compared to $107,956,351 or $2.04 per share (basic) and $2.01 per share (diluted), an earnings increase of 41.1% for the year 2003. ROA and ROCE for the full year 2003 were 1.46% and 25.20% respectively, as compared to 1.23% and 21.90% respectively, for 2002. Average common shares outstanding for the year were 39,994,454 (basic) and 40,983,175 (diluted). Earnings for the fourth quarter and full year 2003 include a $18,840,065 or 46 cents per share diluted (net of tax), gain on the sale of a large part of the subsidiary bank's credit card portfolio, as part of a new marketing strategic alliance with MBNA Corporation, which is further explained in a separate press release issued today. Earnings for the fourth quarter and full year 2003, excluding the after tax effect of such gain, are as follows: net earnings for the fourth quarter, $36,114,882 or 65 cents (basic) and 63 cents (diluted), 29.1% increase in earnings for the 2003 fourth quarter; net earnings for the full year 2003, $133,498,277, or $2.57 per share (basic) and $2.52 per share (diluted). Main profitability ratios for the same periods, excluding the after tax effect of the gain on the sale of a large part of the credit card portfolio, were: Return on Assets, 1.21% for the fourth quarter of 2003, and 1.28% for the full year 2003; Return on Common Equity for the fourth quarter of 2003, 20.30% and 21.31% for the full year 2003; and the efficiency ratio, 43.86% for the quarter, and 43.15% for the full year 2003.
The earnings increase (excluding the after tax effect of the gain on the sale mentioned above) is attributable mostly to increases in the Corporation's net interest income and other income net of an increase in operating expenses. Commenting on the year 2003 achievements, Mr. Angel Alvarez-Perez, CEO of First BanCorp, said, "2003 was a challenging year, as related to interest rates and the general economic environment. Notwithstanding this, we have earned record profits, through the continuous growth of our loan portfolios, especially commercial and residential loans and maintaining low delinquencies in a difficult economic environment, especially in the consumer portfolios. In addition during this year, we restructured our investment portfolio which enabled us to record substantial profits on the securities sold, while at the same time giving us the opportunity to reinvest in a mortgage backed securities portfolio with more attractive yields and shorter maturities."
Net interest income increased by $25.4 million for the year, to end the year at $292.2 million. The increase in net interest income for the year is the result of volume increases of $1,571 million in the Corporation's average loan and investment portfolios. Net interest income was $84.0 million for this quarter, as compared to $68.7 million for the fourth quarter of 2002 and $71.9 million for the third quarter of 2003. During the fourth quarter the net interest income on investments, increased as a result of the portfolio restructuring completed during the third quarter of the year 2003.
Net interest margin (on a tax equivalent basis) was 3.32% and 3.24% for the fourth quarter and full year 2003, respectively, as compared to 3.10% and 3.56% for the fourth quarter and full year 2002, respectively. The decrease for the year is mainly due to lower net yield on the Corporation's mortgage backed securities portfolios experienced during the period ended September 30, 2003. The increase for the fourth quarter results from the portfolio restructuring and investments in mortgage backed securities mentioned above.
During 2003 the Corporation experienced solid asset growth, ending the year with assets of $12,668 million, up 31.4% from total assets as of December 31 2002 of $9,644 million. Deposits were $6,765 million as of December 31, 2003, as compared to $5,483 million as of December 31, 2002. Loans increased to $7,045 million as of December 31, 2003, an increase of 25%, when compared to $5,638 million as of December 31, 2002, mostly as a result of an increase of $341 million in commercial loans and $1,025 million in residential real estate loans. Consumer loans and finance leases increased by $40 million.
Another factor contributing to the record financial results was the stable write-offs of our loan portfolio during the year. Loan losses (net write-offs) were $10.8 million for the fourth quarter, (0.63% of average loans) slightly over the $10.1 million (.74% of average loans) for the fourth quarter of 2002 and $10.1 million (0.63% of average loans) for the immediately preceding third quarter of 2003. For the total year net write-offs were $41.4 million (0.66% of average loans), as compared to $41.5 million during 2002, (.87% of average loans). Non-performing loans at year end were $85.5 million or 1.21% of total loans, lower in absolute dollar amount and as a percentage of loans, when compared to $91.8 million or 1.63% of total loans, as of December 31, 2002, and $85.7 million or 1.28% of total loans as of September 30, 2003, the previous quarter end. The reserve coverage ratio (allowance for loan losses to non-performing loans) was 147.8% as of December 31, 2003, as compared to 121.9% for December 31, 2002 and 143.6% for September 30, 2003. The allowance for loan losses increased to $126.4 million as of December 31, 2003, from $123.0 million as of September 30, 2003 and $111.9 million as of December 31, 2002. The increase corresponds to a higher commercial loan portfolio and current economic conditions.
Other operating income was $50.4 million for the fourth quarter of 2003. Excluding the gain on the sale of a large part of the credit card portfolio of $30.9 million (before tax), other operating income was $19.5 million, as compared to $16.0 million for the fourth quarter of 2002 and $19.1 million for the third quarter of 2003. The increase of $3.5 million, when compared to fourth quarter 2002 is mostly attributable to $2.9 million higher net gains on sale of investments and derivative income (loss).
The Corporation, mainly through its subsidiary Bank, has maintained a better than average efficiency ratio of 33.78% and 39.91% (43.86% and 43.15% excluding the gain on sale of a large part of the credit card portfolio) for fourth quarter and the year 2003, respectively, while it has invested significantly in state-of-the-art technology and infrastructure to provide the latest in delivery channels for financial products and services. Operating expenses were $45.4 million for the fourth quarter 2003, as compared to expenses of $36.4 million during the fourth quarter of 2002, and $39.9 million of expenses during the previous third quarter of 2003. The higher operating expenses during the last quarter, as compared to the third quarter, are related to the launching of a new image campaign, the launching of First Mortgage, the new Bank subsidiary dedicated to mortgage origination, advertising related to a new deposit product "Cuenta Perfecta," year-end incentive bonuses, and higher supervisory examination fees, since these fees are based on asset size. Expense increases for the whole year include the fourth quarter increases, plus the regular salary, occupancy and technology expense increases necessary to maintain the infrastructure of the Corporation's products and services. Expenses also include the cost of Virgin Islands operations, acquired on October 15, 2002.
First Bancorp is a $12.7 billion well-capitalized Financial Holding Company. It is the parent company of FirstBank Puerto Rico, which is the second largest commercial bank in Puerto Rico and Virgin Islands and of FirstBank Insurance Agency. Both, First BanCorp and FirstBank Puerto Rico, operate within US banking laws and regulations. The Bank operates a total of 99 financial service facilities throughout Puerto Rico and the US and British Virgin Islands, including the operations of its subsidiaries. In Puerto Rico the Bank operates: Money Express, a finance company, First Leasing and Car Rental, a car and truck rental and leasing company and FirstMortgage, a mortgage banking company. In the US and British Virgin Islands, the bank operates an insurance agency, FirstBank Insurance Agency VI, First Trade Inc., a foreign corporation management company, and First Express, a finance company.
The Corporation's common and preferred shares trade on the New York Stock Exchange, under the symbols FBP, FBPPrA, FBPPrB, FBPPrC, FBPPrD, and FBPrE.
This press release contains certain "forward-looking statements" concerning the Corporation's economic future performance. The words or phrases "expect," "anticipate," "likely," "look forward," "should," "probably," and similar expressions are meant to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.
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 regional and national economic conditions, changes in interest rates, competitive and regulatory factors and legislative changes, could affect the Corporation's financial performance and could cause the Corporation's actual results for future periods to differ materially from those anticipated or projected.
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.
FIRST BANCORP Consolidated Statement of Income (Unaudited) Dollars in thousands except per share data Twelve Months Three Months Ended Ended Dec 31Dec. 31Sept. 31Dec. 31Dec. 31 2003 2002 2003 2003 2002 Interest income: Loans $99,719 $96,115 $98,762 $389,722 $351,839 Investments 47,600 41,249 34,856 146,959 188,194 Total interest income 147,319 137,364 133,618 536,681 540,033 Interest expense: Deposits 28,287 33,305 28,036 112,541 133,235 Borrowings 35,058 35,341 33,686 131,930 139,949 Total interest expense 63,345 68,646 61,722 244,471 273,184 Net interest income 83,974 68,718 71,896 292,210 266,849 Provision for loan losses 14,152 14,001 12,600 55,916 62,302 Net interest income after provision for loan losses 69,822 54,717 59,296 236,294 204,547 Other income: Service charges on deposit accounts 2,380 2,251 2,202 9,527 9,200 Other fees on loans 5,334 6,015 5,282 20,617 21,441 Mortgage banking activities 640 369 432 3,014 3,540 Net gain on sale of investments 6,651 3,899 4,384 34,856 12,000 Derivative (loss) gain (420) (600) 1,154 619 (4,062) Rental Income 615 555 579 2,224 2,285 Gain on sale of credit cards portfolio 30,885 30,885 Other operating income 4,322 3,551 5,103 16,968 14,088 Total other income 50,407 16,040 19,136 118,710 58,492 Other operating expenses: Employees' compensation and benefits 20,494 16,297 18,195 75,213 59,432 Occupancy and equipment 9,637 8,290 9,042 36,394 29,015 Business promotion 4,300 1,795 2,691 12,415 9,304 Taxes, other than income taxes 1,977 1,800 1,920 7,405 6,857 Insurance and supervisory fees 1,254 755 726 3,730 2,804 Other 7,729 7,455 7,285 28,837 25,344 Total other operating expenses 45,391 36,392 39,859 163,994 132,756 Income before income tax 74,838 34,365 38,573 191,010 130,283 Income tax provision 19,883 6,394 6,889 38,672 22,327 Net income $54,955 $27,971 $31,684 $152,338 $107,956 Net income applicable to Common Stock $44,849 $21,220 $24,933 $121,979 $81,550 Net income per common share - basic $1.12 $0.53 $0.62 $3.04 $2.04 Net income per common share - diluted $1.09 $0.52 $0.61 $2.98 $2.01 Dividends declared per common share $0.11 $0.10 $0.11 $0.44 $0.40 FIRST BANCORP Consolidated Statements of Financial Condition (Unaudited) Dollars in thousands except per share data Dec. 31, 2003Dec. 31, 2002 Assets Cash and due from banks $89,305 $108,306 Money market instruments 705,940 251,660 Federal funds sold and securities purchased under agreements to resell 265,000 22,000 Investment securities available for sale, at market: United States and Puerto Rico Government obligations 16,157 28,772 Mortgage backed securities 1,086,891 2,512,606 Corporate bonds 53,770 133,742 Equity investment 62,320 41,654 Total investment securities available for sale 1,219,138 2,716,774 Investment securities held to maturity, at cost: United States and Puerto Rico Government obligations 1,119,775 638,174 Mortgage backed securities 1,970,855 Corporate bonds 39,847 64,432 Total investment securities held to maturity 3,130,477 702,606 Federal Home Loan Bank (FHLB) stock 45,650 35,630 Loans receivable: Commercial Loans 2,832,635 2,491,358 Finance Leases 161,283 143,412 Consumer Loans 1,171,590 1,149,014 Residential Loans 2,879,010 1,854,068 Total loans receivable 7,044,518 5,637,852 Allowance for loan losses (126,378) (111,911) Total loans, net 6,918,140 5,525,941 Other real estate owned 4,617 2,938 Premises and equipment, net 85,269 87,595 Accrued interest receivable 41,508 39,282 Other assets 162,866 151,120 Total assets $12,667,910 $9,643,852 Liabilities & Stockholders' Equity Liabilities: Deposits $6,765,107 $5,482,918 Federal funds purchased and securities sold under agreements to repurchase 3,650,297 2,793,540 Advances from FHLB & Subordinated Notes 995,818 455,815 Accounts payable and other liabilities 167,119 113,155 11,578,341 8,845,428 Stockholders' equity: Preferred Stock 550,100 360,500 Common stock outstanding 40,027 39,955 Additional paid - in capital 269 - Capital Reserve and Legal Surplus 243,107 219,345 Retained earnings 220,038 145,243 Accumulated other comprehensive income 36,028 33,381 1,089,569 798,424 Total liabilities and stockholders' equity $12,667,910 $9,643,852 Book value per common share $13.48 $10.96 FIRST BANCORP Selected Financial Data (Unaudited) Dollars in thousands Credit quality Data at: Dec. 31, 2003Dec. 31, 2002 Non-performing Assets $100,771 $104,675 Non-performing Loans 85,525 91,765 Past Due Loans 23,493 24,435 Allowance for Loan Losses 126,378 111,911 Non-performing Assets to Total Assets 0.80% 1.09% Non-performing Loans to Total Loans 1.21% 1.63% Allowance to Non-Performing Loans 147.77% 121.95% Selected Performance Ratios: Three Months Ended December 31, 2003 2002 Net Interest Yield (1) 3.32% 3.10% Return on Assets 1.84% 1.16% Return on Equity 20.69% 14.66% Return on Common Equity 35.00% 21.08% Net Write offs to Average Loans 0.63% 0.74% Efficiency Ratio 33.78% 42.94% Average Balances: Assets $11,958,774 $9,681,233 Earnings Assets 11,627,166 9,391,837 Loans 6,887,854 5,423,346 Deposits 6,601,516 5,323,973 Interest-bearing liabilities 10,258,656 8,375,600 Stockholders Equity 1,062,619 763,219 Common Stockholders Equity 512,519 402,719 Selected Performance Ratios: Three Months Ended Year Ended Sept. 30, December 31, 2003 2003 2002 Net Interest Yield (1) 2.93% 3.24% 3.56% Return on Assets 1.14% 1.46% 1.23% Return on Equity 15.00% 17.06% 14.90% Return on Common Equity 20.67% 25.20% 21.90% Net Write offs to Average Loans 0.63% 0.66% 0.87% Efficiency Ratio 43.79% 39.91% 40.81% Average Balances: Assets $11,093,765 $10,430,262 $8,748,222 Earnings Assets 10,679,453 10,077,446 8,506,828 Loans 6,466,821 6,291,937 4,773,363 Deposits 6,097,961 5,861,346 4,744,960 Interest-bearing liabilities 9,597,063 8,939,851 7,655,393 Stockholders Equity 845,051 892,760 724,514 Common Stockholders Equity 482,490 483,951 372,343 (1) On a taxable equivalent basis.
The following table provides a reconciliation of financial information, as reported under generally accepted accounting principles (GAAP), to information excluding the effect of the after tax gain on sale of a large part of the Corporation's credit card loans. This information has also been given on this Press Release narrative. Management believes this presentation is useful to investors as it provides information excluding the effect of the gain on this sale.
First BanCorp Press Release (Unaudited) Fiscal year ended December 31, 2003 2003 4th 2003 4th Earnings for Quarter Quarter Quarter Basic EPS Diluted EPS Under GAAP as reported $54,954,947 $1.12 $1.09 Effect of the gain on the sale of a large part of the subsidiary bank's credit card loans (18,840,065) (0.47) (0.46) Excluding effect stated above $36,114,882 $0.65 $0.63 2003 4th Quarter 2003 4th 2003 4th Efficiency Quarter ROA Quarter ROCE Ratio Under GAAP as reported 1.84% 35.00% 33.78% Effect of the gain on the sale of a large part of the subsidiary bank's credit card loans -0.63% -14.70% 10.08% Excluding effect stated above 1.21% 20.30% 43.86% 2003 Earnings for Annual 2003 Annual Year Basic EPS Diluted EPS Under GAAP as reported $152,338,342 $3.04 $2.98 Effect of the gain on the sale of a large part of the subsidiary bank's credit card loans (18,840,065) (0.47) (0.46) Excluding effect stated above $133,498,277 $2.57 $2.52 2003 Annual 2003 Annual 2003 Annual Efficiency ROA ROCE Ratio Under GAAP as reported 1.46% 25.20% 39.91% Effect of the gain on the sale of a large part of the subsidiary bank's credit card loans -0.18% -3.89% 3.24% Excluding effect stated above 1.28% 21.31% 43.15%
SOURCE First BanCorp -0- 01/21/2004 /CONTACT: Annie Astor-Carbonell, Senior Executive Vice President and Chief Financial Officer of First BanCorp, +1-787-729-8088/ /Web site: http://www.firstbankpr.com / (FBP) CO: First BanCorp; FirstBank Puerto Rico ST: Puerto Rico IN: FIN SU: ERN MD -- MXW002 -- 6406 01/21/200410:52 ESThttp://www.prnewswire.com