SAN JUAN, Puerto Rico--(BUSINESS WIRE)-- First BanCorp. (the “Corporation” or “First BanCorp.”) (NYSE: FBP), the bank holding company for FirstBank Puerto Rico (“FirstBank” or “the Bank”), today reported net income of $73.2 million, or $0.40 per diluted share, for the fourth quarter of 2022, compared to $74.6 million, or $0.40 per diluted share, for the third quarter of 2022, and $73.6 million, or $0.35 per diluted share, for the fourth quarter of 2021.
For the year ended December 31, 2022, the Corporation reported net income of $305.1 million or $1.59 per diluted share, compared to $281.0 million, or $1.31 per diluted share, for the year ended December 31, 2021.
Aurelio Alemán, President and Chief Executive Officer of First BanCorp., commented: “We closed the year with another strong quarter of organic growth and notable improvement across franchise metrics. We generated $73.2 million in net income, or $0.40 per diluted share, and reached $122.2 million in pre-tax, pre-provision income, highlighting once again our solid earnings generation capacity and expense management discipline. The loan portfolio grew by $254.3 million during the quarter, driven by strong loan origination activity, particularly in the commercial and consumer business segments. Net interest margin expanded by 6 basis points, asset quality improved, and we reached the lowest efficiency ratio among our peers at 48.02%. In line with industry trends, core deposits, net of brokered and government deposits, decreased by $314.9 million during the quarter as households unwind excess liquidity associated with pandemic-related programs. Our main market continues to be supported by a large amount of disaster relief funds flowing into the economy, strong consumer demand, and positive labor market trends.
“Over the course of 2022, the organization performed exceptionally well reflecting one of its best performing years on record. We registered organic loan growth of $762 million or 10% (excluding SBA PPP loans and strategic reduction of residential mortgages), achieved a record pre-tax pre-provision income of $475.3 million, up 21% when compared to 2021, and reached a decade low non-performing asset ratio of 0.69%. Responsible and value driven capital allocation has allowed us to grow the franchise and invest for the future, while supporting our communities and colleagues and returning approximately $363 million, or 119% of 2022 earnings, to our shareholders through repurchases of common stock and the payment of common stock dividends.
“We remain vigilant to changing global economic conditions and the effect that restrictive monetary policies may continue to have on the overall inflationary environment. We believe that our organization has ample experience navigating uncertainty and is well equipped to manage rising market challenges going into the next cycle. We are highly encouraged by the growth prospects in our main market which should continue to benefit from rebuilding activity over the next few years.”
NON-GAAP DISCLOSURES
This press release includes certain non-GAAP financial measures, including adjusted net income, adjusted earnings per diluted share, and adjusted pre-tax, pre-provision income that exclude the effect of items that management believes are not reflective of core operating performance, are not expected to reoccur with any regularity or may reoccur at uncertain times and in uncertain amounts (the “Special Items”). Other non-GAAP financial measures include adjusted net interest income and margin, tangible common equity, tangible book value per common share, and certain capital ratios. These measures should be read in conjunction with the discussion below in Basis of Presentation – Use of Non-GAAP Financial Measures, the accompanying tables (Exhibit A), which are an integral part of this press release, and the Corporation’s other financial information that is presented in accordance with GAAP. Management believes that the presentation of these non-GAAP financial measures enhances the ability of analysts and investors to analyze trends in the Corporation’s business and understand the performance of the Corporation. The Corporation may utilize these non-GAAP financial measures as guides in its budgeting and long-term planning process.
SPECIAL ITEMS
The financial results for the fourth and third quarters of 2022 and year ended December 31, 2022 did not include any significant Special Item. The financial results for the fourth quarter of 2021 and year ended December 31, 2021 included the significant Special Items discussed below.
Quarter ended December 31, 2021
- Merger and restructuring costs of $1.9 million ($1.2 million after-tax, calculated based on the statutory rate of 37.5%) in connection with the Banco Santander Puerto Rico (“BSPR”) acquisition integration process and related restructuring initiatives.
- Costs of $4 thousand ($3 thousand after-tax, calculated based on the statutory rate of 37.5%) related to the COVID-19 pandemic response efforts, consisting primarily of costs related to additional cleaning, safety materials, and security measures.
Year ended December 31, 2021
- Merger and restructuring costs of $26.4 million ($16.5 million after-tax, calculated based on the statutory rate of 37.5%) in connection with the BSPR acquisition integration process and related restructuring initiatives. Merger and restructuring costs in 2021 included approximately $6.5 million related to previously announced Employee Voluntary Separation Program (the “VSP”) as well as involuntary separation actions implemented in the Puerto Rico region. In addition, these costs included costs related to system conversions, accelerated depreciation charges related to planned closures and consolidation of branches in accordance with the Corporation’s integration and restructuring plan, and other integration related efforts.
- Costs of $3.0 million ($1.9 million after-tax, calculated based on the statutory rate of 37.5%) related to the COVID-19 pandemic response efforts, consisting primarily of costs related to additional cleaning, safety materials, and security measures.
NET INCOME AND RECONCILIATION TO ADJUSTED NET INCOME (NON-GAAP)
Net income was $73.2 million for the fourth quarter of 2022, or $0.40 per diluted share, compared to $74.6 million for the third quarter of 2022, or $0.40 per diluted share. For the year ended December 31, 2022, net income was $305.1 million or $ 1.59 per diluted share, compared to adjusted net income of $295.7 million or $1.40 per diluted share for the year ended December 31, 2021. The following table shows the net income and earnings per diluted share for the fourth and third quarters of 2022 and for the year ended December 31, 2022, and reconciles, for the fourth quarter of 2021 and for the year ended December 31, 2021 the net income to adjusted net income and adjusted earnings per diluted share, which are non-GAAP financial measures that exclude the significant Special Items identified above.
Quarter Ended
Year Ended
December 31, 2022
September 30, 2022
December 31, 2021
(In thousands, except per share information)
Net income, as reported (GAAP)
$
73,174
74,603
73,639
305,072
281,025
Adjustments:
Merger and restructuring costs
-
1,853
26,435
COVID-19 pandemic-related expenses
4
2,958
Income tax impact of adjustments (1)
(696
)
(11,023
Adjusted net income (Non-GAAP)
74,800
299,395
Preferred stock dividends
(446
(2,453
Excess of redemption value over carrying value of Series A through E
Preferred Stock redeemed
(1,234
Adjusted net income attributable to common stockholders (Non-GAAP)
73,120
295,708
Weighted-average diluted shares outstanding
184,847
188,319
204,705
191,968
211,300
Earnings Per Share - diluted (GAAP)
0.40
0.35
1.59
1.31
Adjusted Earnings Per Share - diluted (Non-GAAP)
0.36
1.40
(1) See Special Items discussion above for the individual tax impact related to the above adjustments.
INCOME BEFORE INCOME TAXES AND RECONCILIATION TO ADJUSTED PRE-TAX, PRE-PROVISION INCOME (NON-GAAP)
Income before income taxes was $106.5 million for the fourth and third quarters of 2022. For the year ended December 31, 2022, income before income taxes was $447.6 million, compared to $427.8 million for the same period in 2021. Pre-tax, pre-provision income was $122.2 million for the fourth quarter of 2022, compared to $122.4 million for the third quarter of 2022. For the year ended December 31, 2022, pre-tax, pre-provision income was $475.3 million, compared to adjusted pre-tax, pre-provision income of $391.5 million for the same period in 2021. The following table reconciles income before income taxes to adjusted pre-tax, pre-provision income for the last five quarters and for the years ended December 31, 2022 and 2021:
June 30, 2022
March 31, 2022
(Dollars in thousands)
Income before income taxes
106,530
106,631
108,798
125,625
115,260
447,584
427,817
Add/Less: Provision for credit losses expense (benefit)
15,712
15,783
10,003
(13,802
(12,209
27,696
(65,698
Add: COVID-19 pandemic-related expenses
Add: Merger and restructuring costs
Adjusted pre-tax, pre-provision income (1)
122,242
122,414
118,801
111,823
104,908
475,280
391,512
Change from most recent prior quarter (amount)
(172
3,613
6,978
6,915
1,347
83,768
91,729
Change from most recent prior quarter (percentage)
-0.1
%
3.0
6.2
6.6
1.3
21.4
30.6
(1) Non-GAAP financial measure. See Basis of Presentation below for definition and additional information about this non-GAAP financial measure.
NET INTEREST INCOME
The following table sets forth information concerning net interest income for the last five quarters:
December 31,2021
Net Interest Income
Interest income
233,452
222,683
208,625
197,854
198,435
Interest expense
27,879
14,773
12,439
12,230
14,297
Net interest income
205,573
207,910
196,186
185,624
184,138
Average Balances
Loans and leases
11,364,963
11,218,864
11,102,310
11,106,855
11,108,997
Total securities, other short-term investments and interest-bearing cash balances
7,314,293
7,938,530
8,568,022
8,647,087
9,140,313
Average interest-earning assets
18,679,256
19,157,394
19,670,332
19,753,942
20,249,310
Average interest-bearing liabilities
10,683,776
11,026,975
11,567,228
11,211,780
11,467,480
Average Yield/Rate
Average yield on interest-earning assets - GAAP
4.96
4.61
4.25
4.06
3.89
Average rate on interest-bearing liabilities - GAAP
1.04
0.53
0.43
0.44
0.49
Net interest spread - GAAP
3.92
4.08
3.82
3.62
3.40
Net interest margin - GAAP
4.37
4.31
4.00
3.81
3.61
Net interest income amounted to $205.6 million for the fourth quarter of 2022, a decrease of $2.3 million, compared to $207.9 million for the third quarter of 2022. The decrease in net interest income was mainly due to:
- a net increase of $11.1 million in interest expense on interest-bearing deposits, primarily associated with higher average rates paid in the fourth quarter, partially offset by the effects of a $407.4 million reduction in the average balance of interest-bearing deposits;
- a $2.0 million increase in interest expense on FHLB advances mainly associated with an increased use of short-term advances taken in the fourth quarter, which increased the average balance by $124.5 million, and higher rates paid on FHLB advances in the fourth quarter; and
- interest expense on other borrowings remained relatively flat as compared to the third quarter, including an increase of $0.7 million due to the repricing of junior subordinated debentures that are tied to LIBOR, which was almost entirely offset by a $0.6 million decrease in the interest expense associated with $200.0 million of securities sold under agreements to repurchase called prior to maturity during the fourth quarter, net of an increase of short-term securities sold under agreements to repurchase in the fourth quarter.
Partially offset by:
The interest rate on approximately 56% of the Corporation’s commercial and construction loans is variable, 42% is based upon LIBOR, SOFR and other indexes and 14% is based upon the Prime rate index. For the fourth quarter of 2022, the average one-month LIBOR increased 143 basis points, the average three-month LIBOR increased 151 basis points, the average Prime rate increased 146 basis points, and the average three-month SOFR increased 140 basis points, compared to the average rates for such indexes during the third quarter of 2022.
Net interest margin for the fourth quarter of 2022 increased to 4.37%, when compared to 4.31% for the third quarter of 2022, mainly due to a change in asset mix to higher yielding earning assets, partially offset by higher cost of funds.
NON-INTEREST INCOME
The following table sets forth information concerning non-interest income for the last five quarters:
December 31,2022
(In thousands)
Service charges and fees on deposit accounts
9,174
9,820
9,466
9,363
9,502
Mortgage banking activities
2,572
3,400
4,082
5,206
5,223
Other operating income
17,854
16,473
17,393
18,289
15,653
Non-interest income
29,600
29,693
30,941
32,858
30,378
Non-interest income amounted to $29.6 million for the fourth quarter of 2022, relatively flat compared to $29.7 million for the third quarter of 2022. The $0.1 million decrease in non-interest income was mainly due to:
NON-INTEREST EXPENSES
The following table sets forth information concerning non-interest expenses for the last five quarters:
Employees' compensation and benefits
52,241
52,939
51,304
49,554
49,681
Occupancy and equipment
21,843
22,543
21,505
22,386
21,589
Deposit insurance premium
1,544
1,466
1,673
1,253
Other insurance and supervisory fees
2,429
2,387
2,303
2,235
2,127
Taxes, other than income taxes
5,211
5,349
4,689
5,018
5,138
Professional service fees:
Collections, appraisals and other credit-related fees
1,483
1,261
1,075
909
874
Outsourcing technology services
7,806
7,564
7,636
6,905
7,909
Other professional fees
3,380
3,724
3,325
2,780
3,154
Credit and debit card processing expenses
6,362
6,410
5,843
4,121
5,523
Business promotion
5,590
5,136
4,042
3,463
5,794
Communications
2,322
2,272
1,978
2,151
2,268
Net gain on OREO operations
(2,557
(1,064
(1,485
(720
(1,631
Other
5,277
5,202
4,645
6,184
5,933
Total
112,931
115,189
108,326
106,659
111,465
Non-interest expenses amounted to $112.9 million in the fourth quarter of 2022, a decrease of $2.3 million from $115.2 million in the third quarter of 2022. The $2.3 million decrease reflects, among other things, the following significant variances:
INCOME TAXES
The Corporation recorded an income tax expense of $33.4 million for the fourth quarter of 2022, compared to $32.0 million for the third quarter of 2022. The increase was mainly related to the effect during the third quarter of a benefit recognized on discrete items.
The Corporation’s effective tax rate, excluding entities with pre-tax losses from which a tax benefit cannot be recognized and discrete items, was 31.2%, compared to an estimated effective tax rate of 31.8% for the third quarter of 2022. As of December 31, 2022, the Corporation had a deferred tax asset of $155.6 million, net of a valuation allowance of $185.5 million against the deferred tax assets. The Corporation’s banking subsidiary, FirstBank, had a deferred tax asset of $155.6 million, net of a valuation allowance of $149.5 million.
CREDIT QUALITY
Non-Performing Assets
The following table sets forth information concerning non-performing assets for the last five quarters:
Nonaccrual loans held for investment:
Residential mortgage
42,772
43,036
44,588
48,818
55,127
Commercial mortgage
22,319
23,741
24,753
26,576
25,337
Commercial and Industrial
7,830
15,715
17,079
18,129
17,135
Construction
2,208
2,237
2,375
2,543
2,664
Consumer and finance leases
14,806
12,787
10,315
10,964
10,454
Total nonaccrual loans held for investment
89,935
97,516
99,110
107,030
110,717
OREO
31,641
38,682
41,706
42,894
40,848
Other repossessed property
5,380
4,936
3,840
3,823
3,687
Other assets (1)
2,202
2,193
2,809
2,727
2,850
Total non-performing assets (2)
129,158
143,327
147,465
156,474
158,102
Past due loans 90 days and still accruing (3)
80,517
81,790
94,485
118,798
115,448
Nonaccrual loans held for investment to total loans held for investment
0.78%
0.86%
0.88%
0.96%
1.00%
Nonaccrual loans to total loans
Non-performing assets to total assets
0.69%
0.76%
0.79%
(1)
Residential pass-through MBS issued by the Puerto Rico Housing Finance Authority ("PRHFA") held as part of the available-for-sale debt securities portfolio.
(2)
Excludes purchased-credit deteriorated ("PCD") loans previously accounted for under Accounting Standards Codification ("ASC") Subtopic 310-30 for which the Corporation made the accounting policy election of maintaining pools of loans as “units of account” both at the time of adoption of current expected credit losses ("CECL") on January 1, 2020 and on an ongoing basis for credit loss measurement. These loans will continue to be excluded from nonaccrual loan statistics as long as the Corporation can reasonably estimate the timing and amount of cash flows expected to be collected on the loan pools. The portion of such loans contractually past due 90 days or more amounted to $12.0 million as of December 31, 2022 (September 30, 2022 - $12.8 million; June 30, 2022 - $15.3 million; March 31, 2022 - $18.0 million; December 31, 2021 - $20.6 million).
(3)
These include rebooked loans, which were previously pooled into Government National Mortgage Association ("GNMA") securities, amounting to $10.3 million as of December 31, 2022 (September 30, 2022 - $8.0 million; June 30, 2022 - $10.8 million; March 31, 2022 - $9.5 million; December 31, 2021 - $7.2 million). Under the GNMA program, the Corporation has the option but not the obligation to repurchase loans that meet GNMA’s specified delinquency criteria. For accounting purposes, the loans subject to the repurchase option are required to be reflected on the financial statements with an offsetting liability.
Variances in credit quality metrics:
The decrease in non-performing assets was mainly driven by:
- A $9.3 million decrease in nonaccrual commercial and construction loans, mainly related to the restoration to accrual status of a $5.2 million commercial and industrial loan and a $1.2 million collection of a commercial and industrial loan during the fourth quarter.
- A $7.1 million decrease in the OREO portfolio balance, mainly related to sales of residential properties in the Puerto Rico region.
- A $0.2 million decrease in nonaccrual residential mortgage loans, mainly related to $3.0 million of loans restored to accrual status, $1.6 million in collections, and $1.3 million in loans transferred to OREO, partially offset by inflows of $5.8 million, including the inflow of a $1.4 million loan in the Florida region.
- A $1.9 million increase in nonaccrual consumer loans, associated with the overall portfolio growth, mainly auto loans.
- A $0.5 million increase in other repossessed property, mainly due to auto repossessions.
Early Delinquency
Total loans held for investment in early delinquency (i.e., 30-89 days past due accruing loans, as defined in regulatory reporting instructions) amounted to $104.9 million as of December 31, 2022, a decrease of $9.0 million, compared to $113.9 million as of September 30, 2022. The variances by major portfolio categories are as follows:
- Residential mortgage loans in early delinquency decreased by $3.6 million to $28.2 million.
- Commercial and construction loans in early delinquency decreased by $2.4 million to $5.8 million, mainly due to the payoff of a $2.0 million commercial and industrial line of credit.
- Consumer loans in early delinquency decreased in the fourth quarter by $3.0 million to $70.9 million, mainly in auto loans.
Allowance for Credit Losses
The following table summarizes the activity of the allowance for credit losses (“ACL”) for on-balance sheet and off-balance sheet exposures during the fourth and third quarters of 2022:
Quarter ended December 31,2022
Loans and Finance Leases
Debt Securities
Residential Mortgage Loans
Commercial and Construction Loans
Consumer Loans and Finance Leases
Total Loans and Finance Leases
Unfunded Loans Commitments
Held-to-Maturity
Available-for-Sale
Total ACL
Allowance for credit losses, beginning balance
65,079
67,572
125,208
257,859
4,242
8,257
664
271,022
Provision for credit losses - (benefit) expense
(1,821
3,469
14,003
15,651
31
29
1
Net charge-offs
(498
(763
(11,785
(13,046
(207
(13,253
Allowance for credit losses, end of period
62,760
70,278
127,426
260,464
4,273
8,286
458
273,481
Amortized cost of loans and finance leases
2,847,290
5,378,067
3,327,468
11,552,825
Allowance for credit losses on loans to amortized cost
2.20
3.83
2.25
Quarter ended September 30, 2022
65,231
70,842
116,079
252,152
2,171
8,885
676
263,884
Provision for credit losses - expense (benefit)
755
(3,790
17,387
14,352
2,071
(628
(12
Net (charge-offs) recoveries
(907
520
(8,258
(8,645
2,830,974
5,247,894
3,219,750
11,298,618
2.30
1.29
2.28
The main variances of the total ACL by main categories are discussed below:
Allowance for Credit Losses for Loans and Finance Leases
As of December 31, 2022, the ACL for loans and finance leases was $260.5 million, an increase of $2.6 million, from $257.9 million as of September 30, 2022. The ACL for commercial and construction loans increased by $2.7 million, mostly due to an increase in the size of the loan portfolio and a less favorable economic outlook in the projection of certain forecasted macroeconomic variables, such as the commercial real estate (“CRE”) price index, partially offset by reserve releases totaling $4.8 million associated with the aforementioned large adversely classified loans that were paid off or sold during the fourth quarter of 2022. The ACL for consumer loans increased by $2.2 million, primarily reflecting the effect of the increase in the size of the consumer loan portfolios and the increase in historical charge-off levels associated to the overall portfolio growth. On the other hand, the ACL for residential mortgage loans decreased by $2.3 million, mainly due to a decrease in qualitative adjustments due to improvements in underlying portfolio metrics.
- Provision for credit losses for the commercial and construction loan portfolio was an expense of $3.4 million for the fourth quarter of 2022, compared to a net benefit of $3.8 million in the third quarter of 2022. The expense recognized during the fourth quarter of 2022 was related mostly to the increase in the size of the loan portfolio and a less favorable economic outlook in the projection of certain forecasted macroeconomic variables, such as the CRE price index, partially offset by the aforementioned reserve reductions. Meanwhile, the net benefit recognized during the third quarter of 2022 was related mostly to a reduction in reserves due to improvements in financial information of certain borrowers.
- Provision for credit losses for the consumer loans and finance leases portfolio was $14.0 million for the fourth quarter of 2022, compared to $17.4 million in the third quarter of 2022, primarily reflecting a reduction in qualitative reserves, partially offset by the effect of the increase in the size of the consumer loan portfolios and the increase in historical charge-off levels associated to the overall portfolio growth.
- Provision for credit losses for the residential mortgage loan portfolio was a net benefit of $1.8 million for the fourth quarter of 2022, compared to an expense of $0.8 million in the third quarter of 2022. The net benefit recorded in the fourth quarter of 2022 was primarily related to the decrease in qualitative adjustments due to the aforementioned improvements in underlying portfolio metrics.
Net Charge-Offs
The following table presents ratios of annualized net charge-offs (recoveries) to average loans held-in-portfolio for the last five quarters:
0.07%
0.13%
0.11%
0.15%
0.00%
-0.01%
-0.22%
0.01%
Commercial and industrial
0.19%
-0.07%
-0.10%
0.10%
-1.82%
-0.09%
-0.03%
Consumer loans and finance leases
1.44%
1.05%
0.91%
0.85%
0.75%
Total loans
0.46%
0.31%
0.21%
0.24%
0.26%
The ratios above are based on annualized net charge-offs and are not necessarily indicative of the results expected in subsequent periods.
Net charge-offs were $13.0 million for the fourth quarter of 2022, or an annualized 0.46% of average loans, compared to $8.6 million, or an annualized 0.31% of average loans, in the third quarter of 2022. The increase of $4.4 million in net charge-offs included the following:
Allowance for Credit Losses for Unfunded Loan Commitments
The Corporation estimates expected credit losses over the contractual period during which the Corporation is exposed to credit risk as a result of a contractual obligation to extend credit, such as pursuant to unfunded loan commitments and standby letters of credit for commercial and construction loans, unless the obligation is unconditionally cancellable by the Corporation. The ACL for off-balance sheet credit exposures is adjusted as a provision for credit loss expense. As of December 31, 2022, the ACL for off-balance sheet credit exposures was $4.3 million, compared to $4.2 million as of September 30, 2022.
Allowance for Credit Losses for Held-to-Maturity Debt Securities
As of December 31, 2022, the ACL for held-to-maturity debt securities was $8.3 million, relatively flat when compared to September 30, 2022. The ACL for held-to-maturity debt securities related only to Puerto Rico municipal bonds.
STATEMENT OF FINANCIAL CONDITION
Total assets were approximately $18.6 billion as of December 31, 2022, up $192.5 million from September 30, 2022.
The following variances within the main components of total assets are noted:
Total liabilities were approximately $17.3 billion as of December 31, 2022, an increase of $132.3 million from September 30, 2022.
The increase in total liabilities was mainly due to:
Total stockholders’ equity amounted to $1.3 billion as of December 31, 2022, an increase of $60.2 million from September 30, 2022. The increase was driven by earnings generated in the fourth quarter and the $60.1 million increase in the fair value of available-for-sale debt securities due to changes in market interest rates recognized as part of accumulated other comprehensive loss, partially offset by the repurchase of approximately 3.5 million shares of common stock for a total purchase price of approximately $50.0 million and $22.2 million in quarterly dividends declared to common stock shareholders.
As of December 31, 2022, capital ratios exceeded the required regulatory levels for bank holding companies and well-capitalized banks. The Corporation’s estimated CET1 capital, tier 1 capital, total capital and leverage ratios under the Basel III rules were 16.53%, 16.53%, 19.21%, and 10.70%, respectively, as of December 31, 2022, compared to CET1 capital, tier 1 capital, total capital and leverage ratios of 16.66%, 16.66%, 19.38%, and 10.36%, respectively, as of September 30, 2022.
Meanwhile, estimated CET1 capital, tier 1 capital, total capital and leverage ratios of our banking subsidiary, FirstBank Puerto Rico, were 16.84%, 17.65%, 18.90%, and 11.43%, respectively, as of December 31, 2022, compared to common equity tier 1 capital, tier 1 capital, total capital and leverage ratios of 17.00%, 17.82%, 19.07%, and 11.08%, respectively, as of September 30, 2022.
Tangible Common Equity
The Corporation’s tangible common equity ratio increased to 6.81% as of December 31, 2022, compared to 6.55% as of September 30, 2022. The increase in tangible common equity includes the effect of a $60.1 million increase in the fair value of available-for-sale debt securities due to changes in market interest rates recognized as part of accumulated other comprehensive loss, partially offset by $50.0 million in repurchases of common stock and $22.2 million in quarterly dividends declared during the fourth quarter.
The following table presents a reconciliation of the Corporation’s tangible common equity and tangible assets to the most comparable GAAP items as of the indicated dates:
(In thousands, except ratios and per share information)
Tangible Equity:
Total equity - GAAP
1,325,540
1,265,333
1,557,916
1,781,102
2,101,767
Goodwill
(38,611
Purchased credit card relationship intangible
(205
(376
(599
(873
(1,198
Core deposit intangible
(20,900
(22,818
(24,736
(26,648
(28,571
Insurance customer relationship intangible
(13
(51
(89
(127
(165
Tangible common equity
1,265,811
1,203,477
1,493,881
1,714,843
2,033,222
Tangible Assets:
Total assets - GAAP
18,634,484
18,442,034
19,531,635
19,929,037
20,785,275
Tangible assets
18,574,755
18,380,178
19,467,600
19,862,778
20,716,730
Common shares outstanding
182,709
186,258
191,626
198,701
201,827
Tangible common equity ratio
6.81
6.55
7.67
8.63
9.81
Tangible book value per common share
6.93
6.46
7.80
10.07
Exposure to Puerto Rico Government
As of December 31, 2022, the Corporation had $338.9 million of direct exposure to the Puerto Rico government, its municipalities and public corporations, an increase of $11.7 million when compared to $327.2 million as of September 30, 2022, mainly due to a $12.8 million loan granted to a municipality in Puerto Rico that is supported by assigned property tax revenues. As of December 31, 2022, approximately $183.4 million of the exposure consisted of loans and obligations of municipalities in Puerto Rico that are supported by assigned property tax revenues and for which, in most cases, the good faith, credit and unlimited taxing power of the applicable municipality have been pledged to their repayment, and $114.0 million consisted of loans and obligations which are supported by one or more specific sources of municipal revenues. The Corporation’s total direct exposure to the Puerto Rico government also included $10.8 million in loans extended to an affiliate of a public corporation, $27.4 million in loans to an agency of the Puerto Rico central government, and obligations of the Puerto Rico government, specifically a residential pass-through MBS issued by the PRHFA, at an amortized cost of $3.3 million (fair value of $2.2 million as of December 31, 2022), included as part of the Corporation’s available-for-sale debt securities portfolio. This residential pass-through MBS issued by the PRHFA is collateralized by certain second mortgages and had an unrealized loss of $1.1 million as of December 31, 2022, of which $0.4 million is due to credit deterioration.
The aforementioned exposure to municipalities in Puerto Rico included $165.7 million of financing arrangements with Puerto Rico municipalities that were issued in bond form but underwritten as loans with features that are typically found in commercial loans. These bonds are accounted for as held-to-maturity debt securities. As of December 31, 2022, the ACL for these securities was $8.3 million, relatively flat when compared to September 30, 2022.
As of December 31, 2022, the Corporation had $2.3 billion of public sector deposits in Puerto Rico, compared to $2.5 billion as of September 30, 2022. Approximately 24% of the public sector deposits as of December 31, 2022, were from municipalities and municipal agencies in Puerto Rico and 76% were from public corporations, the Puerto Rico central government and agencies, and U.S. federal government agencies in Puerto Rico.
Conference Call / Webcast Information
First BanCorp.’s senior management will host an earnings conference call and live webcast on Friday, January 27, 2023, 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: fbpinvestor.com or through a dial-in telephone number at (844) 200-6205 or (929) 526–1599 for international callers. The participant access code is 291448. The Corporation recommends that listeners go to the web site at least 15 minutes prior to the call to download and install any necessary software. Following the webcast presentation, a question and answer session will be made available to research analysts and institutional investors. A replay of the webcast will be archived in the investor relations section of First BanCorp.’s website, fbpinvestor.com, until January 27, 2024. A telephone replay will be available one hour after the end of the conference call through February 26, 2023 at (866) 813-9403. The replay access code is 044230.
Safe Harbor
This press release may contain “forward-looking statements” concerning the Corporation’s future economic, operational and financial performance. The words or phrases “expect,” “anticipate,” “intend,” “should,” “would,” “will,” “plans,” “forecast,” “believe” and similar expressions are meant to identify “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by such sections. The Corporation cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date hereof, and advises readers that any such forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, estimates and assumptions by us that are difficult to predict. Various factors, some of which are beyond our control, including, but not limited to, the uncertainties more fully discussed in Part I, Item 1A, “Risk Factors” of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021 and the following, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements: the impacts of rising interest rates and inflation on the Corporation, including a decrease in demand for new loan originations and refinancings, increased competition for borrowers, attrition in deposits and an increase in non-interest expenses which would impact the Corporation’s margins and may adversely impact origination volumes and financial performance; the long-term effects of the COVID-19 pandemic and their impact on the Corporation’s business, operations and financial condition, including the impact of any residual risks related to the Corporation’s participation in the SBA PPP; adverse changes in general economic conditions in Puerto Rico, the U.S., and the U.S. and British Virgin Islands, including in the interest rate environment, unemployment rates, market liquidity, housing absorption rates, real estate markets and U.S. capital markets, which may affect funding sources, loan portfolio performance and credit quality, market prices of investment securities and demand for the Corporation’s products and services, and which may reduce the Corporation’s revenues and earnings and the value and credit quality of the Corporation’s assets; the Corporation’s ability to identify and prevent cyber-security incidents, such as data security breaches, ransomware, malware, “denial of service” attacks, “hacking,” identity theft and state-sponsored cyberthreats, and the occurrence of any, which may result in misuse or misappropriation of confidential or proprietary information, disruption or damage to our systems, increased costs and losses or an adverse effect to our reputation; general competitive factors, industry consolidation and other market risks as well as the implementation of strategic growth opportunities, including risks, uncertainties and other factors or events related to any business acquisitions or dispositions; uncertainty as to the ultimate outcome of the debt restructuring plan of Puerto Rico (“Plan of Adjustment” or “PoA”) and the 2022 Fiscal Plan for Puerto Rico as certified by the Financial Oversight and Management Board for Puerto Rico, or any revisions to it, on our clients and loan portfolios, and any potential impact from future economic or political developments in Puerto Rico; the impact of government financial assistance for hurricane recovery and other disaster relief on economic activity in Puerto Rico; uncertainty as to the availability of wholesale funding sources, such as securities sold under agreements to repurchase, FHLB advances, and brokered CDs; the impact of changes in accounting standards or assumptions in applying those standards, on forecasts of economic variables considered for the determination of the ACL; the ability of FirstBank to realize the benefits of its net deferred tax assets; the ability of FirstBank to generate sufficient cash flow to make dividend payments to the Corporation; the impacts of natural or man-made disasters, widespread health emergencies, geopolitical conflicts (including the ongoing conflict in Ukraine), terrorist attacks or other catastrophic external events, including impacts of such events on general economic conditions and on the Corporation’s assumptions regarding forecasts of economic variables; the effect of changes in the interest rate environment, including uncertainty about the effect of the cessation of the LIBOR; any adverse change in the Corporation’s ability to attract and retain clients and gain acceptance from current and prospective customers for new products and services, including those related to the offering of digital banking and financial services; the risk that additional portions of the unrealized losses in the Corporation’s debt securities portfolio are determined to be credit-related, resulting in additional charges to the provision for credit losses on the Corporation’s available-for-sale debt securities portfolio; the impacts of applicable legislative, tax or regulatory changes on the Corporation’s financial condition or performance; the effect of changes in the fiscal and monetary policies and regulations of the U.S. federal government and the Puerto Rico and other governments, including those determined by the Federal Reserve Board, the Federal Reserve Bank of New York, the Federal Deposit Insurance Corporation (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 the Corporation’s internal 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, causing an additional increase in the Corporation’s non-interest expenses; any need to recognize impairments on the Corporation’s financial instruments, goodwill and other intangible assets; the risk that the impact of the occurrence of any of these uncertainties on the Corporation’s capital would preclude further growth of FirstBank and preclude the Corporation’s Board of Directors from declaring dividends; and uncertainty as to whether FirstBank will be able to continue to satisfy its regulators regarding, among other things, its asset quality, liquidity plans, maintenance of capital levels and compliance with applicable laws, regulations; and related requirements. 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 GAAP financial measures and non-GAAP financial measures. Non-GAAP financial measures are used when management believes them to be helpful to an investor’s understanding of the Corporation’s results of operations or financial position. Where non-GAAP financial measures are used, the most comparable GAAP financial measure, as well as the reconciliation of the non-GAAP financial measure to the most comparable GAAP financial measure, can be found in the text or in the tables in or attached to this press release. Any analysis of these non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP.
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 financial measures that management believes are generally used by the financial community to evaluate capital adequacy. Tangible common equity is total equity less preferred equity, goodwill, and other intangibles. Tangible assets are total assets less goodwill and other intangibles. Management uses and believes that many stock analysts use the tangible common equity ratio and tangible book value per common share in conjunction with other 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. Accordingly, the Corporation believes that disclosure of these financial measures may be useful to investors. 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.
Adjusted Pre-Tax, Pre-Provision Income
Adjusted pre-tax, pre-provision income is a non-GAAP performance metric that management uses and believes that investors may find useful in analyzing underlying performance trends, particularly in times of economic stress, including as a result of natural catastrophes or health epidemics. Adjusted pre-tax, pre-provision income, as defined by management, represents income before income taxes adjusted to exclude the provisions for credit losses on loans, finance leases and debt securities and any gains or losses on sales of investment securities. In addition, from time to time, earnings are also adjusted for certain items regarded as Special Items, such as merger and restructuring costs in connection with the acquisition of BSPR and related integration and restructuring efforts, and costs incurred in connection with the COVID-19 pandemic response efforts, because management believes these items are not reflective of core operating performance, are not expected to reoccur with any regularity or may reoccur at uncertain times and in uncertain amounts.
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 on a tax-equivalent basis in order to provide to investors additional information about the Corporation’s net interest income that management uses and believes should facilitate comparability and analysis of the periods presented. The changes in the fair value of derivative instruments 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 tax-exempt loans, on a common basis that management believes facilitates comparison of results to the results of peers.
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 for the fourth and third quarters of 2022, the fourth quarter of 2021 and the year ended December 31, 2022 and 2021, respectively. The table also reconciles netinterest spread and net interest margin to these items excluding valuations, and on a tax-equivalent basis.
Interest income - GAAP
862,614
794,708
Unrealized loss (gain) on derivative instruments
5
(11
(2
(30
(24
Interest income excluding valuations
233,457
222,672
198,433
862,584
794,684
Tax-equivalent adjustment
7,391
9,150
6,208
33,149
23,753
Interest income on a tax-equivalent basis and excluding valuations
240,848
231,822
204,641
895,733
818,437
Interest expense - GAAP
67,321
64,779
Net interest income - GAAP
795,293
729,929
Net interest income excluding valuations
205,578
207,899
184,136
795,263
729,905
Net interest income on a tax-equivalent basis and excluding valuations
212,969
217,049
190,344
828,412
753,658
11,199,013
11,413,149
8,112,842
8,180,944
Average Interest-Earning Assets
19,311,855
19,594,093
Average Interest-Bearing Liabilities
11,120,732
11,778,841
4.47
0.61
0.55
3.86
3.51
4.12
3.73
Average yield on interest-earning assets excluding valuations
Average rate on interest-bearing liabilities excluding valuations
Net interest spread excluding valuations
Net interest margin excluding valuations
Average yield on interest-earning assets on a tax-equivalent basis and excluding valuations
5.12
4.80
4.01
4.64
4.18
Average rate on interest-bearing liabilities
Net interest spread on a tax-equivalent basis and excluding valuations
4.27
3.52
4.03
3.63
Net interest margin on a tax-equivalent basis and excluding valuations
4.52
4.49
4.29
3.85
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
As of
(In thousands, except for share information)
ASSETS
Cash and due from banks
478,480
552,933
2,540,376
Money market investments:
Time deposits with other financial institutions
300
Other short-term investments
1,725
1,757
2,382
Total money market investments
2,025
2,057
2,682
Debt securities available for sale, at fair value (ACL of $458 as of December 31, 2022; $664 as of September 30, 2022; and $1,105 as of December 31, 2021)
5,599,520
5,668,689
6,453,761
Debt securities held to maturity, at amortized cost, net of ACL of $8,286 as of December 31, 2022, $8,257 as of September 30, 2022, and $8,571 as of December 31, 2021
429,251
437,605
169,562
Equity securities
55,289
24,727
32,169
Total investment securities
6,084,060
6,131,021
6,655,492
Loans, net of ACL (December 31, 2022 - $260,464; September 30, 2022 - $257,859;
December 31, 2021 - $269,030)
11,292,361
11,040,759
10,791,628
Loans held for sale, at lower of cost or market
12,306
12,169
35,155
Total loans, net
11,304,667
11,052,928
10,826,783
Accrued interest receivable on loans and investments
69,730
61,108
61,507
Premises and equipment, net
142,935
143,429
146,417
Deferred tax asset, net
155,584
166,100
208,482
38,611
Intangible assets
21,118
23,245
29,934
Other assets
305,633
231,920
234,143
Total assets
LIABILITIES
Deposits:
Non-interest-bearing deposits
6,112,884
6,235,782
7,027,513
Interest-bearing deposits
10,030,583
10,333,799
10,757,381
Total deposits
16,143,467
16,569,581
17,784,894
Securities sold under agreements to repurchase
75,133
200,000
300,000
Advances from the FHLB
675,000
Other borrowings
183,762
Accounts payable and other liabilities
231,582
223,358
214,852
Total liabilities
17,308,944
17,176,701
18,683,508
STOCKHOLDERSʼ EQUITY
Common stock outstanding and additional paid-in capital, net of treasury stock
(December 31, 2022 - 182,709,059; September 30, 2022 - 186,257,659;
December 31, 2021 - 201,826,505)
486,109
534,742
758,471
Retained earnings
1,644,209
1,593,284
1,427,295
Accumulated other comprehensive loss
(804,778
(862,693
(83,999
Total stockholdersʼ equity
Total liabilities and stockholdersʼ equity
FIRST BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Net interest income:
Provision for credit losses - expense (benefit):
Loans
(12,241
25,679
(61,720
Unfunded loan commitments
(222
2,736
(3,568
Debt securities
30
(640
254
(719
(410
Net interest income after provision for credit losses
189,861
192,127
196,347
767,597
795,627
Non-interest income:
37,823
35,284
15,260
24,998
Other non-interest income
70,009
60,882
Total non-interest income
123,092
121,164
Non-interest expenses:
Employees’ compensation and benefits
206,038
200,457
88,277
93,253
18,231
15,359
Professional service fees
12,669
12,549
11,937
47,848
59,956
20,267
22,151
Insurance and supervisory fees
3,973
3,853
15,503
15,642
(5,826
(2,160
Other non-interest expenses
13,961
13,884
13,724
52,767
57,881
Total non-interest expenses
443,105
488,974
Income tax expense
(33,356
(32,028
(41,621
(142,512
(146,792
Net income
Net income attributable to common stockholders
71,959
277,338
Earnings per common share:
Basic
1.60
1.32
Diluted
About First BanCorp.
First BanCorp. is the parent corporation of FirstBank Puerto Rico, a state-chartered commercial bank with operations in Puerto Rico, the U.S. and the British Virgin Islands and Florida, and of FirstBank Insurance Agency. Among the subsidiaries of FirstBank Puerto Rico are First Federal Finance Corp. and First Express, both small loan companies. 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.1firstbank.com.
EXHIBIT A
Table 1 – Selected Financial Data
Quarter ended
(Shares in thousands)
Per Common Share Results:
Net earnings per share - basic
Net earnings per share - diluted
Cash dividends declared
0.12
0.10
0.46
0.31
Average shares outstanding
183,649
187,236
203,344
190,805
210,122
Average shares outstanding diluted
Book value per common share
7.25
6.79
10.41
Tangible book value per common share (1)
Selected Financial Ratios (In Percent):
Profitability:
Return on Average Assets
1.58
1.55
1.57
1.38
Interest Rate Spread (2)
Net Interest Margin (2)
Return on Average Total Equity
22.37
19.00
13.40
18.66
12.56
Return on Average Common Equity
13.24
12.58
Average Total Equity to Average Total Assets
7.05
8.14
10.46
8.44
11.02
Total capital
19.21
19.38
20.50
Common equity Tier 1 capital
16.53
16.66
17.80
Tier 1 capital
Leverage
10.70
10.36
10.14
Tangible common equity ratio (1)
Dividend payout ratio
30.12
28.26
28.77
23.49
Efficiency ratio (3)
48.02
48.48
51.96
48.25
57.45
Asset Quality:
Allowance for credit losses for loans and finance leases to total loans held for investment
2.43
Net charge-offs (annualized) to average loans
0.26
0.48
Provision for credit losses for loans and finance leases - expense (benefit) to net charge-offs
119.97
166.02
(172.67
74.99
(111.94
0.69
0.78
0.76
0.86
1.00
Allowance for credit losses for loans and finance leases to total nonaccrual loans held for investment
289.61
264.43
242.99
Allowance for credit losses for loans and finance leases to total nonaccrual loans held for investment, excluding residential estate loans
552.26
473.31
483.95
Other Information:
Common Stock Price: End of period
12.72
13.68
13.78
Non-GAAP financial measures (as defined above). Refer to Statement of Financial Condition above for additional information about the components and a reconciliation of these measures.
On a tax-equivalent basis and excluding changes in the fair value of derivative instruments (Non-GAAP financial measure). Refer to Basis of Presentation above for additional information and a reconciliation of these measures.
Non-interest expenses to the sum of net interest income and non-interest income.
Table 2 – Quarterly Statement of Average Interest-Earning Assets and Average Interest-Bearing Liabilities (On a Tax-Equivalent Basis)
Average Volume
Interest income (1) / expense
Average Rate (1)
December 31,
September 30,
2022
2021
Interest-earning assets:
Money market and other short-term investments
394,471
882,759
2,350,719
3,444
4,654
912
3.46
2.09
0.15
Government obligations (2)
2,910,733
2,912,130
2,585,069
10,386
10,325
7,431
1.42
1.41
1.14
Mortgage-backed securities
3,973,307
4,113,870
4,166,861
20,838
22,028
15,986
2.08
2.12
1.52
FHLB stock
22,292
16,677
26,103
284
292
5.05
6.95
4.56
Other investments
13,490
13,094
11,561
48
45
16
1.36
Total investments (3)
35,000
37,344
24,645
1.90
1.87
1.07
Residential mortgage loans
2,839,268
2,855,927
3,069,075
39,225
39,874
42,633
5.48
5.54
5.51
Construction loans
128,845
118,794
165,067
2,227
1,831
2,236
6.86
6.12
5.37
C&I and commercial mortgage loans
5,127,028
5,085,257
5,028,753
81,464
73,518
63,202
6.30
5.74
4.99
Finance leases
691,585
647,586
561,423
12,769
11,751
10,395
7.33
7.20
7.35
Consumer loans
2,578,237
2,511,300
2,284,679
70,163
67,504
61,530
10.80
10.66
10.68
Total loans (4) (5)
205,848
194,478
179,996
7.19
6.88
6.43
Total interest-earning assets
Interest-bearing liabilities:
Brokered CDs
47,304
63,524
106,275
286
333
561
2.40
Other interest-bearing deposits
10,090,687
10,481,863
10,573,790
20,751
9,645
8,115
0.82
0.37
0.30
FHLB advances
220,652
97,826
301,739
2,469
529
1,771
4.44
2.15
2.33
Other borrowed funds
325,133
383,762
485,676
4,373
4,266
3,850
5.34
4.41
3.15
Total interest-bearing liabilities
Interest rate spread
Net interest margin
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 of 37.5% 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 are excluded from interest income because the changes in valuation do not affect interest paid or received. Refer to Basis of Presentation above for additional information and a reconciliation of these measures.
Government obligations include debt issued by government-sponsored agencies.
Unrealized gains and losses on available-for-sale debt securities are excluded from the average volumes.
(4)
Average loan balances include the average of non-performing loans.
(5)
Interest income on loans includes $2.7 million, $2.9 million and $2.7 million for the quarters ended December 31, 2022, September 30, 2022, and December 31, 2021, respectively, of income from prepayment penalties and late fees related to the Corporation's loan portfolio.
Table 3 – Year-to-Date Statement of Average Interest-Earning Assets and Average Interest-Bearing Liabilities (On a Tax-Equivalent Basis)
1,156,127
2,012,617
11,791
2,662
1.02
0.13
2,870,889
2,065,522
39,033
27,058
4,052,660
4,064,343
85,090
57,159
2.10
20,419
28,208
1,114
1,394
5.46
4.94
12,747
10,254
126
61
0.99
0.59
137,154
88,334
1.69
1.08
2,886,594
3,277,087
160,359
177,747
5.56
5.42
121,642
181,470
7,350
12,766
6.04
7.03
5,092,638
5,228,150
281,486
261,333
5.53
5.00
636,507
518,757
46,842
38,532
7.36
7.43
2,461,632
2,207,685
262,542
239,725
10.67
10.86
758,579
730,103
6.77
6.40
69,694
141,959
1,500
2,982
10,492,465
10,798,583
44,861
38,500
179,452
354,055
8,199
2.86
2.32
379,121
484,244
15,824
15,098
4.17
3.12
Interest income on loans includes $11.2 million and $10.5 million for years ended December 31, 2022 and 2021, respectively, of income from prepayment penalties and late fees related to the Corporation's loan portfolio.
Table 4 – Loan Portfolio by Geography
As of December 31,2022
Puerto Rico
Virgin Islands
United States
Consolidated
2,237,983
179,917
429,390
Commercial loans:
30,529
4,243
98,181
132,953
Commercial mortgage loans
1,768,890
65,314
524,647
2,358,851
Commercial and Industrial loans (1)
1,791,235
68,874
1,026,154
2,886,263
Commercial loans
3,590,654
138,431
1,648,982
718,230
2,537,840
61,419
9,979
2,609,238
Loans held for investment
9,084,707
379,767
2,088,351
Loans held for sale
9,097,013
11,565,131
As of September 30, 2022
2,240,466
174,766
415,742
23,595
96,278
123,994
1,688,345
66,102
511,167
2,265,614
1,772,418
69,748
1,016,120
2,858,286
3,484,358
139,971
1,623,565
669,114
2,480,412
58,911
11,313
2,550,636
8,874,350
373,648
2,050,620
8,886,519
11,310,787
As of December 31, 2021
2,361,322
188,251
429,322
2,978,895
38,789
4,344
95,866
138,999
1,635,137
67,094
465,238
2,167,469
1,867,082
79,515
940,654
2,887,251
3,541,008
150,953
1,501,758
5,193,719
575,005
2,245,097
52,282
15,660
2,313,039
8,722,432
391,486
1,946,740
11,060,658
33,002
177
1,976
8,755,434
391,663
1,948,716
11,095,813
Includes $6.8 million of SBA PPP loans, net of unearned fees of $0.5 million, as of December 31, 2022 (September 30, 2022 - $17.9 million; December 31, 2021 - $145.0 million).
Table 5 – Non-Performing Assets by Geography
28,857
6,614
7,301
14,341
7,978
5,859
1,179
792
831
1,377
14,142
469
195
64,030
17,617
8,288
28,135
3,475
5,275
76
99,642
21,168
8,348
76,417
4,100
30,988
6,530
5,518
15,269
8,472
13,564
1,313
838
854
1,383
12,510
143
134
73,185
17,841
6,490
34,626
4,025
4,789
98
49
114,793
21,964
6,570
80,249
1,541
39,256
8,719
7,152
9,834
14,708
1,476
951
1,198
10,177
144
133
80,842
21,639
8,236
36,750
3,450
648
3,456
187
44
123,898
25,276
8,928
114,001
1,265
182
Residential pass-through MBS issued by the PRHFA held as part of the available-for-sale debt securities portfolio.
Excludes PCD loans previously accounted for under ASC Subtopic 310-30 for which the Corporation made the accounting policy election of maintaining pools of loans as “units of account” both at the time of adoption of CECL on January 1, 2020 and on an ongoing basis for credit loss measurement. These loans will continue to be excluded from nonaccrual loan statistics as long as the Corporation can reasonably estimate the timing and amount of cash flows expected to be collected on the loan pools. The portion of such loans contractually past due 90 days or more amounted to $12.0 million as of December 31, 2022 (September 30, 2022 - $12.8 million; December 31, 2021 - $20.6 million).
These include rebooked loans, which were previously pooled into GNMA securities, amounting to $10.3 million as of December 31, 2022 (September 30, 2022 - $8.0 million; December 31, 2021 - $7.2 million). Under the GNMA program, the Corporation has the option but not the obligation to repurchase loans that meet GNMA's specified delinquency criteria. For accounting purposes, the loans subject to the repurchase option are required to be reflected on the financial statements with an offsetting liability.
Table 6 – Allowance for Credit Losses on Loans and Finance Leases
Allowance for credit losses on loans and finance leases, beginning of period
288,360
269,030
385,887
Provision for credit losses on loans and finance leases expense (benefit)
Net (charge-offs) recoveries of loans:
(988
(3,343
(28,517
10
54
(56
1,287
(1,213
(1,360
486
(702
392
4,889
587
(20
12
602
(5,355
(33,183
(30,372
(7,089
(34,245
(55,137
Allowance for credit losses on loans and finance leases, end of period
Allowance for credit losses on loans and finance leases to period end total loans held for investment
Net charge-offs (annualized) to average loans outstanding during the period
Provision for credit losses on loans and finance leases to net charge-offs during the period
1.20x
1.66x
-1.73x
0.75x
-1.12x
Includes net charge-offs totaling $23.1 million associated with a bulk sale of residential mortgage nonaccrual loans and related servicing advance receivables.
Excluding net charge-offs associated with the bulk sale, total net charge-offs to average loans for the year ended December 31, 2021 was 0.28%.
Table 7 – Annualized Net Charge-Offs (Recoveries) to Average Loans
0.07
0.87
0.00
-0.01
0.01
-0.06
0.06
0.19
-0.07
-0.16
-1.82
-0.03
-0.49
-0.04
1.44
1.05
0.75
1.11
Includes net charge-offs totaling $23.1 million associated with the bulk sale of residential mortgage nonaccrual loans and related servicing advance receivables. Excluding net charge-offs associated with the bulk sale, residential mortgage and total net charge offs to related average loans for the year ended December 31, 2021 was 0.17% and 0.28%, respectively.
First BanCorp. Ramon Rodriguez Senior Vice President Corporate Strategy and Investor Relations ramon.rodriguez@firstbankpr.com (787) 729-8200 Ext. 82179