First BanCorp. Announces Earnings for the Quarter Ended March 31, 2021
First BanCorp (FBP) reported a net income of $61.2 million ($0.28 per diluted share) for Q1 2021, up from $50.1 million ($0.23 per diluted share) in Q4 2020 and $2.3 million ($0.01 per diluted share) in Q1 2020. The results included a $15.3 million provision benefit related to credit losses. Merger and restructuring costs amounted to $11.3 million during the quarter. Loan origination reached $1.2 billion, with $209 million in new SBA PPP loans. Total deposits rose by $472 million. The firm anticipates increased commercial and construction activity as economic conditions improve.
- Net income increased to $61.2 million from $50.1 million in the prior quarter.
- Loan origination reached $1.2 billion, showing strong client support.
- Total deposits increased by $472 million, enhancing liquidity.
- Total loan portfolio declined by 1%, or $130 million, due to a decrease in residential mortgage loans.
- Non-interest expenses remained high at $133.3 million, with merger costs impacting profitability.
First BanCorp. (the “Corporation”) (NYSE: FBP), the bank holding company for FirstBank Puerto Rico (“FirstBank” or “the Bank”), today reported net income of
Aurelio Alemán, President and Chief Executive Officer of First BanCorp., commented: “We are very pleased with our results for the first quarter of 2021 and our continued progress on the integration of the acquired operations. We generated net income of
Loan origination activity was solid reaching
Total pandemic relief funding designated for Puerto Rico is currently estimated at
The economy in our main market continues to show signs of recovery, with tourism, hotel occupancy, airline passengers, manufacturing and cement sales all showing improving trends. While advancements are evident in overcoming the pandemic challenges and vaccinations continue to progress, we continue to operate under strict safety rules yet remain optimistic about recovery trends across the economy. We have solidified our market position and are poised to benefit from these improving economic conditions. Our asset quality ratios continue to improve, and our capital ratios remain very strong.”
NON-GAAP DISCLOSURES
This press release includes certain non-GAAP financial measures, including adjusted net income, adjusted pre-tax, pre-provision income, adjusted net interest income and margin, adjusted non-interest expenses, tangible common equity, tangible book value per common share, certain capital ratios, and certain other financial measures 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”), and 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.
SPECIAL ITEMS
The financial results for the first quarter of 2021 and fourth and first quarters of 2020 included the following significant Special Items:
Quarter ended March 31, 2021
- Merger and restructuring costs of
- Costs of
Quarter ended December 31, 2020
- Merger and restructuring costs of
- Costs of
- Loss of
Quarter ended March 31, 2020
- Gain of
- A benefit of
- Merger and restructuring costs of
- Costs of
NET INCOME AND RECONCILIATION TO ADJUSTED NET INCOME (NON-GAAP)
Net income was
| Quarter Ended | Quarter Ended | Quarter Ended | |||||||||||
| (In thousands, except per share information) | March 31, 2021 | December 31, 2020 | March 31, 2020 | ||||||||||
| Net income, as reported (GAAP) | $ |
61,150 |
|
$ |
50,138 |
|
$ |
2,266 |
|
||||
| Adjustments: | |||||||||||||
| Merger and restructuring costs |
|
11,267 |
|
|
12,321 |
|
|
845 |
|
||||
| Benefit from hurricane-related insurance recoveries |
|
- |
|
|
- |
|
|
(1,153 |
) |
||||
| Loss (gain) on sales of investment securities |
|
- |
|
|
182 |
|
|
(8,247 |
) |
||||
| COVID-19 pandemic-related expenses |
|
1,209 |
|
|
1,125 |
|
|
363 |
|
||||
| Income tax impact of adjustments (1) |
|
(4,679 |
) |
|
(5,042 |
) |
|
(21 |
) |
||||
| Adjusted net income (loss) (Non-GAAP) | $ |
68,947 |
|
$ |
58,724 |
|
$ |
(5,947 |
) |
||||
| Preferred stock dividends |
|
(669 |
) |
|
(669 |
) |
|
(669 |
) |
||||
| Adjusted net income (loss) attributable to common stockholders (Non-GAAP) | $ |
68,278 |
|
$ |
58,055 |
|
$ |
(6,616 |
) |
||||
| Weighted-average diluted shares outstanding | $ |
218,277 |
|
|
218,071 |
|
$ |
217,314 |
|
||||
| Earnings Per Share - diluted (GAAP) | $ |
0.28 |
|
$ |
0.23 |
|
$ |
0.01 |
|
||||
| Adjusted Earnings (Loss) Per Share - diluted (Non-GAAP) | $ |
0.31 |
|
$ |
0.27 |
|
$ |
(0.03 |
) |
||||
| (1) See Basis of Presentation for the individual tax impact related to reconciling items. | |||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES AND RECONCILIATION TO ADJUSTED PRE-TAX, PRE-PROVISION INCOME (NON-GAAP)
Income before income taxes was
| (Dollars in thousands) | Quarter Ended | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
2021 |
2020 |
2020 |
2020 |
2020 |
||||||||||||||||
| Income (loss) before income taxes | $ |
89,172 |
|
$ |
65,514 |
|
$ |
24,208 |
|
$ |
27,302 |
|
$ |
(701 |
) |
|||||
| Less/Add: Provision for credit losses (benefit) expense |
|
(15,252 |
) |
|
7,691 |
|
|
46,914 |
|
|
39,014 |
|
|
77,366 |
|
|||||
| Add/Less: Net loss (gain) on sales of investment securities |
|
- |
|
|
182 |
|
|
(5,288 |
) |
|
155 |
|
|
(8,247 |
) |
|||||
| Less: Benefit from hurricane-related insurance recoveries |
|
- |
|
|
- |
|
|
- |
|
|
(5,000 |
) |
|
(1,153 |
) |
|||||
| Less: Gain on early extinguishment of debt |
|
- |
|
|
- |
|
|
(94 |
) |
|
- |
|
|
- |
|
|||||
| Add: COVID-19 pandemic-related expenses |
|
1,209 |
|
|
1,125 |
|
|
962 |
|
|
2,961 |
|
|
363 |
|
|||||
| Add: Merger and restructuring costs |
|
11,267 |
|
|
12,321 |
|
|
10,441 |
|
|
2,902 |
|
|
845 |
|
|||||
| Adjusted pre-tax, pre-provision income (1) | $ |
86,396 |
|
$ |
86,833 |
|
$ |
77,143 |
|
$ |
67,334 |
|
$ |
68,473 |
|
|||||
| Change from most recent prior quarter (amount) | $ |
(437 |
) |
$ |
9,690 |
|
$ |
9,809 |
|
$ |
(1,139 |
) |
$ |
(3,670 |
) |
|||||
| Change from most recent prior quarter (percentage) |
|
-0.5 |
% |
|
12.6 |
% |
|
14.6 |
% |
|
-1.7 |
% |
|
-5.1 |
% |
|||||
| (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:
| (Dollars in thousands) | Quarter Ended | |||||||||||||||||||
| March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | ||||||||||||||||
| Net Interest Income | ||||||||||||||||||||
| Interest income | $ |
194,642 |
|
$ |
198,700 |
|
$ |
170,402 |
|
$ |
158,616 |
|
$ |
165,264 |
|
|||||
| Interest expense |
|
18,377 |
|
|
20,933 |
|
|
21,706 |
|
|
23,406 |
|
|
26,615 |
|
|||||
| Net interest income | $ |
176,265 |
|
$ |
177,767 |
|
$ |
148,696 |
|
$ |
135,210 |
|
$ |
138,649 |
|
|||||
| Average Balances | ||||||||||||||||||||
| Loans and leases | $ |
11,768,266 |
|
$ |
11,843,157 |
|
$ |
10,163,671 |
|
$ |
9,247,878 |
|
$ |
8,997,418 |
|
|||||
| Total securities, other short-term investments and interest-bearing cash balances |
|
6,510,960 |
|
|
6,057,360 |
|
|
4,871,710 |
|
|
3,636,532 |
|
|
3,055,546 |
|
|||||
| Average interest-earning assets | $ |
18,279,226 |
|
$ |
17,900,517 |
|
$ |
15,035,381 |
|
$ |
12,884,410 |
|
$ |
12,052,964 |
|
|||||
| Average interest-bearing liabilities | $ |
11,815,179 |
|
$ |
11,704,166 |
|
$ |
9,732,691 |
|
$ |
8,436,511 |
|
$ |
8,099,199 |
|
|||||
| Average Yield/Rate | ||||||||||||||||||||
| Average yield on interest-earning assets - GAAP |
|
4.32 |
% |
|
4.42 |
% |
|
4.51 |
% |
|
4.95 |
% |
|
5.51 |
% |
|||||
| Average rate on interest-bearing liabilities - GAAP |
|
0.63 |
% |
|
0.71 |
% |
|
0.89 |
% |
|
1.12 |
% |
|
1.34 |
% |
|||||
| Net interest spread - GAAP |
|
3.69 |
% |
|
3.71 |
% |
|
3.62 |
% |
|
3.83 |
% |
|
4.17 |
% |
|||||
| Net interest margin - GAAP |
|
3.91 |
% |
|
3.95 |
% |
|
3.93 |
% |
|
4.22 |
% |
|
4.63 |
% |
|||||
Net interest income amounted to
-
A
$2.4 million decrease in interest income on residential mortgage loans, primarily due to a decrease of$121.2 million in the average balance of this portfolio, and, to a lesser extent, a decrease in collection of interest on loans restored to accrual status and higher inflows of loans to nonaccrual status, as compared to the fourth quarter of 2020.
-
A
$1.4 million decrease in interest income on commercial and construction loans, primarily due to: (i) the adverse effect of two fewer days in the first quarter, which resulted in a decrease of approximately$1.5 million in interest income on these portfolios, (ii) a decrease of approximately$1.0 million in interest income attributed to the decline in discount accretion related to commercial and construction loans acquired in the BSPR acquisition; and (iii) the prepayment of higher yielding loans, which are being replaced by loans at lower current interest rates. These variances were partially offset by a$2.5 million increase in the acceleration of fee income recognition related to forgiveness remittances for SBA PPP loans.
-
A
$0.2 million decrease in interest income on consumer loans and finance leases, primarily due to the adverse effect of two fewer days in the first quarter, which resulted in a decrease of approximately$1.2 million in interest income on consumer loans. This variance was partially offset by an increase of approximately$44.9 million in the average balance of this portfolio, which resulted in an increase in interest income of approximately$1.0 million , largely related to auto loans and finance leases.
Partially offset by:
-
A
$2.6 million decrease in interest expense, including a reduction of approximately$2.8 million related to lower average rates paid on interest-bearing checking, savings, and non-brokered time deposits, a$0.4 million decrease related to a$64.6 million decrease in the average balance of brokered CDs, and a$0.4 million decrease in total interest expense associated with two fewer days in the first quarter. These variances were partially offset by a$0.9 million increase in interest expense related to the upward repricing of$200 million repurchase agreements (flipper repos) for which its interest rate changed early in the first quarter from variable rates tied to 3-month LIBOR to a fixed rate of3.90% .
Interest income on investment securities remained relatively flat, as the adverse effects of a higher premium amortization expense related to the higher amount of prepayments of U.S. agencies MBS and lower reinvestment yields were almost entirely offset by an increase of
Net interest margin was
The first quarter results continue to reflect the effect of SBA PPP loans. During the first quarter of 2021, the Corporation originated
NON-INTEREST INCOME
The following table sets forth information concerning non-interest income for the last five quarters:
| Quarter Ended | |||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||
| (In thousands) | 2021 |
2020 |
2020 |
2020 |
2020 |
||||||||||||
| Service charges on deposit accounts | $ |
8,304 |
$ |
8,332 |
|
$ |
5,848 |
$ |
4,475 |
|
$ |
5,957 |
|||||
| Mortgage banking activities |
|
7,273 |
|
7,551 |
|
|
7,099 |
|
3,686 |
|
|
3,788 |
|||||
| Net (loss) gain on investments and impairments |
|
- |
|
(182 |
) |
|
5,288 |
|
(155 |
) |
|
8,247 |
|||||
| Gain on early extinguishment of debt |
|
- |
|
- |
|
|
94 |
|
- |
|
|
- |
|||||
| Other operating income |
|
15,379 |
|
14,499 |
|
|
11,605 |
|
12,886 |
|
|
12,208 |
|||||
| Non-interest income | $ |
30,956 |
$ |
30,200 |
|
$ |
29,934 |
$ |
20,892 |
|
$ |
30,200 |
|||||
Non-interest income amounted to
-
A
$3.3 million increase in insurance income, included as part of Other operating income in the table above, reflecting the effect of seasonal contingent commissions of$3.3 million recorded in the first quarter of 2021 based on the prior year’s production of insurance policies.
Partially offset by:
-
The effect in the fourth quarter of 2020 of fee income of
$1.4 million recorded in connection with the sale of a95% participation in the$184.4 million of Main Street loans originated during the fourth quarter, included as part of Other operating income in the table above. The Corporation participates in the Main Street Lending Program to support lending to small and medium-sized businesses that were in sound financial condition before the onset of the COVID-19 pandemic. Under this program, the Corporation originated loans to borrowers meeting the terms and requirements of the program, including requirements as to eligibility, use of proceeds and priority, and sold a95% participation interest in these loans to a special-purpose vehicle (the “SPV”) organized by the FED to purchase the participation interests from eligible lenders, including the Corporation. During the fourth quarter of 2020, the Corporation originated 23 loans totaling$184.4 million in principal amount under this program and sold participation interests totaling$175.1 million to the SPV, resulting in the aforementioned fee income recognition of$1.4 million related to the portion of the loans sold.
-
A
$0.6 million decrease in transactional fee income from merchant and safekeeping related-activity, primarily due to seasonally lower transaction volumes, included as part of Other operating income in the table above.
-
A
$0.3 million decrease in revenues from mortgage banking activities, driven by a$1.7 million decrease in realized gains on sales of residential mortgage loans in the secondary market, partially offset by a$1.0 million increase related to the net change in mark-to-market gains and losses from both interest rate lock commitments and To-Be-Announced (“TBA”) MBS forward contracts, and a$0.3 million decrease in the amortization of mortgage servicing rights. Total loans sold in the secondary market to U.S. government-sponsored agencies during the first quarter of 2021 amounted to$151.5 million , with a related net gain of$5.7 million (including realized gains of$0.3 million on TBA hedges), compared to total loans sold during the fourth quarter of 2020 of$157.1 million , with a related net gain of$7.4 million (net of realized losses of$0.1 million on TBA hedges).
-
The effect in the fourth quarter of 2020 of a
$0.2 million gain realized on the utilization of previously purchased income tax credits, included as part of “Other operating income” in the table above.
NON-INTEREST EXPENSES
The following table sets forth information concerning non-interest expenses for the last five quarters:
| Quarter Ended | |||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||
| (In thousands) | 2021 |
2020 |
2020 |
2020 |
2020 |
||||||||||
| Employees' compensation and benefits | $ |
50,842 |
$ |
51,618 |
$ |
43,063 |
$ |
39,532 |
$ |
42,859 |
|||||
| Occupancy and equipment |
|
24,242 |
|
24,066 |
|
19,064 |
|
16,376 |
|
15,127 |
|||||
| Deposit insurance premium |
|
1,988 |
|
1,900 |
|
1,630 |
|
1,436 |
|
1,522 |
|||||
| Other insurance and supervisory fees |
|
2,362 |
|
2,720 |
|
1,389 |
|
1,129 |
|
1,087 |
|||||
| Taxes, other than income taxes |
|
6,199 |
|
5,795 |
|
4,510 |
|
3,577 |
|
3,880 |
|||||
| Professional fees: | |||||||||||||||
| Collections, appraisals and other credit-related fees |
|
1,310 |
|
1,218 |
|
1,262 |
|
1,387 |
|
1,696 |
|||||
| Outsourcing technology services |
|
12,373 |
|
12,524 |
|
6,949 |
|
7,672 |
|
6,829 |
|||||
| Other professional fees |
|
4,018 |
|
3,567 |
|
3,352 |
|
2,909 |
|
3,268 |
|||||
| Credit and debit card processing expenses |
|
4,278 |
|
6,397 |
|
4,859 |
|
3,938 |
|
3,950 |
|||||
| Business promotion |
|
2,970 |
|
3,163 |
|
3,046 |
|
2,314 |
|
3,622 |
|||||
| Communications |
|
2,462 |
|
2,462 |
|
2,246 |
|
1,852 |
|
1,877 |
|||||
| Net loss on OREO operations |
|
1,898 |
|
580 |
|
1,019 |
|
811 |
|
1,188 |
|||||
| Merger and restructuring costs |
|
11,267 |
|
12,321 |
|
10,441 |
|
2,902 |
|
845 |
|||||
| Other |
|
7,092 |
|
6,431 |
|
4,678 |
|
3,951 |
|
4,434 |
|||||
| Total | $ |
133,301 |
$ |
134,762 |
$ |
107,508 |
$ |
89,786 |
$ |
92,184 |
|||||
Non-interest expenses amounted to
-
Merger and restructuring costs associated with the acquisition of BSPR of
$11.3 million for the first quarter of 2021, compared to$12.3 million for the fourth quarter of 2020.
-
COVID-19 pandemic-related expenses of
$1.2 million for the first quarter of 2021, compared to$1.1 million for the fourth quarter of 2020. COVID-19 pandemic-related expenses for the first quarter of 2021, primarily consist of$1.0 million of expenses associated with cleaning and security protocols, included as part of Occupancy and equipment in the table above, relatively flat compared to the fourth quarter of 2020.
On a non-GAAP basis, adjusted non-interest expenses, excluding the effect of the Special Items mentioned above, amounted to
-
A
$2.1 million decrease in credit and debit card processing expenses, primarily related to credit card networks incentive payments of$1.6 million recorded as a contra expense in the first quarter of 2021, and seasonally lower transaction volumes.
-
A
$0.8 million decrease in employees’ compensation and benefits expenses, due to several factors, including: (i) a$1.4 million increase in deferred loan origination costs in connection with the origination of SBA PPP loans; (ii) a$1.1 million decrease related to the effect of two fewer business days in the first quarter; (iii) a$0.8 million decrease related to expense savings from the voluntary and involuntary separation programs implemented by the Corporation; and (iv) a$0.7 million decrease in expenses related to uniforms, staff education and other staff-related expenses. These reductions were partially offset by an increase of$3.4 million related to higher seasonal payroll taxes and bonus expenses.
Partially offset by:
-
A
$1.3 million increase in the net loss on OREO operations, primarily due to a$1.9 million increase in write-downs to the value of OREO properties, largely related to a commercial property in the Puerto Rico region, and a$0.3 million decrease in income recognized from rental payments associated with OREO income-producing properties. These variances were partially offset by a$0.6 million increase in net realized gains on sales of OREO properties and a$0.3 million decrease in OREO-related operating expenses, primarily taxes, repairs, and maintenance expenses.
-
A
$0.7 million increase in other non-interest expenses in the table above, as compared to the fourth quarter of 2020, primarily related to a lower net periodic pension plan credit recorded in the first quarter. Net periodic pension plan and other postretirement benefit plan costs (credits), other than service costs, are recorded as part of Other non-interest expenses in the consolidated statement of income.
-
A
$0.4 million increase in total professional service fees, primarily due to increased costs incurred in connection with the platform used for SBA PPP loan originations and forgiveness funding, as well as increased audit fees, partially offset by a decrease in costs related to information technology and security matters as compared to the fourth quarter of 2020.
The adjusted non-interest expenses financial metric presented above is a non-GAAP financial measure. See Basis of Presentation for additional information and the reconciliation of total non-interest expenses and certain non-interest expense components to adjusted total non-interest expenses and certain adjusted non-interest expense components.
INCOME TAXES
The Corporation recorded an income tax expense of
The Corporation’s estimated effective tax rate, excluding entities with pre-tax losses from which a tax benefit cannot be recognized and discrete items, increased to
CREDIT QUALITY
Non-Performing Assets
The following table sets forth information concerning non-performing assets for the last five quarters:
| (Dollars in thousands) | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
2021 |
2020 |
2020 |
2020 |
2020 |
|||||||||||||||||
| Nonaccrual loans held for investment: | |||||||||||||||||||||
| Residential mortgage | $ |
132,339 |
|
$ |
125,367 |
|
$ |
122,797 |
|
$ |
122,249 |
|
$ |
122,903 |
|
||||||
| Commercial mortgage |
|
28,548 |
|
|
29,611 |
|
|
29,651 |
|
|
34,109 |
|
|
35,953 |
|
||||||
| Commercial and Industrial |
|
19,128 |
|
|
20,881 |
|
|
20,882 |
|
|
19,995 |
|
|
19,734 |
|
||||||
| Construction |
|
6,378 |
|
|
12,971 |
|
|
13,090 |
|
|
9,574 |
|
|
9,663 |
|
||||||
| Consumer and Finance leases |
|
14,708 |
|
|
16,259 |
|
|
14,870 |
|
|
18,047 |
|
|
24,042 |
|
||||||
| Total nonaccrual loans held for investment |
|
201,101 |
|
|
205,089 |
|
|
201,290 |
|
|
203,974 |
|
|
212,295 |
|
||||||
| OREO |
|
79,207 |
|
|
83,060 |
|
|
89,049 |
|
|
96,319 |
|
|
99,674 |
|
||||||
| Other repossessed property |
|
4,544 |
|
|
5,357 |
|
|
3,006 |
|
|
3,554 |
|
|
5,832 |
|
||||||
| Total non-performing assets (1) | $ |
284,852 |
|
$ |
293,506 |
|
$ |
293,345 |
|
$ |
303,847 |
|
$ |
317,801 |
|
||||||
| Past-due loans 90 days and still accruing (2) | $ |
160,884 |
|
$ |
146,889 |
|
$ |
160,066 |
|
$ |
164,519 |
|
$ |
132,058 |
|
||||||
| Nonaccrual loans held for investment to total loans held for investment |
|
1.73 |
% |
|
1.74 |
% |
|
1.70 |
% |
|
2.18 |
% |
|
2.35 |
% |
||||||
| Nonaccrual loans to total loans |
|
1.72 |
% |
|
1.73 |
% |
|
1.69 |
% |
|
2.17 |
% |
|
2.35 |
% |
||||||
| Non-performing assets to total assets |
|
1.47 |
% |
|
1.56 |
% |
|
1.57 |
% |
|
2.16 |
% |
|
2.44 |
% |
||||||
(1) |
Excludes purchased-credit deteriorated ("PCD") loans previously accounted for under Accounting Standards Codification ("ASC") 310-30 for which the Corporation made the accounting policy election of maintaining pools of loans accounted for under ASC 310-30 as "units of account" both at the time of adoption of the current expected credit loss ("CECL") accounting standard and on an ongoing basis for credit loss measurement. These loans accrete interest income based on the effective interest rate of the loan pools determined at the time of adoption of the CECL accounting standard and 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 amortized cost of such loans as of March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020, and March 31, 2020 amounted to |
||||||||||||||||||||
(2) |
These include rebooked loans, which were previously pooled into Government National Mortgage Association ("GNMA") securities, amounting to |
||||||||||||||||||||
Variances in credit quality metrics:
-
Total non-performing assets decreased by
$8.6 million to$284.9 million as of March 31, 2021, compared to$293.5 million as of December 31, 2020. Total nonaccrual loans decreased by$4.0 million to$201.1 million as of March 31, 2021, compared to$205.1 million as of December 31, 2020.
The decrease in non-performing assets consisted of:
- A
- A
- A
- A
Partially offset by:
- A
-
Inflows to nonaccrual loans held for investment were
$32.0 million , a$0.9 million decrease compared to inflows of$32.9 million in the fourth quarter of 2020. Inflows to nonaccrual residential mortgage loans were$17.3 million in the first quarter of 2021, an increase of$4.5 million compared to inflows of$12.8 million in the fourth quarter of 2020. Inflows to nonaccrual consumer loans were$10.8 million , a decrease of$0.7 million compared to inflows of$11.5 million in the fourth quarter of 2020. Inflows to nonaccrual commercial and construction loans were$3.9 million in the first quarter of 2021, a decrease of$4.8 million compared to inflows of$8.7 million in the fourth quarter of 2020. See Early Delinquency, CARES Act Modifications, and SBA PPP Loans below for additional information.
-
Adversely classified commercial and construction loans increased by
$49.5 million to$204.7 million as of March 31, 2021.
-
Total Troubled Debt Restructured (“TDR”) loans held for investment were
$460.2 million as of March 31, 2021, down$19.0 million from December 31, 2020. Approximately$373.8 million of total TDR loans held for investment were in accrual status as of March 31, 2021. These figures exclude$59.8 million of TDR residential mortgage loans guaranteed by the U.S. federal government (i.e., Federal Housing Administration and Veterans Administration loans).
Early Delinquency, CARES Act Modifications, and SBA PPP Loans
Total loans in early delinquency (i.e., 30-89 days past due loans, as defined in regulatory reporting instructions) amounted to
- Residential mortgage loans in early delinquency decreased by
- Commercial and construction loans in early delinquency increased in the first quarter by
As of March 31, 2021, commercial loans totaling
As of March 31, 2021, SBA PPP loans, net of unearned fees of
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 first quarter of 2021 and fourth quarter of 2020:
| Quarter Ended March 31, 2021 | ||||||||||||||||||||||
| Loans and | Unfunded Loan | Held-to-Maturity | Availabe-for-Sale | |||||||||||||||||||
| Allowance for Credit Losses | Finance Leases | Commitments | Debt Securities | Debt Securities | Total | |||||||||||||||||
| (In thousands) | ||||||||||||||||||||||
| Allowance for credit losses, beginning balance | $ |
385,887 |
|
$ |
5,105 |
|
$ |
8,845 |
|
$ |
1,310 |
|
|
401,147 |
|
|||||||
| Provision for credit losses (benefit) expense |
|
(14,443 |
) |
|
(706 |
) |
|
24 |
|
|
(127 |
) |
|
(15,252 |
) |
|||||||
| Net charge-offs |
|
(12,508 |
) |
|
- |
|
|
- |
|
|
- |
|
|
(12,508 |
) |
|||||||
| Allowance for credit losses, end of period | $ |
358,936 |
|
$ |
4,399 |
|
(1 |
) |
$ |
8,869 |
|
$ |
1,183 |
|
$ |
373,387 |
|
|||||
| (1) Included in accounts payable and other liabilities. | ||||||||||||||||||||||
| Quarter Ended December 31, 2020 | ||||||||||||||||||||||
| Loans and | Unfunded Loan | Held-to-Maturity | Availabe-for-Sale | |||||||||||||||||||
| Allowance for Credit Losses | Finance Leases | Commitments | Debt Securities | Debt Securities | Total | |||||||||||||||||
| (In thousands) | ||||||||||||||||||||||
| Allowance for credit losses, beginning balance | $ |
384,718 |
|
$ |
6,281 |
|
$ |
10,176 |
|
$ |
1,386 |
|
$ |
402,561 |
|
|||||||
| Provision for credit losses expense (benefit) |
|
10,186 |
|
|
(1,176 |
) |
|
(1,331 |
) |
|
10 |
|
|
7,689 |
|
|||||||
| Net charge-offs |
|
(9,017 |
) |
|
- |
|
|
- |
|
|
(86 |
) |
|
(9,103 |
) |
|||||||
| Allowance for credit losses, end of period | $ |
385,887 |
|
$ |
5,105 |
|
(1 |
) |
$ |
8,845 |
|
$ |
1,310 |
|
$ |
401,147 |
|
|||||
| (1) Included in accounts payable and other liabilities. | ||||||||||||||||||||||
The main variances of the total ACL by main categories are discussed below:
Allowance for Credit Losses for Loans and Finance Leases
The following table sets forth information concerning the ACL for loans and finance leases during the periods indicated:
| Quarter Ended | |||||||||||||||||||
| (Dollars in thousands) | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||
2021 |
2020 |
2020 |
2020 |
2020 |
|||||||||||||||
| Allowance for credit losses, beginning balance | $ |
385,887 |
|
$ |
384,718 |
|
$ |
319,297 |
|
$ |
292,774 |
|
$ |
155,139 |
|
||||
| Impact of adopting ASC 326 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
81,165 |
|
||||
| Allowance for credit losses on loans and finance leases, beginning balance after CECL adoption |
|
385,887 |
|
|
384,718 |
|
|
319,297 |
|
|
292,774 |
|
|
236,304 |
|
||||
| Provision for credit losses (benefit) expense |
|
(14,443 |
) |
|
10,186 |
|
|
48,078 |
|
|
36,408 |
|
|
74,045 |
|
||||
| Initial allowance on PCD loans |
|
- |
|
|
- |
|
|
28,744 |
|
|
- |
|
|
- |
|
||||
| Net (charge-offs) recoveries of loans: | |||||||||||||||||||
| Residential mortgage |
|
(2,092 |
) |
|
(1,642 |
) |
|
(2,283 |
) |
|
(1,794 |
) |
|
(3,779 |
) |
||||
| Commercial mortgage |
|
(740 |
) |
|
1,769 |
|
|
(3,104 |
) |
|
25 |
|
|
(84 |
) |
||||
| Commercial and Industrial |
|
(545 |
) |
|
(367 |
) |
|
(70 |
) |
|
5 |
|
|
(10 |
) |
||||
| Construction |
|
(9 |
) |
|
102 |
|
|
36 |
|
|
(54 |
) |
|
24 |
|
||||
| Consumer and finance leases |
|
(9,122 |
) |
|
(8,879 |
) |
|
(5,980 |
) |
|
(8,067 |
) |
|
(13,726 |
) |
||||
| Net charge-offs |
|
(12,508 |
) |
|
(9,017 |
) |
|
(11,401 |
) |
|
(9,885 |
) |
|
(17,575 |
) |
||||
| Allowance for credit losses on loans and finance leases, end of period | $ |
358,936 |
|
$ |
385,887 |
|
$ |
384,718 |
|
$ |
319,297 |
|
$ |
292,774 |
|
||||
| Allowance for credit losses on loans and finance leases to period end total loans held for investment |
|
3.08 |
% |
|
3.28 |
% |
|
3.25 |
% |
|
3.41 |
% |
|
3.24 |
% |
||||
| Net charge-offs (annualized) to average loans outstanding during the period |
|
0.43 |
% |
|
0.30 |
% |
|
0.45 |
% |
|
0.43 |
% |
|
0.78 |
% |
||||
| Provision for credit losses on loans and finance leases to net charge-offs during the period | -1.15x |
1.13x |
4.22x |
3.68x |
4.21x |
||||||||||||||
-
As of March 31, 2021, the ACL for loans and finance leases was
$358.9 million , down$27.0 million from December 31, 2020. The ACL net reserve release for commercial and construction loans was$15.9 million in the first quarter of 2021, primarily reflecting an improvement in the outlook of macroeconomic variables to which the reserve is correlated, including improvements in unemployment rate forecasts, and the overall decline in the size of these portfolios. In addition, there were ACL net reserve releases of$6.3 million and$4.8 million for residential mortgage and consumer loans, respectively. The net reserve release for residential mortgage loans was also driven by improved macroeconomic variables, such as unemployment rate forecasts, and the overall portfolio decrease. The net reserve release for consumer loans consisted of net charge-offs of$9.1 million , primarily taken on personal loans and credit card loans, partially offset by charges to the provision of$4.3 million recorded in the first quarter, as further explained below.
-
The provision for credit losses on loans and finance leases was a net benefit of
$14.4 million for the first quarter of 2021, compared to an expense of$10.2 million in the fourth quarter of 2020. The variance primarily reflects the effect of the aforementioned reserve releases in the first quarter of 2021. The following table shows the breakdown of the provision for credit losses (benefit) expense by portfolio for the first quarter of 2021 and fourth quarter of 2020:
| Quarter Ended March 31, 2021 | ||||||||||||||||
| (In thousands) | Residential Mortgage Loans |
Commercial Loans (including Commercial Mortgage, C&I, and Construction) |
Consumer Loans and Finance Leases |
Total | ||||||||||||
| Provision for credit losses on loans and finance leases (benefit) expense | $ |
(4,175 |
) |
$ |
(14,588 |
) |
$ |
4,320 |
|
$ |
(14,443 |
) |
||||
| Quarter Ended December 31, 2020 | ||||||||||||||||
| (In thousands) | Residential Mortgage Loans |
Commercial Loans (including Commercial Mortgage, C&I, and Construction) |
Consumer Loans and Finance Leases |
Total | ||||||||||||
| Provision for credit losses on loans and finance leases (benefit) expense | $ |
(9,828 |
) |
$ |
22,286 |
|
$ |
(2,272 |
) |
$ |
10,186 |
|
||||
- Provision for credit losses for the commercial and construction loan portfolio was a net benefit of
- Provision for credit losses for the residential mortgage loan portfolio was a net benefit of
- Provision for credit losses for the consumer loans and finance leases portfolio expense was
-
The ratio of the ACL for loans and finance leases to total loans held for investment was
3.08% as of March 31, 2021, compared to3.28% as of December 31, 2020. No ACL was allocated to SBA PPP loans since they are fully guaranteed. On a non-GAAP basis, excluding SBA PPP loans, the ratio of the ACL for loans and finance leases to adjusted total loans held for investment was3.20% as of March 31, 2021 compared to3.39% as of December 31, 2020. The ratio of the total allowance for credit losses for loans and finance leases to nonaccrual loans held for investment was178.49% as of March 31, 2021, compared to188.16% as of December 31, 2020.
The following table sets forth information concerning the composition of the Corporation’s ACL for loans and finance leases as of March 31, 2021 and December 31, 2020 by loan category:
| (Dollars in thousands) | Residential Mortgage Loans |
Commercial Loans (including Commercial Mortgage, C&I, and Construction) |
Consumer and Finance Leases |
Total | |||||||||||
| As of March 31, 2021 | |||||||||||||||
| Total loans held for investment: | |||||||||||||||
| Amortized cost | $ |
3,395,081 |
|
$ |
5,590,589 |
|
$ |
2,656,189 |
|
$ |
11,641,859 |
|
|||
| Allowance for credit losses on loans |
|
114,044 |
|
|
136,784 |
|
|
108,108 |
|
|
358,936 |
|
|||
| Allowance for credit losses on loans to amortized cost |
|
3.36 |
% |
|
2.45 |
% |
|
4.07 |
% |
|
3.08 |
% |
|||
| As of December 31, 2020 | |||||||||||||||
| Total loans held for investment: | |||||||||||||||
| Amortized cost | $ |
3,521,954 |
|
$ |
5,645,692 |
|
$ |
2,609,643 |
|
$ |
11,777,289 |
|
|||
| Allowance for credit losses on loans |
|
120,311 |
|
|
152,666 |
|
|
112,910 |
|
|
385,887 |
|
|||
| Allowance for credit losses on loans to amortized cost |
|
3.42 |
% |
|
2.70 |
% |
|
4.33 |
% |
|
3.28 |
% |
|||
Net Charge-Offs
The following table presents ratios of annualized net charge-offs to average loans held-in-portfolio:
| Quarter Ended | |||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||
2021 |
2020 |
2020 |
2020 |
2020 |
|||||||
| Residential mortgage |
|
|
|
|
|
||||||
| Commercial mortgage |
|
- |
|
- |
|
||||||
| Commercial and Industrial |
|
|
|
|
|
||||||
| Construction |
|
- |
- |
|
- |
||||||
| Consumer and finance leases |
|
|
|
|
|
||||||
| Total loans |
|
|
|
|
|
||||||
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
-
A
$2.8 million increase in commercial and construction loan net charge-offs, as the Corporation recorded net charge-offs of$1.3 million in the first quarter of 2021 compared to net recoveries of$1.5 million in the fourth quarter of 2020. Approximately$0.7 million of the net charge-offs recorded in the first quarter was related to the$28.2 million in criticized commercial loan participations transferred to held for sale. The commercial and construction loan loss net recoveries in the fourth quarter of 2020 included recoveries totaling$3.9 million in connection with the repayment and cancellation of two nonaccrual commercial loans.
-
A
$0.5 million increase in residential mortgage loan net charge-offs, primarily related to a higher amount of charge-offs taken on collateral dependent loans with high delinquency levels and foreclosures.
-
A
$0.2 million increase in consumer loan net charge-offs, primarily reflecting increases in charge-offs taken on small personal loans and credit card loans.
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 March 31, 2021, the ACL for off-balance sheet credit exposures was
Allowance for Credit Losses for Held-to-Maturity Debt Securities
As of March 31, 2021, the held-to-maturity debt securities portfolio consisted of Puerto Rico municipal bonds. As of March 31, 2021, the ACL for held-to-maturity debt securities was
Allowance for Credit Losses for Available-for-Sale Debt Securities
As of March 31, 2021, the ACL for available-for-sale debt securities was
STATEMENT OF FINANCIAL CONDITION
Total assets were approximately
The following variances within the main components of total assets are noted:
-
A
$763.9 million increase in investment securities, mainly driven by purchases of U.S. agencies MBS and U.S. agencies callable and bullet debentures totaling$1.4 billion during the first quarter, partially offset by approximately$202.1 million of U.S. agencies bonds that were called prior to maturity during the first quarter, prepayments of$314.1 million of U.S. agencies MBS, and a$98.9 million decrease in the fair value of available-for-sale investment securities attributable to changes in market interest rates. The purchases of investment securities reflect, to some extent, the deployment of liquidity obtained from the growth in deposits.
-
A
$24.3 million increase in cash and cash equivalents attributable to the liquidity obtained from the growth in deposits and loan repayments, partially offset by the deployment of some cash balances into U.S. agencies MBS and debt securities, as well as the repayment of brokered CDs upon maturity.
-
A
$129.7 million decrease in total loans. The decrease consisted of reductions of$125.6 million in the Puerto Rico region and$15.5 million in the Virgin Islands region, partially offset by an$11.4 million increase in the Florida region. On a portfolio basis, the decrease consisted of reductions of$134.5 million in residential mortgage loans, and$41.7 million in commercial and construction loans (net of a$24.5 million increase in the SBA PPP loan portfolio), partially offset by an increase of$46.5 million in consumer loans. As further discussed below, the decrease in commercial and construction loans reflects, among other things, the effect of the aforementioned sale of a$14.3 million criticized commercial loan participation in the Florida region, the aforementioned repayment of a$6.0 million nonaccrual construction relationship, as well as large repayments for certain term loans and revolving lines of credit in the Puerto Rico region, partially offset by new loan originations, primarily in the Florida region.
The decrease in the Puerto Rico region consisted of reductions of
The decrease in total loans in the Virgin Islands region consisted of reductions of
The increase in total loans in the Florida region consisted of an increase of
Total loan originations, including refinancings, renewals and draws from existing commitments (excluding credit card utilization activity), amounted to
Total loan originations in the Puerto Rico region amounted to
Total loan originations in the Florida region amounted to
Total loan originations in the Virgin Islands region amounted to
Total liabilities were approximately
The increase in total liabilities was mainly due to:
-
A
$472.3 million increase in total deposits, excluding brokered deposits and government deposits, consisting of increases of$415.2 million in the Puerto Rico region,$47.5 million in the Virgin Islands region, and$9.6 million in the Florida region. On a deposit type basis, there were increases of$505.8 million in demand deposits, reflecting increases across all regions, and$107.7 million in savings deposits, primarily in the Puerto Rico region, partially offset by a$141.2 million decrease in retail CDs, reflecting decreases across all regions.
-
A
$252.0 million increase in government deposits, consisting of increases of$251.8 million in the Puerto Rico region and$0.6 million in the Florida region, partially offset by a reduction of$0.4 million in the Virgin Islands region. The increase in the Puerto Rico region was primarily related to increases in transactional account balances of government public corporations that reflect, among other things, the funds received by government entities from federal disaster recovery funding allocated to Puerto Rico.
Partially offset by:
-
A
$31.3 million decrease in brokered deposits, reflecting maturities of approximately$54.1 million of brokered CDs, with an all-in cost of2.32% , that were paid off during the first quarter, partially offset by a$22.8 million increase in the balance of non-maturity brokered money market deposit accounts maintained by a deposit broker.
Total stockholders’ equity amounted to
As of March 31, 2021, capital ratios exceeded the required regulatory levels for bank holding companies and well-capitalized banks. The Corporation’s preliminary estimated common equity tier 1 capital, tier 1 capital, total capital and leverage ratios under the Basel III rules were
Meanwhile, the preliminary estimated common equity tier 1 capital, tier 1 capital, total capital and leverage ratios of our banking subsidiary, FirstBank Puerto Rico, were
Tangible Common Equity
The Corporation’s tangible common equity ratio decreased to
The following table presents 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, | |||||||||||||||
2021 |
2020 |
2020 |
2020 |
2020 |
|||||||||||||||
| Tangible Equity: | |||||||||||||||||||
| Total equity - GAAP | $ |
2,220,425 |
|
$ |
2,275,179 |
|
$ |
2,225,282 |
|
$ |
2,214,834 |
|
$ |
2,199,751 |
|
||||
| Preferred equity |
|
(36,104 |
) |
|
(36,104 |
) |
|
(36,104 |
) |
|
(36,104 |
) |
|
(36,104 |
) |
||||
| Goodwill |
|
(38,611 |
) |
|
(38,632 |
) |
|
(34,401 |
) |
|
(28,098 |
) |
|
(28,098 |
) |
||||
| Purchased credit card relationship intangible |
|
(3,768 |
) |
|
(4,733 |
) |
|
(5,789 |
) |
|
(2,668 |
) |
|
(3,141 |
) |
||||
| Core deposit intangible |
|
(34,339 |
) |
|
(35,842 |
) |
|
(37,749 |
) |
|
(3,086 |
) |
|
(3,287 |
) |
||||
| Insurance customer relationship intangible |
|
(280 |
) |
|
(318 |
) |
|
(355 |
) |
|
(394 |
) |
|
(432 |
) |
||||
| Tangible common equity | $ |
2,107,323 |
|
$ |
2,159,550 |
|
$ |
2,110,884 |
|
$ |
2,144,484 |
|
$ |
2,128,689 |
|
||||
| Tangible Assets: | |||||||||||||||||||
| Total assets - GAAP | $ |
19,413,734 |
|
$ |
18,793,071 |
|
$ |
18,659,768 |
|
$ |
14,096,406 |
|
$ |
13,047,977 |
|
||||
| Goodwill |
|
(38,611 |
) |
|
(38,632 |
) |
|
(34,401 |
) |
|
(28,098 |
) |
|
(28,098 |
) |
||||
| Purchased credit card relationship intangible |
|
(3,768 |
) |
|
(4,733 |
) |
|
(5,789 |
) |
|
(2,668 |
) |
|
(3,141 |
) |
||||
| Core deposit intangible |
|
(34,339 |
) |
|
(35,842 |
) |
|
(37,749 |
) |
|
(3,086 |
) |
|
(3,287 |
) |
||||
| Insurance customer relationship intangible |
|
(280 |
) |
|
(318 |
) |
|
(355 |
) |
|
(394 |
) |
|
(432 |
) |
||||
| Tangible assets | $ |
19,336,736 |
|
$ |
18,713,546 |
|
$ |
18,581,474 |
|
$ |
14,062,160 |
|
$ |
13,013,019 |
|
||||
| Common shares outstanding |
|
218,629 |
|
|
218,235 |
|
|
218,229 |
|
|
218,158 |
|
|
218,161 |
|
||||
| Tangible common equity ratio |
|
10.90 |
% |
|
11.54 |
% |
|
11.36 |
% |
|
15.25 |
% |
|
16.36 |
% |
||||
| Tangible book value per common share | $ |
9.64 |
|
$ |
9.90 |
|
$ |
9.67 |
|
$ |
9.83 |
|
$ |
9.76 |
|
||||
Exposure to Puerto Rico Government
As of March 31, 2021, the Corporation had
The aforementioned exposure to municipalities in Puerto Rico included
As of March 31, 2021, the Corporation had
Conference Call / Webcast Information
First BanCorp’s senior management will host an earnings conference call and live webcast on Monday, April 26, 2021, 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.1firstbank.com or through a dial-in telephone number at (877) 506-6537 or (412) 380–2001 for international callers. 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, www.1firstbank.com, until April 26, 2022. A telephone replay will be available one hour after the end of the conference call through May 26, 2021 at (877) 344-7529 or (412) 317-0088 for international callers. The replay access code is 10154496.
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,” “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 made, and advises readers that these 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 following, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements: uncertainties relating to the impact of the COVID-19 pandemic, including recent increases in, and any additional waves of, COVID-19 cases, new variants of the virus, and the efficacy of a vaccine and treatments for the disease, on the Corporation’s business, operations, employees, credit quality, financial condition and net income, including because of uncertainties as to the extent and duration of the pandemic and the impact of the pandemic on consumer spending, borrowing and saving habits, the underemployment and unemployment rates, which can adversely affect repayment patterns, the Puerto Rico economy and the global economy, as well as the risk that the COVID-19 pandemic may exacerbate any other factor that could cause our actual results to differ materially from those expressed in or implied by any forward-looking statements; the success of our preventative actions to protect the Corporation’s information and that of its customers in response to the cyber incident that we experienced in 2020, including the integrity of our data and data security systems, increased mitigation costs or an adverse effect on our reputation; risks related to the effect on the Corporation and its customers of governmental, regulatory, or central bank responses to COVID-19 and the Corporation’s participation in any such responses or programs, such as the SBA PPP established by the CARES Act of 2020, including any judgments, claims, damages, penalties, fines or reputational damage resulting from claims or challenges against the Corporation by governments, regulators, customers or otherwise, relating to the Corporation’s participation in any such responses or programs; risks, uncertainties and other factors related to the Corporation’s recent acquisition of BSPR, including the risk that costs, expenses, and the use of resources associated with the acquisition may be higher than expected, the risks that the Corporation’s integration of procedures, personnel and systems, such as the Corporation’s internal control over financial reporting, of BSPR into FirstBank is not effective, thus risking the economic success resulting from the transaction and the risk that the Corporation may not realize, either fully or on a timely basis, the cost savings and any other synergies from the acquisition that the Corporation expected, such as because of deposit attrition, customer loss and/or revenue loss following the acquisition, including because of the impact of the COVID-19 pandemic on customers; uncertainty as to the ultimate outcomes of actions taken, or those that may be taken, by the Puerto Rico government, or the oversight board established by the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”) to address the Commonwealth of Puerto Rico’s financial problems, including a court-supervised debt restructuring process similar to U.S. bankruptcy protection undertaken pursuant to Title III of PROMESA, the designation by the PROMESA oversight board of Puerto Rico municipalities as instrumentalities covered under PROMESA, the effects of measures included in the Puerto Rico government fiscal plan, or any revisions to it, on our clients and loan portfolios, and any potential impact from future economic or political developments in Puerto Rico; changes in economic and business conditions, including those caused by the COVID-19 pandemic, or other global or regional health crises as well as past or future natural disasters, that directly or indirectly affect the financial health of the Corporation’s customer base in the geographic areas we serve and may result in increased costs or losses of property and equipment and other assets; the impact that a slowing economy and increased unemployment or underemployment may have on the performance of our loan and lease portfolio, the market price of our investment securities, the availability of sources of funding and the demand for our products; uncertainty as to the availability of certain funding sources, such as brokered CDs; the effect of deteriorating economic conditions in the real estate markets and the consumer and commercial sectors, which may be exacerbated by unemployment and underemployment and government restrictions imposed as a result of the COVID-19 pandemic, 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, higher than targeted levels of non-performing assets, charge-offs and provisions for credit losses, and may subject the Corporation to further risk from loan defaults and foreclosures; the impact of changes in accounting standards or assumptions in applying those standards, including the impact of the COVID-19 pandemic on forecasts of economic variables considered for the determination of the allowance for credit losses required by the CECL accounting standard; 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; adverse changes in general economic conditions in Puerto Rico, the U.S., and the U.S. 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, including as a result of the COVID-19 pandemic, which may further reduce interest margins, affect funding sources and demand for all of the Corporation’s products and services, and reduce the Corporation’s revenues and earnings and the value of the Corporation’s assets; uncertainty related to the effect of the discontinuation of the London Interbank Offered Rate beginning at the end of 2021; an adverse change in the Corporation’s ability to attract new clients and retain existing ones; the risk that additional portions of the unrealized losses in the Corporation’s investment portfolio are determined to be credit-related, resulting in additional charges to the provision for credit losses on the Corporation’s remaining
Basis of Presentation
Use of Non-GAAP Financial Measures
This press release contains non-GAAP financial measures. Non-GAAP financial measures are used when management believes they will 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 comparable GAAP financial measure, as well as the reconciliation of the non-GAAP financial measure to the comparable GAAP financial measure, can be found in the text or in the tables in or attached to this earnings 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, core deposit intangibles, and other intangibles, such as the purchased credit card relationship intangible and the insurance customer relationship intangible. Tangible assets are total assets less goodwill, core deposit intangibles, and other intangibles, such as the purchased credit card relationship intangible and the insurance customer 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. 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, such as the hurricanes that affected the Corporation’s service areas in 2017 and the earthquakes experienced in Puerto Rico in early 2020, or health epidemics, such as the COVID-19 pandemic in 2020 and 2021. 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, costs incurred in connection with the COVID-19 pandemic response efforts, and hurricane-related insurance recoveries, 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 the 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 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 first quarter of 2021 and the fourth and first quarters of 2020. The table also reconciles net interest spread and net interest margin to these items excluding valuations, and on a tax-equivalent basis.
| (Dollars in thousands) | Quarter Ended | |||||||||||
| March 31, 2021 | December 31, 2020 | March 31, 2020 | ||||||||||
| Net Interest Income | ||||||||||||
| Interest income - GAAP | $ |
194,642 |
|
$ |
198,700 |
|
$ |
165,264 |
|
|||
| Unrealized (gain) loss on | ||||||||||||
| derivative instruments |
|
(25 |
) |
|
(9 |
) |
|
- |
|
|||
| Interest income excluding valuations |
|
194,617 |
|
|
198,691 |
|
|
165,264 |
|
|||
| Tax-equivalent adjustment |
|
4,552 |
|
|
5,308 |
|
|
5,652 |
|
|||
| Interest income on a tax-equivalent basis and excluding valuations | $ |
199,169 |
|
$ |
203,999 |
|
$ |
170,916 |
|
|||
| Interest expense - GAAP |
|
18,377 |
|
|
20,933 |
|
|
26,615 |
|
|||
| Net interest income - GAAP | $ |
176,265 |
|
$ |
177,767 |
|
$ |
138,649 |
|
|||
| Net interest income excluding valuations | $ |
176,240 |
|
$ |
177,758 |
|
$ |
138,649 |
|
|||
| Net interest income on a tax-equivalent basis and excluding valuations | $ |
180,792 |
|
$ |
183,066 |
|
$ |
144,301 |
|
|||
| Average Balances | ||||||||||||
| Loans and leases | $ |
11,768,266 |
|
$ |
11,843,157 |
|
$ |
8,997,418 |
|
|||
| Total securities, other short-term investments and interest-bearing cash balances |
|
6,510,960 |
|
|
6,057,360 |
|
|
3,055,546 |
|
|||
| Average interest-earning assets | $ |
18,279,226 |
|
$ |
17,900,517 |
|
$ |
12,052,964 |
|
|||
| Average interest-bearing liabilities | $ |
11,815,179 |
|
$ |
11,704,166 |
|
$ |
8,009,199 |
|
|||
| Average Yield/Rate | ||||||||||||
| Average yield on interest-earning assets - GAAP |
|
4.32 |
% |
|
4.42 |
% |
|
5.51 |
% |
|||
| Average rate on interest-bearing liabilities - GAAP |
|
0.63 |
% |
|
0.71 |
% |
|
1.34 |
% |
|||
| Net interest spread - GAAP |
|
3.69 |
% |
|
3.71 |
% |
|
4.17 |
% |
|||
| Net interest margin - GAAP |
|
3.91 |
% |
|
3.95 |
% |
|
4.63 |
% |
|||
| Average yield on interest-earning assets excluding valuations |
|
4.32 |
% |
|
4.42 |
% |
|
5.51 |
% |
|||
| Average rate on interest-bearing liabilities excluding valuations |
|
0.63 |
% |
|
0.71 |
% |
|
1.34 |
% |
|||
| Net interest spread excluding valuations |
|
3.69 |
% |
|
3.71 |
% |
|
4.17 |
% |
|||
| Net interest margin excluding valuations |
|
3.91 |
% |
|
3.95 |
% |
|
4.63 |
% |
|||
| Average yield on interest-earning assets on a tax-equivalent basis and excluding valuations |
|
4.42 |
% |
|
4.53 |
% |
|
5.70 |
% |
|||
| Average rate on interest-bearing liabilities excluding valuations |
|
0.63 |
% |
|
0.71 |
% |
|
1.34 |
% |
|||
| Net interest spread on a tax-equivalent basis and excluding valuations |
|
3.79 |
% |
|
3.82 |
% |
|
4.36 |
% |
|||
| Net interest margin on a tax-equivalent basis and excluding valuations |
|
4.01 |
% |
|
4.07 |
% |
|
4.82 |
% |
|||
Financial measures adjusted to exclude the effect of Special 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.
To supplement the Corporation’s financial statements presented in accordance with GAAP, the Corporation uses, and believes that investors would benefit from disclosure of, non-GAAP financial measures that reflect adjustments to net income and non-interest expenses to exclude items that management identifies as Special Items because management believes they 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. This press release includes the following non-GAAP financial measures for the first quarter of 2021 and the fourth and first quarters of 2020 that reflect the described items that were excluded for one of those reasons:
- Adjusted net income – The adjusted net income amounts for the first quarter of 2021 and the fourth and first quarters of 2020 reflect the following exclusions:
- Merger and restructuring costs of
- COVID-19 pandemic-related expenses of
- Loss of
- Benefit of
- The tax-related effects of all of the pre-tax items mentioned in the above bullets as follows:
-
Tax benefit of
$4.2 million ,$4.6 million and$0.3 million in the first quarter of 2021, fourth quarter of 2020, and first quarter of 2020, respectively, related to merger and restructuring costs in connection with the acquisition of BSPR (calculated based on the statutory tax rate of37.5% ).
-
Tax benefit of
$0.5 million ,$0.4 million , and$0.1 million in the first quarter of 2021, fourth quarter of 2020, and first quarter of 2020, respectively, in connection with COVID-19 pandemic-related expenses (calculated based on the statutory tax rate of37.5% ).
-
Tax expense of
$0.4 million in the first quarter of 2020 related to the benefit of hurricane-related insurance recoveries (calculated based on the statutory tax rate of37.5% ).
- No tax benefit/expense was recorded for the loss/gain on sales of U.S. agencies MBS in the fourth and first quarters of 2020. Those sales were recorded at the tax-exempt international banking entity subsidiary level.
- Adjusted non-interest expenses – The following tables reconcile for the first quarter of 2021 and fourth quarter of 2020 the non-interest expenses to adjusted non-interest expenses, which is a non-GAAP financial measure that excludes the relevant Special Items identified above:
| (In thousands) | ||||||||||||
| First Quarter 2021 | Non-Interest Expenses (GAAP) |
Merger and Restructuring Costs |
COVID-19 Pandemic- Related Expenses |
Adjusted (Non-GAAP) | ||||||||
| Non-interest expenses | $ |
133,301 |
$ |
11,267 |
$ |
1,209 |
$ |
120,825 |
||||
| Employees' compensation and benefits |
|
50,842 |
|
- |
|
27 |
|
50,815 |
||||
| Occupancy and equipment |
|
24,242 |
|
- |
|
1,039 |
|
23,203 |
||||
| Business promotion |
|
2,970 |
|
- |
|
18 |
|
2,952 |
||||
| Professional service fees |
|
17,701 |
|
- |
|
- |
|
17,701 |
||||
| Taxes, other than income taxes |
|
6,199 |
|
- |
|
125 |
|
6,074 |
||||
| Insurance and supervisory fees |
|
4,350 |
|
- |
|
- |
|
4,350 |
||||
| Net loss on other real estate owned operations |
|
1,898 |
|
- |
|
- |
|
1,898 |
||||
| Merger and restrucuring costs |
|
11,267 |
|
11,267 |
|
- |
|
- |
||||
| Other non-interest expenses |
|
13,832 |
|
- |
|
- |
|
13,832 |
||||
| (In thousands) | ||||||||||||
| Fourth Quarter 2020 | Non-Interest Expenses (GAAP) |
Merger and Restructuring Costs |
COVID-19 Pandemic- Related Expenses |
Adjusted (Non-GAAP) | ||||||||
| Non-interest expenses | $ |
134,762 |
$ |
12,321 |
$ |
1,125 |
$ |
121,316 |
||||
| Employees' compensation and benefits |
|
51,618 |
|
- |
|
8 |
|
51,610 |
||||
| Occupancy and equipment |
|
24,066 |
|
- |
|
961 |
|
23,105 |
||||
| Business promotion |
|
3,163 |
|
- |
|
38 |
|
3,125 |
||||
| Professional service fees |
|
17,309 |
|
- |
|
1 |
|
17,308 |
||||
| Taxes, other than income taxes |
|
5,795 |
|
- |
|
113 |
|
5,682 |
||||
| Insurance and supervisory fees |
|
4,620 |
|
- |
|
- |
|
4,620 |
||||
| Net loss on other real estate owned operations |
|
580 |
|
- |
|
- |
|
580 |
||||
| Merger and restrucuring costs |
|
12,321 |
|
12,321 |
|
- |
|
- |
||||
| Other non-interest expenses |
|
15,290 |
|
- |
|
4 |
|
15,286 |
||||
- Allowance for credit losses on loans and finance leases to adjusted total loans held for investment ratio - The following table reconciles the ratio of the ACL on loans and finance leases to adjusted total loans held for investment, excluding SBA PPP loans, as of March 31, 2021 and December 31, 2020:
| Allowance for credit losses for loans and finance leases to Loans Held for Investment (GAAP to Non-GAAP reconciliation) |
||||||||
| As of March 31, 2021 | ||||||||
| (In thousands) | Allowance for Credit Losses for Loans and Finance Leases |
Loans Held for Investment | ||||||
| Allowance for credit losses for loans and finance leases and loans held for investment (GAAP) | $ |
358,936 |
|
$ |
11,641,859 |
|||
| Less: | ||||||||
| SBA PPP loans |
|
- |
|
|
430,493 |
|||
| Allowance for credit losses for loans and finance leases and adjusted loans held for investment, excluding SBA PPP loans (Non-GAAP) | $ |
358,936 |
|
$ |
11,211,366 |
|||
| Allowance for credit losses for loans and finance leases to loans held for investment (GAAP) |
|
3.08 |
% |
|||||
| Allowance for credit losses for loans and finance leases to adjusted loans held for investment, excluding SBA PPP loans (Non-GAAP) |
|
3.20 |
% |
|||||
| Allowance for credit losses for loans and finance leases to Loans Held for Investment (GAAP to Non-GAAP reconciliation) |
||||||||
| As of December 31, 2020 | ||||||||
| (In thousands) | Allowance for Credit Losses for Loans and Finance Leases |
Loans Held for Investment | ||||||
| Allowance for credit losses for loans and finance leases and loans held for investment (GAAP) | $ |
385,887 |
|
$ |
11,777,289 |
|||
| Less: | ||||||||
| SBA PPP loans |
|
- |
|
|
405,953 |
|||
| Allowance for credit losses for loans and finance leases and adjusted loans held for investment, excluding SBA PPP loans (Non-GAAP) | $ |
385,887 |
|
$ |
11,371,336 |
|||
| Allowance for credit losses for loans and finance leases to loans held for investment (GAAP) |
|
3.28 |
% |
|||||
| Allowance for credit losses for loans and finance leases to adjusted loans held for investment, excluding SBA PPP loans (Non-GAAP) |
|
3.39 |
% |
|||||
Management believes that the presentation of adjusted net income, adjusted non-interest expenses and adjustments to the various components of non-interest expenses, and the ratio of allowance for credit losses to adjusted total loans held for investment enhances the ability of analysts and investors to analyze trends in the Corporation’s business and understand the performance of the Corporation. In addition, the Corporation may utilize these non-GAAP financial measures as guides in its budgeting and long-term planning process.
| FIRST BANCORP | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | |||||||
| As of | |||||||
| March 31, | December 31, | ||||||
| (In thousands, except for share information) | 2021 |
2020 |
|||||
| ASSETS | |||||||
| Cash and due from banks | $ |
1,515,232 |
|
$ |
1,433,261 |
|
|
| Money market investments: | |||||||
| Time deposits with other financial institutions |
|
300 |
|
|
300 |
|
|
| Other short-term investments |
|
2,632 |
|
|
60,272 |
|
|
| Total money market investments |
|
2,932 |
|
|
60,572 |
|
|
| Investment securities available for sale, at fair value (allowance for credit losses of |
|||||||
|
5,406,790 |
|
|
4,647,019 |
|
||
| Investment securities held to maturity, at amortized cost, net of allowance for credit losses of |
|||||||
| and |
|
180,811 |
|
|
180,643 |
|
|
| Equity securities |
|
41,558 |
|
|
37,588 |
|
|
| Total investment securities |
|
5,629,159 |
|
|
4,865,250 |
|
|
| Loans, net of allowance for credit losses of |
|||||||
| (December 31, 2020 - |
|
11,282,923 |
|
|
11,391,402 |
|
|
| Loans held for sale, at lower of cost or market |
|
56,070 |
|
|
50,289 |
|
|
| Total loans, net |
|
11,338,993 |
|
|
11,441,691 |
|
|
| Premises and equipment, net |
|
154,684 |
|
|
158,209 |
|
|
| Other real estate owned |
|
79,207 |
|
|
83,060 |
|
|
| Accrued interest receivable on loans and investments |
|
61,511 |
|
|
69,505 |
|
|
| Deferred tax asset, net |
|
306,373 |
|
|
329,261 |
|
|
| Goodwill |
|
38,611 |
|
|
38,632 |
|
|
| Intangible assets |
|
38,387 |
|
|
40,893 |
|
|
| Other assets |
|
248,645 |
|
|
272,737 |
|
|
| Total assets | $ |
19,413,734 |
|
$ |
18,793,071 |
|
|
| LIABILITIES | |||||||
| Deposits: | |||||||
| Non-interest-bearing deposits | $ |
5,026,468 |
|
$ |
4,546,123 |
|
|
| Interest-bearing deposits |
|
10,983,968 |
|
|
10,771,260 |
|
|
| Total deposits |
|
16,010,436 |
|
|
15,317,383 |
|
|
| Securities sold under agreements to repurchase |
|
300,000 |
|
|
300,000 |
|
|
| Advances from the Federal Home Loan Bank (FHLB) |
|
440,000 |
|
|
440,000 |
|
|
| Other borrowings |
|
183,762 |
|
|
183,762 |
|
|
| Accounts payable and other liabilities |
|
259,111 |
|
|
276,747 |
|
|
| Total liabilities |
|
17,193,309 |
|
|
16,517,892 |
|
|
| STOCKHOLDERS' EQUITY | |||||||
| Preferred Stock, authorized 50,000,000 shares; issued 22,828,174 shares; | |||||||
| outstanding 1,444,146 shares; aggregate liquidation value of |
|
36,104 |
|
|
36,104 |
|
|
| Common stock, |
|||||||
| (December 31, 2020 - 223,034,348 shares issued) |
|
22,363 |
|
|
22,303 |
|
|
| Less: Treasury stock (at par value) |
|
(500 |
) |
|
(480 |
) |
|
| Common stock outstanding, 218,628,862 shares outstanding | |||||||
| (December 31, 2020 - 218,235,064 shares outstanding) |
|
21,863 |
|
|
21,823 |
|
|
| Additional paid-in capital |
|
945,476 |
|
|
946,476 |
|
|
| Retained earnings |
|
1,260,456 |
|
|
1,215,321 |
|
|
| Accumulated other comprehensive (loss) income |
|
(43,474 |
) |
|
55,455 |
|
|
| Total stockholders' equity |
|
2,220,425 |
|
|
2,275,179 |
|
|
| Total liabilities and stockholders' equity | $ |
19,413,734 |
|
$ |
18,793,071 |
|
|
| FIRST BANCORP | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||
| Quarter Ended | |||||||
| March 31, | December 31, | March 31, | |||||
| (In thousands, except per share information) | 2021 |
|
2020 |
|
2020 |
||
| Net interest income: | |||||||
| Interest income |
|
|
|
||||
| Interest expense | 18,377 |
20,933 |
26,615 |
||||
| Net interest income | 176,265 |
177,767 |
138,649 |
||||
| Provision for credit losses (benefit) expense: | |||||||
| Loans | (14,443) |
10,186 |
74,045 |
||||
| Unfunded loan commitments | (706) |
(1,176) |
1,819 |
||||
| Debt securities | (103) |
(1,319) |
1,502 |
||||
| Provision for credit losses (benefit) expense | (15,252) |
7,691 |
77,366 |
||||
| Net interest income after provision for credit losses | 191,517 |
170,076 |
61,283 |
||||
| Non-interest income: | |||||||
| Service charges on deposit accounts | 8,304 |
8,332 |
5,957 |
||||
| Mortgage banking activities | 7,273 |
7,551 |
3,788 |
||||
| Net (loss) gain on investments | - |
(182) |
8,247 |
||||
| Other non-interest income | 15,379 |
14,499 |
12,208 |
||||
| Total non-interest income | 30,956 |
30,200 |
30,200 |
||||
| Non-interest expenses: | |||||||
| Employees' compensation and benefits | 50,842 |
51,618 |
42,859 |
||||
| Occupancy and equipment | 24,242 |
24,066 |
15,127 |
||||
| Business promotion | 2,970 |
3,163 |
3,622 |
||||
| Professional service fees | 17,701 |
17,309 |
11,793 |
||||
| Taxes, other than income taxes | 6,199 |
5,795 |
3,880 |
||||
| Insurance and supervisory fees | 4,350 |
4,620 |
2,609 |
||||
| Net loss on other real estate owned operations | 1,898 |
580 |
1,188 |
||||
| Merger and restructuring costs | 11,267 |
12,321 |
845 |
||||
| Other non-interest expenses | 13,832 |
15,290 |
10,261 |
||||
| Total non-interest expenses | 133,301 |
134,762 |
92,184 |
||||
| Income (loss) before income taxes | 89,172 |
65,514 |
(701) |
||||
| Income tax (expense) benefit | (28,022) |
(15,376) |
2,967 |
||||
| Net income |
|
|
|
||||
| Net income attributable to common stockholders |
|
|
|
||||
| Earnings per common share: | |||||||
| Basic |
|
|
|
||||
| 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
| (In thousands, except per share amounts and financial ratios) | Quarter Ended | ||||||||||
| March 31, | December 31, | March 31, | |||||||||
2021 |
2020 |
2020 |
|||||||||
| Condensed Income Statements: | |||||||||||
| Total interest income | $ |
194,642 |
|
$ |
198,700 |
|
$ |
165,264 |
|
||
| Total interest expense |
|
18,377 |
|
|
20,933 |
|
|
26,615 |
|
||
| Net interest income |
|
176,265 |
|
|
177,767 |
|
|
138,649 |
|
||
| Provision for credit losses (benefit) expense |
|
(15,252 |
) |
|
7,691 |
|
|
77,366 |
|
||
| Non-interest income |
|
30,956 |
|
|
30,200 |
|
|
30,200 |
|
||
| Non-interest expenses |
|
133,301 |
|
|
134,762 |
|
|
92,184 |
|
||
| Income (loss) before income taxes |
|
89,172 |
|
|
65,514 |
|
|
(701 |
) |
||
| Income tax (expense) benefit |
|
(28,022 |
) |
|
(15,376 |
) |
|
2,967 |
|
||
| Net income |
|
61,150 |
|
|
50,138 |
|
|
2,266 |
|
||
| Net income attributable to common stockholders |
|
60,481 |
|
|
49,469 |
|
|
1,597 |
|
||
| Per Common Share Results: | |||||||||||
| Net earnings per share - basic | $ |
0.28 |
|
$ |
0.23 |
|
$ |
0.01 |
|
||
| Net earnings per share - diluted | $ |
0.28 |
|
$ |
0.23 |
|
$ |
0.01 |
|
||
| Cash dividends declared | $ |
0.07 |
|
$ |
0.05 |
|
$ |
0.05 |
|
||
| Average shares outstanding |
|
217,033 |
|
|
216,987 |
|
|
216,785 |
|
||
| Average shares outstanding diluted |
|
218,277 |
|
|
218,071 |
|
|
217,314 |
|
||
| Book value per common share | $ |
9.99 |
|
$ |
10.26 |
|
$ |
9.92 |
|
||
| Tangible book value per common share (1) | $ |
9.64 |
|
$ |
9.90 |
|
$ |
9.76 |
|
||
| Selected Financial Ratios (In Percent): | |||||||||||
| Profitability: | |||||||||||
| Return on Average Assets |
|
1.30 |
|
|
1.06 |
|
|
0.07 |
|
||
| Interest Rate Spread (2) |
|
3.79 |
|
|
3.82 |
|
|
4.36 |
|
||
| Net Interest Margin (2) |
|
4.01 |
|
|
4.07 |
|
|
4.82 |
|
||
| Return on Average Total Equity |
|
10.82 |
|
|
8.91 |
|
|
0.41 |
|
||
| Return on Average Common Equity |
|
10.88 |
|
|
8.93 |
|
|
0.29 |
|
||
| Average Total Equity to Average Total Assets |
|
120.05 |
|
|
11.95 |
|
|
17.38 |
|
||
| Total capital |
|
20.73 |
|
|
20.37 |
|
|
25.42 |
|
||
| Common equity Tier 1 capital |
|
17.68 |
|
|
17.31 |
|
|
21.79 |
|
||
| Tier 1 capital |
|
17.99 |
|
|
17.61 |
|
|
22.19 |
|
||
| Leverage |
|
11.36 |
|
|
11.26 |
|
|
15.98 |
|
||
| Tangible common equity ratio (1) |
|
10.90 |
|
|
11.54 |
|
|
16.36 |
|
||
| Dividend payout ratio |
|
25.12 |
|
|
21.93 |
|
|
678.80 |
|
||
| Efficiency ratio (3) |
|
64.33 |
|
|
64.80 |
|
|
54.60 |
|
||
| Asset Quality: | |||||||||||
| Allowance for credit losses on loans and finance leases to loans held for investment |
|
3.08 |
|
|
3.28 |
|
|
3.24 |
|
||
| Net charge-offs (annualized) to average loans |
|
0.43 |
|
|
0.30 |
|
|
0.78 |
|
||
| Provision for credit losses for loans and finance leases to net charge-offs |
|
-115.47 |
|
|
112.96 |
|
|
421.31 |
|
||
| Non-performing assets to total assets |
|
1.47 |
|
|
1.56 |
|
|
2.44 |
|
||
| Nonaccrual loans held for investment to total loans held for investment |
|
1.73 |
|
|
1.74 |
|
|
2.35 |
|
||
| Allowance for credit losses on loans and finance leases to total nonaccrual loans held for investment |
|
178.49 |
|
|
188.16 |
|
|
137.91 |
|
||
| Allowance for credit losses on loans and finance leases to total nonaccrual loans held for investment, | |||||||||||
| excluding residential real estate loans |
|
522.00 |
|
|
484.04 |
|
|
327.52 |
|
||
| Other Information: | |||||||||||
| Common Stock Price: End of period | $ |
11.26 |
|
$ |
9.22 |
|
$ |
5.32 |
|
||
1- Non-GAAP financial measure. See page 19 for GAAP to Non-GAAP reconciliations. |
|||||||||||
| 2- On a tax-equivalent basis and excluding changes in the fair value of derivative instruments (Non-GAAP financial measure). See page 23 for GAAP to Non-GAAP reconciliations and refer to discussion 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. | |||||||||||
Table 2 – Quarterly Statement of Average Interest-Earning Assets and Average Interest-Bearing Liabilities (On a Tax-Equivalent Basis)
| (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, | ||||||||||||||||||
| Quarter ended | 2021 |
2020 |
2020 |
2021 |
2020 |
2020 |
2021 |
2020 |
2020 |
|||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||
| Money market & other short-term investments | $ |
1,428,038 |
$ |
1,732,372 |
$ |
770,708 |
$ |
349 |
$ |
438 |
$ |
2,262 |
0.10 |
% |
0.10 |
% |
1.18 |
% |
||||||||
| Government obligations (2) |
|
1,439,872 |
|
1,159,053 |
|
481,967 |
|
5,974 |
|
5,768 |
|
5,301 |
1.68 |
% |
1.98 |
% |
4.42 |
% |
||||||||
| Mortgage-backed securities |
|
3,604,584 |
|
3,127,296 |
|
1,763,813 |
|
9,730 |
|
10,809 |
|
14,009 |
1.09 |
% |
1.38 |
% |
3.19 |
% |
||||||||
| FHLB stock |
|
31,228 |
|
31,937 |
|
33,390 |
|
401 |
|
432 |
|
596 |
5.21 |
% |
5.38 |
% |
7.18 |
% |
||||||||
| Other investments |
|
7,238 |
|
6,702 |
|
5,668 |
|
9 |
|
10 |
|
11 |
0.50 |
% |
0.59 |
% |
0.78 |
% |
||||||||
| Total investments (3) |
|
6,510,960 |
|
6,057,360 |
|
3,055,546 |
|
16,463 |
|
17,457 |
|
22,179 |
1.03 |
% |
1.15 |
% |
2.92 |
% |
||||||||
| Residential mortgage loans |
|
3,493,822 |
|
3,615,018 |
|
2,890,810 |
|
45,586 |
|
47,975 |
|
38,655 |
5.29 |
% |
5.28 |
% |
5.38 |
% |
||||||||
| Construction loans |
|
212,676 |
|
198,377 |
|
122,120 |
|
3,244 |
|
2,575 |
|
1,881 |
6.19 |
% |
5.16 |
% |
6.20 |
% |
||||||||
| C&I and commercial mortgage loans |
|
5,431,614 |
|
5,444,469 |
|
3,679,470 |
|
66,269 |
|
68,201 |
|
47,972 |
4.95 |
% |
4.98 |
% |
5.24 |
% |
||||||||
| Finance leases |
|
481,995 |
|
463,973 |
|
421,740 |
|
8,870 |
|
8,500 |
|
7,919 |
7.46 |
% |
7.29 |
% |
7.55 |
% |
||||||||
| Consumer loans |
|
2,148,159 |
|
2,121,320 |
|
1,883,278 |
|
58,737 |
|
59,291 |
|
52,310 |
11.09 |
% |
11.12 |
% |
11.17 |
% |
||||||||
| Total loans (4) (5) |
|
11,768,266 |
|
11,843,157 |
|
8,997,418 |
|
182,706 |
|
186,542 |
|
148,737 |
6.30 |
% |
6.27 |
% |
6.65 |
% |
||||||||
| Total interest-earning assets | $ |
18,279,226 |
$ |
17,900,517 |
$ |
12,052,964 |
$ |
199,169 |
$ |
203,999 |
$ |
170,916 |
4.42 |
% |
4.53 |
% |
5.70 |
% |
||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||
| Brokered CDs | $ |
188,949 |
$ |
253,508 |
$ |
429,106 |
$ |
989 |
$ |
1,417 |
$ |
2,452 |
2.12 |
% |
2.22 |
% |
2.30 |
% |
||||||||
| Other interest-bearing deposits |
|
10,702,468 |
|
10,511,135 |
|
6,580,393 |
|
11,353 |
|
14,232 |
|
17,202 |
0.43 |
% |
0.54 |
% |
1.05 |
% |
||||||||
| Loans payable |
|
- |
|
- |
|
4,396 |
|
- |
|
- |
|
3 |
0.00 |
% |
0.00 |
% |
0.27 |
% |
||||||||
| Other borrowed funds |
|
483,762 |
|
483,762 |
|
440,194 |
|
3,572 |
|
2,689 |
|
3,950 |
2.99 |
% |
2.21 |
% |
3.61 |
% |
||||||||
| FHLB advances |
|
440,000 |
|
455,761 |
|
555,110 |
|
2,463 |
|
2,595 |
|
3,008 |
2.27 |
% |
2.27 |
% |
2.18 |
% |
||||||||
| Total interest-bearing liabilities | $ |
11,815,179 |
$ |
11,704,166 |
$ |
8,009,199 |
$ |
18,377 |
$ |
20,933 |
$ |
26,615 |
0.63 |
% |
0.71 |
% |
1.34 |
% |
||||||||
| Net interest income | $ |
180,792 |
$ |
183,066 |
$ |
144,301 |
||||||||||||||||||||
| Interest rate spread | 3.79 |
% |
3.82 |
% |
4.36 |
% |
||||||||||||||||||||
| Net interest margin | 4.01 |
% |
4.07 |
% |
4.82 |
% |
||||||||||||||||||||
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 of |
||||||||||||||||||||||||||
| 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 non-performing loans. | ||||||||||||||||||||||||||
| 5- Interest income on loans includes |
||||||||||||||||||||||||||
Table 3 – Non-Interest Income
| Quarter Ended | |||||||||
| March 31, | December 31, | March 31, | |||||||
| (In thousands) | 2021 |
2020 |
2020 |
||||||
| Service charges on deposit accounts | $ |
8,304 |
$ |
8,332 |
|
$ |
5,957 |
||
| Mortgage banking activities |
|
7,273 |
|
7,551 |
|
|
3,788 |
||
| Insurance income |
|
5,241 |
|
1,928 |
|
|
4,582 |
||
| Other operating income |
|
10,138 |
|
12,571 |
|
|
7,626 |
||
| Non-interest income before net gain on | |||||||||
| sales of investment securities |
|
30,956 |
|
30,382 |
|
|
21,953 |
||
| Net (loss) gain on sales of investment securities |
|
- |
|
(182 |
) |
|
8,247 |
||
$ |
30,956 |
$ |
30,200 |
|
$ |
30,200 |
|||
Table 4 – Non-Interest Expenses
| Quarter Ended | ||||||||
| March 31, | December 31, | March 31, | ||||||
| (In thousands) | 2021 |
2020 |
2020 |
|||||
| Employees' compensation and benefits | $ |
50,842 |
$ |
51,618 |
$ |
42,859 |
||
| Occupancy and equipment |
|
24,242 |
|
24,066 |
|
15,127 |
||
| Deposit insurance premium |
|
1,988 |
|
1,900 |
|
1,522 |
||
| Other insurance and supervisory fees |
|
2,362 |
|
2,720 |
|
1,087 |
||
| Taxes, other than income taxes |
|
6,199 |
|
5,795 |
|
3,880 |
||
| Collections, appraisals and other credit related fees |
|
1,310 |
|
1,218 |
|
1,696 |
||
| Outsourcing technology services |
|
12,373 |
|
12,524 |
|
6,829 |
||
| Other professional fees |
|
4,018 |
|
3,567 |
|
3,268 |
||
| Credit and debit card processing expenses |
|
4,278 |
|
6,397 |
|
3,950 |
||
| Business promotion |
|
2,970 |
|
3,163 |
|
3,622 |
||
| Communications |
|
2,462 |
|
2,462 |
|
1,877 |
||
| Net loss on OREO operations |
|
1,898 |
|
580 |
|
1,188 |
||
| Merger and restructuring costs |
|
11,267 |
|
12,321 |
|
845 |
||
| Other |
|
7,092 |
|
6,431 |
|
4,434 |
||
| Total | $ |
133,301 |
$ |
134,762 |
$ |
92,184 |
||
Table 5 – Selected Balance Sheet Data
| (In thousands) | As of | |||||
| March 31, | December 31, | |||||
2021 |
2020 |
|||||
| Balance Sheet Data: | ||||||
| Loans, including loans held for sale | $ |
11,697,929 |
|
$ |
11,827,578 |
|
| Allowance for credit losses for loans and finance leases |
|
358,936 |
|
|
385,887 |
|
| Money market and investment securities, net of allowance for credit losses for debt securities |
|
5,632,090 |
|
|
4,925,822 |
|
| Intangible assets |
|
76,998 |
|
|
79,525 |
|
| Deferred tax asset, net |
|
306,373 |
|
|
329,261 |
|
| Total assets |
|
19,413,734 |
|
|
18,793,071 |
|
| Deposits |
|
16,010,436 |
|
|
15,317,383 |
|
| Borrowings |
|
923,762 |
|
|
923,762 |
|
| Total preferred equity |
|
36,104 |
|
|
36,104 |
|
| Total common equity |
|
2,227,795 |
|
|
2,183,620 |
|
| Accumulated other comprehensive (loss) income, net of tax |
|
(43,474 |
) |
|
55,455 |
|
| Total equity |
|
2,220,425 |
|
|
2,275,179 |
|
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, | ||||
2021 |
2020 |
||||
| Residential mortgage loans | $ |
3,395,081 |
$ |
3,521,954 |
|
| Commercial loans: | |||||
| Construction loans |
|
190,996 |
|
212,500 |
|
| Commercial mortgage loans |
|
2,216,887 |
|
2,230,602 |
|
| Commercial and Industrial loans |
|
3,182,706 |
|
3,202,590 |
|
| Commercial loans |
|
5,590,589 |
|
5,645,692 |
|
| Finance leases |
|
493,620 |
|
472,989 |
|
| Consumer loans |
|
2,162,569 |
|
2,136,654 |
|
| Loans held for investment |
|
11,641,859 |
|
11,777,289 |
|
| Loans held for sale |
|
56,070 |
|
50,289 |
|
| Total loans | $ |
11,697,929 |
$ |
11,827,578 |
|
Table 7 – Loan Portfolio by Geography
| (In thousands) | As of March 31, 2021 | ||||||||||
| Puerto Rico | Virgin Islands | United States | Consolidated | ||||||||
| Residential mortgage loans | $ |
2,698,364 |
$ |
205,528 |
$ |
491,189 |
$ |
3,395,081 |
|||
| Commercial loans: | |||||||||||
| Construction loans |
|
64,468 |
|
4,817 |
|
121,711 |
|
190,996 |
|||
| Commercial mortgage loans |
|
1,767,431 |
|
58,314 |
|
391,142 |
|
2,216,887 |
|||
| Commercial and Industrial loans |
|
2,094,809 |
|
129,204 |
|
958,693 |
|
3,182,706 |
|||
| Commercial loans |
|
3,926,708 |
|
192,335 |
|
1,471,546 |
|
5,590,589 |
|||
| Finance leases |
|
493,620 |
|
- |
|
- |
|
493,620 |
|||
| Consumer loans |
|
2,087,062 |
|
52,102 |
|
23,405 |
|
2,162,569 |
|||
| Loans held for investment |
|
9,205,754 |
|
449,965 |
|
1,986,140 |
|
11,641,859 |
|||
| Loans held for sale |
|
35,719 |
|
1,309 |
|
19,042 |
|
56,070 |
|||
| Total loans | $ |
9,241,473 |
$ |
451,274 |
$ |
2,005,182 |
$ |
11,697,929 |
|||
| (In thousands) | As of December 31, 2020 | ||||||||||
| Puerto Rico | Virgin Islands | United States | Consolidated | ||||||||
| Residential mortgage loans | $ |
2,788,827 |
$ |
213,376 |
$ |
519,751 |
$ |
3,521,954 |
|||
| Commercial loans: | |||||||||||
| Construction loans |
|
73,619 |
|
11,397 |
|
127,484 |
|
212,500 |
|||
| Commercial mortgage loans |
|
1,793,095 |
|
60,129 |
|
377,378 |
|
2,230,602 |
|||
| Commercial and Industrial loans |
|
2,135,291 |
|
129,440 |
|
937,859 |
|
3,202,590 |
|||
| Commercial loans |
|
4,002,005 |
|
200,966 |
|
1,442,721 |
|
5,645,692 |
|||
| Finance leases |
|
472,989 |
|
- |
|
- |
|
472,989 |
|||
| Consumer loans |
|
2,058,217 |
|
51,726 |
|
26,711 |
|
2,136,654 |
|||
| Loans held for investment |
|
9,322,038 |
|
466,068 |
|
1,989,183 |
|
11,777,289 |
|||
| Loans held for sale |
|
44,994 |
|
681 |
|
4,614 |
|
50,289 |
|||
| Total loans | $ |
9,367,032 |
$ |
466,749 |
$ |
1,993,797 |
$ |
11,827,578 |
|||
Table 8 – Non-Performing Assets
| As of | |||||||||
| (Dollars in thousands) | March 31, | December 31, | |||||||
2021 |
2020 |
||||||||
| Nonaccrual loans held for investment: | |||||||||
| Residential mortgage | $ |
132,339 |
|
$ |
125,367 |
|
|||
| Commercial mortgage |
|
28,548 |
|
|
29,611 |
|
|||
| Commercial and Industrial |
|
19,128 |
|
|
20,881 |
|
|||
| Construction |
|
6,378 |
|
|
12,971 |
|
|||
| Consumer and Finance leases |
|
14,708 |
|
|
16,259 |
|
|||
| Total nonaccrual loans held for investment |
|
201,101 |
|
|
205,089 |
|
|||
| OREO |
|
79,207 |
|
|
83,060 |
|
|||
| Other repossessed property |
|
4,544 |
|
|
5,357 |
|
|||
| Total non-performing assets (1) | $ |
284,852 |
|
$ |
293,506 |
|
|||
| Past-due loans 90 days and still accruing (2) | $ |
160,884 |
|
$ |
146,889 |
|
|||
| Allowance for credit losses on loans | $ |
358,936 |
|
$ |
385,887 |
|
|||
| Allowance for credit losses on loans to total nonaccrual loans held for investment |
|
178.49 |
% |
|
188.16 |
% |
|||
| Allowance for credit losses on loans to total nonaccrual loans held for investment, excluding residential real estate loans |
|
522.00 |
% |
|
484.04 |
% |
|||
(1) |
Excludes PCD loans previously accounted for under ASC 310-30 for which the Corporation made the accounting policy election of maintaining pools of loans accounted for under ASC 310-30 as "units of account" both at the time of adoption of CECL and on an ongoing basis for credit loss measurement. These loans accrete interest income based on the effective interest rate of the loan pools determined at the time of adoption of CECL and 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 amortized cost of such loans as of March 31,2021, and December 31, 2020, amounted to |
||||||||
(2) |
These include rebooked loans, which were previously pooled into GNMA securities, amounting to |
||||||||
Table 9 – Non-Performing Assets by Geography
| As of | |||||||
| (In thousands) | March 31, | December 31, | |||||
2021 |
2020 |
||||||
| Puerto Rico: | |||||||
| Nonaccrual loans held for investment: | |||||||
| Residential mortgage | $ |
105,846 |
$ |
101,763 |
|||
| Commercial mortgage |
|
17,979 |
|
18,733 |
|||
| Commercial and Industrial |
|
17,103 |
|
18,876 |
|||
| Construction |
|
4,871 |
|
5,323 |
|||
| Finance leases |
|
967 |
|
1,466 |
|||
| Consumer |
|
12,887 |
|
13,615 |
|||
| Total nonaccrual loans held for investment |
|
159,653 |
|
159,776 |
|||
| OREO |
|
75,005 |
|
78,618 |
|||
| Other repossessed property |
|
4,339 |
|
5,120 |
|||
| Total non-performing assets (1) | $ |
238,997 |
$ |
243,514 |
|||
| Past-due loans 90 days and still accruing (2) | $ |
159,084 |
$ |
144,619 |
|||
| Virgin Islands: | |||||||
| Nonaccrual loans held for investment: | |||||||
| Residential mortgage | $ |
11,956 |
$ |
9,182 |
|||
| Commercial mortgage |
|
10,569 |
|
10,878 |
|||
| Commercial and Industrial |
|
1,489 |
|
1,444 |
|||
| Construction |
|
1,507 |
|
7,648 |
|||
| Consumer |
|
284 |
|
354 |
|||
| Total nonaccrual loans held for investment |
|
25,805 |
|
29,506 |
|||
| OREO |
|
4,202 |
|
4,411 |
|||
| Other repossessed property |
|
69 |
|
109 |
|||
| Total non-performing assets | $ |
30,076 |
$ |
34,026 |
|||
| Past-due loans 90 days and still accruing | $ |
1,550 |
$ |
2,020 |
|||
| United States: | |||||||
| Nonaccrual loans held for investment: | |||||||
| Residential mortgage | $ |
14,537 |
$ |
14,422 |
|||
| Commercial mortgage |
|
- |
|
- |
|||
| Commercial and Industrial |
|
536 |
|
561 |
|||
| Construction |
|
- |
|
- |
|||
| Consumer |
|
570 |
|
824 |
|||
| Total nonaccrual loans held for investment |
|
15,643 |
|
15,807 |
|||
| OREO |
|
- |
|
31 |
|||
| Other repossessed property |
|
136 |
|
128 |
|||
| Total non-performing assets | $ |
15,779 |
$ |
15,966 |
|||
| Past-due loans 90 days and still accruing | $ |
250 |
$ |
250 |
|||
(1) |
Excludes PCD loans previously accounted for under ASC 310-30 for which the Corporation made the accounting policy election of maintaining pools of loans accounted for under ASC 310-30 as "units of account" both at the time of adoption of CECL and on an ongoing basis for credit loss measurement. These loans accrete interest income based on the effective interest rate of the loan pools determined at the time of adoption of CECL and 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 amortized cost of such loans as of March 31,2021, and December 31, 2020, amounted to |
||||||
(2) |
These include rebooked loans, which were previously pooled into GNMA securities, amounting to |
||||||
Table 10 – Allowance for Credit Losses for Loans and Finance Leases
| Quarter Ended | |||||||||||
| (Dollars in thousands) | March 31, | December 31, | March 31, | ||||||||
2021 |
2020 |
2020 |
|||||||||
| Allowance for credit losses on loans and finance leases, beginning balance | $ |
385,887 |
|
$ |
384,718 |
|
$ |
155,139 |
|
||
| Impact of adopting ASC 326 |
|
- |
|
|
- |
|
|
81,165 |
|
||
| Allowance for credit losses on loans and finance leases, beginning balance after CECL adoption |
|
385,887 |
|
|
384,718 |
|
|
236,304 |
|
||
| Provision for credit losses on loans and finance leases (benefit) expense |
|
(14,443 |
) |
|
10,186 |
|
|
74,045 |
|
||
| Net (charge-offs) recoveries of loans: | |||||||||||
| Residential mortgage |
|
(2,092 |
) |
|
(1,642 |
) |
|
(3,779 |
) |
||
| Commercial mortgage |
|
(740 |
) |
|
1,769 |
|
|
(84 |
) |
||
| Commercial and Industrial |
|
(545 |
) |
|
(367 |
) |
|
(10 |
) |
||
| Construction |
|
(9 |
) |
|
102 |
|
|
24 |
|
||
| Consumer and finance leases |
|
(9,122 |
) |
|
(8,879 |
) |
|
(13,726 |
) |
||
| Net charge-offs |
|
(12,508 |
) |
|
(9,017 |
) |
|
(17,575 |
) |
||
| Allowance for credit losses on loans and finance leases, end of period | $ |
358,936 |
|
$ |
385,887 |
|
$ |
292,774 |
|
||
| Allowance for credit losses on loans and finance leases to period end total loans held for investment |
|
3.08 |
% |
|
3.28 |
% |
|
3.24 |
% |
||
| Net charge-offs (annualized) to average loans outstanding during the period |
|
0.43 |
% |
|
0.30 |
% |
|
0.78 |
% |
||
| Provision for credit losses on loans and finance leases to net charge-offs during the period | -1.15x |
1.13x |
4.21x |
||||||||
Table 11 – Net Charge-Offs to Average Loans
| Quarter Ended | Year Ended | |||||||||
| March 31, 2021 | December 31, | December 31, | December 31, | December 31, | ||||||
| (annualized) | 2020 |
2019 |
2018 |
2017 |
||||||
| Residential mortgage |
|
|
|
|
|
|||||
| Commercial mortgage |
|
|
|
|
|
|||||
| Commercial and Industrial |
|
|
|
|
|
|||||
| Construction |
|
- |
- |
|
|
|||||
| Consumer and finance leases |
|
|
|
|
|
|||||
| Total loans |
|
|
|
|
|
|||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20210426005199/en/
FAQ
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