First BanCorp (the “Corporation”) (NYSE: FBP), the bank holding company for FirstBank Puerto Rico (“FirstBank” or “the Bank”), today reported a net loss of $14.8 million for the fourth quarter of 2011, compared to a net loss of $24.0 million for the third quarter of 2011 and a net loss of $251.4 million for the fourth quarter of 2010. For the year ended December 31, 2011, the Corporation reported a net loss of $82.2 million compared to a net loss of $524.3 million for full year 2010.
2011 Fourth Quarter Highlights Compared with 2011 Third Quarter:
Significantly Strengthened Capital Position after Completion of
Capital Raise and Conversion of TARP Preferred Stock:
- Completion on October 7, 2011, of a $525 million capital raise and the conversion of 424,174 shares of the Series G Preferred Stock, held by the U.S. Treasury, into 32.9 million shares of common stock.
- Issuance of an additional $3.3 million of capital in a rights offering completed on December 8, 2011.
- Increase in total common equity of $819.5 million, to $1.4 billion as of December 31, 2011.
- Total capital, Tier 1 capital and Leverage ratios of the Corporation of 17.12%, 15.79% and 11.91%, respectively, up from 12.39%, 11.07% and 8.41%, respectively, for the previous quarter.
- Total capital, Tier 1 capital and Leverage ratios of the Corporation’s wholly owned banking subsidiary, FirstBank of 16.58%, 15.25% and 11.52%, respectively, up from 12.15%, 10.84%, and 8.24%, respectively, for the previous quarter. All of the capital ratios are above the minimum required under the Consent Order with the FDIC.
- 12.96% Tier 1 common risk-based capital ratio, up from 4.79%.
- 10.25% tangible common equity ratio, up from 3.84%.
Growth in Net Interest Income and Margin:
- Net interest income, excluding fair value adjustments, increased $3.5 million.
- Net interest margin, excluding fair value adjustments, up 17 basis points to 2.99%. The increase in net interest income and margin primarily reflects the reduction of excess liquidity to pay down borrowings (brokered CDs and FHLB advances), the restructuring of certain repurchase agreements and the reduction in the average cost of core deposits.
Continued Improvement in Credit Quality:
- Provision for loan and lease losses decreased for the fourth consecutive quarter, a decrease of $4.5 million to $42.0 million.
- The level of non-performing loans decreased for the seventh consecutive quarter, the decline from the third quarter of 2011 was $45.7 million to $1.14 billion.
- Inflows of non-performing loans for almost all major loan categories declined from the third quarter.
- Net charge-offs remained relatively flat at $67.8 million. Net charge-offs for commercial and construction loans were primarily related to reserves established in prior periods.
Increase of $2.9 million in Non-Interest Expenses:
- A $1.8 million non-recurring write-down to the value of REO properties optioned during the fourth quarter as part of a special auction sponsored by the Bank intended to achieve reductions in REO operational costs in the immediate future.
- A $1.7 million increase in directors’ fees associated with the election of new directors to the Corporation’s Board of Directors in the fourth quarter.
- A $1.2 million decrease in the deposit insurance premium resulting from the Bank’s improved capital position.
Decrease of $2.6 million in the Income Tax Expense:
- Previous quarter included a $3.2 million charge related to Uncertain Tax Positions and related accrued interest.
- Growth of $51.2 million, or 1%, in core deposits, reflecting increases in retail and commercial demand deposits, as well as in money market accounts.
- Consumer and Residential mortgage loan originations for the fourth quarter amounted to $163.0 million and $160.1 million, respectively, an increase of 10% and 8%, respectively, compared to the third quarter.
- Total assets of $13.1 billion, a decrease of $348.3 million since the end of the third quarter and a $2.5 billion decrease for full year 2011, consistent with the continuing process of optimizing the balance sheet.
Aurelio Alemán, President and Chief Executive Officer of First BanCorp, commented, “Fourth quarter results capped another challenging year for First BanCorp, and represents the beginning of a new stage in the execution of our strategic plan with a total focus on returning our franchise to profitability and improving our risk profile. The hard work and progress we are making in advancing key operating strategies is evident. During 2011 we fortified our capital base, in particular our level of common equity, and ended the year with strong regulatory capital and very strong common equity capital ratios. The quality of our deposit base improved in 2011 with a $365.8 million, or 7%, growth in core deposits and a $2.5 billion, or 40%, decrease in brokered CDs. We are optimistic with the momentum in growing retail and commercial deposits and services, resulting from our cross-selling strategies and the offering of innovative products. Deposit customers grew 19.8% during 2011 and our client base exceeds 650,000 retail and commercial customers. Our strong second position in loans market share in Puerto Rico and brand recognition provide opportunities for additional deposit growth and cross-selling opportunities. The Corporation’s credit-risk profile improved as total non-performing assets decreased $224.4 million, or 14%, during 2011, total net charge-offs decreased $314.2 million, or 52%, and our exposure to construction lending decreased 52%. Even so, some of our credit quality performance metrics remain elevated and we will continue to aggressively address our credit issues in a still challenging economic environment.”
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