First BanCorp Reports Earnings for First Quarter 2005
AN JUAN, Puerto Rico, April 19 /PRNewswire-FirstCall/ -- First BanCorp (NYSE: FBP - News), the second largest Puerto Rico Financial Holding Company, with diversified banking operations in Puerto Rico, the U.S. and British Virgin Islands, and Florida, reported today earnings for the quarter ended March 31, 2005.
Net income was $53,431,802, or $1.07 per share basic and $1.04 per share diluted, for the first quarter of 2005, as compared to earnings of $40,205,034, or $0.75 per share basic and $0.73 per share diluted for the first quarter of 2004. These results represent an earnings increase of 32.9% for this quarter. Return on Assets (ROA) and Return on Common Equity (ROCE) were 1.40% and 25.44%, respectively, for the quarter, as compared to 1.32% and 21.74%, respectively, for the same quarter of 2004. Basic and diluted weighted average common shares were 40,391,489 and 41,762,565, respectively, for the quarter ended March 31, 2005.
Commenting on these first quarter 2005 results, Mr. Angel Alvarez-Perez, Chairman, President and CEO of First BanCorp, said, "This has been a very good quarter overall. Our loan portfolios continue to grow, and our non-performing assets and charge offs continue to decline. Earnings this quarter include a gain on sale of investments, net of derivatives net losses, of $8.4 million. However, comparable earnings of the March 2004 first quarter included $6.7 million in special items due to an after-tax gain on the sale of a credit card portfolio of $3.2 million and gains on sale of investments net of derivative losses of $3.5 million."
Net interest income, the Corporation's main source of income, increased by $21.4 million from $88.2 million during the first quarter of 2004 to $109.6 million during the first quarter of 2005. This increase is mostly attributable to an increase in average earning assets of $3.1 billion since March of 2004. On a linked quarter basis, net interest income increased $5.5 million. The Corporation was able to replace investments, which had been called during the previous quarter, with new securities. Starting this quarter, the Corporation has reclassified late charges and prepayment fees on loans, as interest income, to conform with 2005 presentation. Previously, these fees were included as other income. This reclassification varies the net interest margin ratio. Net interest margin was 3.33% for the first quarter of 2005, as compared to 3.45% for the first quarter of 2004 and 3.36% for the fourth quarter of 2004. Utilizing the previous calculation method, where late charges and prepayment fees were included under other income, net interest margin would have been 3.26% for the first quarter 2005, as compared to the previously reported 3.33% for the first quarter of 2004 and 3.30% for the last quarter of 2004.
Other income amounted to $19.6 million for the first quarter of 2005, as compared to $20.0 million for the first quarter of 2004. Other income included a net gain on sale of investments net of derivatives losses of $8.4 million for this quarter, as compared to $8.8 million in gains on sale (net of derivatives losses) plus credit card gains on sale, for the comparable first quarter of 2004. Other income for the linked December 2004 quarter amounted to $14.8 million, which included $3.9 million in gains on sale of investments, net of derivatives losses.
The efficiency ratio was 40.75% and 39.89% for the three months ended March 31, 2005 and 2004, respectively, one of the best in the industry. An increase in expenses of $9.5 million is mainly attributable to normal costs of operating the Corporation, especially those of its first and second tier subsidiaries, including salaries, advertising and promotions, and occupancy expenses. The Corporation has continued to add personnel in all of its growing business areas. In addition, the Corporation has incurred in higher compliance and audit costs related to Sarbanes-Oxley-Section 404.
Total assets were $17.4 billion as of March 31, 2005, as compared to $13.3 billion as of March 31, 2004 and $15.6 billion as of December 31, 2004. Loans receivable increased by 48.6% to $11.0 billion, as compared to $7.4 billion as of March 31, 2004 and $9.5 billion as of December 31, 2004. The largest loan volume increases were achieved in the commercial and real estate portfolios. In addition, loans receivable include $476 million of loans acquired on March 31, 2005, on the acquisition of UniBank.
Non-performing loans as of March 31, 2005 were $88.9 million (.81% of total loans), as compared to $85.7 million (1.15% of total loans) and $91.7 million (.97% of total loans) as of March 31, 2004 and December 31, 2004, respectively. Non-performing loans, when compared to the March 2004 and December 2004 quarters, decreased as a percentage of the portfolio. These results reflect a continuation of the decreasing trend in non-performers, which has been experienced since early 2003.
The allowance for loan losses to non-performing loans (reserve coverage) was 162.2% as of March 31, 2005, compared to 152.2% as of March 31, 2004, and 153.9% as of December 31, 2004. The improvement is due to the stability experienced in our non-performing loans, resulting in a reduction in the charge offs. The allowance increase is related to the $1.5 billion increase in the Corporation's loan portfolio during this quarter. Net charge offs were $9.1 million (.37% of average loans), as compared to $9.2 million (0.51% of average loans) during the first quarter of 2004, and $9.4 million (.42% of average loans) during the last quarter of 2004. Charge offs have remained stable due to the Corporation's prudent underwriting policies implemented since 1998 and to the gradual shifting of the loan portfolio toward secured loans.
On March 31, 2005, the Corporation closed the acquisition of Ponce General Corporation, the parent company of UniBank, a $540.6 million asset size federal savings and loan association, which operates in the state of Florida, and of Ponce Realty Corporation, a $5.0 million realty estate company, which also operates in the state of Florida.
With $17.4 billion in assets, First BanCorp is the second largest Financial Holding Company in Puerto Rico. It is the parent company of FirstBank Puerto Rico, a state chartered commercial bank in Puerto Rico, the Virgin Islands and Florida; of FirstBank Insurance Agency; and Ponce General Corporation. First BanCorp, FirstBank Puerto Rico and UniBank all operate within U.S. banking laws and regulations. The Corporation operates a total of 129 financial service facilities throughout Puerto Rico, the U.S. and British Virgin Islands, and Florida. On October 1, 2004, the Bank opened a loan office in Coral Gables, Florida. Among the subsidiaries of FirstBank Puerto Rico is Money Express, a finance company; First Leasing and Car Rental, a car and truck rental leasing company; and FirstMortgage, a mortgage banking company. In the U.S. and British Virgin Islands, the Bank operates FirstBank Insurance VI, an insurance agency; First Trade, Inc., a foreign corporation management company; and First Express, a small loan company.
The Corporation's common and preferred shares trade on the New York Stock Exchange under the symbols FBP, FBPPrA, FBPPrB, FBPPrC, FBPPrD and FBPPrE.
This press release may contain certain "forward-looking statements" concerning the Corporation's economic future performance. The words or phrases "expect," "anticipate," "look forward," "should" and similar expressions are meant to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.
The Corporation wishes to caution readers not to place undue reliance on any such "forward-looking statements," which speak only as of the date made and to advise readers that various factors, including regional and national economic conditions, changes in interest rates, competitive and regulatory factors and legislative changes, could affect the Corporation's financial performance and could cause the Corporation's actual results for future period to differ materially from those anticipated or projected.
The Corporation does not undertake, and specifically disclaims any obligation, to update any "forward-looking statements" to reflect occurrences or unanticipated events or circumstances after the date of such statements.
FIRST BANCORP
Consolidated Statements of Financial Condition
(Unaudited)
Dollars in thousands
March 31, December 31,
2005 2004
Assets
Cash and due from banks $22,877 $98,615
Money market instruments 218,443 702,164
Federal funds sold and securities
purchased under agreements to resell 10,000 118,000
Investment securities available for
sale, at fair value:
United States and Puerto Rico
Government obligations 313,271 222,180
Mortgage backed securities 1,390,956 1,219,500
Corporate bonds 44,025 44,288
Equity investment 50,353 58,735
Total investment securities
available for sale 1,798,605 1,544,703
Investment securities held to
maturity, at amortized cost:
United States and Puerto Rico
Government obligations 2,530,190 1,835,905
Mortgage backed securities 1,467,730 1,540,590
Corporate bonds 29,123 --
Total investment securities
held to maturity 4,027,043 3,376,495
Federal Home Loan Bank (FHLB) stock 66,433 79,900
Loans receivable:
Commercial Loans 3,702,846 3,207,110
Finance Leases 229,472 214,663
Consumer Loans 1,479,040 1,371,669
Residential Loans 5,556,824 4,684,575
Total loans receivable 10,968,182 9,478,017
Allowance for loan losses (144,222) (141,036)
Total loans, net 10,823,960 9,336,981
Other real estate owned 8,299 9,649
Premises and equipment, net 105,166 95,814
Accrued interest receivable 70,391 57,095
Other assets 232,689 200,401
Total assets $17,383,906 $15,619,817
Liabilities & Stockholders' Equity
Liabilities:
Deposits $9,247,089 $7,902,982
Federal funds purchased and
securities sold under agreements
to repurchase 4,299,840 4,221,523
Advances from FHLB 1,313,000 1,598,000
Notes Payable & Subordinated Notes 258,307 259,576
Other Borrowings 231,549 231,525
Payable for unsettled investment
trade 537,535 --
Accounts payable and other
liabilities 262,701 183,300
16,150,021 14,396,906
Stockholders' equity:
Preferred Stock 550,100 550,100
Common stock outstanding 40,400 40,389
Additional paid - in capital 5,034 4,863
Capital Reserve and Legal Surplus 263,397 263,397
Retained earnings 356,740 319,032
Accumulated other comprehensive
income, net of tax 18,214 45,130
1,233,885 1,222,911
Total liabilities and
stockholders' equity $17,383,906 $15,619,817
Book value per common share $16.93 $16.66
FIRST BANCORP
Consolidated Statement of Income
(Unaudited)
Dollars in thousands
Three Months Ended
March 31 March 31, December 31,
2005 2004 2004
Interest income:
Loans $148,910 $103,877 $130,661
Investments 59,937 46,650 60,548
Total interest income 208,847 150,527 191,209
Interest expense:
Deposits 47,280 27,047 37,649
Borrowings 51,965 35,297 49,453
Total interest expense 99,245 62,344 87,102
Net interest income 109,602 88,183 104,107
Provision for loan losses 10,954 13,200 13,200
Net interest income after provision
for loan losses 98,648 74,983 90,907
Other income:
Service charges on deposit accounts 2,690 2,783 2,707
Other fees on loans 2,033 2,116 1,938
Mortgage banking activities 510 1,545 831
Net gain on sale of investments 9,514 3,965 4,581
Derivatives (loss) gain (1,063) (424) (661)
Rental Income 866 618 937
Gain on sale of credit cards
portfolio -- 5,236 --
Other operating income 5,068 4,180 4,476
Total other income 19,618 20,019 14,809
Other operating expenses:
Employees' compensation and benefits 23,605 19,986 20,596
Occupancy and equipment 10,342 9,383 10,313
Business promotion 4,548 3,469 3,938
Taxes, other than income taxes 2,269 1,948 2,286
Insurance and supervisory fees 1,064 1,076 1,045
Other 10,824 7,296 7,614
Total other operating expenses 52,652 43,158 45,792
Income before income tax provision 65,614 51,844 59,924
Income tax provision 12,182 11,639 10,265
Net income $53,432 $40,205 $49,659
Net income applicable to
Common Stock $43,363 $30,136 $39,590
Net income per common share -- basic $1.07 $0.75 $0.98
Net income per common share --
diluted $1.04 $0.73 $0.95
Dividends declared per common share $0.14 $0.12 $0.12
FIRST BANCORP
Selected Financial Data
(Unaudited)
Dollars in thousands
March 31, March 31, December 31,
Credit quality Data at: 2005 2004 2004
Non-performing Assets $104,504 $101,156 $108,605
Non-performing Loans 88,919 85,653 91,665
Past Due Loans 31,237 22,515 18,359
Allowance for Loan Losses 144,222 130,357 141,036
Non-performing Assets to Total Assets 0.60% 0.76% 0.70%
Non-performing Loans to Total Loans 0.81% 1.15% 0.97%
Allowance to Non-Performing Loans 162.19% 152.19% 153.86%
Three Months Three Months
Selected Performance Ratios: Ended Ended
March 31, December 31,
2005 2004 2004
Net Interest Yield (1) 3.33% 3.45% 3.36%
Return on Assets 1.40% 1.32% 1.37%
Return on Equity 17.35% 14.56% 16.56%
Return on Common Equity 25.44% 1.74% 24.40%
Net Write offs to Average Loans 0.37% 0.51% 0.42%
Efficiency Ratio 40.75% 39.89% 38.51%
Average Balances:
Assets $15,227,710 $12,161,894 $14,549,503
Earnings Assets 14,881,567 11,764,838 14,142,289
Loans 9,823,600 7,188,149 8,894,613
Deposits 8,413,724 6,705,126 7,575,263
Interest-bearing liabilities 13,326,303 10,315,508 12,547,998
Stockholders Equity 1,232,025 1,104,490 1,199,175
Common Stockholders Equity 681,925 554,390 649,075
(1) On a taxable equivalent basis.
Contact:
Annie Astor-Carbonell
Senior Executive Vice President
and Chief Financial Officer
(787) 729-8088
annie.astor@firstbankpr.com
