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| 8-K - 8-K - DORAL FINANCIAL CORP | d695968d8k.htm |
| EX-99.1 - EX-99.1 - DORAL FINANCIAL CORP | d695968dex991.htm |
 Doral Financial Corporation
Q4 2013 Investor Presentation
March 24, 2014
Exhibit 99.2 |
 Disclaimer
2
This presentation may include forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995 (the
“PSLRA”). These include comments with respect to our objectives and
strategies, and the results of our operations and our business.
Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts.
They
often
include
words
such
as
“expects,”
“anticipates,”
“intends,”
“plans,”
“believes,”
“seeks,”
“estimates,”
or
words
of
similar
meaning,
or
future
or
conditional
verbs
such
as
“will,”
“would,”
“should,”
“could”
or
“may.”
We
intend
these
forward-looking
statements to be covered by the safe harbor provisions of the PSLRA.
Forward-looking statements provide our expectations or predictions of future
conditions, events or results. They are, by their nature, subject to risks
and uncertainties. They are not guarantees of future performance, and actual results may differ materially.
By their nature, these forward-looking statements involve numerous assumptions
and uncertainties, both general and specific, including those discussed in
Doral Financial Corporation’s 2013 Annual Report on Form 10-K and other filings we make with the
Securities and Exchange Commission. Risk factors and uncertainties that could cause
the Company's actual results to differ materially from those described in
forward-looking statements can be found in the Company's 2013 Annual Report on Form 10-K,
which
is
available
in
the
Company's
website
at
,
as
they
may
be
updated
from
time
to
time
in
the
Company’s periodic and other reports filed with the Securities and Exchange
Commission. The statements in this presentation speak only as of the date
they are made. We do not undertake to update forward-looking
statements
to
reflect
the
impact
of
circumstances
or
events
that
arise
after
the
date
the
forward-looking
statements
were
made,
other than as required by law, including requirements of applicable securities
laws. www.doralfinancial.com |
 2013
Review 3
Compliance with Regulatory Requirements
o
Experienced higher operating costs to meet Consent Order (FDIC) and Written
Agreement (Federal Reserve) requirements o
DFC contributed
$131MM
of Capital in 2013 to maintain Doral Bank capital ratios above Consent Order
requirements Continued Contraction in Puerto Rico market
o
Key
economic
indicators
including
GDP,
Population
and
Employment
fell
during
2013
o
Doral maintained
#2
mortgage
position,
however
origination
volume
fell
by
10%
from
2012
to
2013
Improvements made to Asset Quality, however credit costs remained high
o
Established
Doral
Recovery
and
reduced
NPAs
by
$38MM
(2)
during
2013
o
Credit
Costs
in
Puerto
Rico
exceeded
$100MM
for
2013
while
the
NPL
coverage
ratio
increased
from
35%
(1)
to
40%
(1)
Profitable Expansion of US Operations
o
Increased assets by 18% to $2.8B and deposits by 11% to $1.7B; US Operations now
account for 41% of loans o
Segment Net income increased 17% to $55MM
1
Excludes Residential Mortgage loans guaranteed by FHA/VA
2
Excludes Loans Held for Sale & Residential Mortgage loans guaranteed by
FHA/VA |
 Q4
2013 Results 4
Q4 results negatively impacted by continued deterioration in the
Puerto Rico market and charges related to actions
taken to contribute over $81MM
from Doral Financial Corporation to Doral Bank.
Bank Capital Ratios improved, however capital contribution actions resulted in a $9MM
loss in the quarter o
Bank Leverage Ratio improved to 8.5% following contribution of $81.4MM from Doral
Financial Corporation NPAs declined by $27MM, however credit costs totaled over
$40MM o
Exploring more cost effective NPA reduction options: restructures /
modifications, discounted pay-offs, portfolio sales Core business
performance continues to demonstrate progress: o
o
o
Net Income (Loss)
$(50.9)MM
o
Provisions
$25.8MM
o
Net Interest Margin
302bps
o
Tier-1 Leverage Ratio (Doral Bank)
8.5%
Maintained #2 position in Puerto Rico Mortgage despite a contracting market US Operations: Contributed $15MM of income on
$30MM of revenue; revenue up $2MM on higher yields |
 Doral
Financial Corporation Profile 5
Company Overview
$8.5B Asset PR Mortgage & US Commercial Bank
Doral Bank capital ratios continue to exceed regulatory
requirements:
o
DFC (Holding Company) contributed $81.4MM of capital to
Doral Bank during Q4
o
Tier-1 Leverage Ratio (DFC):
7.6%
o
Tier-1 Leverage Ratio (Doral Bank): 8.5%
Book Value of $57.65 per share
o
A
valuation
allowance
against
Doral’s
remaining
deferred
tax asset represents an additional $ 48.31 per share ($321.2MM)
Doral operates two segments:
1.
Doral Growth : Puerto Rico Mortgage & US Commercial Bank
o
US: Commercial & Retail Bank (41% of Loans)
o
PR Growth: Mortgage & Retail Bank (33% of Loans)
2.
Doral
Recovery:
Puerto
Rico
Special
Servicing
Portfolio
o
PR Residential Mortgage & OREO
o
PR Commercial Loans & OREO
Loan Portfolio Composition ($6.7B)
Doral Growth
(74%)
Doral Recovery
(26%)
Loan Portfolio
$ MM
Loan Category
Growth
Recovery
Total
Residential
$2,232
$1,042
$3,274
CRE
699
462
1,161
C&I
1,526
108
1,634
Construction & Land
525
127
652
Consumer / Other
19
-
19
Total
$5,001
$1,739
$6,740
US Commercial
(41%)
PR Mortgage
(33%) |
 6
Doral Operating Segments
Two Operating Segments: High Margin Bank & Special Servicing Group
Puerto Rico Mortgage & Retail Banking
o
$2.2B Residential Mortgage Portfolio
o
Doral remains the #2 Mortgage Bank in Puerto Rico
o
A $10.7B Mortgage Servicer
o
Maintaining over $1.6B of deposits
US Commercial & Retail Banking
o
$2.7B
High NIM Specialty Commercial Lender
o
8 branches with over $1.7B of deposits ($169MM growth in Q4)
o
Achieved over $55MM of income @ >2% ROAA in 2013
63% of Loans are Performing.
$1.0B of Puerto Rico Residential Mortgages
o
TDRs and Defaulted Loans (180 days past due)
o
67% of loans are Performing
$0.7B of Puerto Rico Commercial Loans
o
CRE, Small Business and Construction & Land
o
57% of loans are Performing
$0.1B of OREO & Other
Puerto Rico Loans
(34%)
US Loans
(40%)
PR OREO & Other
(6%)
Cash & Securities
(15%)
PR Commercial
(38%)
PR Residential Mortgage
(56%)
Taxes & Other
(11%)
Doral Growth: Mortgage & Commercial Bank
Doral Recovery: Puerto Rico Special Servicing Portfolio
|
 Q4
Results Net Loss ($MM)
4Q ’13
Net Interest Income
$57.4
Non Interest Income
11.6
Total Net Revenue
69.0
Non-Interest Expense
94.6
Pre-Tax, Pre-Provision Income
(25.6)
Credit Provision
25.8
Pre-Tax Income
(51.4)
Tax Expense (Benefit)
(0.5)
Reported Net Loss
$(50.9)
Ratios:
NIM (bps)
302
Average Assets
$8,568
$51MM loss driven by credit and compliance costs.
Credit Costs totaled over $41MM
o
$26MM Provision Expense
o
$15MM
Non-Interest Expenses (OREO, Foreclosure and
Credit Provision costs)
7
Non-Interest Income impacted by $12MM of
restructuring transactions
Loan portfolio income holding steady as NIM
remained above 300bps
Credit provisions driven by declining asset values
in Puerto Rico:
$MM
Total
Residential
$1.0
Commercial
$24.8
Total
$25.8
o
$9MM related to capital contributions (sale of I/O)
o
$3MM related to early termination of debt |
 Asset
Quality 8
1
Excludes Loans Held for Sale & FHA / VA Loans
2
UPB-
Partial Charge Offs
3
Adjusted Coverage ratio, (ALLL+Partial Charge Offs)/UPB
NPAs down $27MM; Recovery efforts driving continued reduction in NPAs
NPL: Adjusted Coverage Ratios
$ MM
UPB
Partial Charge-Offs,
Deferred Fees and
Discounts
Recorded
Investment
ALLL
ALLL + Partial
Charge-Offs
Adjusted
Coverage
Ratio
Residential
498.1
81.2
416.9
81.3
162.5
32.6%
Commercial / Consumer
426.6
157.6
269.0
49.6
207.2
48.6%
Total
$924.7
$238.8
$685.9
$130.9
$369.7
40.0%
NPL Adjusted Coverage Ratio increased to 40%
NPL & NPA: Q3 vs. Q4
NPL
NPA
$ MM
Q3
Q4
Change
Q3
Q4
Change
Residential
431.0
416.9
(14.1)
512.9
509.4
(3.5)
Commercial/
Consumer
286.5
269.0
(17.4)
330.9
307.3
(23.6)
Total
$717.4
$685.9
$(31.5)
$843.8
$816.7
$(27.1)
1
1
1
2
3 |
 9
Executive Summary
Fourth Quarter significantly impacted by lower asset values and lower mortgage
volume DFC contributed $81MM of capital to Doral Bank, but these transactions
created a $9MM loss Doral Recovery continues to drive down NPAs, however credit
costs continue to rise NIM remained above 300bps on higher US margin and lower
funding costs Capital ratios remain in excess of regulatory requirements
US platform remains highly profitable – now represents 41% of loans and 48% of retail
deposits |
 Investor Relations Contact and Conference Replay Details
10
Investor Relations:
Christopher Poulton –
Executive Vice President
212 / 329-3794
Media:
Lucienne Gigante –
SVP Public Relations
787 / 474-6298
Conference Call:
2:00 PM EDT March 24, 2014
(800) 288-8975 or (612) 332-0725
Conference Call Replay:
March 24, 2014 –
April 24, 2014
(800) 475-6701 or (320) 365-3844
Replay Code: 322434
christopher.poulton@doralfinancial.com
lucienne.gigante@doralbank.com |
 Exhibits |
 Exhibit A –
Financial Summary
12
($ MM)
31-Dec-13
30-Sep-13
30-June-13
31-Mar-13
31-Dec-12
Income Statement
Net Interest Income
57.4
57.6
50.5
60.7
56.8
Provision for Credit Losses
25.8
23.6
5.5
18.7
21.3
NII After Provisions
31.6
34.0
45.0
42.0
35.5
Non-Interest Income
11.6
18.6
16.8
24.5
28.8
Non-Interest Expense
94.6
68.4
73.9
74.9
86.2
Pre-Tax Loss
(51.4)
(15.7)
(12.1)
(8.4)
(21.9)
Income Taxes
(0.5)
(1.0)
(1.7)
4.0
(50.2)
Net Income/ (Loss)
(50.9)
(14.7)
(10.4)
(12.4)
28.3
Pre-Tax Pre-Provision Income /(Loss)
(25.6)
7.9
(6.6)
10.3
(0.6)
Balance Sheet
Total Gross Loans (incl. HFS)
$6,740
$6,751
$6,705
$6,614
$6,613
Loan Loss Reserves
131
113
112
125
135
Total Deposits
4,997
4,980
4,972
4,783
4,629
Total Assets
8,493
8,570
8,521
8,369
8,479
Profitability Metrics
Net Interest Margin
3.02%
3.03%
2.70%
3.31%
2.97%
Capital & Credit Ratios
NPL / Loans¹
10.3%
11.1%
11.6%
12.3%
11.9%
Leverage Ratio (DFC)
7.58%
8.67%
8.98%
9.26%
9.39%
1
Excludes
Loans
Held
for
Sale
and
Residential
loans
guaranteed
by
FHA
/
VA |
 13
($ MM)
PR
Growth
US
Doral Growth¹
Recovery
Corporate
Treasury
Total
Income Statement
Net Interest Income
$19.2
$28.0
$47.2
$10.3
$(0.1)
$0.0
$57.4
Non-Interest Income
21.6
1.6
23.2
0.0
0.0
(11.6)
11.6
Total Net Revenue
40.8
29.6
70.4
10.3
(0.1)
(11.6)
69.0
Non-Interest Expense
32.8
14.0
46.8
31.4
15.2
1.1
94.6
Pre-Tax , Pre Provision Income
8.0
15.6
23.6
(21.2)
(15.3)
(12.7)
(25.6)
Credit Provision
6.5
1.0
7.5
18.3
0.0
0.0
25.8
Pre-Tax Income
$1.5
$14.6
$16.1
$(39.5)
$(15.3)
$(12.7)
$(51.4)
Allocation of Corporate & Treasury
Adjusted Revenue
(10.2)
(1.5)
0.1
11.6
0.0
Adjusted Non Interest Expense
14.2
2.1
(15.2)
(1.1)
0.0
Adjusted Pre-Tax Income
$(8.3)
$(43.1)
$0.0
$0.0
$(51.4)
Exhibit B –
Segment Reconciliation
1
Doral Growth is the sum of PR Growth and US Segments |