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| 8-K - 8-K - FIRST BANCORP /PR/ | d820274d8k.htm |
 First
BanCorp Investor Presentation
November 2014
Exhibit 99.1 |
 Disclaimer
1
This presentation may contain “forward-looking statements” concerning the
Corporation’s future economic performance. The words or phrases “expect,” “anticipate,” “look
forward,” “should,” “believes” 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 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, but
not limited to, the following could cause actual results to differ materially from those
expressed in, or implied by such forward-looking statements: uncertainty about whether
the Corporation and FirstBank will be able to fully comply with the written agreement dated
June 3, 2010 that the Corporation entered into with the Federal Reserve Bank of New
York (the “New York Fed”) and the consent order dated June 2, 2010 that FirstBank entered into with the FDIC and the Office of the Commissioner of Financial Institutions
of the Commonwealth of Puerto Rico (the “FDIC Order”) that, among other things,
require FirstBank to maintain certain capital levels and reduce its special mention, classified,
delinquent, and non-performing assets; the risk of being subject to possible additional
regulatory actions; uncertainty as to the availability of certain funding sources, such as
brokered CDs; the Corporation’s reliance on brokered CDs and its ability to obtain, on a
periodic basis, approval from the FDIC to issue brokered CDs to fund operations and
provide liquidity in accordance with the terms of the FDIC Order; the risk of not being able
to fulfill the Corporation’s cash obligations or resume paying dividends to the
Corporation’s stockholders in the future due to the Corporation’s inability to
receive approval from the New York Fed or the Board of Governors of the Federal Reserve System
(“Federal Reserve Board”) to receive dividends from FirstBank or FirstBank’s
failure to generate sufficient cash flow to make a dividend payment to the Corporation; the strength
or weakness of the real estate markets and of the consumer and commercial credit sectors and
their impact on the credit quality of the Corporation’s loans and other assets,
which has contributed and may continue to contribute to, among other things, the high levels
of non-performing assets, charge-offs, and provisions and may subject the
Corporation to further risk from loan defaults and foreclosures; the ability of FirstBank to
realize the benefit of the deferred tax asset; adverse changes in general economic
conditions in Puerto Rico, the U.S., and the U.S. Virgin Islands 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, which may reduce interest margins,
impact funding sources, and affect demand for all of the Corporation’s products
and services and reduce the Corporation’s revenues, earnings, and the value of the
Corporation’s assets; an adverse change in the Corporation’s ability to attract new clients and
retain existing ones; a decrease in demand for the Corporation’s products and services
and lower revenues and earnings because of the continued recession in Puerto Rico, the
current fiscal problems and budget deficit of the Puerto Rico government and recent credit
downgrades of the Puerto Rico government; a credit default by the Puerto Rico
government or any of its public corporations or other instrumentalities, and recent and/or
future downgrades of the long-term debt ratings of the Puerto Rico government,
which could adversely affect economic conditions in Puerto Rico; the risk that any portion of
the unrealized losses in the Corporation’s investment portfolio is determined to be
other-than-temporary, including unrealized losses on Puerto Rico government
obligations; uncertainty about regulatory and legislative changes for financial services companies
in Puerto Rico, the U.S., and the U.S. Virgin Islands and British Virgin Islands, which could
affect the Corporation’s financial condition or performance and could cause the
Corporation’s actual results for future periods to differ materially from prior results
and anticipated or projected results; changes in the fiscal and monetary policies and
regulations of the federal government, including those determined by the Federal Reserve
Board, the New York Fed, the FDIC, government-sponsored housing agencies, and
regulators in Puerto Rico and the U.S. and British Virgin Islands; the risk of possible
failure or circumvention of controls and procedures and the risk that the Corporation’s risk
management policies may not be adequate; the risk that the FDIC may further increase the
deposit insurance premium and/or require special assessments to replenish its insurance
fund, causing an additional increase in the Corporation’s non-interest expenses; the impact on the Corporation’s results of operations and financial condition of
acquisitions and dispositions; a need to recognize additional impairments on financial
instruments, goodwill, or other intangible assets relating to acquisitions; the risks that
downgrades in the credit ratings of the Corporation’s long-term senior debt will
adversely affect the Corporation’s ability to access necessary external funds; the impact of the
Dodd-Frank Wall Street Reform and Consumer Protection Act on the Corporation’s
businesses, business practices, and cost of operations; the risk of losses in the value of
investments in unconsolidated entities that the Corporation does not control; and general
competitive factors and industry consolidation. The Corporation does not undertake,
and specifically disclaims any obligation, to update any “forward-looking
statements” to reflect occurrences or unanticipated events or circumstances after the date of such
statements except as required by the federal securities laws.
|
 A
turn-around story underscored by steady improvement and organic market share gains in
the core franchise operating within a challenging macro environment.
Strong, tenured leadership team with a commitment to increasing shareholder value, while
fulfilling our vision to be the most highly regarded financial institution in the markets we
serve.
Improving operating results, together with ongoing efforts to improve efficiencies and further
build-out our core franchise, are our priorities.
Improving our risk profile and maintaining a strong capital position remain central to our
operating philosophy.
Opportunities for additional branch consolidation and market share expansion.
Outlook enhanced by the increasing interest of foreign investment in Puerto Rico and
potential benefits for the underlying economy.
Share price continues to trail capital formation and profitability as TBV ended 3Q14 at
$5.81/share. Our DTA valuation allowance is $505 million, or $2.37/share assuming 100%
recapture.
2
The Value of First BanCorp |
 Eastern
Caribbean:
7% of Assets
Franchise Overview
Founded in 1948
Headquartered in San Juan, Puerto
Rico with operations in PR, Eastern
Caribbean (Virgin Islands) and Florida
–
~2,500 FTE employees
(1)
2nd largest financial holding company
in Puerto Rico with attractive business
mix and substantial loan market share
Florida presence with focus on
serving south Florida region
The
largest
depository
institution
in
the US Virgin Islands with
approximately 40% market share
164 ATM machines and largest ATM
network in the Eastern Caribbean
Region
(2)
A well diversified operation with over
650,000 retail & commercial
customers
Well diversified with significant competitive strengths
As of September 30, 2014.
1) FTE = Full Time Equivalent.
2) Eastern Caribbean Region or ECR includes United States and British Virgin Islands.
3) Data as of September 30, 2014. Core deposits excludes brokered CDs.
3
Total Assets -
$12.6B
Total Loans -
$9.4B
Total Deposits -
$9.7B
12 bank branches
1 Loan Production Office
SE Florida:
10% of Assets
30% of core
deposits
(3)
15% of core
deposits
(3)
12 bank branches
2 First Express branches |
 Franchise
Overview ($ in millions)
Well positioned Puerto Rico institution in a consolidating market
Source: PR Market Share Report prepared with data provided by the Commissioner of Financial
Institutions of Puerto Rico as of 6/30/14. 1) Puerto Rico only.
2) Calculated as institution bank branches within a mile of an FBP branch as a percentage of
total institution branches. 3) Alphabetical order.
4
Puerto Rico Total Assets
(1)
Puerto Rico Total Loans
(1)
Puerto Rico Deposits, Net of Brokered
(1)
Strong and uniquely positioned franchise in
densely populated regions of core operating
footprint
Strong market share in loan portfolios
facilitates customer relationship expansion and
cross-sell to increase deposit share
Long-term opportunity for additional
consolidation
Branch overlap of greater than 40% with six
Puerto Rico institutions
(2)
Portfolio
Balance
Market
Share
Portfolio
Balance
Market
Share
Portfolio
Balance
Market
Share
1
Banco Popular
$25,967
41.1%
1
Banco Popular
$18,869
40.1%
1
Banco Popular
$18,177
45.5%
2
FirstBank
9,600
15.2%
2
FirstBank
7,869
16.7%
2
Banco Santander
4,954
12.4%
3
Oriental Bank
7,225
11.4%
3
Oriental Bank
5,033
10.7%
3
Oriental Bank
4,430
11.1%
4
Scotiabank
6,126
9.7%
4
Banco Santander
4,735
10.1%
4
FirstBank
3,986
10.0%
5
Banco Santander
6,029
9.5%
5
Scotiabank
4,414
9.4%
5
Scotiabank
3,630
9.1%
6
Doral Bank
4,870
7.7%
6
Other
2,781
5.9%
6
Citibank
2,883
7.2%
7
Citibank
2,825
4.5%
7
Doral Bank
2,588
5.5%
7
Doral Bank
1,430
3.6%
8
Banco Cooperativo
558
0.9%
8
Citibank
591
1.3%
8
Banco Cooperativo
470
1.2%
9
BBU
56
0.1%
9
Banco Cooperativo
175
0.4%
9
BBU
33
0.1%
Total
$63,255
100%
Total
$47,054
100%
Total
$39,991
100%
Institutions
Institutions
Institutions
58
44
100%
40
49
43
1-mile
branch
overlap
(3) |
 5
Diversified business model across all regions
Franchise Overview
1) Originations include purchases, refinancings, and draws from existing revolving and
non-revolving commitments. •
Attractive branch network across
densely populated regions in
Puerto Rico, south Florida and the
V.I.
Consumer Banking
Mortgage
Banking
•
Average origination
(1)
volume
over past 4 quarters of $269
million.
•
Earnings growth focused on
ongoing market share gains and
product penetration via cross-
selling activities —notably tied
to mortgage, credit cards,
personal loans and auto finance.
•
Well-diversified, high-yielding
consumer portfolio: auto
finance -
#1 market share
among banks; personal loans;
and credit card portfolio.
•
Originate, sale & servicing model.
•
Production channels centered on
expanding branch network vs.
correspondents/brokers.
•
Target majority conforming
originations .
•
Fannie, Freddie and FHA Servicer.
•
Recently purchased prime
residential mortgage portfolio of
$192 million from in-market
competitor.
•
Average
origination
(1)
volume
over the past 4 quarters of
$161
million.
•
Focus on small to middle
market commercial and
corporate borrowers across
FBP’s footprint.
Complimented
by full suite of deposit and
business products.
•
Balanced risk/return profile to
manage concentration
risk/earnings.
•
Growth opportunities centered
in south Florida region and
expanding lending teams.
•
Building stronger transaction
banking services to target
market share opportunities.
•
Emphasis on cross-sell and core
deposit gathering with recent
launch of new products and
services.
•
Average origination
(1)
volume
over past 4 quarters of $469
million.
Commercial
Lending
Strong Governance, Risk Management and Compliance Culture
•
Full suite of leading edge deposit
products. Increased emphasis on
transaction processing. |
 Executing for
Earnings Growth Targeted strategies for growth
6
(1)
Solidify leadership position by further increasing customer
share of wallet
Lending teams generating growth in loan portfolio
Continue focus in core deposit growth, commercial
and transaction banking and conforming residential
mortgages
Expansion prospects in Florida given long-term
demographic trends
FirstBank-branded credit card portfolio continues to
broaden and deepen relationships, while diversifying
revenue stream
Growth in selected loan products for balanced
risk/return to manage risk concentration and diversify
income sources
Largest opportunity on deposit products, electronic
banking & transaction services
Opportunities for ongoing market share gains
Total Loans
Total Assets
Branches
Deposits, net of brokered
Small Loans
Commercial Loans
Auto Loans & Leasing
Credit Cards
Personal Loans
POS Terminals
ATM Terminals
Debit Cards
ACH Transactions
16.7%
15.2%
12.0%
10.0%
21.7%
20.1%
19.2%
17.1%
16.3%
7.6%
18.1%
11.2%
7.0%
3.9%
2Q 2014
2
4
2
2
2
2
4
2
2
4
2
3
3
6
Puerto Rico
SE Florida
Virgin Islands
Puerto Rico Market Share
Residential Mortgage
1)
Residential Mortgage – based on net volume origination as of 9/30/2014. |
 Improved
Profitability; Focus Remains on Credit Third Quarter 2014
Profitability
•
Net income of $23.2 million, or $0.11 per diluted share, up 9% compared to $21.2 million in
2Q 2014. •
Year-over-year 3Q net income increased $7.2 million compared to 3Q 2013 net income of
$15.9 million. •
Net interest margin decreased by 7 basis points to 4.14%.
•
Pre-tax, pre-provision income of $50.8 million up from $48.6 million in 2Q
2014. Asset Quality
•
Total NPAs decreased by $12.9 million compared to 2Q 2014. No large nonperforming loan sales
were completed during the quarter.
•
OREO inventory balance declined $9.0 million due to sales of $12.2 million completed in 3Q
2014. •
Inflows
to
nonperforming
loans
decreased
by
$59.1
million
or
42%
compared
to
2Q
2014.
•
Provision
for
loan
and
lease
losses
of
$27.0
million
compared
to
$26.7
million
in
2Q
2014
a
$0.3
million
increase.
•
Net charge-offs of $42.7 million, including $16.0 million charge-off related to two
collateral dependent commercial and industrial relationships in Puerto Rico.
Core Deposits
•
Deposits, net of government and brokered, increased by $76.6 million in 3Q 2014.
•
Government deposits increased $28.9 million in 3Q 2014.
•
Brokered certificates of deposit (CDs) decreased by $33.1 million in 3Q 2014.
Capital
•
3Q 2014 Capital position was further strengthened:
•
Book value per common share of $6.05 compared to $5.97 in 2Q 2014 and $5.59 in 3Q
2013. •
Tangible book value per common share of $5.81 compared to $5.72 in 2Q 2014 and $5.32 in 3Q
2013. •
Deferred Tax Asset valuation allowance of $505 million.
7
Risk Based Capital Ratio 18.6% compared to 18.1% in 2Q 2014;
Tier 1 Ratio 17.3% compared to 16.8% in 2Q 2014; and
Leverage Ratio 12.3% compared to 12.0% in 2Q 2014. |
 Ongoing
Improvement in Risk Profile 8
Net Charge-offs (NCO)
Non-performing Assets (NPA)
NPAs are down over $1 billion, or 56%, since the peak in 1Q 2010.
Commercial NPLs are being carried at 57.9% of unpaid principal balance,
net of specific reserves. Commercial REOs are carried at approximately
42% of UPB.
Focus remains on organic reductions of nonperforming assets including
the disposition of $185 million of HFS and OREO.
We continue to move many complex credit cases to a position in which
the asset can be marketed and sold.
(1)
($ in millions)
(2)
Commercial NPLs (Includes HFS)
(3)
2010
2011
2012
2013
2014
1,639
1,551
1,506
1,239 1,233
1,208
1,184
1,138
1,119
1,066
1,008
976
683
506
498
496
522
565
560
150
150
163
163
172
176
188
194
213
242
251
260
256
151
147
175
154
138
130
159
148
95
80
55
55
55
55
1,790
1,701
1,669
1,562
1,410
1,390
1,377
1,337
1,332
1,308
1,259
1,238
1,087
752
726
725
731
757
744
9.5%
10.0%
9.3%
10.2%
10.2%
9.6%
8.4%
5.7%
5.7%
5.7%
6.1%
5.9%
$0
$400
$800
$1,200
$1,600
$2,000
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
NPLs Held for Sale
Repossessed Assets & Other
Loans Held for Investment
NPAs / Assets
63
39
37
29
17
54
38
35
56
52
142
118
67
68
71
186
101
41
7
6
$445
$295
$180
$161
$146
$0
$100
$200
$300
$400
$500
2010
2011
2012
2013
2014 YTD
Construction
Commercial
Consumer
Residential
Product
Book
Value
Accum.
Charge-offs
Reserves
Net Carrying
Amount
(4)
C&I
$130.9
$64.3
$17.7
58.0%
CRE
77.9
99.5
3.2
42.1%
Const.
176.8
62.7
10.3
69.5%
Total
$385.6
$226.5
$31.2
57.9%
Proactively managing asset quality
Excludes $165 million of net charge-offs associated with the bulk sale to CPG in 2010.
Excludes $232 million of net-charge offs associated with the bulk asset sales and transfer
of loans in 2013. 1)
2)
3)
4)
September 30, 2014.
Net Carrying Amount = % of carrying value net of reserves and accumulated
charge-offs. |
 Despite
softening in our market, we continue selectively pursuing high quality loans:
Slight increase in residential mortgages.
Reduction in the commercial book includes a
reduction in outstanding loans to government
entities and a C&I loan paid in full in Puerto Rico.
Reduction in consumer portfolio reflects a softening
of demand in 2014.
YTD Origination and renewal activity at healthy levels
$2.65 billion compared to the same period 2013 of
$2.74 billion:
Softening in consumer demand reflected in
origination volumes. Consumer originations of $792
million YTD 2014 compared to $877 million same
period 2013. Reduction in auto sales is reflected in
loan originations.
The FL market continues to produce good levels of
commercial originations. The FL market increased
from 10% to 13% of total commercial loans from 3Q
13 to 3Q 14.
Executing within a more challenging market
environment in Puerto Rico during 2014 and continue
building on Florida growth opportunities.
9
Loan Portfolio
1) Originations include purchases, refinancings, and draws from existing revolving and
non-revolving commitments. Business Model Driven by Strong Origination
Capabilities Loan Originations
(1)
($ in millions)
Rebuilding and replacing to achieve higher quality portfolio
Loans Held for Sale
Commercial
Construction
Consumer & Finance Leases
Residential Mortgage |
 Well Balanced
Loan Portfolio Mix 10
Diversified sources of revenue
Our well-diversified business model within
commercial, consumer and residential across
three unique regions allows us to be agile when
responding to growth opportunities.
Commercial represents 48%, residential
represents 30% and consumer represents 22%
of the total loan portfolio.
24% of Residential portfolio is located outside of
Puerto Rico
40%
3%
54%
3%
Commercial Mortgage
Construction
Commercial & Industrial
Floor Plans
76%
12%
12%
Puerto Rico
South Florida
Virgin Islands
54%
12%
15%
10%
5%
2%
2%
Auto
Lease Finance
Credit Card
Personal Loans
Small Loans
Boat
Other
3Q 14 Residential Loan by Geography
3Q 14 Commercial Loan Composition
3Q 14 Consumer Loan Composition
1) Loan portfolio mix percentages exclude $80 million loans held for sale. |
 Core deposit
growth strategy continues producing positive results; $1.5 billion since 2009.
Florida continues to be a strong funding source.
Focus remains on cross-selling opportunities.
2014 core deposits declined due to an anticipated
reduction in government deposits.
Cost of deposits, net of brokered CDs, decreased to 0.72%.
Continue to improve by reducing reliance on brokered CDs:
$3.1 billion (31% of deposits) today vs. $7.6 billion
(60%) in 2009.
11
Core Deposits
(1)
Total Deposit Composition
Cost of Deposits
(1)
Brokered CDs
32%
Non-interest
bearing
9%
Interest bearing
59%
3Q 2014
1) Total Deposits excluding Brokered CDs.
Favorable Funding Mix Shift
Successful deposit growth over recent years
Brokered CDs
60%
Non-interest
bearing
6%
Interest bearing
34%
4Q 2009
($ in millions)
$-
$1,500
$3,000
$4,500
$6,000
$7,500
2009
2010
2011
2012
2013
3Q 2014
2,381
2,477
2,654
2,776
2,842
2,814
774
763
915
1,108
1,136
1,246
1,505
2,090
2,126
2,077
2,054
2,111
448
470
481
529
706
469
$5,108
$5,800
$6,176
$6,490
$6,738
$6,640
Retail
Commercial
CDs & IRAs
Public Funds
1.88%
1.56%
1.34%
0.97%
0.81%
0.72%
0.50%
1.00%
1.50%
2.00%
2009
2010
2011
2012
2013
3Q 2014
Total Deposits, Net of Brokered |
 Income
Statement 3Q 2013
4Q 2013
1Q 2014
2Q 2014
3Q 2014
GAAP Net Interest Income
130.9
$
132.7
$
131.3
$
129.9
$
127.7
$
Provision for loan and lease losses
22.2
23.0
31.9
26.7
27.0
Non-interest income
16.0
18.4
18.0
16.6
16.2
Equity in (losses) gains of unconsolidated entities
(5.9)
(5.9)
(6.6)
(0.7)
-
Non-interest expense
99.2
106.5
92.8
98.1
93.6
Pre-tax net income
19.6
15.6
18.0
21.0
23.3
Income tax (expense) benefit
(3.7)
(0.8)
(0.9)
0.3
0.1
Net income
15.9
$
14.8
$
17.1
$
21.2
$
23.2
$
Adjusted Pre-tax pre-provision earnings
50.9
$
47.6
$
56.9
$
48.6
$
50.8
$
Net Interest Margin, (GAAP) (%)
4.20%
4.25%
4.27%
4.21%
4.14%
Net income per common share-basic
0.08
$
0.07
$
0.08
$
0.11
$
0.11
$
Tangible book value per common share
5.32
$
5.30
$
5.48
$
5.72
$
5.81
$
Improving Core Performance
Opportunities for earnings growth
($ in millions, except per share results)
1)
See reconciliation on page 20.
(1)
12
Opportunity for revenue expansion and earnings growth
Potential for NIM expansion as low interest rate environment effects both liquidity
reinvestment and floating rate loan yields. Additional income opportunities through
replacement of NPLs with performing loans and reduced provisioning needs.
Future earnings potential with a reduction in high costs associated with managing NPLs and
OREO. Potential for additional loan growth opportunities as macro environment in Puerto
Rico improves. Long-term potential for value creation from consolidation in Puerto
Rico. Net income of $23.2 million in 3Q 2014; highest net income since
return to profitability.
Pre-tax pre-provision income of $50.8 million
(1)
average 5 quarters of $51 million. |
 Earnings Continue
to Drive Capital Growth 13
Healthy capital levels
1)
See reconciliation to total equity on page 21.
2)
Tier 1 Common of $1.3 billion or 14.4% and Tier 1 capital of 17.3%.
Book value per common share of $6.05 compared to $5.59 in 3Q 2013.
Tangible book value per common share of $5.81
(1)
compared to $5.32 in 3Q 2013.
Deferred Tax Asset Valuation Allowance of $505m; Adjusted Tangible Book Value
(2)
of $8.18 / share.
Assuming 100% reversal of Deferred Tax Asset Valuation Allowance of $505m; shares outstanding
of 213m. See reconciliation to adjusted tangible book value on page 21.
16.9%
Total Risk Based Capital
18.1%
18.6%
12.6%
Tier 1 Common
13.9%
14.4%
8.7%
Tangible Common
9.8%
9.8%
6.5%
9.0%
11.5%
14.0%
16.5%
19.0%
3Q 2013
4Q 2013
1Q 2014
2Q 2014
3Q 2014 |
 A
turn-around story underscored by steady improvement and organic market share gains in
the core franchise operating within a challenging macro environment.
Strong, tenured leadership team with a commitment to increasing shareholder value, while
fulfilling our vision to be the most highly regarded financial institution in the markets we
serve.
Improving operating results, together with ongoing efforts to improve efficiencies and further
build-out our core franchise, are our priorities.
Improving our risk profile and maintaining a strong capital position remain central to our
operating philosophy.
Opportunities for additional branch consolidation and market share expansion.
Outlook enhanced by the increasing interest of foreign investment in Puerto Rico and
potential benefits for the underlying economy.
Share price continues to trail capital formation and profitability as TBV ended 3Q14 at
$5.81/share. Our DTA valuation allowance is $505 million, or $2.37/share assuming 100%
recapture
(1)
.
14
The Value of First BanCorp
1)
See reconciliation on page 21 |
 Appendix
|
 2009
3Q 2014
Change ('09-'14)
% improvement
NPAs
$1,711
$744
$966
56%
NPAs/assets
8.7%
5.9%
282 bps
Tier 1 Common
4.1%
14.4%
1029 bps
120%
TCE / TA
3.2%
9.8%
662 bps
98%
Core deposits
$5,108
$6,640
$1,532
30%
NIM
2.69%
4.14%
145 bps
Our Turnaround Story
($ in millions)
De-Risking of Balance Sheet
Capital
Enhanced Franchise Value
16
June 2010:
Written
Agreement
with the FED
and Consent
Order with
FDIC
July 2010:
The U.S. Treasury
exchanged TARP
for convertible
preferred
August 2010:
Exchange of
89% Perpetual
Preferred Stock
for Common
February 2011:
Sale of non-
performing
loans with a book
value of $269
million
Feb-April 2011:
Sale of $330
million of MBS
and $518
million of
performing
residential
mortgages
March 2013:
Sale of non-performing
loans with a book value
of $217.7 million and
entered two separate
agreements for sale of
NPLs with a book value
of $99 million
2010
2011
2014
October 2011:
Conversion of
the shares held
by the U.S.
Treasury into
32.9 million
shares of
common stock
May 2012:
Acquisition of a
$406 million
portfolio of
FirstBank-
branded credit
cards from FIA
June 2013:
Write-off of $66.6
million collateral
pledged to
Lehman, sale of
NPLs with book
value of $203.8
million and $19.2
million of OREO
October 2011:
Private placement
of $525 million in
common stock.
Lead investors
included Thomas H.
Lee & Oaktree
2012
1) Represents change in dollar amount.
(1)
(1)
(1)
(1)
August 2013:
Completed
secondary
offering reducing
ownership
interest of U S
Treasury and PE
Investors
2013
September 2014:
Achieved five
consecutive
quarters of
profitability.
Average PPPT
income over
five quarters
$51 million
September 2014:
UST announced on
September
9
its
first predefined
written trading
plan, in which it
will be selling it’s
position in FBP.
th |
 Non-performing Assets
1) Collateral pledged with Lehman Brothers Special Financing, Inc.
17
($ in thousands)
2009
2010
2011
2012
2013
1Q 2014
2Q 2014
3Q 2014
Non-performing loans held for investment:
Residential mortgage
441,642
$
392,134
$
338,208
$
313,626
$
161,441
$
172,796
$
175,404
$
185,025
$
Commercial mortgage
196,535
217,165
240,414
214,780
120,107
145,535
166,218
169,967
Commercial & industrial
241,316
317,243
270,171
230,090
114,833
113,996
143,669
130,917
Construction
634,329
263,056
250,022
178,190
58,866
50,387
38,830
30,111
Consumer & finance leases
50,041
49,391
39,547
38,875
40,302
39,061
40,510
43,496
Total non-performing loans held for investment
1,563,863
1,238,989
1,138,362
975,561
495,549
521,775
564,631
559,516
OREO
69,304
84,897
114,292
185,764
160,193
138,622
121,842
112,803
Other repossessed property
12,898
14,023
15,392
10,107
14,865
15,587
16,114
17,467
Other assets
(1)
64,543
64,543
64,543
64,543
-
-
-
-
Total non-performing assets, excluding loans held for sale
1,710,608
1,402,452
1,332,589
1,235,975
670,607
675,984
702,587
689,786
Non-performing loans held for sale
-
159,321
4,764
2,243
54,801
54,755
54,755
54,641
Total non-performing assets
1,710,608
$
1,561,773
$
1,337,353
$
1,238,218
$
725,408
$
730,739
$
757,342
$
744,427
$ |
  Quarterly Migration
Trends ($ in thousands)
18
Residential
Mortgage
Commercial
Mortgage
Commercial &
Industrial
Construction
Consumer
Total
Beginning balance
175,404
$
166,218
$
143,669
$
38,830
$
40,510
$
564,631
$
Plus:
Additions to non-performing
35,645
11,985
13,967
122
19,392
81,111
Less:
Non-performing loans transferred to OREO
(2,216)
(1,058)
(2,124)
(749)
(103)
(6,250)
Non-performing loans
charged-off (4,445)
(2,292)
(17,570)
(7,689)
(13,773)
(45,769)
Loans returned to accrual status /
collections (19,363)
(4,886)
(7,025)
(403)
(2,530)
(34,207)
Ending balance
185,025
$
169,967
$
130,917
$
30,111
$
43,496
$
559,516
$
Residential
Mortgage
Commercial
Mortgage
Commercial &
Industrial
Construction
Consumer
Total
Beginning balance
172,796
$
145,535
$
113,996
$
50,387
$
39,061
$
521,775
$
Plus:
Additions to non-performing
29,981
36,039
54,557
1,791
17,891
140,259
Less:
Non-performing loans transferred to OREO
(1,083)
(575)
(2,041)
(45)
-
(3,744)
Non-performing loans
charged-off (3,965)
(13,422)
(12,449)
(2,509)
(11,231)
(43,576)
Loans returned to accrual status /
collections (22,325)
(1,359)
(10,394)
(10,794)
(5,211)
(50,083)
Ending balance
175,404
$
166,218
$
143,669
$
38,830
$
40,510
$
564,631
$
September 30, 2014
June 30, 2014 |
  Puerto Rico
Government Exposure 19
As of September 30, 2014
($ in millions)
Total asset exposure to the Puerto Rico
Government as of September 30, 2014 was
$377 million a $91.4 million decrease from
4Q 2013.
In addition, there is $200 million of indirect
exposure to the Tourism Development
Fund supporting hotel projects.
Total Government Deposits as of
September 30, 2014 were $251 million.
Time deposits declined $238 million
compared to 4Q 2013.
Transaction accounts decreased $57.4 million
compared to 4Q 2013.
Government Unit
Time
Deposits
Transaction
Accounts
Total
Federal Funds
-
$
8.9
$
8.9
$
Municipalities
20.6
117.2
137.7
Public Agencies
2.2
100.6
102.8
Public Corporations
-
1.3
1.3
Total Deposits
22.7
$
228.1
$
250.8
$
Total
Government Unit
Outstanding
Investment Portfolio
61.1
$
Central Government:
Commonwealth Appropriations
17.0
Federal Funds
7.7
Total Central Government (3 Loans)
24.8
Public Corporations:
Operating Revenues
86.1
Rental Income
4.0
Total Public Corporations (3 Loans)
90.1
Municipalities (9 Loans)
Property Tax Revenues
201.4
Total Direct Government Exposure
377.4
$
Source of Repayment |
  (1) Offering of
common stock by certain of the Corporation's existing stockholders. (2) Represents
the impact of the national gross receipts tax corresponding to the first quarter of 2013, recorded during the second quarter after enactment of Act No. 40.
(3) Represents the impact of the national gross receipt tax related to the trade or business
outside of Puerto Rico that was reversed in the fourth quarter after enactment of Act No. 117.
Adjusted Pre-tax, Pre-provision Income Reconciliation
20
($ in thousands)
3Q 2013
4Q 2013
1Q 2014
2Q 2014
3Q 2014
Income (loss) before income taxes
19,616
$
15,634
$
17,970
$
20,949
$
23,264
$
Add: Provision for loan and lease losses
22,195
22,969
31,915
26,744
26,999
Add: Net loss on investments and impairments
-
-
-
(291)
245
Less: Unrealized gain (loss) on derivatives instruments and
liabilities measured at fair value
(232)
(355)
(313)
(262)
(418)
Add: Acquisition of mortgage loans from Doral related expenses
-
-
-
576
659
Add: Secondary offering costs (1)
1,669
-
-
-
-
Add: Credit card processing platform conversion costs
1,715
-
-
-
-
Add: National gross receipt tax (2)
-
-
-
-
-
Less: National gross receipt tax - outside Puerto Rico (3)
-
(473)
-
-
-
Add: Branch consolidations and other restructuring
expenses/valuation adjustments
-
1,421
718
236
-
Add: Write-off collateral pledged to Lehman and related expenses
-
2,500
-
-
-
Add: Equity in losses (earnings) of unconsolidated entities
5,908
5,893
6,610
670
-
Adjusted pre-tax, pre-provision income
50,871
$
47,589
$
56,900
$
48,622
$
50,750
$
Quarter Ended |
 3Q 2013
4Q 2013
1Q 2014
2Q 2014
3Q 2014
Tangible equity:
Total equity - GAAP
1,221
$
1,216
$
1,256
$
1,306
$
1,324
$
Preferred equity
(63)
(63)
(57)
(36)
(36)
Goodwill
(28)
(28)
(28)
(28)
(28)
Purchased credit card relationship
(21)
(20)
(19)
(18)
(17)
Core deposit intangible
(8)
(7)
(7)
(6)
(6)
Tangible common equity
1,101
$
1,098
$
1,145
$
1,218
$
1,237
$
Common shares outstanding
207
207
209
213
213
Tangible book value per common share
5.32
$
5.30
$
5.48
$
5.72
$
5.81
$
Deferred tax valuation allowance
520
$
523
$
519
$
511
$
505
$
Deferred tax valuation allowance per share
2.51
2.53
2.48
2.40
2.37
Adjusted tangible book value per share
7.83
$
7.83
$
7.97
$
8.12
$
8.18
$
Tangible Book Value Per Share Reconciliation
21
($ in millions, except for per share data)
1) Assuming 100% recapture of valuation allowance.
(1) |
 Stock
Profile 22
Trading Symbol:
•
FBP
Exchange:
•
NYSE
Share Price
(10/31/14):
•
$5.21
Shares Outstanding
(as of September 30, 2014): •
212,977,588
Market Capitalization
(10/31/14):
•
$1.1 billion
1 Yr. Average Daily
Volume:
•
807,290
Price
(10/31/14)
to Tangible
Book
(9/30/14):
•
0.90x
Price
(10/31/14)
to Adjusted
Tangible Book
(1)
(9/30/14):
•
0.64x
5% of more Beneficial Ownership
Beneficial Owner
Amount
Percent of
Class
Entities affiliated with Thomas H. Lee
Partners, L.P.
41,851,067
19.7%
Entities managed by Oaktree Capital
Management, L.P.
41,851,066
19.7
United States Department of the
Treasury
(2)
20,966,340
9.8
1) Assuming 100% reversal of Deferred Tax Valuation Allowance of $505m; shares outstanding of
213m. 2) Includes the U.S. Treasury warrant that entitles it to purchase up to 1,285,899 shares of
Common Stock at an exercise price of $3.29 per share, as adjusted as a result of the
issuance of shares of Common Stock in the Corporation’s $525m private placement of Common
Stock completed in October 2011. The exercise price and the number of shares issuable
upon exercise of the warrant are subject to further adjustments under certain circumstances to prevent dilution. The warrant has a 10-year term from its issue date and
is exercisable in whole or in part at any time. |