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First BanCorp. Announces Earnings for the Quarter and Year Ended December 31, 2023

  • Net income of $79.5 million, or $0.46 per diluted share, for the fourth quarter of 2023, compared to $82.0 million, or $0.46 per diluted share, for the third quarter of 2023. Net income of $302.9 million, or $1.71 per diluted share, for the year ended December 31, 2023, compared to $305.1 million, or $1.59 per diluted share, for the year ended December 31, 2022. Net income for the quarter and year ended December 31, 2023 included a one-time Federal Deposit Insurance Corporation (“FDIC”) special assessment expense of $6.3 million ($3.9 million after-tax, or a decrease of $0.03 per diluted share).
  • Return on average assets for the fourth quarter of 2023 was 1.70%, compared to 1.72% for the third quarter of 2023. Return on average assets for the year ended December 31, 2023 was 1.62%, compared to 1.57% for the year ended December 31, 2022.
  • Income before income taxes of $84.9 million for the fourth quarter of 2023, compared to $109.0 million for the third quarter of 2023. Income before income taxes of $397.4 million for the year ended December 31, 2023, compared to $447.6 million for the year ended December 31, 2022.
  • On a non-GAAP basis, adjusted pre-tax, pre-provision income of $110.0 million for the fourth quarter of 2023, compared to pre-tax, pre-provision income of $113.4 million for the third quarter of 2023. Adjusted pre-tax, pre-provision income of $459.5 million for the year ended December 31, 2023, compared to pre-tax, pre-provision income of $475.3 million for the year ended December 31, 2022.
  • Net interest income of $196.7 million for the fourth quarter of 2023, compared to $199.7 million for the third quarter of 2023. The decrease includes an increase in interest expense, particularly in time deposits, coupled with a reduction in average interest-earning assets, partially offset by an increase in the yields of the loan portfolio. In addition, the third quarter of 2023 included $1.2 million of interest income recognized on the collection of a previously charged-off construction loan. Net interest margin remained relatively flat at 4.14% for the fourth quarter of 2023, compared to 4.15% for the third quarter of 2023.
  • Provision for credit losses increased to $18.8 million for the fourth quarter of 2023, compared to $4.4 million for the third quarter of 2023. The increase is related to various factors, including increases in volume across all loan portfolio classes and higher charge-off levels, particularly in the consumer loan and finance lease portfolios, partially offset by improvements in the projection of certain macroeconomic variables, such as the commercial real estate price index (“CRE price index”). The ratio of the allowance for credit losses (“ACL”) for loans and finance leases to total loans held for investment was 2.15% as of December 31, 2023, compared to 2.21% as of September 30, 2023.
  • Non-interest income increased to $33.6 million for the fourth quarter of 2023, compared to $30.3 million for the third quarter of 2023, mainly related to a $3.0 million gain recognized on the sale of a banking premise in the Florida region.
  • Non-interest expenses increased by $10.0 million to $126.6 million for the fourth quarter of 2023, compared to $116.6 million for the third quarter of 2023, mainly driven by the aforementioned FDIC deposit special assessment. The efficiency ratio for the fourth quarter of 2023 was 54.98%, compared to 50.71% for the third quarter of 2023. On a non-GAAP basis, excluding the aforementioned FDIC deposit special assessment, the adjusted efficiency ratio for the fourth quarter of 2023 was 52.24%.
  • Income tax expense decreased to $5.4 million for the fourth quarter of 2023, compared to $27.0 million for the third quarter of 2023. The decrease is mainly related to a lower effective tax rate and lower pre-tax income.
  • Credit quality variances:

- Non-performing assets decreased by $4.3 million to $125.9 million as of December 31, 2023, mainly driven by the commercial and construction loan portfolios, which includes $7.7 million in collections and loans returned to accrual status and $1.5 million in charge-offs, partially offset by a $3.3 million increase in consumer loans, mainly auto loans and finance leases, and a $1.1 million increase in other repossessed automobiles.

- Annualized net charge-offs to average loans ratio increased to 0.69% for the fourth quarter of 2023, compared to 0.48% for the third quarter of 2023, mainly driven by a $4.6 million increase in consumer loans, a $1.4 million recovery recorded on a construction loan in the Puerto Rico region during the third quarter of 2023, and a $1.0 million charge-off recorded on a nonaccrual commercial mortgage loan transferred to other real estate owned (“OREO”) during the fourth quarter of 2023.

  • Total loans increased by $233.0 million from the prior quarter to $12.2 billion as of December 31, 2023. On a portfolio basis, the variance consisted of increases of $156.3 million in commercial and construction loans, $69.2 million in consumer loans, primarily auto loans and finance leases, and $7.5 million in residential mortgage loans. In terms of geography, the total loan growth consisted of increases of $254.0 million in the Puerto Rico region and $1.4 million in the Virgin Islands region, partially offset by a decrease of $22.4 million in the Florida region. The increase in commercial and construction loans in the Puerto Rico region includes a $150.0 million commercial and industrial participated loan funded in the fourth quarter in connection with the financial closing of a private-public private partnership (P3) for improvement of infrastructure for toll roads.
  • Total loan originations, including refinancings, renewals, and draws from existing commitments (other than credit card utilization activity), amounted to $1.3 billion in the fourth quarter of 2023, an increase of $116.5 million compared to the third quarter of 2023. The growth in total loan originations consisted of an increase of $162.5 million in commercial and construction loans, which includes the origination of the aforementioned $150.0 million commercial and industrial participated loan, partially offset by declines of $27.6 million in residential mortgage loans and $18.4 million in consumer loans.
  • Brokered certificates of deposit (“brokered CDs”) increased by $473.0 million during the fourth quarter of 2023 to $783.3 million as of December 31, 2023, which represents 4.7% of total deposits.
  • Excluding brokered CDs and government deposits, total deposits decreased by $261.9 million to $12.6 billion as of December 31, 2023, reflecting declines of $202.8 million in the Puerto Rico region, $42.8 million in the Florida region, and $16.3 million in the Virgin Islands region. This decrease is net of a $79.8 million increase in time deposits.
  • Government deposits, which are fully collateralized, decreased in the fourth quarter of 2023 by $90.4 million and totaled $3.2 billion as of December 31, 2023. The variance reflects reductions of $57.0 million in the Puerto Rico region, $31.3 million in the Virgin Islands region, and $2.1 million in the Florida region.
  • Cash and cash equivalents increased to $663.2 million as of December 31, 2023, compared to $584.9 million as of September 30, 2023. When adding $2.2 billion of free high-quality liquid securities that could be liquidated or pledged within one day, total core liquidity amounted to $2.8 billion as of December 31, 2023, or 14.93% of total assets, compared to 14.58% as of September 30, 2023. Including the $924.2 million in available lending capacity at the Federal Home Loan Bank (“FHLB”), available liquidity amounted to 19.82% of total assets as of December 31, 2023, compared to 19.67% as of September 30, 2023.
  • In 2023, the Corporation returned approximately $300 million, or close to 100%, of 2023 earnings, to its shareholders through $200 million in repurchases of common stock and the payment of $100 million in common stock dividends.
  • Capital ratios exceed required regulatory levels for bank holding companies and well-capitalized banks. The Corporation’s estimated total capital, common equity tier 1 (“CET1”) capital, tier 1 capital, and leverage ratios were 18.57%, 16.10%, 16.10%, and 10.78%, respectively, as of December 31, 2023. On a non-GAAP basis, the tangible common equity ratio increased to 7.67% as of December 31, 2023, from 6.74% as of September 30, 2023 driven by an increase in the fair value of available-for-sale debt securities. 

First BanCorp. (the “Corporation” or “First BanCorp.”) (NYSE: FBP), the bank holding company for FirstBank Puerto Rico (“FirstBank” or “the Bank”), today reported a net income of $79.5 million, or $0.46 per diluted share, for the fourth quarter of 2023, compared to $82.0 million, or $0.46 per diluted share, for the third quarter of 2023, and $73.2 million, or $0.40 per diluted share, for the fourth quarter of 2022.

For the year ended December 31, 2023, the Corporation reported net income of $302.9 million, or $1.71 per diluted share, compared to $305.1 million, or $1.59 per diluted share, for the year ended December 31, 2022.

Aurelio Alemán, President and Chief Executive Officer of First BanCorp., commented: “We closed an unprecedented and challenging year for the banking industry with another quarter of strong financial performance and solid loan growth for our franchise. We delivered a 1.70% return on average assets, grew loans by $233.0 million or 7.8% linked quarter annualized, and decreased non-performing assets to just 0.67% of total assets. Core deposits, other than government and brokered, contracted by 2.0% as we continue to see use of excess liquidity across all market segments. We are very fortunate to have the support of our loyal client base and the commitment from all our service-oriented colleagues during this period and as we continue to capitalize on the stable economic environment of our main operating markets.”

Alemán continued: “Over the course of 2023, we continued to deploy our capital wisely while selectively growing the loan portfolio, proactively managing the acceleration in funding costs, and executing on multiple franchise investments. Total loans grew by $627.7 million, or 5.4%, during the year driven by strong commercial and consumer loan originations, and we expect that a significant portion of unfunded construction loan originations will be disbursed during 2024. Franchise investments continue to enable the achievement of our strategic objectives. We grew digital banking registered users by 14%, deployed multiple enhancements to both our physical and information technology infrastructure, and advanced several process improvement initiatives aimed at supporting business goals and increase efficiency across the organization. For the third consecutive year, we distributed close to 100% of earnings to shareholders in the form of cash dividends and share repurchases, while maintaining robust regulatory capital levels and ample liquidity.

“As we look forward to 2024, additional investments will be geared towards simplifying our commercial lending process and enhancing the resiliency of the franchise, while continuing to expand our digital offerings. Although we are seeing an expected correction in the credit cycle of the consumer lending business driven by lower levels of excess liquidity and inflationary pressures, our ample reserve coverage levels and risk management framework should withstand the impact of any additional credit deterioration over the next year. That said, we remain confident that the economic prospects of our primary market, driven by a strong labor market and an unprecedented level of federal support, should also serve as a mitigant.

Alemán concluded: “Finally, while we don’t manage the organization based on short-term stock price fluctuations, we do believe that our 2023 stock price performance is a clear reflection of the strength of our balance sheet and our growth prospects for the coming years. We thank our shareholders for their support and remain committed to delivering consistent results.”

NON-GAAP DISCLOSURES

This press release contains GAAP financial measures and non-GAAP financial measures. Non-GAAP financial measures are used when management believes that the presentation of these non-GAAP financial measures enhances the ability of analysts and investors to analyze trends in the Corporation’s business and understand the performance of the Corporation. The Corporation may utilize these non-GAAP financial measures as guides in its budgeting and long-term planning process. Where non-GAAP financial measures are used, the most comparable GAAP financial measure, as well as the reconciliation of the non-GAAP financial measure to the most comparable GAAP financial measure, can be found in the text or in the tables in or attached to this press release. Any analysis of these non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP.

Certain non-GAAP financial measures, such as adjusted net income, adjusted pre-tax, pre-provision income, adjusted non-interest expenses, and adjusted efficiency ratio, exclude the effect of items that management believes are not reflective of core operating performance (the “Special Items”). Other non-GAAP financial measures include adjusted net interest income and margin, tangible common equity, tangible book value per common share, and certain capital ratios. These measures should be read in conjunction with 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 third quarter of 2023, fourth quarter of 2022, and the year ended December 31, 2022 did not include any significant Special Items. The financial results for the fourth quarter of 2023 and the year ended December 31, 2023 included the following Special Items:

Quarter ended December 31, 2023

- A one-time FDIC special assessment expense of $6.3 million ($3.9 million after-tax, calculated based on the statutory tax rate of 37.5%) recognized as a result of the final rule approved by the FDIC Board of Directors on November 16, 2023 to recover the loss to the Deposit Insurance Fund associated with protecting uninsured deposits following certain financial institution failures during the first half of 2023 by means of a quarterly special assessment rate of 3.36 basis points to be applied to the special assessment base during an eight-quarter collection period. The special assessment base is equal to estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the first $5 billion of such deposits. The FDIC deposit special assessment is reflected in the condensed consolidated statements of income as part of “FDIC deposit insurance” expenses.

Year ended December 31, 2023

- A $6.3 million ($3.9 million after-tax, calculated based on the statutory tax rate of 37.5%) one-time expense related to the aforementioned FDIC special assessment.

- A $3.6 million ($2.3 million after-tax, calculated based on the statutory tax rate of 37.5%) gain recognized from a legal settlement reflected in the condensed consolidated statements of income as part of “Other non-interest income.”

- A $1.6 million gain on the repurchase of $21.4 million in junior subordinated debentures reflected in the condensed consolidated statements of income as “Gain on early extinguishment of debt.” The junior subordinated debentures are reflected in the condensed consolidated statements of financial condition as “Other borrowings.” The purchase price equated to 92.5% of the $21.4 million par value. The 7.5% discount resulted in the gain of $1.6 million. The gain, realized at the holding company level, had no effect on the income tax expense recorded during 2023.

Non-GAAP Financial Measures

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 or health epidemics. 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, unfunded loan commitments 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 that management believes are not reflective of core operating performance, which are regarded as Special Items.

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 common equity less goodwill and other intangibles. Tangible assets are total assets less goodwill and other intangibles. Management uses and believes that many stock analysts use the tangible common equity ratio and tangible book value per common share in conjunction with other 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.

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 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 management believes facilitates comparison of results to the results of peers.

NET INCOME AND RECONCILIATION TO ADJUSTED NET INCOME (NON-GAAP)

Net income was $79.5 million for the fourth quarter of 2023, or $0.46 per diluted share, compared to $82.0 million, or $0.46 per diluted share, for the third quarter of 2023. The following table reconciles, for the fourth quarter of 2023 and year ended December 31, 2023, net income to adjusted net income and adjusted earnings per share, which are non-GAAP financial measures that exclude the significant Special Items identified above, and shows the net income and earnings per diluted share for the third quarter of 2023, fourth quarter of 2022, and year ended December 31, 2022.

 

Quarter Ended

 

Year Ended

 

December 31,

2023

 

September 30,

2023

 

December 31,

2022

 

December 31,

2023

 

December 31,

2022

(In thousands, except per share information)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income, as reported (GAAP)

$

79,489

 

 

$

82,022

 

$

73,174

 

$

302,864

 

 

$

305,072

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FDIC special assessment expense

 

6,311

 

 

 

-

 

 

-

 

 

6,311

 

 

 

-

Gain recognized from legal settlement

 

-

 

 

 

-

 

 

-

 

 

(3,600

)

 

 

-

Gain on early extinguishment of debt

 

-

 

 

 

-

 

 

-

 

 

(1,605

)

 

 

-

Income tax impact of adjustments (1)

 

(2,367

)

 

 

-

 

 

-

 

 

(1,017

)

 

 

-

Adjusted net income attributable to common stockholders (non-GAAP)

$

83,433

 

 

$

82,022

 

$

73,174

 

$

302,953

 

 

$

305,072

Weighted-average diluted shares outstanding

 

171,351

 

 

 

176,962

 

 

184,847

 

 

177,180

 

 

 

191,968

Earnings Per Share - diluted (GAAP)

$

0.46

 

 

$

0.46

 

$

0.40

 

$

1.71

 

 

$

1.59

Adjusted Earnings Per Share - diluted (non-GAAP)

$

0.49

 

 

$

0.46

 

$

0.40

 

$

1.71

 

 

$

1.59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) See Special Items discussion above for the individual tax impact related to the above adjustments.

INCOME BEFORE INCOME TAXES AND RECONCILIATION TO ADJUSTED PRE-TAX, PRE-PROVISION INCOME (NON-GAAP)

Income before income taxes was $84.9 million for the fourth quarter of 2023, compared to $109.0 million for the third quarter of 2023. For the year ended December 31, 2023, income before income taxes was $397.4 million, compared to $447.6 million for the same period in 2022. Adjusted pre-tax, pre-provision income was $110.0 million for the fourth quarter of 2023, compared to pre-tax, pre-provision income of $113.4 million for the third quarter of 2023. For the year ended December 31, 2023, adjusted pre-tax, pre-provision income was $459.5 million, compared to pre-tax, pre-provision income of $475.3 million for the same period in 2022. The following table reconciles income before income taxes to adjusted pre-tax, pre-provision income for the last five quarters and for the years ended December 31, 2023 and 2022:

 

 

Quarter Ended

 

Year Ended

 

 

December 31,

2023

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

December 31,

2023

 

December 31,

2022

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

$

84,874

 

 

$

108,990

 

 

$

100,939

 

 

$

102,633

 

 

$

106,530

 

 

$

397,436

 

 

$

447,584

 

Add: Provision for credit losses expense

 

18,812

 

 

 

4,396

 

 

 

22,230

 

 

 

15,502

 

 

 

15,712

 

 

 

60,940

 

 

 

27,696

 

Add: FDIC special assessment expense

 

6,311

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,311

 

 

 

-

 

Less: Gain recognized from legal settlement

 

-

 

 

 

-

 

 

 

(3,600

)

 

 

-

 

 

 

-

 

 

 

(3,600

)

 

 

-

 

Less: Gain on early extinguishment of debt

 

-

 

 

 

-

 

 

 

(1,605

)

 

 

-

 

 

 

-

 

 

 

(1,605

)

 

 

-

 

 

Adjusted pre-tax, pre-provision income (1)

$

109,997

 

 

$

113,386

 

 

$

117,964

 

 

$

118,135

 

 

$

122,242

 

 

$

459,482

 

 

$

475,280

 

Change from most recent prior period (amount)

$

(3,389

)

 

$

(4,578

)

 

$

(171

)

 

$

(4,107

)

 

$

(172

)

 

$

(15,798

)

 

$

83,768

 

Change from most recent prior period (percentage)

 

-3.0

%

 

 

-3.9

%

 

 

-0.1

%

 

 

-3.4

%

 

 

-0.1

%

 

 

-3.3

%

 

 

21.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Non-GAAP financial measure. See Non-GAAP Disclosures above for the 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:

 

 

Quarter Ended

(Dollars in thousands)

 

December 31,

2023

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

Net Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

265,481

 

 

$

263,405

 

 

$

252,204

 

 

$

242,396

 

 

$

233,452

 

Interest expense

 

 

68,799

 

 

 

63,677

 

 

 

52,389

 

 

 

41,511

 

 

 

27,879

 

Net interest income

 

$

196,682

 

 

$

199,728

 

 

$

199,815

 

 

$

200,885

 

 

$

205,573

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Balances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases

 

$

12,004,881

 

 

$

11,783,456

 

 

$

11,591,516

 

 

$

11,519,399

 

 

$

11,364,963

 

Total securities, other short-term investments and interest-bearing cash balances

 

 

6,835,407

 

 

 

7,325,226

 

 

 

7,333,989

 

 

 

7,232,347

 

 

 

7,314,293

 

Average interest-earning assets

 

$

18,840,288

 

 

$

19,108,682

 

 

$

18,925,505

 

 

$

18,751,746

 

 

$

18,679,256

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average interest-bearing liabilities

 

$

11,665,459

 

 

$

11,671,938

 

 

$

11,176,385

 

 

$

10,957,892

 

 

$

10,683,776

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Yield/Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average yield on interest-earning assets - GAAP

 

 

5.59

%

 

 

5.47

%

 

 

5.35

%

 

 

5.24

%

 

 

4.96

%

Average rate on interest-bearing liabilities - GAAP

 

 

2.34

%

 

 

2.16

%

 

 

1.88

%

 

 

1.54

%

 

 

1.04

%

Net interest spread - GAAP

 

 

3.25

%

 

 

3.31

%

 

 

3.47

%

 

 

3.70

%

 

 

3.92

%

Net interest margin - GAAP

 

 

4.14

%

 

 

4.15

%

 

 

4.23

%

 

 

4.34

%

 

 

4.37

%

Net interest income amounted to $196.7 million for the fourth quarter of 2023, a decrease of $3.0 million, compared to $199.7 million for the third quarter of 2023. The decrease in net interest income reflects the following:

  • A $5.4 million increase in interest expense on interest-bearing deposits, including:

- A $3.7 million increase in interest expense on brokered CDs, primarily related to a $3.3 million increase associated with a $253.3 million increase in the average balance of this portfolio and approximately $0.4 million driven by an increase in average rates paid in the fourth quarter of 2023.

- A $2.4 million increase in interest expense on time deposits, excluding brokered CDs, mainly due to approximately $1.8 million associated with higher rates paid in the fourth quarter of 2023 on new issuances and renewals, and $0.6 million of additional interest expense associated with an $84.5 million increase in the average balance. The average cost of non-brokered time deposits in the fourth quarter of 2023 increased 26 basis points to 3.17% when compared to the previous quarter.

Partially offset by:

- A $0.7 million net decrease in interest expense on interest-bearing checking and saving accounts, of which $1.7 million is due to a $321.6 million decrease in the average balance, partially offset by approximately $1.0 million driven by an increase in average rates paid in the fourth quarter of 2023 on public sector deposits. The average cost of interest-bearing checking and saving accounts, excluding public sector deposits, remained stable at 0.73% in the fourth quarter of 2023, when compared to 0.74% in the previous quarter.

  • A $3.9 million decrease in interest income from interest-bearing cash balances and investment securities, mainly due to a $4.1 million decrease in interest income from interest-bearing cash balances, primarily consisting of cash balances deposited at the Federal Reserve Bank (“FED”), driven by the $304.6 million decrease in the average balance. This decrease was partially offset by a $0.2 million increase in interest income associated with dividends received on other equity securities during the fourth quarter of 2023.

Partially offset by:

  • A $2.9 million increase in interest income on consumer loans and finance leases, of which approximately $2.1 million was related to an increase of $88.2 million in the average balance of this portfolio, and $0.8 million increase was related to higher yields, mainly in the auto loans and credit cards portfolios.
  • A $2.1 million increase in interest income on commercial and construction loans, of which approximately $2.5 million was related to the $121.4 million increase in the average balance of this portfolio, and $0.8 million was related to the effect of higher market interest rates on the upward repricing of the variable-rate loans and new loan originations in the commercial and industrial loan portfolio. These variances were partially offset by the effect during the third quarter of 2023 of interest income of $1.2 million recognized on the collection of a previously charged-off construction loan in the Puerto Rico region.
  • A $1.1 million increase in interest income on residential mortgage loans, mainly driven by interest income of $0.9 million mostly associated with higher collections on nonaccrual loans during the fourth quarter of 2023, including $0.5 million recognized on the payoff of a nonaccrual loan in the Puerto Rico region.
  • A $0.3 million decrease in interest expense on borrowings, mainly driven by the $25.3 million decrease in the average balance of short-term repurchase agreements due to the repayments at maturity of such borrowings during the third quarter of 2023.

Net interest margin for the fourth quarter of 2023 remained relatively flat at 4.14% and includes an increase in cost of funds which offsets the change in mix to higher interest-earning assets.

NON-INTEREST INCOME

The following table sets forth information concerning non-interest income for the last five quarters:

 

Quarter Ended

 

December 31,

2023

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges and fees on deposit accounts

$

9,662

 

$

9,552

 

$

9,287

 

$

9,541

 

$

9,174

Mortgage banking activities

 

2,094

 

 

2,821

 

 

2,860

 

 

2,812

 

 

2,572

Gain on early extinguishment of debt

 

-

 

 

-

 

 

1,605

 

 

-

 

 

-

Insurance commission income

 

2,379

 

 

2,790

 

 

2,747

 

 

4,847

 

 

2,898

Card and processing income

 

11,015

 

 

10,841

 

 

11,135

 

 

10,918

 

 

10,601

Other non-interest income

 

8,459

 

 

4,292

 

 

8,637

 

 

4,400

 

 

4,355

Non-interest income

$

33,609

 

$

30,296

 

$

36,271

 

$

32,518

 

$

29,600

Non-interest income increased by $3.3 million to $33.6 million for the fourth quarter of 2023, compared to $30.3 million for the third quarter of 2023, mainly due to:

  • A $4.2 million increase in other non-interest income, mainly driven by a $3.0 million gain recognized on the sale of a banking premise in the Florida region, $0.4 million in debit card incentives collected, and a $0.2 million increase in unrealized gains on marketable equity securities.

Partially offset by:

  • A $0.7 million decrease in revenues from mortgage banking activities, mainly driven by a decrease in the net realized gain on sales of residential mortgage loans in the secondary market due to a lower volume of sales and lower margins, and a $0.3 million decrease in the fair value of to-be-announced forward contracts. During the fourth and third quarters of 2023, net realized gains of $0.4 million and $0.9 million, respectively, were recognized as a result of Government National Mortgage Association (“GNMA”) securitization transactions and whole loan sales to U.S. government-sponsored enterprises amounting to $23.7 million and $42.3 million, respectively.

NON-INTEREST EXPENSES

The following table sets forth information concerning non-interest expenses for the last five quarters:

 

 

Quarter Ended

 

 

December 31,

2023

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employees' compensation and benefits

$

55,584

 

 

$

56,535

 

 

$

54,314

 

 

$

56,422

 

 

$

52,241

 

Occupancy and equipment

 

21,847

 

 

 

21,781

 

 

 

21,097

 

 

 

21,186

 

 

 

21,843

 

Business promotion

 

6,725

 

 

 

4,759

 

 

 

4,167

 

 

 

3,975

 

 

 

5,590

 

Professional service fees:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collections, appraisals and other credit-related fees

 

952

 

 

 

930

 

 

 

1,231

 

 

 

848

 

 

 

1,483

 

 

Outsourcing technology services

 

7,003

 

 

 

7,261

 

 

 

7,278

 

 

 

8,141

 

 

 

7,806

 

 

Other professional fees

 

3,295

 

 

 

2,831

 

 

 

3,087

 

 

 

2,984

 

 

 

3,380

 

Taxes, other than income taxes

 

5,535

 

 

 

5,465

 

 

 

5,124

 

 

 

5,112

 

 

 

5,211

 

FDIC deposit insurance

 

8,454

 

 

 

2,143

 

 

 

2,143

 

 

 

2,133

 

 

 

1,544

 

Other insurance and supervisory fees

 

2,308

 

 

 

2,356

 

 

 

2,352

 

 

 

2,368

 

 

 

2,429

 

Net gain on OREO operations

 

(1,005

)

 

 

(2,153

)

 

 

(1,984

)

 

 

(1,996

)

 

 

(2,557

)

Credit and debit card processing expenses

 

7,360

 

 

 

6,779

 

 

 

6,540

 

 

 

5,318

 

 

 

6,362

 

Communications

 

2,134

 

 

 

2,219

 

 

 

1,992

 

 

 

2,216

 

 

 

2,322

 

Other non-interest expenses

 

6,413

 

 

 

5,732

 

 

 

5,576

 

 

 

6,561

 

 

 

5,277

 

 

Total non-interest expenses

$

126,605

 

 

$

116,638

 

 

$

112,917

 

 

$

115,268

 

 

$

112,931

 

Non-interest expenses amounted to $126.6 million in the fourth quarter of 2023, an increase of $10.0 million, from $116.6 million in the third quarter of 2023. Non-interest expenses for the fourth quarter of 2023 include the FDIC special assessment expense of $6.3 million. On a non-GAAP basis, excluding the effect of this Special Item, adjusted non-interest expenses increased by $3.7 million mainly due to:

  • A $2.0 million increase in business promotion expenses, mainly as a result of a $1.1 million increase in sponsorship and public relations activities and a $0.6 million increase in marketing and advertising expenses.
  • A $1.1 million decrease in net gain on OREO operations, mainly driven by a $0.8 million decrease in net realized gains on sales of OREO properties, primarily residential properties in Puerto Rico, and a $0.3 million increase in property values write-downs, mainly a $0.1 million write-down to the value of a commercial OREO in Puerto Rico recorded during the fourth quarter of 2023.
  • A $0.7 million increase in other non-interest expenses, of which $0.5 million related to legal and operational losses.
  • A $0.6 million increase in credit and debit card processing expenses, mainly due to higher debit card assessment fees and lower incentives collected than the previous quarter.

Partially offset by:

  • A $1.0 million decrease in employees’ compensation and benefits expense, mainly driven by a reduction of $1.4 million in Christmas bonuses and incentives accruals, partially offset by a $0.6 million increase in salary compensation mainly due to new hires and salary adjustments.

INCOME TAXES

The Corporation recorded an income tax expense of $5.4 million for the fourth quarter of 2023, compared to $27.0 million for the third quarter of 2023. The income tax expense decreased due to a reduction in the effective tax rate for the year related to higher than previously forecasted business activities during the fourth quarter with preferential tax treatment under the Puerto Rico tax code, coupled with a lower pre-tax income.

The Corporation’s estimated annual effective tax rate, excluding entities with pre-tax losses from which a tax benefit cannot be recognized and discrete items, was 23.5% for the fourth quarter of 2023, compared to 28.2% estimated during the third quarter of 2023. As of December 31, 2023, the Corporation had a deferred tax asset of $150.1 million, net of a valuation allowance of $139.2 million against the deferred tax assets.

CREDIT QUALITY

Non-Performing Assets

The following table sets forth information concerning non-performing assets for the last five quarters:

(Dollars in thousands)

December 31,

2023

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

Nonaccrual loans held for investment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage

$

32,239

 

 

$

31,946

 

 

$

33,252

 

 

$

36,410

 

 

$

42,772

 

Construction

 

1,569

 

 

 

1,640

 

 

 

1,677

 

 

 

1,794

 

 

 

2,208

 

Commercial mortgage

 

12,205

 

 

 

21,632

 

 

 

21,536

 

 

 

21,598

 

 

 

22,319

 

Commercial and Industrial

 

15,250

 

 

 

18,809

 

 

 

9,194

 

 

 

13,404

 

 

 

7,830

 

Consumer and finance leases

 

22,444

 

 

 

19,137

 

 

 

16,362

 

 

 

15,936

 

 

 

14,806

 

Total nonaccrual loans held for investment

$

83,707

 

 

$

93,164

 

 

$

82,021

 

 

$

89,142

 

 

$

89,935

 

OREO

 

32,669

 

 

 

28,563

 

 

 

31,571

 

 

 

32,862

 

 

 

31,641

 

Other repossessed property

 

8,115

 

 

 

7,063

 

 

 

5,404

 

 

 

4,743

 

 

 

5,380

 

Other assets (1)

 

1,415

 

 

 

1,448

 

 

 

2,111

 

 

 

2,203

 

 

 

2,202

 

Total non-performing assets (2)

$

125,906

 

 

$

130,238

 

 

$

121,107

 

 

$

128,950

 

 

$

129,158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Past due loans 90 days and still accruing (3)

$

59,452

 

 

$

62,892

 

 

$

63,211

 

 

$

74,380

 

 

$

80,517

 

Nonaccrual loans held for investment to total loans held for investment

 

0.69

%

 

 

0.78

%

 

 

0.70

%

 

 

0.77

%

 

 

0.78

%

Nonaccrual loans to total loans

 

0.69

%

 

 

0.78

%

 

 

0.70

%

 

 

0.77

%

 

 

0.78

%

Non-performing assets to total assets

 

0.67

%

 

 

0.70

%

 

 

0.63

%

 

 

0.68

%

 

 

0.69

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Residential pass-through mortgage-backed securities ("MBS") issued by the Puerto Rico Housing Finance Authority ("PRHFA") held as part of the available-for-sale debt securities portfolio.

(2)

Excludes purchased-credit deteriorated ("PCD") loans previously accounted for under Accounting Standards Codification ("ASC") Subtopic 310-30 for which the Corporation made the accounting policy election of maintaining pools of loans as “units of account” both at the time of adoption of current expected credit losses ("CECL") on January 1, 2020 and on an ongoing basis for credit loss measurement. These loans 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 portion of such loans contractually past due 90 days or more amounted to $8.3 million as of December 31, 2023 (September 30, 2023 - $8.9 million; June 30, 2023 - $9.5 million; March 31, 2023 - $10.4 million; December 31, 2022 - $12.0 million).

(3)

These include rebooked loans, which were previously pooled into GNMA securities, amounting to $7.9 million as of December 31, 2023 (September 30, 2023 - $8.5 million; June 30, 2023 - $6.5 million; March 31, 2023 - $7.1 million; December 31, 2022 - $10.3 million). Under the GNMA program, the Corporation has the option but not the obligation to repurchase loans that meet GNMA’s specified delinquency criteria. For accounting purposes, the loans subject to the repurchase option are required to be reflected on the financial statements with an offsetting liability.

Variances in credit quality metrics:

  • Total non-performing assets decreased by $4.3 million to $125.9 million as of December 31, 2023, compared to $130.2 million as of September 30, 2023. Total nonaccrual loans held for investment decreased by $9.5 million to $83.7 million as of December 31, 2023, compared to $93.2 million as of September 30, 2023.



    The decrease in non-performing assets was driven by the commercial and construction loan portfolios, which includes the following:

- $7.7 million in collections and loans returned to accrual status, which include a $2.7 million commercial mortgage loan that was cured during the quarter; and

- $1.5 million in charge-offs, of which $1.0 million was related to the aforementioned $1.0 million charge-off recorded on a nonaccrual commercial mortgage loan transferred to OREO during the fourth quarter of 2023.

Partially offset by:

- A $3.3 million increase in nonaccrual consumer loans, consisting mainly of auto loans and finance leases.

- A $1.1 million increase in other repossessed property, consisting of repossessed automobiles.

- A $0.3 million increase in nonaccrual residential mortgage loans, mainly related to inflows of $5.3 million, partially offset by $3.0 million in collections and $1.6 million of loans restored to accrual status.

  • Inflows to nonaccrual loans held for investment were $34.9 million in the fourth quarter of 2023, a decrease of $5.6 million, compared to inflows of $40.5 million in the third quarter of 2023. Inflows to nonaccrual commercial and construction loans were $1.5 million in the fourth quarter of 2023, a decrease of $9.6 million, compared to inflows of $11.1 million in the third quarter of 2023, mainly due to the inflow of a $9.5 million commercial and industrial loan in the Puerto Rico region during the third quarter of 2023. Inflows to nonaccrual consumer loans were $28.1 million, an increase of $3.2 million compared to inflows of $24.9 million in the third quarter of 2023. Inflows to nonaccrual residential mortgage loans were $5.3 million in the fourth quarter of 2023, an increase of $0.8 million compared to inflows of $4.5 million in the third quarter of 2023. See Early Delinquency below for additional information.

Early Delinquency

Total loans held for investment in early delinquency (i.e., 30-89 days past due accruing loans, as defined in regulatory reporting instructions) amounted to $150.8 million as of December 31, 2023, an increase of $13.8 million, compared to $137.0 million as of September 30, 2023. The variances by major portfolio categories are as follows:

  • Consumer loans in early delinquency increased in the fourth quarter of 2023 by $15.4 million to $112.0 million, mainly in the auto loans and finance leases portfolio.
  • Residential mortgage loans in early delinquency increased by $2.4 million to $36.5 million.
  • Commercial and construction loans in early delinquency decreased by $4.0 million to $2.3 million, in part due to a $1.8 million matured construction loan that migrated to 90 days past due and still accruing that is in the process of renewal but for which the Corporation continues to receive interest and principal payments from the borrower.

Allowance for Credit Losses

The following table summarizes the activity of the ACL for on-balance sheet and off-balance sheet exposures during the fourth and third quarters of 2023:

 

 

Quarter ended December 31,2023

 

 

Loans and Finance Leases

 

 

 

 

Debt Securities

 

 

 

 

 

Residential

Mortgage

Loans

 

Commercial

and

Construction

Loans

 

Consumer

Loans and

Finance

Leases

 

Total Loans

and Finance

Leases

 

Unfunded

Loans

Commitments

 

Held-to-

Maturity

 

Available-

for-Sale

 

Total ACL

Allowance for Credit Losses

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses, beginning balance

 

$

57,200

 

 

$

76,875

 

 

$

129,540

 

 

$

263,615

 

 

$

4,761

 

 

$

2,250

 

 

$

465

 

$

271,091

 

Provision for credit losses - (benefit) expense

 

 

(90

)

 

 

(4,905

)

 

 

23,970

 

 

 

18,975

 

 

 

(123

)

 

 

(53

)

 

 

13

 

 

18,812

 

Net recoveries (charge-offs)

 

 

287

 

 

 

(544

)

 

 

(20,490

)

 

 

(20,747

)

 

 

-

 

 

 

-

 

 

 

33

 

 

(20,714

)

Allowance for credit losses, end of period

 

$

57,397

 

 

$

71,426

 

 

$

133,020

 

 

$

261,843

 

 

$

4,638

 

 

$

2,197

 

 

$

511

 

$

269,189

 

Amortized cost of loans and finance leases

 

$

2,821,726

 

 

$

5,706,092

 

 

$

3,657,665

 

 

$

12,185,483

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses on loans to amortized cost

 

 

2.03

%

 

 

1.25

%

 

 

3.64

%

 

 

2.15

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended September 30, 2023

 

 

Loans and Finance Leases

 

 

 

 

Debt Securities

 

 

 

 

 

Residential

Mortgage

Loans

 

Commercial

and

Construction

Loans

 

Consumer

Loans and

Finance

Leases

 

Total Loans

and Finance

Leases

 

Unfunded

Loans

Commitments

 

Held-to-

Maturity

 

Available-

for-Sale

 

Total ACL

Allowance for Credit Losses

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses, beginning balance

 

$

60,514

 

 

$

75,245

 

 

$

131,299

 

 

$

267,058

 

 

$

4,889

 

 

$

8,401

 

 

$

433

 

$

280,781

 

Provision for credit losses - (benefit) expense

 

 

(3,349

)

 

 

(55

)

 

 

14,047

 

 

 

10,643

 

 

 

(128

)

 

 

(6,151

)

 

 

32

 

 

4,396

 

Net recoveries (charge-offs)

 

 

35

 

 

 

1,685

 

 

 

(15,806

)

 

 

(14,086

)

 

 

-

 

 

 

-

 

 

 

-

 

 

(14,086

)

Allowance for credit losses, end of period

 

$

57,200

 

 

$

76,875

 

 

$

129,540

 

 

$

263,615

 

 

$

4,761

 

 

$

2,250

 

 

$

465

 

$

271,091

 

Amortized cost of loans and finance leases

 

$

2,812,631

 

 

$

5,549,841

 

 

$

3,588,460

 

 

$

11,950,932

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses on loans to amortized cost

 

 

2.03

%

 

 

1.39

%

 

 

3.61

%

 

 

2.21

%

 

 

 

 

 

 

 

 

 

 

 

 

The main variances of the total ACL by main categories are discussed below:

Allowance for Credit Losses for Loans and Finance Leases

As of December 31, 2023, the ACL for loans and finance leases was $261.8 million, a decrease of $1.8 million, from $263.6 million as of September 30, 2023. The ratio of the ACL for loans and finance leases to total loans held for investment was 2.15% as of December 31, 2023, compared to 2.21% as of September 30, 2023. The ratio of the total ACL for loans and finance leases to nonaccrual loans held for investment was 312.81% as of December 31, 2023, compared to 282.96% as of September 30, 2023.

The ACL for commercial and construction loans decreased by $5.5 million to $71.4 million as of December 31, 2023, when compared to September 30, 2023, mainly due to an improvement on the economic outlook of certain macroeconomic variables, such as the CRE price index, which was partially offset by increased volume particularly in the commercial and industrial loan portfolio. Meanwhile, the ACL for consumer loans increased by $3.5 million mainly due to increases in portfolio volumes in the auto loan and finance lease portfolios and increases in delinquency and historical charge-off levels. In addition, the ACL for residential mortgage loans increased by $0.2 million, mainly due to the increase in the size of the loan portfolio, partially offset by updated macroeconomic variables, mainly in the projection of unemployment rates across all regions.

The provision for credit losses on loans and finance leases was $19.0 million for the fourth quarter of 2023, compared to $10.6 million in the third quarter of 2023.

- Provision for credit losses for the consumer loan and finance lease portfolios was an expense of $24.0 million for the fourth quarter of 2023, compared to an expense of $14.0 million in the third quarter of 2023. The increase in provision expense recorded during the fourth quarter of 2023 reflects increases in portfolio balances across all major consumer products and higher delinquency and historical charge-off levels.

- Provision for credit losses for the residential mortgage loan portfolio was a net benefit of $0.1 million for the fourth quarter of 2023, compared to a net benefit of $3.3 million in the third quarter of 2023. The net benefit recorded during the fourth quarter of 2023 was mainly due to updated macroeconomic variables, partially offset by the increase in the size of the loan portfolio. Meanwhile, the net benefit recorded during the third quarter of 2023 was mainly due to an update in macroeconomic variables and a reduction in qualitative reserves, partially offset by the increase in the size of the loan portfolio.

- Provision for credit losses for the commercial and construction loan portfolio was a net benefit of $4.9 million for the fourth quarter of 2023, compared to a net benefit of $0.1 million in the third quarter of 2023. The net benefit recorded during the fourth quarter of 2023 was mainly driven by an improvement on the economic outlook of certain macroeconomic variables, such as the CRE price index, which was partially offset by increased volume particularly in the commercial and industrial loan portfolio. Meanwhile, the net benefit recorded during the third quarter of 2023 was mainly driven by a $1.4 million recovery recorded on a construction loan in the Puerto Rico region, partially offset by an incremental provision of $1.7 million associated to the aforementioned inflow to nonaccrual of a $9.5 million commercial and industrial loan in the Puerto Rico region.

Net Charge-Offs

The following table presents ratios of annualized net (recoveries) charge-offs to average loans held-in-portfolio for the last five quarters:

 

 

Quarter Ended

 

 

December 31,

2023

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage

-0.04

%

 

-0.01

%

 

0.06

%

 

0.07

%

 

0.07

%

Construction

0.01

%

 

-3.18

%

 

-0.99

%

 

-0.17

%

 

-1.82

%

Commercial mortgage

0.09

%

 

-0.01

%

 

0.01

%

 

-0.03

%

 

0.00

%

Commercial and Industrial

0.00

%

 

-0.02

%

 

0.87

%

 

0.00

%

 

0.19

%

Consumer loans and finance leases

2.26

%

 

1.79

%

 

1.51

%

 

1.54

%

 

1.44

%

 

Total loans

0.69

%

 

0.48

%

 

0.67

%

 

0.46

%

 

0.46

%

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 $20.8 million for the fourth quarter of 2023, or an annualized 0.69% of average loans, compared to $14.0 million, or an annualized 0.48% of average loans, in the third quarter of 2023. The increase of $6.8 million in net charge-offs was mainly driven by increases of $4.6 million in consumer loans net charge-offs and $2.2 million in commercial and construction loans net charge-offs mainly related to the aforementioned $1.4 million recovery recorded on a construction loan in the Puerto Rico region during the third quarter of 2023 and the aforementioned $1.0 million charge-off recorded on a nonaccrual commercial mortgage loan transferred to OREO during the fourth quarter of 2023.

Allowance for Credit Losses for Unfunded Loan Commitments

As of December 31, 2023, the ACL for off-balance sheet credit exposures decreased to $4.6 million, compared to $4.8 million as of September 30, 2023.

Allowance for Credit Losses for Debt Securities

As of December 31, 2023, the ACL for debt securities was $2.7 million, of which $2.2 million related to Puerto Rico municipal bonds classified as held-to-maturity, compared to $2.8 million and $2.3 million, respectively, as of September 30, 2023.

LIQUIDITY

Cash and cash equivalents increased by $78.3 million to $663.2 million as of December 31, 2023. When adding $2.2 billion of free high-quality liquid securities that could be liquidated or pledged within one day, total core liquidity amounted to $2.8 billion as of December 31, 2023, or 14.93% of total assets, compared to $2.7 billion, or 14.58% of total assets as of September 30, 2023. In addition, as of December 31, 2023, the Corporation had $924.2 million available for credit with the FHLB based on the value of collateral pledged with the FHLB. As such, the basic liquidity ratio (which includes cash, free high-quality liquid assets such as U.S. government and government-sponsored enterprises’ obligations that could be liquidated or pledged within one day, and available secured lines of credit with the FHLB to total assets) was approximately 19.82% as of December 31, 2023, compared to 19.67% as of September 30, 2023.

In addition to the aforementioned available credit from the FHLB, the Corporation also maintains borrowing capacity at the FED Discount Window Program. The Corporation does not consider borrowing capacity from the FED Discount Window as a primary source of liquidity but had approximately $1.5 billion available for funding under the FED’s Borrower-In-Custody (“BIC”) Program as of December 31, 2023. Also, the Corporation has access to financing with other counterparties through repurchase agreements and is enrolled in the FED’s Bank Term Funding Program. Combined, as of December 31, 2023, the Corporation had $5.2 billion, or 118% of estimated uninsured deposits (excluding fully collateralized government deposits), available to meet liquidity needs.

The Corporation’s total deposits, excluding brokered CDs, amounted to $15.8 billion as of December 31, 2023, which includes government deposits of $3.2 billion that are fully collateralized. Excluding fully collateralized government deposits, as of December 31, 2023, $4.4 billion of these deposits are uninsured, which represent 28.13% of total deposits.

STATEMENT OF FINANCIAL CONDITION

Total assets were approximately $18.9 billion as of December 31, 2023, up $314.9 million from September 30, 2023.

The following variances within the main components of total assets are noted:

  • A $78.3 million increase in cash and cash equivalents, related to the increase in brokered CDs and the cash flows from the investment securities portfolio, partially offset by loan growth, the repurchases of common stock, and the payment of common stock dividends.
  • A $50.2 million increase in investment securities, mainly driven by a $212.0 million increase in the fair value of available-for-sale debt securities attributable to changes in market interest rates, partially offset by principal repayments of $161.6 million, which include scheduled repayments of $96.8 million related to U.S. agencies MBS and maturities of $62.7 million related to U.S. agencies callable debentures.
  • A $233.0 million increase in total loans. The variance consisted of increases of $254.0 million in the Puerto Rico region and $1.4 million in the Virgin Islands region, partially offset by a decrease of $22.4 million in the Florida region. On a portfolio basis, the variance consisted of increases of $156.3 million in commercial and construction loans, $69.2 million in consumer loans, primarily auto loans and finance leases, and $7.5 million in residential mortgage loans. The growth was mainly due to a $143.3 million increase in commercial and industrial loans, primarily in the Puerto Rico region, which includes the $150.0 million commercial and industrial participated loan funded in the fourth quarter in connection with the financial closing of a private-public private partnership (P3) for improvement of infrastructure for toll roads.



    Total loan originations, including refinancings, renewals, and draws from existing commitments (excluding credit card utilization activity), amounted to $1.3 billion in the fourth quarter of 2023, an increase of $116.5 million compared to the third quarter of 2023. The growth in total loan originations consisted of an increase of $162.5 million in commercial and construction loans, which includes the origination of the aforementioned $150.0 million commercial and industrial participated loan, partially offset by declines of $27.6 million in residential mortgage loans and $18.4 million in consumer loans.



    Total loan originations in the Puerto Rico region amounted to $1.1 billion in the fourth quarter of 2023, an increase of $112.0 million, compared to $939.0 million in the third quarter of 2023. The $112.0 million growth in total loan originations consisted of an increase of $142.3 million in commercial and construction loans, partially offset by decreases of $18.2 million in consumer loans and $12.1 million in residential mortgage loans. The increase in commercial and construction loans was mainly in commercial and industrial loans in the Puerto Rico region, which includes the origination of the aforementioned $150.0 million commercial and industrial participated loan.



    Total loan originations in the Virgin Islands region amounted to $19.5 million in the fourth quarter of 2023, compared to $31.0 million in the third quarter of 2023. The $11.5 million decline in total loan originations consisted of decreases of $10.3 million in commercial and construction loans, $1.0 million in residential mortgage loans, and $0.2 million in consumer loans.



    Total loan originations in the Florida region amounted to $220.4 million in the fourth quarter of 2023, compared to $204.4 million in the third quarter of 2023. The $16.0 million growth in total loan originations consisted of an increase of $30.5 million in commercial and construction loans, partially offset by a $14.5 million decrease in residential mortgage loans.

Total liabilities were approximately $17.4 billion as of December 31, 2023, an increase of $120.4 million from September 30, 2023.

The increase in total liabilities was mainly due to:

  • A $120.7 million net increase in total deposits consisting of:
    • A $473.0 million increase in brokered CDs. The increase reflects $668.0 million of new issuances with original average maturities of less than a year and an all-in cost of 5.46%, partially offset by maturing short-term brokered CDs amounting to $194.4 million with an all-in cost of 5.25% that were paid off during the fourth quarter of 2023.
    • A $261.9 million decrease in deposits, excluding brokered CDs and government deposits, reflecting declines of $202.8 million in the Puerto Rico region, $42.8 million in the Florida region, and $16.3 million in the Virgin Islands region. The decrease in such deposits is net of a $79.8 million increase in time deposits.
    • A $90.4 million decrease in government deposits, which includes declines of $57.0 million in the Puerto Rico region, $31.3 million in the Virgin Islands region, and $2.1 million in the Florida region.

Total stockholders’ equity amounted to $1.5 billion as of December 31, 2023, an increase of $194.5 million from September 30, 2023, mainly driven by a $212.0 million increase in the fair value of available-for-sale debt securities due to changes in market interest rates recognized as part of accumulated other comprehensive loss and earnings generated in the fourth quarter of 2023, partially offset by $75.0 million in stock repurchases under the 2023 capital plan authorization of $225 million and $24.0 million in common stock dividends declared in the fourth quarter of 2023.

As of December 31, 2023, capital ratios exceeded the required regulatory levels for bank holding companies and well-capitalized banks. The Corporation’s estimated CET1 capital, tier 1 capital, total capital and leverage ratios under the Basel III rules were 16.10%, 16.10%, 18.57%, and 10.78%, respectively, as of December 31, 2023, compared to CET1 capital, tier 1 capital, total capital, and leverage ratios of 16.35%, 16.35%, 18.84%, and 10.57%, respectively, as of September 30, 2023.

Meanwhile, estimated CET1 capital, tier 1 capital, total capital and leverage ratios of our banking subsidiary, FirstBank, were 16.33%, 17.11%, 18.36%, and 11.15%, respectively, as of December 31, 2023, compared to CET1 capital, tier 1 capital, total capital and leverage ratios of 16.41%, 17.20%, 18.45%, and 11.12%, respectively, as of September 30, 2023.

Tangible Common Equity (Non-GAAP)

On a non-GAAP basis, the Corporation’s tangible common equity ratio increased to 7.67% as of December 31, 2023, compared to 6.74% as of September 30, 2023, mainly driven by a $212.0 million increase in the fair value of available-for-sale debt securities due to changes in market interest rates recognized as part of accumulated other comprehensive loss.

The following table presents a reconciliation of the Corporation’s tangible common equity and tangible assets to the most comparable GAAP items as of the indicated dates:

 

December 31,

2023

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

(In thousands, except ratios and per share information)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total common equity - GAAP

$

1,497,609

 

 

$

1,303,068

 

 

$

1,397,999

 

 

$

1,405,593

 

 

$

1,325,540

 

 

Goodwill

 

(38,611

)

 

 

(38,611

)

 

 

(38,611

)

 

 

(38,611

)

 

 

(38,611

)

 

Purchased credit card relationship intangible

 

-

 

 

 

-

 

 

 

(17

)

 

 

(86

)

 

 

(205

)

 

Core deposit intangible

 

(13,383

)

 

 

(15,229

)

 

 

(17,075

)

 

 

(18,987

)

 

 

(20,900

)

 

Insurance customer relationship intangible

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(13

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity - non-GAAP

$

1,445,615

 

 

$

1,249,228

 

 

$

1,342,296

 

 

$

1,347,909

 

 

$

1,265,811

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets - GAAP

$

18,909,549

 

 

$

18,594,608

 

 

$

19,152,455

 

 

$

18,977,114

 

 

$

18,634,484

 

 

Goodwill

 

(38,611

)

 

 

(38,611

)

 

 

(38,611

)

 

 

(38,611

)

 

 

(38,611

)

 

Purchased credit card relationship intangible

 

-

 

 

 

-

 

 

 

(17

)

 

 

(86

)

 

 

(205

)

 

Core deposit intangible

 

(13,383

)

 

 

(15,229

)

 

 

(17,075

)

 

 

(18,987

)

 

 

(20,900

)

 

Insurance customer relationship intangible

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(13

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible assets - non-GAAP

$

18,857,555

 

 

$

18,540,768

 

 

$

19,096,752

 

 

$

18,919,430

 

 

$

18,574,755

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

169,303

 

 

 

174,386

 

 

 

179,757

 

 

 

179,789

 

 

 

182,709

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity ratio - non-GAAP

 

7.67

%

 

 

6.74

%

 

 

7.03

%

 

 

7.12

%

 

 

6.81

%

 

Tangible book value per common share - non-GAAP

$

8.54

 

 

$

7.16

 

 

$

7.47

 

 

$

7.50

 

 

$

6.93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exposure to Puerto Rico Government

As of December 31, 2023, the Corporation had $297.9 million of direct exposure to the Puerto Rico government, its municipalities, and public corporations, an increase of $3.0 million when compared to $294.9 million as of September 30, 2023. As of December 31, 2023, approximately $189.0 million of the exposure consisted of loans and obligations of municipalities in Puerto Rico that are supported by assigned property tax revenues and for which, in most cases, the good faith, credit, and unlimited taxing power of the applicable municipality have been pledged to their repayment, and $59.4 million consisted of loans and obligations which are supported by one or more specific sources of municipal revenues. The Corporation’s total direct exposure to the Puerto Rico government also included $8.9 million in a loan extended to an affiliate of the Puerto Rico Electric Power Authority and $37.4 million in loans to agencies of Puerto Rico public corporations. In addition, the total direct exposure included obligations of the Puerto Rico government, specifically a residential pass-through MBS issued by the PRHFA, at an amortized cost of $3.2 million (fair value of $1.4 million as of December 31, 2023), included as part of the Corporation’s available-for-sale debt securities portfolio. This residential pass-through MBS issued by the PRHFA is collateralized by certain second mortgages and had an unrealized loss of $1.7 million as of December 31, 2023, of which $0.4 million is due to credit deterioration.

The aforementioned exposure to municipalities in Puerto Rico included $107.0 million of financing arrangements with Puerto Rico municipalities that were issued in bond form but underwritten as loans with features that are typically found in commercial loans. These bonds are accounted for as held-to-maturity debt securities.

As of December 31, 2023, the Corporation had $2.7 billion of public sector deposits in Puerto Rico, compared to $2.8 billion as of September 30, 2023. Approximately 20% of the public sector deposits as of December 31, 2023, were from municipalities and municipal agencies in Puerto Rico, and 80% were from public corporations, the Puerto Rico central government and agencies, and U.S. federal government agencies in Puerto Rico.

Conference Call / Webcast Information

First BanCorp.’s senior management will host an earnings conference call and live webcast on Wednesday, January 24, 2024, at 11:00 a.m. (Eastern Time). The call may be accessed via a live Internet webcast through the Corporation’s investor relations website, fbpinvestor.com, or through a dial-in telephone number at (833) 470-1428 or (404) 975-4839 for international callers. The participant access code is 636165. 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 Corporation’s investor relations website, fbpinvestor.com, until January 24, 2025. A telephone replay will be available one hour after the end of the conference call through February 23, 2024, at (866) 813-9403. The replay access code is 906531.

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,” “will,” “plans,” “forecast,” “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 hereof, and advises readers that any such 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 uncertainties more fully discussed in Part I, Item 1A, “Risk Factors” of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022, as amended on October 13, 2023 (the “2022 Annual Report on Form 10-K”), and the following, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements: the effect of the current interest rate environment or changes in interest rates and inflation levels or the level or composition of the Corporation’s assets and liabilities on the Corporation’s net interest income, net interest margin, loan originations, results of operations and its liquidity position; volatility in the financial services industry, including failures or rumored failures of other depository institutions, and actions taken by governmental agencies to stabilize the financial system, which could result in, among other things, bank deposit runoffs, liquidity constraints, and increased regulatory requirements and costs; the effect of continued changes in the fiscal and monetary policies and regulations of the U.S. federal government, the Puerto Rico government and other governments, including those determined by the Federal Reserve Board, the Federal Reserve Bank of New York, the FDIC, government-sponsored housing agencies and regulators in Puerto Rico, the U.S., and the U.S. and British Virgin Islands, that may affect the future results of the Corporation; uncertainty as to the ability of FirstBank to retain its core deposits and generate sufficient cash flow through its wholesale funding sources, such as securities sold under agreements to repurchase, FHLB advances, and brokered CDs, which may require us to sell investment securities at a loss; adverse changes in general economic conditions in Puerto Rico, the U.S., and the U.S. and British Virgin Islands, including in the interest rate environment, unemployment rates, market liquidity, housing absorption rates, real estate markets, and U.S. capital markets, which may affect funding sources, loan portfolio performance and credit quality, market prices of investment securities, and demand for the Corporation’s products and services, and which may reduce the Corporation’s revenues and earnings and the value of the Corporation’s assets; the impact of government financial assistance for hurricane recovery and other disaster relief on economic activity in Puerto Rico, and the timing and pace of disbursements of funds earmarked for disaster relief; the ability of the Corporation, FirstBank, and third-party service providers to identify and prevent cyber-security incidents, such as data security breaches, ransomware, malware, “denial of service” attacks, “hacking,” identity theft, and state-sponsored cyberthreats, and the occurrence of and response to any incidents that occur, such as an April 2023 security incident at one of our third-party vendors, which may result in misuse or misappropriation of confidential or proprietary information, disruption, or damage to our systems or those of third-party service providers, increased costs and losses or an adverse effect to our reputation; general competitive factors and other market risks as well as the implementation of strategic growth opportunities, including risks, uncertainties, and other factors or events related to any business acquisitions or dispositions; uncertainty as to the implementation of the debt restructuring plan of Puerto Rico and the fiscal plan for Puerto Rico as certified on April 3, 2023, by the oversight board established by the Puerto Rico Oversight, Management, and Economic Stability Act, or any revisions to it, on our clients and loan portfolios, and any potential impact from future economic or political developments and tax regulations in Puerto Rico; the impact of changes in accounting standards, or assumptions in applying those standards, and of forecasts of economic variables considered for the determination of the ACL; the ability of FirstBank to realize the benefits of its net deferred tax assets; environmental, social, and governance matters, including our climate-related initiatives and commitments; the impacts of natural or man-made disasters, the emergence or continuation of widespread health emergencies, geopolitical conflicts (including the ongoing conflict in Ukraine, the conflict in Israel and surrounding areas, the possible expansion of such conflicts and potential geopolitical consequences), terrorist attacks, or other catastrophic external events, including impacts of such events on general economic conditions and on the Corporation’s assumptions regarding forecasts of economic variables; the effect of changes in the interest rate environment, including any adverse change in the Corporation’s ability to attract and retain clients and gain acceptance from current and prospective customers for new products and services, including those related to the offering of digital banking and financial services; the risk that additional portions of the unrealized losses in the Corporation’s debt securities portfolio are determined to be credit-related, or the need of additional credit losses that could emerge from the downgrade of the U.S.’s Long-Term Foreign-Currency Issuer Rating to ‘AA+’ from ‘AAA’ in August 2023 and subsequent negative ratings outlooks, resulting in additional charges to the provision for credit losses on the Corporation’s debt securities portfolio; the impacts of applicable legislative, tax, or regulatory changes, as well as of the 2024 U.S. presidential election, on the Corporation’s financial condition or performance; the risk of possible failure or circumvention of the Corporation’s internal 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 further special assessments, causing an additional increase in the Corporation’s non-interest expenses; any need to recognize impairments on the Corporation’s financial instruments, goodwill, and other intangible assets; the risk that the impact of the occurrence of any of these uncertainties on the Corporation’s capital would preclude further growth of FirstBank and preclude the Corporation’s Board of Directors from declaring dividends; and uncertainty as to whether FirstBank will be able to continue to satisfy its regulators regarding, among other things, its asset quality, liquidity plans, maintenance of capital levels, and compliance with applicable laws, regulations and related requirements. 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.

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. 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 – Condensed Consolidated Statements of Financial Condition

 

As of

 

December 31, 2023

 

September 30, 2023

 

December 31, 2022

(In thousands, except for share information)

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Cash and due from banks

$

661,925

 

 

$

583,913

 

 

$

478,480

 

Money market investments:

 

 

 

 

 

 

 

 

Time deposits with other financial institutions

 

300

 

 

 

300

 

 

 

300

 

Other short-term investments

 

939

 

 

 

700

 

 

 

1,725

 

Total money market investments

 

1,239

 

 

 

1,000

 

 

 

2,025

 

Debt securities available for sale, at fair value (ACL of $511 as of December 31, 2023; $465 as of September 30, 2023; and $458 as of December 31, 2022)

 

5,229,984

 

 

 

5,175,803

 

 

 

5,599,520

 

Debt securities held to maturity, at amortized cost, net of ACL of $2,197 as of December 31, 2023; $2,250 as of September 30, 2023; and $8,286 as of December 31, 2022 (fair value of $346,132 as of December 31, 2023; $342,851 as of September 30, 2023; and $427,115 as of December 31, 2022)

 

351,981

 

 

 

356,919

 

 

 

429,251

 

Total debt securities

 

5,581,965

 

 

 

5,532,722

 

 

 

6,028,771

 

Equity securities

 

49,675

 

 

 

48,683

 

 

 

55,289

 

Total investment securities

 

5,631,640

 

 

 

5,581,405

 

 

 

6,084,060

 

Loans, net of ACL of $261,843 as of December 31, 2023; $263,615 as of September 30, 2023; and $260,464 as of December 31, 2022

 

11,923,640

 

 

 

11,687,317

 

 

 

11,292,361

 

Loans held for sale, at lower of cost or market

 

7,368

 

 

 

8,961

 

 

 

12,306

 

Total loans, net

 

11,931,008

 

 

 

11,696,278

 

 

 

11,304,667

 

Accrued interest receivable on loans and investments

 

77,716

 

 

 

68,783

 

 

 

69,730

 

Premises and equipment, net

 

142,016

 

 

 

144,611

 

 

 

142,935

 

OREO

 

32,669

 

 

 

28,563

 

 

 

31,641

 

Deferred tax asset, net

 

150,127

 

 

 

150,805

 

 

 

155,584

 

Goodwill

 

38,611

 

 

 

38,611

 

 

 

38,611

 

Other intangible assets

 

13,383

 

 

 

15,229

 

 

 

21,118

 

Other assets

 

229,215

 

 

 

285,410

 

 

 

305,633

 

Total assets

$

18,909,549

 

 

$

18,594,608

 

 

$

18,634,484

 

LIABILITIES

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Non-interest-bearing deposits

$

5,404,121

 

 

$

5,440,247

 

 

$

6,112,884

 

Interest-bearing deposits

 

11,151,864

 

 

 

10,994,990

 

 

 

10,030,583

 

Total deposits

 

16,555,985

 

 

 

16,435,237

 

 

 

16,143,467

 

Securities sold under agreements to repurchase

 

-

 

 

 

-

 

 

 

75,133

 

Advances from the FHLB

 

500,000

 

 

 

500,000

 

 

 

675,000

 

Other borrowings

 

161,700

 

 

 

161,700

 

 

 

183,762

 

Accounts payable and other liabilities

 

194,255

 

 

 

194,603

 

 

 

231,582

 

Total liabilities

 

17,411,940

 

 

 

17,291,540

 

 

 

17,308,944

 

STOCKHOLDERSʼ EQUITY

 

 

 

 

 

 

 

 

Common stock, $0.10 par value, 223,663,116 shares issued (December 31, 2023 - 169,302,812 shares outstanding; September 30, 2023 - 174,386,326 shares outstanding; and December 31, 2022 - 182,709,059 shares outstanding)

 

22,366

 

 

 

22,366

 

 

 

22,366

 

Additional paid-in capital

 

965,707

 

 

 

963,791

 

 

 

970,722

 

Retained earnings

 

1,846,112

 

 

 

1,790,652

 

 

 

1,644,209

 

Treasury stock, at cost (December 31, 2023 - 54,360,304 shares; September 30, 2023 - 49,276,790 shares; December 31, 2022 - 40,954,057 shares)

 

(697,406

)

 

 

(622,378

)

 

 

(506,979

)

Accumulated other comprehensive loss

 

(639,170

)

 

 

(851,363

)

 

 

(804,778

)

Total stockholdersʼ equity

 

1,497,609

 

 

 

1,303,068

 

 

 

1,325,540

 

Total liabilities and stockholdersʼ equity

$

18,909,549

 

 

$

18,594,608

 

 

$

18,634,484

 

Table 2 – Condensed Consolidated Statements of Income

 

 

 

Quarter Ended

 

Year Ended

 

 

 

December 31, 2023

 

September 30, 2023

 

December 31, 2022

 

December 31, 2023

 

December 31, 2022

(In thousands, except per share information)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

$

265,481

 

 

$

263,405

 

 

$

233,452

 

 

$

1,023,486

 

 

$

862,614

 

 

Interest expense

 

68,799

 

 

 

63,677

 

 

 

27,879

 

 

 

226,376

 

 

 

67,321

 

 

 

Net interest income

 

196,682

 

 

 

199,728

 

 

 

205,573

 

 

 

797,110

 

 

 

795,293

 

Provision for credit losses - expense (benefit):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

18,975

 

 

 

10,643

 

 

 

15,651

 

 

 

66,644

 

 

 

25,679

 

 

Unfunded loan commitments

 

(123

)

 

 

(128

)

 

 

31

 

 

 

365

 

 

 

2,736

 

 

Debt securities

 

(40

)

 

 

(6,119

)

 

 

30

 

 

 

(6,069

)

 

 

(719

)

 

 

Provision for credit losses - expense

18,812

 

 

4,396

 

 

15,712

 

 

60,940

 

 

27,696

 

 

Net interest income after provision for credit losses

177,870

 

 

195,332

 

 

189,861

 

 

736,170

 

 

767,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges and fees on deposit accounts

 

9,662

 

 

 

9,552

 

 

 

9,174

 

 

 

38,042

 

 

 

37,823

 

 

Mortgage banking activities

 

2,094

 

 

 

2,821

 

 

 

2,572

 

 

 

10,587

 

 

 

15,260

 

 

Gain on early extinguishment of debt

 

-

 

 

 

-

 

 

 

-

 

 

 

1,605

 

 

 

-

 

 

Card and processing income

 

11,015

 

 

 

10,841

 

 

 

10,601

 

 

 

43,909

 

 

 

40,416

 

 

Other non-interest income

 

10,838

 

 

 

7,082

 

 

 

7,253

 

 

 

38,551

 

 

 

29,593

 

 

 

Total non-interest income

33,609

 

 

30,296

 

 

29,600

 

 

132,694

 

 

123,092

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employees’ compensation and benefits

 

55,584

 

 

 

56,535

 

 

 

52,241

 

 

 

222,855

 

 

 

206,038

 

 

Occupancy and equipment

 

21,847

 

 

 

21,781

 

 

 

21,843

 

 

 

85,911

 

 

 

88,277

 

 

Business promotion

 

6,725

 

 

 

4,759

 

 

 

5,590

 

 

 

19,626

 

 

 

18,231

 

 

Professional service fees

 

11,250

 

 

 

11,022

 

 

 

12,669

 

 

 

45,841

 

 

 

47,848

 

 

Taxes, other than income taxes

 

5,535

 

 

 

5,465

 

 

 

5,211

 

 

 

21,236

 

 

 

20,267

 

 

FDIC deposit insurance

 

8,454

 

 

 

2,143

 

 

 

1,544

 

 

 

14,873

 

 

 

6,149

 

 

Net gain on OREO operations

 

(1,005

)

 

 

(2,153

)

 

 

(2,557

)

 

 

(7,138

)

 

 

(5,826

)

 

Credit and debit card processing expenses

 

7,360

 

 

 

6,779

 

 

 

6,362

 

 

 

25,997

 

 

 

22,736

 

 

Other non-interest expenses

 

10,855

 

 

 

10,307

 

 

 

10,028

 

 

 

42,227

 

 

 

39,385

 

 

 

Total non-interest expenses

126,605

 

 

116,638

 

 

112,931

 

 

471,428

 

 

443,105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

84,874

 

 

 

108,990

 

 

 

106,530

 

 

 

397,436

 

 

 

447,584

 

Income tax expense

 

5,385

 

 

 

26,968

 

 

 

33,356

 

 

 

94,572

 

 

 

142,512

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

79,489

 

 

$

82,022

 

 

$

73,174

 

 

$

302,864

 

 

$

305,072

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders

$

79,489

 

 

$

82,022

 

 

$

73,174

 

 

$

302,864

 

 

$

305,072

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.47

 

 

$

0.47

 

 

$

0.40

 

 

$

1.72

 

 

$

1.60

 

 

Diluted

$

0.46

 

 

$

0.46

 

 

$

0.40

 

 

$

1.71

 

 

$

1.59

 

Table 3 – Selected Financial Data

 

 

Quarter Ended

 

 

Year Ended

 

 

December 31, 2023

 

September 30, 2023

 

December 31, 2022

 

December 31, 2023

 

December 31, 2022

(Shares in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Common Share Results:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share - basic

$

0.47

 

$

0.47

 

$

0.40

 

$

1.72

 

$

1.60

 

Net earnings per share - diluted

$

0.46

 

$

0.46

 

$

0.40

 

$

1.71

 

$

1.59

 

Cash dividends declared

$

0.14

 

$

0.14

 

$

0.12

 

$

0.56

 

$

0.46

 

Average shares outstanding

 

170,624

 

 

176,358

 

 

183,649

 

 

176,504

 

 

190,805

 

Average shares outstanding diluted

 

171,351

 

 

176,962

 

 

184,847

 

 

177,180

 

 

191,968

 

Book value per common share

$

8.85

 

$

7.47

 

$

7.25

 

$

8.85

 

$

7.25

 

Tangible book value per common share (1)

$

8.54

 

$

7.16

 

$

6.93

 

$

8.54

 

$

6.93

 

Common Stock Price: End of period

$

16.45

 

$

13.46

 

$

12.72

 

$

16.45

 

$

12.72

Selected Financial Ratios (In Percent):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profitability:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on Average Assets

 

1.70

 

 

1.72

 

 

1.58

 

 

1.62

 

 

1.57

 

Return on Average Common Equity

 

23.69

 

 

20.70

 

 

22.37

 

 

21.86

 

 

18.66

 

Interest Rate Spread (2)

 

3.34

 

 

3.41

 

 

4.08

 

 

3.53

 

 

4.03

 

Net Interest Margin (2)

 

4.23

 

 

4.24

 

 

4.52

 

 

4.33

 

 

4.29

 

Efficiency ratio (3)

 

54.98

 

 

50.71

 

 

48.02

 

 

50.70

 

 

48.25

Capital and Other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Total Equity to Average Total Assets

 

7.16

 

 

8.32

 

 

7.05

 

 

7.41

 

 

8.44

 

Total capital

 

18.57

 

 

18.84

 

 

19.21

 

 

18.57

 

 

19.21

 

Common equity Tier 1 capital

 

16.10

 

 

16.35

 

 

16.53

 

 

16.10

 

 

16.53

 

Tier 1 capital

 

16.10

 

 

16.35

 

 

16.53

 

 

16.10

 

 

16.53

 

Leverage

 

10.78

 

 

10.57

 

 

10.70

 

 

10.78

 

 

10.70

 

Tangible common equity ratio (1)

 

7.67

 

 

6.74

 

 

6.81

 

 

7.67

 

 

6.81

 

Dividend payout ratio

 

30.05

 

 

30.10

 

 

30.12

 

 

32.64

 

 

28.77

 

Basic liquidity ratio (4)

 

19.82

 

 

19.67

 

 

22.48

 

 

19.82

 

 

22.48

 

Core liquidity ratio (5)

 

14.93

 

 

14.58

 

 

19.02

 

 

14.93

 

 

19.02

 

Loan to deposit ratio

 

73.65

 

 

72.77

 

 

71.64

 

 

73.65

 

 

71.64

Asset Quality:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses for loans and finance leases to total loans held for investment

 

2.15

 

 

2.21

 

 

2.25

 

 

2.15

 

 

2.25

 

Net charge-offs (annualized) to average loans outstanding

 

0.69

 

 

0.48

 

 

0.46

 

 

0.58

 

 

0.31

 

Provision for credit losses for loans and finance leases to net charge-offs

 

91.46

 

 

75.56

 

 

119.97

 

 

98.91

 

 

74.99

 

Non-performing assets to total assets

 

0.67

 

 

0.70

 

 

0.69

 

 

0.67

 

 

0.69

 

Nonaccrual loans held for investment to total loans held for investment

 

0.69

 

 

0.78

 

 

0.78

 

 

0.69

 

 

0.78

 

Allowance for credit losses for loans and finance leases to total nonaccrual loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

held for investment

 

312.81

 

 

282.96

 

 

289.61

 

 

312.81

 

 

289.61

 

Allowance for credit losses for loans and finance leases to total nonaccrual loans held for investment, excluding residential estate loans

 

508.75

 

 

430.62

 

 

552.26

 

 

508.75

 

 

552.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Non-GAAP financial measures (as defined above). Refer to Statement of Financial Condition above and Table 4 below for additional information about the components and a reconciliation of these measures.

(2)

On a tax-equivalent basis and excluding changes in the fair value of derivative instruments (non-GAAP financial measure). Refer to Non-GAAP Disclosures above for additional information and a reconciliation of these measures.

(3)

Non-interest expenses to the sum of net interest income and non-interest income.

(4)

Defined as the sum of cash and cash equivalents, free high quality liquid assets that could be liquidated within one day, and available secured lines of credit with the FHLB to total assets.

(5)

Defined as the sum of cash and cash equivalents and free high quality liquid assets that could be liquidated within one day to total assets.

Table 4 – Reconciliation of Net Interest Income to Net Interest Income Excluding Valuations and on a Tax-Equivalent Basis

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 fourth and third quarters of 2023, the fourth quarter of 2022 and for the years ended December 31, 2023 and 2022, respectively. The table also reconciles net interest spread and net interest margin to these items excluding valuations, and on a tax-equivalent basis.

 

Quarter Ended

 

Year Ended

(Dollars in thousands)

December 31,2023

 

September 30, 2023

 

December 31,2022

 

 

December 31,2023

 

December 31,2022

Net Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income - GAAP

$

265,481

 

 

$

263,405

 

 

$

233,452

 

 

 

$

1,023,486

 

 

$

862,614

 

Unrealized loss (gain) on derivative instruments

 

8

 

 

 

(3

)

 

 

5

 

 

 

 

8

 

 

 

(30

)

Interest income excluding valuations non-GAAP

 

265,489

 

 

 

263,402

 

 

 

233,457

 

 

 

 

1,023,494

 

 

 

862,584

 

Tax-equivalent adjustment

 

4,262

 

 

 

4,690

 

 

 

7,391

 

 

 

 

20,839

 

 

 

33,149

 

Interest income on a tax-equivalent basis and excluding valuations non-GAAP

$

269,751

 

 

$

268,092

 

 

$

240,848

 

 

 

$

1,044,333

 

 

$

895,733

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense - GAAP

$

68,799

 

 

$

63,677

 

 

$

27,879

 

 

 

$

226,376

 

 

$

67,321

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income - GAAP

$

196,682

 

 

$

199,728

 

 

$

205,573

 

 

 

$

797,110

 

 

$

795,293

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income excluding valuations - non-GAAP

$

196,690

 

 

$

199,725

 

 

$

205,578

 

 

 

$

797,118

 

 

$

795,263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income on a tax-equivalent basis and excluding valuations - non-GAAP

$

200,952

 

 

$

204,415

 

 

$

212,969

 

 

 

$

817,957

 

 

$

828,412

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Balances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases

$

12,004,881

 

 

$

11,783,456

 

 

$

11,364,963

 

 

 

$

11,726,304

 

 

$

11,199,013

 

Total securities, other short-term investments and interest-bearing cash balances

 

6,835,407

 

 

 

7,325,226

 

 

 

7,314,293

 

 

 

 

7,181,048

 

 

 

8,112,842

 

Average Interest-Earning Assets

$

18,840,288

 

 

$

19,108,682

 

 

$

18,679,256

 

 

 

$

18,907,352

 

 

$

19,311,855

 

Average Interest-Bearing Liabilities

$

11,665,459

 

 

$

11,671,938

 

 

$

10,683,776

 

 

 

$

11,370,689

 

 

$

11,120,732

 

Average Assets (1)

$

18,581,625

 

 

$

18,895,980

 

 

$

18,411,440

 

 

 

$

18,706,423

 

 

$

19,378,649

 

Average Non-Interest-Bearing Deposits

$

5,384,264

 

 

$

5,621,233

 

 

$

6,207,108

 

 

 

$

5,741,345

 

 

$

6,391,171

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Yield/Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average yield on interest-earning assets - GAAP

 

5.59

%

 

 

5.47

%

 

 

4.96

%

 

 

 

5.41

%

 

 

4.47

%

Average rate on interest-bearing liabilities - GAAP

 

2.34

%

 

 

2.16

%

 

 

1.04

%

 

 

 

1.99

%

 

 

0.61

%

Net interest spread - GAAP

 

3.25

%

 

 

3.31

%

 

 

3.92

%

 

 

 

3.42

%

 

 

3.86

%

Net interest margin - GAAP

 

4.14

%

 

 

4.15

%

 

 

4.37

%

 

 

 

4.22

%

 

 

4.12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average yield on interest-earning assets excluding valuations - non-GAAP

 

5.59

%

 

 

5.47

%

 

 

4.96

%

 

 

 

5.41

%

 

 

4.47

%

Average rate on interest-bearing liabilities

 

2.34

%

 

 

2.16

%

 

 

1.04

%

 

 

 

1.99

%

 

 

0.61

%

Net interest spread excluding valuations - non-GAAP

 

3.25

%

 

 

3.31

%

 

 

3.92

%

 

 

 

3.42

%

 

 

3.86

%

Net interest margin excluding valuations - non-GAAP

 

4.14

%

 

 

4.15

%

 

 

4.37

%

 

 

 

4.22

%

 

 

4.12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average yield on interest-earning assets on a tax-equivalent basis and excluding valuations - non-GAAP

 

5.68

%

 

 

5.57

%

 

 

5.12

%

 

 

 

5.52

%

 

 

4.64

%

Average rate on interest-bearing liabilities

 

2.34

%

 

 

2.16

%

 

 

1.04

%

 

 

 

1.99

%

 

 

0.61

%

Net interest spread on a tax-equivalent basis and excluding valuations - non-GAAP

 

3.34

%

 

 

3.41

%

 

 

4.08

%

 

 

 

3.53

%

 

 

4.03

%

Net interest margin on a tax-equivalent basis and excluding valuations - non-GAAP

 

4.23

%

 

 

4.24

%

 

 

4.52

%

 

 

 

4.33

%

 

 

4.29

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes, among other things, the ACL on loans and finance leases and debt securities, as well as unrealized gains and losses on available-for-sale debt securities.

Table 5 – Quarterly Statement of Average Interest-Earning Assets and Average Interest-Bearing Liabilities (On a Tax-Equivalent Basis)

 

Average Volume

 

Interest income (1) / expense

 

Average Rate (1)

Quarter Ended

December

31,

 

September

30,

 

December

31,

 

December

31,

 

September

30,

 

December

31,

 

December

31,

 

September

30,

 

December

31,

 

 

2023

 

2023

 

2022

 

2023

 

2023

 

2022

 

2023

 

2023

 

2022

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market and other short-term investments

$

503,293

 

$

807,883

 

$

394,471

 

$

6,933

 

$

10,956

 

$

3,444

 

5.47

%

 

5.38

%

 

3.46

%

Government obligations (2)

 

2,738,478

 

 

2,817,646

 

 

2,910,733

 

 

9,161

 

 

9,415

 

 

10,386

 

1.33

%

 

1.33

%

 

1.42

%

MBS

 

3,543,423

 

 

3,650,737

 

 

3,973,307

 

 

15,481

 

 

15,677

 

 

20,838

 

1.73

%

 

1.70

%

 

2.08

%

FHLB stock

 

34,745

 

 

34,666

 

 

22,292

 

 

830

 

 

768

 

 

284

 

9.48

%

 

8.79

%

 

5.05

%

Other investments

 

15,468

 

 

14,294

 

 

13,490

 

 

232

 

 

61

 

 

48

 

5.95

%

 

1.69

%

 

1.41

%

 

Total investments (3)

 

6,835,407

 

 

7,325,226

 

 

7,314,293

 

 

32,637

 

 

36,877

 

 

35,000

 

1.89

%

 

2.00

%

 

1.90

%

Residential mortgage loans

 

2,812,428

 

 

2,800,675

 

 

2,839,268

 

 

40,711

 

 

39,640

 

 

39,225

 

5.74

%

 

5.62

%

 

5.48

%

Construction loans

 

211,641

 

 

183,507

 

 

128,845

 

 

4,295

 

 

4,937

 

 

2,227

 

8.05

%

 

10.67

%

 

6.86

%

C&I and commercial mortgage loans

 

5,355,145

 

 

5,261,849

 

 

5,127,028

 

 

96,299

 

 

93,711

 

 

81,464

 

7.13

%

 

7.07

%

 

6.30

%

Finance leases

 

844,780

 

 

808,480

 

 

691,585

 

 

16,584

 

 

15,802

 

 

12,769

 

7.79

%

 

7.75

%

 

7.33

%

Consumer loans

 

2,780,887

 

 

2,728,945

 

 

2,578,237

 

 

79,225

 

 

77,125

 

 

70,163

 

11.30

%

 

11.21

%

 

10.80

%

 

Total loans (4) (5)

 

12,004,881

 

 

11,783,456

 

 

11,364,963

 

 

237,114

 

 

231,215

 

 

205,848

 

7.84

%

 

7.78

%

 

7.19

%

 

Total interest-earning assets

$

18,840,288

 

$

19,108,682

 

$

18,679,256

 

$

269,751

 

$

268,092

 

$

240,848

 

5.68

%

 

5.57

%

 

5.12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time deposits

$

2,792,843

 

$

2,708,297

 

$

2,180,928

 

$

22,304

 

$

19,852

 

$

6,055

 

3.17

%

 

2.91

%

 

1.10

%

Brokered CDs

 

572,105

 

 

318,831

 

 

47,304

 

 

7,452

 

 

3,830

 

 

286

 

5.17

%

 

4.77

%

 

2.40

%

Other interest-bearing deposits

 

7,635,223

 

 

7,956,856

 

 

7,909,759

 

 

29,918

 

 

30,616

 

 

14,696

 

1.55

%

 

1.53

%

 

0.74

%

Securities sold under agreements to repurchase

 

925

 

 

26,254

 

 

139,740

 

 

13

 

 

359

 

 

1,408

 

5.58

%

 

5.43

%

 

4.00

%

Advances from the FHLB

 

502,446

 

 

500,000

 

 

220,652

 

 

5,709

 

 

5,675

 

 

2,469

 

4.51

%

 

4.50

%

 

4.44

%

Other borrowings

 

161,917

 

 

161,700

 

 

185,393

 

 

3,403

 

 

3,345

 

 

2,965

 

8.34

%

 

8.21

%

 

6.35

%

 

Total interest-bearing liabilities

$

11,665,459

 

$

11,671,938

 

$

10,683,776

 

$

68,799

 

$

63,677

 

$

27,879

 

2.34

%

 

2.16

%

 

1.04

%

Net interest income

 

 

 

 

 

 

 

 

 

$

200,952

 

$

204,415

 

$

212,969

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.34

%

 

3.41

%

 

4.08

%

Net interest margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.23

%

 

4.24

%

 

4.52

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 37.5% and adding to it the cost of interest-bearing liabilities. When adjusted to a tax-equivalent basis, yields on taxable and exempt assets are comparable. Changes in the fair value of derivative instruments are excluded from interest income because the changes in valuation do not affect interest paid or received. Refer to Non-GAAP Disclosures and Table 4 above for additional information and a reconciliation of these measures.

(2)

Government obligations include debt issued by government-sponsored agencies.

(3)

Unrealized gains and losses on available-for-sale debt securities are excluded from the average volumes.

(4)

Average loan balances include the average of non-performing loans.

(5)

Interest income on loans includes $3.0 million, $2.9 million, and $2.7 million, for the quarters ended December 31, 2023, September 31, 2023, and December 31, 2022, of income from prepayment penalties and late fees related to the Corporation’s loan portfolio.

Table 6 – Year-to-Date Statement of Average Interest-Earning Assets and Average Interest-Bearing Liabilities (On a Tax-Equivalent Basis)

 

Average Volume

 

Interest income (1) / expense

 

Average Rate (1)

Year Ended

December 31,

2023

 

December 31,

2022

 

December 31,

2023

 

December 31,

2022

 

December 31,

2023

 

December 31,

2022

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market and other short-term investments

$

584,083

 

$

1,156,127

 

$

30,419

 

$

11,791

 

5.21

%

 

1.02

%

Government obligations (2)

 

2,843,284

 

 

2,870,889

 

 

40,314

 

 

39,033

 

1.42

%

 

1.36

%

MBS

 

3,702,908

 

 

4,052,660

 

 

67,641

 

 

85,090

 

1.83

%

 

2.10

%

FHLB stock

 

36,606

 

 

20,419

 

 

2,799

 

 

1,114

 

7.65

%

 

5.46

%

Other investments

 

14,167

 

 

12,747

 

 

490

 

 

126

 

3.46

%

 

0.99

%

 

Total investments (3)

 

7,181,048

 

 

8,112,842

 

 

141,663

 

 

137,154

 

1.97

%

 

1.69

%

Residential mortgage loans

 

2,814,102

 

 

2,886,594

 

 

160,009

 

 

160,359

 

5.69

%

 

5.56

%

Construction loans

 

172,952

 

 

121,642

 

 

14,811

 

 

7,350

 

8.56

%

 

6.04

%

C&I and commercial mortgage loans

 

5,244,503

 

 

5,092,638

 

 

365,185

 

 

281,486

 

6.96

%

 

5.53

%

Finance leases

 

789,870

 

 

636,507

 

 

60,909

 

 

46,842

 

7.71

%

 

7.36

%

Consumer loans

 

2,704,877

 

 

2,461,632

 

 

301,756

 

 

262,542

 

11.16

%

 

10.67

%

 

Total loans (4) (5)

 

11,726,304

 

 

11,199,013

 

 

902,670

 

 

758,579

 

7.70

%

 

6.77

%

 

Total interest-earning assets

$

18,907,352

 

$

19,311,855

 

$

1,044,333

 

$

895,733

 

5.52

%

 

4.64

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time deposits

$

2,590,313

 

$

2,213,145

 

$

68,605

 

$

18,102

 

2.65

%

 

0.82

%

Brokered CDs

 

348,829

 

 

69,694

 

 

16,630

 

 

1,500

 

4.77

%

 

2.15

%

Other interest-bearing deposits

 

7,664,793

 

 

8,279,320

 

 

100,226

 

 

26,759

 

1.31

%

 

0.32

%

Securities sold under agreements to repurchase

 

54,570

 

 

194,948

 

 

2,769

 

 

7,555

 

5.07

%

 

3.88

%

Advances from the FHLB

 

541,000

 

 

179,452

 

 

24,608

 

 

5,136

 

4.55

%

 

2.86

%

Other borrowings

 

171,184

 

 

184,173

 

 

13,538

 

 

8,269

 

7.91

%

 

4.49

%

 

Total interest-bearing liabilities

$

11,370,689

 

$

11,120,732

 

$

226,376

 

$

67,321

 

1.99

%

 

0.61

%

Net interest income

 

 

 

 

 

 

$

817,957

 

$

828,412

 

 

 

 

Interest rate spread

 

 

 

 

 

 

 

 

 

 

 

 

3.53

%

 

4.03

%

Net interest margin

 

 

 

 

 

 

 

 

 

 

 

 

4.33

%

 

4.29

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 37.5% and adding to it the cost of interest-bearing liabilities. When adjusted to a tax-equivalent basis, yields on taxable and exempt assets are comparable. Changes in the fair value of derivative instruments are excluded from interest income because the changes in valuation do not affect interest paid or received. Refer to Non-GAAP Disclosures and Table 4 above for additional information and a reconciliation of these measures.

(2)

Government obligations include debt issued by government-sponsored agencies.

(3)

Unrealized gains and losses on available-for-sale debt securities are excluded from the average volumes.

(4)

Average loan balances include the average of non-performing loans.

(5)

Interest income on loans includes $11.9 million and $11.2 million for the years ended December 31, 2023 and 2022, respectively, of income from prepayment penalties and late fees related to the Corporation's loan portfolio.

Table 7 – Loan Portfolio by Geography

 

As of December 31,2023

 

Puerto Rico

 

Virgin Islands

 

United States

 

Consolidated

(In thousands)

 

 

Residential mortgage loans

$

2,187,875

 

$

168,131

 

$

465,720

 

$

2,821,726

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans:

 

 

 

 

 

 

 

 

 

 

 

Construction loans

 

111,664

 

 

3,737

 

 

99,376

 

 

214,777

Commercial mortgage loans

 

1,725,325

 

 

65,312

 

 

526,446

 

 

2,317,083

Commercial and Industrial loans

 

2,130,368

 

 

119,040

 

 

924,824

 

 

3,174,232

Commercial loans

 

3,967,357

 

 

188,089

 

 

1,550,646

 

 

5,706,092

 

 

 

 

 

 

 

 

 

 

 

 

Finance leases

 

856,815

 

 

-

 

 

-

 

 

856,815

 

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

2,726,457

 

 

68,498

 

 

5,895

 

 

2,800,850

Loans held for investment

 

9,738,504

 

 

424,718

 

 

2,022,261

 

 

12,185,483

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

7,368

 

 

-

 

 

-

 

 

7,368

Total loans

$

9,745,872

 

$

424,718

 

$

2,022,261

 

$

12,192,851

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2023

 

Puerto Rico

 

Virgin Islands

 

United States

 

Consolidated

(In thousands)

 

 

Residential mortgage loans

$

2,182,882

 

$

170,797

 

$

458,952

 

$

2,812,631

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans:

 

 

 

 

 

 

 

 

 

 

 

Construction loans

 

98,565

 

 

3,762

 

 

100,447

 

 

202,774

Commercial mortgage loans

 

1,714,974

 

 

65,034

 

 

536,105

 

 

2,316,113

Commercial and Industrial loans

 

1,971,686

 

 

116,588

 

 

942,680

 

 

3,030,954

Commercial loans

 

3,785,225

 

 

185,384

 

 

1,579,232

 

 

5,549,841

 

 

 

 

 

 

 

 

 

 

 

 

Finance leases

 

831,540

 

 

-

 

 

-

 

 

831,540

 

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

2,683,277

 

 

67,184

 

 

6,459

 

 

2,756,920

Loans held for investment

 

9,482,924

 

 

423,365

 

 

2,044,643

 

 

11,950,932

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

8,961

 

 

-

 

 

-

 

 

8,961

Total loans

$

9,491,885

 

$

423,365

 

$

2,044,643

 

$

11,959,893

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2022

 

Puerto Rico

 

Virgin Islands

 

United States

 

Consolidated

(In thousands)

 

 

Residential mortgage loans

$

2,237,983

 

$

179,917

 

$

429,390

 

$

2,847,290

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans:

 

 

 

 

 

 

 

 

 

 

 

Construction loans

 

30,529

 

 

4,243

 

 

98,181

 

 

132,953

Commercial mortgage loans

 

1,768,890

 

 

65,314

 

 

524,647

 

 

2,358,851

Commercial and Industrial loans

 

1,791,235

 

 

68,874

 

 

1,026,154

 

 

2,886,263

Commercial loans

 

3,590,654

 

 

138,431

 

 

1,648,982

 

 

5,378,067

 

 

 

 

 

 

 

 

 

 

 

 

Finance leases

 

718,230

 

 

-

 

 

-

 

 

718,230

 

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

2,537,840

 

 

61,419

 

 

9,979

 

 

2,609,238

Loans held for investment

 

9,084,707

 

 

379,767

 

 

2,088,351

 

 

11,552,825

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

12,306

 

 

-

 

 

-

 

 

12,306

Total loans

$

9,097,013

 

$

379,767

 

$

2,088,351

 

$

11,565,131

Table 8 – Non-Performing Assets by Geography

 

As of December 31,2023

(In thousands)

Puerto Rico

 

Virgin Islands

 

United States

 

Total

Nonaccrual loans held for investment:

 

 

Residential mortgage

$

18,324

 

$

6,688

 

$

7,227

 

$

32,239

Construction

 

595

 

 

974

 

 

-

 

 

1,569

Commercial mortgage

 

3,106

 

 

9,099

 

 

-

 

 

12,205

Commercial and Industrial

 

13,414

 

 

1,169

 

 

667

 

 

15,250

Consumer and finance leases

 

21,954

 

 

419

 

 

71

 

 

22,444

Total nonaccrual loans held for investment

 

57,393

 

 

18,349

 

 

7,965

 

 

83,707

OREO

 

28,382

 

 

4,287

 

 

-

 

 

32,669

Other repossessed property

 

7,857

 

 

252

 

 

6

 

 

8,115

Other assets (1)

 

1,415

 

 

-

 

 

-

 

 

1,415

Total non-performing assets (2)

$

95,047

 

$

22,888

 

$

7,971

 

$

125,906

Past due loans 90 days and still accruing (3)

$

53,308

 

$

6,005

 

$

139

 

$

59,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2023

(In thousands)

Puerto Rico

 

Virgin Islands

 

United States

 

Total

Nonaccrual loans held for investment:

 

 

Residential mortgage

$

19,378

 

$

5,871

 

$

6,697

 

$

31,946

Construction

 

669

 

 

971

 

 

-

 

 

1,640

Commercial mortgage

 

13,220

 

 

8,412

 

 

-

 

 

21,632

Commercial and Industrial

 

15,779

 

 

1,094

 

 

1,936

 

 

18,809

Consumer and finance leases

 

18,564

 

 

475

 

 

98

 

 

19,137

Total nonaccrual loans held for investment

 

67,610

 

 

16,823

 

 

8,731

 

 

93,164

OREO

 

23,547

 

 

4,638

 

 

378

 

 

28,563

Other repossessed property

 

6,799

 

 

264

 

 

-

 

 

7,063

Other assets (1)

 

1,448

 

 

-

 

 

-

 

 

1,448

Total non-performing assets (2)

$

99,404

 

$

21,725

 

$

9,109

 

$

130,238

Past due loans 90 days and still accruing (3)

$

57,834

 

$

4,678

 

$

380

 

$

62,892

 

 

 

 

 

 

  <