UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
______________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2016
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______
COMMISSION FILE NUMBER 001-14793
First BanCorp.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Puerto Rico |
|
66-0561882 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. employer identification number) |
|
|
|
1519 Ponce de León Avenue, Stop 23 Santurce, Puerto Rico (Address of principal executive offices) |
|
00908 (Zip Code) |
|
|
|
(787) 729-8200 |
||
(Registrant’s telephone number, including area code) |
||
Not applicable (Former name, former address and former fiscal year, if changed since last report) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ Noo
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes þ Noo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o |
Accelerated filerþ |
|
|
Non-accelerated filer o (Do not check if a smaller reporting company) |
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common stock: 217,047,224 shares outstanding as of April 30, 2016.
FIRST BANCORP.
INDEX PAGE
PART I. FINANCIAL INFORMATION |
PAGE |
Item 1. Financial Statements: |
|
Consolidated Statements of Financial Condition (Unaudited) as of March 31, 2016 and December 31, 2015 |
5 |
Consolidated Statements of Income (Unaudited) – Quarters ended March 31, 2016 and March 31, 2015 |
6 |
Consolidated Statements of Comprehensive Income (Unaudited) – Quarters ended March 31, 2016 and March 31, 2015 |
7 |
Consolidated Statements of Cash Flows (Unaudited) – Quarters ended March 31, 2016 and March 31, 2015 |
8 |
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) – Quarters ended March 31, 2016 and March 31, 2015 |
9 |
Notes to Consolidated Financial Statements (Unaudited) |
10 |
Item 2. Management's Discussion and Analysis of Financial Condition |
|
and Results of Operations |
69 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
119 |
Item 4. Controls and Procedures |
119 |
|
|
PART II. OTHER INFORMATION |
|
Item 1. Legal Proceedings |
120 |
Item 1A. Risk Factors |
120 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
122 |
Item 3. Defaults Upon Senior Securities |
123 |
Item 4. Mine Safety Disclosures |
123 |
Item 5. Other Information |
123 |
Item 6. Exhibits |
124 |
|
|
SIGNATURES |
|
|
|
2
Forward Looking Statements
This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the safe harbors created by such sections. When used in this Form 10-Q or future filings by First BanCorp. (the “Corporation”) with the U.S. Securities and Exchange Commission (“SEC”), in the Corporation’s press releases or in other public or stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “would,” “will allow,” “intends,” “will likely result,” “expect to,” “should,” “anticipate,” “look forward,” “believes,” and other terms of similar meaning or import in connection with any discussion of future operating, financial or other performance are meant to identify “forward-looking statements.”
FirstBanCorp. wishes to caution readers not to place undue reliance on any such “forward-looking statements,” which speak only as of the date made, and to advise readers that these 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, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. Factors that might cause such a difference include, but are not limited to, the risks described or referenced below in Item 1A. “Risk Factors,” and the following:
· the ability of the Puerto Rico government or any of its public corporations or other instrumentalities to repay its respective debt obligations, including the effect of the recent payment defaults on bonds of the Government Development Bank for Puerto Rico (“GDB”) and certain bonds of government public corporations, recent and any future downgrades of the long-term and short-term debt ratings of the Puerto Rico government, and uncertainties as to how the United States (“U.S.”) government will address Puerto Rico’s financial problems, which could exacerbate Puerto Rico’s adverse economic conditions and, in turn, further adversely impact the Corporation;
· uncertainty about whether the Corporation will be able to continue to fully comply with the written agreement dated June 3, 2010 (the “Written Agreement”) that the Corporation entered into with the Federal Reserve Bank of New York (the “New York FED” or “Federal Reserve”) that, among other things, requires the Corporation to serve as a source of strength to FirstBank Puerto Rico (“FirstBank” or the “Bank”) and that, except with the consent generally of the New York FED and the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), prohibits the Corporation from paying dividends to stockholders or receiving dividends from FirstBank, making payments on trust preferred securities or subordinated debt and incurring, increasing or guaranteeing debt or repurchasing any capital securities;
· a decrease in demand for the Corporation’s products and services and lower revenues and earnings because of the continued recession in Puerto Rico;
· uncertainty as to the availability of certain funding sources, such as retail brokered certificates of deposit (“brokered CDs”);
· the Corporation’s reliance on brokered CDs to fund operations and provide liquidity;
· the risk of not being able to fulfill the Corporation’s cash obligations or resume paying dividends to the Corporation’s stockholders in the future due to the Corporation’s need to receive approval from the New York FED and the Federal Reserve Board to declare or pay any dividends and to take dividends or any other form of payment representing a reduction in capital from FirstBank or FirstBank’s failure to generate sufficient cash flow to make a dividend payment to the Corporation;
· the weakness of the real estate markets and of the consumer and commercial sectors and their impact on the credit quality of the Corporation’s loans and other assets, which has contributed and may continue to contribute to, among other things, high levels of non-performing assets, charge-offs and provisions for loan and lease losses and may subject the Corporation to further risk from loan defaults and foreclosures;
· the ability of FirstBank to realize the benefits of its deferred tax assets subject to the remaining valuation allowance;
· adverse changes in general economic conditions in Puerto Rico, the U.S., and the U.S. Virgin Islands (“USVI”) and British Virgin Islands (“BVI”), including the interest rate environment, market liquidity, housing absorption rates, real estate prices, and disruptions in the U.S. capital markets, which reduced interest margins and affected funding sources, and has affected demand for all of the Corporation’s products and services and reduced the Corporation’s revenues and earnings, and the value of the Corporation’s assets, and may continue to have these effects;
· an adverse change in the Corporation’s ability to attract new clients and retain existing ones;
3
· the risk that additional portions of the unrealized losses in the Corporation’s investment portfolio are determined to be other-than-temporary, including additional impairments on the Puerto Rico government’s obligations;
· uncertainty about regulatory and legislative changes for financial services companies in Puerto Rico, the U.S., the USVI and the BVI, which could affect the Corporation’s financial condition or performance and could cause the Corporation’s actual results for future periods to differ materially from prior results and anticipated or projected results;
· changes in the fiscal and monetary policies and regulations of the U.S. federal government and the Puerto Rico and other governments, including those determined by the Federal Reserve Board, the New York FED, the Federal Deposit Insurance Corporation (“FDIC”), government-sponsored housing agencies, and regulators in Puerto Rico, the USVI and the BVI;
· the risk of possible failure or circumvention of controls and procedures and the risk that the Corporation’s risk management policies may not be adequate;
· the risk that the FDIC may increase the deposit insurance premium and/or require special assessments to replenish its insurance fund, causing an additional increase in the Corporation’s non-interest expenses;
· the impact on the Corporation’s results of operations and financial condition of acquisitions and dispositions;
· a need to recognize impairments on the Corporation’s financial instruments, goodwill or other intangible assets relating to acquisitions;
· the risk that downgrades in the credit ratings of the Corporation’s long-term senior debt will adversely affect the Corporation’s ability to access necessary external funds;
· the impact on the Corporation’s businesses, business practices and results of operations of a potential higher interest rate environment; and
· general competitive factors and industry consolidation.
The Corporation does not undertake, and specifically disclaims any obligation, to update any of the “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.
Investors should refer to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015, as well as “Part II, Item 1A, Risk Factors” in this quarterly report on Form 10-Q, for a discussion of such factors and certain risks and uncertainties to which the Corporation is subject.
4
FIRST BANCORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
|
March 31, 2016 |
|
December 31, 2015 |
||
(In thousands, except for share information) |
|||||
ASSETS |
|
|
|
|
|
Cash and due from banks |
$ |
813,732 |
|
$ |
532,985 |
Money market investments: |
|
|
|
|
|
Time deposits with other financial institutions |
|
3,000 |
|
|
3,000 |
Other short-term investments |
|
210,093 |
|
|
216,473 |
Total money market investments |
|
213,093 |
|
|
219,473 |
Investment securities available for sale, at fair value: |
|
|
|
|
|
Securities pledged that can be repledged |
|
793,303 |
|
|
793,562 |
Other investment securities |
|
1,110,952 |
|
|
1,092,833 |
Total investment securities available for sale |
|
1,904,255 |
|
|
1,886,395 |
Other equity securities |
|
32,310 |
|
|
32,169 |
Loans, net of allowance for loan and lease losses of $238,125 |
|
|
|
|
|
(2015 - $240,710) |
|
8,893,217 |
|
|
9,033,155 |
Loans held for sale, at lower of cost or market |
|
37,868 |
|
|
35,869 |
Total loans, net |
|
8,931,085 |
|
|
9,069,024 |
Premises and equipment, net |
|
159,151 |
|
|
161,016 |
Other real estate owned |
|
142,888 |
|
|
146,801 |
Accrued interest receivable on loans and investments |
|
44,891 |
|
|
48,697 |
Other assets |
|
472,965 |
|
|
476,459 |
Total assets |
$ |
12,714,370 |
|
$ |
12,573,019 |
LIABILITIES |
|
|
|
|
|
Non-interest-bearing deposits |
$ |
1,422,346 |
|
$ |
1,336,559 |
Interest-bearing deposits |
|
8,012,434 |
|
|
8,001,565 |
Total deposits |
|
9,434,780 |
|
|
9,338,124 |
Securities sold under agreements to repurchase |
|
700,000 |
|
|
700,000 |
Advances from the Federal Home Loan Bank (FHLB) |
|
455,000 |
|
|
455,000 |
Other borrowings |
|
216,183 |
|
|
226,492 |
Accounts payable and other liabilities |
|
159,240 |
|
|
159,269 |
Total liabilities |
|
10,965,203 |
|
|
10,878,885 |
STOCKHOLDERS' EQUITY |
|
|
|
|
|
Preferred stock, authorized, 50,000,000 shares: |
|
|
|
|
|
Non-cumulative Perpetual Monthly Income Preferred Stock: |
|
|
|
|
|
issued 22,004,000 shares, outstanding 1,444,146 shares, aggregate |
|
|
|
|
|
liquidation value of $36,104 |
|
36,104 |
|
|
36,104 |
Common stock, $0.10 par value, authorized, 2,000,000,000 shares; |
|
|
|
|
|
issued, 218,089,106 shares (2015 - 216,051,128 shares issued) |
|
21,809 |
|
|
21,605 |
Less: Treasury stock (at par value) |
|
(108) |
|
|
(96) |
Common stock outstanding, 217,011,555 shares outstanding (2015 - 215,088,698 |
|
|
|
|
|
shares outstanding) |
|
21,701 |
|
|
21,509 |
Additional paid-in capital |
|
927,454 |
|
|
926,348 |
Retained earnings, includes legal surplus reserve of $42.8 million |
|
761,266 |
|
|
737,922 |
Accumulated other comprehensive income (loss), net of tax of $7,752 |
|
2,642 |
|
|
(27,749) |
Total stockholders' equity |
|
1,749,167 |
|
|
1,694,134 |
Total liabilities and stockholders' equity |
$ |
12,714,370 |
|
$ |
12,573,019 |
|
|
|
|
|
|
The accompanying notes are an integral part of these statements. |
5
FIRST BANCORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
Quarter Ended |
||||
|
March 31, 2016 |
|
March 31, 2015 |
||
(In thousands, except per share information) |
|
|
|
||
Interest and dividend income: |
|
|
|
|
|
Loans |
$ |
137,033 |
|
$ |
139,344 |
Investment securities |
|
12,725 |
|
|
12,604 |
Money market investments |
|
1,073 |
|
|
537 |
Total interest income |
150,831 |
|
152,485 |
||
Interest expense: |
|
|
|
|
|
Deposits |
|
17,257 |
|
|
17,694 |
Securities sold under agreements to repurchase |
|
5,476 |
|
|
6,393 |
Advances from FHLB |
|
1,471 |
|
|
934 |
Other borrowings |
|
1,979 |
|
|
1,817 |
Total interest expense |
26,183 |
|
26,838 |
||
Net interest income |
|
124,648 |
|
|
125,647 |
Provision for loan and lease losses |
|
21,053 |
|
|
32,970 |
Net interest income after provision for loan and lease losses |
103,595 |
|
92,677 |
||
Non-interest income: |
|
|
|
|
|
Service charges and fees on deposit accounts |
|
5,800 |
|
|
4,555 |
Mortgage banking activities |
|
4,753 |
|
|
3,618 |
Net gain on sale of investments |
|
8 |
|
|
- |
Other-than-temporary impairment (OTTI) losses on available-for-sale debt securities: |
|
|
|
|
|
Total other-than-temporary impairment losses |
|
(1,845) |
|
|
- |
Portion of other-than-temporary impairment |
|
|
|
|
|
recognized in other comprehensive income (OCI) |
|
(4,842) |
|
|
(156) |
Net impairment losses on available-for-sale debt securities |
|
(6,687) |
|
|
(156) |
Gain on early extinguishment of debt |
|
4,217 |
|
|
- |
Insurance commission income |
|
3,269 |
|
|
3,022 |
Bargain purchase gain |
|
- |
|
|
13,443 |
Other non-interest income |
|
7,109 |
|
|
8,247 |
Total non-interest income |
18,469 |
|
32,729 |
||
Non-interest expenses: |
|
|
|
|
|
Employees' compensation and benefits |
|
38,435 |
|
|
35,654 |
Occupancy and equipment |
|
14,183 |
|
|
14,349 |
Business promotion |
|
4,003 |
|
|
2,868 |
Professional fees |
|
10,776 |
|
|
15,218 |
Taxes, other than income taxes |
|
3,792 |
|
|
3,001 |
Insurance and supervisory fees |
|
7,343 |
|
|
6,860 |
Net loss on other real estate owned (OREO) and OREO operations |
|
3,206 |
|
|
2,628 |
Credit and debit card processing expenses |
|
3,282 |
|
|
3,957 |
Communications |
|
1,808 |
|
|
1,608 |
Other non-interest expenses |
|
6,169 |
|
|
5,585 |
Total non-interest expenses |
92,997 |
|
91,728 |
||
Income before income taxes |
|
29,067 |
|
|
33,678 |
Income tax expense |
|
(5,723) |
|
|
(8,032) |
Net income |
$ |
23,344 |
|
$ |
25,646 |
Net income attributable to common stockholders |
$ |
23,344 |
|
$ |
25,646 |
Net income per common share: |
|
|
|
|
|
Basic |
$ |
0.11 |
|
$ |
0.12 |
Diluted |
$ |
0.11 |
|
$ |
0.12 |
Dividends declared per common share |
$ |
- |
|
$ |
- |
|
|
|
|
|
|
The accompanying notes are an integral part of these statements. |
|
|
|
|
|
6
FIRST BANCORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
Quarter Ended |
||||
|
|
March 31, |
|
|
March 31, |
|
2016 |
|
|
2015 |
|
(In thousands) |
|
||||
|
|
|
|
|
|
Net income |
$ |
23,344 |
|
$ |
25,646 |
|
|
|
|
|
|
Available-for-sale debt securities on which an other-than-temporary |
|
|
|
|
|
impairment has been recognized: |
|
|
|
|
|
Unrealized (loss) gain on debt securities on which an |
|
|
|
|
|
other-than-temporary impairment has been recognized |
|
(998) |
|
|
689 |
Reclassification adjustment for other-than-temporary impairment |
|
|
|
|
|
on debt securities included in net income |
|
6,687 |
|
|
156 |
All other unrealized gains and losses on available-for-sale securities: |
|
|
|
|
|
Reclassification adjustments for net gain included in net income |
|
(8) |
|
|
- |
All other unrealized holding gains on available-for-sale securities arising during the period |
|
24,710 |
|
|
6,295 |
Other comprehensive income for the period, net of tax |
|
30,391 |
|
|
7,140 |
Total comprehensive income |
$ |
53,735 |
|
$ |
32,786 |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these statements. |
7
FIRST BANCORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
Quarter Ended |
||||
|
March 31, 2016 |
|
March 31, 2015 |
||
(In thousands) |
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
Net income |
$ |
23,344 |
|
$ |
25,646 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
4,588 |
|
|
5,306 |
Amortization of intangible assets |
|
1,214 |
|
|
1,093 |
Provision for loan and lease losses |
|
21,053 |
|
|
32,970 |
Deferred income tax expense |
|
3,635 |
|
|
2,060 |
Stock-based compensation |
|
1,557 |
|
|
1,457 |
Gain on sales of investments |
|
(8) |
|
|
- |
Bargain purchase gain |
|
- |
|
|
(13,443) |
Gain on early extinguishment of debt |
|
(4,217) |
|
|
- |
Other-than-temporary impairments on debt securities |
|
6,687 |
|
|
156 |
Unrealized loss on derivative instruments |
|
153 |
|
|
72 |
Gain on sales of premises and equipment and other assets |
|
- |
|
|
(194) |
Net gain on sales of loans |
|
(2,488) |
|
|
(1,689) |
Net amortization/accretion of premiums, discounts and deferred loan fees and costs |
|
(2,343) |
|
|
(673) |
Originations and purchases of loans held for sale |
|
(107,034) |
|
|
(89,425) |
Sales and repayments of loans held for sale |
|
108,615 |
|
|
87,051 |
Amortization of broker placement fees |
|
858 |
|
|
1,335 |
Net amortization/accretion of premium and discounts on investment securities |
|
447 |
|
|
1,269 |
Decrease in accrued interest receivable |
|
3,806 |
|
|
1,953 |
Increase in accrued interest payable |
|
2,257 |
|
|
1,000 |
Decrease in other assets |
|
3,320 |
|
|
8,562 |
(Decrease) increase in other liabilities |
|
(11,167) |
|
|
11,007 |
Net cash provided by operating activities |
|
54,277 |
|
|
75,513 |
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
Principal collected on loans |
|
735,801 |
|
|
751,062 |
Loans originated and purchased |
|
(627,105) |
|
|
(705,621) |
Proceeds from sales of loans held for investment |
|
- |
|
|
2,230 |
Proceeds from sales of repossessed assets |
|
12,375 |
|
|
18,446 |
Proceeds from sales of available-for-sale securities |
|
14,990 |
|
|
- |
Purchases of securities available for sale |
|
(62,770) |
|
|
(56,429) |
Proceeds from principal repayments and maturities of securities available for sale |
|
62,418 |
|
|
53,596 |
Additions to premises and equipment |
|
(3,006) |
|
|
(3,027) |
Purchases of other equity securities |
|
(141) |
|
|
(433) |
Proceeds from sale of premises and equipment and other assets |
|
- |
|
|
2,492 |
Net cash received from acquisition |
|
- |
|
|
217,659 |
Purchase of insurance contracts |
|
(1,067) |
|
|
- |
Net cash provided by investing activities |
|
131,495 |
|
|
279,975 |
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
Net increase (decrease) in deposits |
|
95,879 |
|
|
(166,924) |
Repurchase of outstanding common stock |
|
(259) |
|
|
(236) |
Repayment of junior subordinated debentures |
|
(7,025) |
|
|
- |
Net cash provided by (used in) financing activities |
|
88,595 |
|
|
(167,160) |
Net increase in cash and cash equivalents |
|
274,367 |
|
|
188,328 |
Cash and cash equivalents at beginning of period |
|
752,458 |
|
|
796,108 |
Cash and cash equivalents at end of period |
$ |
1,026,825 |
|
$ |
984,436 |
|
|
|
|
|
|
Cash and cash equivalents include: |
|
|
|
|
|
Cash and due from banks |
$ |
813,732 |
|
$ |
767,471 |
Money market instruments |
|
213,093 |
|
|
216,965 |
|
$ |
1,026,825 |
|
$ |
984,436 |
|
|
|
|
|
|
The accompanying notes are an integral part of these statements. |
|
|
|
|
|
8
FIRST BANCORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
|
Quarter Ended |
||||
|
March 31, |
|
March 31, |
||
|
2016 |
|
2015 |
||
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock |
$ |
36,104 |
|
$ |
36,104 |
|
|
|
|
|
|
Common Stock outstanding: |
|
|
|
|
|
Balance at beginning of period |
|
21,509 |
|
|
21,298 |
Common stock issued as compensation |
|
25 |
|
|
8 |
Common stock withheld for taxes |
|
(12) |
|
|
(5) |
Restricted stock grants |
|
179 |
|
|
83 |
Restricted stock forfeited |
|
- |
|
|
(1) |
Balance at end of period |
|
21,701 |
|
|
21,383 |
|
|
|
|
|
|
Additional Paid-In-Capital: |
|
|
|
|
|
Balance at beginning of period |
|
926,348 |
|
|
916,067 |
Stock-based compensation |
|
1,557 |
|
|
1,457 |
Common stock withheld for taxes |
|
(247) |
|
|
(231) |
Restricted stock grants |
|
(179) |
|
|
(83) |
Common stock issued as compensation |
|
(25) |
|
|
(8) |
Restricted stock forfeited |
|
- |
|
|
1 |
Balance at end of period |
|
927,454 |
|
|
917,203 |
|
|
|
|
|
|
Retained Earnings: |
|
|
|
|
|
Balance at beginning of period |
|
737,922 |
|
|
716,625 |
Net income |
|
23,344 |
|
|
25,646 |
Balance at end of period |
|
761,266 |
|
|
742,271 |
|
|
|
|
|
|
Accumulated Other Comprehensive Income (Loss), net of tax: |
|
|
|
|
|
Balance at beginning of period |
|
(27,749) |
|
|
(18,351) |
Other comprehensive income, net of tax |
|
30,391 |
|
|
7,140 |
Balance at end of period |
|
2,642 |
|
|
(11,211) |
|
|
|
|
|
|
Total stockholders' equity |
$ |
1,749,167 |
|
$ |
1,705,750 |
|
|
|
|
|
|
The accompanying notes are an integral part of these statements. |
|
|
|
|
|
9
FIRST BANCORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The Consolidated Financial Statements (unaudited) of First BanCorp. (the “Corporation”) have been prepared in conformity with the accounting policies stated in the Corporation’s Audited Consolidated Financial Statements included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015. Certain information and note disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted from these statements pursuant to the rules and regulations of the SEC and, accordingly, these financial statements should be read in conjunction with the Audited Consolidated Financial Statements of the Corporation for the year ended December 31, 2015, which are included in the Corporation’s 2015 Annual Report on Form 10-K. All adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the statement of financial position, results of operations and cash flows for the interim periods have been reflected. All significant intercompany accounts and transactions have been eliminated in consolidation.
The results of operations for the quarter ended March 31, 2016 are not necessarily indicative of the results to be expected for the entire year.
The Financial Accounting Standards Board (“FASB”) has issued the following accounting pronouncements and guidance relevant to the Corporation’s operations:
In May 2014, the FASB updated the Accounting Standards Codification (the “Codification” or the “ASC”) to create a new, principles-based revenue recognition framework. The Update is the culmination of efforts by the FASB and the International Accounting Standards Board to develop a common revenue standard for GAAP and International Financial Reporting Standards. The core principal of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance describes a 5-step process that entities can apply to achieve the core principle of revenue recognition and requires disclosures sufficient to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers and the significant judgments used in determining that information. The new framework is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those reporting periods, as a result of the FASB’s recent amendment to the standard to defer the effective date by one year. Early adoption is permitted for interim periods beginning after December 15, 2016. The Corporation is currently evaluating the impact that the adoption of this guidance will have on the presentation and disclosures in its financial statements.
In June 2014, the FASB updated the Codification to provide guidance for determining compensation cost when an employee’s compensation award is eligible to vest regardless of whether the employee is rendering service on the date the performance target is achieved. This Update is effective for annual and interim periods beginning after December 15, 2015. The adoption of this guidance did not have an impact on the Corporation’s financial statements.
In August 2014, the FASB updated the Codification to provide guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, but the substantial doubt is alleviated as a result of consideration of management’s plans, the entity should disclose information that enables users of the financial statements to understand such determination. The Update is effective for all business entities for annual periods ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Corporation expects the adoption of this guidance will have no impact on the Corporation’s financial position, results of operations, comprehensive income, cash flows and disclosures.
In November 2014, the FASB updated the Codification to clarify how current GAAP should be interpreted in evaluating the economic characteristics and risk of a host contract in a hybrid financial instrument that is issued in the form of a share. In addition, the Update was issued to clarify that, in evaluating the nature of a host contract, an entity should assess the substance of the relevant terms and features (that is, the relative strength of the debt-like or equity-like terms and features given the facts and circumstances) when considering how to weight those terms and features. The effects of initially adopting this Update should be applied on a modified retrospective basis to existing hybrid financial instruments issued in the form of a share as of the beginning of the fiscal year for which the amendments are effective. Retrospective application is permitted to all relevant prior periods. This Update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The adoption of this guidance did not have an impact on the Corporation’s financial statements.
10
In January 2015, the FASB updated the Codification to eliminate from GAAP the concept of extraordinary items as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). Under current GAAP, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item. In order to be classified as an extraordinary item, the event or transaction must be: (i) unusual in nature and (ii) infrequent in occurrence. Before the Update was issued, an entity was required to segregate these items from the results of ordinary operations and show the items separately in the income statement, net of tax, after income from continuing operations. This Update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The adoption of this guidance did not have an impact on the Corporation’s financial statements.
In February 2015, the FASB updated the Codification to eliminate the deferral of the requirements of Accounting Standards Update (“ASU”) No. 2009-17 for certain interests in investment funds and provide a scope for exception for certain investments in money market funds. While the Update is aimed at asset managers, it will affect all reporting entities involved with limited partnerships or similar entities. In some cases, consolidation conclusions will change. In other cases, reporting entities will need to provide additional disclosure about entities that currently are not considered Variable Interest Entities (“VIEs”) but will be considered VIEs under the new guidance when they have a variable interest in those VIEs. Regardless of whether conclusions change or additional disclosure requirements are triggered, reporting entities will need to re-evaluate limited partnerships and similar entities for consolidation and revise their documentation. For public business entities, the Update is effective for annual and interim periods beginning after December 15, 2015. A reporting entity must apply the amendments retrospectively. The adoption of this guidance did not have an impact on the Corporation’s financial statements.
In April 2015, the FASB updated the Codification to clarify that customers should determine whether a cloud computing arrangement includes the license of software by applying the same guidance cloud service providers use to make this determination. Examples of cloud computing arrangements include software as a service, platform as a service, infrastructure as a service and other hosting arrangements. If a hosting arrangement includes a software license for internal use software, the software license should be accounted for by the customer under ASC 350-40. A license of software other than internal use software would be accounted for by the customer under other GAAP (e.g., a research and development cost and software to be sold, leased or otherwise marketed). A software license included in a hosting arrangement would be accounted for separately from any service contract in the arrangement. Hosting arrangements that do not include software licenses should be accounted for as service contracts. The Update also eliminates the existing requirement for customers to account for software licenses they acquire by analogizing to the guidance on leases. Instead, customers will account for software licenses that are in the scope of ASC 350-40 in the same manner as licenses of other intangible assets. Entities have the option of applying the guidance (1) prospectively to all arrangements entered into or materially modified after the effective date or (2) retrospectively. Entities that elect prospective application are required to disclose the reason for the change in accounting principle, the transition method, and a description of the financial statement line items affected by the change. Entities that elect retrospective application must disclose the information required by ASC 250. For public business entities, the guidance is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. The adoption of this guidance did not have an impact on the Corporation’s financial statements.
In May 2015, the FASB updated the Codification to provide guidance on disclosures for investments in certain entities that calculate net asset value (NAV) per share (or its equivalent). This Update removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient and modifies certain disclosure requirements. This guidance is effective for interim and annual reporting periods in fiscal years beginning after December 31, 2015, and requires retrospective adoption. The adoption of this pronouncement did not have an impact on the Corporation’s financial statements.
In September 2015, the FASB updated the Codification to simplify the accounting for adjustments made to provisional amounts recognized in a business combination by eliminating the requirement to retrospectively account for those adjustments. This Update allows the acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The acquirer must record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. Also, this Update requires entities to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. Prior to this Update, GAAP required that, during the measurement period, the acquirer retrospectively adjust the provisional amounts recognized at the acquisition date with a corresponding adjustment to goodwill. The acquirer also had to revise comparative information for prior periods presented in financial statements as needed, including revising depreciation, amortization, or other income effects as a result of changes made to provisional amounts. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments in this Update should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this Update with earlier application permitted for financial statements that have not been issued. The adoption of this guidance did not have an impact on the Corporation’s financial statements.
11
In January 2016, the FASB updated the Codification to require an entity to: (i) measure equity investments at fair value through net income, with certain exceptions, (ii) present in other comprehensive income (“OCI”) the changes in instrument-specific credit risk for financial liabilities measured using the fair value option, (iii) present financial assets and financial liabilities by measurement category and form of financial asset, (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price, and (v) assess a valuation allowance on deferred tax assets related to unrealized losses of available-for-sale debt securities in combination with other deferred tax assets. The Update provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment, adjusted for certain observable price changes. The Update also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. For public companies, the Update is effective for fiscal years beginning after December 15, 2017. Early adoption is only permitted for the provision related to instrument-specific credit risk and the fair value disclosure exemption provided to nonpublic entities. The Corporation is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements.
In February 2016, the FASB updated the Codification to provide guidance for the financial reporting about leasing transactions. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, the guidance will require both types of leases to be recognized on the balance sheet. The guidance will also require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative disclosures intended to provide additional information about the amounts recorded in the financial statements. The guidance on leases will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early application is permitted. The Corporation is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements.
In March 2016, the FASB updated the Codification to simplify certain aspects of the accounting for share-based payment transactions. The main provisions in this Update include: (i) recognition of all tax benefits and tax deficiencies (including tax benefits of dividends on share-base payment awards) as income tax expense or benefit in the income statement, (ii) classification of the excess tax benefit along with other income tax cash flows as an operating activity, (iii) an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur, (iv) a threshold to qualify for equity classification which permits withholding up to the maximum statutory tax rates in the applicable jurisdictions, (v) classification of cash paid by an employer as a financing activity when the payment results from the withholding of shares for tax withholding purposes. In addition to those simplifications, the amendments eliminate the guidance in ASC 718 that was indefinitely deferred shortly after the issuance of FASB Statement No. 123 (revised 2004), Share-Based Payment. This should not result in a change in practice because the guidance that is being superseded was never effective. For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Corporation is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements.
In March 2016, the FASB updated the Codification to require an equity method investor to add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. Also, this Update requires that an entity that has an available-for sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Earlier application is permitted. The Corporation is currently evaluating the impact of the adoption of this guidance, if any, on its consolidated financial statements.
12
NOTE 2 – EARNINGS PER COMMON SHARE
|
The calculations of earnings per common share for the quarters ended on March 31, 2016 and 2015 are as follows: |
||||||
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
||||
|
|
March 31, |
|
March 31, |
|
||
|
|
2016 |
|
2015 |
|
||
(In thousands, except per share information) |
|
|
|||||
Net income |
$ |
23,344 |
|
$ |
25,646 |
|
|
Net income attributable to common stockholders |
$ |
23,344 |
|
$ |
25,646 |
|
|
|
|
|
|
|
|
|
|
Weighted-Average Shares: |
|
|
|
|
|
|
|
|
Average common shares outstanding |
|
212,348 |
|
|
210,686 |
|
|
Average potential dilutive common shares |
|
926 |
|
|
2,060 |
|
|
Average common shares outstanding-assuming dilution |
|
213,274 |
|
|
212,746 |
|
|
|
|
|
|
|
|
|
Earnings per common share: |
|
|
|
|
|
|
|
|
Basic |
$ |
0.11 |
|
$ |
0.12 |
|
|
Diluted |
$ |
0.11 |
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share is computed by dividing net income attributable to common stockholders by the weighted-average number of common shares issued and outstanding. Net income attributable to common stockholders represents net income adjusted for any preferred stock dividends, including any dividends declared, and any cumulative dividends related to the current dividend period that have not been declared as of the end of the period.
Potential common shares consist of common stock issuable under the assumed exercise of stock options, unvested shares of restricted stock, and outstanding warrants using the treasury stock method. This method assumes that the potential common shares are issued and the proceeds from the exercise, in addition to the amount of compensation cost attributable to future services, are used to purchase common stock at the exercise date. The difference between the numbers of potential shares issued and the shares purchased is added as incremental shares to the actual number of shares outstanding to compute diluted earnings per share. Stock options, unvested shares of restricted stock, and outstanding warrants that result in lower potential shares issued than shares purchased under the treasury stock method are not included in the computation of dilutive earnings per share since their inclusion would have an antidilutive effect on earnings per share. Stock options not included in the computation of outstanding shares because they were antidilutive amounted to 39,855 and 69,848 for the quarters ended March 31, 2016 and 2015, respectively.
13
NOTE 3 – STOCK-BASED COMPENSATION
As of January 21, 2007, the Corporation’s 1997 stock option plan expired and no additional awards could be granted under that plan. All outstanding awards granted under this plan have continued in full force and effect since then, subject to their original terms. No awards of shares could be granted under the 1999 stock option plan as of its expiration.
The activity of stock options granted under the 1997 stock option plan for the quarter ended March 31, 2016 is set forth below: |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
Number of Options |
|
Weighted-Average Exercise Price |
|
Weighted-Average Remaining Contractual Term (Years) |
|
Aggregate Intrinsic Value (In thousands) |
||
|
|
|
|
|
|
|
|
|
|
Beginning of period outstanding |
|
|
|
|
|
|
|
|
|
and exercisable |
69,848 |
|
$ |
160.30 |
|
|
|
|
|
Options expired |
(29,993) |
|
|
190.07 |
|
|
|
|
|
End of period outstanding and |
|
|
|
|
|
|
|
|
|
exercisable |
39,855 |
|
$ |
137.89 |
|
0.8 |
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
On April 29, 2008, the Corporation’s stockholders approved the First BanCorp. 2008 Omnibus Incentive Plan (the “Omnibus Plan”). The Omnibus Plan provides for equity-based compensation incentives (the “awards”) through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, and other stock-based awards. The Omnibus Plan authorizes the issuance of up to 8,169,807 shares of common stock, subject to adjustments for stock splits, reorganizations, and other similar events. The Corporation’s Board of Directors, upon receiving the relevant recommendation of the Compensation Committee, has the power and authority to determine those eligible to receive awards and to establish the terms and conditions of any awards, subject to various limits and vesting restrictions that apply to individual and aggregate awards.
Under the Omnibus Plan, during the first quarter of 2016, the Corporation awarded 1,785,137 shares of restricted stock to employees subject to a vesting period of two years. Included in those 1,785,137 shares of restricted stock are 1,546,137 shares granted to certain senior officers consistent with the requirements of the Troubled Asset Relief Program (“TARP”) Interim Final Rule, which permit TARP recipients to grant “long-term restricted stock” without violating the prohibition on paying or accruing a bonus payment provided that: (i) the value of the grant may not exceed one-third of the amount of the employee’s annual compensation, (ii) no portion of the grant may vest before two years after the grant date, and (iii) the grant must be subject to a further restriction on transfer or payment as described below. Specifically, the stock that has otherwise vested may not become transferable at any time earlier than as permitted under the schedule set forth by TARP, which is based on the repayment in 25% increments of the aggregate financial assistance received from the U.S. Treasury. Hence, notwithstanding the vesting period mentioned above, the senior officers covered by TARP are restricted from transferring the shares. The U.S. Treasury confirmed that, effective March 2014, it has recovered more than a 25% of its investment in First BanCorp. Therefore, the restriction on transfer relating to 25% of the shares granted under TARP requirements was released.
The fair value of the shares of restricted stock granted in the first quarter of 2016 was based on the market price of the Corporation’s outstanding common stock on the date of the grant. For the 1,546,137 shares of restricted stock granted under the TARP requirements, the market price was discounted due to TARP transferability restrictions. For purposes of determining the awards’ fair value, the Corporation estimated an appreciation of 14% in the value of the common stock using the Capital Asset Pricing Model as a basis of what would be a market participant’s expected return on the Corporation’s stock and assumed that the U.S. Treasury would hold the common stock of the Corporation that it currently owns for a period not to exceed two years, resulting in a fair value of $1.43 for restricted shares granted under the TARP requirements. Also, the Corporation used empirical data to estimate employee terminations; separate groups of employees that have similar historical exercise behavior were considered separately for valuation purposes.
14
The following table summarizes the restricted stock activity in the first quarter of 2016 under the Omnibus Plan for both executive officers covered by the TARP requirements and other employees as well as for the independent directors: |
||||
|
|
|
|
|
|
Quarter Ended |
|||
|
March 31, 2016 |
|||
|
Number of |
|
|
|
|
shares of |
|
|
Weighted-Average |
|
restricted |
|
|
Grant Date |
|
stock |
|
|
Fair Value |
|
|
|
|
|
Non-vested shares at beginning of period |
2,968,461 |
|
$ |
3.34 |
Granted |
1,785,137 |
|
|
1.62 |
Vested |
(377,747) |
|
|
3.35 |
Non-vested shares at March 31, 2016 |
4,375,851 |
|
$ |
2.64 |
For the quarters ended March 31, 2016 and 2015, the Corporation recognized $0.9 million and $1.0 million, respectively, of stock-based compensation expense related to restricted stock awards. As of March 31, 2016, there was $5.9 million of total unrecognized compensation cost related to non-vested shares of restricted stock. The weighted average period over which the Corporation expects to recognize such cost is 1.8 years.
During the first quarter of 2015, 30,068 shares of restricted stock were awarded to one of the Corporation’s independent directors subject to vesting periods that range from 1 to 5 years. In addition, in the first quarter of 2015, the Corporation issued 791,464 shares of restricted stock subject to vesting periods that range from 3 months to 3 years. Included in those 791,464 shares of restricted stock are 615,464 shares granted to certain senior officers consistent with the requirements of TARP. The employees covered by TARP are restricted from transferring the shares, subject to certain conditions as explained above.
The fair value of the shares of restricted stock granted in the first quarter of 2015 was based on the market price of the Corporation’s outstanding common stock on the date of the grant. For the 615,464 shares of restricted stock granted under the TARP requirements, the market price was discounted due to the post-vesting restrictions. For purposes of computing the discount, the Corporation estimated an appreciation of 14% in the value of the common stock using the Capital Asset Pricing Model as a basis of what would be a market participant’s expected return on the Corporation’s stock and assumed that the U.S. Treasury would hold the common stock of the Corporation that it owned as of the date of the grants for a period not to exceed one year, resulting in a fair value of $3.18 for restricted shares granted under the TARP requirements.
Stock-based compensation accounting guidance requires the Corporation to reverse compensation expense for any awards that are forfeited due to employee or director turnover. Approximately $26 thousand of compensation expense was reversed during the first quarter of 2015, related to forfeited awards. No forfeitures occurred during the first quarter of 2016.
Also, under the Omnibus Plan, effective April 1, 2013, the Corporation’s Board of Directors determined to increase the salary amounts paid to certain executive officers primarily by paying the increased salary amounts in the form of shares of the Corporation’s common stock, instead of cash. During the first quarter of 2016, the Corporation issued 252,841 shares of common stock (first quarter of 2015 – 80,234 shares) with a weighted average market value of $2.70 (first quarter of 2015 - $6.02) as salary stock compensation. This resulted in a compensation expense of $0.7million recorded in the first quarter of 2016 (first quarter of 2015 - $0.4 million).
For the quarter ended March 31, 2016, the Corporation withheld 79,954 shares (first quarter of 2015 – 28,183 shares) from the common stock paid to certain senior officers as additional compensation and 35,167 shares of the restricted stock that vested during the first quarter of 2016 (first quarter of 2015 – 22,525 shares) to cover employees’ payroll and income tax withholding liabilities; these shares are held as treasury shares. The Corporation paid any fractional share of salary stock that the officer was entitled to in cash. In the consolidated financial statements, the Corporation treats shares withheld for tax purposes as common stock repurchases.
15
NOTE 4 – INVESTMENT SECURITIES
Investment Securities Available for Sale
The amortized cost, non-credit loss component of other-than-temporary impairment (“OTTI”) recorded in other comprehensive income (“OCI”), gross unrealized gains and losses recorded in OCI, approximate fair value, and weighted average yield of investment securities available for sale by contractual maturities as of March 31, 2016 and December 31, 2015 were as follows:
|
|
March 31, 2016 |
|||||||||||||||
|
|
Amortized cost |
|
Noncredit Loss Component of OTTI Recorded in OCI |
|
Gross |
|
Fair value |
|
Weighted average yield% |
|||||||
|
|
|
Unrealized |
|
|
||||||||||||
|
|
|
|
gains |
|
losses |
|
|
|||||||||
(Dollars in thousands) |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 1 to 5 years |
$ |
7,525 |
|
$ |
- |
|
$ |
- |
|
$ |
7 |
|
$ |
7,518 |
|
0.57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
government-sponsored |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agencies: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due within one year |
|
14,626 |
|
|
- |
|
|
10 |
|
|
- |
|
|
14,636 |
|
0.68 |
|
After 1 to 5 years |
|
385,103 |
|
|
- |
|
|
2,148 |
|
|
- |
|
|
387,251 |
|
1.32 |
|
After 5 to 10 years |
|
51,089 |
|
|
- |
|
|
1,131 |
|
|
- |
|
|
52,220 |
|
2.42 |
|
After 10 years |
|
13,930 |
|
|
- |
|
|
14 |
|
|
20 |
|
|
13,924 |
|
0.84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Puerto Rico Government |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 1 to 5 years |
|
21,423 |
|
|
11,501 |
|
|
- |
|
|
- |
|
|
9,922 |
|
4.38 |
|
After 5 to 10 years |
|
855 |
|
|
- |
|
|
1 |
|
|
- |
|
|
856 |
|
5.20 |
|
After 10 years |
|
21,141 |
|
|
3,962 |
|
|
147 |
|
|
1,656 |
|
|
15,670 |
|
5.38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States and Puerto |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rico Government |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
obligations |
|
515,692 |
|
|
15,463 |
|
|
3,451 |
|
|
1,683 |
|
|
501,997 |
|
1.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FHLMC certificates: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 5 to 10 years |
|
321 |
|
|
- |
|
|
31 |
|
|
- |
|
|
352 |
|
4.95 |
|
After 10 years |
|
277,487 |
|
|
- |
|
|
4,063 |
|
|
5 |
|
|
281,545 |
|
2.15 |
|
|
|
277,808 |
|
|
- |
|
|
4,094 |
|
|
5 |
|
|
281,897 |
|
2.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GNMA certificates: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due within one year |
|
1 |
|
|
- |
|
|
- |
|
|
- |
|
|
1 |
|
1.78 |
|
After 1 to 5 years |
|
100 |
|
|
- |
|
|
4 |
|
|
- |
|
|
104 |
|
4.29 |
|
After 5 to 10 years |
|
112,732 |
|
|
- |
|
|
2,839 |
|
|
- |
|
|
115,571 |
|
3.07 |
|
After 10 years |
|
157,658 |
|
|
- |
|
|
13,095 |
|
|
6 |
|
|
170,747 |
|
4.38 |
|
|
|
270,491 |
|
|
- |
|
|
15,938 |
|
|
6 |
|
|
286,423 |
|
3.83 |
FNMA certificates: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 1 to 5 years |
|
30,223 |
|
|
- |
|
|
63 |
|
|
21 |
|
|
30,265 |
|
1.50 |
|
After 5 to 10 years |
|
21,429 |
|
|
- |
|
|
835 |
|
|
- |
|
|
22,264 |
|
2.73 |
|
After 10 years |
744,660 |
|
|
- |
|
|
11,641 |
|
|
- |
|
|
756,301 |
|
2.35 |
|
|
|
|
796,312 |
|
|
- |
|
|
12,539 |
|
|
21 |
|
|
808,830 |
|
2.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other mortgage pass-through |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
trust certificates: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 5 to 10 years |
|
89 |
|
|
- |
|
|
- |
|
|
- |
|
|
89 |
|
7.26 |
|
After 10 years |
|
32,962 |
|
|
8,457 |
|
|
- |
|
|
- |
|
|
24,505 |
|
2.34 |
|
|
|
33,051 |
|
|
8,457 |
|
|
- |
|
|
- |
|
|
24,594 |
|
2.34 |
Total mortgage-backed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
securities |
|
1,377,662 |
|
|
8,457 |
|
|
32,571 |
|
|
32 |
|
|
1,401,744 |
|
2.59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 1 to 5 years |
|
100 |
|
|
- |
|
|
- |
|
|
- |
|
|
100 |
|
1.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities (1) |
|
408 |
|
|
- |
|
|
6 |
|
|
- |
|
|
414 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
available for sale |
$ |
1,893,862 |
|
$ |
23,920 |
|
$ |
36,028 |
|
$ |
1,715 |
|
$ |
1,904,255 |
|
2.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Equity securities consisted of investment in a Community Reinvestment Act Qualified Investment Fund. |
16
|
|
December 31, 2015 |
|||||||||||||||
|
|
Amortized cost |
|
Noncredit Loss Component of OTTI Recorded in OCI |
|
Gross |
|
Fair value |
|
Weighted average yield% |
|||||||
|
|
|
Unrealized |
|
|
||||||||||||
|
|
|
|
gains |
|
losses |
|
|
|||||||||
(Dollars in thousands) |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 1 to 5 years |
$ |
7,530 |
|
$ |
- |
|
$ |
- |
|
$ |
33 |
|
$ |
7,497 |
|
0.57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
government-sponsored |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agencies: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due within one year |
|
14,624 |
|
|
- |
|
|
4 |
|
|
10 |
|
|
14,618 |
|
0.68 |
|
After 1 to 5 years |
|
384,323 |
|
|
- |
|
|
174 |
|
|
4,305 |
|
|
380,192 |
|
1.32 |
|
After 5 to 10 years |
|
58,150 |
|
|
- |
|
|
343 |
|
|
242 |
|
|
58,251 |
|
2.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Puerto Rico Government |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 1 to 5 years |
|
25,663 |
|
|
14,662 |
|
|
- |
|
|
- |
|
|
11,001 |
|
4.38 |
|
After 5 to 10 years |
|
855 |
|
|
- |
|
|
- |
|
|
- |
|
|
855 |
|
5.20 |
|
After 10 years |
|
23,162 |
|
|
5,255 |
|
|
134 |
|
|
1,680 |
|
|
16,361 |
|
5.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States and Puerto |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rico Government |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
obligations |
|
514,307 |
|
|
19,917 |
|
|
655 |
|
|
6,270 |
|
|
488,775 |
|
1.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FHLMC certificates: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 5 to 10 years |
|
336 |
|
|
- |
|
|
31 |
|
|
- |
|
|
367 |
|
4.95 |
|
After 10 years |
|
287,711 |
|
|
- |
|
|
1,073 |
|
|
1,706 |
|
|
287,078 |
|
2.14 |
|
|
|
288,047 |
|
|
- |
|
|
1,104 |
|
|
1,706 |
|
|
287,445 |
|
2.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GNMA certificates: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due within one year |
|
2 |
|
|
- |
|
|
- |
|
|
- |
|
|
2 |
|
1.70 |
|
After 1 to 5 years |
|
109 |
|
|
- |
|
|
5 |
|
|
- |
|
|
114 |
|
4.26 |
|
After 5 to 10 years |
|
120,298 |
|
|
- |
|
|
3,182 |
|
|
- |
|
|
123,480 |
|
3.07 |
|
After 10 years |
|
165,175 |
|
|
- |
|
|
12,822 |
|
|
20 |
|
|
177,977 |
|
4.38 |
|
|
|
285,584 |
|
|
- |
|
|
16,009 |
|
|
20 |
|
|
301,573 |
|
3.83 |
FNMA certificates: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 1 to 5 years |
|
2,552 |
|
|
- |
|
|
74 |
|
|
- |
|
|
2,626 |
|
3.32 |
|
After 5 to 10 years |
|
21,557 |
|
|
- |
|
|
433 |
|
|
233 |
|
|
21,757 |
|
2.73 |
|
After 10 years |
759,247 |
|
|
- |
|
|
5,628 |
|
|
6,063 |
|
|
758,812 |
|
2.34 |
|
|
|
|
783,356 |
|
|
- |
|
|
6,135 |
|
|
6,296 |
|
|
783,195 |
|
2.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other mortgage pass-through |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
trust certificates: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 5 to 10 years |
|
92 |
|
|
- |
|
|
1 |
|
|
- |
|
|
93 |
|
7.26 |
|
After 10 years |
|
34,905 |
|
|
9,691 |
|
|
- |
|
|
- |
|
|
25,214 |
|
2.26 |
|
|
|
34,997 |
|
|
9,691 |
|
|
1 |
|
|
- |
|
|
25,307 |
|
2.26 |
Total mortgage-backed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
securities |
|
1,391,984 |
|
|
9,691 |
|
|
23,249 |
|