þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Puerto Rico | 66-0561882 | |
(State or other jurisdiction of | (I.R.S. employer | |
incorporation or organization) | identification number) | |
1519 Ponce de León Avenue, Stop 23 | 00908 | |
Santurce, Puerto Rico | (Zip Code) | |
(Address of principal executive offices) |
PAGE | ||||||||
PART I. FINANCIAL INFORMATION |
||||||||
Item 1. Financial Statements: |
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5 | ||||||||
6 | ||||||||
7 | ||||||||
8 | ||||||||
9 | ||||||||
10 | ||||||||
11 | ||||||||
12 | ||||||||
56 | ||||||||
99 | ||||||||
99 | ||||||||
103 | ||||||||
103 | ||||||||
103 | ||||||||
103 | ||||||||
103 | ||||||||
103 | ||||||||
103 | ||||||||
EX-31.1 SECTION 302, CERTIFICATION OF THE CEO | ||||||||
EX-31.2 SECTION 302, CERTIFICATION OF THE CFO | ||||||||
EX-32.1 SECTION 906, CERTIFICATION OF THE CEO | ||||||||
EX-32.2 SECTION 906, CERTIFICATION OF THE CFO |
2
| risks associated with the Corporations inability to prepare and timely submit SEC and other regulatory filings; | |
| a reduction in the Corporations ability to attract new clients and retain existing ones; | |
| general economic conditions, including prevailing interest rates and the performance of the financial markets, which may affect demand for the Corporations products and services and the value of the Corporations assets, including the value of the interest rate swaps that hedge the interest rate risk mainly relating to brokered certificates of deposit and medium-term notes; | |
| risks arising from worsening economic conditions in Puerto Rico; | |
| risks arising from credit and other risks of the Corporations lending and investment activities, including the condo conversion loans in its Miami Agency; | |
| increases in the Corporations expenses associated with acquisitions and dispositions; | |
| developments in technology; | |
| risks associated with changes to the Corporations business strategy to no longer acquire mortgage loans in bulk; | |
| risks associated with the failure to obtain a final order from the District Court of Puerto Rico approving the settlement of the class-action lawsuit brought against the Corporation; |
3
| the impact of Doral Financial Corporation financial condition on its repayment of its outstanding secured loan to the Corporation; | |
| risks associated with being subject to the cease and desist order; | |
| potential further downgrades in the credit ratings of the Corporations securities; | |
| general competitive factors and industry consolidation; and | |
| risks associated with regulatory and legislative changes for financial services companies in Puerto Rico, the United States, and the U.S. and British Virgin Islands. |
4
September 30, 2004 | ||||||||||||||||
September 30, 2006 | December 31, 2005 | September 30, 2005 | (As Restated) | |||||||||||||
Assets |
||||||||||||||||
Cash and due from banks |
$ | 81,983,261 | $ | 155,848,810 | $ | 137,248,464 | $ | 91,317,992 | ||||||||
Money market instruments, including $381,848,364
pledged that can be repledged as of December 31, 2005
(September 30, 2005 - $267,777,336; September 30, 2004 - $300,000,000) |
748,784,722 | 666,856,432 | 1,073,114,286 | 732,600,317 | ||||||||||||
Federal funds sold and securities purchased
under agreements to resell |
41,336,579 | 508,967,369 | 160,783,017 | 302,000,000 | ||||||||||||
Time deposits with other financial institutions |
9,100,000 | 48,967,475 | 48,600,000 | 600,000 | ||||||||||||
Total money market investments |
799,221,301 | 1,224,791,276 | 1,282,497,303 | 1,035,200,317 | ||||||||||||
Investment securities available for sale, at fair value: |
||||||||||||||||
Securities pledged that can be repledged |
1,272,618,338 | 1,744,846,054 | 1,806,959,109 | 1,225,842,399 | ||||||||||||
Other investment securities |
483,936,067 | 203,331,449 | 280,255,292 | 251,671,039 | ||||||||||||
Total investment securities available for sale |
1,756,554,405 | 1,948,177,503 | 2,087,214,401 | 1,477,513,438 | ||||||||||||
Investment securities held to maturity, at amortized cost: |
||||||||||||||||
Securities pledged that can be repledged |
2,335,051,406 | 3,115,260,660 | 2,727,562,713 | 3,290,537,802 | ||||||||||||
Other investment securities |
1,022,978,696 | 323,327,297 | 239,186,736 | 360,132,648 | ||||||||||||
Total investment securities held to maturity |
3,358,030,102 | 3,438,587,957 | 2,966,749,449 | 3,650,670,450 | ||||||||||||
Other equity securities |
20,989,185 | 42,367,500 | 77,230,500 | 69,025,000 | ||||||||||||
Loans, net of allowance for loan and lease losses of $150,924,964
(December 31, 2005 - $147,998,733; September 30, 2005 - $147,267,275;
September 30, 2004 - $137,253,064) |
10,710,424,305 | 12,436,257,993 | 12,150,959,315 | 8,496,426,264 | ||||||||||||
Loans held for sale, at lower of cost or market |
30,603,213 | 101,672,531 | 74,198,668 | 7,419,060 | ||||||||||||
Total loans, net |
10,741,027,518 | 12,537,930,524 | 12,225,157,983 | 8,503,845,324 | ||||||||||||
Premises and equipment, net |
152,079,987 | 116,947,772 | 111,862,913 | 88,865,587 | ||||||||||||
Other real estate owned |
3,712,895 | 5,019,106 | 6,032,210 | 6,938,890 | ||||||||||||
Accrued interest receivable on loans and investments |
101,149,237 | 103,692,478 | 82,754,088 | 60,944,997 | ||||||||||||
Due from customers on acceptances |
531,416 | 353,864 | 397,538 | 717,930 | ||||||||||||
Other assets |
372,662,226 | 343,933,937 | 294,848,038 | 196,904,455 | ||||||||||||
Total assets |
$ | 17,387,941,533 | $ | 19,917,650,727 | $ | 19,271,992,887 | $ | 15,181,944,380 | ||||||||
Liabilities & Stockholders Equity |
||||||||||||||||
Liabilities: |
||||||||||||||||
Non-interest-bearing deposits |
$ | 676,027,822 | $ | 811,006,126 | $ | 751,689,852 | $ | 603,713,284 | ||||||||
Interest-bearing deposits |
11,205,497,022 | 11,652,746,080 | 11,501,114,323 | 6,753,832,707 | ||||||||||||
Federal funds purchased and securities sold
under agreements to repurchase |
3,228,435,000 | 4,833,882,000 | 4,470,696,000 | 4,558,915,656 | ||||||||||||
Advances from the Federal Home Loan Bank (FHLB) |
134,000,000 | 506,000,000 | 448,000,000 | 1,373,000,000 | ||||||||||||
Notes payable |
181,575,237 | 178,693,249 | 178,419,384 | 152,901,700 | ||||||||||||
Other borrowings |
231,694,859 | 231,622,020 | 231,597,474 | 276,667,705 | ||||||||||||
Subordinated notes |
| | 82,684,827 | 82,137,249 | ||||||||||||
Bank acceptance outstanding |
531,416 | 353,864 | 397,538 | 717,930 | ||||||||||||
Payable for unsettled investment trade |
| | | 10,285,040 | ||||||||||||
Accounts payable and other liabilities |
505,665,617 | 505,506,453 | 352,634,036 | 197,125,840 | ||||||||||||
Total liabilities |
16,163,426,973 | 18,719,809,792 | 18,017,233,434 | 14,009,297,111 | ||||||||||||
Commitments and contingencies (Note 17) |
||||||||||||||||
Stockholders equity: |
||||||||||||||||
Preferred stock, authorized 50,000,000 shares: issued and
outstanding 22,004,000 shares at $25 liquidation value per share |
550,100,000 | 550,100,000 | 550,100,000 | 550,100,000 | ||||||||||||
Common stock, $1 par value, authorized
250,000,000 shares; issued 93,151,856 shares
(December 31, 2005- 90,772,856 shares ; September 30, 2005 - 90,772,856 shares;
September 30, 2004 - 45,206,555 shares) |
93,151,856 | 90,772,856 | 90,772,856 | 45,206,555 | ||||||||||||
Less: Treasury Stock (at par value) |
(9,897,800 | ) | (9,897,800 | ) | (9,897,800 | ) | (4,920,900 | ) | ||||||||
Common stock outstanding |
83,254,056 | 80,875,056 | 80,875,056 | 40,285,655 | ||||||||||||
Additional paid-in capital |
22,756,994 | | | 3,209,915 | ||||||||||||
Capital reserve |
| | 82,825,000 | 80,000,000 | ||||||||||||
Legal surplus |
265,844,192 | 265,844,192 | 183,019,192 | 165,709,122 | ||||||||||||
Retained earnings |
331,375,119 | 316,696,971 | 357,748,736 | 292,850,947 | ||||||||||||
Accumulated other comprehensive (loss) income, net of tax
benefit (expense) of $234,362 (December 31, 2005 - $16,259 ;
September 30, 2005 - ($369,061) ; September 30, 2004 ($1,131,416)) |
(28,815,801 | ) | (15,675,284 | ) | 191,469 | 40,491,630 | ||||||||||
Total stockholders equity |
1,224,514,560 | 1,197,840,935 | 1,254,759,453 | 1,172,647,269 | ||||||||||||
Total liabilities and stockholders equity |
$ | 17,387,941,533 | $ | 19,917,650,727 | $ | 19,271,992,887 | $ | 15,181,944,380 | ||||||||
5
Quarter Ended | ||||||||||||
September 30, | ||||||||||||
September 30, | September 30, | 2004 | ||||||||||
2006 | 2005 | (As Restated) | ||||||||||
Interest income: |
||||||||||||
Loans |
$ | 216,953,076 | $ | 214,006,807 | $ | 115,148,412 | ||||||
Investment securities |
70,490,419 | 71,660,199 | 70,363,002 | |||||||||
Money market investments |
30,267,972 | 6,596,601 | 1,152,460 | |||||||||
Total interest income |
317,711,467 | 292,263,607 | 186,663,874 | |||||||||
Interest expense: |
||||||||||||
Deposits (Note 11) |
135,647,412 | 161,152,342 | (30,653,464 | ) | ||||||||
Federal funds purchased and repurchase agreements |
49,412,806 | 48,838,569 | 34,625,138 | |||||||||
Advances from FHLB |
2,876,488 | 5,207,707 | 7,573,861 | |||||||||
Notes payable and other borrowings |
7,072,733 | 10,321,624 | 4,512,647 | |||||||||
Total interest expense |
195,009,439 | 225,520,242 | 16,058,182 | |||||||||
Net interest income |
122,702,028 | 66,743,365 | 170,605,692 | |||||||||
Provision for loan and lease losses |
20,559,123 | 12,861,207 | 13,199,850 | |||||||||
Net interest income after provision
for loan and lease losses |
102,142,905 | 53,882,158 | 157,405,842 | |||||||||
Non-interest income: |
||||||||||||
Other service charges on loans |
1,227,894 | 1,529,430 | 851,848 | |||||||||
Service charges on deposit accounts |
3,025,188 | 3,025,013 | 2,705,111 | |||||||||
Mortgage banking activities |
1,595,068 | 318,125 | 1,328,492 | |||||||||
Gain on partial extinguishment of a secured
commercial loan
to a local financial institution |
1,000,000 | | | |||||||||
Net (loss) gain on investments and impairments |
(6,083,674 | ) | 4,517,344 | 360,031 | ||||||||
Rental income |
847,343 | 875,408 | 814,398 | |||||||||
Other operating income |
6,432,570 | 7,427,195 | 5,631,393 | |||||||||
Total non-interest income |
8,044,389 | 17,692,515 | 11,691,273 | |||||||||
Non-interest expenses: |
||||||||||||
Employees compensation and benefits |
32,881,298 | 26,838,736 | 21,153,090 | |||||||||
Occupancy and equipment |
13,730,875 | 12,842,629 | 10,260,593 | |||||||||
Business promotion |
4,512,400 | 4,876,566 | 4,354,617 | |||||||||
Professional fees |
7,407,582 | 3,553,065 | 1,023,091 | |||||||||
Taxes, other than income taxes |
3,577,530 | 2,577,072 | 2,283,388 | |||||||||
Insurance and supervisory fees |
1,862,433 | 1,171,779 | 994,620 | |||||||||
Other operating expenses |
8,967,989 | 8,695,503 | 5,807,371 | |||||||||
Total non-interest expenses |
72,940,107 | 60,555,350 | 45,876,770 | |||||||||
Income before income taxes |
37,247,187 | 11,019,323 | 123,220,345 | |||||||||
Income tax (provision) benefit |
(10,565,431 | ) | 6,285,264 | (34,826,984 | ) | |||||||
Net income |
$ | 26,681,756 | $ | 17,304,587 | $ | 88,393,361 | ||||||
Net income attributable to common stockholders |
$ | 16,612,757 | $ | 7,235,588 | $ | 78,324,362 | ||||||
Net income per common share: |
||||||||||||
Basic |
$ | 0.20 | $ | 0.09 | $ | 0.97 | ||||||
Diluted |
$ | 0.20 | $ | 0.09 | $ | 0.94 | ||||||
Dividends declared per common share |
$ | 0.07 | $ | 0.07 | $ | 0.06 | ||||||
6
Nine Month Period Ended | ||||||||||||
September 30, | ||||||||||||
September 30, | September 30, | 2004 | ||||||||||
2006 | 2005 | (As Restated) | ||||||||||
Interest income: |
||||||||||||
Loans |
$ | 710,646,312 | $ | 541,459,045 | $ | 325,791,945 | ||||||
Investment securities |
214,171,649 | 201,724,546 | 169,875,169 | |||||||||
Money market investments |
65,041,845 | 10,613,567 | 2,415,876 | |||||||||
Total interest income |
989,859,806 | 753,797,158 | 498,082,990 | |||||||||
Interest expense: |
||||||||||||
Deposits (Note 11) |
479,639,216 | 252,840,683 | 71,913,056 | |||||||||
Federal funds purchased and repurchase agreements |
154,111,848 | 126,896,352 | 94,816,509 | |||||||||
Advances from FHLB |
9,921,291 | 27,497,510 | 18,690,602 | |||||||||
Notes payable and other borrowings |
24,428,872 | 21,472,722 | 8,287,120 | |||||||||
Total interest expense |
668,101,227 | 428,707,267 | 193,707,287 | |||||||||
Net interest income |
321,758,579 | 325,089,891 | 304,375,703 | |||||||||
Provision for loan and lease losses |
49,289,600 | 34,889,980 | 39,600,000 | |||||||||
Net interest income after provision
for loan and lease losses |
272,468,979 | 290,199,911 | 264,775,703 | |||||||||
Non-interest income: |
||||||||||||
Other service charges on loans |
4,181,291 | 4,187,995 | 2,957,425 | |||||||||
Service charges on deposit accounts |
9,580,326 | 8,736,728 | 8,230,790 | |||||||||
Mortgage banking activities |
1,447,392 | 3,888,206 | 3,090,458 | |||||||||
Loss on partial extinguishment of a secured
commercial loan
to a local financial institution |
(10,640,344 | ) | | | ||||||||
Net (loss) gain on investments and impairments |
(6,658,218 | ) | 12,849,663 | 4,875,926 | ||||||||
Rental income |
2,458,013 | 2,584,232 | 2,133,341 | |||||||||
Gain on sale of credit card portfolio |
| | 5,532,684 | |||||||||
Other operating income |
20,047,067 | 19,116,254 | 17,981,078 | |||||||||
Total non-interest income |
20,415,527 | 51,363,078 | 44,801,702 | |||||||||
Non-interest expenses: |
||||||||||||
Employees compensation and benefits |
96,875,998 | 76,427,208 | 62,126,994 | |||||||||
Occupancy and equipment |
40,060,463 | 35,247,619 | 29,080,304 | |||||||||
Business promotion |
12,610,641 | 14,509,582 | 12,411,300 | |||||||||
Professional fees |
24,943,755 | 6,960,961 | 2,963,785 | |||||||||
Taxes, other than income taxes |
8,690,870 | 7,131,394 | 6,182,051 | |||||||||
Insurance and supervisory fees |
5,472,995 | 3,362,138 | 3,080,826 | |||||||||
Other operating expenses |
27,063,159 | 25,996,404 | 18,346,305 | |||||||||
Total non-interest expenses |
215,717,881 | 169,635,306 | 134,191,565 | |||||||||
Income before income taxes |
77,166,625 | 171,927,683 | 175,385,840 | |||||||||
Income tax provision |
(14,819,125 | ) | (32,002,088 | ) | (39,754,445 | ) | ||||||
Net income |
$ | 62,347,500 | $ | 139,925,595 | $ | 135,631,395 | ||||||
Net income attributable to common stockholders |
$ | 32,140,503 | $ | 109,718,598 | $ | 105,424,398 | ||||||
Net income per common share: |
||||||||||||
Basic |
$ | 0.39 | $ | 1.36 | $ | 1.31 | ||||||
Diluted |
$ | 0.39 | $ | 1.32 | $ | 1.27 | ||||||
Dividends declared per common share |
$ | 0.21 | $ | 0.21 | $ | 0.18 | ||||||
7
Nine Month Period Ended | ||||||||||||
September 30, | ||||||||||||
September 30, | September 30, | 2004 | ||||||||||
2006 | 2005 | (As Restated) | ||||||||||
Cash flows from operating activities: |
||||||||||||
Net income |
$ | 62,347,500 | $ | 139,925,595 | $ | 135,631,395 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||
Depreciation |
12,566,395 | 11,179,619 | 10,474,400 | |||||||||
Amortization of core deposit intangible |
2,581,437 | 2,463,235 | 1,797,465 | |||||||||
Provision for loan and lease losses |
49,289,600 | 34,889,980 | 39,600,000 | |||||||||
Deferred income tax (benefit) provision |
(35,605,857 | ) | (17,898,389 | ) | 237,561 | |||||||
Stock-based compensation recognized |
5,379,511 | | | |||||||||
Gain on sale of investments, net |
(5,431,170 | ) | (14,348,729 | ) | (7,574,918 | ) | ||||||
Other-than-temporary impairments on available-for-sale securities |
12,089,388 | 1,499,066 | 2,698,992 | |||||||||
Unrealized loss (gain) on derivative instruments |
64,025,985 | 39,977,961 | (23,644,682 | ) | ||||||||
Net gain on sale of loans and impairments |
(1,063,882 | ) | (3,635,744 | ) | (2,873,893 | ) | ||||||
Net loss on
partial extinguishment of a secured commercial loan to a local financial institution |
10,640,344 | | | |||||||||
Net amortization of premiums and discounts and deferred loan fees and costs |
(2,045,780 | ) | (45,794 | ) | 1,736,639 | |||||||
Amortization of broker placement fees |
15,228,471 | 11,384,353 | 10,228,646 | |||||||||
Amortization of basis adjustments on fair value hedges |
458,374 | | | |||||||||
Net (accretion) of discounts and premiums on investment securities |
(26,242,786 | ) | (19,494,586 | ) | (20,521,612 | ) | ||||||
Amortization of discount on subordinated notes |
| 404,409 | 371,861 | |||||||||
Gain on sale of credit card portfolio |
| | (5,532,684 | ) | ||||||||
(Decrease) increase in accrued income tax payable |
(42,621,586 | ) | 16,444,977 | (6,013,033 | ) | |||||||
Decrease (increase) in accrued interest receivable |
2,543,241 | (23,057,636 | ) | (19,408,552 | ) | |||||||
Increase in accrued interest payable |
26,564,232 | 39,556,298 | 6,294,948 | |||||||||
Decrease (increase) in other assets |
4,922,947 | (19,422,780 | ) | (20,475,269 | ) | |||||||
Increase in other liabilities |
17,353,014 | 30,974,572 | 23,331,745 | |||||||||
Total adjustments |
110,631,878 | 90,870,812 | (9,272,386 | ) | ||||||||
Net cash provided by operating activities |
172,979,378 | 230,796,407 | 126,359,009 | |||||||||
Cash flows from investing activities: |
||||||||||||
Principal collected on loans |
5,209,573,268 | 2,522,641,911 | 1,664,761,267 | |||||||||
Loans originated |
(3,491,295,450 | ) | (4,580,927,938 | ) | (3,327,844,911 | ) | ||||||
Purchase of loans |
(134,310,032 | ) | (317,031,608 | ) | (147,976,311 | ) | ||||||
Proceeds from sale of loans |
116,214,827 | 120,682,234 | 109,704,058 | |||||||||
Proceeds from sale of repossessed assets |
32,988,920 | 24,737,292 | 23,556,754 | |||||||||
Purchase of servicing assets |
(723,779 | ) | | | ||||||||
Proceeds from sale of available for sale securities |
228,122,652 | 223,329,617 | 32,845,372 | |||||||||
Purchase of securities held to maturity |
(402,607,038 | ) | (1,410,859,719 | ) | (1,547,072,399 | ) | ||||||
Purchase of securities available for sale |
(225,372,830 | ) | (1,220,389,587 | ) | (495,451,907 | ) | ||||||
Principal repayments and maturities of securities held to maturity |
509,566,831 | 1,842,826,825 | 1,056,932,801 | |||||||||
Principal repayments of securities available for sale |
168,697,285 | 232,016,437 | 270,854,574 | |||||||||
Additions to premises and equipment |
(47,698,610 | ) | (19,603,460 | ) | (14,070,585 | ) | ||||||
Decrease (increase) in other equity securities |
21,378,315 | 6,827,600 | (23,000,000 | ) | ||||||||
Cash paid for net assets acquired in acquisition of business |
| (78,404,804 | ) | | ||||||||
Net cash provided by (used in) investing activities |
1,984,534,359 | (2,654,155,200 | ) | (2,396,761,287 | ) | |||||||
Cash flows from financing activities: |
||||||||||||
Net (decrease) increase in deposits |
(651,589,392 | ) | 3,892,017,199 | 577,444,682 | ||||||||
Net (decrease) increase in federal funds purchased and securities
sold under repurchase agreements |
(1,605,447,000 | ) | 303,335,087 | 919,443,313 | ||||||||
Net FHLB advances (paid) taken |
(372,000,000 | ) | (1,190,000,000 | ) | 460,000,000 | |||||||
Net proceeds from issuance of notes payable and other borrowings |
| | 429,409,766 | |||||||||
Repayments of notes payable and other borrowings |
| (45,167,616 | ) | | ||||||||
Dividends paid |
(47,669,352 | ) | (47,184,548 | ) | (44,684,441 | ) | ||||||
Exercise of stock options |
19,756,483 | 2,094,354 | 3,199,430 | |||||||||
Treasury stock acquired |
| (965,079 | ) | | ||||||||
Net cash (used in) provided by financing activities |
(2,656,949,261 | ) | 2,914,129,397 | 2,344,812,750 | ||||||||
Net (decrease) increase in cash and cash equivalents |
(499,435,524 | ) | 490,770,604 | 74,410,472 | ||||||||
Cash and cash equivalents at beginning of period |
1,380,640,086 | 926,975,163 | 1,052,107,837 | |||||||||
Cash and cash equivalents at end of period |
$ | 881,204,562 | $ | 1,417,745,767 | $ | 1,126,518,309 | ||||||
Cash and cash equivalents include: |
||||||||||||
Cash and due from banks |
$ | 81,983,261 | $ | 137,248,464 | $ | 91,317,992 | ||||||
Money market instruments |
799,221,301 | 1,282,497,303 | 1,035,200,317 | |||||||||
$ | 881,204,562 | $ | 1,419,745,767 | $ | 1,126,518,309 | |||||||
Supplemental disclosures of cash flow information: |
||||||||||||
Cash paid during the period for: |
||||||||||||
Interest on borrowings |
$ | 559,113,647 | $ | 400,248,577 | $ | 293,543,996 | ||||||
Income Taxes |
91,125,590 | 32,823,146 | 41,131,288 | |||||||||
Non-cash investing and financing activities: |
||||||||||||
Additions to other real estate owned |
$ | 2,466,033 | $ | 2,973,012 | $ | 4,682,526 | ||||||
Additions to auto repossessions |
86,020,776 | 45,952,789 | 31,032,738 | |||||||||
Capitalization of servicing assets |
851,591 | 1,480,900 | 1,459,800 | |||||||||
Mortgage loans securitized and transferred to securities available-for-sale |
| | 51,107,154 |
8
Nine Month Period Ended | ||||||||||||
September 30, 2004 | ||||||||||||
September 30, 2006 | September 30, 2005 | (As Restated) | ||||||||||
Preferred Stock |
$ | 550,100,000 | $ | 550,100,000 | $ | 550,100,000 | ||||||
Common Stock outstanding: |
||||||||||||
Balance at beginning of period |
80,875,056 | 40,389,155 | 40,027,285 | |||||||||
Common stock
issued under stock option plan |
2,379,000 | 76,373 | 258,370 | |||||||||
Treasury stock acquired before stock split |
| (28,000 | ) | | ||||||||
Shares issued as a result of stock split |
| 40,437,528 | | |||||||||
Balance at end of period |
83,254,056 | 80,875,056 | 40,285,655 | |||||||||
Additional Paid-In-Capital: |
||||||||||||
Balance at beginning of period |
| 4,863,299 | 268,855 | |||||||||
Shares issued under stock option plan |
17,377,483 | 2,017,981 | 2,941,060 | |||||||||
Stock-based compensation recognized |
5,379,511 | | | |||||||||
Treasury stock acquired |
| (937,079 | ) | | ||||||||
Adjustment for stock split |
| (5,944,201 | ) | | ||||||||
Balance at end of period |
22,756,994 | | 3,209,915 | |||||||||
Capital Reserve |
| 82,825,000 | 80,000,000 | |||||||||
Legal Surplus |
265,844,192 | 183,019,192 | 165,709,122 | |||||||||
Retained Earnings: |
||||||||||||
Balance at beginning of period |
316,696,971 | 299,501,016 | 201,903,993 | |||||||||
Net income |
62,347,500 | 139,925,595 | 135,631,395 | |||||||||
Cash dividends declared on common stock |
(17,462,355 | ) | (16,977,551 | ) | (14,477,444 | ) | ||||||
Cash dividends declared on preferred stock |
(30,206,997 | ) | (30,206,997 | ) | (30,206,997 | ) | ||||||
Adjustment for stock split |
| (34,493,327 | ) | | ||||||||
Balance at end of period |
331,375,119 | 357,748,736 | 292,850,947 | |||||||||
Accumulated Other Comprehensive (Loss) Income, net of tax: |
||||||||||||
Balance at beginning of period |
(15,675,284 | ) | 43,635,624 | 35,812,500 | ||||||||
Other comprehensive (loss) income, net of tax |
(13,140,517 | ) | (43,444,155 | ) | 4,679,130 | |||||||
Balance at end of period |
(28,815,801 | ) | 191,469 | 40,491,630 | ||||||||
Total stockholders equity |
$ | 1,224,514,560 | $ | 1,254,759,453 | $ | 1,172,647,269 | ||||||
9
Quarter Ended | ||||||||||||
September 30, | ||||||||||||
September 30, | September 30, | 2004 | ||||||||||
2006 | 2005 | (As Restated) | ||||||||||
Net income |
$ | 26,681,756 | $ | 17,304,587 | $ | 88,393,361 | ||||||
Other comprehensive income (loss): |
||||||||||||
Unrealized gain (loss) on securities: |
||||||||||||
Unrealized holding gain (loss)
arising during the period |
48,411,623 | (32,042,194 | ) | 18,839,245 | ||||||||
Less:
Reclassification adjustments for net loss (gain)
and other than temporary impairments
included in net income |
6,083,674 | (4,517,344 | ) | (360,031 | ) | |||||||
Income tax (expense) benefit related to items of
other comprehensive income |
(675,834 | ) | 762,753 | (48,139 | ) | |||||||
Other comprehensive income (loss) for the period, net of tax |
53,819,463 | (35,796,785 | ) | 18,431,075 | ||||||||
Total comprehensive income (loss) |
$ | 80,501,219 | $ | (18,492,198 | ) | $ | 106,824,436 | |||||
10
Nine Month Period Ended | ||||||||||||
September 30, | ||||||||||||
September 30, | September 30, | 2004 | ||||||||||
2006 | 2005 | (As Restated) | ||||||||||
Net income |
$ | 62,347,500 | $ | 139,925,595 | $ | 135,631,395 | ||||||
Other comprehensive (loss) income: |
||||||||||||
Unrealized (loss) gain on securities: |
||||||||||||
Unrealized holding (loss) gain
arising during the period |
(20,016,838 | ) | (31,119,827 | ) | 10,073,391 | |||||||
Less:
Reclassification adjustments for net loss (gain)
and other than temporary impairments
included in net income |
6,658,218 | (12,849,663 | ) | (4,875,926 | ) | |||||||
Income tax benefit (expense) related to items of
other comprehensive income |
218,103 | 525,335 | (518,335 | ) | ||||||||
Other comprehensive (loss) income for the period, net of tax |
(13,140,517 | ) | (43,444,155 | ) | 4,679,130 | |||||||
Total comprehensive income |
$ | 49,206,983 | $ | 96,481,440 | $ | 140,310,525 | ||||||
11
12
As of | ||||
September 30, | ||||
(In thousands) | 2004 | |||
Cash and due from banks, (no adjustment required) |
$ | 91,318 | ||
Money market investments, as previously reported |
$ | 1,023,910 | ||
Impact of accounting errors and corrections: |
||||
Reclassifications |
11,290 | |||
Money market investments, as restated |
$ | 1,035,200 | ||
Investment securities including FHLB Stock, as previously reported |
$ | 5,350,974 | ||
Impact of accounting errors and corrections: |
||||
Accounting for investment securities |
771 | |||
Recharacterization of pass-through certificates as secured loans |
(143,246 | ) | ||
Reclassifications |
(11,290 | ) | ||
Investment securities including FHLB stock, as restated |
$ | 5,197,209 | ||
Total loans, net of allowance for loan and lease losses, as previously reported |
$ | 8,365,028 | ||
Impact of accounting errors and corrections: |
||||
Accounting for derivative instruments and broker placement fees |
(210 | ) | ||
Accounting for origination fees and costs and premiums and discounts on loans |
(2,267 | ) | ||
Recharacterization of pass-through certificates as secured loans |
143,246 | |||
Reclassifications |
492 | |||
Other accounting adjustments |
(2,444 | ) | ||
Total loans, net of allowance for loan and lease losses, as restated |
$ | 8,503,845 | ||
Total other assets, as previously reported |
$ | 346,430 | ||
Impact of accounting errors and corrections: |
||||
Accounting for derivative instruments and broker placement fees |
(475 | ) | ||
Tax impact of accounting adjustments |
7,259 | |||
Reclassifications |
(488 | ) | ||
Valuation of financial instruments |
1,200 | |||
Other accounting adjustments |
446 | |||
Total other assets, as restated |
$ | 354,372 | ||
Total assets, as restated |
$ | 15,181,944 | ||
Total liabilities, as previously reported |
$ | 13,994,207 | ||
Impact of accounting errors and corrections: |
||||
Accounting for derivative instruments and broker placement fees |
13,863 | |||
Tax impact of accounting adjustments |
2,392 | |||
Reclassifications |
4 | |||
Other accounting adjustments |
(1,169 | ) | ||
Total liabilities, as restated |
$ | 14,009,297 | ||
Stockholders equity, as previously reported |
$ | 1,183,453 | ||
Impact of accounting errors and corrections: |
||||
Accounting for derivative instruments and broker placement fees |
(15,211 | ) | ||
Accounting for investment securities |
3,121 | |||
Accounting for origination fees and costs and premiums and discounts on loans |
(2,267 | ) | ||
Valuation of financial instruments |
1,200 | |||
Tax impact of accounting adjustments |
4,866 | |||
Impact of accounting adjustments in other comprehensive income |
(1,686 | ) | ||
Other accounting adjustments |
(829 | ) | ||
Stockholders equity, as restated |
$ | 1,172,647 | ||
13
Quarter Ended | Nine Month Period Ended | |||||||
September 30, 2004 | September 30, 2004 | |||||||
(In thousands, except per share amounts) | ||||||||
Net interest income, as previously reported |
$ | 103,272 | $ | 281,753 | ||||
Impact of accounting errors and corrections: |
||||||||
Accounting for derivative instruments and broker placement fees |
58,924 | 11,761 | ||||||
Accounting for investment securities |
6,043 | 1,731 | ||||||
Accounting for origination fees and costs and premiums and discounts on loans |
241 | 535 | ||||||
Reclassification of late charges, penalty fees on loans and other |
2,561 | 8,803 | ||||||
Other accounting adjustments |
(435 | ) | (207 | ) | ||||
Net interest income, as restated |
$ | 170,606 | $ | 304,376 | ||||
Provision for loan and lease losses (no adjustment required) |
$ | 13,200 | $ | 39,600 | ||||
Non-interest income, as previously reported |
$ | 15,722 | $ | 53,370 | ||||
Impact of accounting errors and corrections: |
||||||||
Accounting for derivative instruments and broker placement fees |
(763 | ) | 623 | |||||
Accounting for origination fees and costs and premiums and discounts on loans |
(721 | ) | (2,020 | ) | ||||
Reclassification of late charges, penalty fees on loans and other |
(2,561 | ) | (8,803 | ) | ||||
Valuation of financial instruments |
| 1,200 | ||||||
Other accounting adjustments |
15 | 432 | ||||||
Non-interest income, as restated |
$ | 11,692 | $ | 44,802 | ||||
Non-interest expenses, as previously reported |
$ | 45,976 | $ | 134,644 | ||||
Impact of accounting errors and corrections: |
||||||||
Accounting for origination fees and costs and premiums and discounts on loans |
(280 | ) | (805 | ) | ||||
Other accounting adjustments |
181 | 353 | ||||||
Non-interest expenses, as restated |
$ | 45,877 | $ | 134,192 | ||||
Income tax expense, as previously reported |
$ | (10,737 | ) | $ | (31,659 | ) | ||
Impact of accounting errors and corrections |
(24,091 | ) | (8,096 | ) | ||||
Income tax expense, as restated |
$ | (34,828 | ) | $ | (39,755 | ) | ||
Net income, as restated |
$ | 88,393 | $ | 135,631 | ||||
Basic earnings per common share, as previously reported |
$ | 0.48 | $ | 1.23 | ||||
Effect of adjustments |
0.49 | 0.08 | ||||||
Basic earnings per common share, as restated |
$ | 0.97 | $ | 1.31 | ||||
Diluted earnings per common share, as previously reported |
$ | 0.47 | $ | 1.20 | ||||
Effect of adjustments |
0.47 | 0.07 | ||||||
Diluted earnings per common share, as restated |
$ | 0.94 | $ | 1.27 | ||||
14
Quarter Ended | Nine Month Period Ended | |||||||
September 30, 2004 | September 30, 2004 | |||||||
Elimination of fair value adjustments previously made to hedged items |
$ | 61,661 | $ | 12,507 | ||||
Recognition of interest rate swap up-front fees |
3,727 | 16,468 | ||||||
Broker placement fees amortization |
(3,351 | ) | (8,886 | ) | ||||
Corrections to interest rate swap valuations |
(3,876 | ) | (7,705 | ) | ||||
Total |
$ | 58,161 | $ | 12,384 | ||||
15
16
September 30, 2004 | September 30, 2004 | |||||||||||
(Dollars in thousands) | (As Previously Reported) | Adjustments | (As Restated) | |||||||||
Assets |
||||||||||||
Cash and due from banks |
$ | 91,318 | $ | | $ | 91,318 | ||||||
Money market instruments |
721,310 | 11,290 | 732,600 | |||||||||
Federal funds sold and securities purchased
under agreements to resell |
302,000 | | 302,000 | |||||||||
Time deposits with other financial institutions |
600 | | 600 | |||||||||
Total money market investments |
1,023,910 | 11,290 | 1,035,200 | |||||||||
Investment securities available for sale, at fair value: |
||||||||||||
Securities pledged that can be repledged |
1,270,255 | (44,413 | ) | 1,225,842 | ||||||||
Other investment securities |
350,923 | (99,252 | ) | 251,671 | ||||||||
Total investment securities available for sale |
1,621,178 | (143,665 | ) | 1,477,513 | ||||||||
Investment securities held to maturity, at amortized cost: |
||||||||||||
Securities pledged that can be repledged |
3,289,813 | 725 | 3,290,538 | |||||||||
Other investment securities |
371,333 | (11,200 | ) | 360,133 | ||||||||
Total investment securities held to maturity |
3,661,146 | (10,475 | ) | 3,650,671 | ||||||||
Other equity securities |
68,650 | 375 | 69,025 | |||||||||
Loans, net of allowance for loan and lease losses |
8,357,609 | 138,817 | 8,496,426 | |||||||||
Loans held for sale, at lower of cost or market |
7,419 | | 7,419 | |||||||||
Total loans, net |
8,365,028 | 138,817 | 8,503,845 | |||||||||
Premises and equipment, net |
88,866 | | 88,866 | |||||||||
Other real estate owned |
6,939 | | 6,939 | |||||||||
Accrued interest receivable |
61,181 | (236 | ) | 60,945 | ||||||||
Due from customers on acceptances |
718 | | 718 | |||||||||
Other assets |
188,726 | 8,178 | 196,904 | |||||||||
Total assets |
$ | 15,177,660 | $ | 4,284 | $ | 15,181,944 | ||||||
Liabilities & Stockholders Equity |
||||||||||||
Liabilities: |
||||||||||||
Non-interest-bearing deposits |
$ | 603,713 | $ | | $ | 603,713 | ||||||
Interest-bearing deposits |
6,764,318 | (10,485 | ) | 6,753,833 | ||||||||
Federal funds purchased and securities sold
under agreements to repurchase |
4,614,109 | (55,194 | ) | 4,558,915 | ||||||||
Advances from the Federal Home Loan Bank (FHLB) |
1,373,000 | | 1,373,000 | |||||||||
Notes payable |
153,551 | (649 | ) | 152,902 | ||||||||
Other borrowings |
231,500 | 45,168 | 276,668 | |||||||||
Subordinated notes |
82,821 | (684 | ) | 82,137 | ||||||||
Bank acceptance outstanding |
718 | | 718 | |||||||||
Payable for unsettled investment trade |
10,285 | | 10,285 | |||||||||
Accounts payable and other liabilities |
160,192 | 36,934 | 197,126 | |||||||||
Total liabilities |
13,994,207 | 15,090 | 14,009,297 | |||||||||
Stockholders equity: |
||||||||||||
Preferred stock, authorized 50,000,000 shares: issued and
outstanding 22,004,000 shares at $25 liquidation value per share |
550,100 | | 550,100 | |||||||||
Common stock, $1 par value, authorized
250,000,000 shares; issued 45,206,555 shares |
45,207 | | 45,207 | |||||||||
Less: Treasury Stock (at par value) |
(4,921 | ) | | (4,921 | ) | |||||||
Common stock outstanding |
40,286 | | 40,286 | |||||||||
Additional paid-in capital |
3,210 | | 3,210 | |||||||||
Capital reserve |
80,000 | | 80,000 | |||||||||
Legal surplus |
163,107 | 2,602 | 165,709 | |||||||||
Retained earnings |
304,573 | (11,722 | ) | 292,851 | ||||||||
Accumulated other comprehensive income, net of tax |
42,177 | (1,686 | ) | 40,491 | ||||||||
Total stockholders equity |
1,183,453 | (10,806 | ) | 1,172,647 | ||||||||
Total liabilities and stockholders equity |
$ | 15,177,660 | $ | 4,284 | $ | 15,181,944 | ||||||
17
Quarter Ended | ||||||||||||
September 30, | September 30, | |||||||||||
2004 | 2004 | |||||||||||
(In thousands, except per share data) | (As Previously Reported) | Adjustments | (As Restated) | |||||||||
Interest income: |
||||||||||||
Loans |
$ | 113,832 | $ | 1,316 | $ | 115,148 | ||||||
Investment securities |
65,095 | 5,268 | 70,363 | |||||||||
Money market investments |
1,153 | | 1,153 | |||||||||
Total interest income |
180,080 | 6,584 | 186,664 | |||||||||
Interest expense: |
||||||||||||
Deposits |
30,730 | (61,384 | ) | (30,654 | ) | |||||||
Federal funds purchased and repurchase agreements |
34,829 | (204 | ) | 34,625 | ||||||||
Advances from FHLB |
7,574 | | 7,574 | |||||||||
Notes payable and other borrowings |
3,675 | 838 | 4,513 | |||||||||
Total interest expense |
76,808 | (60,750 | ) | 16,058 | ||||||||
Net interest income |
103,272 | 67,334 | 170,606 | |||||||||
Provision for loan and lease losses |
13,200 | | 13,200 | |||||||||
Net interest income after provision
for loan and lease losses |
90,072 | 67,334 | 157,406 | |||||||||
Non-interest income: |
||||||||||||
Other service charges on loans |
4,384 | (3,532 | ) | 852 | ||||||||
Service charges on deposit accounts |
2,705 | | 2,705 | |||||||||
Mortgage banking activities |
1,329 | | 1,329 | |||||||||
Net gain on investments and impairments |
360 | | 360 | |||||||||
Rental income |
814 | | 814 | |||||||||
Other operating income |
6,130 | (498 | ) | 5,632 | ||||||||
Total non-interest income |
15,722 | (4,030 | ) | 11,692 | ||||||||
Non-interest expenses: |
||||||||||||
Employees compensation and benefits |
21,433 | (280 | ) | 21,153 | ||||||||
Occupancy and equipment |
10,223 | 37 | 10,260 | |||||||||
Business promotion |
4,354 | | 4,354 | |||||||||
Professional fees |
1,024 | | 1,024 | |||||||||
Taxes, other than income taxes |
2,283 | | 2,283 | |||||||||
Insurance and supervisory fees |
995 | | 995 | |||||||||
Other operating expenses |
5,664 | 144 | 5,808 | |||||||||
Total non-interest expenses |
45,976 | (99 | ) | 45,877 | ||||||||
Income before income tax |
59,818 | 63,403 | 123,221 | |||||||||
Income tax provision |
(10,737 | ) | (24,091 | ) | (34,828 | ) | ||||||
Net income |
$ | 49,081 | $ | 39,312 | $ | 88,393 | ||||||
Net income attributable to common stockholders |
$ | 39,012 | $ | 39,312 | $ | 78,324 | ||||||
Net income per common share: |
||||||||||||
Basic |
$ | 0.48 | $ | 0.49 | $ | 0.97 | ||||||
Diluted |
$ | 0.47 | $ | 0.47 | $ | 0.94 | ||||||
18
Nine Months Ended | ||||||||||||
September 30, | September 30, | |||||||||||
2004 | 2004 | |||||||||||
(In thousands, except per share data) | (As Previously Reported) | Adjustments | (As Restated) | |||||||||
Interest income: |
||||||||||||
Loans |
$ | 316,954 | $ | 8,838 | $ | 325,792 | ||||||
Investment securities |
168,465 | 1,410 | 169,875 | |||||||||
Money market investments |
2,416 | | 2,416 | |||||||||
Total interest income |
487,835 | 10,248 | 498,083 | |||||||||
Interest expense: |
||||||||||||
Deposits |
84,387 | (12,474 | ) | 71,913 | ||||||||
Federal funds purchased and repurchase agreements |
95,175 | (359 | ) | 94,816 | ||||||||
Advances from FHLB |
18,691 | | 18,691 | |||||||||
Notes payable and other borrowings |
7,829 | 458 | 8,287 | |||||||||
Total interest expense |
206,082 | (12,375 | ) | 193,707 | ||||||||
Net interest income |
281,753 | 22,623 | 304,376 | |||||||||
Provision for loan and lease losses |
39,600 | | 39,600 | |||||||||
Net interest income after provision
for loan and lease losses |
242,153 | 22,623 | 264,776 | |||||||||
Non-interest income: |
||||||||||||
Other service charges on loans |
14,547 | (11,590 | ) | 2,957 | ||||||||
Service charges on deposit accounts |
8,231 | | 8,231 | |||||||||
Mortgage banking activities |
3,091 | | 3,091 | |||||||||
Net gain on investments and impairments |
4,876 | | 4,876 | |||||||||
Rental income |
2,133 | | 2,133 | |||||||||
Gain on sale of credit card portfolio |
5,533 | | 5,533 | |||||||||
Other operating income |
14,959 | 3,022 | 17,981 | |||||||||
Total non-interest income |
53,370 | (8,568 | ) | 44,802 | ||||||||
Non-interest expenses: |
||||||||||||
Employees compensation and benefits |
62,932 | (805 | ) | 62,127 | ||||||||
Occupancy and equipment |
29,054 | 26 | 29,080 | |||||||||
Business promotion |
12,411 | | 12,411 | |||||||||
Professional fees |
2,964 | | 2,964 | |||||||||
Taxes, other than income taxes |
6,182 | | 6,182 | |||||||||
Insurance and supervisory fees |
3,081 | | 3,081 | |||||||||
Other operating expenses |
18,020 | 327 | 18,347 | |||||||||
Total non-interest expenses |
134,644 | (452 | ) | 134,192 | ||||||||
Income before income tax |
160,879 | 14,507 | 175,386 | |||||||||
Income tax provision |
(31,659 | ) | (8,096 | ) | (39,755 | ) | ||||||
Net income |
$ | 129,220 | $ | 6,411 | $ | 135,631 | ||||||
Net income attributable to common stockholders |
$ | 99,013 | $ | 6,411 | $ | 105,424 | ||||||
Net income per common share: |
||||||||||||
Basic |
$ | 1.23 | $ | 0.08 | $ | 1.31 | ||||||
Diluted |
$ | 1.20 | $ | 0.07 | $ | 1.27 | ||||||
19
20
2004 | ||||||||||||
As Previously | ||||||||||||
Nine Month Period Ended September 30, (in thousands) | Reported | Adjustments | (As Restated) | |||||||||
Cash flows from operating activities: |
||||||||||||
Net income |
$ | 129,220 | $ | 6,411 | $ | 135,631 | ||||||
Adjustments to reconcile net income to net cash provided by
operating activities: |
||||||||||||
Deferred income tax (benefit) provision (1) |
(5,047 | ) | 5,285 | 238 | ||||||||
Unrealized derivatives (gain) (2) |
(1,174 | ) | (22,471 | ) | (23,645 | ) | ||||||
Amortization of brokers placement fees (2) |
| 10,229 | 10,229 | |||||||||
(Accretion) amortization of premiums and discounts on investment
securities (3) |
| (20,522 | ) | (20,522 | ) | |||||||
Decrease (increase) in other assets (3) |
6,011 | (26,486 | ) | (20,475 | ) | |||||||
Other adjustments to cash flows from operating activities (4) (5) |
(7,526 | ) | 52,428 | 44,902 | ||||||||
Total adjustments to reconcile net income to net cash provided by
operating activities |
(7,736 | ) | (1,537 | ) | (9,273 | ) | ||||||
Net cash provided by operating activities |
121,484 | 4,874 | 126,358 | |||||||||
Cash flows from investing activities: |
||||||||||||
Proceeds from sale of repossessed assets (3) |
| 23,557 | 23,557 | |||||||||
Purchase of securities held to maturity (3) |
(5,182,605 | ) | 3,635,533 | (1,547,072 | ) | |||||||
Principal repayments and maturities of securities held to maturity (3) |
4,651,937 | (3,595,004 | ) | 1,056,933 | ||||||||
Other adjustments to cash flows from investing activities (4) (5) |
(1,894,906 | ) | (35,273 | ) | (1,930,179 | ) | ||||||
Net cash used in investing activities |
(2,425,574 | ) | 28,813 | (2,396,761 | ) | |||||||
Cash flows from financing activities: |
||||||||||||
Net increase in deposits (2) |
590,289 | (12,844 | ) | 577,445 | ||||||||
Other adjustments to cash flows from financing activities (5) |
1,768,785 | (1,417 | ) | 1,767,368 | ||||||||
Net cash provided by financing activities |
2,359,074 | (14,261 | ) | 2,344,813 | ||||||||
Net increase in cash and cash equivalents |
54,984 | 19,426 | 74,410 | |||||||||
Cash and cash equivalents at beginning of period |
1,060,244 | (8,136 | ) | 1,052,108 | ||||||||
Cash and cash equivalents at end of period (6) |
$ | 1,115,228 | $ | 11,290 | $ | 1,126,518 | ||||||
(1) | Deferred tax effect of items related to the 2004 restatement; refer to explanation of change in Note 1 Restatement of previously issued financial statements Income Taxes above. | |
(2) | Refer to explanation of change in Note 1 Restatement of previously issued financial statements Accounting for Derivative Instruments and Broker Placement Fees above. | |
(3) | Refer to explanation of change in the first paragraph of Restatement of 2004 Consolidated Statements of Cash Flows above. | |
(4) | Refer to explanation of change in the third paragraph of Restatement of 2004 Consolidated Statements of Cash Flows above. | |
(5) | Change resulting from certain not significant 2004 restatement adjustments (refer to Note 1 Restatement of previously issued financial statements) and the correction of immaterial classification errors. | |
(6) | Correction of classification of short-term held-to-maturity investments (less than 90 days) from investments to cash and cash equivalents. |
21
22
23
24
Quarter Ended | ||||||||||||
September 30, | ||||||||||||
2004 | ||||||||||||
2006 | 2005 | (As Restated) | ||||||||||
(In thousands, except per share data) | ||||||||||||
Net Income: |
||||||||||||
Net Income |
$ | 26,682 | $ | 17,305 | $ | 88,393 | ||||||
Less: Preferred stock dividend |
(10,069 | ) | (10,069 | ) | (10,069 | ) | ||||||
Net income available to common stockholders |
$ | 16,613 | $ | 7,236 | $ | 78,324 | ||||||
Weighted-Average Shares: |
||||||||||||
Basic weighted average common shares outstanding |
83,254 | 80,875 | 80,484 | |||||||||
Average potential common shares |
83 | 2,051 | 2,524 | |||||||||
Diluted weighted-average number of common shares outstanding |
83,337 | 82,926 | 83,008 | |||||||||
Earnings per common share: |
||||||||||||
Basic |
$ | 0.20 | $ | 0.09 | $ | 0.97 | ||||||
Diluted |
$ | 0.20 | $ | 0.09 | $ | 0.94 | ||||||
Nine Month Period Ended | ||||||||||||
September 30, | ||||||||||||
2004 | ||||||||||||
2006 | 2005 | (As Restated) | ||||||||||
(In thousands, except per share data) | ||||||||||||
Net Income: |
||||||||||||
Net Income |
$ | 62,348 | $ | 139,926 | $ | 135,631 | ||||||
Less: Preferred stock dividend |
(30,207 | ) | (30,207 | ) | (30,207 | ) | ||||||
Net income available to common stockholders |
$ | 32,141 | $ | 109,719 | $ | 105,424 | ||||||
Weighted-Average Shares: |
||||||||||||
Basic weighted average common shares outstanding |
82,694 | 80,837 | 80,348 | |||||||||
Average potential common shares |
360 | 2,218 | 2,480 | |||||||||
Diluted weighted-average number of common shares outstanding |
83,054 | 83,055 | 82,828 | |||||||||
Earnings per common share: |
||||||||||||
Basic |
$ | 0.39 | $ | 1.36 | $ | 1.31 | ||||||
Diluted |
$ | 0.39 | $ | 1.32 | $ | 1.27 | ||||||
25
26
Quarter ended | Nine month period ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2004 | 2004 | |||||||||||||||
2005 | (As Restated) | 2005 | (As Restated) | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Net income |
||||||||||||||||
As reported |
$ | 17,305 | $ | 88,393 | $ | 139,926 | $ | 135,631 | ||||||||
Deduct: Stock-based employee compensation
expense determined under fair value method |
| | 6,118 | 4,963 | ||||||||||||
Pro forma |
$ | 17,305 | $ | 88,393 | $ | 133,808 | $ | 130,668 | ||||||||
Earnings per common share-basic: |
||||||||||||||||
As reported |
$ | 0.09 | $ | 0.97 | $ | 1.36 | $ | 1.31 | ||||||||
Pro forma |
$ | 0.09 | $ | 0.97 | $ | 1.28 | $ | 1.25 | ||||||||
Earnings per common share-diluted: |
||||||||||||||||
As reported |
$ | 0.09 | $ | 0.94 | $ | 1.32 | $ | 1.27 | ||||||||
Pro forma |
$ | 0.09 | $ | 0.94 | $ | 1.25 | $ | 1.21 |
Nine Month Period Ended | ||||||||||||||||
September 30, 2006 | ||||||||||||||||
Weighted-Average | ||||||||||||||||
Remaining | Aggregate | |||||||||||||||
Number of | Weighted-Average | Contractual Term | Intrinsic Value | |||||||||||||
Options | Exercise Price | (Years) | (In thousands) | |||||||||||||
Beginning of period |
5,316,410 | $ | 13.28 | |||||||||||||
Options granted |
1,235,000 | 12.21 | ||||||||||||||
Options exercised |
(2,379,000 | ) | 8.30 | |||||||||||||
Options expired unexercised |
(1,148,000 | ) | 20.68 | |||||||||||||
End of period outstanding and exercisable |
3,024,410 | $ | 13.95 | 7.23 | $ | 2,065 | ||||||||||
27
2006 | 2005 | 2004 | ||||||||||
Weighted Average Stock Price at grant date and exercise price |
$ | 12.21 | $ | 23.92 | $ | 21.45 | ||||||
Stock option estimated fair value |
$ | 2.89-$4.60 | $ | 6.40-$6.41 | $ | 5.30-$5.45 | ||||||
Weighted-average estimated fair value |
$ | 4.36 | $ | 6.40 | $ | 5.33 | ||||||
Expected stock option term (years) |
4.22-4.31 | 4.25 - 4.27 | 4.08-4.33 | |||||||||
Expected volatility |
39% -46 | % | 28 | % | 28 | % | ||||||
Weighted-average expected volatility |
45 | % | 28 | % | 28 | % | ||||||
Expected dividend yield |
2.2% - 3.2 | % | 1.0 | % | 1.0 | % | ||||||
Weighted-average expected dividend yield |
2.3 | % | 1.0 | % | 1.0 | % | ||||||
Risk-free interest rate |
4.7% - 5.6 | % | 4.2 | % | 3.1 | % |
28
September 30, 2006 | December 31, 2005 | |||||||||||||||||||||||||||||||||||||||
Gross | Weighted | Gross | Weighted | |||||||||||||||||||||||||||||||||||||
Amortized | Unrealized | Fair | average | Amortized | Unrealized | Fair | average | |||||||||||||||||||||||||||||||||
cost | gains | losses | value | yield% | cost | gains | losses | value | yield% | |||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||
Obligations of U.S.
Government Sponsored
Agencies: |
||||||||||||||||||||||||||||||||||||||||
Within 1 year |
$ | | $ | | $ | | $ | | | $ | 1,000 | $ | | $ | | $ | 1,000 | 6.00 | ||||||||||||||||||||||
After 5 to 10 years |
402,378 | 21 | 9,778 | 392,621 | 4.31 | 392,939 | | 4,289 | 388,650 | 4.27 | ||||||||||||||||||||||||||||||
After 10 years |
12,984 | 8 | 47 | 12,945 | 6.16 | | | | | | ||||||||||||||||||||||||||||||
Puerto Rico Government
Obligations: |
||||||||||||||||||||||||||||||||||||||||
After 1 to 5 years |
4,624 | 149 | | 4,773 | 6.17 | 4,594 | 223 | | 4,817 | 6.17 | ||||||||||||||||||||||||||||||
After 5 to 10 years |
15,467 | 303 | 507 | 15,263 | 4.86 | 15,271 | 196 | 678 | 14,789 | 4.84 | ||||||||||||||||||||||||||||||
After 10 years |
5,360 | 101 | 172 | 5,289 | 5.88 | 5,311 | 131 | 42 | 5,400 | 5.88 | ||||||||||||||||||||||||||||||
United States and
Puerto Rico Government
Obligations |
440,813 | 582 | 10,504 | 430,891 | 4.42 | 419,115 | 550 | 5,009 | 414,656 | 4.34 | ||||||||||||||||||||||||||||||
Mortgage-backed Securities: |
||||||||||||||||||||||||||||||||||||||||
FHLMC certificates: |
||||||||||||||||||||||||||||||||||||||||
Within 1 year |
10 | | | 10 | 6.06 | 2 | | | 2 | 4.26 | ||||||||||||||||||||||||||||||
After 1 to 5 years |
2,016 | 40 | | 2,056 | 7.03 | 1,762 | 30 | | 1,792 | 6.43 | ||||||||||||||||||||||||||||||
After 5 to 10 years |
| | | | | 1,336 | 82 | | 1,418 | 7.98 | ||||||||||||||||||||||||||||||
After 10 years |
6,021 | 55 | 156 | 5,920 | 5.60 | 6,839 | 77 | 166 | 6,750 | 5.55 | ||||||||||||||||||||||||||||||
8,047 | 95 | 156 | 7,986 | 5.96 | 9,939 | 189 | 166 | 9,962 | 6.03 | |||||||||||||||||||||||||||||||
GNMA certificates: |
||||||||||||||||||||||||||||||||||||||||
After 1 to 5 years |
692 | 5 | | 697 | 6.37 | 939 | 14 | | 953 | 6.39 | ||||||||||||||||||||||||||||||
After 5 to 10 years |
1,068 | 6 | 3 | 1,071 | 5.78 | 291 | 10 | | 301 | 6.64 | ||||||||||||||||||||||||||||||
After 10 years |
393,906 | 482 | 7,663 | 386,725 | 5.23 | 438,565 | 1,021 | 1,959 | 437,627 | 5.19 | ||||||||||||||||||||||||||||||
395,666 | 493 | 7,666 | 388,493 | 5.24 | 439,795 | 1,045 | 1,959 | 438,881 | 5.20 | |||||||||||||||||||||||||||||||
FNMA certificates: |
||||||||||||||||||||||||||||||||||||||||
After 1 to 5 years |
105 | | | 105 | 7.33 | 187 | 3 | | 190 | 7.55 | ||||||||||||||||||||||||||||||
After 5 to 10 years |
9,026 | 11 | 150 | 8,887 | 4.76 | 124 | 11 | | 135 | 11.40 | ||||||||||||||||||||||||||||||
After 10 years |
907,500 | 670 | 13,376 | 894,794 | 5.17 | 1,038,126 | 1,054 | 10,031 | 1,029,149 | 5.14 | ||||||||||||||||||||||||||||||
916,631 | 681 | 13,526 | 903,786 | 5.16 | 1,038,437 | 1,068 | 10,031 | 1,029,474 | 5.14 | |||||||||||||||||||||||||||||||
Mortgage pass-through
certificates: |
||||||||||||||||||||||||||||||||||||||||
After 10 years |
375 | 3 | | 378 | 7.28 | 400 | 3 | | 403 | 7.29 | ||||||||||||||||||||||||||||||
Mortgage-backed
Securities |
1,320,719 | 1,272 | 21,348 | 1,300,643 | 5.19 | 1,488,571 | 2,305 | 12,156 | 1,478,720 | 5.16 | ||||||||||||||||||||||||||||||
Corporate Bonds: |
||||||||||||||||||||||||||||||||||||||||
After 1 to 5 years |
| | | | | 2,483 | 84 | 1 | 2,566 | 7.75 | ||||||||||||||||||||||||||||||
After 5 to 10 years |
1,302 | | 178 | 1,124 | 7.46 | 1,912 | 12 | 42 | 1,882 | 8.09 | ||||||||||||||||||||||||||||||
After 10 years |
4,468 | | 792 | 3,676 | 7.72 | 21,857 | 909 | 1,833 | 20,933 | 7.44 | ||||||||||||||||||||||||||||||
Corporate bonds |
5,770 | | 970 | 4,800 | 7.66 | 26,252 | 1,005 | 1,876 | 25,381 | 7.52 | ||||||||||||||||||||||||||||||
Equity securities (without
contractual maturity) |
18,302 | 1,955 | 37 | 20,220 | 0.80 | 29,931 | 1,131 | 1,641 | 29,421 | 3.70 | ||||||||||||||||||||||||||||||
Total Investment Securities
Available for Sale |
$ | 1,785,604 | $ | 3,809 | $ | 32,859 | $ | 1,756,554 | 4.96 | $ | 1,963,869 | $ | 4,991 | $ | 20,682 | $ | 1,948,178 | 5.00 | ||||||||||||||||||||||
29
September 30, 2004 | ||||||||||||||||||||||||||||||||||||||||
September 30, 2005 | (As Restated) | |||||||||||||||||||||||||||||||||||||||
Gross | Weighted | Gross | Weighted | |||||||||||||||||||||||||||||||||||||
Amortized | Unrealized | Fair | average | Amortized | Unrealized | Fair | average | |||||||||||||||||||||||||||||||||
cost | gains | losses | value | yield% | cost | gains | losses | value | yield% | |||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||
Obligations of U.S.
Government Sponsored
Agencies: |
||||||||||||||||||||||||||||||||||||||||
After 5 to 10 years |
$ | 392,782 | $ | 394 | $ | 2,886 | $ | 390,290 | 4.27 | $ | 284,743 | $ | 11,742 | $ | | $ | 296,485 | 4.68 | ||||||||||||||||||||||
Puerto Rico Government
Obligations: |
||||||||||||||||||||||||||||||||||||||||
After 1 to 5 years |
4,585 | 261 | | 4,846 | 6.17 | 4,449 | 255 | | 4,704 | 6.16 | ||||||||||||||||||||||||||||||
After 5 to 10 years |
15,207 | 223 | 172 | 15,258 | 4.83 | 12,730 | 251 | 66 | 12,915 | 4.58 | ||||||||||||||||||||||||||||||
After 10 years |
5,295 | 135 | 46 | 5,384 | 5.87 | 7,567 | 437 | 83 | 7,921 | 5.94 | ||||||||||||||||||||||||||||||
United States and
Puerto Rico Government
Obligations |
417,869 | 1,013 | 3,104 | 415,778 | 4.33 | 309,489 | 12,685 | 149 | 322,025 | 4.73 | ||||||||||||||||||||||||||||||
Mortgage-backed Securities: |
||||||||||||||||||||||||||||||||||||||||
FHLMC certificates: |
||||||||||||||||||||||||||||||||||||||||
Within 1 year |
| | | | | 1 | | | 1 | 4.26 | ||||||||||||||||||||||||||||||
After 1 to 5 years |
1,964 | 45 | | 2,009 | 6.41 | 2,634 | 135 | | 2,769 | 6.35 | ||||||||||||||||||||||||||||||
After 5 to 10 years |
1,535 | 99 | | 1,634 | 8.04 | 2,568 | 167 | | 2,735 | 8.12 | ||||||||||||||||||||||||||||||
After 10 years |
7,191 | 98 | 101 | 7,188 | 5.58 | 3,069 | 176 | | 3,245 | 6.85 | ||||||||||||||||||||||||||||||
10,690 | 242 | 101 | 10,831 | 6.08 | 8,272 | 478 | | 8,750 | 7.08 | |||||||||||||||||||||||||||||||
GNMA certificates: |
||||||||||||||||||||||||||||||||||||||||
After 1 to 5 years |
996 | 17 | | 1,013 | 6.40 | 965 | 44 | | 1,009 | 5.90 | ||||||||||||||||||||||||||||||
After 5 to 10 years |
321 | 11 | | 332 | 6.65 | 996 | 61 | | 1,057 | 6.90 | ||||||||||||||||||||||||||||||
After 10 years |
456,524 | 969 | 1,007 | 456,486 | 5.21 | 110,105 | 2,428 | | 112,533 | 4.75 | ||||||||||||||||||||||||||||||
457,841 | 997 | 1,007 | 457,831 | 5.21 | 112,066 | 2,533 | | 114,599 | 4.78 | |||||||||||||||||||||||||||||||
FNMA certificates: |
||||||||||||||||||||||||||||||||||||||||
After 1 to 5 years |
113 | 2 | | 115 | 7.53 | 48 | 3 | | 51 | 8.29 | ||||||||||||||||||||||||||||||
After 5 to 10 years |
164 | 8 | | 172 | 9.10 | 362 | 34 | | 396 | 8.37 | ||||||||||||||||||||||||||||||
After 10 years |
1,093,553 | 2,453 | 2,457 | 1,093,549 | 5.11 | 922,291 | 16,546 | 3 | 938,834 | 4.97 | ||||||||||||||||||||||||||||||
1,093,830 | 2,463 | 2,457 | 1,093,836 | 5.11 | 922,701 | 16,583 | 3 | 939,281 | 4.98 | |||||||||||||||||||||||||||||||
Mortgage pass-through
certificates: |
||||||||||||||||||||||||||||||||||||||||
After 10 years |
408 | 4 | | 412 | 7.29 | 554 | 5 | | 559 | 7.28 | ||||||||||||||||||||||||||||||
Mortgage-backed
Securities |
1,562,769 | 3,706 | 3,565 | 1,562,910 | 5.15 | 1,043,593 | 19,599 | 3 | 1,063,189 | 4.97 | ||||||||||||||||||||||||||||||
Corporate Bonds: |
||||||||||||||||||||||||||||||||||||||||
Within 1 year |
20,000 | | | 20,000 | 4.68 | 20,000 | 450 | | 20,450 | 6.36 | ||||||||||||||||||||||||||||||
After 1 to 5 years |
3,361 | 2,080 | | 5,441 | 7.63 | 20,875 | 1,835 | | 22,710 | 3.13 | ||||||||||||||||||||||||||||||
After 5 to 10 years |
3,399 | 1,022 | 87 | 4,334 | 7.81 | 375 | 751 | | 1,126 | 7.73 | ||||||||||||||||||||||||||||||
After 10 years |
22,682 | 914 | 1,490 | 22,106 | 7.44 | | | | | | ||||||||||||||||||||||||||||||
Corporate bonds |
49,442 | 4,016 | 1,577 | 51,881 | 6.36 | 41,250 | 3,036 | | 44,286 | 4.74 | ||||||||||||||||||||||||||||||
Equity securities (without
contractual maturity) |
56,572 | 6,506 | 6,433 | 56,645 | 3.51 | 41,557 | 8,818 | 2,362 | 48,013 | 0.35 | ||||||||||||||||||||||||||||||
Total Investment Securities
Available for Sale |
$ | 2,086,652 | $ | 15,241 | $ | 14,679 | $ | 2,087,214 | 4.97 | $ | 1,435,889 | $ | 44,138 | $ | 2,514 | $ | 1,477,513 | 4.78 |
30
As of September 30, 2006 | ||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Debt Securities |
||||||||||||||||||||||||
Obligations of U.S. Government
Sponsored Agencies |
$ | 12,911 | $ | 65 | $ | 383,660 | $ | 9,760 | $ | 396,571 | $ | 9,825 | ||||||||||||
Puerto Rico Government
Obligations |
| | 13,482 | 679 | 13,482 | 679 | ||||||||||||||||||
Mortgage-Backed Securities |
||||||||||||||||||||||||
FHLMC |
591 | | 4,008 | 156 | 4,599 | 156 | ||||||||||||||||||
GNMA |
367,308 | 7,666 | | | 367,308 | 7,666 | ||||||||||||||||||
FNMA |
368,958 | 5,900 | 506,296 | 7,626 | 875,254 | 13,526 | ||||||||||||||||||
Corporate Bonds |
| | 4,800 | 970 | 4,800 | 970 | ||||||||||||||||||
Equity Securities |
1,735 | 37 | | | 1,735 | 37 | ||||||||||||||||||
$ | 751,503 | $ | 13,668 | $ | 912,246 | $ | 19,191 | $ | 1,663,749 | $ | 32,859 | |||||||||||||
As of December 31, 2005 | ||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Debt Securities |
||||||||||||||||||||||||
Obligations of U.S. Government
Sponsored Agencies |
$ | 388,650 | $ | 4,289 | $ | | $ | | $ | 388,650 | $ | 4,289 | ||||||||||||
Puerto Rico Government
Obligations |
| | 13,440 | 720 | 13,440 | 720 | ||||||||||||||||||
Mortgage-Backed Securities |
||||||||||||||||||||||||
FHLMC |
4,440 | 166 | | | 4,440 | 166 | ||||||||||||||||||
GNMA |
369,231 | 1,959 | | | 369,231 | 1,959 | ||||||||||||||||||
FNMA |
939,197 | 10,031 | | | 939,197 | 10,031 | ||||||||||||||||||
Corporate Bonds |
8,711 | 1,876 | | | 8,711 | 1,876 | ||||||||||||||||||
Equity Securities |
16,229 | 1,641 | | | 16,229 | 1,641 | ||||||||||||||||||
$ | 1,726,458 | $ | 19,962 | $ | 13,440 | $ | 720 | $ | 1,739,898 | $ | 20,682 | |||||||||||||
31
As of September 30, 2005 | ||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Debt Securities |
||||||||||||||||||||||||
Obligations of U.S. Government
Sponsored Agencies |
$ | 292,950 | $ | 2,886 | $ | | $ | | $ | 292,950 | $ | 2,886 | ||||||||||||
Puerto Rico Government
Obligations |
| | 13,943 | 218 | 13,943 | 218 | ||||||||||||||||||
Mortgage-Backed Securities |
||||||||||||||||||||||||
FHLMC |
4,660 | 101 | | | 4,660 | 101 | ||||||||||||||||||
GNMA |
426,362 | 1,007 | | | 426,362 | 1,007 | ||||||||||||||||||
FNMA |
823,027 | 2,457 | | | 823,027 | 2,457 | ||||||||||||||||||
Corporate Bonds |
10,828 | 1,577 | | | 10,828 | 1,577 | ||||||||||||||||||
Equity Securities |
29,036 | 6,433 | | | 29,036 | 6,433 | ||||||||||||||||||
$ | 1,586,863 | $ | 14,461 | $ | 13,943 | $ | 218 | $ | 1,600,806 | $ | 14,679 | |||||||||||||
As of September 30, 2004 | ||||||||||||||||||||||||
(As Restated) | ||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Debt Securities |
||||||||||||||||||||||||
Puerto Rico Government
Obligations |
$ | 4,852 | $ | 149 | $ | | $ | | $ | 4,852 | $ | 149 | ||||||||||||
Mortgage-Backed Securities |
||||||||||||||||||||||||
FNMA |
1,001 | 3 | | | 1,001 | 3 | ||||||||||||||||||
Equity Securities |
22,600 | 2,362 | 22,600 | 2,362 | ||||||||||||||||||||
$ | 28,453 | $ | 2,514 | $ | | $ | | $ | 28,453 | $ | 2,514 | |||||||||||||
32
September 30, 2006 | December 31, 2005 | |||||||||||||||||||||||||||||||||||||||
Gross | Weighted | Gross | Weighted | |||||||||||||||||||||||||||||||||||||
Amortized | Unrealized | Fair | average | Amortized | Unrealized | Fair | average | |||||||||||||||||||||||||||||||||
cost | gains | losses | value | yield% | cost | gains | losses | value | yield% | |||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||
U.S. Treasury Securities: |
||||||||||||||||||||||||||||||||||||||||
Due within 1 year |
$ | 156,913 | $ | 23 | $ | | $ | 156,936 | 4.96 | $ | 149,156 | $ | 48 | $ | | $ | 149,204 | 3.97 | ||||||||||||||||||||||
Obligations of other U.S. Government
Sponsored Agencies: |
||||||||||||||||||||||||||||||||||||||||
After 10 years |
2,066,418 | | 63,531 | 2,002,887 | 5.83 | 2,041,558 | | 65,799 | 1,975,759 | 5.83 | ||||||||||||||||||||||||||||||
Puerto Rico Government
Obligations: |
||||||||||||||||||||||||||||||||||||||||
After 1 to 5 years |
| | | | | 5,000 | 20 | | 5,020 | 5.00 | ||||||||||||||||||||||||||||||
After 5 to 10 years |
16,575 | 535 | 141 | 16,969 | 5.84 | | | | | | ||||||||||||||||||||||||||||||
After 10 years |
15,000 | 309 | | 15,309 | 5.50 | 9,163 | 502 | 143 | 9,522 | 5.94 | ||||||||||||||||||||||||||||||
United States and Puerto
Rico Government obligations |
2,254,906 | 867 | 63,672 | 2,192,101 | 5.77 | 2,204,877 | 570 | 65,942 | 2,139,505 | 5.70 | ||||||||||||||||||||||||||||||
Mortgage-backed securities: |
||||||||||||||||||||||||||||||||||||||||
FHLMC certificates: |
||||||||||||||||||||||||||||||||||||||||
After 5 to 10 years |
16,511 | | 574 | 15,937 | 3.57 | 20,211 | | 778 | 19,433 | 3.63 | ||||||||||||||||||||||||||||||
FNMA certificates: |
||||||||||||||||||||||||||||||||||||||||
After 5 to 10 years |
15,196 | | 542 | 14,654 | 3.80 | 18,418 | | 602 | 17,816 | 3.79 | ||||||||||||||||||||||||||||||
After 10 years |
1,069,417 | 57 | 37,369 | 1,032,105 | 4.38 | 1,195,082 | | 35,277 | 1,159,805 | 4.32 | ||||||||||||||||||||||||||||||
Mortgage-backed securities |
1,101,124 | 57 | 38,485 | 1,062,696 | 4.36 | 1,233,711 | | 36,657 | 1,197,054 | 4.30 | ||||||||||||||||||||||||||||||
Corporate Bonds: |
||||||||||||||||||||||||||||||||||||||||
After 10 years |
2,000 | | | 2,000 | 5.80 | | | | | | ||||||||||||||||||||||||||||||
Total Investment Securities
Held to Maturity |
$ | 3,358,030 | $ | 924 | $ | 102,157 | $ | 3,256,797 | 5.31 | $ | 3,438,588 | $ | 570 | $ | 102,599 | $ | 3,336,559 | 5.20 | ||||||||||||||||||||||
33
September 30, 2004 | ||||||||||||||||||||||||||||||||||||||||
September 30, 2005 | (As Restated) | |||||||||||||||||||||||||||||||||||||||
Gross | Weighted | Gross | Weighted | |||||||||||||||||||||||||||||||||||||
Amortized | Unrealized | Fair | average | Amortized | Unrealized | Fair | average | |||||||||||||||||||||||||||||||||
cost | gains | losses | value | yield% | cost | gains | losses | value | yield% | |||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||
Obligations of other U.S. Government
Sponsored Agencies: |
||||||||||||||||||||||||||||||||||||||||
Due within 1 year |
$ | 64,838 | $ | | $ | | $ | 64,838 | 3.85 | $ | | $ | | $ | | $ | | | ||||||||||||||||||||||
After 10 years |
1,583,502 | | 44,707 | 1,538,795 | 5.76 | 2,011,140 | 359 | 39,122 | 1,972,377 | 5.39 | ||||||||||||||||||||||||||||||
Puerto Rico Government
Obligations: |
||||||||||||||||||||||||||||||||||||||||
After 1 to 5 years |
5,000 | 43 | | 5,043 | 5.00 | 5,000 | 135 | | 5,135 | 5.00 | ||||||||||||||||||||||||||||||
After 10 years |
9,030 | 507 | 144 | 9,393 | 5.94 | 8,517 | 797 | | 9,314 | 5.93 | ||||||||||||||||||||||||||||||
United States and Puerto
Rico Government obligations |
1,662,370 | 550 | 44,851 | 1,618,069 | 5.68 | 2,024,657 | 1,291 | 39,122 | 1,986,826 | 5.39 | ||||||||||||||||||||||||||||||
Mortgage-backed securities: |
||||||||||||||||||||||||||||||||||||||||
FHLMC certificates: |
||||||||||||||||||||||||||||||||||||||||
After 5 to 10 years |
21,736 | | 743 | 20,993 | 3.69 | 28,508 | 5 | 624 | 27,889 | 3.59 | ||||||||||||||||||||||||||||||
FNMA certificates: |
||||||||||||||||||||||||||||||||||||||||
After 5 to 10 years |
19,611 | | 539 | 19,072 | 3.78 | 24,905 | | 46 | 24,859 | 3.80 | ||||||||||||||||||||||||||||||
After 10 years |
1,263,032 | | 27,895 | 1,235,137 | 4.29 | 1,572,601 | 32 | 10,154 | 1,562,479 | 4.27 | ||||||||||||||||||||||||||||||
Mortgage-backed securities |
1,304,379 | | 29,177 | 1,275,202 | 4.27 | 1,626,014 | 37 | 10,824 | 1,615,227 | 4.25 | ||||||||||||||||||||||||||||||
Total Investment Securities
Held to Maturity |
$ | 2,966,749 | $ | 550 | $ | 74,028 | $ | 2,893,271 | 5.06 | $ | 3,650,671 | $ | 1,328 | $ | 49,946 | $ | 3,602,053 | 4.89 | ||||||||||||||||||||||
As of September 30, 2006 | ||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Debt Securities |
||||||||||||||||||||||||
Other U.S. Government Sponsored
Agencies |
$ | 139,960 | $ | 9,723 | $ | 1,862,927 | $ | 53,808 | $ | 2,002,887 | $ | 63,531 | ||||||||||||
Puerto Rico Government Obligations |
| | 3,900 | 141 | 3,900 | 141 | ||||||||||||||||||
Mortgage Backed Securities |
||||||||||||||||||||||||
FHLMC |
| | 15,937 | 574 | 15,937 | 574 | ||||||||||||||||||
FNMA |
24,817 | 1,092 | 1,018,585 | 36,819 | 1,043,402 | 37,911 | ||||||||||||||||||
$ | 164,777 | $ | 10,815 | $ | 2,901,349 | $ | 91,342 | $ | 3,066,126 | $ | 102,157 | |||||||||||||
As of December 31, 2005 | ||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Debt Securities |
||||||||||||||||||||||||
Other U.S. Government Sponsored
Agencies |
$ | 1,585,810 | $ | 40,379 | $ | 389,949 | $ | 25,420 | $ | 1,975,759 | $ | 65,799 | ||||||||||||
Puerto Rico Government Obligations |
3,746 | 143 | | | 3,746 | 143 | ||||||||||||||||||
Mortgage-Backed Securities |
||||||||||||||||||||||||
FHLMC |
| | 19,433 | 778 | 19,433 | 778 | ||||||||||||||||||
FNMA |
11,771 | 339 | 1,165,849 | 35,540 | 1,177,620 | 35,879 | ||||||||||||||||||
$ | 1,601,327 | $ | 40,861 | $ | 1,575,231 | $ | 61,738 | $ | 3,176,558 | $ | 102,599 | |||||||||||||
34
As of September 30, 2005 | ||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Debt Securities |
||||||||||||||||||||||||
US Treasury Securities |
||||||||||||||||||||||||
Other U.S. Government Sponsored
Agencies |
$ | 1,219,932 | $ | 18,884 | $ | 383,701 | $ | 25,823 | $ | 1,603,633 | $ | 44,707 | ||||||||||||
Puerto Rico Government Obligations |
3,695 | 144 | | | 3,695 | 144 | ||||||||||||||||||
Mortgage- Backed Securities |
||||||||||||||||||||||||
FHLMC |
513 | 21 | 20,480 | 722 | 20,993 | 743 | ||||||||||||||||||
FNMA |
374,127 | 7,891 | 880,082 | 20,543 | 1,254,209 | 28,434 | ||||||||||||||||||
$ | 1,598,267 | $ | 26,940 | $ | 1,284,263 | $ | 47,088 | $ | 2,882,530 | $ | 74,028 | |||||||||||||
As of September 30, 2004 | ||||||||||||||||||||||||
(As restated) | ||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Debt Securities |
||||||||||||||||||||||||
Other U.S. Government Sponsored
Agencies |
$ | 1,378,472 | $ | 30,840 | $ | 457,154 | $ | 8,282 | $ | 1,835,626 | $ | 39,122 | ||||||||||||
Mortgage-Backed Securities |
||||||||||||||||||||||||
FHLMC |
| | 27,028 | 624 | 27,028 | 624 | ||||||||||||||||||
FNMA |
1,556,661 | 10,200 | | | 1,556,661 | 10,200 | ||||||||||||||||||
$ | 2,935,133 | $ | 41,040 | $ | 484,182 | $ | 8,906 | $ | 3,419,315 | $ | 49,946 | |||||||||||||
35
September 30, | ||||||||||||||||
September 30, | December 31, | September 30, | 2004 | |||||||||||||
2006 | 2005 | 2005 | (As Restated) | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Residential real estate loans, mainly
secured by first mortgages |
$ | 2,663,587 | $ | 2,245,272 | $ | 2,025,749 | $ | 1,211,980 | ||||||||
Commercial loans: |
||||||||||||||||
Construction loans |
1,533,409 | 1,137,118 | 969,540 | 398,570 | ||||||||||||
Commercial mortgage loans |
1,180,631 | 1,090,193 | 1,037,658 | 632,330 | ||||||||||||
Commercial loans |
2,388,014 | 2,421,219 | 2,311,053 | 1,765,082 | ||||||||||||
Loans to local financial institutions collateralized by
real estate mortgages and pass-through trust certificates |
960,970 | 3,676,314 | 4,011,063 | 3,135,491 | ||||||||||||
Commercial loans |
6,063,024 | 8,324,844 | 8,329,314 | 5,931,473 | ||||||||||||
Finance leases |
344,416 | 280,571 | 258,705 | 198,322 | ||||||||||||
Consumer loans |
1,790,323 | 1,733,569 | 1,684,458 | 1,291,904 | ||||||||||||
Loans receivable |
10,861,350 | 12,584,256 | 12,298,226 | 8,633,679 | ||||||||||||
Allowance for loan and lease losses |
(150,925 | ) | (147,999 | ) | (147,267 | ) | (137,253 | ) | ||||||||
Loans receivable, net |
10,710,425 | 12,436,257 | 12,150,959 | 8,496,426 | ||||||||||||
Loans held for sale |
30,603 | 101,673 | 74,199 | 7,419 | ||||||||||||
Total loans |
$ | 10,741,028 | $ | 12,537,930 | $ | 12,225,158 | $ | 8,503,845 | ||||||||
36
Quarter Ended | ||||||||||||
September 30, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in thousands) | ||||||||||||
Balance at beginning of period |
$ | 146,527 | $ | 146,154 | $ | 133,678 | ||||||
Provision for loan and lease losses |
20,560 | 12,861 | 13,200 | |||||||||
Charge-offs |
(21,233 | ) | (13,197 | ) | (11,104 | ) | ||||||
Recoveries |
5,071 | 1,449 | 1,479 | |||||||||
Balance at end of year |
$ | 150,925 | $ | 147,267 | $ | 137,253 | ||||||
Nine Month Period Ended | ||||||||||||
September 30, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in thousands) | ||||||||||||
Balance at beginning of period |
$ | 147,999 | $ | 141,036 | $ | 126,378 | ||||||
Provision for loan and lease losses |
49,290 | 34,890 | 39,600 | |||||||||
Charge-offs |
(54,494 | ) | (34,794 | ) | (33,081 | ) | ||||||
Recoveries |
8,130 | 4,772 | 4,356 | |||||||||
Other adjustments (1) |
| 1,363 | | |||||||||
Balance at end of year |
$ | 150,925 | $ | 147,267 | $ | 137,253 | ||||||
(1) | Represents allowance for loan losses from the acquisition of Ponce General Corporation. |
37
As of | ||||||||||||||||
As of | As of | As of | September 30, | |||||||||||||
September 30, | December 31, | September 30, | 2004 | |||||||||||||
2006 | 2005 | 2005 | (As Restated) | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Impaired loans |
$ | 60,159 | $ | 59,801 | $ | 58,369 | $ | 62,589 | ||||||||
Allowance for impaired loans |
$ | 8,762 | $ | 9,219 | $ | 17,193 | $ | 14,729 |
38
39
Notional amounts | ||||||||||||||||
As of | ||||||||||||||||
As of | As of | As of | September 30, | |||||||||||||
September 30, | December 31, | September 30, | 2004 | |||||||||||||
2006 | 2005 | 2005 | (As Restated) | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Interest rate swap agreements: |
||||||||||||||||
Pay fixed versus receive floating |
$ | 80,720 | $ | 109,320 | $ | 109,320 | $ | 113,165 | ||||||||
Received fixed versus pay floating |
4,858,490 | 5,751,128 | 5,748,120 | 3,867,766 | ||||||||||||
Embedded written options |
13,515 | 13,515 | 13,515 | 13,515 | ||||||||||||
Purchased options |
13,515 | 13,515 | 13,515 | 13,515 | ||||||||||||
Written interest rate cap agreements |
125,200 | 150,200 | 150,200 | 25,000 | ||||||||||||
Purchased interest rate caps |
338,617 | 386,750 | 556,052 | 25,000 | ||||||||||||
$ | 5,430,057 | $ | 6,424,428 | $ | 6,590,722 | $ | 4,057,961 | |||||||||
40
Notional amounts | ||||||||||||||||
As of | ||||||||||||||||
As of | As of | As of | September 30, | |||||||||||||
September 30, | December 31, | September 30, | 2004 | |||||||||||||
2006 | 2005 | 2005 | (As Restated) | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Designated hedges: |
||||||||||||||||
Fair value hedge: |
||||||||||||||||
Interest rate swaps used to hedge
fixed rate certificates of deposit |
$ | 4,321,746 | $ | | $ | | $ | | ||||||||
Interest rate swaps used to hedge
fixed and step rate notes payable |
165,442 | | | | ||||||||||||
Total fair value hedges |
$ | 4,487,188 | $ | | $ | | $ | | ||||||||
Economic undesignated hedges: |
||||||||||||||||
Interest rate swaps used to hedge
fixed rate certificates of deposit and loans |
$ | 452,022 | $ | 5,860,448 | $ | 5,857,440 | $ | 3,980,931 | ||||||||
Embedded options on stock index deposits |
13,515 | 13,515 | 13,515 | 13,515 | ||||||||||||
Purchased options used to manage exposure to
the stock market on embedded stock index options |
13,515 | 13,515 | 13,515 | 13,515 | ||||||||||||
Written interest rate cap agreements |
125,200 | 150,200 | 150,200 | 25,000 | ||||||||||||
Purchased interest rate cap agreements |
338,617 | 386,750 | 556,052 | 25,000 | ||||||||||||
Total derivatives not designated as hedge |
$ | 942,869 | $ | 6,424,428 | $ | 6,590,722 | $ | 4,057,961 | ||||||||
Total |
$ | 5,430,057 | $ | 6,424,428 | $ | 6,590,722 | $ | 4,057,961 | ||||||||
41
As of | ||||||||||||||||
As of | As of | As of | September 30, | |||||||||||||
September 30, | December 31, | September 30, | 2004 | |||||||||||||
2006 | 2005 | 2005 | (As Restated) | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Pay fixed/receive floating: |
||||||||||||||||
Notional amount |
$ | 80,720 | $ | 109,320 | $ | 109,320 | $ | 113,165 | ||||||||
Weighted average receive rate at period end |
7.39 | % | 6.41 | % | 5.86 | % | 3.46 | % | ||||||||
Weighted average pay rate at period end |
6.37 | % | 6.60 | % | 6.60 | % | 6.97 | % | ||||||||
Floating rates range from 187 to 251.5 basis
points over 3-month LIBOR |
||||||||||||||||
Receive fixed/pay floating: |
||||||||||||||||
Notional amount |
$ | 4,858,490 | $ | 5,751,128 | $ | 5,748,120 | $ | 3,867,766 | ||||||||
Weighted average receive rate at period end |
5.13 | % | 4.90 | % | 4.88 | % | 5.23 | % | ||||||||
Weighted average pay rate at period end |
5.49 | % | 4.37 | % | 3.82 | % | 1.79 | % | ||||||||
Floating rates range from 5 basis points under
to 19.5 basis points over 3-month LIBOR |
42
As of | ||||||||||||||||
As of | As of | As of | September 30, | |||||||||||||
September 30, | December 31, | September 30, | 2004 | |||||||||||||
2006 | 2005 | 2005 | (As Restated) | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Non-interest-bearing checking account deposits |
$ | 676,028 | $ | 811,006 | $ | 751,690 | $ | 603,713 | ||||||||
Saving accounts |
998,844 | 1,034,047 | 1,084,843 | 893,080 | ||||||||||||
Interest-bearing checking accounts |
354,604 | 375,305 | 376,915 | 331,117 | ||||||||||||
Certificates of deposit |
1,703,483 | 1,664,379 | 1,667,130 | 1,336,161 | ||||||||||||
Brokered certificates of deposit |
8,148,566 | 8,579,015 | 8,372,226 | 4,193,475 | ||||||||||||
$ | 11,881,525 | $ | 12,463,752 | $ | 12,252,804 | $ | 7,357,546 | |||||||||
Quarter ended | Nine month period ended | |||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
September 30, | September 30, | 2004 | September 30, | September 30, | 2004 | |||||||||||||||||||
2006 | 2005 | (As Restated) | 2006 | 2005 | (As Restated) | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Interest expense on deposits |
$ | 141,903 | $ | 88,568 | $ | 30,342 | $ | 402,956 | $ | 202,905 | $ | 83,045 | ||||||||||||
Amortization of broker placement fees |
6,491 | 4,917 | 3,084 | 15,196 | 11,364 | 9,574 | ||||||||||||||||||
Interest expense on deposits excluding unrealized (gain)
loss on derivatives (designated and undesignated hedges) and
(accretion) amortization of basis adjustment on fair value hedges |
148,394 | 93,485 | 33,426 | 418,152 | 214,269 | 92,619 | ||||||||||||||||||
Unrealized (gain) loss on derivatives (designated and undesignated hedges) |
(11,886 | ) | 67,668 | (64,080 | ) | 61,069 | 38,572 | (20,706 | ) | |||||||||||||||
(Accretion)
amortization of basis adjustment on fair value hedges |
(861 | ) | | | 418 | | | |||||||||||||||||
Total interest expense on deposits |
$ | 135,647 | $ | 161,153 | $ | (30,654 | ) | $ | 479,639 | $ | 252,841 | $ | 71,913 | |||||||||||
43
September 30, | ||||||||||||||||
September 30, | December 31, | September 30, | 2004 | |||||||||||||
2006 | 2005 | 2005 | (As Restated) | |||||||||||||
(Dollars in Thousands) | ||||||||||||||||
Callable fixed rate notes, bearing interest at 6.00%,
maturing on October 1, 2024 |
$ | 151,246 | $ | 149,456 | $ | 149,452 | $ | | ||||||||
Callable step-rate notes, bearing step increasing interest
from 5.00% to 7.00% maturing on October 18, 2019 |
15,547 | 15,245 | 15,241 | | ||||||||||||
Dow Jones Industrial Average (DJIA) linked principal
protected notes: |
||||||||||||||||
Series A maturing on February 28, 2012 |
7,107 | 6,752 | 6,631 | 6,328 | ||||||||||||
Series B maturing on May 27, 2011 |
7,675 | 7,240 | 7,095 | 6,661 | ||||||||||||
Callable fixed rate notes, bearing interest at 6.40%,
maturing on June 1, 2019 |
| | | 30,112 | ||||||||||||
Callable fixed rate notes, bearing interest at 6.40%,
maturing on July 1, 2019 |
| | | 99,841 | ||||||||||||
Callable step-up fixed rate notes, bearing interest at 4.90%,
maturing on July 1, 2014 |
| | | 9,960 | ||||||||||||
$ | 181,575 | $ | 178,693 | $ | 178,419 | $ | 152,902 | |||||||||
44
September 30, | ||||||||||||||||
September 30, | December 31, | September 30, | 2004 | |||||||||||||
2006 | 2005 | 2005 | (As Restated) | |||||||||||||
(Dollars in Thousands) | ||||||||||||||||
Junior subordinated debentures due in 2034,
interest bearing at a floating rate of 2.75%
over 3-month LIBOR (8.14% at September 30, 2006,
7.25% at December 31, 2005, 6.64% at September 30, 2005
and 4.64% at September 30, 2004) |
$ | 102,829 | $ | 102,756 | $ | 102,731 | $ | 102,634 | ||||||||
Junior subordinated debentures due in 2034,
interest bearing at a floating rate of 2.50%
over 3-month LIBOR (7.89% at September 30, 2006,
7.00% at December 31, 2005, 6.39% at September 30, 2005
and 4.37% at September 30, 2004) |
128,866 | 128,866 | 128,866 | 128,866 | ||||||||||||
Loan payable to a local financial institution due in October 2004,
interest bearing at 2.09% |
| | | 45,168 | ||||||||||||
$ | 231,695 | $ | 231,622 | $ | 231,597 | $ | 276,668 | |||||||||
45
46
Mortgage | Commercial and | Treasury and | ||||||||||||||||||||||
Banking | Consumer | Corporate | Investments | Other | Total | |||||||||||||||||||
For the quarter ended September 30, 2006: |
||||||||||||||||||||||||
Interest income |
$ | 38,256 | $ | 51,095 | $ | 98,146 | $ | 100,078 | $ | 30,136 | $ | 317,711 | ||||||||||||
Net (charge) credit for transfer of funds |
(27,473 | ) | 27,754 | (69,499 | ) | 74,735 | (5,517 | ) | | |||||||||||||||
Interest expense |
| (18,302 | ) | | (169,804 | ) | (6,903 | ) | (195,009 | ) | ||||||||||||||
Net interest income |
10,783 | 60,547 | 28,647 | 5,009 | 17,716 | 122,702 | ||||||||||||||||||
Provision for loan and lease losses |
(209 | ) | (11,488 | ) | (4,589 | ) | | (4,274 | ) | (20,560 | ) | |||||||||||||
Other income (loss) |
1,617 | 5,695 | 1,835 | (5,942 | ) | 4,840 | 8,045 | |||||||||||||||||
Direct operating expenses |
(4,759 | ) | (20,807 | ) | (3,987 | ) | (2,398 | ) | (11,570 | ) | (43,521 | ) | ||||||||||||
Segment income (loss) |
$ | 7,432 | $ | 33,947 | $ | 21,906 | $ | (3,331 | ) | $ | 6,712 | $ | 66,666 | |||||||||||
Average earnings assets |
$ | 2,346,487 | $ | 1,921,140 | $ | 5,297,964 | $ | 7,674,849 | $ | 1,189,667 | $ | 18,430,107 | ||||||||||||
For the quarter ended September 30, 2005: |
||||||||||||||||||||||||
Interest income |
$ | 27,821 | $ | 45,326 | $ | 117,823 | $ | 77,586 | $ | 23,707 | $ | 292,263 | ||||||||||||
Net (charge) credit for transfer of funds |
(17,677 | ) | 20,522 | (69,692 | ) | 70,260 | (3,413 | ) | | |||||||||||||||
Interest expense |
| (14,317 | ) | | (207,383 | ) | (3,820 | ) | (225,520 | ) | ||||||||||||||
Net interest
income (loss) |
10,144 | 51,531 | 48,131 | (59,537 | ) | 16,474 | 66,743 | |||||||||||||||||
Provision for loan and lease losses |
(470 | ) | (7,295 | ) | (1,859 | ) | | (3,237 | ) | (12,861 | ) | |||||||||||||
Other income |
16 | 7,098 | 1,202 | 4,727 | 4,650 | 17,693 | ||||||||||||||||||
Direct operating expenses |
(4,023 | ) | (20,003 | ) | (2,651 | ) | (1,432 | ) | (9,242 | ) | (37,351 | ) | ||||||||||||
Segment income |
$ | 5,667 | $ | 31,331 | $ | 44,823 | $ | (56,242 | ) | $ | 8,645 | $ | 34,224 | |||||||||||
Average earnings assets |
$ | 1,702,626 | $ | 1,769,130 | $ | 7,561,035 | $ | 6,471,610 | $ | 917,143 | $ | 18,421,544 | ||||||||||||
For the quarter ended September 30, 2004 (As Restated): |
||||||||||||||||||||||||
Interest income |
$ | 19,539 | $ | 34,492 | $ | 49,082 | $ | 71,516 | $ | 12,035 | $ | 186,664 | ||||||||||||
Net (charge) credit for transfer of funds |
(12,636 | ) | 13,983 | (25,144 | ) | 25,791 | (1,994 | ) | | |||||||||||||||
Interest expense |
| (9,933 | ) | | (6,125 | ) | | (16,058 | ) | |||||||||||||||
Net interest income |
6,903 | 38,542 | 23,938 | 91,182 | 10,041 | 170,606 | ||||||||||||||||||
(Provision) recovery for loan and lease losses |
(221 | ) | (4,614 | ) | (4,737 | ) | | (3,628 | ) | (13,200 | ) | |||||||||||||
Other income |
1,339 | 4,579 | 1,946 | 572 | 3,256 | 11,692 | ||||||||||||||||||
Direct operating expenses |
(2,985 | ) | (16,947 | ) | (1,935 | ) | (852 | ) | (4,785 | ) | (27,504 | ) | ||||||||||||
Segment income |
$ | 5,036 | $ | 21,560 | $ | 19,212 | $ | 90,902 | $ | 4,884 | $ | 141,594 | ||||||||||||
Average earnings assets |
$ | 1,152,374 | $ | 1,352,992 | $ | 5,258,914 | $ | 5,808,739 | $ | 296,362 | $ | 13,869,381 |
47
Mortgage | Commercial and | Treasury and | ||||||||||||||||||||||
Banking | Consumer | Corporate | Investments | Other | Total | |||||||||||||||||||
For the nine-month period ended September 30, 2006: |
||||||||||||||||||||||||
Interest income |
$ | 110,108 | $ | 151,607 | $ | 365,568 | $ | 277,252 | $ | 85,324 | $ | 989,859 | ||||||||||||
Net (charge) credit for transfer of funds |
(77,279 | ) | 80,959 | (245,668 | ) | 256,875 | (14,887 | ) | | |||||||||||||||
Interest expense |
| (52,235 | ) | | (597,709 | ) | (18,156 | ) | (668,100 | ) | ||||||||||||||
Net interest
income (loss) |
32,829 | 180,331 | 119,900 | (63,582 | ) | 52,281 | 321,759 | |||||||||||||||||
Provision for loan and lease losses |
(3,796 | ) | (24,405 | ) | (4,556 | ) | | (16,533 | ) | (49,290 | ) | |||||||||||||
Other income
(loss) |
1,513 | 17,440 | (6,760 | ) | (6,788 | ) | 15,011 | 20,416 | ||||||||||||||||
Direct operating expenses |
(12,134 | ) | (63,479 | ) | (12,549 | ) | (5,679 | ) | (33,221 | ) | (127,062 | ) | ||||||||||||
Segment income (loss) |
$ | 18,412 | $ | 109,887 | $ | 96,035 | $ | (76,049 | ) | $ | 17,538 | $ | 165,823 | |||||||||||
Average earnings assets |
$ | 2,256,743 | $ | 1,930,513 | $ | 6,613,801 | $ | 7,214,537 | $ | 1,131,857 | $ | 19,147,451 | ||||||||||||
For the nine-month period ended September 30, 2005: |
||||||||||||||||||||||||
Interest income |
$ | 76,481 | $ | 127,029 | $ | 280,467 | $ | 210,982 | $ | 58,838 | $ | 753,797 | ||||||||||||
Net (charge) credit for transfer of funds |
(47,747 | ) | 55,879 | (173,560 | ) | 175,280 | (9,852 | ) | | |||||||||||||||
Interest expense |
| (37,935 | ) | | (383,472 | ) | (7,300 | ) | (428,707 | ) | ||||||||||||||
Net interest income |
28,734 | 144,973 | 106,907 | 2,790 | 41,686 | 325,090 | ||||||||||||||||||
Provision for loan and lease losses |
(1,964 | ) | (19,814 | ) | (5,666 | ) | | (7,446 | ) | (34,890 | ) | |||||||||||||
Other income |
3,604 | 17,360 | 3,915 | 13,317 | 13,167 | 51,363 | ||||||||||||||||||
Direct operating expenses |
(11,363 | ) | (56,206 | ) | (7,687 | ) | (3,807 | ) | (23,124 | ) | (102,187 | ) | ||||||||||||
Segment income |
$ | 19,011 | $ | 86,313 | $ | 97,469 | $ | 12,300 | $ | 24,283 | $ | 239,376 | ||||||||||||
Average earnings assets |
$ | 1,530,763 | $ | 1,657,212 | $ | 7,172,343 | $ | 5,823,033 | $ | 710,506 | $ | 16,893,857 | ||||||||||||
For the nine-month period ended September 30, 2004
(As Restated): |
||||||||||||||||||||||||
Interest income |
$ | 56,217 | $ | 101,011 | $ | 134,058 | $ | 172,292 | $ | 34,505 | $ | 498,083 | ||||||||||||
Net (charge) credit for transfer of funds |
(36,004 | ) | 39,295 | (57,501 | ) | 59,965 | (5,755 | ) | | |||||||||||||||
Interest expense |
| (29,826 | ) | | (163,881 | ) | | (193,707 | ) | |||||||||||||||
Net interest income |
20,213 | 110,480 | 76,557 | 68,376 | 28,750 | 304,376 | ||||||||||||||||||
Provision for loan and lease losses |
(661 | ) | (19,843 | ) | (10,896 | ) | | (8,200 | ) | (39,600 | ) | |||||||||||||
Other income |
3,138 | 19,940 | 5,875 | 6,517 | 9,332 | 44,802 | ||||||||||||||||||
Direct operating expenses |
(7,792 | ) | (48,114 | ) | (5,745 | ) | (2,302 | ) | (13,443 | ) | (77,396 | ) | ||||||||||||
Segment income |
$ | 14,898 | $ | 62,463 | $ | 65,791 | $ | 72,591 | $ | 16,439 | $ | 232,182 | ||||||||||||
Average earnings assets |
$ | 1,073,365 | $ | 1,296,098 | $ | 4,887,378 | $ | 5,228,527 | $ | 279,752 | $ | 12,825,120 |
48
Quarter Ended | ||||||||||||
September 30, | ||||||||||||
2004 | ||||||||||||
2006 | 2005 | (As Restated) | ||||||||||
Net income: |
||||||||||||
Total income for segments and other |
$ | 66,666 | $ | 34,224 | $ | 141,594 | ||||||
Other operating expenses |
(29,419 | ) | (23,204 | ) | (18,373 | ) | ||||||
Income before income tax (expense) benefit |
37,247 | 11,020 | 123,221 | |||||||||
Income taxes |
(10,565) | 6,285 | (34,828 | ) | ||||||||
Total consolidated net income |
$ | 26,682 | $ | 17,305 | $ | 88,393 | ||||||
Average assets: |
||||||||||||
Total
average earning assets for segments |
$ | 18,430,107 | $ | 18,421,544 | $ | 13,869,381 | ||||||
Average non- earning assets |
736,097 | 588,549 | 409,889 | |||||||||
Total consolidated average assets |
$ | 19,166,204 | $ | 19,010,093 | $ | 14,279,270 | ||||||
Nine-month Period Ended | ||||||||||||
September 30, | ||||||||||||
2004 | ||||||||||||
2006 | 2005 | (As Restated) | ||||||||||
Net income: |
||||||||||||
Total income for segments and other |
$ | 165,823 | $ | 239,376 | $ | 232,182 | ||||||
Other operating expenses |
(88,656 | ) | (67,448 | ) | (56,796 | ) | ||||||
Income before income taxes |
77,167 | 171,928 | 175,386 | |||||||||
Income taxes |
(14,819 | ) | (32,002 | ) | (39,755 | ) | ||||||
Total consolidated net income |
$ | 62,348 | $ | 139,926 | $ | 135,631 | ||||||
Average assets: |
||||||||||||
Total average earning assets for segments
|
$ | 19,147,451 | $ | 16,893,857 | $ | 12,825,120 | ||||||
Average non-earning assets |
721,444 | 537,922 | 446,754 | |||||||||
Total consolidated average assets |
$ | 19,868,895 | $ | 17,431,779 | $ | 13,271,874 | ||||||
49
| The payment of $61 million to be deposited by First BanCorp in a settlement fund within fifteen calendar days of the date of issuance of the Preliminary Order; and | |
| The mailing of a notice to shareholders that describes the general terms of the settlement. |
50
51
As of | ||||||||||||||||
As of | As of | As of | September 30, | |||||||||||||
September 30, | December 31, | September 30, | 2004 | |||||||||||||
2006 | 2005 | 2005 | (As Restated) | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Assets |
||||||||||||||||
Cash and due from banks |
$ | 20,682 | $ | 2,772 | $ | 18,007 | $ | 17,604 | ||||||||
Money market instruments |
300 | 300 | 75,300 | 194,200 | ||||||||||||
Investment securities available for sale, at market: |
||||||||||||||||
Equity investments |
20,220 | 29,421 | 52,962 | 45,556 | ||||||||||||
Other equity securities |
1,425 | 1,425 | 1,425 | 375 | ||||||||||||
Loans receivable, net |
67,173 | 74,914 | 78,852 | 97,823 | ||||||||||||
Investment in FirstBank Puerto Rico, at equity |
1,348,269 | 1,316,380 | 1,207,411 | 1,129,363 | ||||||||||||
Investment in FirstBank Insurance Agency, at equity |
3,177 | 5,953 | 4,833 | 2,413 | ||||||||||||
Investment in Ponce General Corporation, at equity |
102,087 | 105,907 | 104,991 | | ||||||||||||
Investment in PR Finance, at equity |
2,579 | 3,005 | 2,545 | | ||||||||||||
Accrued interest receivable |
376 | 363 | 354 | 281 | ||||||||||||
Investment in FBP Statutory Trust I |
3,093 | 3,093 | 3,093 | | ||||||||||||
Investment in FBP Statutory Trust II |
3,866 | 3,866 | 3,866 | | ||||||||||||
Other assets |
35,522 | 29,758 | 740 | 8,389 | ||||||||||||
Total assets |
$ | 1,608,769 | $ | 1,577,157 | $ | 1,554,379 | $ | 1,496,004 | ||||||||
Liabilities & Stockholders Equity |
||||||||||||||||
Liabilities: |
||||||||||||||||
Other borrowings |
$ | 231,695 | $ | 295,446 | $ | 298,660 | $ | 321,668 | ||||||||
Accounts payable and other liabilities |
152,559 | 83,870 | 960 | 1,689 | ||||||||||||
Total liabilities |
384,254 | 379,316 | 299,620 | 323,357 | ||||||||||||
Stockholders equity |
1,224,515 | 1,197,841 | 1,254,759 | 1,172,647 | ||||||||||||
Total liabilities and stockholders equity |
$ | 1,608,769 | $ | 1,577,157 | $ | 1,554,379 | $ | 1,496,004 | ||||||||
52
Quarter Ended | ||||||||||||
Quarter Ended | Quarter Ended | September 30, | ||||||||||
September 30, | September 30, | 2004 | ||||||||||
2006 | 2005 | (As Restated) | ||||||||||
(Dollars in thousands) | ||||||||||||
Income: |
||||||||||||
Interest income on investment securities |
$ | | $ | 321 | $ | 82 | ||||||
Interest income on other investments |
4 | 587 | 241 | |||||||||
Interest income on loans |
983 | 1,053 | 821 | |||||||||
Dividend from FirstBank Puerto Rico |
22,209 | 17,013 | 15,957 | |||||||||
Other income |
142 | 109 | 212 | |||||||||
23,338 | 19,083 | 17,313 | ||||||||||
Expense: |
||||||||||||
Notes payable and other borrowings |
4,755 | 4,345 | 1,677 | |||||||||
Interest on funding to subsidiaries |
1,296 | | | |||||||||
Other operating expenses |
1,492 | 244 | 201 | |||||||||
7,543 | 4,589 | 1,878 | ||||||||||
(Loss) gain on sale of investments, net |
(9,139 | ) | 4,517 | 360 | ||||||||
Income before income tax provision and equity
in undistributed earnings of subsidiaries |
6,656 | 19,011 | 15,795 | |||||||||
Income tax benefit (provision) |
1,157 | (32 | ) | (24 | ) | |||||||
Equity in undistributed earnings (loss) of subsidiaries |
18,869 | (1,674 | ) | 72,622 | ||||||||
Net income |
$ | 26,682 | $ | 17,305 | $ | 88,393 | ||||||
Nine-month Period Ended | ||||||||||||
Nine-month Period Ended | Nine-month Period Ended | September 30, | ||||||||||
September 30, | September 30, | 2004 | ||||||||||
2006 | 2005 | (As Restated) | ||||||||||
(Dollars in thousands) | ||||||||||||
Income: |
||||||||||||
Interest income on investment securities |
$ | 178 | $ | 663 | $ | 323 | ||||||
Interest income on other investments |
171 | 2,309 | 532 | |||||||||
Interest income on loans |
3,068 | 3,085 | 1,267 | |||||||||
Dividend from FirstBank Puerto Rico |
41,297 | 50,644 | 46,277 | |||||||||
Dividend from other subsidiaries |
13,500 | 240 | 2,770 | |||||||||
Other income |
400 | 583 | 441 | |||||||||
58,614 | 57,524 | 51,610 | ||||||||||
Expense: |
||||||||||||
Federal funds purchased and repurchase agreements |
| | 2 | |||||||||
Notes payable and other borrowings |
13,423 | 11,861 | 2,548 | |||||||||
Interest on funding to subsidiaries |
3,265 | | | |||||||||
(Recovery) provision for loan losses |
(71 | ) | | | ||||||||
Other operating expenses |
4,036 | 892 | 592 | |||||||||
20,653 | 12,753 | 3,142 | ||||||||||
(Loss) gain on sale of investments, net |
(10,989 | ) | 6,297 | 4,275 | ||||||||
Income before income tax provision and equity
in undistributed earnings of subsidiaries |
26,972 | 51,068 | 52,743 | |||||||||
Income tax benefit (provision) |
320 | (66 | ) | (98 | ) | |||||||
Equity in undistributed earnings of subsidiaries |
35,056 | 88,924 | 82,986 | |||||||||
Net income |
$ | 62,348 | $ | 139,926 | $ | 135,631 | ||||||
53
| Effective January 1, 2007, the Corporation elected to early adopt SFAS 159 for the callable brokered CDs and a portion of the callable medium-term notes that were previously recognized under the long-haul method as hedged against certain interest rate swaps under SFAS 133. Refer to Note 2 for additional information on the adoption of SFAS 159. | ||
| In February 2007, the Corporation entered into various agreements with R&G relating to prior transactions originally treated as purchases of mortgages and pass-through trust certificates from R&G subsidiaries. First, through a mortgage payment agreement, R&G paid the Corporation approximately $50 million to reduce the commercial loan that R&G Premier has outstanding with the Corporation. In addition, the remaining balance of approximately $271 million was re-documented as a secured loan from the Corporation to R&G. Second, R&G and the Corporation amended various agreements involving approximately $218 million of securities collateralized by loans that were originally sold through five grantor trusts. The modifications to the original agreements allow the Corporation to treat these transactions as true sales for accounting and legal purposes. The agreements enable First BanCorp to fulfill the remaining requirement of the Consent Order signed with banking regulators relating to the mortgage-related transactions with R&G that First BanCorp recharacterized for accounting and legal purposes as commercial loans secured by the mortgage loans and pass-through trust certificates. | ||
|