First Ban(FBP)

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First Ban(FBP) - 2023 Q3 - Earnings Call Transcript
2023-10-21 03:52
First BanCorp. (NYSE:FBP) Q3 2023 Earnings Conference Call October 20, 2023 11:00 AM ET Company Participants Ramon Rodriguez - IR Officer Aurelio Alemán-Bermudez - President and CEO Orlando Berges-González - EVP and CFO Conference Call Participants Alex Twerdahl - Piper Sandler Operator Hello, everyone, and welcome to the First BanCorp Third Quarter 2023 Financial Results. My name is Bruno and I'll be operating your call today. [Operator Instructions] I will now hand over to your host, Ramon Rodriguez, Inve ...
First Ban(FBP) - 2023 Q2 - Quarterly Report
2023-08-07 16:00
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________ FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934 For the transition period from ___________________ to___________________ Not applicable (Former name, former address and former fiscal year, if changed since last report) COMMISSION FIL ...
First Ban(FBP) - 2023 Q2 - Earnings Call Transcript
2023-07-27 21:38
Financial Data and Key Metrics Changes - The company reported net income of $70.7 million or $0.39 per share, translating to a return on assets of 1.51% [95] - Net interest income for the quarter was $199.8 million, which was $1.1 million lower than the previous quarter [69] - The effective tax rate decreased to 30.1%, down from 31.2% in the previous quarter [69] - Operating expenses decreased by $2.4 million to $112.9 million compared to $115 million in the previous quarter [78] Business Line Data and Key Metrics Changes - The commercial loan portfolio interest income grew by $3.4 million, with a yield increase of 15 basis points [71] - Consumer loans saw an interest income increase of $3.9 million, driven by a $71.8 million growth in average balances [71] - The loan portfolio grew by approximately $140 million during the quarter, with consumer loans increasing by $88 million (10% linked-quarter annualized) and commercial loans increasing by $71 million (5% linked-quarter annualized) [100] Market Data and Key Metrics Changes - Total deposits increased by $768 million during the quarter, with government deposits rising by $761 million primarily in Puerto Rico [106] - The average cost of non-brokered time deposits grew by 63 basis points to 2.5% during the quarter [72] - The liquidity position remains strong, with total unused liquidity increasing to $5.6 billion, representing over 117% of uninsured deposits [107] Company Strategy and Development Direction - The company continues to operate with a conservative risk appetite while maintaining a well-diversified and balanced portfolio [102] - There is a focus on core deposit strategy, including increasing client share and launching new products [107] - The company is investing in technology and process improvements, particularly in migrating to cloud-based IT systems [61] Management's Comments on Operating Environment and Future Outlook - The economic backdrop in Puerto Rico is supported by a strong labor market and a consistent flow of federal disaster funds [108] - The company remains vigilant regarding the potential impact of monetary policy and economic slowdown on credit and loan demand [104] - Management expects interest income to continue growing in the next couple of quarters due to loan repricing and portfolio growth [75] Other Important Information - The provision for credit losses increased to $22.2 million, reflecting stable credit quality with non-performing assets at 63 basis points of total assets [96] - The company completed its capital planning process and approved a $225 million common share repurchase program [98] - The allowance for credit losses stands at $281 million, reflecting growth in the portfolio and projected deterioration in commercial real estate values [83] Q&A Session Summary Question: What are the expectations for government deposit balances over the next couple of quarters? - Management expects government deposits to remain stable, with some fluctuations based on ongoing projects related to energy [31] Question: Can you provide details on the average balance of public funds for the quarter? - The average balance of government deposits in Puerto Rico was $2.9 billion, up from $2.2 billion at the end of the last quarter [24] Question: What is the timeline for capital expenditures and how will delays affect expenses? - Delays in capital projects are ongoing, and expenses will remain lower for the next couple of quarters as projects progress at a slower pace [22]
First Ban(FBP) - 2023 Q1 - Quarterly Report
2023-05-09 16:00
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________ FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or For the transition period from ___________________ to___________________ COMMISSION FILE NUMBER001-14793 FIRST BANCORP. (EXACT NAME OF REGISTRANT AS SPECIFIEDIN ITS CHARTER) Puerto Ric ...
First Ban(FBP) - 2023 Q1 - Earnings Call Transcript
2023-04-25 19:08
First BanCorp. (NYSE:FBP) Q1 2023 Earnings Conference Call April 25, 2023 10:00 AM ET Company Participants Ramon Rodriguez - Senior Vice President, Corporate Strategy and Investor Relations Aurelio Aleman-Bermudez - President and Chief Executive Officer Orlando Berges-Gonzalez - Executive Vice President and Chief Financial Officer Conference Call Participants Timur Braziler - Wells Fargo Kelly Motta - KBW Operator Hello, everyone and welcome to First BanCorp's First Quarter 2023 Financial Results Call. My n ...
First Ban(FBP) - 2022 Q4 - Annual Report
2023-02-27 16:00
PART I [Business](index=5&type=section&id=Item%201.%20Business) First BanCorp. is a financial holding company providing diverse banking services across Puerto Rico, the U.S., and the Virgin Islands, with **$18.6 billion in assets** and six reportable segments - Key Financial Metrics as of December 31, 2022 | Metric | Amount (USD Billions) | | :--- | :--- | | Total Assets | $18.6 | | Total Loans | $11.6 | | Total Deposits | $16.1 | | Total Stockholders' Equity | $1.3 | - The Corporation operates through its main office in San Juan, Puerto Rico, and a network of **59 branches** in Puerto Rico, **8** in the USVI and BVI, and **9** in Florida[18](index=18&type=chunk) - As of December 31, 2022, the company employed **3,133 regular employees**, a **2% increase** from 2021. Women comprised approximately **67%** of the total workforce and **57%** of top and middle management[36](index=36&type=chunk) [Business Segments](index=5&type=section&id=Business%20Segments) The Corporation operates through six distinct segments, including Commercial, Mortgage, Consumer, Treasury, and U.S./Virgin Islands Operations, each focusing on specific banking activities - The Corporation has six reportable segments: Commercial and Corporate Banking; Mortgage Banking; Consumer (Retail) Banking; Treasury and Investments; United States Operations; and Virgin Islands Operations[20](index=20&type=chunk) - The United States Operations segment provides consumer and commercial banking services primarily in southern Florida through **nine branches**[27](index=27&type=chunk) - The Virgin Islands Operations segment conducts all banking activities in the USVI and BVI regions through **eight branches**[29](index=29&type=chunk) [Supervision and Regulation](index=9&type=section&id=Supervision%20and%20Regulation) The Corporation and FirstBank are subject to extensive federal and Puerto Rican regulatory oversight, covering capital requirements, dividend restrictions, consumer protection, and anti-money laundering laws - Capital Ratios as of December 31, 2022 | Ratio | First BanCorp. | FirstBank | Well-Capitalized Minimum (Bank) | | :--- | :--- | :--- | :--- | | Total capital to risk-weighted assets | 19.21% | 18.90% | 10.00% | | CET1 Capital to risk-weighted assets | 16.53% | 16.84% | 6.50% | | Tier 1 capital to risk-weighted assets | 16.53% | 17.65% | 8.00% | | Leverage ratio | 10.70% | 11.43% | 5.00% | - The Corporation and its banking subsidiary, FirstBank, elected to phase in the full effect of the Current Expected Credit Losses (CECL) accounting standard on regulatory capital over a five-year transition period starting January 1, 2022[65](index=65&type=chunk) - The principal source of funds for the Corporation is dividends from its subsidiary, FirstBank. The ability of FirstBank to pay dividends is regulated by the Puerto Rico Banking Law and the FDIA, with restrictions based on capital levels and earnings[70](index=70&type=chunk)[71](index=71&type=chunk) - The FDIC adopted a final rule to increase initial base deposit insurance assessment rates by **2 basis points**, beginning in the first quarter of 2023. The Corporation estimates this will increase its deposit insurance expense by approximately **56%** for 2023 compared to 2022[97](index=97&type=chunk) [Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) The Corporation faces significant risks from rising interest rates, economic conditions in Puerto Rico, LIBOR transition, funding reliance, credit losses, cybersecurity threats, and evolving regulatory requirements - Rising interest rates and inflation may reduce demand for new loans, increase competition, and reduce net interest income. The Federal Reserve raised the federal funds rate **seven times** in 2022[138](index=138&type=chunk) - The Corporation has significant exposure to the transition away from LIBOR, with **$1.4 billion** in variable-rate loans, **$124.4 million** in held-to-maturity securities, and **$183.8 million** of junior subordinated debentures tied to the rate as of December 31, 2022[144](index=144&type=chunk)[147](index=147&type=chunk) - A significant portion of the business is concentrated in Puerto Rico, which has experienced a prolonged economic and fiscal crisis. As of December 31, 2022, the Corporation had **$338.9 million** of direct exposure to the Puerto Rico government and its entities[157](index=157&type=chunk)[161](index=161&type=chunk) - Non-performing assets, while decreasing, remain a risk. As of December 31, 2022, non-performing assets were **$129.2 million**, a decrease of **18%** from **$158.1 million** at year-end 2021[190](index=190&type=chunk) [Properties](index=36&type=section&id=Item%202.%20Properties) As of December 31, 2022, First BanCorp. owns three main buildings and 22 other properties, while leasing 89 premises across its operating regions - The Corporation owns its headquarters building in San Juan, a Service Center in Hato Rey housing over **1,000 employees**, and a Consumer Lending Center in Hato Rey[245](index=245&type=chunk)[248](index=248&type=chunk) - In total, the Corporation owns **16 retail branches** and **6 office centers**, and leases **89 branch premises** and other facilities across its operating regions[245](index=245&type=chunk) [Legal Proceedings](index=36&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 29, "Regulatory Matters, Commitments and Contingencies," in the audited consolidated financial statements included in Item 8 of this report - Details on legal proceedings are available in Note 29 of the financial statements[246](index=246&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=37&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) First BanCorp.'s common stock trades on the NYSE, with the company consistently increasing dividends and executing significant stock repurchase programs, including **$275 million** in buybacks during 2022 - The quarterly cash dividend was increased from **$0.10 to $0.12 per share** in Q2 2022, and a further increase to **$0.14 per share** was declared in February 2023[252](index=252&type=chunk) - The Board of Directors has authorized two repurchase programs totaling up to **$650 million**. In 2022, the Corporation repurchased **19.4 million shares** for **$275 million**[259](index=259&type=chunk)[279](index=279&type=chunk) - Stock Repurchases in Q4 2022 | Period | Total Shares Purchased | Average Price Paid | Approx. Dollar Value Remaining Under Program (in thousands) | | :--- | :--- | :--- | :--- | | Oct 2022 | 1,649,963 | $15.18 | $150,000 | | Nov 2022 | - | - | $150,000 | | Dec 2022 | 1,902,468 | $13.14 | $125,000 | | **Total Q4** | **3,552,431** | **$14.09** | **$125,000** | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=41&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, First BanCorp. reported **$305.1 million** net income, driven by higher net interest income, while total assets decreased to **$18.6 billion** and loans grew, reflecting a shift in balance sheet composition - Key Performance Indicators | Indicator | 2022 | 2021 | | :--- | :--- | :--- | | Net Income (in millions) | $305.1 | $281.0 | | Diluted EPS | $1.59 | $1.31 | | Return on Average Assets | 1.57% | 1.38% | | Return on Average Total Equity | 18.66% | 12.56% | | Efficiency Ratio | 48.25% | 57.45% | - Net interest income increased to **$795.3 million** in 2022 from **$729.9 million** in 2021, driven by a **39 basis point increase** in net interest margin to **4.12%** due to the higher interest rate environment[291](index=291&type=chunk)[335](index=335&type=chunk) - The provision for credit losses was an expense of **$27.7 million** in 2022, compared to a net benefit of **$65.7 million** in 2021, reflecting loan portfolio growth and macroeconomic uncertainty[291](index=291&type=chunk) - Total assets decreased by **$2.2 billion** to **$18.6 billion** as of year-end 2022, mainly due to a **$2.1 billion** decline in cash and cash equivalents. Total loans grew by **$469.3 million**[291](index=291&type=chunk)[374](index=374&type=chunk) - Stockholders' equity decreased by **$776.2 million** to **$1.3 billion**, primarily driven by a **$718.6 million** decrease in the fair value of available-for-sale debt securities (AOCI loss) and capital returns to shareholders[292](index=292&type=chunk)[482](index=482&type=chunk) [Critical Accounting Estimates](index=48&type=section&id=Critical%20Accounting%20Estimates) Management's critical accounting estimates include the Allowance for Credit Losses, financial instrument valuation, and income taxes, all requiring significant judgment and forward-looking assumptions - The determination of the Allowance for Credit Losses (ACL) is a critical estimate, involving quantitative models, forward-looking macroeconomic scenarios (e.g., unemployment rates, real estate prices), and qualitative adjustments[299](index=299&type=chunk)[300](index=300&type=chunk)[302](index=302&type=chunk) - Valuation of financial instruments, especially Level 3 assets like private label MBS, requires significant judgment using discounted cash flow models with unobservable inputs such as prepayment and default rates[305](index=305&type=chunk)[309](index=309&type=chunk) - Accounting for income taxes is complex, requiring estimation of the realizability of a net deferred tax asset of **$155.6 million** (net of a **$185.5 million** valuation allowance) as of December 31, 2022, which depends on generating sufficient future taxable income[316](index=316&type=chunk)[317](index=317&type=chunk) [Financial Condition and Operating Data Analysis](index=66&type=section&id=Financial%20Condition%20and%20Operating%20Data%20Analysis) As of December 31, 2022, total assets decreased to **$18.6 billion** due to lower cash, while the loan portfolio grew to **$11.6 billion**, and investment securities declined due to unrealized losses - Loan Portfolio Composition as of December 31, 2022 | Loan Type | Amount (USD Billions) | % of Total | | :--- | :--- | :--- | | Commercial & Construction | $5.4 | 46% | | Residential Real Estate | $2.8 | 25% | | Consumer & Finance Leases | $3.3 | 29% | - Total loans increased by **$469.3 million** to **$11.6 billion** in 2022, driven by a **$439.5 million** increase in consumer loans and a **$184.3 million** increase in commercial and construction loans, while residential mortgage loans decreased by **$154.5 million**[376](index=376&type=chunk) - The available-for-sale debt securities portfolio decreased by **$854.2 million** to **$5.6 billion**, primarily due to a **$718.6 million** decrease in fair value from changes in market interest rates[398](index=398&type=chunk) - The held-to-maturity debt securities portfolio increased to **$437.5 million** from **$178.1 million** in 2021, mainly due to purchases of GSE MBS[400](index=400&type=chunk) [Risk Management](index=74&type=section&id=Risk%20Management) The Corporation manages liquidity, interest rate, credit, and operational risks, maintaining a **$3.5 billion** core liquidity reserve and reducing non-performing assets, while managing **$338.9 million** exposure to Puerto Rico government entities - The core liquidity reserve was **$3.5 billion**, or **19.0%** of total assets, as of December 31, 2022, a decrease from **$5.6 billion**, or **27.0%** of total assets, at year-end 2021[439](index=439&type=chunk) - The Corporation's tangible common equity ratio decreased to **6.81%** as of December 31, 2022, from **9.81%** a year prior, largely due to the impact of unrealized losses on available-for-sale securities[487](index=487&type=chunk) - Non-performing assets decreased by **$28.9 million** to **$129.2 million** as of December 31, 2022. The ratio of ACL for loans to nonaccrual loans improved to **289.61%** from **242.99%** in 2021[292](index=292&type=chunk)[513](index=513&type=chunk)[532](index=532&type=chunk) - Direct exposure to the Puerto Rico government, its municipalities, and public corporations was **$338.9 million** as of December 31, 2022, down from **$360.1 million** at year-end 2021[591](index=591&type=chunk) [Financial Statements and Supplementary Data](index=112&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the Corporation's audited consolidated financial statements for 2022 and prior years, including the independent auditor's report and detailed notes on accounting policies and financial health - Consolidated Statement of Financial Condition Highlights (in millions) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Assets | $18,634 | $20,785 | | Total Loans, net | $11,305 | $10,827 | | Total Deposits | $16,143 | $17,785 | | Total Liabilities | $17,309 | $18,684 | | Total Stockholders' Equity | $1,326 | $2,102 | - Consolidated Statement of Income Highlights (in millions) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Net Interest Income | $795.3 | $729.9 | | Provision for Credit Losses | $27.7 | ($65.7) | | Non-interest Income | $123.1 | $121.2 | | Non-interest Expenses | $443.1 | $489.0 | | **Net Income** | **$305.1** | **$281.0** | - The independent auditor, Crowe LLP, issued an unqualified opinion on the financial statements and on the effectiveness of internal control over financial reporting as of December 31, 2022[609](index=609&type=chunk) [Controls and Procedures](index=221&type=section&id=Item%209A.%20Controls%20and%20Procedures) As of December 31, 2022, management and the independent auditor concluded that the Corporation's disclosure controls and internal control over financial reporting were effective - Management, including the CEO and CFO, evaluated and concluded that the Corporation's disclosure controls and procedures were effective as of December 31, 2022[1146](index=1146&type=chunk) - Management's report on internal control over financial reporting concluded that controls were effective as of December 31, 2022, a conclusion supported by the independent auditor's report[1147](index=1147&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=222&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The required information regarding directors, executive officers, corporate governance, delinquent Section 16(a) reports, and the Audit Committee Report is incorporated by reference from the company's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders - Information for this item is incorporated by reference from the 2023 Proxy Statement[1153](index=1153&type=chunk) [Executive Compensation](index=222&type=section&id=Item%2011.%20Executive%20Compensation) The required information regarding executive compensation, including the Compensation Discussion and Analysis and related tables, is incorporated by reference from the company's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders - Information for this item is incorporated by reference from the 2023 Proxy Statement[1154](index=1154&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=222&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details securities authorized for issuance under equity compensation plans, with **791,923** outstanding and **3,830,165** available for future issuance as of December 31, 2022 - Equity Compensation Plan Information as of December 31, 2022 | Plan Category | Securities to be Issued Upon Exercise | Securities Remaining Available for Future Issuance | | :--- | :--- | :--- | | Equity compensation plans, approved by stockholders | 791,923 | 3,830,165 | [Certain Relationships and Related Transactions, and Director Independence](index=222&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The required information regarding certain relationships, related person transactions, and director independence is incorporated by reference from the company's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders - Information for this item is incorporated by reference from the 2023 Proxy Statement[1158](index=1158&type=chunk) [Principal Accountant Fees and Services](index=223&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) The required information regarding principal accountant fees and services is incorporated by reference from the sections titled "Audit Fees" and "Audit Committee Report" in the company's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders - Information for this item is incorporated by reference from the 2023 Proxy Statement[1160](index=1160&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=223&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists documents filed with the Annual Report on Form 10-K, including consolidated financial statements and the independent auditor's report, with financial schedules omitted as information is provided elsewhere - The consolidated financial statements of First BanCorp. are included in Item 8 of this report[1163](index=1163&type=chunk) - All financial schedules have been omitted because the required information is provided within the financial statements or notes[1166](index=1166&type=chunk)
First Ban(FBP) - 2022 Q4 - Earnings Call Transcript
2023-01-27 20:07
First BanCorp. (NYSE:FBP) Q4 2022 Earnings Conference Call January 27, 2023 10:00 AM ET Company Participants Ramon Rodriguez - Corporate Strategy and IR Officer Aurelio Aleman - President & CEO Orlando Berges - EVP & CFO Conference Call Participants Timur Braziler - Wells Fargo Kelly Motta - KBW Alex Twerdahl - Piper Sandler Brett Rabatin - Hovde Group Operator Good morning. Thank you for attending today’s First BanCorp 4Q 2022 financial results conference call. My name is Alexis, and I'll be your moderato ...
First Ban(FBP) - 2022 Q3 - Quarterly Report
2022-11-07 16:00
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________ FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934 For the transition period from ___________________ to___________________ COMMISSION FILE NUMBER001-14793 FIRST BANCORP. (EXACT NAME OF REGISTRANT AS SPECIFIEDIN ITS CHAR ...
First Ban(FBP) - 2022 Q3 - Earnings Call Transcript
2022-10-25 20:22
First BanCorp. (NYSE:FBP) Q3 2022 Earnings Conference Call October 25, 2022 10:00 AM ET Company Participants Aurelio Aleman - President & CEO Orlando Berges - EVP & CFO Ramon Rodriguez - Corporate Strategy & IR Conference Call Participants Timur Braziler - Wells Fargo Alex Twerdahl - Piper Sandler Kelly Motta - KBW Operator Thank you for standing by, and welcome to the First BanCorp 3Q 2022 financial results call. My name is Sam, and I'll be your moderator for today’s call. [Operator Instructions]. I'll now ...
First Ban(FBP) - 2022 Q2 - Quarterly Report
2022-08-09 14:43
PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for First Bancorp as of June 30, 2022, and for the three and six-month periods then ended [Consolidated Statements of Financial Condition](index=6&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) Total assets, liabilities, and equity decreased due to reduced cash, lower deposits, and increased comprehensive loss Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$19,531,635** | **$20,785,275** | **($1,253,640)** | | Cash and due from banks | $1,261,590 | $2,540,376 | ($1,278,786) | | Total available-for-sale debt securities | $6,081,120 | $6,453,761 | ($372,641) | | Loans, net of ACL | $10,954,722 | $10,791,628 | $163,094 | | **Total Liabilities** | **$17,973,719** | **$18,683,508** | **($709,789)** | | Total deposits | $17,140,128 | $17,784,894 | ($644,766) | | **Total Stockholders' Equity** | **$1,557,916** | **$2,101,767** | **($543,851)** | | Accumulated other comprehensive loss | ($591,756) | ($83,999) | ($507,757) | [Consolidated Statements of Income](index=7&type=section&id=Consolidated%20Statements%20of%20Income) Q2 net income rose to $74.7 million, driven by higher net interest income despite credit loss provisions Quarterly Income Statement Highlights (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | YoY Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $196,186 | $184,783 | +6.2% | | Provision for credit losses | $10,003 | ($26,155) | N/A | | Non-interest Income | $30,941 | $29,884 | +3.5% | | Non-interest Expenses | $108,326 | $130,172 | -16.8% | | **Net Income** | **$74,695** | **$70,558** | **+5.9%** | | **Diluted EPS** | **$0.38** | **$0.33** | **+15.2%** | Six-Month Income Statement Highlights (in thousands, except per share data) | Metric | H1 2022 | H1 2021 | YoY Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $381,810 | $361,048 | +5.8% | | Provision for credit losses | ($3,799) | ($41,407) | N/A | | Non-interest Income | $63,799 | $60,840 | +4.9% | | Non-interest Expenses | $214,985 | $263,473 | -18.4% | | **Net Income** | **$157,295** | **$131,708** | **+19.4%** | | **Diluted EPS** | **$0.80** | **$0.60** | **+33.3%** | [Consolidated Statements of Comprehensive (Loss) Income](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20(Loss)%20Income) Q2 2022 total comprehensive loss was $101.2 million, driven by unrealized losses on debt securities from rising rates Comprehensive (Loss) Income (in thousands) | Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $74,695 | $70,558 | $157,295 | $131,708 | | Net unrealized holding (losses) gains on debt securities | ($175,923) | $28,496 | ($507,757) | ($70,433) | | **Total Comprehensive (Loss) Income** | **($101,228)** | **$99,054** | **($350,462)** | **$61,275** | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash decreased by $1.28 billion, driven by cash used in investing and financing activities, despite stable operating cash Six-Month Cash Flow Summary (in thousands) | Cash Flow Category | H1 2022 | H1 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $219,608 | $224,526 | | Net cash used in investing activities | ($557,692) | ($1,435,009) | | Net cash (used in) provided by financing activities | ($941,451) | $2,505,419 | | **Net (decrease) increase in cash and cash equivalents** | **($1,279,535)** | **$1,294,936** | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed disclosures cover debt securities, loan portfolios, credit losses, deposits, equity, segment performance, and regulatory capital [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=82&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, condition, and risk management, including Q2 results, income/expense, balance sheet, and various risks [Executive Summary](index=82&type=section&id=Executive%20Summary) Q2 2022 net income increased to $74.7 million, with a new $350 million stock repurchase program and LIBOR transition management - A new stock repurchase program of up to **$350 million** was approved in April 2022. As of August 3, 2022, the Corporation had repurchased approximately **10.71 million shares** for **$150 million** under this program[222](index=222&type=chunk) - The Corporation's total LIBOR exposure was approximately **$2.4 billion** as of June 30, 2022, primarily in commercial loans, debt securities, and subordinated debentures. New originations using LIBOR ceased as of December 31, 2021[226](index=226&type=chunk)[227](index=227&type=chunk) [Results of Operations](index=84&type=section&id=Results%20of%20Operations) Q2 2022 net income rose to $74.7 million, driven by higher net interest income and lower non-interest expenses - Net interest income for Q2 2022 increased by **$11.4 million** YoY to **$196.2 million**, driven by lower MBS premium amortization, upward repricing of variable-rate loans, and growth in consumer loans[233](index=233&type=chunk)[250](index=250&type=chunk)[259](index=259&type=chunk) - The provision for credit losses was an expense of **$10.0 million** in Q2 2022, a reversal from a **$26.2 million** benefit in Q2 2021, reflecting increased uncertainties in the economic outlook[235](index=235&type=chunk) - Non-interest expenses fell by **$21.9 million** YoY to **$108.3 million**. This was largely due to the absence of **$11.0 million** in merger/restructuring costs and **$1.1 million** in COVID-related expenses that were present in Q2 2021[238](index=238&type=chunk)[296](index=296&type=chunk) [Financial Condition Analysis](index=100&type=section&id=Financial%20Condition%20Analysis) Total assets decreased by $1.3 billion due to reduced cash, while the loan portfolio grew and investment securities declined - Total assets decreased by **$1.3 billion** since year-end 2021, primarily due to a **$1.3 billion** decrease in cash and cash equivalents[312](index=312&type=chunk) Loan Portfolio Composition (in thousands) | Loan Category | June 30, 2022 | Dec 31, 2021 | Change | | :--- | :--- | :--- | :--- | | Residential mortgage | $2,851,685 | $2,978,895 | ($127,210) | | Commercial & Construction | $5,248,340 | $5,193,719 | $54,621 | | Consumer loans & finance leases | $3,106,849 | $2,888,044 | $218,805 | | **Total loans held for investment** | **$11,206,874** | **$11,060,658** | **$146,216** | - The available-for-sale debt securities portfolio decreased by **$372.6 million**, mainly driven by a **$507.8 million** decrease in fair value due to rising interest rates, partially offset by purchases[334](index=334&type=chunk) [Risk Management](index=108&type=section&id=Risk%20Management) The Corporation manages liquidity, interest rate, credit, and concentration risks, maintaining strong liquidity and improving credit quality - As of June 30, 2022, the core liquidity reserve was **$4.5 billion**, or **23.1%** of total assets. The Corporation had **$1.1 billion** in available borrowing capacity from the FHLB[351](index=351&type=chunk) - The Corporation remains asset-sensitive. A gradual **200 bps** increase in interest rates over 12 months is projected to increase net interest income by approximately **$26.9 million**[402](index=402&type=chunk)[404](index=404&type=chunk) Non-Performing Assets (in thousands) | Category | June 30, 2022 | Dec 31, 2021 | Change | | :--- | :--- | :--- | :--- | | Nonaccrual loans | $99,110 | $110,717 | ($11,607) | | OREO & repossessed property | $45,546 | $44,535 | $1,011 | | **Total Non-Performing Assets** | **$147,465** | **$158,102** | **($10,637)** | - The Corporation has a significant geographic concentration risk, with **79%** of its total gross loan portfolio located in Puerto Rico as of June 30, 2022[471](index=471&type=chunk)[315](index=315&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=144&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Market risk disclosures are detailed in the Risk Management section of the MD&A - Information regarding the Corporation's exposure to market risk is detailed in the Risk Management section of the MD&A[505](index=505&type=chunk) [Item 4. Controls and Procedures](index=144&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were effective as of June 30, 2022, with no material changes to internal controls - The CEO and CFO concluded that the Corporation's disclosure controls and procedures were effective as of June 30, 2022[505](index=505&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the Corporation's internal control over financial reporting[506](index=506&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=145&type=section&id=Item%201.%20Legal%20Proceedings) The Corporation is involved in ordinary course legal proceedings not expected to materially affect its financial position - The company is party to various legal proceedings from the ordinary course of business, but management does not expect them to have a material adverse effect on its financial position[216](index=216&type=chunk)[507](index=507&type=chunk) [Item 1A. Risk Factors](index=145&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the 2021 Annual Report on Form 10-K - No material changes have been identified from the risk factors disclosed in the 2021 Annual Report on Form 10-K[509](index=509&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=146&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Corporation repurchased $100 million of common stock in Q2 2022 as part of a $350 million program Issuer Purchases of Equity Securities (Q2 2022) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining (in thousands) | | :--- | :--- | :--- | :--- | | May 2022 | 5,695,062 | $13.92 | $270,699 | | June 2022 | 1,374,201 | $15.06 | $250,000 | | **Total Q2** | **7,069,263** | **$14.15** | **$250,000** | [Item 6. Exhibits](index=147&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data