First Ban(US:FBP)2022-05-08 16:00PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents First Bancorp's unaudited consolidated financial statements for Q1 2022, including key financial statements and detailed notes, with comparative data Consolidated Statements of Financial Condition Total assets decreased to $19.9 billion from $20.8 billion, driven by lower cash and deposits, while stockholders' equity declined to $1.8 billion due to unrealized investment losses Consolidated Statements of Financial Condition (Unaudited) | (In thousands) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total assets | $19,929,037 | $20,785,275 | | Cash and due from banks | $1,694,066 | $2,540,376 | | Total loans, net | $10,880,163 | $10,826,783 | | Investment securities available for sale, at fair value | $6,424,660 | $6,453,761 | | Total liabilities | $18,147,935 | $18,683,508 | | Total deposits | $17,335,403 | $17,784,894 | | Total stockholders' equity | $1,781,102 | $2,101,767 | | Accumulated other comprehensive loss, net of tax | ($415,833) | ($83,999) | Consolidated Statements of Income Net income increased to $82.6 million from $61.2 million year-over-year, driven by higher net interest income, a credit loss benefit, and lower non-interest expenses, with diluted EPS rising to $0.41 Consolidated Statements of Income (Unaudited) | (In thousands, except per share) | Quarter Ended March 31, 2022 | Quarter Ended March 31, 2021 | | :--- | :--- | :--- | | Net interest income | $185,624 | $176,265 | | Provision for credit losses - (benefit) | ($13,802) | ($15,252) | | Net interest income after provision | $199,426 | $191,517 | | Total non-interest income | $32,858 | $30,956 | | Total non-interest expenses | $106,659 | $133,301 | | Net income | $82,600 | $61,150 | | Diluted EPS | $0.41 | $0.28 | Consolidated Statements of Comprehensive Loss Total comprehensive loss significantly increased to $249.2 million in Q1 2022, primarily due to $331.8 million in net unrealized holding losses on debt securities available-for-sale Consolidated Statements of Comprehensive Loss (Unaudited) | (In thousands) | Quarter Ended March 31, 2022 | Quarter Ended March 31, 2021 | | :--- | :--- | :--- | | Net income | $82,600 | $61,150 | | Net unrealized holding losses on debt securities | ($331,834) | ($98,929) | | Total comprehensive loss | ($249,234) | ($37,779) | Consolidated Statements of Cash Flows Cash and cash equivalents decreased by $846.8 million in Q1 2022, with $114.8 million from operations, $333.0 million used in investing, and $628.7 million used in financing activities Consolidated Statements of Cash Flows (Unaudited) | (In thousands) | Quarter Ended March 31, 2022 | Quarter Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $114,834 | $112,678 | | Net cash used in investing activities | ($332,992) | ($768,093) | | Net cash (used in) provided by financing activities | ($628,651) | $679,746 | | Net (decrease) increase in cash and cash equivalents | ($846,809) | $24,331 | Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity decreased from $2.1 billion to $1.8 billion in Q1 2022, primarily due to $331.8 million in other comprehensive loss and $52.4 million in stock repurchases, partially offset by net income Key Changes in Stockholders' Equity (Q1 2022) | (In thousands) | Amount | | :--- | :--- | | Balance at beginning of period | $2,101,767 | | Net income | $82,600 | | Common stock repurchases | ($52,351) | | Dividends on common stock | ($19,900) | | Other comprehensive loss, net of tax | ($331,834) | | Balance at end of period | $1,781,102 | Notes to Consolidated Financial Statements This section provides detailed disclosures for the financial statements, covering accounting policies, breakdowns of key assets and liabilities, equity, fair value measurements, and regulatory matters Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's Q1 2022 financial performance and condition, covering recent developments, net interest income, credit losses, non-interest items, portfolio analysis, and risk management practices - Net income for Q1 2022 was $82.6 million ($0.41 per diluted share), up from $61.2 million ($0.28 per diluted share) in Q1 2021251 - On April 27, 2022, the Board approved a new stock repurchase program of up to $350 million and increased the quarterly common stock dividend by 20% to $0.12 per share237238 - Total assets decreased by $856.2 million to $19.9 billion as of March 31, 2022, primarily due to a decrease in cash and cash equivalents259 - Stockholders' equity decreased by $320.7 million to $1.8 billion, driven by a $331.8 million decrease in the fair value of available-for-sale securities and stock repurchases, partially offset by quarterly earnings261 Results of Operations Net income increased to $82.6 million in Q1 2022, driven by higher net interest income, a credit loss benefit, and lower non-interest expenses due to reduced merger costs Key Performance Indicators | (In percent) | March 31, 2022 | March 31, 2021 | | :--- | :--- | :--- | | Return on Average Assets | 1.65% | 1.30% | | Return on Average Total Equity | 16.64% | 10.82% | | Efficiency Ratio | 48.82% | 64.33% | Financial Condition and Operating Data Analysis Total assets decreased to $19.9 billion due to lower cash, while the loan portfolio slightly grew to $11.1 billion, and the investment portfolio decreased to $6.4 billion due to unrealized losses Loan Portfolio Composition (In thousands) | Loan Type | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Residential mortgage loans | $2,891,699 | $2,978,895 | | Total commercial loans | $5,229,866 | $5,193,719 | | Consumer loans and finance leases | $2,976,140 | $2,888,044 | | Total loans held for investment | $11,097,705 | $11,060,658 | - Total loan production in Q1 2022 was $1.2 billion, compared to $1.3 billion in Q1 2021, with an increase of $57.8 million year-over-year excluding SBA PPP loans321322 Risk Management The company manages liquidity, interest rate, credit, and concentration risks, maintaining strong liquidity, an asset-sensitive balance sheet, improved credit quality, and $356.8 million exposure to the Puerto Rico government - As of March 31, 2022, the estimated core liquidity reserve was $5.3 billion, or 26.5% of total assets, with available borrowing capacity from the FHLB of $1.2 billion347 Net Interest Income Sensitivity (Next 12 Months) | Scenario | Change (in millions) | % Change | | :--- | :--- | :--- | | +200 bps ramp | $27.8 | 3.56% | | -200 bps ramp | ($18.6) | (2.38)% | Non-Performing Assets (In thousands) | Category | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total nonaccrual loans | $107,030 | $110,717 | | OREO | $42,894 | $40,848 | | Total non-performing assets | $156,474 | $158,102 | - Direct exposure to the Puerto Rico government, its municipalities, and public corporations was $356.8 million as of March 31, 2022478 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section refers to the market risk disclosures detailed within the 'Risk Management' heading of Item 2, Management's Discussion and Analysis - The report directs readers to the 'Risk Management' section within Item 2 (MD&A) for information regarding the Corporation's exposure to market risk501 Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the Corporation's disclosure controls and procedures were effective as of March 31, 2022501 - No changes were made to the internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls502 PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 23 of the financial statements for details on legal proceedings, which management believes will not materially affect the company's financial position - For details on legal proceedings, the report refers to Note 23, 'Regulatory Matters and Contingencies,' in the financial statements503 Item 1A. Risk Factors The company reports no material changes to risk factors from its 2021 Annual Report on Form 10-K, directing readers to that report for detailed discussion of potential risks - There have been no material changes from the risk factors disclosed in the 2021 Annual Report on Form 10-K505 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered equity sales and details common stock repurchases, having completed its $300 million program by purchasing 3,611,627 shares during the quarter Issuer Purchases of Equity Securities (Q1 2022) | Period | Total Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | Jan 2022 | 2,712,584 | $14.60 | | Feb 2022 | 697,113 | $14.90 | | Mar 2022 | 201,930 | $13.44 | | Total | 3,611,627 | N/A | - During Q1 2022, the Corporation completed its $300 million stock repurchase program approved in April 2021508 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications under Sarbanes-Oxley and XBRL data files - The exhibits include CEO/CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as XBRL instance and taxonomy documents510511512513514