First Ban(FBP) - 2023 Q4 - Annual Report

Employee Statistics - As of December 31, 2023, the Corporation had 3,168 regular employees, representing a 1% increase from December 31, 2022[35] - Approximately 67% of the total employee population and 57% of management positions were women as of December 31, 2023[35] - The Corporation delivered more than 98,000 hours of training in 2023, with each employee completing an average of 31 training hours[42] - The Corporation's voluntary turnover rate was 10.97% for 2023, with a turnover rate of 2.8% among high performers[39] - The Corporation's average employee tenure was 10 years as of December 31, 2023[39] Banking Segments - The Corporation's Mortgage Banking segment focuses on originating residential real estate loans, including FHA, VA, and RD loans[21] - The Commercial and Corporate Banking segment offers commercial loans, including commercial real estate and construction loans, primarily secured by real estate collateral[20] - The United States Operations segment provides a wide range of banking services through eight branches in southern Florida[26] Capital Ratios - As of December 31, 2023, the Corporation's total capital ratio was 18.57%, exceeding the minimum requirement of 10.00%[65] - The Corporation's Common Equity Tier 1 (CET1) capital ratio was 16.10%, significantly above the minimum requirement of 6.50%[65] - The Tier 1 capital ratio for the Corporation was 16.10%, well above the minimum requirement of 8.00%[65] - The leverage ratio for the Corporation stood at 10.78%, surpassing the minimum requirement of 5.00%[65] - The Corporation had $156.9 million in trust-preferred securities (TRuPs) subject to phase-out from Tier 1 capital[64] Regulatory Compliance - FirstBank is subject to regulation and examination by the OCIF, CFPB, and FDIC, ensuring compliance with safe banking practices[58] - The Corporation and FirstBank are required to maintain a capital conservation buffer of CET1 capital greater than 2.5% of total risk-weighted assets to avoid limitations on capital distributions[68] - The Corporation has elected to phase in the full effect of the Current Expected Credit Loss (CECL) on regulatory capital over a five-year transition period[62] - The Corporation is registered under the Bank Holding Company Act and is subject to ongoing supervision by the Federal Reserve Board[54] - The Corporation monitors its capital consistent with federal regulators' safety and soundness expectations, despite not being formally required to conduct stress tests[67] CRA and Deposit Insurance - FirstBank received a "satisfactory" CRA rating in its most recent examination by the FDIC[77] - In 2023, the Corporation recognized an increase of approximately $2.4 million in deposit insurance expense compared to 2022 due to increased assessment rates[97] - A special assessment of 3.36 basis points will be collected quarterly starting January 1, 2024, to recover losses associated with protecting uninsured depositors[98] - The Corporation recorded a charge of $6.3 million in Q4 2023 as part of "FDIC deposit insurance expenses" related to the special assessment[98] - The final rule for CRA regulations takes effect on April 1, 2024, with compliance dates staggered until January 1, 2027[78] Anti-Money Laundering and Cybersecurity - The AML Act of 2020 includes enhanced reporting requirements and penalties for violations, aimed at modernizing anti-money laundering regulations[80] - The SEC's new rules require registrants to disclose material cybersecurity incidents within four business days and annual disclosures on risk management[86] - The Corporation has adopted appropriate policies to comply with the Bank Secrecy Act and USA PATRIOT Act requirements[82] Banking Operations and Regulations - FirstBank is a member of the Federal Home Loan Bank (FHLB) system, which serves as a credit facility for member institutions[101] - FirstBank complies with the stock ownership requirements of the FHLB of New York, holding shares calculated according to applicable laws[102] - The Puerto Rico Banking Law mandates that banks maintain a legal reserve of at least 20% of demand liabilities, excluding certain government deposits[111] - Under the Banking Law, FirstBank can make loans up to 15% of its paid-in capital, reserve fund, and 50% of retained earnings, with potential increases if secured by collateral[112] Taxation - The Corporation has maintained an effective tax rate lower than the maximum statutory rate in Puerto Rico, benefiting from special tax treatments[122] - The IBE Act 52 provides tax exemptions for FirstBank's international banking operations, allowing it to operate under favorable conditions[116] - The recent amendments to the IBE Act increase the annual license fee for IBEs from $5,000 to $25,000, effective May 15, 2024[120] FDIC Authority - The FDIC has broad authority to act as a conservator or receiver for failed banks, prioritizing claims of insured depositors[99] - The FDIA allows the FDIC to take possession of a bank's assets and liabilities during insolvency, ensuring depositors are paid from available assets[99] Supervision and Governance - FirstBank's operations are subject to supervision by the OCIF under the Puerto Rico Banking Law, which includes extensive rule-making powers[109] - First BanCorp is treated as a foreign corporation for U.S. and USVI income tax purposes, subject to U.S. and USVI income tax only on income from those jurisdictions[123] - FirstBank Insurance Agency is registered and regulated by the Insurance Commissioner of Puerto Rico and the Division of Banking, Insurance and Financial Regulation in the USVI[125] - FirstBank is subject to various regulations from entities such as FHA, VA, FNMA, FHLMC, GNMA, and HUD regarding mortgage banking operations, including annual submission of audited financial statements[126] - The Corporation provides access to annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K through its investor relations website[128] - Corporate Governance Guidelines and Principles, along with various committee charters, are available free of charge on the Corporation's website[129] - The Corporation maintains a Code of Ethics for CEO and Senior Financial Officers, applicable to all employees, and principles for directors[131] - The Corporation's market risk management information is incorporated by reference in the Management's Discussion and Analysis section of the Form 10-K[601]