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First BanCorp. Announces Earnings for the Quarter Ended June 30, 2019

July 23, 2019 7:30 AM

SAN JUAN, Puerto Rico--(BUSINESS WIRE)-- First BanCorp. (the “Corporation”) (NYSE: FBP), the bank holding company for FirstBank Puerto Rico (“FirstBank” or “the Bank”), today reported net income of $41.3 million, or $0.19 per diluted share, for the second quarter of 2019, compared to $43.3 million, or $0.20 per diluted share, for the first quarter of 2019, and $31.0 million, or $0.14 per diluted share, for the second quarter of 2018.

Aurelio Alemán, President and Chief Executive Officer of First BanCorp., commented: “We reported another strong quarter of core earnings with net income of $41.3 million or $0.19 per share. Pre-tax, pre-provision income reached another record level at $71 million this quarter. Franchise metrics continue to move in a positive direction. Our loan portfolio grew $118 million, representing our fourth consecutive quarter of loan growth. On a year-over-year basis the loan portfolio has grown over $425 million, almost 5%, reflecting a 19% increase in the consumer portfolio, a 7% increase in the commercial and construction portfolio, and a decrease in the residential loan portfolio of approximately 5%, consistent with previously mentioned strategies. Origination activity was healthy at $885 million and the pipeline for the remainder of the year continues to be strong.

We continue achieving organic reductions in NPAs with a $31 million reduction during the quarter, a 7% decrease which resulted in a ratio of NPAs to asset of 3.06%. Year-over-year we have reduced our NPAs by $237 million, or 38%. We have achieved this through organic reductions with minimal impact on our earnings. Inflows to NPAs for the quarter declined and credit quality improved in almost every asset class.

Our capital continues to grow with tangible book value now at $9.57 per share and our common equity tier 1 capital ratio is 20.6%. Our organization is poised for growth and our teams are well prepared for executing on opportunities within our markets.”

SPECIAL ITEMS

The financial results for the second and first quarters of 2019 and the second quarter of 2018 include the following items that management believes are not reflective of core operating performance, are not expected to reoccur with any regularity or may reoccur at uncertain times and in uncertain amounts (the “Special Items”):

Quarter ended June 30, 2019

- A $0.8 million ($0.5 million after-tax) benefit resulting from hurricane-related insurance recoveries related to impairments, repairs and maintenance costs incurred on facilities in the British Virgin Islands.

Quarter ended March 31, 2019

- A $6.4 million ($4.0 million after-tax) positive effect in earnings related to loan loss reserve releases resulting from revised estimates of the hurricane-related qualitative reserves associated with the effects of Hurricanes Irma and Maria, primarily related to consumer and commercial loans.

- A $2.3 million expense recovery related to an employee retention benefit payment (the “Benefit”) received by the Bank by virtue of the Disaster Tax Relief and Airport Extension Act of 2017, as amended (the “Act”). The Corporation recorded the Benefit as an offset to the employees’ compensation and benefits expenses recognized in the first quarter of 2019. See Non-interest expenses below for additional information.

Quarter ended June 30, 2018

- A $1.4 million ($0.9 million after-tax) positive effect in earnings related to a $2.1 million net loan loss reserve release resulting from revised estimates of the hurricane-related qualitative reserves associated with the effects of Hurricanes Irma and Maria, primarily related to commercial loans, partially offset by $0.7 million of hurricane-related expenses recorded in the second quarter of 2018.

The following table reconciles for the second and first quarters of 2019 and the second quarter of 2018 the reported net income to adjusted net income and adjusted earnings per share, non-GAAP financial measures that exclude the Special Items identified above:

Quarter Ended Quarter Ended Quarter Ended
(In thousands) June 30, 2019 March 31, 2019 June 30, 2018
Net income, as reported (GAAP)

$ 41,287

$ 43,314

$ 31,032

Adjustments:
Hurricane-related loan loss reserve release

-

(6,425)

(2,057)

Hurricane-related expenses

-

-

654

Benefit from hurricane-related insurance recoveries

(820)

-

-

Employee retention benefit - Disaster Tax Relief and Airport Extension Act of 2017

-

(2,317)

-

Income tax impact of adjustments (1)

308

2,409

547

Adjusted net income (Non-GAAP)

$ 40,775

$ 36,981

$ 30,176

Preferred stock dividends

(669)

(669)

(669)

Adjusted net income attributable to common stockholders (Non-GAAP)

$ 40,106

$ 36,312

$ 29,507

Weighted-average diluted shares outstanding

$ 216,978

216,950

216,666

Earnings Per Share - diluted (GAAP)

$ 0.19

$ 0.20

$ 0.14

Adjusted Earnings Per Share - diluted (Non-GAAP)

$ 0.18

$ 0.17

$ 0.14

(1) See Basis of Presentation for the individual tax impact related to each reconciling item.

This press release includes certain non-GAAP financial measures, including adjusted net income, adjusted pre-tax, pre-provision income, adjusted net interest income and margin, tangible common equity, tangible book value per common share, certain capital ratios, and certain other financial measures that exclude the effect of items that management identifies as Special Items because they are not reflective of core operating performance, are not expected to reoccur with any regularity or may reoccur at uncertain times and in uncertain amounts, and should be read in conjunction with the discussion below in Basis of Presentation – Use of Non-GAAP Financial Measures and the accompanying tables (Exhibit A), which are an integral part of this press release.

INCOME BEFORE INCOME TAXES AND RECONCILIATION TO ADJUSTED PRE-TAX, PRE-PROVISION INCOME (NON-GAAP)

Income before income taxes amounted to $59.3 million for the second quarter of 2019, compared to $60.9 million for the first quarter of 2019. Adjusted pre-tax, pre-provision income amounted to $71.0 million for the second quarter of 2019, up $0.6 million from the first quarter of 2019. The following table reconciles income before income taxes to adjusted pre-tax, pre-provision income for the last five quarters:

(Dollars in thousands) Quarter Ended

June 30,

March 31,

December 31,

September 30,

June 30,

2019

2019

2018

2018

2018

Income before income taxes

$

59,298

$

60,932

$

59,886

$

48,655

$

41,191

Add: Provision for loan and lease losses

12,534

11,820

7,649

11,524

19,536

(Less)/Add: Net (gain) loss on investments and impairments

-

-

84

-

-

Less: Employee retention benefit - Disasater Tax Relief
and Airport Extension Act of 2017

-

(2,317)

-

-

-

Less: Benefit from hurricane-related insurance recoveries

(820)

-

-

(478)

-

Add: Hurricane-related expenses

-

-

-

533

654

Adjusted pre-tax, pre-provision income (1)

$

71,012

$

70,435

$

67,619

$

60,234

$

61,381

Change from most recent prior quarter (amount)

$

577

$

2,816

$

7,385

$

(1,147)

$

651

Change from most recent prior quarter (percentage)

0.8%

4.2%

12.3%

-1.9%

1.1%

(1) See Basis of Presentation for additional information.

Adjusted pre-tax, pre-provision income is a non-GAAP financial measure that management believes is useful to investors in analyzing the Corporation’s performance and trends. This metric is income before income taxes adjusted to exclude the provision for loan and lease losses and any gains or losses on sales of investment securities and impairments. In addition, from time to time, earnings are also adjusted for certain items regarded as Special Items, such as the one-time employee retention benefit, and hurricane-related expenses and insurance recoveries reflected above, because management believes these items are not reflective of core operating performance, are not expected to reoccur with any regularity or may reoccur at uncertain times and in uncertain amounts. (See Basis of Presentation – Use of Non-GAAP Financial Measures - Adjusted Pre-Tax, Pre-Provision Income for additional information about this non-GAAP financial measure).

NET INTEREST INCOME

Net interest income, excluding fair value adjustments on derivatives (“valuations”), and net interest income on a tax-equivalent basis are non-GAAP financial measures. See Basis of Presentation – Use of Non-GAAP Financial Measures - Net Interest Income, Excluding Valuations, and on a Tax-Equivalent Basis below for additional information. The following table reconciles net interest income in accordance with GAAP to net interest income excluding valuations, and net interest income on a tax-equivalent basis for the last five quarters. The table also reconciles net interest spread and net interest margin on a GAAP basis to these items excluding valuations, and on a tax-equivalent basis.

(Dollars in thousands)

Quarter Ended
June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2018
Net Interest Income
Interest income - GAAP

$

169,510

$

166,472

$

162,424

$

157,492

$

155,633

Unrealized loss (gain) on
derivative instruments

1

4

(22)

-

-

Interest income excluding valuations

169,511

166,476

162,402

157,492

155,633

Tax-equivalent adjustment

4,929

5,322

6,135

5,413

5,163

Interest income on a tax-equivalent basis and excluding valuations

$

174,440

$

171,798

$

168,537

$

162,905

$

160,796

Interest expense - GAAP

26,964

26,291

24,726

24,971

25,162

Net interest income - GAAP

$

142,546

$

140,181

$

137,698

$

132,521

$

130,471

Net interest income excluding valuations

$

142,547

$

140,185

$

137,676

$

132,521

$

130,471

Net interest income on a tax-equivalent basis and excluding valuations

$

147,476

$

145,507

$

143,811

$

137,934

$

135,634

Average Balances
Loans and leases

$

9,035,618

$

8,912,874

$

8,761,306

$

8,676,620

$

8,693,347

Total securities, other short-term investments and interest-bearing cash balances

2,641,185

2,634,055

2,685,654

2,892,148

2,959,281

Average interest-earning assets

$

11,676,803

$

11,546,929

$

11,446,960

$

11,568,768

$

11,652,628

Average interest-bearing liabilities

$

7,714,393

$

7,615,212

$

7,654,622

$

7,830,063

$

8,054,865

Average Yield/Rate
Average yield on interest-earning assets - GAAP

5.82%

5.85%

5.63%

5.40%

5.36%

Average rate on interest-bearing liabilities - GAAP

1.40%

1.40%

1.28%

1.27%

1.25%

Net interest spread - GAAP

4.42%

4.45%

4.35%

4.13%

4.11%

Net interest margin - GAAP

4.90%

4.92%

4.77%

4.54%

4.49%

Average yield on interest-earning assets excluding valuations

5.82%

5.85%

5.63%

5.40%

5.36%

Average rate on interest-bearing liabilities excluding valuations

1.40%

1.40%

1.28%

1.27%

1.25%

Net interest spread excluding valuations

4.42%

4.45%

4.35%

4.13%

4.11%

Net interest margin excluding valuations

4.90%

4.92%

4.77%

4.54%

4.49%

Average yield on interest-earning assets on a tax-equivalent basis and excluding valuations

5.99%

6.03%

5.84%

5.59%

5.53%

Average rate on interest-bearing liabilities excluding valuations

1.40%

1.40%

1.28%

1.27%

1.25%

Net interest spread on a tax-equivalent basis and excluding valuations

4.59%

4.63%

4.56%

4.32%

4.28%

Net interest margin on a tax-equivalent basis and excluding valuations

5.07%

5.11%

4.99%

4.73%

4.67%

Net interest income amounted to $142.5 million for the second quarter of 2019, an increase of $2.3 million when compared to net interest income of $140.2 million for the first quarter of 2019. The increase in net interest income was mainly due to:

Partially offset by:

Net interest margin was 4.90%, relatively flat compared to 4.92% for the first quarter of 2019. The slight decrease was primarily related to the aforementioned increase in the premium amortization expense of U.S. agency MBS.

PROVISION FOR LOAN AND LEASE LOSSES

The provision for loan and lease losses for the second quarter of 2019 was $12.5 million, compared to $11.8 million for the first quarter of 2019. As mentioned above, a loan loss reserve release of approximately $6.4 million was recorded in the first quarter of 2019 in connection with revised estimates of the hurricane-related qualitative reserves for consumer and commercial and construction loans associated with the effects of Hurricanes Irma and Maria. The significant overall uncertainties that complicated management’s early assessments of hurricane-related credit losses have been largely addressed in the 18-month period since the hurricanes, and the hurricanes’ effect on credit quality is now reflected in the normal process for determining the allowance for loan losses and not through a separate hurricane-related qualitative reserve.

The $0.7 million increase in the provision for loan and lease losses, as compared to the 2019 first quarter provision, was driven by the following factors:

Partially offset by:

See Credit Quality – Allowance for Loan and Lease Losses below for additional information regarding the allowance for loan and lease losses, including variances in net charge-offs.

NON-INTEREST INCOME

The following table sets forth information concerning non-interest income during the periods indicated:

Quarter Ended
June 30, March 31, December 31, September 30, June 30,
(In thousands)

2019

2019

2018

2018

2018

Service charges on deposit accounts

$

5,887

$

5,716

$

5,666

$

5,581

$

5,344

Mortgage banking activities

4,395

3,627

3,677

4,551

4,835

Net gain (loss) on investments and impairments

-

-

(84)

-

-

Other operating income

11,941

13,200

11,272

8,391

10,293

Non-interest income

$

22,223

$

22,543

$

20,531

$

18,523

$

20,472

Non-interest income amounted to $22.2 million for the second quarter of 2019, compared to $22.5 million for the first quarter of 2019. The $0.3 million decrease in non-interest income was primarily due to:

Partially offset by:

NON-INTEREST EXPENSES

The following table sets forth information concerning non-interest expenses during the periods indicated:

Quarter Ended
June 30, March 31, December 31, September 30, June 30,
(In thousands)

2019

2019

2018

2018

2018

Employees' compensation and benefits

$

40,813

$

39,296

$

40,012

$

39,243

$

39,555

Occupancy and equipment

15,834

16,055

14,431

14,660

13,746

Deposit insurance premium

1,482

1,698

1,750

2,067

2,443

Other insurance and supervisory fees

547

1,170

996

1,143

1,258

Taxes, other than income taxes

3,737

3,820

3,680

3,534

3,637

Professional fees:
Collections, appraisals and other credit-related fees

1,946

1,717

2,106

2,150

1,650

Outsourcing technology services

5,798

5,520

5,610

5,215

5,127

Other professional fees

3,927

3,073

4,026

4,137

3,416

Credit and debit card processing expenses

3,820

4,154

4,096

4,147

3,766

Business promotion

3,940

3,706

4,356

3,860

4,016

Communications

1,714

1,752

1,666

1,642

1,582

Net loss on OREO operations

5,043

3,743

4,247

4,360

5,655

Other

4,336

4,268

3,718

4,707

4,365

Total

$

92,937

$

89,972

$

90,694

$

90,865

$

90,216

Non-interest expenses amounted to $92.9 million in the second quarter of 2019, an increase of $2.9 million from $90.0 million in the first quarter of 2019. The $2.9 million increase in non-interest expenses was primarily due to:

Partially offset by:

INCOME TAXES

The Corporation recorded an income tax expense of $18.0 million for the second quarter of 2019, compared to $17.6 million for the first quarter of 2019.

The Corporation’s effective tax rate, excluding entities with pre-tax losses from which a tax benefit cannot be recognized and discrete items, increased to 29% compared to the effective tax rate of 28% as of the end of the first quarter of 2019. The increase in the effective tax rate was primarily driven by a higher projected proportion of taxable to exempt income for the year. As of June 30, 2019, the Corporation had a deferred tax asset of $290.3 million (net of a valuation allowance of $92.8 million, including a valuation allowance of $60.0 million against the deferred tax assets of the Corporation’s banking subsidiary, FirstBank).

CREDIT QUALITY

Non-Performing Assets

(Dollars in thousands) June 30, March 31, December 31, September 30, June 30,

2019

2019

2018

2018

2018

Nonaccrual loans held for investment:
Residential mortgage

$

129,501

$

132,049

$

147,287

$

156,685

$

162,539

Commercial mortgage

77,495

93,192

109,536

117,397

142,614

Commercial and Industrial

21,327

22,507

30,382

34,551

76,887

Construction

6,936

7,700

8,362

9,071

14,148

Consumer and Finance leases

17,846

17,330

20,406

21,664

22,953

Total nonaccrual loans held for investment

253,105

272,778

315,973

339,368

419,141

OREO

118,081

129,716

131,402

135,218

143,355

Other repossessed property

5,744

5,032

3,576

3,992

4,271

Total non-performing assets, excluding nonaccrual loans held for sale

$

376,930

$

407,526

$

450,951

$

478,578

$

566,767

Nonaccrual loans held for sale

7,144

7,381

16,111

44,177

54,546

Total non-performing assets, including nonaccrual loans held for sale (1)

$

384,074

$

414,907

$

467,062

$

522,755

$

621,313

Past-due loans 90 days and still accruing (2)

$

142,113

$

148,625

$

158,527

$

165,432

$

171,737

Nonaccrual loans held for investment to total loans held for investment

2.78%

3.03%

3.57%

3.89%

4.85%

Nonaccrual loans to total loans

2.85%

3.10%

3.73%

4.37%

5.43%

Non-performing assets, excluding nonaccrual loans held for sale,
to total assets, excluding nonaccrual loans held for sale

3.01%

3.29%

3.69%

3.93%

4.60%

Non-performing assets to total assets

3.06%

3.35%

3.81%

4.28%

5.02%

(1)

Purchased credit impaired ("PCI") loans of $141.7 million accounted for under Accounting Standards Codification ("ASC") 310-30 as of June 30, 2019, primarily mortgage loans acquired from Doral Bank
in the first quarter of 2015 and from Doral Financial in the second quarter of 2014, are excluded and not considered nonaccrual loans due to the application of the accretion method, under which these loans
will accrete interest income over the remaining life of the loans using an estimated cash flow analysis.

(2)

Amount includes PCI loans with individual delinquencies over 90 days and still accruing with a carrying value as of June 30, 2019 of approximately $27.0 million, primarily related to
the loans acquired from Doral Bank in the first quarter of 2015 and from Doral Financial in the second quarter of 2014.

Variances in credit quality metrics:

The decrease in non-performing assets was mainly due to:

- A charge-off of $11.4 million taken on a commercial mortgage loan in the Florida region with a previously-established specific reserve.

- Collections on nonaccrual commercial and construction loans of $4.3 million.

- A $2.5 million decrease in nonaccrual residential mortgage loans, driven by loans brought current, charge-offs, collections, and foreclosures that, in the aggregate, offset the inflows in the second quarter.

- An $11.6 million decrease in the OREO portfolio balance. The decrease was driven by sales of $14.1 million, and write-down adjustments to the OREO value of $5.4 million, partially offset by additions of $7.9 million.

Early Delinquency

Total loans in early delinquency (i.e., 30-89 days past due loans, as defined in regulatory report instructions) amounted to $146.9 million as of June 30, 2019, an increase of $3.1 million compared to $143.8 million as of March 31, 2019. The variances by major portfolio categories were as follow:

- Commercial and construction loans in early delinquency decreased in the second quarter by $1.5 million to $6.1 million as of June 30, 2019.

- Residential mortgage loans in early delinquency increased in the second quarter by $0.4 million to $80.1 million as of June 30, 2019, and consumer loans in early delinquency increased in the second quarter by $4.3 million to $60.7 million as of June 30, 2019.

Allowance for Loan and Lease Losses

The following table sets forth information concerning the allowance for loan and lease losses during the periods indicated:

Quarter Ended
(Dollars in thousands) June 30, March 31, December 31, September 30, June 30,

2019

2019

2018

2018

2018

Allowance for loan and lease losses, beginning of period

$

183,732

$

196,362

$

200,563

$

222,035

$

225,856

Provision for loan and lease losses

12,534

11,820

(1)

7,649

(2)

11,524

(3)

19,536

(4)

Net (charge-offs) recoveries of loans:
Residential mortgage

(4,188)

(5,547)

(6,009)

(7,483)

(4,855)

Commercial mortgage

(11,598)

(2,272)

4,193

(9,559)

(3,859)

Commercial and Industrial

(83)

(5,216)

(168)

(2,115)

(3,734)

Construction

237

(166)

60

(2,178)

(680)

Consumer and finance leases

(8,623)

(11,249)

(9,926)

(11,661)

(10,229)

Net charge-offs

(24,255)

(24,450)

(11,850)

(32,996)

(23,357)

Allowance for loan and lease losses, end of period

$

172,011

$

183,732

$

196,362

$

200,563

$

222,035

Allowance for loan and lease losses to period end total loans held for investment

1.89%

2.04%

2.22%

2.30%

2.57%

Net charge-offs (annualized) to average loans outstanding during the period

1.07%

1.10%

0.54%

1.52%

1.07%

Provision for loan and lease losses to net charge-offs during the period 0.52x 0.48x 0.65x 0.35x 0.84x
Provision for loan and lease losses to net charge-offs during the period,
excluding effect of the hurricane-related qualitative reserve releases
in the first quarter of 2019 and the fourth, third, and second quarters of 2018 0.52x 0.75x 1.13x 0.43x 0.92x
(1) Net of a $6.4 million net loan loss reserve release associated with the effect of Hurricanes Irma and Maria.
(2) Net of a $5.7 million net loan loss reserve release associated with the effect of Hurricanes Irma and Maria.
(3) Net of a $2.8 million net loan loss reserve release associated with the effect of Hurricanes Irma and Maria.
(4) Net of a $2.1 million net loan loss reserve release associated with the effect of Hurricanes Irma and Maria.

The following table sets forth information concerning the composition of the Corporation’s allowance for loan and lease losses as of June 30, 2019 and March 31, 2019, by loan category and by whether the allowance and related provisions were calculated individually for impairment purposes or through a general valuation allowance:

(Dollars in thousands)

Residential
Mortgage Loans		 Commercial Loans
(including Commercial
Mortgage, C&I, and
Construction)		 Consumer and
Finance Leases		 Total
As of June 30, 2019
Impaired loans:
Principal balance of loans, net of charge-offs

$

391,016

$

293,675

$

27,137

$

711,828

Allowance for loan and lease losses

18,788

13,477

4,570

36,835

Allowance for loan and lease losses to principal balance

4.80%

4.59%

16.84%

5.17%

PCI loans:
Carrying value of PCI loans

138,367

3,339

-

141,706

Allowance for PCI loans

11,063

371

-

11,434

Allowance for PCI loans to carrying value

8.00%

11.11%

-

8.07%

Loans with general allowance:
Principal balance of loans

2,541,363

3,633,279

2,085,779

8,260,421

Allowance for loan and lease losses

18,433

57,195

48,114

123,742

Allowance for loan and lease losses to principal balance

0.73%

1.57%

2.31%

1.50%

Total loans held for investment:
Principal balance of loans

$

3,070,746

$

3,930,293

$

2,112,916

$

9,113,955

Allowance for loan and lease losses

48,284

71,043

52,684

172,011

Allowance for loan and lease losses to principal balance

1.57%

1.81%

2.49%

1.89%

As of March 31, 2019
Impaired loans:
Principal balance of loans, net of charge-offs

$

393,735

$

310,708

$

28,428

$

732,871

Allowance for loan and lease losses

20,753

25,022

4,779

50,554

Allowance for loan and lease losses to principal balance

5.27%

8.05%

16.81%

6.90%

PCI loans:
Carrying value of PCI loans

140,979

3,464

-

144,443

Allowance for PCI loans

10,954

400

-

11,354

Allowance for PCI loans to carrying value

7.77%

11.55%

-

7.86%

Loans with general allowance:
Principal balance of loans

2,591,848

3,540,790

1,986,864

8,119,502

Allowance for loan and lease losses

20,179

53,660

47,985

121,824

Allowance for loan and lease losses to principal balance

0.78%

1.52%

2.42%

1.50%

Total loans held for investment:
Principal balance of loans

$

3,126,562

$

3,854,962

$

2,015,292

$

8,996,816

Allowance for loan and lease losses

51,886

79,082

52,764

183,732

Allowance for loan and lease losses to principal balance

1.66%

2.05%

2.62%

2.04%

Net Charge-Offs

The following table presents annualized net charge-offs to average loans held-in-portfolio:

Quarter Ended
June 30, March 31, December 31, September 30, June 30,

2019

2019

2018

2018

2018

Residential mortgage

0.54%

0.71%

0.77%

0.95%

0.61%

Commercial mortgage

2.97%

0.59%

-1.10%

2.47%

0.98%

Commercial and Industrial

0.01%

0.96%

0.03%

0.42%

0.73%

Construction

-1.03%

0.78%

-0.22%

7.13%

2.25%

Consumer and finance leases

1.68%

2.27%

2.10%

2.57%

2.34%

Total loans

1.07%

1.10%

0.54%

1.52%

1.07%

The ratios above are based on annualized net charge-offs and are not necessarily indicative of the results expected in subsequent periods.

Net charge-offs were $24.3 million for the second quarter of 2019, or an annualized 1.07% of average loans, compared to $24.5 million, or an annualized 1.10% of average loans, in the first quarter of 2019. The decrease of $0.2 million in net charge-offs was mainly related to:

Partially offset by:

STATEMENT OF FINANCIAL CONDITION

Total assets were approximately $12.5 billion as of June 30, 2019, up $160.4 million from March 31, 2019.

The increase was mainly due to:

The increase in total loans in the Puerto Rico region consisted of a $102.2 million growth in consumer loans and a $49.1 million increase in commercial and construction loans, partially offset by a reduction of $50.2 million in residential mortgage loans. The increase in commercial and construction loans was mainly related to certain large originations in the second quarter, including the origination of three new floor plan lines of credit with an aggregate outstanding balance of $51.3 million as of the end of the second quarter, the refinancing of a commercial and industrial term loan that increased the balance of this commercial relationship by approximately $18.5 million, and an aggregate increase of $21.2 million in the outstanding balance of two revolving commercial lines of credit. These variances were partially offset by repayments that reduced the balance of four commercial and industrial loans by $34.3 million. The decrease in residential mortgage loans in Puerto Rico reflects the effect of collections, charge-offs and approximately $7.6 million of foreclosures recorded in the second quarter, which more than offset the volume of non-conforming residential mortgage loan originations maintained in the loans held for investment portfolio. Approximately 84% of the $99.0 million in residential mortgage loans originated in Puerto Rico during the second quarter of 2019 consisted of conforming loan originations and refinancings. The increase in consumer loans was driven by new loan originations.

The increase in total loans in the Florida region consisted of a $25.7 million growth in commercial and construction loans, despite the aforementioned charge-off of $11.4 million taken on a commercial mortgage loan, partially offset by reductions of $0.5 million in residential mortgage loans and $5.3 million in consumer loans.

The decrease in total loans in the Virgin Islands region primarily reflects a reduction of $4.5 million in residential mortgage loans, partially offset by increases of $0.6 million in consumer loans and $0.4 million in commercial and construction loans.

Total loan originations, including refinancings, renewals and draws from existing commitments (excluding credit card utilization activity), increased by $3.9 million to $885.4 million in the second quarter of 2019, compared to $881.5 million in the first quarter of 2019. The increase primarily reflects seasonally higher residential and consumer loan originations compared to the first quarter.

Total loan originations in the Puerto Rico region increased by $66.7 million to $724.5 million in the second quarter of 2019, compared to $657.8 million in the first quarter of 2019. The increase in the Puerto Rico region consisted of increases of $39.9 million in commercial and construction loan originations, primarily related to floor plan lines of credit, $22.5 million in consumer loan originations, and $4.3 million in residential mortgage loan originations.

Total loan originations in the Florida region decreased by $53.0 million to $146.6 million in the second quarter of 2019, compared to $199.6 million in the first quarter of 2019. The decrease in the Florida region consisted of decreases of $55.7 million in commercial and construction loan originations and $3.0 million in consumer loan originations, partially offset by a $5.7 million increase in residential mortgage loan originations.

Total loan originations in the Virgin Islands region decreased by $9.7 million to $14.3 million in the second quarter of 2019, compared to $24.1 million in the first quarter of 2019. The decrease in the Virgin Islands region consisted of a $10.8 million decrease in commercial and construction loan originations, partially offset by increases of $0.9 million in residential mortgage loan originations and $0.2 million in consumer loan originations.

Partially offset by:

Total liabilities were approximately $10.4 billion as of June 30, 2019, up $107.9 million from March 31, 2019.

The increase in total liabilities was mainly due to:

Partially offset by:

Total stockholders’ equity amounted to $2.2 billion as of June 30, 2019, an increase of $52.5 million from March 31, 2019. The increase was mainly driven by the earnings generated in the second quarter and the $17.5 million increase in the fair value of available-for-sale investment securities recorded as part of “Other comprehensive income,” partially offset by common and preferred stock dividends declared in the second quarter of 2019 totaling $7.2 million.

The Corporation’s common equity tier 1 capital, tier 1 capital, total capital and leverage ratios under the Basel III rules were 20.63%, 21.03%, 24.25% and 15.64%, respectively, as of June 30, 2019, compared to common equity tier 1 capital, tier 1 capital, total capital and leverage ratios of 20.44%, 20.84%, 24.10%, and 15.46%, respectively, as of March 31, 2019.

Meanwhile, the common equity tier 1 capital, tier 1 capital, total capital and leverage ratios of our banking subsidiary, FirstBank Puerto Rico, were 19.09%, 22.48%, 23.74%, and 16.75%, respectively, as of June 30, 2019, compared to common equity tier 1 capital, tier 1 capital, total capital and leverage ratios of 18.91%, 22.35%, 23.61% and 16.59%, respectively, as of March 31, 2019.

Tangible Common Equity

The Corporation’s tangible common equity ratio increased to 16.64% as of June 30, 2019, compared to 16.42% as of March 31, 2019.

The following table presents a reconciliation of the Corporation’s tangible common equity and tangible assets over the last five quarters to the comparable GAAP items:

(In thousands, except ratios and per share information)

June 30, March 31, December 31, September 30, June 30,

2019

2019

2018

2018

2018

Tangible Equity:
Total equity - GAAP

$

2,152,976

$

2,100,457

$

2,044,704

$

1,927,415

$

1,901,679

Preferred equity

(36,104)

(36,104)

(36,104)

(36,104)

(36,104)

Goodwill

(28,098)

(28,098)

(28,098)

(28,098)

(28,098)

Purchased credit card relationship intangible

(4,659)

(5,180)

(5,702)

(6,276)

(6,851)

Core deposit intangible

(3,903)

(4,096)

(4,335)

(4,585)

(4,835)

Insurance customer relationship intangible

(546)

(584)

(622)

(661)

(699)

Tangible common equity

$

2,079,666

$

2,026,395

$

1,969,843

$

1,851,691

$

1,825,092

Tangible Assets:
Total assets - GAAP

$

12,537,196

$

12,376,780

$

12,243,561

$

12,209,700

$

12,384,862

Goodwill

(28,098)

(28,098)

(28,098)

(28,098)

(28,098)

Purchased credit card relationship intangible

(4,659)

(5,180)

(5,702)

(6,276)

(6,851)

Core deposit intangible

(3,903)

(4,096)

(4,335)

(4,585)

(4,835)

Insurance customer relationship intangible

(546)

(584)

(622)

(661)

(699)

Tangible assets

$

12,499,990

$

12,338,822

$

12,204,804

$

12,170,080

$

12,344,379

Common shares outstanding

217,328

217,332

217,235

217,241

217,185

Tangible common equity ratio

16.64%

16.42%

16.14%

15.22%

14.78%

Tangible book value per common share

$

9.57

$

9.32

$

9.07

$

8.52

$

8.40

Exposure to Puerto Rico Government

As of June 30, 2019, the Corporation had $213.4 million of direct exposure to the Puerto Rico Government, its municipalities and public corporations, compared to $213.5 million as of March 31, 2019. Approximately $190.9 million of the exposure consisted of loans and obligations of municipalities in Puerto Rico that are supported by assigned property tax revenues and for which, in most cases, the good faith, credit and unlimited taxing power of the applicable municipality have been pledged to their repayment. The Corporation’s total direct exposure to the Puerto Rico Government also includes a $14.2 million loan extended to an affiliate of a public corporation and obligations of the Puerto Rico Government, specifically bonds of the Puerto Rico Housing Finance Authority, at an amortized cost of $8.3 million as part of its available-for-sale investment securities portfolio (fair value of $7.0 million as of June 30, 2019).

The exposure to municipalities in Puerto Rico included $144.7 million of financing arrangements with Puerto Rico municipalities that were issued in bond form, but underwritten as loans with features that are typically found in commercial loans. These bonds are accounted for as held-to-maturity investment securities.

As of June 30, 2019, the Corporation had $785.4 million of public sector deposits in Puerto Rico, compared to $684.2 million as of March 31, 2019. Approximately 41% is from municipalities and municipal agencies in Puerto Rico and 59% is from public corporations and the central government and agencies in Puerto Rico.

Conference Call / Webcast Information

First BanCorp’s senior management will host an earnings conference call and live webcast on Tuesday, July 23, 2019, at 10:00 a.m. (Eastern Time). The call may be accessed via a live Internet webcast through the investor relations section of the Corporation’s web site: www.1firstbank.com or through a dial-in telephone number at (877) 506-6537 or (412) 380–2001 for international callers. The Corporation recommends that listeners go to the web site at least 15 minutes prior to the call to download and install any necessary software. Following the webcast presentation, a question and answer session will be made available to research analysts and institutional investors. A replay of the webcast will be archived in the investor relations section of First BanCorp’s web site, www.1firstbank.com, until July 23, 2020. A telephone replay will be available one hour after the end of the conference call through August 23, 2019 at (877) 344-7529 or (412) 317-0088 for international callers. The replay access code is 10133157.

Safe Harbor

This press release may contain “forward-looking statements” concerning the Corporation’s future economic, operational and financial performance. The words or phrases “expect,” “anticipate,” “intend,” “look forward,” “should,” “would,” “believes” and similar expressions are meant to identify “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by such sections. The Corporation cautions readers not to place undue reliance on any such “forward-looking statements,” which speak only as of the date made, and advises readers that various factors, including, but not limited to, the following could cause actual results to differ materially from those expressed in, or implied by such forward-looking statements: changes in economic and business conditions, including those caused by past or future natural disasters, that directly or indirectly affect the financial health of the Corporation’s customer base in the geographic areas we serve; the actual pace and magnitude of economic recovery in the Corporation’s service areas that were affected by Hurricanes Maria and Irma during 2017 compared to management’s current views on the economic recovery; uncertainty as to the timing of the receipt of disaster relief funds allocated to Puerto Rico; uncertainty as to the ultimate outcomes of actions taken, or those that may be taken, by the Puerto Rico government, or the oversight board established by the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”) to address the Commonwealth of Puerto Rico’s financial problems, including the filing of a form of bankruptcy under Title III of PROMESA, which provides a court-supervised debt restructuring process similar to U.S. bankruptcy protection, the effects of measures included in the Puerto Rico government fiscal plan, or any revisions to it, on our clients and loan portfolios and the effect of the current political environment in Puerto Rico; uncertainty about whether the Federal Reserve Bank of New York (the “New York FED” or “Federal Reserve”) will continue to provide approvals for receiving dividends from FirstBank, making payments of dividends on non-cumulative perpetual preferred stock and common stock, or payments on trust-preferred securities or subordinated debt, incurring, increasing or guaranteeing debt or repurchasing any capital securities, despite the consents that have enabled the Corporation to receive quarterly dividends from FirstBank since the second quarter of 2016, to pay quarterly interest payments on the Corporation’s subordinated debentures associated with its trust-preferred securities since the second quarter of 2016, to pay monthly dividends on the non-cumulative perpetual preferred stock since December 2016, and to pay quarterly dividends on common stock since December 2018; a decrease in demand for the Corporation’s products and services, resulting in lower revenues and earnings because of the continued economic recession in Puerto Rico; uncertainty as to the availability of certain funding sources, such as brokered CDs; the Corporation’s reliance on brokered CDs to fund operations and provide liquidity; the risk of not being able to fulfill the Corporation’s cash obligations in the future due to the Corporation’s need to receive regulatory approvals to declare or pay any dividends and to take dividends or any other form of payment representing a reduction in capital from FirstBank or FirstBank’s failure to generate sufficient cash flow to make a dividend payment to the Corporation; the weakness of the real estate markets and of the consumer and commercial sectors and their impact on the credit quality of the Corporation’s loans and other assets, which have contributed and may continue to contribute to, among other things, higher than targeted levels of non-performing assets, charge-offs and provisions for loan and lease losses, and may subject the Corporation to further risk from loan defaults and foreclosures; the estimated or actual impact of changes in accounting standards or assumptions in applying those standards, including the new credit loss accounting standard that is effective in 2020; the ability of FirstBank to realize the benefits of its net deferred tax assets; adverse changes in general economic conditions in Puerto Rico, the U.S., the U.S. Virgin Islands, and the British Virgin Islands, including the interest rate environment, market liquidity, housing absorption rates, real estate prices, and disruptions in the U.S. capital markets, which may reduce interest margins, affect funding sources and demand for all of the Corporation’s products and services, and reduce the Corporation’s revenues and earnings and the value of the Corporation’s assets; uncertainty related to the likely discontinuation of the London Interbank Offered Rate at the end of 2021; an adverse change in the Corporation’s ability to attract new clients and retain existing ones; the risk that additional portions of the unrealized losses in the Corporation’s investment portfolio are determined to be other-than-temporary, including additional impairments on the Corporation’s remaining $8.3 million exposure to the Puerto Rico government’s debt securities held as part of the available-for-sale securities portfolio; uncertainty about legislative, tax or regulatory changes that affect financial services companies in Puerto Rico, the U.S., and the U.S. and British Virgin Islands, which could affect the Corporation’s financial condition or performance and could cause the Corporation’s actual results for future periods to differ materially from prior results and anticipated or projected results; changes in the fiscal and monetary policies and regulations of the U.S. federal government and the Puerto Rico and other governments, including those determined by the Federal Reserve Board, the New York FED, the FDIC, government-sponsored housing agencies, and regulators in Puerto Rico and the U.S. and British Virgin Islands; the risk of possible failure or circumvention of controls and procedures and the risk that the Corporation’s risk management policies may not be adequate; the Corporation’s ability to identify and address cyber-security incidents such as data security breaches, malware, “denial of service” attacks, “hacking” and identity theft, a failure of which could disrupt our business and has resulted in misuse or misappropriation of confidential or proprietary information, and could result in the disruption or damage to our systems, increased costs and losses or an adverse effect to our reputation; the risk that the FDIC may increase the deposit insurance premium and/or require special assessments to replenish its insurance fund, causing an additional increase in the Corporation’s non-interest expenses; the impact on the Corporation’s results of operations and financial condition of business acquisitions and dispositions; a need to recognize impairments on the Corporation’s financial instruments, goodwill and other intangible assets relating to business acquisitions; the effect of changes in the interest rate scenario on the Corporation’s businesses, business practices and results of operations; the risk that the impact of the occurrence of any of these uncertainties on the Corporation’s capital would preclude further growth of the Bank and preclude the Corporation’s Board of Directors from declaring dividends; uncertainty as to whether FirstBank will be able to continue to satisfy its regulators regarding, among other things, its asset quality, liquidity plans, maintenance of capital levels and compliance with applicable laws, regulations and related requirements; and general competitive factors and industry consolidation. The Corporation does not undertake, and specifically disclaims any obligation, to update any “forward-looking statements” to reflect occurrences or unanticipated events or circumstances after the date of such statements, except as required by the federal securities laws.

Basis of Presentation

Use of Non-GAAP Financial Measures

This press release contains non-GAAP financial measures. Non-GAAP financial measures are used when management believes they will be helpful to an investor’s understanding of the Corporation’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation of the non-GAAP financial measure to the comparable GAAP financial measure, can be found in the text or in the tables in or attached to this earnings release. Any analysis of these non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP.

Tangible Common Equity Ratio and Tangible Book Value per Common Share

The tangible common equity ratio and tangible book value per common share are non-GAAP financial measures generally used by the financial community to evaluate capital adequacy. Tangible common equity is total equity less preferred equity, goodwill, core deposit intangibles, and other intangibles, such as the purchased credit card relationship intangible and the insurance customer relationship intangible. Tangible assets are total assets less goodwill, core deposit intangibles, and other intangibles, such as the purchased credit card relationship intangible and the insurance customer relationship intangible. Management and many stock analysts use the tangible common equity ratio and tangible book value per common share in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase method of accounting for mergers and acquisitions. Accordingly, the Corporation believes that disclosure of these financial measures may be useful to investors. Neither tangible common equity nor tangible assets, or the related measures, should be considered in isolation or as a substitute for stockholders’ equity, total assets, or any other measure calculated in accordance with GAAP. Moreover, the manner in which the Corporation calculates its tangible common equity, tangible assets, and any other related measures may differ from that of other companies reporting measures with similar names.

Adjusted Pre-Tax, Pre-Provision Income

Adjusted pre-tax, pre-provision income is a non-GAAP performance metric that management uses and believes that investors may find useful in analyzing underlying performance trends, particularly in times of economic stress, including as a result of natural catastrophes such as the hurricanes that affected the Corporation’s service areas in 2017. Adjusted pre-tax, pre-provision income, as defined by management, represents net income excluding income tax expense (benefit) and the provision for loan and lease losses, as well as Special Items that management believes are not reflective of core operating performance, are not expected to reoccur with any regularity or may reoccur at uncertain times and in uncertain amounts.

Net Interest Income, Excluding Valuations, and on a Tax-Equivalent Basis

Net interest income, interest rate spread, and net interest margin are reported excluding the changes in the fair value of derivative instruments and on a tax-equivalent basis in order to provide to investors additional information about the Corporation’s net interest income that management uses and believes should facilitate comparability and analysis of the periods presented. The changes in the fair value of derivative instruments have no effect on interest due or interest earned on interest-bearing liabilities or interest-earning assets, respectively. The tax-equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a marginal income tax rate. Income from tax-exempt earning assets is increased by an amount equivalent to the taxes that would have been paid if this income had been taxable at statutory rates. Management believes that it is a standard practice in the banking industry to present net interest income, interest rate spread, and net interest margin on a fully tax-equivalent basis. This adjustment puts all earning assets, most notably tax-exempt securities and tax-exempt loans, on a common basis that facilitates comparison of results to the results of peers.

Financial measures adjusted to exclude the effect of Special Items that management believes are not reflective of core operating performance, are not expected to reoccur with any regularity or may reoccur at uncertain times and in uncertain amounts.

To supplement the Corporation’s financial statements presented in accordance with GAAP, the Corporation uses, and believes that investors would benefit from disclosure of, non-GAAP financial measures that reflect adjustments to net income to exclude items that management identifies as Special Items because management believes they are not reflective of core operating performance, are not expected to reoccur with any regularity or may reoccur at uncertain times and in uncertain amounts. This press release includes the following non-GAAP financial measures for the second and first quarters of 2019, and the second quarter of 2018 that reflect the described items that were excluded for one of those reasons:

Management believes that the presentation of adjusted net income enhances the ability of analysts and investors to analyze trends in the Corporation’s business and understand the performance of the Corporation. In addition, the Corporation may utilize these non-GAAP financial measures as guides in its budgeting and long-term planning process.

The following table reconciles the ratio of the adjusted provision for loan and lease losses to net charge-offs for the first quarter of 2019, the second quarter of 2018, and the first six months of 2019 and 2018, excluding the hurricane-related qualitative reserve releases:

Provision for loan and lease losses to Net Charge-Offs
(GAAP to Non-GAAP reconciliation)		 Provision for loan and lease losses to Net Charge-Offs
(GAAP to Non-GAAP reconciliation)
Quarter Ended March 31, 2019 Quarter Ended June 30, 2018
(In thousands) Provision for Loan and Lease
Losses		 Net Charge-Offs Provision for Loan and Lease
Losses		 Net Charge-Offs
Provision for loan and lease losses and net charge-offs (GAAP)

$ 11,820

$ 24,450

$ 19,536

$ 23,357

Less Special items:
Hurrricane-related qualitative reserve release

6,425

-

2,057

-

Provision for loan and lease losses and net charge-offs, excluding special items (Non-GAAP)

$ 18,245

$ 24,450

$ 21,593

$ 23,357

Provision for loan and lease losses to net charge-offs (GAAP)

48.34%

83.64%

Provision for loan and lease losses to net charge-offs, excluding special items (Non-GAAP)

74.62%

92.45%

Provision for loan and lease losses to Net Charge-Offs
(GAAP to Non-GAAP reconciliation)		 Provision for loan and lease losses to Net Charge-Offs
(GAAP to Non-GAAP reconciliation)
Six-Month Period Ended June 30, 2019 Six-Month Period Ended June 30, 2018
(In thousands) Provision for Loan and Lease
Losses		 Net Charge-Offs Provision for Loan and Lease
Losses		 Net Charge-Offs
Provision for loan and lease losses and net charge-offs (GAAP)

$ 24,354

$ 48,705

$ 40,080

$ 49,888

Less Special items:
Hurrricane-related qualitative reserve release

6,425

-

8,464

-

Provision for loan and lease losses and net charge-offs, excluding special items (Non-GAAP)

$ 30,779

$ 48,705

$ 48,544

$ 49,888

Provision for loan and lease losses to net charge-offs (GAAP)

50.00%

80.34%

Provision for loan and lease losses to net charge-offs, excluding special items (Non-GAAP)

63.19%

97.31%

FIRST BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
As of
June 30, March 31, December 31,
(In thousands, except for share information)

2019

2019

2018

ASSETS
Cash and due from banks

$

642,440

$

581,838

$

578,613

Money market investments:
Time deposits with other financial institutions

300

300

300

Other short-term investments

97,553

7,437

7,290

Total money market investments

97,853

7,737

7,590

Investment securities available for sale, at fair value

1,803,688

1,905,230

1,942,568

Investment securities held to maturity, at amortized cost

144,672

144,673

144,815

Other equity securities

44,227

44,438

44,530

Total investment securities

1,992,587

2,094,341

2,131,913

Loans, net of allowance for loan and lease losses of $172,011
(March 31, 2019 - $183,732; December 31, 2018 - $196,362)

8,941,944

8,813,084

8,661,761

Loans held for sale, at lower of cost or market

33,630

33,175

43,186

Total loans, net

8,975,574

8,846,259

8,704,947

Premises and equipment, net

148,814

147,410

147,814

Other real estate owned

118,081

129,716

131,402

Accrued interest receivable on loans and investments

53,931

50,405

50,365

Deferred tax asset, net

290,326

305,963

319,851

Other assets

217,590

213,111

171,066

Total assets

$

12,537,196

$

12,376,780

$

12,243,561

LIABILITIES
Deposits:
Non-interest-bearing deposits

$

2,375,517

$

2,494,787

$

2,395,481

Interest-bearing deposits

6,806,664

6,576,047

6,599,233

Total deposits

9,182,181

9,070,834

8,994,714

Securities sold under agreements to repurchase

100,000

100,000

150,086

Advances from the Federal Home Loan Bank (FHLB)

740,000

740,000

740,000

Other borrowings

184,150

184,150

184,150

Accounts payable and other liabilities

177,889

181,339

129,907

Total liabilities

10,384,220

10,276,323

10,198,857

STOCKHOLDERS' EQUITY
Preferred Stock, authorized 50,000,000 shares; issued 22,828,174 shares;
outstanding 1,444,146 shares; aggregate liquidation value of $36,104

36,104

36,104

36,104

Common stock, $0.10 par value, authorized 2,000,000,000 shares; issued, 222,055,625 shares
(March 31, 2019 - 222,055,125 shares issued; December 31, 2018 - 221,789,509 shares issued)

22,205

22,205

22,179

Less: Treasury stock (at par value)

(472)

(472)

(455)

Common stock outstanding, 217,328,179 shares outstanding
(March 31, 2019 - 217,331,577 shares outstanding; December 31, 2018 - 217,235,140 shares outstanding)

21,733

21,733

21,724

Additional paid-in capital

939,769

938,801

939,674

Retained earnings

1,157,808

1,123,724

1,087,617

Accumulated other comprehensive loss

(2,438)

(19,905)

(40,415)

Total stockholders' equity

2,152,976

2,100,457

2,044,704

Total liabilities and stockholders' equity

$

12,537,196

$

12,376,780

$

12,243,561

FIRST BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Quarter Ended Six-Month Period Ended
June 30, March 31, June 30, June 30, June 30,
(In thousands, except per share information)

2019

2019

2018

2019

2018

Net interest income:
Interest income

$

169,510

$

166,472

$

155,633

$

335,982

$

305,051

Interest expense

26,964

26,291

25,162

53,255

49,887

Net interest income

142,546

140,181

130,471

282,727

255,164

Provision for loan and lease losses

12,534

11,820

19,536

24,354

40,080

Net interest income after provision for loan and lease losses

130,012

128,361

110,935

258,373

215,084

Non-interest income:
Service charges on deposit accounts

5,887

5,716

5,344

11,603

10,432

Mortgage banking activities

4,395

3,627

4,835

8,022

9,000

Net gain (loss) on investments and impairments

-

-

-

-

-

Gain on early extinguishment of debt

-

-

-

-

2,316

Other non-interest income

11,941

13,200

10,293

25,141

21,508

Total non-interest income

22,223

22,543

20,472

44,766

43,256

Non-interest expenses:
Employees' compensation and benefits

40,813

39,296

39,555

80,109

80,239

Occupancy and equipment

15,834

16,055

13,746

31,889

28,851

Business promotion

3,940

3,706

4,016

7,646

6,592

Professional fees

11,671

10,310

10,193

21,981

20,253

Taxes, other than income taxes

3,737

3,820

3,637

7,557

7,493

Insurance and supervisory fees

2,029

2,868

3,701

4,897

7,556

Net loss on other real estate owned operations

5,043

3,743

5,655

8,786

5,845

Other non-interest expenses

9,870

10,174

9,713

20,044

19,414

Total non-interest expenses

92,937

89,972

90,216

182,909

176,243

Income before income taxes

59,298

60,932

41,191

120,230

82,097

Income tax expense

(18,011)

(17,618)

(10,159)

(35,629)

(17,917)

Net income

$

41,287

$

43,314

$

31,032

$

84,601

$

64,180

Net income attributable to common stockholders

$

40,618

$

42,645

$

30,363

$

83,263

$

62,842

Earnings per common share:
Basic

$

0.19

$

0.20

$

0.14

$

0.38

$

0.29

Diluted

$

0.19

$

0.20

$

0.14

$

0.38

$

0.29

About First BanCorp.

First BanCorp. is the parent corporation of FirstBank Puerto Rico, a state-chartered commercial bank with operations in Puerto Rico, the U.S. and the British Virgin Islands and Florida, and of FirstBank Insurance Agency. Among the subsidiaries of FirstBank Puerto Rico are First Federal Finance Corp. and First Express, both small loan companies. First BanCorp’s shares of common stock trade on the New York Stock Exchange under the symbol FBP. Additional information about First BanCorp. may be found at www.1firstbank.com.

EXHIBIT A

Table 1 – Selected Financial Data

(In thousands, except per share amounts and financial ratios) Quarter Ended Six-Month Period Ended
June 30, March 31, June 30, June 30, June 30,

2019

2019

2018

2019

2018

Condensed Income Statements:
Total interest income

$

169,510

$

166,472

$

155,633

$

335,982

$

305,051

Total interest expense

26,964

26,291

25,162

53,255

49,887

Net interest income

142,546

140,181

130,471

282,727

255,164

Provision for loan and lease losses

12,534

11,820

19,536

24,354

40,080

Non-interest income

22,223

22,543

20,472

44,766

43,256

Non-interest expenses

92,937

89,972

90,216

182,909

176,243

Income before income taxes

59,298

60,932

41,191

120,230

82,097

Income tax expense

(18,011)

(17,618)

(10,159)

(35,629)

(17,917)

Net income

41,287

43,314

31,032

84,601

64,180

Net income attributable to common stockholders

40,618

42,645

30,363

83,263

62,842

Per Common Share Results:
Net earnings per share - basic

$

0.19

$

0.20

$

0.14

$

0.38

$

0.29

Net earnings per share - diluted

$

0.19

$

0.20

$

0.14

$

0.38

$

0.29

Cash dividends declared

$

0.03

$

0.03

$

-

$

0.06

$

-

Average shares outstanding

216,674

216,338

215,737

216,507

215,194

Average shares outstanding diluted

216,978

216,950

216,666

216,965

216,483

Book value per common share

$

9.74

$

9.50

$

8.59

$

9.74

$

8.59

Tangible book value per common share (1)

$

9.57

$

9.32

$

8.40

$

9.57

$

8.40

Selected Financial Ratios (In Percent):
Profitability:
Return on Average Assets

1.33

1.43

1.01

1.38

1.06

Interest Rate Spread (2)

4.59

4.63

4.28

4.61

4.25

Net Interest Margin (2)

5.07

5.11

4.67

5.09

4.62

Return on Average Total Equity

7.77

8.43

6.65

8.09

6.93

Return on Average Common Equity

7.90

8.58

6.78

8.23

7.07

Average Total Equity to Average Total Assets

17.12

16.97

15.17

17.05

15.24

Total capital

24.25

24.10

23.47

24.25

23.47

Common equity Tier 1 capital

20.63

20.44

19.73

20.63

19.73

Tier 1 capital

21.03

20.84

20.14

21.03

20.14

Leverage

15.64

15.46

14.35

15.64

14.35

Tangible common equity ratio (1)

16.64

16.42

14.78

16.64

14.78

Dividend payout ratio

16.00

15.22

-

15.60

-

Efficiency ratio (3)

56.40

55.29

59.77

55.85

59.06

Asset Quality:
Allowance for loan and lease losses to loans held for investment

1.89

2.04

2.57

1.89

2.57

Net charge-offs (annualized) to average loans

1.07

1.10

1.07

1.09

1.14

Provision for loan and lease losses to net charge-offs (4)

51.68

48.34

83.64

50.00

80.34

Non-performing assets to total assets

3.06

3.35

5.02

3.06

5.02

Nonaccrual loans held for investment to total loans held for investment

2.78

3.03

4.85

2.78

4.85

Allowance to total nonaccrual loans held for investment

67.96

67.36

52.97

67.96

52.97

Allowance to total nonaccrual loans held for investment,
excluding residential real estate loans

139.16

130.56

86.53

139.16

86.53

Other Information:
Common Stock Price: End of period

$

11.04

$

11.46

$

7.65

$

11.04

$

7.65

1- Non-GAAP financial measure. See page 16 for GAAP to Non-GAAP reconciliations.
2- On a tax-equivalent basis and excluding changes in the fair value of derivative instruments (Non-GAAP financial measure). See page 5 for GAAP to Non-GAAP
reconciliations and refer to discussion in Tables 2 and 3 below.
3- Non-interest expenses to the sum of net interest income and non-interest income. The denominator includes non-recurring income
and changes in the fair value of derivative instruments.
4 - The ratio of the provision for loan and lease losses to net charge-offs, excluding the hurricane-related qualitative reserve releases
was 74.62% and 92.45% for the quarters ended March 31, 2019, and June 30, 2018, respectively,
and 63.19% and 97.31% for the six-month period ended June 30, 2019 and 2018, respectively.

Table 2 – Quarterly Statement of Average Interest-Earning Assets and Average Interest-Bearing Liabilities (On a Tax-Equivalent Basis)

(Dollars in thousands)
Average volume Interest income (1) / expense Average rate (1)
June 30, March 31, June 30, June 30, March 31, June 30, June 30, March 31, June 30,
Quarter ended

2019

2019

2018

2019

2019

2018

2019

2019

2018

Interest-earning assets:
Money market & other short-term investments

$

590,517

$

490,045

$

780,346

$

3,440

$

2,829

$

3,387

2.34%

2.34%

1.74%

Government obligations (2)

720,106

765,250

822,416

7,254

7,476

7,103

4.04%

3.96%

3.46%

Mortgage-backed securities

1,285,812

1,333,752

1,313,082

10,316

11,897

10,825

3.22%

3.62%

3.31%

FHLB stock

41,720

41,930

40,812

657

696

656

6.32%

6.73%

6.45%

Other investments

3,030

3,078

2,625

7

6

2

0.93%

0.79%

0.31%

Total investments (3)

2,641,185

2,634,055

2,959,281

21,674

22,904

21,973

3.29%

3.53%

2.98%

Residential mortgage loans

3,075,037

3,122,372

3,195,633

41,350

41,819

42,842

5.39%

5.43%

5.38%

Construction loans

91,711

85,485

121,136

1,511

1,329

1,106

6.61%

6.31%

3.66%

C&I and commercial mortgage loans

3,809,702

3,724,486

3,627,829

54,693

53,282

48,349

5.76%

5.80%

5.35%

Finance leases

360,224

341,789

272,096

6,735

6,386

4,901

7.50%

7.58%

7.22%

Consumer loans

1,698,944

1,638,742

1,476,653

48,477

46,078

41,625

11.44%

11.40%

11.31%

Total loans (4) (5)

9,035,618

8,912,874

8,693,347

152,766

148,894

138,823

6.78%

6.78%

6.41%

Total interest-earning assets

$

11,676,803

$

11,546,929

$

11,652,628

$

174,440

$

171,798

$

160,796

5.99%

6.03%

5.53%

Interest-bearing liabilities:
Brokered CDs

$

509,102

$

523,258

$

874,766

$

2,782

$

2,687

$

3,865

2.19%

2.08%

1.77%

Other interest-bearing deposits

6,181,141

6,024,953

6,080,949

16,321

14,805

13,109

1.06%

1.00%

0.86%

Other borrowed funds

284,150

327,001

384,150

4,034

5,014

4,778

5.69%

6.22%

4.99%

FHLB advances

740,000

740,000

715,000

3,827

3,785

3,410

2.07%

2.07%

1.91%

Total interest-bearing liabilities

$

7,714,393

$

7,615,212

$

8,054,865

$

26,964

$

26,291

$

25,162

1.40%

1.40%

1.25%

Net interest income

$

147,476

$

145,507

$

135,634

Interest rate spread

4.59%

4.63%

4.28%

Net interest margin

5.07%

5.11%

4.67%

1- On a tax-equivalent basis. The tax-equivalent yield was estimated by dividing the interest rate spread on exempt assets by 1 less the Puerto Rico statutory tax rate of 37.5% (39% for the quarter ended June 30, 2018)
and adding to it the cost of interest-bearing liabilities. When adjusted to a tax-equivalent basis, yields on taxable and exempt assets are comparable. Changes in the fair value of derivative instruments
are excluded from interest income because the changes in valuation do not affect interest paid or received. See page 5 for GAAP to Non-GAAP reconciliations.
2- Government obligations include debt issued by government-sponsored agencies.
3- Unrealized gains and losses on available-for-sale securities are excluded from the average volumes.
4- Average loan balances include the average of non-performing loans.
5- Interest income on loans includes $1.9 million, $2.1 million and $2.1 million for the quarters ended June 30, 2019, March 31, 2019, and June 30, 2018, respectively, of income
from prepayment penalties and late fees related to the Corporation's loan portfolio.

Table 3 – Year-to-Date Statement of Average Interest-Earning Assets and Average Interest-Bearing Liabilities (On a Tax-Equivalent Basis)

(Dollars in thousands)
Average volume Interest income (1) / expense Average rate (1)
June 30, June 30, June 30, June 30, June 30, June 30,
Six-Month Period Ended

2019

2018

2019

2018

2019

2018

Interest-earning assets:
Money market & other short-term investments

$

540,559

$

699,854

$

6,269

$

5,643

2.34%

1.63%

Government obligations (2)

742,553

810,368

14,730

13,296

4.00%

3.31%

Mortgage-backed securities

1,309,650

1,286,756

22,213

21,450

3.42%

3.36%

FHLB stock

41,825

40,874

1,353

1,349

6.52%

6.66%

Other investments

3,054

2,670

13

4

0.86%

0.30%

Total investments (3)

2,637,641

2,840,522

44,578

41,742

3.41%

2.96%

Residential mortgage loans

3,098,574

3,210,984

83,169

86,192

5.41%

5.41%

Construction loans

88,615

119,996

2,840

2,028

6.46%

3.41%

C&I and commercial mortgage loans

3,767,329

3,657,985

107,975

93,538

5.78%

5.16%

Finance leases

351,058

266,140

13,121

9,561

7.54%

7.24%

Consumer loans

1,669,009

1,480,455

94,555

81,931

11.42%

11.16%

Total loans (4) (5)

8,974,585

8,735,560

301,660

273,250

6.78%

6.31%

Total interest-earning assets

$

11,612,226

$

11,576,082

$

346,238

$

314,992

6.01%

5.49%

Interest-bearing liabilities:
Brokered CDs

$

516,141

$

958,545

$

5,469

$

8,220

2.14%

1.73%

Other interest-bearing deposits

6,103,478

6,051,489

31,126

25,725

1.03%

0.86%

Other borrowed funds

305,457

399,235

9,048

9,160

5.97%

4.63%

FHLB advances

740,000

715,000

7,612

6,782

2.07%

1.91%

Total interest-bearing liabilities

$

7,665,076

$

8,124,269

$

53,255

$

49,887

1.40%

1.24%

Net interest income

$

292,983

$

265,105

Interest rate spread

4.61%

4.25%

Net interest margin

5.09%

4.62%

1- On a tax-equivalent basis. The tax-equivalent yield was estimated by dividing the interest rate spread on exempt assets by 1 less the Puerto Rico statutory tax rate of 37.5 (39 % for the six-month period ended June 30, 2018)
and adding to it the cost of interest-bearing liabilities. When adjusted to a tax-equivalent basis, yields on taxable and exempt assets are comparable. Changes in the fair value of derivative instruments
are excluded from interest income because the changes in valuation do not affect interest paid or received. See page 5 for GAAP to Non-GAAP reconciliation.
2- Government obligations include debt issued by government-sponsored agencies.
3- Unrealized gains and losses on available-for-sale securities are excluded from the average volumes.
4- Average loan balances include the average of non-performing loans.
5- Interest income on loans includes $4.0 million and $3.9 million for the six-month periods ended June 30, 2019 and 2018, respectively, of income
from prepayment penalties and late fees related to the Corporation's loan portfolio.
Table 4 - Non-Interest Income
Quarter Ended Six-Month Period Ended
June 30, March 31, June 30, June 30, June 30,
(In thousands)

2019

2019

2018

2019

2018

Service charges on deposit accounts

$

5,887

$

5,716

$

5,344

$

11,603

$

10,432

Mortgage banking activities

4,395

3,627

4,835

8,022

9,000

Insurance income

2,025

4,250

1,780

6,275

5,135

Other operating income

9,916

8,950

8,513

18,866

16,373

Non-interest income before net gain (loss) on investments
and gain on early extinguishment of debt

22,223

22,543

20,472

44,766

40,940

Net gain on sale of investments

-

-

-

-

-

OTTI on debt securities

-

-

-

-

-

Net gain (loss) on investments

-

-

-

-

-

Gain on early extinguishment of debt

-

-

-

-

2,316

$

22,223

$

22,543

$

20,472

$

44,766

$

43,256

Table 5 - Non-Interest Expenses
Quarter Ended Six-Month Period Ended
June 30, March 31, June 30, June 30, June 30,
(In thousands)

2019

2019

2018

2019

2018

Employees' compensation and benefits

$

40,813

$

39,296

$

39,555

$

80,109

$

80,239

Occupancy and equipment

15,834

16,055

13,746

31,889

28,851

Deposit insurance premium

1,482

1,698

2,443

3,180

5,092

Other insurance and supervisory fees

547

1,170

1,258

1,717

2,464

Taxes, other than income taxes

3,737

3,820

3,637

7,557

7,493

Professional fees:
Collections, appraisals and other credit related fees

1,946

1,717

1,650

3,663

3,249

Outsourcing technology services

5,798

5,520

5,127

11,318

10,250

Other professional fees

3,927

3,073

3,416

7,000

6,754

Credit and debit card processing expenses

3,820

4,154

3,766

7,974

7,303

Business promotion

3,940

3,706

4,016

7,646

6,592

Communications

1,714

1,752

1,582

3,466

3,064

Net loss on OREO operations

5,043

3,743

5,655

8,786

5,845

Other

4,336

4,268

4,365

8,604

9,047

Total

$

92,937

$

89,972

$

90,216

$

182,909

$

176,243

Table 6 - Selected Balance Sheet Data
(In thousands) As of
June 30, March 31, December 31,

2019

2019

2018

Balance Sheet Data:
Loans, including loans held for sale

$

9,147,585

$

9,029,991

$

8,901,309

Allowance for loan and lease losses

172,011

183,732

196,362

Money market and investment securities

2,090,440

2,102,078

2,139,503

Intangible assets

37,206

37,958

38,757

Deferred tax asset, net

290,326

305,963

319,851

Total assets

12,537,196

12,376,780

12,243,561

Deposits

9,182,181

9,070,834

8,994,714

Borrowings

1,024,150

1,024,150

1,074,236

Total preferred equity

36,104

36,104

36,104

Total common equity

2,119,310

2,084,258

2,049,015

Accumulated other comprehensive loss, net of tax

(2,438)

(19,905)

(40,415)

Total equity

2,152,976

2,100,457

2,044,704

Table 7 – Loan Portfolio

Composition of the loan portfolio including loans held for sale at period-end.

(In thousands) As of
June 30, March 31, December 31,

2019

2019

2018

Residential mortgage loans

$

3,070,746

$

3,126,562

$

3,163,208

Commercial loans:
Construction loans

100,244

84,507

79,429

Commercial mortgage loans

1,550,364

1,558,724

1,522,662

Commercial and Industrial loans

2,279,685

2,211,731

2,148,111

Commercial loans

3,930,293

3,854,962

3,750,202

Finance leases

370,907

352,277

333,536

Consumer loans

1,742,009

1,663,015

1,611,177

Loans held for investment

9,113,955

8,996,816

8,858,123

Loans held for sale

33,630

33,175

43,186

Total loans

$

9,147,585

$

9,029,991

$

8,901,309

Table 8 - Loan Portfolio by Geography

(In thousands) As of June 30, 2019
Puerto Rico Virgin Islands United States Consolidated
Residential mortgage loans

$

2,235,828

$

242,937

$

591,981

$

3,070,746

Commercial loans:
Construction loans

31,191

12,585

56,468

100,244

Commercial mortgage loans

1,031,597

70,131

448,636

1,550,364

Commercial and Industrial loans

1,416,447

107,789

755,449

2,279,685

Commercial loans

2,479,235

190,505

1,260,553

3,930,293

Finance leases

370,907

-

-

370,907

Consumer loans

1,643,248

48,233

50,528

1,742,009

Loans held for investment

6,729,218

481,675

1,903,062

9,113,955

Loans held for sale

32,092

311

1,227

33,630

Total loans

$

6,761,310

$

481,986

$

1,904,289

$

9,147,585

(In thousands) As of March 31, 2019
Puerto Rico Virgin Islands United States Consolidated
Residential mortgage loans

$

2,285,978

$

247,711

$

592,873

$

3,126,562

Commercial loans:
Construction loans

27,989

11,274

45,244

84,507

Commercial mortgage loans

1,041,914

71,912

444,898

1,558,724

Commercial and Industrial loans

1,360,013

106,969

744,749

2,211,731

Commercial loans

2,429,916

190,155

1,234,891

3,854,962

Finance leases

352,277

-

-

352,277

Consumer loans

1,559,633

47,584

55,798

1,663,015

Loans held for investment

6,627,804

485,450

1,883,562

8,996,816

Loans held for sale

32,363

-

812

33,175

Total loans

$

6,660,167

$

485,450

$

1,884,374

$

9,029,991

(In thousands) As of December 31, 2018
Puerto Rico Virgin Islands United States Consolidated
Residential mortgage loans

$

2,313,230

$

252,363

$

597,615

$

3,163,208

Commercial loans:
Construction loans

26,069

11,303

42,057

79,429

Commercial mortgage loans

1,014,023

74,585

434,054

1,522,662

Commercial and Industrial loans

1,351,661

95,900

700,550

2,148,111

Commercial loans

2,391,753

181,788

1,176,661

3,750,202

Finance leases

333,536

-

-

333,536

Consumer loans

1,505,720

46,838

58,619

1,611,177

Loans held for investment

6,544,239

480,989

1,832,895

8,858,123

Loans held for sale

41,794

199

1,193

43,186

Total loans

$

6,586,033

$

481,188

$

1,834,088

$

8,901,309

Table 9 - Non-Performing Assets
As of
(Dollars in thousands) June 30, March 31, December 31,

2019

2019

2018

Nonaccrual loans held for investment:
Residential mortgage

$

129,501

$

132,049

$

147,287

Commercial mortgage

77,495

93,192

109,536

Commercial and Industrial

21,327

22,507

30,382

Construction

6,936

7,700

8,362

Consumer and Finance leases

17,846

17,330

20,406

Total nonaccrual loans held for investment

253,105

272,778

315,973

OREO

118,081

129,716

131,402

Other repossessed property

5,744

5,032

3,576

Total non-performing assets, excluding nonaccrual loans held for sale

$

376,930

$

407,526

$

450,951

Nonaccrual loans held for sale

7,144

7,381

16,111

Total non-performing assets, including nonaccrual loans held for sale (1)

$

384,074

$

414,907

$

467,062

Past-due loans 90 days and still accruing (2)

$

142,113

$

148,625

$

158,527

Allowance for loan and lease losses

$

172,011

$

183,732

$

196,362

Allowance to total nonaccrual loans held for investment

67.96%

67.36%

62.15%

Allowance to total nonaccrual loans held for investment, excluding residential real estate loans

139.16%

130.56%

116.41%

(1)

Purchased credit impaired loans of $141.7 million accounted for under ASC 310-30 as of June 30, 2019, primarily mortgage loans acquired from Doral Bank in the first quarter of 2015
and from Doral Financial in the second quarter of 2014, are excluded and not considered nonaccrual loans due to the application of the accretion method, under which these loans will accrete
interest income over the remaining life of the loans using an estimated cash flow analysis.

(2)

Amount includes purchased credit impaired loans with individual delinquencies over 90 days and still accruing with a carrying value as of June 30, 2019 of approximately $27.0 million,
primarily related to loans acquired from Doral Bank in the first quarter of 2015 and from Doral Financial in the second quarter of 2014.
Table 10 - Non-Performing Assets by Geography
As of
(In thousands) June 30, March 31, December 31,

2019

2019

2018

Puerto Rico:
Nonaccrual loans held for investment:
Residential mortgage

$

108,152

$

111,666

$

120,707

Commercial mortgage

26,535

29,778

44,925

Commercial and Industrial

17,709

18,452

26,005

Construction

4,857

5,597

6,220

Finance leases

994

1,009

1,329

Consumer

15,684

15,374

18,037

Total nonaccrual loans held for investment

173,931

181,876

217,223

OREO

111,990

121,914

124,124

Other repossessed property

5,560

4,926

3,357

Total non-performing assets, excluding nonaccrual loans held for sale

$

291,481

$

308,716

$

344,704

Nonaccrual loans held for sale

7,144

7,381

16,111

Total non-performing assets, including nonaccrual loans held for sale (1)

$

298,625

$

316,097

$

360,815

Past-due loans 90 days and still accruing (2)

$

140,099

$

147,512

$

153,269

Virgin Islands:
Nonaccrual loans held for investment:
Residential mortgage

$

11,178

$

11,070

$

12,106

Commercial mortgage

18,118

18,735

19,368

Commercial and Industrial

3,618

4,055

4,377

Construction

2,079

2,103

2,142

Consumer

426

545

710

Total nonaccrual loans held for investment

35,419

36,508

38,703

OREO

5,636

6,685

6,704

Other repossessed property

105

26

76

Total non-performing assets, excluding nonaccrual loans held for sale

$

41,160

$

43,219

$

45,483

Nonaccrual loans held for sale

-

-

-

Total non-performing assets, including nonaccrual loans held for sale

$

41,160

$

43,219

$

45,483

Past-due loans 90 days and still accruing

$

2,014

$

1,113

$

5,258

United States:
Nonaccrual loans held for investment:
Residential mortgage

$

10,171

$

9,313

$

14,474

Commercial mortgage

32,842

44,679

45,243

Construction

-

-

-

Consumer

742

402

330

Total nonaccrual loans held for investment

43,755

54,394

60,047

OREO

455

1,117

574

Other repossessed property

79

80

143

Total non-performing assets, excluding nonaccrual loans held for sale

$

44,289

$

55,591

$

60,764

Nonaccrual loans held for sale

-

-

-

Total non-performing assets, including nonaccrual loans held for sale

$

44,289

$

55,591

$

60,764

Past-due loans 90 days and still accruing

$

-

$

-

$

-

(1)

Purchased credit impaired loans of $141.7 million accounted for under ASC 310-30 as of June 30, 2019, primarily mortgage loans acquired
from Doral Bank in the first quarter of 2015 and from Doral Financial in the second quarter of 2014, are excluded and not considered
nonaccrual loans due to the application of the accretion method, under which these loans will accrete interest income over the remaining life of the loans using an estimated cash flow analysis.

(2)

Amount includes purchased credit impaired loans with individual delinquencies over 90 days and still accruing with a carrying value
as of June 30, 2019 of approximately $27.0 million, primarily related to loans acquired from Doral Bank in the first quarter of 2015 and
from Doral Financial in the second quarter of 2014.
Table 11-Allowance for Loan and Lease Losses
Quarter Ended Six-Month Period Ended
(Dollars in thousands) June 30, March 31, June 30, June 30, June 30,

2019

2019

2018

2019

2018

Allowance for loan and lease losses, beginning of period

$

183,732

$

196,362

$

225,856

$

196,362

$

231,843

Provision for loan and lease losses

12,534

11,820

(1)

19,536

(2)

24,354

(3)

40,080

(4)

Net (charge-offs) recoveries of loans:
Residential mortgage

(4,188)

(5,547)

(4,855)

(9,735)

(7,891)

Commercial mortgage

(11,598)

(2,272)

(3,859)

(13,870)

(10,620)

Commercial and Industrial

(83)

(5,216)

(3,734)

(5,299)

(5,602)

Construction

237

(166)

(680)

71

(5,844)

Consumer and finance leases

(8,623)

(11,249)

(10,229)

(19,872)

(19,931)

Net charge-offs

(24,255)

(24,450)

(23,357)

(48,705)

(49,888)

Allowance for loan and lease losses, end of period

$

172,011

$

183,732

$

222,035

$

172,011

$

222,035

Allowance for loan and lease losses to period end total loans held for investment

1.89%

2.04%

2.57%

1.89%

2.57%

Net charge-offs (annualized) to average loans outstanding during the period

1.07%

1.10%

1.07%

1.09%

1.14%

Provision for loan and lease losses to net charge-offs during the period 0.52x 0.48x 0.84x 0.50x 0.80x
Provision for loan and lease losses to net charge-offs during the period,
excluding effect of the hurricane-related qualitative reserve releases in the first quarter and
first six months of 2019, and the second quarter and first six-months of 2018 0.52x 0.75x 0.92x 0.63x 0.97x
(1) Net of a $6.4 million net loan loss reserve release associated with the effect of Hurricanes Irma and Maria.
(2) Net of a $2.1 million net loan loss reserve release associated with the effect of Hurricanes Irma and Maria.
(3) Net of a $6.4 million net loan loss reserve release associated with the effect of Hurricanes Irma and Maria.
(4) Net of an $8.5 million net loan loss reserve release associated with the effect of Hurricanes Irma and Maria.

Table 12 – Net Charge-Offs to Average Loan

Six-Month Period Ended Year Ended
June 30, 2019 December 31, December 31, December 31, December 31,
(annualized)

2018

2017

2016

2015

Residential mortgage

0.63%

0.67%

0.79%

0.93%

0.55%

Commercial mortgage

1.79%

1.03%

2.42%

1.28%

3.12%

Commercial and Industrial

0.48%

0.38%

0.66%

1.11%

1.32%

Construction

-0.16%

6.75%

2.05%

1.02%

1.42%

Consumer and finance leases

1.97%

2.31%

2.12%

2.63%

2.85%

Total loans

1.09%

1.09%

1.33%

1.37%

1.68%

First BanCorp.

John B. Pelling III

Investor Relations Officer

[email protected]

(787) 729-8003

Source: First BanCorp.

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