First Bancorp. (NYSE: FBP) reported Q1 EPS of $0.01, versus $0.16 reported last year.

• Net income of $2.3 million, or $0.01 per diluted share, for the first quarter of 2020, compared to $36.4 million, or $0.16 per diluted share, for the fourth quarter of 2019. Financial results for the first quarter of 2020 included the effect of a reserve build1 for loans, finance leases and debt securities of $59.8 million ($39.8 million after-tax, or $(0.18) per diluted share) driven by the effect of the COVID-19 pandemic on forecasted economic and market conditions, and a tax-exempt gain from sales of investment securities of $8.2 million, or $0.04 per diluted share.
• Loss before income taxes of $0.7 million for the first quarter of 2020, compared to income before income taxes of $53.5 million for the fourth quarter of 2019.
• On a non-GAAP basis, adjusted pre-tax, pre-provision income of $68.5 million for the first quarter of 2020, compared to $72.1 million for the fourth quarter of 2019.
• Net interest income decreased by $1.3 million to $138.6 million for the first quarter of 2020, compared to $139.9 million for the fourth quarter of 2019, primarily due to the downward repricing of variable-rate commercial loans during the first quarter of 2020, as well as the adverse effect of one less day in the first quarter.
• Net interest margin was 4.63% for the first quarter of 2020, compared to 4.70% for the fourth quarter of 2019, reflecting, among other things, the effect of a lower interest rate environment on variable-rate commercial loans and credit card loans.
• Provision for credit losses on loans, finance leases and debt securities increased by $68.9 million to $77.4 million for the first quarter of 2020, compared to a provision of $8.5 million for the fourth quarter of 2019, driven by the reserve builda of $59.8 million in the first quarter in connection with the effect of the COVID-19 pandemic on forecasted economic and market conditions. Effective January 1, 2020, First BanCorp. (the “Corporation”) adopted the current expected credit loss impairment model (“CECL”) required by the Accounting Standards Codification (“ASC”) Topic 326 (“ASC 326”), which replaced the incurred loss methodology. ASC 326 does not require restatement of comparative period financial statements; as such, results for the first quarter of 2020 reflect the adoption of ASC 326, while prior periods reflect results under the previously required incurred loss methodology. The adoption of ASC 326 resulted in a cumulative increase of approximately $93.2 million in the total allowance for credit losses (“ACL”) as of January 1, 2020.
• Non-interest income increased by $5.8 million to $30.2 million for the first quarter of 2020, compared to $24.4 million for the fourth quarter of 2019, primarily due to an $8.2 million tax-exempt gain on sales of approximately $275.6 million of U.S. agencies mortgage-backed securities (“MBS”) in the first quarter of 2020, partially offset by the effect in the fourth quarter of 2019 of a $2.1 million gain from the sale of a $6.7 million nonaccrual commercial mortgage loan held for sale.
• Non-interest expenses decreased by $10.1 million to $92.2 million for the first quarter of 2020, compared to $102.3 million for the fourth quarter of 2019, primarily due to a $10.0 million decrease in costs associated with the pending acquisition of Banco Santander Puerto Rico (“BSPR”) and related restructuring initiatives.
• Income tax benefit of $3.0 million for the first quarter of 2020, compared to income tax expense of $17.1 million for the fourth quarter of 2019.
• The governor of Puerto Rico declared a full lock down of businesses effective March 16, 2020 where only essential functions were allowed to open. Only some of the functions within the financial businesses were considered essential, therefore, there have been limited loan originations since that date and the Corporation has experienced significant reductions in transaction volume due to business closures.

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