First BanCorp reports 1Q ’12 net loss, announces $400M credit card portfolio deal
First BanCorp, the bank holding company for FirstBank Puerto Rico reported Monday a net loss of $13.2 million for the first quarter of 2012, which included a non-cash charge of $6.2 million related to equity in losses of unconsolidated entities.
Excluding this non-cash charge, the net loss would have been $6.9 million compared to a net loss of $14.8 million for the fourth quarter of 2011 and a net loss of $28.4 million for the first quarter of 2011.
According to the results first quarter net charge-offs decreased by $21.6 million to $46.2 million, or 1.78 percent (annualized) of average loans, the lowest level since the first quarter of 2009, FirstBank said.
Meanwhile, the provision for loan and lease losses decreased for the fifth consecutive quarter, reflecting a drop of $5.8 million to $36.2 million.
“First quarter results demonstrated continued progress in our operating metrics toward our goal to return to profitability, as we continue making progress in key areas and adding to our revenue growth opportunities,” First BanCorp President Aurelio Alemán said.
“Net interest income and margin increased as a result of improvements in our deposit mix and pricing, commensurate with higher yields on earning assets. Our strategies to increase core deposits were successful, as these grew $119 million, or 2 percent, and we continue focused on reducing the overall cost of funding,” he said.
While core deposits grew, the bank reduced its cost by 14 basis points, reflecting increases in retail and commercial demand deposits, as well as in savings accounts, since December 31, 2011. Brokered deposits decreased by $125.6 million, or 3 percent.
Loan originations amounted to $569 million for the first quarter, while FirstBank reported total assets of $13.1 billion, a decrease of $41.7 million since the beginning of the year, driven by commercial loans paid-off during the quarter.
Coupled with the quarterly results, the bank announced it has signed a definitive agreement with FIA Card Services, N.A. to acquire the FirstBank-branded credit card portfolio of approximately $400 million. The portfolio consists of approximately 150,000 active credit card relationships.
“This acquisition diversifies our revenue stream and the composition of our loan portfolio. In addition, it provides significant opportunity to broaden and deepen our relationship with our customers and it accelerates our cross sell targets. The transaction strengthens our franchise value and will contribute to our objective to return the corporation to profitability,” Alemán said.
The closing of the transaction is subject to the conditions set forth in the definitive agreement and should be finalized during the second quarter of 2012.
Upon closing of the transaction, customers will experience minimal impact since FIA Card Services, N.A. will continue to service the accounts under an interim servicing agreement into 2013, the financial institution said.