October 29, 2008 — While each night the evening news brings fresh, dire reports on the U.S. economy and the finance industry as a whole, First BanCorp, the parent company of FirstBank Puerto Rico and St. Croix FirstBank, is profitable, growing and doing well.
First BanCorp reported net income for the third quarter ended on Sept. 30, of $24.5 million, an increase of 74 percent over the same quarter a year before. Total assets increased to $19.3 billion, up from $17.2 billion, from the first of the year to now, according to the company's earnings statement.
"We had a good quarter, that is the key thing," said Cassan Pancham, FirstBank's executive vice president for the Eastern Caribbean Region. "FirstBank is a profitable bank in a very difficult economic environment. And we've been continuously profitable for a long time, even though these are difficult times. The other thing that is too, we have a very strong capital base and strong liquidity so on those three measures; profitability, capital and liquidity we are in good shape."
The mortgage crisis has had some impact on First BanCorp, principally in the form of non-performing loans in Florida and Puerto Rico. But the impact has not been a dramatic one. The company held $500.4 million in nonperforming loans as of Sept. 30, compared to $448.5 million as of June 30, and $413.1 million as of December 31, 2007. The slowing economy and deteriorating housing market in the United States coupled with recessionary conditions in Puerto Rico's economy have resulted in higher non-performing balances in most of the corporation's loan portfolio.
Weakening economic conditions in Puerto Rico have tended to push up the volume of non-performing residential mortgage loans, although the rate of non-performing loans remained flat at seven percent since the previous quarter. First BanCorp credits a loan-loss program for the unchanged rate. Under the program the company has modified the terms of 335 loans worth approximately $55.3 million About $31.6 million of those loans are now back to a normal, accruing status.
"There are obviously continuing credit issues in Puerto Rico and in Florida," Pancham said. "But we are beginning to stabilize those portfolios and hopefully they will improve going forward."
More than 90 percent of First BanCorp's residential mortgage loan portfolio consists of fixed-rate, fully amortizing, full documentation loans and over 91 percent of the corporation's securities portfolio is invested in U.S. Government and Agency debentures and fixed-rate U.S. government sponsored-agency mortgage-backed securities.
"It is important to note FirstBank never engaged in subprime lending," Pancham said. "We don't have that type of portfolio."
Only a small portion of the company's assets are invested in equity securities, none of which are related to U.S. financial institutions that recently failed, according to the company's earnings statement.
"Overall, FirstBank is navigating these troubled times pretty well," Pancham said. "We moved to strengthen our credit standard a couple of years ago and that is bearing fruit well for us now. We started an efficiency project which is helping to slow expense growth in these troubled times, with energy and other expenses ramping up. And we have managed to slow our expense growth tremendously. So overall we believe we are clearly moving forward pretty well in this difficult time."
First BanCorp is the parent corporation of FirstBank Puerto Rico, a state-chartered commercial bank with operations in Puerto Rico, the Virgin Islands and Florida; of FirstBank Insurance Agency; and of Ponce General Corporation. The corporation operates 153 financial services facilities throughout Puerto Rico, the U.S. and British Virgin Islands, and Florida. Among the subsidiaries of FirstBank Puerto Rico are Money Express, a finance company; First Leasing and Car Rental, a car and truck rental leasing company; and FirstMortgage, a mortgage origination company. In the U.S. Virgin Islands, FirstBank operates First Insurance VI, an insurance agency, and First Express, a small loan company.