UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
| For the Quarter ended September 30, 2004 |
Commission File No. 001-14793 |
First BanCorp.
| Puerto Rico | 66-0561882 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
| 1519 Ponce de León Avenue, Stop 23 Santurce, Puerto Rico |
00908 | |
| (Address of principal office) | (Zip Code) |
Registrant’s telephone number, including area code:
(787) 729-8200
Indicate by check mark whether the registrant (1) has filed all reports
required by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes [X] No [ ]
Number of shares of the registrant’s common stock outstanding as of October 31, 2004
40,312,655
CONTENTS
| PAGE | ||||||||
PART I. FINANCIAL INFORMATION |
||||||||
Item 1. Financial Statements (Unaudited): |
||||||||
| 3 | ||||||||
| 4 | ||||||||
| 5 | ||||||||
| 6 | ||||||||
| 7 | ||||||||
| 8 | ||||||||
| 26 | ||||||||
| 44 | ||||||||
| 45 | ||||||||
| 46 | ||||||||
| 46 | ||||||||
| 46 | ||||||||
| 46 | ||||||||
| 46 | ||||||||
| 47 | ||||||||
| 48 | ||||||||
| EX-31.1 SECTION 302 CERTIFICATION OF THE CEO | ||||||||
| EX-31.2 SECTION 302 CERTIFICATION OF THE CFO | ||||||||
| EX-32.1 SECTION 906 CERTIFICATION OF THE CEO | ||||||||
| EX-32.2 SECTION 906 CERTIFICATION OF THE CFO | ||||||||
Forward Looking Statements. When used in this Form 10-Q or future filings by First BanCorp. (First BanCorp or the “Corporation”) with the Securities and Exchange Commission, in the Corporation’s press releases or other public or shareholder communication, or in oral statements made with the approval of an authorized executive officer, the words or phrases “would be”, “will allow”, “intends to”, “will likely result”, “are expected to”, “will continue”, “is anticipated”, “estimated”, “project”, “believe”, “should” or similar expressions are intended to identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.
The future results of the Corporation could be affected by subsequent events and could differ materially from those expressed in forward-looking statements. If future events and actual performance differ from the Corporation’s assumptions, the actual results could vary significantly from the performance projected in the forward-looking statements.
The Corporation wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made and are based on Management’s current expectations, and to advise readers that various factors, including regional and national economic conditions, substantial changes in levels of market interest rates, credit and other risks of lending and investment activities, competitive and regulatory factors and legislative changes and accounting pronouncements, could affect the Corporation’s financial performance and could cause the Corporation’s actual results for future periods to differ materially from those anticipated or projected. 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.
2
FIRST BANCORP
| September 30, | December 31, | September 30, | ||||||||||
| 2004 |
2003 |
2003 |
||||||||||
Assets |
||||||||||||
Cash and due from banks |
$ | 91,317,992 | $ | 89,304,520 | $ | 75,145,238 | ||||||
Money market instruments, including $300,000,000
pledged that can be repledged for 2004 (September 30,
2003-$140,000,000) |
721,910,047 | 705,939,823 | 430,257,311 | |||||||||
Federal funds sold and securities purchased under agreements to resell |
302,000,000 | 265,000,000 | 159,000,000 | |||||||||
Total money market investments |
1,023,910,047 | 970,939,823 | 589,257,311 | |||||||||
Investment securities available for sale, at fair value: |
||||||||||||
Securities pledged that can be repledged |
1,270,254,936 | 990,408,046 | 1,070,924,271 | |||||||||
Other investment securities |
350,923,723 | 228,729,507 | 216,982,499 | |||||||||
Total investment securities available for sale |
1,621,178,659 | 1,219,137,553 | 1,287,906,770 | |||||||||
Investment securities held to maturity, at amortized cost: |
||||||||||||
Securities pledged that can be repledged |
3,289,812,839 | 2,687,039,595 | 2,418,663,539 | |||||||||
Other investment securities |
371,332,877 | 443,437,738 | 813,451,967 | |||||||||
Total investment securities held to maturity |
3,661,145,716 | 3,130,477,333 | 3,232,115,506 | |||||||||
Federal Home Loan Bank (FHLB) stock |
68,650,000 | 45,650,000 | 42,595,400 | |||||||||
Loans, net
of allowance for loan losses of $137,253,064
(December 31, 2003-$126,378,484 and September 30,
2003-$123,023,664) |
8,357,609,488 | 6,906,289,028 | 6,568,240,345 | |||||||||
Loans held for sale, at lower of cost or market |
7,419,060 | 11,850,639 | 15,544,053 | |||||||||
Total loans, net |
8,365,028,548 | 6,918,139,667 | 6,583,784,398 | |||||||||
Other real estate owned |
6,938,890 | 4,616,888 | 3,999,081 | |||||||||
Premises and equipment, net |
88,865,587 | 85,269,402 | 82,819,631 | |||||||||
Accrued interest receivable |
61,180,967 | 41,508,434 | 42,462,560 | |||||||||
Due from customers on acceptances |
717,930 | 286,611 | 180,488 | |||||||||
Other assets |
188,726,523 | 162,580,138 | 148,505,488 | |||||||||
Total assets |
$ | 15,177,660,859 | $ | 12,667,910,369 | $ | 12,088,771,871 | ||||||
Liabilities & Stockholders’ Equity |
||||||||||||
Liabilities: |
||||||||||||
Non-interest bearing deposits |
$ | 603,713,284 | $ | 548,920,960 | $ | 495,170,106 | ||||||
Interest bearing deposits |
6,764,318,350 | 6,216,186,213 | 6,017,278,902 | |||||||||
Federal funds purchased and securities sold
under agreements to repurchase |
4,614,109,083 | 3,650,297,211 | 3,587,877,555 | |||||||||
Advances from FHLB |
1,373,000,000 | 913,000,000 | 742,000,000 | |||||||||
Notes payable |
153,550,748 | |||||||||||
Other borrowings |
231,500,089 | |||||||||||
Bank acceptance outstanding |
717,930 | 286,611 | 180,488 | |||||||||
Payable for unsettled investment trade |
10,285,040 | |||||||||||
Accounts payable and other liabilities |
160,191,928 | 166,831,871 | 109,683,561 | |||||||||
| 13,911,386,452 | 11,495,522,866 | 10,952,190,612 | ||||||||||
Subordinated Notes |
82,820,937 | 82,818,437 | 82,817,604 | |||||||||
| 13,994,207,389 | 11,578,341,303 | 11,035,008,216 | ||||||||||
Commitments and contingencies |
||||||||||||
Stockholders’ equity: |
||||||||||||
Preferred stock, authorized 50,000,000 shares: issued and
outstanding 22,004,000 shares at $25 liquidation value
per share (December 31, 2003 and September 30, 2003 - 22,004,000
shares) |
550,100,000 | 550,100,000 | 550,100,000 | |||||||||
Common stock, $1 par value, authorized
250,000,000 shares; issued 45,206,555 shares
(December 31, 2003-44,948,185 and September 30, 2003-44,931,435) |
45,206,555 | 44,948,185 | 44,931,435 | |||||||||
Less: Treasury stock (at par value) |
(4,920,900 | ) | (4,920,900 | ) | (4,920,900 | ) | ||||||
Common stock outstanding |
40,285,655 | 40,027,285 | 40,010,535 | |||||||||
Additional paid-in capital |
3,209,915 | 268,855 | ||||||||||
Capital reserve |
80,000,000 | 80,000,000 | 70,000,000 | |||||||||
Legal surplus |
163,106,509 | 163,106,509 | 149,345,178 | |||||||||
Retained earnings |
304,572,685 | 220,038,308 | 203,283,622 | |||||||||
Accumulated other comprehensive income, net of tax of $1,128,334
(December 31, 2003-$613,081 and September 30, 2003-$909,872) |
42,178,706 | 36,028,109 | 41,024,320 | |||||||||
| 1,183,453,470 | 1,089,569,066 | 1,053,763,655 | ||||||||||
Total liabilities and stockholders’ equity |
$ | 15,177,660,859 | $ | 12,667,910,369 | $ | 12,088,771,871 | ||||||
The accompanying notes are an integral part of these statements.
3
FIRST BANCORP
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
Interest income: |
||||||||||||||||
Loans |
$ | 113,831,359 | $ | 98,762,336 | $ | 316,953,914 | $ | 290,002,832 | ||||||||
Investments |
65,944,646 | 34,621,600 | 170,247,567 | 98,152,862 | ||||||||||||
Dividends on FHLB stock |
303,233 | 234,367 | 633,251 | 1,206,379 | ||||||||||||
Total interest income |
180,079,238 | 133,618,303 | 487,834,732 | 389,362,073 | ||||||||||||
Interest expense: |
||||||||||||||||
Deposits |
30,730,152 | 28,036,230 | 84,387,104 | 84,253,361 | ||||||||||||
Federal funds purchased and repurchase
agreements |
34,828,696 | 27,008,737 | 95,174,779 | 77,345,871 | ||||||||||||
Advances from FHLB |
7,573,861 | 5,004,969 | 18,690,602 | 14,517,211 | ||||||||||||
Notes payable and other borrowings |
3,674,874 | 1,672,271 | 7,829,355 | 5,009,401 | ||||||||||||
Total interest expense |
76,807,583 | 61,722,207 | 206,081,840 | 181,125,844 | ||||||||||||
Net interest income |
103,271,655 | 71,896,096 | 281,752,892 | 208,236,229 | ||||||||||||
Provision for loan losses |
13,199,850 | 12,599,900 | 39,600,000 | 41,763,700 | ||||||||||||
Net interest income after provision
for loan losses |
90,071,805 | 59,296,196 | 242,152,892 | 166,472,529 | ||||||||||||
Other income: |
||||||||||||||||
Other fees on loans |
4,383,988 | 5,281,997 | 14,547,286 | 15,283,224 | ||||||||||||
Service charges on deposit accounts |
2,705,111 | 2,202,101 | 8,230,790 | 7,146,793 | ||||||||||||
Mortgage banking activities |
1,328,492 | 431,881 | 3,090,458 | 2,374,141 | ||||||||||||
Net gain on sale of investments |
360,031 | 4,384,041 | 4,875,926 | 28,205,640 | ||||||||||||
Derivatives gain (loss) |
763,058 | 1,153,744 | (622,571 | ) | 1,039,273 | |||||||||||
Gain on sale of credit cards portfolio |
5,532,684 | |||||||||||||||
Other operating income |
6,180,904 | 5,681,887 | 17,715,621 | 14,254,924 | ||||||||||||
Total other income |
15,721,584 | 19,135,651 | 53,370,194 | 68,303,995 | ||||||||||||
Other operating expenses: |
||||||||||||||||
Employees’ compensation and benefits |
21,432,428 | 18,194,723 | 62,931,789 | 54,719,045 | ||||||||||||
Occupancy and equipment |
10,223,920 | 9,041,531 | 29,054,686 | 26,756,851 | ||||||||||||
Business promotion |
4,354,617 | 2,691,220 | 12,411,300 | 8,114,398 | ||||||||||||
Taxes, other than income taxes |
2,283,388 | 1,920,356 | 6,182,051 | 5,427,811 | ||||||||||||
Insurance and supervisory fees |
994,620 | 725,673 | 3,080,826 | 2,476,206 | ||||||||||||
Other |
6,686,896 | 7,285,249 | 20,983,329 | 21,109,727 | ||||||||||||
Total other operating expenses |
45,975,869 | 39,858,752 | 134,643,981 | 118,604,038 | ||||||||||||
Income before income tax provision |
59,817,520 | 38,573,095 | 160,879,105 | 116,172,486 | ||||||||||||
Income tax provision |
10,738,331 | 6,888,693 | 31,660,287 | 18,789,091 | ||||||||||||
Net income |
$ | 49,079,189 | $ | 31,684,402 | $ | 129,218,818 | $ | 97,383,395 | ||||||||
Net income available to common stockholders |
$ | 39,010,190 | $ | 24,933,402 | $ | 99,011,821 | $ | 77,130,398 | ||||||||
Net
income per common share - basic: |
||||||||||||||||
Earnings per common share-basic |
$ | 0.97 | $ | 0.62 | $ | 2.46 | $ | 1.92 | ||||||||
Net
income per common share - diluted: |
||||||||||||||||
Earnings per common share-diluted |
$ | 0.94 | $ | 0.61 | $ | 2.39 | $ | 1.89 | ||||||||
Dividends declared per common share |
$ | 0.12 | $ | 0.11 | $ | 0.36 | $ | 0.33 | ||||||||
The accompanying notes are an integral part of these statements.
4
FIRST BANCORP
| Nine months ended | Nine months ended | |||||||
| September 30, 2004 |
September 30, 2003 |
|||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 129,218,818 | $ | 97,383,395 | ||||
Adjustments to reconcile net income to net cash provided
by operating activities: |
||||||||
Depreciation |
10,469,923 | 11,351,082 | ||||||
Amortization of core deposit intangible |
1,797,465 | 1,797,465 | ||||||
Provision for loan losses |
39,600,000 | 41,763,700 | ||||||
Deferred income tax benefit |
(5,046,674 | ) | (5,794,061 | ) | ||||
Gain on sale of investments, net |
(4,875,926 | ) | (28,205,640 | ) | ||||
Unrealized derivatives gain |
(1,174,305 | ) | (1,039,273 | ) | ||||
Net gain on sale of loans |
(2,873,893 | ) | (2,335,089 | ) | ||||
Amortization of deferred net loan fees |
(528,683 | ) | (576,348 | ) | ||||
Net originations of loans held for sale |
(31,159,402 | ) | (25,022,681 | ) | ||||
Gain on sale of credit cards portfolio |
(5,532,684 | ) | ||||||
Decrease in accrued income tax payable |
(8,630,568 | ) | (3,483,644 | ) | ||||
Increase in accrued interest receivable |
(19,672,532 | ) | (3,180,550 | ) | ||||
Increase (decrease) in accrued interest payable |
10,292,583 | 3,717,912 | ||||||
Decrease in other assets |
6,010,888 | 13,969,172 | ||||||
Increase in other liabilities |
3,588,747 | (12,107,027 | ) | |||||
Total adjustments |
(7,735,061 | ) | (9,144,982 | ) | ||||
Net cash provided by operating activities |
121,483,757 | 88,238,413 | ||||||
Cash flows from investing activities: |
||||||||
Principal collected on loans |
1,329,544,170 | 1,056,259,575 | ||||||
Loans originated |
(1,582,319,417 | ) | (1,258,655,612 | ) | ||||
Purchase of loans |
(1,386,684,000 | ) | (960,137,000 | ) | ||||
Proceeds from sale of loans |
111,163,859 | 68,193,170 | ||||||
Proceeds from sale of investments securities |
32,845,372 | 1,354,072,521 | ||||||
Purchase of securities held to maturity |
(5,182,605,311 | ) | (10,598,957,484 | ) | ||||
Purchase of securities available for sale |
(642,512,072 | ) | (185,564,450 | ) | ||||
Principal repayments and maturities of securities held to maturity |
4,651,936,929 | 8,002,957,694 | ||||||
Principal repayments of securities available for sale |
280,122,784 | 352,410,227 | ||||||
Additions to premises and equipment |
(14,066,108 | ) | (6,575,144 | ) | ||||
Purchase of FHLB stock |
(23,000,000 | ) | (6,965,900 | ) | ||||
Net cash used in investing activities |
(2,425,573,794 | ) | (2,182,962,403 | ) | ||||
Cash flows from financing activities: |
||||||||
Net increase in deposits |
590,288,815 | 1,063,840,625 | ||||||
Net increase in federal funds purchased and securities
sold under repurchase agreements |
964,610,929 | 794,007,315 | ||||||
FHLB advances taken |
460,000,000 | 369,000,000 | ||||||
Net proceeds from issuance of long-term debt |
385,659,000 | |||||||
Dividends |
(44,684,441 | ) | (33,449,849 | ) | ||||
Exercise of stock options |
3,199,430 | 834,352 | ||||||
Issuance of preferred stock |
182,928,600 | |||||||
Net cash provided by financing activities |
2,359,073,733 | 2,377,161,043 | ||||||
Net increase in cash and cash equivalents |
54,983,696 | 282,437,053 | ||||||
Cash and cash equivalents at beginning of period |
1,060,244,343 | 381,965,496 | ||||||
Cash and cash equivalents at end of period |
$ | 1,115,228,039 | $ | 664,402,549 | ||||
Cash and cash equivalents include: |
||||||||
Cash and due from banks |
$ | 91,317,992 | $ | 75,145,238 | ||||
Money market
investments |
1,023,910,047 | 589,257,311 | ||||||
| $ | 1,115,228,039 | $ | 664,402,549 | |||||
Supplemental disclosures of cash flow information: |
||||||||
Cash paid during the period for: |
||||||||
Interest |
$ | 195,789,257 | $ | 177,407,932 | ||||
Income taxes |
41,131,288 | 16,648,329 | ||||||
The accompanying notes are an integral part of these statements.
5
FIRST BANCORP
| Accumulated | ||||||||||||||||||||||||||||
| Additional | other | |||||||||||||||||||||||||||
| Preferred | Common | paid-in | Capital | Legal | Retained | comprehensive | ||||||||||||||||||||||
| stock |
stock |
capital |
reserve |
surplus |
earnings |
income (loss) |
||||||||||||||||||||||
December 31, 2001 |
$ | 268,500,000 | $ | 26,571,952 | $ | 14,214,877 | $ | 60,000,000 | $ | 136,792,514 | $ | 103,132,913 | $ | (6,293,354 | ) | |||||||||||||
Net income |
107,956,351 | |||||||||||||||||||||||||||
Other comprehensive income |
39,674,517 | |||||||||||||||||||||||||||
Issuance of preferred stock |
92,000,000 | (3,094,000 | ) | |||||||||||||||||||||||||
Addition to legal surplus |
12,552,664 | (12,552,664 | ) | |||||||||||||||||||||||||
Addition to capital reserve |
10,000,000 | (10,000,000 | ) | |||||||||||||||||||||||||
Stock options exercised |
64,500 | 1,276,343 | ||||||||||||||||||||||||||
Common stock split on
September 30, 2002 |
13,318,083 | (12,397,220 | ) | (920,863 | ) | |||||||||||||||||||||||
Cash dividends: |
||||||||||||||||||||||||||||
Common stock |
(15,966,339 | ) | ||||||||||||||||||||||||||
Preferred stock |
(26,406,274 | ) | ||||||||||||||||||||||||||
December 31, 2002 |
360,500,000 | 39,954,535 | 70,000,000 | 149,345,178 | 145,243,124 | 33,381,163 | ||||||||||||||||||||||
Net income |
152,338,342 | |||||||||||||||||||||||||||
Other comprehensive income |
2,646,946 | |||||||||||||||||||||||||||
Issuance of preferred stock |
189,600,000 | (778,352 | ) | (5,823,109 | ) | |||||||||||||||||||||||
Addition to legal surplus |
13,761,331 | (13,761,331 | ) | |||||||||||||||||||||||||
Addition to capital reserve |
10,000,000 | (10,000,000 | ) | |||||||||||||||||||||||||
Stock options exercised |
72,750 | 1,047,207 | ||||||||||||||||||||||||||
Cash dividends: |
||||||||||||||||||||||||||||
Common stock |
(17,599,855 | ) | ||||||||||||||||||||||||||
Preferred stock |
(30,358,863 | ) | ||||||||||||||||||||||||||