a50462013.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
 
Form 8-K
 
 
CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
 
Date of Report (Date of Earliest Event Reported):  October 31, 2012
 
 
First BanCorp.
(Exact Name of Registrant as Specified in its Charter)
 
 
Puerto Rico
 001-14793
66-0561822
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
     
 
     
1519 Ponce de Leon Ave.
P.O. Box 9146
San Juan, Puerto Rico
  
 
00908-0146
(Address of Principal Executive Offices)
  
(Zip Code)

(787) 729-8200
(Registrant’s Telephone Number, including Area Code)

Not applicable
(Former name or former address, if changed since last report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
Item 2.02
Results of Operations and Financial Condition.

On October 31, 2012, First BanCorp. (the “Corporation”), the bank holding company for FirstBank Puerto Rico (“FirstBank” or “the Bank”), issued a press release announcing its unaudited results of operations for the third quarter ended September 30, 2012. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
 
A copy of the presentation that the Corporation will use at its conference call to discuss its financial results for the quarter ended September 30, 2012 is attached hereto as Exhibit 99.2 and is incorporated herein by reference. As announced in a press release dated October 23, 2012, the call may be accessed via a live Internet webcast at 10:00 a.m. Eastern time on Thursday, November 1, 2012 through the investor relations section of the Corporation’s website: www.firstbankpr.com or through the dial-in telephone number (877) 317-6789 or (412) 317-6789. The conference number is 10018992.
 
The Corporation has included in this release the following financial measures that are not recognized under generally accepted accounting principles, which are referred to as non-GAAP financial measures: (i) the calculation of net interest income, interest rate spread and net interest margin rate on a tax-equivalent basis and excluding changes in the fair value of derivative instruments and certain financial liabilities; (ii) the calculation of the tangible common equity ratio and the tangible book value per common share; (iii) the Tier 1 common equity to risk-weighted assets ratio; and (iv) the adjusted pre-tax, pre-provision income.  Investors should be aware that non-GAAP financial measures have inherent limitations and should be read only in conjunction with the Corporation’s consolidated financial data prepared in accordance with GAAP.  The release includes a reconciliation of these non-GAAP financial measures to the GAAP financial measures, except for the reconciliation with respect to the calculation of net interest income, interest rate spread and net interest margin rate on a tax-equivalent basis and excluding changes in the fair value of derivative instruments and certain financial liabilities which is included below.
 
Net interest income, interest rate spread and net interest margin are reported on a tax-equivalent basis and excluding changes in the fair value of derivative instruments and financial liabilities elected to be measured at fair value (“valuations”). The presentation of net interest income excluding valuations provides additional information about the Corporation’s net interest income and facilitates comparability and analysis.  The changes in the fair value of derivative instruments and unrealized gains and losses on liabilities measured at fair value 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, as described in Exhibit A — Tables 2 and 3 of the press release attached hereto as Exhibit 99.1. 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 certain loans, on a common basis that facilitates comparison of the Corporation’s results to results of its peers.
 
 
2
 
 
The following table reconciles the non-GAAP financial measure “net interest income on a tax-equivalent basis excluding valuations” with net interest income calculated and presented in accordance with GAAP. The table also reconciles the non-GAAP financial measures “net interest spread on a tax-equivalent basis and excluding valuations” and “net interest margin on a tax-equivalent basis and excluding valuations” with net interest spread and net interest margin calculated and presented in accordance with GAAP.
 
Reconciliation of GAAP Net Interest Margin and Spread to Non-GAAP Net Interest Margin and Spread on a Tax-Equivalent Basis and excluding
fair value changes on derivative instruments and liabilities measured at fair value ("valuations")
        
(Dollars in Thousands)
                            
 
   
Quarter Ended
    
Nine-Month Period Ended
  
   
September 30, 2012
    
June 30,
2012
    
March 31,
2012
    
December 31,
2011
    
September 30, 2011
    
September 30, 2012
    
September 30, 2011
  
Net Interest Income
                                          
Interest Income - GAAP
   $ 166,964     $ 153,652     $ 152,107     $ 156,752     $ 158,542     $ 472,723     $ 502,863  
Unrealized loss (gain) on
                                                        
derivative instruments
     (170 )     33       (332 )     (246 )     954       (469 )     1,794  
Interest income excluding valuations
     166,794       153,685       151,775       156,506       159,496       472,254       504,657  
Tax-equivalent adjustment
     1,463       1,634       1,741       1,456       1,521       4,838       5,339  
Interest income on a tax-equivalent basis excluding valuations
     168,257       155,319       153,516       157,962       161,017       477,092       509,996  
                                                         
Interest Expense - GAAP
     41,461       44,947       50,241       58,209       64,287       136,649       207,894  
Unrealized gain (loss) on
                                                        
derivative instruments and liabilities measured at fair value
     -       539       (49 )     (1,992 )     (1,601 )     490       (2,176 )
Interest expense excluding valuations
     41,461       45,486       50,192       56,217       62,686       137,139       205,718  
                                                         
Net interest income - GAAP
   $ 125,503     $ 108,705     $ 101,866     $ 98,543     $ 94,255     $ 336,074     $ 294,969  
                                                         
Net interest income excluding valuations
   $ 125,333     $ 108,199     $ 101,583     $ 100,289     $ 96,810     $ 335,115     $ 298,939  
                                                         
Net interest income on a tax-equivalent basis excluding valuations
   $ 126,796     $ 109,833     $ 103,324     $ 101,745     $ 98,331     $ 339,953     $ 304,278  
                                                         
Average Balances
                                                        
Loans and leases
   $ 10,297,835     $ 10,183,229     $ 10,389,246     $ 10,637,523     $ 10,832,426     $ 10,290,132     $ 11,164,370  
Total securities and other short-term investments
     2,238,701       2,450,198       2,397,918       2,665,918       2,787,708       2,361,820       3,305,893  
Average Interest-Earning Assets
   $ 12,536,536     $ 12,633,427     $ 12,787,164     $ 13,303,441     $ 13,620,134     $ 12,651,952     $ 14,470,263  
                                                         
Average Interest-Bearing Liabilities
   $ 10,518,169     $ 10,577,054     $ 10,725,162     $ 11,255,725     $ 11,944,454     $ 10,606,471     $ 12,743,832  
                                                         
Average Yield/Rate
                                                        
Average yield on interest-earning assets - GAAP
     5.30 %     4.89 %     4.78 %     4.67 %     4.62 %     4.99 %     4.65 %
Average rate on interest-bearing liabilities - GAAP
     1.57 %     1.71 %     1.88 %     2.05 %     2.14 %     1.72 %     2.18 %
Net interest spread - GAAP
     3.73 %     3.18 %     2.90 %     2.62 %     2.48 %     3.27 %     2.47 %
Net interest margin - GAAP
     3.98 %     3.46 %     3.20 %     2.94 %     2.75 %     3.55 %     2.73 %
                                                         
Average yield on interest-earning assets excluding valuations
     5.29 %     4.89 %     4.77 %     4.67 %     4.65 %     4.99 %     4.66 %
Average rate on interest-bearing liabilities excluding valuations
     1.57 %     1.73 %     1.88 %     1.98 %     2.08 %     1.73 %     2.16 %
Net interest spread excluding valuations
     3.72 %     3.16 %     2.89 %     2.69 %     2.57 %     3.25 %     2.50 %
Net interest margin excluding valuations
     3.98 %     3.44 %     3.20 %     2.99 %     2.82 %     3.54 %     2.76 %
                                                         
Average yield on interest-earning assets on a tax-equivalent basis and excluding valuations
     5.34 %     4.94 %     4.83 %     4.71 %     4.69 %     5.04 %     4.71 %
Average rate on interest-bearing liabilities excluding valuations
     1.57 %     1.73 %     1.88 %     1.98 %     2.08 %     1.73 %     2.16 %
Net interest spread on a tax-equivalent basis and excluding valuations
     3.77 %     3.21 %     2.95 %     2.73 %     2.61 %     3.31 %     2.55 %
Net interest margin on a tax-equivalent basis and excluding valuations
     4.02 %     3.50 %     3.25 %     3.03 %     2.86 %     3.59 %     2.81 %
                                                         
 
 
3
 
 
Item 9.01.   Financial Statements and Exhibits.
 
(d)           Exhibits
 
Exhibit
  
Description of Exhibit
     
99.1   Press Release dated October 31, 2012 - First BanCorp Announces Earnings for the Quarter Ended September 30, 2012
     
99.2    First BanCorp Conference Call Presentation – Financial Results Third Quarter 2012
 
Exhibits 99.1 and 99.2 referenced therein, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall Exhibits 99.1 and 99.2 be deemed incorporated by reference in any filings under the Securities Act of 1933, as amended.
 
 
 
4
 
 
SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: November 1, 2012 First BanCorp.  
       
 
By:
/s/ Orlando Berges  
  Name:   Orlando Berges  
  Title:  EVP and Chief Financial Officer  
       

 
 

 
5
 
 
Exhibit Index
 
 
 
Exhibit
  
Description of Exhibit
     
99.1   Press Release dated October 31, 2012 - First BanCorp Announces Earnings for the Quarter Ended September 30, 2012
     
99.2    First BanCorp Conference Call Presentation – Financial Results Third Quarter 2012
 
 

6