First Bancorp. New · NYSE:FBP
First Bancorp. New — First Bancorp — Investor Presentation (February 2020)
38 slides from First Bancorp. New's investor presentation, Feb 27, 2020
Slide 1: Investor Presentation February 2020
Investor PresentationFebruary 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation may contain “forward-looking statements” concerning First BanCorp.’s (the “Corporation”) future economic, operational and financial performance. “Forward-looking statements” include, without limitation, statements relating to the impact the Corporation ex
Slide 3: Compelling Value Proposition
Compelling Value Proposition Our business model is diverse and scalable by segment (commercial, residential and consumer) and by unique markets (Puerto Rico, Southeast Florida & Eastern Caribbean). Our equity is valued at 85% of TBV (2/25/20) compared to the SNL bank index (170% of TBV). Our capital
Slide 4: Franchise Overview
Franchise Overview Founded in Puerto Rico in 1948 Headquartered in San Juan, Puerto Rico with operations in PR, Eastern Caribbean (Virgin Islands) and Florida~2,700 FTE employees(1) 2nd largest financial holding company in Puerto Rico with attractive business mix and substantial loan market shareFlo
Slide 5: Diversified Business Model Across Regions
Diversified Business Model Across Regions Strong Capital and Operational Foundation to Support Growth 1 Originations include purchases, refinancings, and draws from existing revolving and non-revolving commitments. Consumer Banking Attractive branch network across densely populated regions in Puerto
Slide 6: Main Market Showing Signs of Economic Recovery
Main Market Showing Signs of Economic Recovery 6 Economic activity in the aftermath of both Hurricanes Irma and Maria has recoveredThe December 2019 Economic Activity Index reached its highest level since December 2016Moreover, improvement in consumer confidence is evidenced by recent increases in R
Slide 7: Year-over-Year Improvement in All Key Franchise Metrics
Year-over-Year Improvement in All Key Franchise Metrics 7 Adjusted Net Income1($ in mm) Net Interest Income($ in mm) Adjusted PTPP Income1($ in mm) +21% +14% Loan Originations2($ in billions) +24% Core Deposits3($ in billions) +8% NPAs($ in mm) -32% TBV/Share1 +9% Brokered CDs($ in mm) -22% 1 See Ex
Slide 8: Favorable Funding Mix
1 Core deposits are total deposits excluding brokered CDs. Favorable Funding Mix Total Deposit Composition (%) Core Deposits1 ($ millions) Core deposits increased $474 million during 2019.Reliance on brokered CDs declined $121 million during 2019 and now represent 5% of total deposits.Non-interest b
Slide 9: Loan Originations and Loan Portfolio
9 Loan Originations* ($ millions) Loan Portfolio ($ millions) Residential Mortgage Consumer & Finance Leases Construction Commercial Loans HFS Healthy origination activity continues to support loan portfolio: * Including refinancing and draws from existing revolving and non-revolving commitments. Co
Slide 10: Proactively Managing Asset Quality
Proactively Managing Asset Quality Commercial NPLs (Includes HFS) NPA Composition Residential Consumer Construction Commercial Loans HFS REO & Repo $332 $467 $317 $415 1 Net Carrying Value = % of unpaid principal balance net of reserves and accumulated charge-offs. $384 Non-Performing Assets ($ mill
Slide 11: Earnings Continue to Drive Significant Capital Formation
Earnings Continue to Drive Significant Capital Formation Tangible Book Value per Share Capital Ratios (%) Equity is valued at 85% of TBV (2/25/20) compared to the SNL bank index (170% of TBV)Capital ratios are among top 4% of banks above $10 billion in assetsCapital ratios are approximately 1,000 ba
Slide 12: Puerto Rico Executing for Earnings Growth
3Q 2019 Goal: 20% Puerto Rico Executing for Earnings Growth Opportunities for ongoing market share gainsInnovation and business rationalization projects geared to transition our products and services towards the evolving digital revolutionCustomer-centric focus critical following announced transacti
Slide 13: Stronger Franchise: Proven Success Implementing Strategic Plan
Stronger Franchise: Proven Success Implementing Strategic Plan Our business model is diverse and scalable by segment (commercial, residential and consumer) and by unique markets (Puerto Rico, Southeast Florida & Eastern Caribbean). Our equity is valued at 85% of TBV (2/25/20) compared to the SNL ban
Slide 14: Exhibits
Exhibits
Slide 15: Fourth Quarter 2019 Highlights
15 Fourth Quarter 2019 Highlights Profitability Net income of $36.4 million, or $0.16 per diluted share. Adjusted 4Q 2019 non-GAAP net income of $42.8 million, or $0.19 per diluted share, compared to adjusted $45.1 million in 3Q 2019.Adjusted pre-tax, pre-provision (“PTPP”) income of $72.1 million,
Slide 16: Franchise History
Franchise History Our turnaround story De-Risking of Balance Sheet Building Capital Enhanced Franchise Value June 2010: Written Agreement with the FED and Consent Order with FDIC. July 2010:The U.S. Treasury exchanged TARP preferred for convertible preferred. August 2010: Exchange of 89% Perpetual P
Slide 17: Diversity in Core Franchise
Our well-diversified business model within commercial, consumer and residential across three unique regions allows us to be agile when responding to growth opportunitiesLine of business diversification: Commercial represents 42%, residential represents 33% and consumer represents 25% of the total lo
Slide 18: Significant Projected Inflow of Disaster-related Funds
Significant Projected Inflow of Disaster-related Funds New Fiscal Plan certified by the Financial Oversight and Management Board for Puerto Rico on May 9, 2019.Recent government reports suggest that approximately $83 billion in federal aid and private insurance disbursements will impact the Puerto R
Slide 19: Disaster Recovery Funds Update
Disaster Recovery Funds Update 19 As seen below, as of December 2019, over $15.2 billion funds had been disbursed, representing 34.5% of the total $44.1 billion Allocated by the Federal government across 14 agencies funds or 68.6% of the total $22.2 billion Obligated fundsDuring 2019, $4.0 billion w
Slide 20: Fourth Quarter 2019 Highlights: PR Government Exposure
20 Fourth Quarter 2019 Highlights: PR Government Exposure ($ in millions) As of December 31, 2019, the Corporation had $204.6 million of direct exposure to the Puerto Rico Government, compared to $204.8 million as of September 30, 2019. 89% of direct government exposure is to municipalities, which a
Slide 21: NPL Migration
NPL Migration 1 First (Sin 000) = SS Beginning balance $ 127,040 $ 49,431 $ 20,725 $ 6,358 § 19,579 $ 223,133 tt ii eae ‘as ES aan an ize a wun 6x) aj eee pei cece om) te Oe) Lows retumed to acrnalsiatus/clectons/ sigs (6745) st)—«4905)—«(B).«= 4). 726) Tessie ostaeananarae Sanaa 7 a Tati tara lacs
Slide 22: Use of Non-GAAP Financial Measures
22 Use of Non-GAAP Financial Measures Basis of PresentationUse of Non-GAAP Financial Measures This presentation contains non-GAAP financial measures. Non-GAAP financial measures are used when management believes they will be helpful to an understanding of the Corporation’s results of operations or f
Slide 23: Use of Non-GAAP Financial Measures
23 Use of Non-GAAP Financial Measures Basis of PresentationUse of Non-GAAP Financial Measures This presentation contains non-GAAP financial measures. Non-GAAP financial measures are used when management believes they will be helpful to an understanding of the Corporation’s results of operations or f
Slide 24: Use of Non-GAAP Financial Measures
24 Use of Non-GAAP Financial Measures Basis of PresentationUse of Non-GAAP Financial Measures This presentation contains non-GAAP financial measures. Non-GAAP financial measures are used when management believes they will be helpful to an understanding of the Corporation’s results of operations or f
Slide 25: Use of Non-GAAP Financial Measures
25 Use of Non-GAAP Financial Measures Basis of PresentationUse of Non-GAAP Financial Measures This presentation contains non-GAAP financial measures. Non-GAAP financial measures are used when management believes they will be helpful to an understanding of the Corporation’s results of operations or f
Slide 26: Use of Non-GAAP Financial Measures
26 Use of Non-GAAP Financial Measures Basis of PresentationUse of Non-GAAP Financial Measures This presentation contains non-GAAP financial measures. Non-GAAP financial measures are used when management believes they will be helpful to an understanding of the Corporation’s results of operations or f
Slide 27: Use of Non-GAAP Financial Measures
27 Use of Non-GAAP Financial Measures Basis of PresentationUse of Non-GAAP Financial Measures To supplement the Corporation’s financial statements presented in accordance with GAAP, the Corporation uses, and believes that investors would benefit from disclosure of, non-GAAP financial measures that r
Slide 28: Use of Non-GAAP Financial Measures
28 Use of Non-GAAP Financial Measures Basis of PresentationUse of Non-GAAP Financial Measures To supplement the Corporation’s financial statements presented in accordance with GAAP, the Corporation uses, and believes that investors would benefit from disclosure of, non-GAAP financial measures that r
Slide 29: Use of Non-GAAP Financial Measures
29 Use of Non-GAAP Financial Measures Basis of PresentationUse of Non-GAAP Financial Measures This presentation contains non-GAAP financial measures. Non-GAAP financial measures are used when management believes they will be helpful to an understanding of the Corporation’s results of operations or f
Slide 30: Acquisition of Banco Santander Puerto Rico, October 21, 2019
First BanCorp.Acquisition ofBanco Santander Puerto RicoOctober 21, 2019
Slide 31: Transaction Highlights
Transaction Highlights Creates a stronger competitor in Puerto Rico with the scale and breadth to better serve retail and commercial customers Enhances funding profile through the addition of a low-cost core deposit funding base and reduction of wholesale funding Deploys capital efficiently, acquiri
Slide 32: Overview of Banco Santander Puerto Rico (BSPR)
Overview of Banco Santander Puerto Rico (“BSPR”) BSPR Overview Financial Highlights ($ millions) Source: S&P Global Market Intelligence, Company Filings, Commissioner of Financial Institutions of Puerto Rico.1 Balances as of June 30, 2019.2 Net of brokered deposits. Leading full-service franchise wi
Slide 33: Stronger Combined Franchise
Stronger Combined Franchise Increased Scale Enhanced Funding Profile Improved Asset Quality Attractive Capital Deployment / Pro Forma Capital Ratios at Close (mid 2020) $17.6bn Total Assets1 $12.0bn Loans2 #2 Rank in Puerto Rico $14.2bn Deposits 84% Loans / Deposits2 $13.6bn Deposits Excluding Broke
Slide 34: Franchise Positioning
Franchise Positioning Creates a stronger competitor in Puerto Rico with over $11bn in deposits in Puerto Rico and the scale and breadth to better serve retail and commercial customers Source: S&P Global Market Intelligence, Commissioner of Financial Institutions of Puerto Rico.1 Balances as of June
Slide 35: Pro Forma Loan and Deposit Composition
Pro Forma Loan and Deposit Composition FBP Loan Portfolio BSPR Loan Portfolio Pro FormaFBP Loan Portfolio1 Commentary FBP Deposit Mix BSPR Deposit Mix Pro FormaFBP Deposit Mix Pro forma loan portfolio will exclude nonperforming BSPR loans (and assets) as well as the JetBlue credit card portfolioPro
Slide 36: Transaction Summary
Transaction Summary Consideration 100% cash consideration Transaction Value $425 million base purchase price, comprised of $63 million premium on $362 million of BSPR’s core tangible common equity1$638 million excess capital1 paid to Santander at parPurchase price subject to adjustment based on BSPR
Slide 37: Transaction Assumptions
Transaction Assumptions Cost Saves ~$48 million (pre-tax) or ~35% of BSPR’s LTM 6/30/19 non-interest expense excluding OREO expense25% realized in 2020, 100% thereafter Durbin Amendment ~$(4) million (pre-tax) Loan Mark Gross loan mark of 5.9% Goodwill and Intangibles Core Deposit Intangible: 1.5% o
Slide 38: Potential Financial Impact of CECL
Potential Financial Impact of CECL Overview Estimated Impact of CECL on Transaction General purchase accounting rules for business combinations require that all loans be marked at fair valueUnder CECL, the loan portfolio will be separated into Purchase Credit Deteriorated (“PCD”) loans and Non-Purch
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