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SEC Filings, Earing Reports, Press Releases
First BanCorp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 15, 2011 04:58PM
First BanCorp. (FBP) filed Quarterly Report for the period ended 2011-06-30.
Highlight of Business Operations:
As previously announced, during the second quarter of 2011 the Corporation entered into separate agreements with Thomas H. Lee Partners, L.P. (THL) and with two funds managed by Oaktree Capital Management, L.P. (Oaktree) under which THL and Oaktree would purchase an aggregate of approximately $348.2 million ($174.1 million each investor) of common stock of the Corporation at a per share price of $3.50 provided the Corporation sells an aggregate of $500 million of shares of common stock. Each of these two investors investment will represent approximately 24.36% of the outstanding shares of the Corporations common stock upon completion of the capital raise and the conversion into common stock of the $424.2 million of the Series G Preferred Stock held by the U.S. Treasury. The Corporation has also entered into investment agreements with institutional investors and other private equity firms for the issuance of an aggregate of approximately $176.8 million of the Corporations common stock, which, together with the THL and Oaktree investments, result in $525 million in commitments. The completion of this transaction is subject to the approval of the Corporations stockholders and regulators. If approved, the transaction is expected to close during the third quarter of 2011.
If the stockholders and regulators approve the $525 million capital raise, the Corporation will issue 150 million shares of common stock at $3.50 per share and will immediately exercise its right to compel the conversion of all of the outstanding Series G Preferred Stock, which is held by the U.S. Treasury, into approximately 32.9 million shares of common stock. Also, the Corporation plans to raise $37.3 million through a rights offering that will enable current stockholders to purchase up to 10.7 million shares of common stock at the same $3.50 price per share. The Corporation is expected to have nearly 229.98 million shares outstanding following the issuance of common stock to institutional investors and private equity firms, the conversion of the Series G Preferred Stock into common stock, the successful completion of the rights offering and the issuance of common stock upon the exercise of anti-dilution rights held by certain of the institutional investors that will buy shares in the capital raise.
Net loss for the quarter ended June 30, 2011 amounted to $14.9 million or $1.04 per diluted common share, compared to a net loss of $90.6 million or $15.70 per diluted common share for the quarter ended June 30, 2010. The Corporations financial results for the second quarter of 2011, as compared to the second quarter of 2010, were principally impacted by (i) a decrease of $87.6 million in the provision for loan and lease losses primarily related to lower charges to specific reserves on a reduced level of adversely classified and non-performing loans as well as lower historical loss rates and the overall reduction of the loan portfolio, and (ii) a decrease of $12.2 million in non-interest expenses also mainly due to credit-related expenses such as a $4.4 million decrease in the provision for unfunded loan commitments and letters of credit, aligned with the sale during the first quarter of 2011 of non-performing construction loans to a joint venture on which the Corporation has an investment, and a $4.8 million decrease in the loss on real estate owned (REO) operations due to lower write-downs and losses on the sale of repossessed properties. These factors were partially offset by a $24.6 million decrease in net interest income driven by the decline in average earning assets consistent with the Corporations deleveraging strategies included in the capital plan submitted to regulators and the maintenance of high levels of liquidity.
Net interest income is the excess of interest earned by First BanCorp on its interest-earning assets over the interest incurred on its interest-bearing liabilities. First BanCorps net interest income is subject to interest rate risk due to the re-pricing and maturity mismatch of the Corporations assets and liabilities. Net interest income for the quarter and six-month period ended June 30, 2011 was $94.4 million and $200.7 million, respectively, compared to $119.1 million and $235.9 million for the comparable periods in 2010. On a tax-equivalent basis and excluding the changes in the fair value of derivative instruments and unrealized gains and losses on liabilities measured at fair value, net interest income for the quarter and six-month period ended June 30, 2011 was $97.1 million and $205.9 million, respectively, compared to $122.9 million and $251.4 million for the comparable periods of 2010.
Stocks Discussed: FBP,