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/ Wednesday, October 27, 2021
Happy Days for Banks
Banco Popular, FirstBank and Oriental report strong Q3 numbers
T Rosario Fajardo
rfajardo@wjournalpr.com
@RosarioWJournal
here is no doubt that these are happy days for banks, as Puerto Rico’s three main commercial banks continue to report strong earnings. The federal government’s financial largesse to residents and businesses alike have helped bank accounts and savings to grow, while reducing the number of bad loans and helping to prop up struggling businesses.
Banco Popular
In announcing its third quarter (Q3) 2021 results, Popular Inc. reported net income of $248.1 million for the quarter ended Sept. 30, 2021, compared to net income of $218.1 million for the previous quarter. The third quarter’s results include a release in the allowance for credit losses of $61.2 million driven by improving credit quality and the improved macroeconomic outlook, Popular said. Net Interest income was $489.4 million, an increase of $1.6 million compared to the previous quarter, mainly due to higher average earning assets and higher income from the loans issued under the U.S. Small Business Administration’s (SBA) Paycheck Protection Program (PPP), offset in part by a lower discount amortization of purchased credit deteriorated loans. Net interest margin decreased 14 basis points to 2.77 percent. Total assets grew by $1.5 billion from the previous quarter, reflecting an increase in deposits across various sectors, principally from the Puerto Rico public sector. “The third quarter was another strong quarter. We achieved net income of $248.1 million, driven by a reserve release of $61 million. The release reflects strong credit quality performance as well as a positive economic outlook. We continued to see higher credit and debit card spending, strong auto and mortgage originations as well as higher deposits. During the quarter we also continued to return capital to our shareholders, completing our $350 million accelerated repurchase program,” said Ignacio Álvarez, president and CEO of Popular.
FirstBank
First BanCorp reported net income of $75.7 million for Q3 2021, compared to $70.6 million
for the second quarter of 2021. Provision for credit losses was a net benefit of $12.1 million for Q3 2021, reflecting, among other things, improvements in the outlook of certain macroeconomic variables and lower loans outstanding. Income before income taxes was $112.7 million for the third quarter of 2021, compared to $110.7 million for Q2 2021, FirstBank reported. Nonperforming assets decreased by $83.2 million to $172.4 million as of Sept. 30, 2021, compared to $255.6 million in the previous quarter. “Financial benefits of our fully integrated and expanded franchise are well underway as we report strong third quarter results. We generated $75.7 million in net income and a record $103.6 million in pre-tax, pre-provision income for the quarter. Improvements in the economic backdrop within our operating markets continue to drive core performance metrics. Asset quality continued to improve, with non-performing assets reaching a decade low of 0.81 percent of total assets,” said Aurelio Alemán, president and CEO of First BanCorp. “Loan originations, including refinancings, were healthy at $1.1 billion; however, the loan portfolio decreased largely driven by a $130.9 million reduction in SBA PPP loans and the sale of $52.5 million in nonaccrual residential mortgage loans. Core deposits, net of brokered and government deposits grew by $288.5 million during the quarter primarily in demand deposit accounts in Puerto
Rico and Florida,” he added.
Oriental
OFG Bancorp reported these highlights for Q3 2021: Total core revenues of $134.7 million compared to $133.3 million in Q2 2021. Total Interest Income of $112.1 million compared to $113.5 million in the second quarter of 2021. The third quarter of 2021 also reflected mortgage paydowns and PPP loan forgiveness mostly offset by increased income from auto and commercial loans, and investment securities. Average loan balances for Q3 2021were $6.47 billion compared to $6.60 billion in the previous quarter. “Results reflect consistently growing recurring net income, our larger scale, our focus on increasing digital utilization and customer service differentiation, and Puerto Rico’s nascent economic and post-pandemic recovery,” said José Rafael Fernández, Oriental’s president and CEO. “Q3 2021 new loan origination remained strong at $556 million. Compared to Q2 2021, loans exPPP increased, cost of funds declined 17 percent, customer deposits increased $154 million, and net interest income continued to steadily grow. Provision for credit losses was a $5 million net benefit as asset quality continued to trend to levels closer to U.S. peer banks. Total banking and financial service revenues rose 3 percent, and noninterest expenses fell 5 percent, reflecting in part reduced credit related expenses,” he noted.
