Safe and Sound

FirstBank Puerto Rico

Santurce, PR
4
Star Rating
FirstBank Puerto Rico is a Santurce, PR-based, FDIC-insured bank that opened its doors in 1949. Regulatory filings show the bank having equity of $2.03 billion on $12.25 billion in assets, as of December 31, 2017.

Thanks to the efforts of 2,546 full-time employees in 12 offices in multiple states, the bank currently holds loans and leases worth $8.65 billion, including real estate loans of $5.95 billion. The bank currently holds $8.83 billion in deposits from U.S. customers.

Overall, Bankrate believes that, as of December 31, 2017, FirstBank Puerto Rico exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three important criteria Bankrate used to score U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and as protection for depositors during times of financial trouble for the bank. Therefore, when it comes to measuring an a bank's financial stability, capital is essential. From a safety and soundness perspective, the more capital, the better.

FirstBank Puerto Rico scored above the national average of 13.13 points on our test to measure capital adequacy, scoring 24 out of a possible 30 points.

One important measure of this buffer is a bank's Tier 1 capital ratio. FirstBank Puerto Rico's Tier 1 capital ratio was 17.70 percent, higher than the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic downturns.

Overall, FirstBank Puerto Rico held equity amounting to 16.57 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization, could be affected by problem assets, such as unpaid mortgages.

A bank with large numbers of these kinds of assets could eventually be forced to use capital to absorb losses, cutting down on its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, reducing earnings and increasing the chances of a failure in the future.

FirstBank Puerto Rico scored 24 out of a possible 40 points on Bankrate's asset quality test, below the national average of 37.49.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 7.33 percent of FirstBank Puerto Rico's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

Banks maintain a reserve to deal with problem assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problem loans can be a widely used indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on FirstBank Puerto Rico's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its safety and soundness. Earnings may be retained by the bank, expanding its capital cushion, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses take away from a bank's ability to do those things.

FirstBank Puerto Rico underperformed the average on Bankrate's test of earnings, achieving a score of 8 out of a possible 30.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for FirstBank Puerto Rico was 3.62 percent, below the national average of 8.10 percent.

The bank recorded net income of $72.3 million on total equity of $2.03 billion for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.60 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.