In this post, I wish to demonstrate that Firstbank had very few commercial bankruptcy during this banking cycle. In particular, I wish to show that Firstbank was a much, much better lender than Westernbank and also probably better than Banco Popular.
First, we can just query the total bad debt for these three banks between Jan 1, 2008 and the present.
The result is $912MM for Westernbank, $672MM for Banco Popular and only $247MM for Firstbank. Firstbank appear much better than the other two. But you should also adjust for the size of their loans portfolios in Puerto Rico. Firstbank is between the other two in size. The bad debt as percent of total loans in Puerto Rico is 10.6% for Westernbank , 4.5% for Popular and only 1.9% for Firstbank. Again, Firstbank appear much better than the other two when it comes to defaulted debt leaving a public record.
I also queried all commercial bankruptcy filings after Jan 1, 2008 with Firstbank as a creditor that had at least $1 million of total debt and at least $500K for Firstbank. I found only 32 filings. The full list is below.
There is $78MM in total bankruptcy debt, 81% of which is secured debt. Only 7 are Chapter 7 liquidation cases. I looked at the assets/collateral and the type of bankruptcy filings and made a conservative estimate of losses and I came up with about $38MM or almost half the total balance due. Most of the secured debt in Chapter 11 reorganizations should survive without any principal reduction though the bank will surely charge-off the loan to collateral value.
There is only one loan (the $32MM secured loan to failed bank holding company R&G Financial) larger than $6MM. For Westernbank, I have counted 27 such loans over $6MM. Westernbank had 17 such loans over $20MM, their largest being the disastrous Inyx loan for $147MM unless you include the loan to Health Care Group, HIMA, for $400MM that was weak but current though involved in litigation against Westernbank.
In terms of commercial loan blowouts, there is really no comparison between Westernbank and Firstbank. Firstbank was a much, much better lender.
However, it appears that Firstbank has been taking lots of charge-offs and provisions for loan losses despite the low level of actual bankruptcy. For example, if we just look at the C&I and Commercial Mortgage categories we see that they charged off $104MM and $74MM in those two categories respectively in 2009 to the present (2010 Q3). They also have $179MM and $98MM currently in the loan-loss allowance for those two categories. Altogether, they have accounted for $455MM in charge-offs and provisions for those two categories. That is an order of magnitude higher than the actual losses that have shown up in actual bankruptcies. This is an indication that they are very conservatively reserved.
What about foreclosures? You can also count the foreclosure filings with El Boletin. Here is a chart for the major banks in PR. FBP looks to be doing well compared with its peers. Note again that these banks and their loan categories are different sizes. But FBP has a pretty large mortgage portfolio not a small one.
The full list of FBP bankruptcies follows:
| All Commercial Bankruptcies over $1MM (total) | ||||||||||
| from 1/1/2007 to 11/07/2010 | ||||||||||
| with FBP as creditor for more than $500K | ||||||||||
| all dollar amounts in $MM | ||||||||||
| Debtor | Chapter | FBP Secured | FBP Unsecured | Total Secured | Total Unsecured | Assets | Notes on loan and assets | Conservative estimate of loss | ||
| MIRAMAR ARCHITECTURAL PRODUCTS MFG, INC. | 7 | 1.2 | 0 | 2.3 | 0.4 | 3.5 | Inventory/AR based loan | 0.5 | ||
| A & A WASTE MANAGEMNET INC | 11 | 0.5 | 0 | 0.6 | 1.2 | 4 | Land,trucks, machinery, AR | 0.1 | ||
| PUNTO APARTE CIMA PUBLICIDAD, INC. | 11 | 0 | 2.8 | 0 | 5.3 | ? | Publishing company, assets not listed | 2.8 | ||
| TURBO GASOLINE, INC | 11 | 1.1 | 0 | 1.1 | 0.1 | 1.6 | Gas station lot worth 1.5 | 0.2 | ||
| MARRERO MELECIO WALESKA | 13 | 1.5 | 0 | 1.6 | 0.07 | 1.4 | 5 houses with mortgages | 0.2 | ||
| CARDONA FUSTER AMALIA E | 11 | 0.5 | 0 | 1.7 | 0.4 | ? | 0.2 | |||
| EL MUELLE SHOPPING CENTER | 7 | 4.4 | 0 | 6.6 | 0.2 | 6.1 | Land and buildings worth 5.4 | 1.5 | ||
| EL EMBARCADERO, INC. | 11 | 5.8 | 0 | 8.3 | 0.1 | 13.5 | Parcel of Land worth 13.5 | 0.2 | ||
| LAUREANO VEGA NOEL | 7 | 1.5 | 0 | 1.8 | 0.8 | ? | 0.2 | |||
| OCEAN BAY PROPERTIES, INC. | 7 | 2.2 | 0 | 0.2 | 6.7 | 1.2 | 1.5 | |||
| BROWN TORRES ERIC N. | 11 | 0 | 1.6 | 1.7 | 2.5 | ? | 1.6 | |||
| ASOCIADOS DE SAN JUAN | 11 | 1 | 0 | 1 | 0.3 | ? | 0.4 | |||
| RUED, INC | 11 | 0 | 0.8 | 0 | 7 | ? | 0.8 | |||
| SEGUROS JOAQUIN PALERM, INC. | 11 | 0 | 1.4 | 0 | 1.7 | ? | 1.4 | |||
| LOPEZ SANCHEZ MARISOL | 7 | 1.2 | 0 | 1.3 | 0.1 | ? | 0.5 | |||
| GONZALEZ PIMIENTEL LEIDEN E. | 7 | 0 | 1.1 | 0 | 1.8 | ? | 1.1 | |||
| VILLA PALMERA FUNERAL, INC. | 11 | 0.9 | 0 | 0.9 | 0.4 | ? | 0.1 | |||
| LR HOMES CORP. | 11 | 1.5 | 0.1 | 1.8 | 4.5 | 6.2 | 0.1 | |||
| ALEJANDRO ZUNIGA GLORIMAR | 7 | 0.6 | 0 | 0.9 | 0.3 | ? | 0.2 | |||
| & INVESTMENT GROUP, CO. | 7 | 0 | 1.3 | 0.8 | 1.7 | 2.6 | 1.3 | |||
| R&G Financial | 11 | 31.8 | 0 | 31.8 | 326.3 | 68.3 | 16 loan participations, 40 "total assets" FBP charged off $15MM which was adaqutely reserved for prior to 2010 | 15 | ||
| LA HACIENDA COUNTRY CLUB | 11 | 0.5 | 0 | 3.8 | 1.5 | 4.7 | Colleteralized by building in Santurce | 0.1 | ||
| CASILLAS BURGOS RAUL | 13 | 0.5 | 0 | 1 | 0.1 | ? | 0.2 | |||
| ARCE RODRIGUEZ JOSE A | 11 | 0.8 | 0 | 3.8 | 0.06 | ? | 0.3 | |||
| LG GUIJARRO TRUST | 11 | 1 | 0 | 1.1 | 0 | 1.3 | COMERCIAL BUILDING-SANTURCE 1.3 | 0.3 | ||
| LASTRA POWER EDUARDO J. | 7 | 0 | 2 | 0.1 | 3.2 | ? | 2 | |||
| HOSPITAL DE ANIMALES PERLA DEL SUR | 11 | 0 | 0.9 | 0 | 1.4 | ? | 0.9 | |||
| ALVAREZ PEREZ ANGEL A. | 11 | 1.5 | 0 | 14.5 | 10.3 | 20.6 | Former FBP CEO | 0.3 | ||
| RODRIGUEZ JARABO EMILIO J. | 7 | 0 | 1.7 | 1.3 | 3.1 | ? | 1.7 | |||
| GAETAN SANTIAGO VICTOR | 13 | 1.3 | 0.02 | 2.4 | 0.3 | ? | 0.5 | |||
| GONZALEZ PANTALEON PEDRO B | 7 | 0.2 | 1.2 | 0.4 | 1.6 | ? | 1.4 | |||
| DIAZ MONCLOVA NILDA M. | 11 | 1.7 | 0 | 1.7 | 0 | 4.3 | House and Commercial Building 4.2 | 0.1 | ||
| Total | 63.2 | 14.92 | 94.5 | 383.43 | 37.7 | |||||
| Total defaulted debt 2008-present | 78.12 | |||||||||
| Percent secured | 80.9 | |||||||||
| Expected loss | 37.7 | |||||||||
| Expected loss as percent of total amount owed | 48.3 | |||||||||
| 2009-2010 cumulative charge-offs in C&I | 104.2 | |||||||||
| Current Q3 allowance in C&I | 179.4 | |||||||||
| 2009-2010 cumulative charge-offs in commercial mort. | 73.8 | |||||||||
| Current Q3 allowance in commercial mortgage | 97.8 | |||||||||
| 2009-2010 charge-offs in C&I and Commercial mort | 178 | |||||||||
| Current Q3 allowance in C&I and Comm mortgage | 277.2 | |||||||||
| Chrage offs + allowance in C&I + Comm. Mortgage | 455.2 | |||||||||
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