UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13
of the Securities Exchange Act of 1934
For the fiscal year ended Commission File
December 31, 1999 001-14793
First BanCorp.
(Exact name of Corporation as specified in its charter)
Puerto Rico 66-0561882
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1519 Ponce de Leon Avenue, Stop 23
Santurce, Puerto Rico 00908
(Address of principal office) (Zip Code)
Corporation's telephone number,
including area code:
(787) 729-8200
Securities registered under Section 12(b)
of the Act:
Common Stock ($1.00 par value) New York Stock Exchange
Title of Class Name of exchange on which registered
Preferred Stock ($25.00 liquidation
preference per share) New York Stock Exchange
Title of Class Name of exchange on which registered
Securities registered under Section 12(g)
of the Act:
Not applicable
Indicate by check mark whether the Corporation (1) has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Corporation was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filer pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Corporation's knowledge, in definite proxy
1
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
State the aggregate market value of the voting common stock held by
nonaffiliates of the Corporation: $380,673,431 (based on the closing sales price
of $17.25 at March 21, 2000 for such shares). Number of shares of Common Stock
outstanding as of March 15, 2000:
27,310,652
Documents Incorporated by Reference
(1) Portions of the annual report to security holders for the fiscal year ended
December 31, 1999 are incorporated by reference in Part I, II and IV; and (2)
Portions of the definite proxy statement filed on March 21, 2000 are
incorporated by reference in Part III.
2
FIRST BANCORP.
CONTENTS
PART I
Item 1. Business ........................................................................ 4
Item 2. Properties ........................................................................ 18
Item 3. Legal Proceedings ................................................................... 18
Item 4. Submission of Matters to a Vote of
Security Holders ................................................................ 18
PART II
Item 5. Market for Corporation's Common Equity and
Related Stockholder Matters ..................................................... 19
Item 6. Selected Financial Data ............................................................. 20
Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations..................................20
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk.................................................................20
Item 8. Financial Statements and Supplementary Data ......................................... 20
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure............................................20
PART III
Item 10. Directors, Executive Officers and Control
Persons of the Corporation ..................................................... 21
Item 11. Executive Compensation ...............................................................21
Item 12. Security Ownership of Certain Beneficial
Owners and Management.............................................................21
Item 13. Certain Relationships and Related Transactions........................................21
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K ............................................................. 22
SIGNATURES .............................................................................................24
3
PART I
Item 1. Business
GENERAL
First BanCorp. (the Corporation) is a publicly owned bank holding
company, registered under the Bank Holding Company Act of 1956, as amended and,
accordingly, subject to the supervision and regulation by the Federal Reserve
Board. The Corporation was incorporated on March 17, 1998 under the laws of the
Commonwealth of Puerto Rico to serve as the bank holding company for FirstBank
Puerto Rico (FirstBank or the Bank). As a result of this reorganization
consummated on October 1, 1998, each of the Bank's outstanding shares of common
stock was converted into one share of common stock of the new bank holding
company.
Based on total assets, the Corporation is the second largest locally
owned bank holding company headquartered in the Commonwealth of Puerto Rico and
the third largest depository institution in Puerto Rico. The Corporation had
total assets of $4.722 billion, total deposits of $2.565 billion and total
stockholders' equity of $294.9 million at December 31, 1999.
The Corporation's only subsidiary, FirstBank, conducts its business
through its main office located in San Juan, Puerto Rico, 45 full-service
branches in Puerto Rico and three branches in the U.S. Virgin Islands of St.
Thomas and St. Croix. The Bank also has four loan origination offices focusing
on mortgage loans, two loan origination offices focusing on personal loans and
credit cards, and two loan origination offices focusing on auto loans. First
chartered in 1948, FirstBank was the first savings and loan association
established in Puerto Rico. It has been a stockholder-owned institution since
January 1987. Effective at the close of business on October 31, 1994, FirstBank
converted to a Puerto Rico chartered commercial bank. The Bank is subject to
supervision, examination and regulation by the Office of the Commissioner of
Financial Institutions of Puerto Rico (the Commissioner) and the Federal Deposit
Insurance Corporation (FDIC), which insures its deposits through the Savings
Association Insurance Fund (SAIF). FirstBank has two subsidiaries, First Leasing
and Rental Corporation, a vehicle leasing and daily rental company with six
offices, and First Federal Finance Corp. D/B/A Money Express "La Financiera," a
small loan company with 27 offices.
The Corporation has distinguished itself by providing innovative
marketing strategies and novel products to attract clients. Besides the branches
and lending offices described above, the Corporation has offered a telephone
information service called "Telebanco" since 1983. This was the first
telebanking service offered in Puerto Rico. The Corporation's clients have
access to an extensive ATM network all over the world. The Corporation was the
first in Puerto Rico to open on weekends and the first to offer in-store
branches to its clients. The Corporation was also the first banking institution
in Puerto Rico with a presence on the Internet. During 2000, First BanCorp. will
launch a new, interactive web site where clients will be able to perform all
types of banking transactions. The Corporation is committed to continue
providing the most efficient and cost effective banking services possible in
selected products niches.
The information under the caption "Achievements in 1999" on pages 10 to
12 and the information under Note 33 - Segment Information on pages 71 to 72 of
the Corporation's annual report to security holders for the year ended December
31, 1999 is incorporated herein by reference.
4
SUPERVISION AND REGULATION
Bank Holding Company Activities and Other Limitations. The Corporation
is subject to ongoing regulation, supervision, and examination by the Federal
Reserve Board, and is required to file with the Federal Reserve Board periodic
and annual reports and other information concerning its own business operations
and those of its subsidiaries. In addition, under the provisions of the Bank
Holding CompanyAct, a bank holding company must obtain Federal Reserve Board
approval before it acquires directly or indirectly ownership or control of more
than 5% of the voting shares of a second bank. Furthermore, Federal Reserve
Board approval must also be obtained before such a company acquires all or
substantially all of the assets of a second bank or merges or consolidates with
another bank holding company. The Federal Reserve Board also has authority to
issue cease and desist orders against holding companies and their non-bank
subsidiaries.
A bank holding company is prohibited under the Bank Holding Company
Act, with limited exceptions, from engaging, directly or indirectly, in any
business unrelated to the business of banking, managing or controlling
corporations. One of the exceptions to these prohibitions permits ownership by a
bank holding company of the shares of any company if the Federal Reserve Board,
after due notice and opportunity for hearing, by regulation or order has
determined that the activities of the company in question are so closely related
to the business of banking or of managing or controlling banks as to be a proper
incident thereto.
Under the Federal Reserve Board policy, a bank holding company such as
the Corporation is expected to act as a source of financial strength to its main
banking subsidiaries and to also commit support to them. This support may be
required at times when, absent such policy, the bank holding company might not
otherwise provide such support. In the event of a bank holding company's
bankruptcy, any commitment by the bank holding company to the federal bank
regulatory agency to maintain capital of a subsidiary bank will be assumed by
the bankruptcy trustee and be entitled to a priority of payment. In addition,
any capital loans by a bank holding company to any of its subsidiary banks must
be subordinated in right of payment to deposits and to certain other
indebtedness of such subsidiary bank. FirstBank is currently the only depository
institution subsidiary of the Corporation.
The Gramm-Leach-Bliley Act, signed into law on November 12, 1999,
revises and expands the existing provisions of the Bank Holding Company Act by
including a new section that permits a bank holding company to elect to become a
financial holding company to engage in a full range of financial activities. The
qualification requirements and the process for a bank holding company that
elects to be treated as a financial holding company requires that all the
subsidiary banks controlled by the bank holding company at the time of election
to become a financial holding company must be and remain at all times well
capitalized and well managed.
The Gramm-Leach-Bliley Act further requires that in the event that the
bank holding company elects to become a financial holding company, the election
must be made by filing a written declaration with the appropriate Federal
Reserve Bank and comply with the following: (i) state that the bank holding
company elects to become a financial holding company; (ii) provide the name and
head office address of bank holding company and each depository institution
controlled by the bank holding company; (iii) certify that all depository
institutions controlled by the bank holding company are well capitalized as of
the date the bank holding company files for the election; (iv) provide the
capital ratios for all relevant capital measures as of the close of the previous
quarter for each depository institution controlled by the bank holding company;
and (v) certify that all depository institutions controlled by the bank holding
company are well managed as of the date the bank holding company files the
5
election. The bank holding company must have also achieved at least a rating of
satisfactory record of meeting community credit needs under the Community
Reinvestment Act during the institution's most recent examination.
The financial holding companies may engage, directly or indirectly, in
any activity that is determined to be (i) financial in nature, (ii) incidental
to such financial activity, or (iii) complementary to a financial activity and
does not pose a substantial risk to the safety and soundness of depository
institutions or the financial system generally. The Gramm-Leach-Bliley Act,
specifically provides that the following activities have been determined to be
"financial in nature": (a) Lending, trust and other banking activities; (b)
Insurance activities; (c) Financial or economic advice or services; (d) Pooled
investments; (e) Securities underwriting and dealing; (f) Existing bank holding
company domestic activities; (g) Existing bank holding company foreign
activities; and (h) Merchant banking activities.
In addition, the Gramm-Leach-Bliley Act specifically gives the Federal
Reserve Board the authority, by regulation or order, to expand the list of
"financial" or "incidental" activities, but requires consultation with the U.S.
Treasury, and gives the Federal Reserve Board authority to allow a financial
holding company to engage in any activity that is "complementary" to a financial
activity and does not "pose a substantial risk to the safety and soundness of
depository institutions or the financial system generally."
State Chartered Non-Member Bank. FirstBank is subject to extensive
regulation and examination by the Commissioner and the FDIC, and subject to
certain requirements established by the Federal Reserve Board. The federal and
state laws and regulations which are applicable to banks regulate, among other
things, the scope of their business, their investments, their reserves against
deposits, the timing and availability of deposited funds and the nature and
amount of and collateral for certain loans. In addition to the impact of
regulations, commercial banks are affected significantly by the actions of the
Federal Reserve Board as it attempts to control the money supply and credit
availability in order to influence the economy.
Dividend Restrictions. The Corporation is subject to certain
restrictions generally imposed on Puerto Rico corporations (i.e., that dividends
may be paid out only from the Corporation's net assets in excess of capital or
in the absence of such excess, from the Corporation's net earnings for such
fiscal year and/or the preceding fiscal year). The Federal Reserve Board has
also issued a policy statement that provides that bank holding companies should
generally pay dividends only out of current operating earnings.
At present, the principal source of funds for the Corporation is
earnings from FirstBank. The ability of FirsBank to pay dividends on its common
stock is restricted by the Banking Law (as defined herein), the Federal Deposit
Insurance Act and FDIC regulations. In general terms, the Puerto Rico Banking
Law provides that when the expenditures of a bank are greater than receipts, the
excess of expenditures over receipts shall be charged against undistributed
profits of the bank and the balance, if any, shall be charged against the
required reserve fund of the bank. If there is no sufficient reserve fund to
cover such balance in whole or in part, the outstanding amount shall be charged
against the bank's capital account. The Puerto Rico Banking Law provides that
until said capital has been restored to its original amount and the reserve fund
to 20% of the original capital, the bank may not declare any dividends.
In general terms, the Federal Deposit Insurance Act and the FDIC
regulations restrict the payment of dividend when a bank is undercapitalized,
when a bank has failed to pay insurance assessments, or when there are safety
and soundness concerns regarding such bank.
6
Limitations on Transactions with Affiliates. Transactions between
financial institutions such as the Bank and any affiliate are governed by
Sections 23A and 23B of the Federal Reserve Act. An affiliate of a financial
institution is any company or entity, which controls, is controlled by or is
under common control with the financial institution. In a holding company
context, the parent bank holding company and any companies which are controlled
by such parent holding company are affiliates of the financial institution.
Generally, Sections 23A and 23B of the Federal Reserve Act (i) limit the extent
to which the financial institution or its subsidiaries may engage in "covered
transactions" with any one affiliate to an amount equal to 10% of such
institution's capital stock and surplus, and contain an aggregate limit on all
such transactions with all affiliates to an amount equal to 20% of such capital
stock and surplus and (ii) require that all such transactions be on terms
substantially the same, or at least as favorable, to the institution or
subsidiary as those provided to a non-affiliate. The term "covered transaction"
includes the making of loans, purchase of assets, issuance of a guarantee and
other similar transactions.
The Gramm-Leach-Bliley Act amended several provisions of section 23A
and 23B of the Federal Reserve Act. The amendments provide that financial
subsidiaries of banks are treated as affiliates for purposes of sections 23A and
23B of the Federal Reserve Act, but the amendment provides that (i) the 10%
capital limit on transactions between the bank and such financial subsidiary as
an affiliate is not applicable, and (ii) the investment by the bank in the
financial subsidiary does not include retained earnings in the financial
subsidiary. Certain anti-evasion provisions have been included that relate to
the relationship between any financial subsidiary of a bank and sister companies
of the bank: (1) any purchase of, or investment in, the securities of a
financial subsidiary by any affiliate of the parent bank is considered a
purchase or investment by the bank; or (2) if the Federal Reserve Board
determines that such treatment is necessary, any loan made by an affiliate of
the parent bank to the financial subsidiary is to be considered a loan made by
the parent bank.
In addition, Sections 22(h) and (g) of the Federal Reserve Act place
restrictions on loans to executive officers, directors and principal
stockholders. Under Section 22(h) of the Federal Reserve Act loans to a
director, an executive officer and to a greater than 10% stockholder of a
financial institution, and certain affiliated interests of these, may not
exceed, together with all other outstanding loans to such person and affiliated
interests, the financial institution's loans to one borrower limit, generally
equal to 15% of the institution's unimpaired capital and surplus. Section 22(h)
of the Federal Reserve Act also requires that loans to directors, executive
officers and principal stockholders be made on terms substantially the same as
offered in comparable transactions to other persons and also requires prior
board approval for certain loans. In addition, the aggregate amount of
extensions of credit by a financial institution to insiders cannot exceed the
institution's unimpaired capital and surplus. Furthermore, Section 22(g) of the
Federal Reserve Act places additional restrictions on loans to executive
officers.
Capital Requirements. The Federal Reserve Board has adopted capital
adequacy guidelines pursuant to which it assesses the adequacy of capital in
examining and supervising a bank holding company and in analyzing applications
to it under the Bank Holding Company Act. The Federal Reserve Board capital
adequacy guidelines generally require bank holding companies to maintain total
capital equal to 8% of total risk-adjusted assets, with at least one-half of
that amount consisting of Tier I or core capital and up to one-half of that
amount consisting of Tier II or supplementary capital. Tier I capital for bank
holding companies generally consists of the sum of common stockholders' equity
and perpetual preferred stock, subject in the case of the latter to limitations
on the kind and amount of such stocks which may be included as Tier I capital,
less goodwill and, with certain exceptions, intangibles. Tier II capital
generally consists of hybrid capital instruments, perpetual preferred stock
which is not
7
eligible to be included as Tier I capital; term subordinated debt and
intermediate-term preferred stock; and, subject to limitations, generally
allowances for loan losses. Assets are adjusted under the risk-based guidelines
to take into account different risk characteristics, with the categories ranging
from 0% (requiring no additional capital) for assets such as cash to 100% for
the bulk of assets which are typically held by a bank holding company, including
multi-family residential and commercial real estate loans, commercial business
loans and commercial loans. Off-balance sheet items also are adjusted to take
into account certain risk characteristics.
In addition to the risk-based capital requirements, the Federal Reserve
Board requires bank holding companies to maintain a minimum leverage capital
ratio of Tier I capital to total assets of 3.0%. Total assets for this purpose
does not include goodwill and any other intangible assets and investments that
the Federal Reserve Board determines should be deducted from Tier I capital. The
Federal Reserve Board has announced that the 3.0% Tier I leverage capital ratio
requirement is the minimum for the top-rated bank holding companies without a
supervisory, financial or operational weaknesses or deficiencies or those which
are not experiencing or anticipating significant growth. Other bank holding
companies will be expected to maintain Tier I leverage capital ratios of at
least 4.0% or more, depending on their overall condition. At December 31, 1999,
the Corporation exceeded each of its capital requirements and was a
well-capitalized institution as defined in the Federal Reserve Board
regulations.
FDIC Capital Requirements. The FDIC has promulgated regulations and
adopted a statement of policy regarding the capital adequacy of state-chartered
non-member banks like the Bank. These requirements are substantially similar to
those adopted by the Federal Reserve Board regarding bank holding companies, as
described above.
The FDIC also requires that banks meet a risk-based capital standard.
The risk-based capital standard for banks requires the maintenance of total
capital (which is defined as Tier I capital and supplementary (Tier 2) capital)
to risk weighted assets of 8%. In determining the amount of risk-weighted of 0%
to 100%, based on the risks the FDIC believes are inherent in the type of asset
or item. The components of Tier I capital are equivalent to those discussed
above under the 3% leverage capital standard. The components of supplementary
capital include certain perpetual preferred stock, certain mandatory convertible
securities, certain subordinated debt and intermediate preferred stock and
generally allowances for loan and lease losses. Allowance for loan and lease
losses includable in supplementary capital is limited to a maximum of 1.25% of
risk-weighted assets. Overall, the amount of capital counted toward
supplementary capital cannot exceed 100% of core capital.
The FDIC's capital regulations establish a minimum 3.0% Tier I capital
to total assets requirement for the most highly-rated state-chartered,
non-member banks, with an additional cushion of at least 100 to 200 basis points
for all other state-chartered, non-member banks, which effectively will increase
the minimum Tier I leverage ratio for such other banks to 4.0% to 5.0% or more.
Under the FDIC's regulation, the highest-rated banks are those that the FDIC
determines are not anticipating or experiencing significant growth and have well
diversified risk, including no undue interest rate risk exposure, excellent
asset quality, high liquidity, good earnings and, in general, which are
considered a strong banking organization and are rated composite I under the
Uniform Financial Institutions Rating System. Leverage or core capital is
defined as the sum of common stockholders' equity including retained earnings,
noncumulative perpetual preferred stock and related surplus, and minority
interests in consolidated subsidiaries, minus all intangible assets other than
certain qualifying supervisory goodwill and certain purchased mortgage servicing
rights. At December 31, 1999, the Bank exceeded each of its capital requirements
and was a well-capitalized institution as defined in the FDIC regulations.
8
Activities and Investments. The activities and equity investments of
FDIC-insured, state-chartered banks such as the Bank are generally limited to
those that are permissible for national banks. Under regulations dealing with
equity investments, an insured state bank generally may not directly or
indirectly acquire or retain any equity investments of a type, or in an amount,
that is not permissible for a national bank. An insured state bank is not
prohibited from, among other things, (i) acquiring or retaining a majority
interest in a subsidiary, (ii) investing as a limited partner in a partnership
the sole purpose of which is direct or indirect investment in the acquisition,
rehabilitation or new construction of a qualified housing project, provided that
such limited partnership investments may not exceed 2% of the bank's total
assets, (iii) acquiring up to 10% of the voting stock of a company that solely
provides or reinsures directors', trustees' and officers' liability insurance
coverage or bankers' blanket bond group insurance coverage for insured
depository institutions, and (iv) acquiring or retaining the voting shares of a
depository institution if certain requirements are met. In addition, an insured
state-chartered bank may not, directly, or indirectly through a subsidiary,
engage as "principal" in any activity that is not permissible for a national
bank unless the FDIC has determined that such activity would pose no risk to the
insurance fund of which it is a member and the bank is in compliance with
applicable regulatory capital requirements. Any insured state-chartered bank
directly or indirectly engaged in any activity that is not permitted for a
national bank must cease the impermissible activity.
Puerto Rico Banking Law. As a commercial bank organized under the laws
of Commonwealth, FirstBank is subject to supervision, examination and regulation
by the Commissioner pursuant to the Puerto Rico Banking Law of 1933, as amended
(the Banking Law). The Banking Law contains provisions governing the
incorporation and organization, rights and responsibilities of directors,
officers and stockholders as well as the corporate powers, lending limitations,
capital requirements, investment requirements and other aspects of the Bank and
its affairs. In addition, the Commissioner is given extensive rule making power
and administrative discretion under the Banking Law.
The Banking Law authorizes Puerto Rico commercial banks to conduct
certain financial and related activities directly or through subsidiaries,
including finance leasing of personal property and operating a small loan
company.
The Banking Law requires every bank to maintain a legal reserve which
shall not be less than twenty percent (20%) of its demand liabilities, except
government deposits (federal, state and municipal) which are secured by actual
collateral. The reserve is required to be composed of any of the following
securities or combination thereof: (1) legal tender of the United States; (2)
checks on banks or trust companies located in any part of Puerto Rico, to be
presented for collection during the day following that on which they are
received, and (3) money deposited in other banks provided said deposits are
authorized by the Commissioner, subject to immediate collection.
The Banking Law permits Puerto Rico commercial banks to make loans to
any one person, firm, partnership or corporation, up to an aggregate amount of
fifteen percent (15%) of paid-in capital and reserve fund of the commercial
bank. If such loans are secured by collateral worth at least twenty-five percent
(25%) more than the amount of the loan, the aggregate maximum amount may reach
one third of the paid-in capital of the commercial bank, plus its reserve fund.
There are no restrictions under the Banking Law on the amount of loans which are
wholly secured by bonds, securities and other evidences of indebtedness of the
Government of the United States, of the Commonwealth of Puerto Rico, or by
bonds, not in default, of municipalities or instrumentalities of the
Commonwealth of Puerto Rico.
9
The Banking Law also prohibits Puerto Rico commercial banks from making
loans secured by their own stock, and from purchasing their own stock, unless
such purchase is made pursuant to a stock repurchase program approved by the
Commissioner or is necessary to prevent losses because of a debt previously
contracted in good faith. The stock so purchased by the Puerto Rico commercial
bank must be sold by the bank in a public or private sale within one year from
the date of purchase.
The Banking Law provides that no officers, directors, agents or
employees of a Puerto Rico commercial bank may serve or discharge a position of
officer, director, agent or employee of another Puerto Rico commercial bank,
financial company, savings and loan association, trust company, company engaged
in granting mortgage loans or any other institution engaged in the money lending
business in Puerto Rico. This prohibition is not applicable to the subsidiaries
of a Puerto Rico commercial bank.
The Banking Law requires that Puerto Rico commercial banks strike each
year a general balance of their operations, and to submit such balance for
approval to a regular general meeting of stockholders, together with an
explanatory report thereon. The Banking Law also requires that at least ten
percent (10%) of the yearly net income of a Puerto Rico commercial bank be
credited annually, to a reserve fund. This apportionment is required to be done
every year until such reserve fund shall be equal to the total paid in capital
of the bank.
The Banking Law also provides that when the expenditures of a Puerto
Rico commercial bank are greater than receipts, the excess of the expenditures
over receipts shall be charged against the undistributed profits of the bank,
and the balance, if any, shall be charged against the reserve fund, as a
reduction thereof. If there is no reserve fund sufficient to cover such balance
in whole or in part, the outstanding amount shall be charged against the capital
account and no dividend shall be declared until said capital has been restored
to its original amount and the reserve fund to twenty percent (20%) of the
original capital.
The Finance Board, which is composed of the Commissioner, the Secretary
of the Treasury, the Secretary of Commerce, the Secretary of Consumer Affairs,
the President of the Housing Bank, the President of the Government Development
Bank of Puerto Rico, and three public interest representatives, has the
authority to regulate the maximum interest rates and finance charges that may be
charged on loans to individuals and unincorporated businesses in Puerto Rico.
The current regulations of the Finance Board provide that the applicable
interest rate on loans to individuals and unincorporated businesses, including
real estate development loans but excluding certain other personal and
commercial loans secured by mortgages on real estate properties, is to be
determined by free competition. Recent Regulations adopted by the Finance Board
deregulated the maximum finance charges on retail installment sales contracts,
and for credit card purchases. These regulations do not set a maximum rate for
charges on retail installment sales contracts and for credit card purchases and
set aside previous regulations which regulated these maximum finance charges.
Furthermore, there is no maximum rate set for installment sales contracts
involving motor vehicles, commercial, agricultural and industrial equipment,
commercial electric appliances and insurance premiums.
10
MARKET AREA AND COMPETITION
Puerto Rico, where the banking market is highly competitive, is the
main geographic service area of the Corporation. At December 31, 1999, Puerto
Rico had 17 banking institutions with a total of approximately $49 billion in
assets according to industry statistics published by the Commissioner. The
Corporation ranked third based on total assets at December 31, 1999. The other
largest banks in order of size were Banco Popular de Puerto Rico and Banco
Santander Puerto Rico. Puerto Rico banks are subject to the same federal laws,
regulations and supervision that apply to similar institutions on the United
States mainland.
In addition, the Corporation competes with brokerage firms with retail
operations, credit unions, cooperatives, small loan companies and mortgage banks
in Puerto Rico.
The Corporation encounters intense competition in attracting and
retaining deposits and in its consumer and commercial lending activities. The
Corporation competes for loans with other financial institutions, some of which
are larger and have available resources greater than those of the Corporation.
There can be no assurance that in the future the Corporation will be able to
continue to increase its deposit base or originate loans in the manner or on the
terms on which it has done so in the past.
Management believes that the Corporation has been able to compete
effectively for deposits and loans by offering a variety of transaction account
products and loans with competitive features, by pricing its products at
competitive interest rates and by offering convenient branch locations and
emphasizing the quality of its service. The Corporation's ability to originate
loans depends primarily on the rates and fees charged and the service it
provides to its borrowers in making prompt credit decisions.
11
FINANCIAL CONDITION
The Corporation's total assets at December 31, 1999 amounted to $4,721.6
million, $704.2 million over the $4,017.4 million at December 31, 1998.
The following table sets forth the maturity distribution of earning
assets at December 31, 1999:
As of December 31, 1999
Maturities
After one year
through five years After five years
Fixed Variable Fixed Variable
One year interest interest interest interest
or less rates rates rates rates Total
(In thousands)
Money market securities $ 34,031 $ 1,186 $ 35,217
-------- ---------- ----------
Investment and
trading securities 283,037 $ 28,817 $ 2,454 1,439,595 $ 22,043 1,775,946
-------- --------- -------- ---------- --------- ----------
Loans:
Residential mortgage 12,555 53,080 1,508 400,639 5,781 473,563
Construction 706 773 130,589 132,068
Commercial and commercial
real estate 138,669 45,326 179,490 88,218 575,357 1,027,060
Lease financing 16,102 69,590 85,692
Consumer 393,214 599,479 34,292 1,026,985
-------- --------- -------- ----------- -------- -----------
Total Loans 561,246 767,475 181,771 523,149 711,727 2,745,368
-------- --------- -------- ---------- -------- -----------
Total $878,314 $796,292 $184,225 $1,963,930 $733,770 $4,556,531
======== ======== ======== ========== ======== ==========
LENDING ACTIVITIES
At December 31, 1999 First BanCorp.'s lending activities include total
commercial loans of $1,159.1 million (42% of total loans), total consumer loans
of $1,112.7 million (41% of total loans), and total residential mortgage loans
of $473.6 million (17% of total loans). The Corporation's portfolio of
commercial loans is composed in its majority of asset based financing and
commercial mortgage loans. Total commercial loans include $371.6 million in
commercial real estate loans and $132.1 million in construction loans. . The
consumer loan portfolio consists principally of auto loans, personal loans and
credit cards. Finance leases of $85.7 million, which are included in the total
amount of consumer loans, are mostly composed of loans to individuals to finance
the acquisition of an auto.
12
The following table sets forth the composition of First BanCorp.'s
total loan at the dates indicated.
1999 1998 1997 1996 1995
------------ ------------ ------------ -------------- ------------
(In thousands)
Residential real estate loans:
Secured by first mortgages:
Conventional $395,885 $237,561 $223,098 $224,253 $231,744
Insured by government agencies:
Federal Housing Administration
and Veterans Administration 6,543 8,185 10,176 9,282 12,418
Puerto Rico Housing Corporation
and Finance Agency 32,928 38,516 44,073 50,016 55,325
Secured by second mortgages 5,706 4,956 14,171 14,375 23,208
----------- -------- -------- ----------- ---------
441,062 289,218 291,518 297,926 322,695
Deferred net loan fees (5,293) (6,848) (9,138) (8,531) (8,461)
---------- -------- -------- ------------ -----------
Residential real estate loans 435,769 282,370 282,380 289,395 314,234
--------- ------- ------- ---------- ----------
Commercial loans:
Construction, land acquisition and
land improvements 288,302 161,498 15,400 12,407 12,088
Undisbursed portion of loans
in process (156,234) (98,535) (6,121) (2,198) (2,855)
--------- --------- -------- ---------- ---------
Construction loans 132,068 62,963 9,279 10,209 9,233
Commercial loans 655,417 368,549 235,571 174,770 156,369
Commercial mortgage 371,643 332,219 306,734 256,227 210,645
------------- ---------- --------- ----------- -----------
Commercial loans 1,159,128 763,731 551,584 441,206 376,247
----------- ---------- --------- ---------- -----------
Finance leases 85,692 52,214 42,500 58,481 32,965
------------- ----------- ---------- ----------- -----------
Consumer and other loans:
Personal 435,752 472,588 676,965 749,732 619,549
Auto 532,242 512,116 512,938 510,083 329,296
Boat 37,018 32,209 29,145 29,458 30,168
Credit card 168,045 125,956 116,734 109,259 79,164
Home equity reserve 2,657 3,385 4,282 5,828 6,811
Other 106 128 148 651 795
Unearned finance interest (148,836) (145,284) (267,599) (305,870) (238,146)
---------- ----------- ------------ ---------- -----------
Consumer and other loans 1,026,985 1,001,098 1,072,613 1,099,141 827,636
---------- ---------- ----------- ---------- -----------
Loans receivable 2,707,574 2,099,413 1,949,077 1,888,223 1,551,083
Loans held for sale 37,794 20,642 10,225 7,851 5,523
------------ ----------- ----------- ------------ -----------
Total loans 2,745,368 2,120,054 1,959,302 1,896,074 1,556,606
---------- --------- ----------- --------- ----------
Allowance for loan losses (71,784) (67,854) (57,712) (55,254) (55,009)
------------ ---------- ----------- ----------- ----------
Total loans-net $2,673,584 $2,052,200 $1,901,590 $1,840,821 $1,501,597
========== ========== ========== ========== ==========
The following table sets forth the composition of First BanCorp.'s total
loan portfolio before the allowance for loan losses and the weighted average
taxable equivalent interest rates of loans in each category at December 31,
1999.
13
December 31, 1999
Weighted
(In thousands) average rate
Residential real estate loans $ 473,563 8.94%
-------------
Construction loans 132,068 8.88%
--------------
Commercial and commercial real estate loans 1,027,060 8.15%
-------------
Finance leases 85,692 12.41%
---------------
Consumer and other loans
Auto 430,798 12.65%
Personal 391,330 16.79%
Credit card 168,045 17.95%
Boat 34,049 10.47%
Home equity reserve loans 2,657 12.88%
Other 106 8.15%
----------------
Total consumer and other loans 1,026,985 15.02%
-------------
Total $ 2,745,368 11.02%
===========
Loan Activity
The following table sets forth certain additional data related to the
Corporation's loan portfolio net of the allowance for loan losses for the dates
indicated:
For the year ended December 31,
------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(Dollars in thousands)
Beginning balance $2,052,200 $1,901,590 $1,840,821 $1,501,597 $1,463,860
---------- ---------- ---------- ---------- ----------
Residential real estate loans originated 216,713 93,552 133,047 98,379 91,739
Commercial loans originated(1) 623,590 307,009 124,121 79,308 82,944
Finance leases originated 51,618 34,427 684 47,975 37,967
Consumer loans originated 515,348 371,333 569,620 823,884 663,056
----------- ----------- ---------- ---------- ---------
Total loans originated 1,407,269 806,321 827,472 1,049,546 875,706
Sales of loans (1,267) (1,250) (360,428)
Repayments and securitization
of loans into mortgage backed securities (719,964) (559,727) (665,175) (654,450) (436,616)
Other decreases(2) (64,654) (95,984) (100,278) (55,872) (40,925)
------------ ------------- ------------ ------------- -----------
Net increase 621,384 150,610 60,769 339,224 37,737
------------ ------------ ------------- ------------ ----------
Ending balance $2,673,584 $2,052,200 $1,901,590 $1,840,821 $1,501,597
========== ========== ========== ========== ==========
Percentage increase 30.28% 7.92% 3.30% 22.59% 2.58%
(1) Includes commercial real estate and construction loans.
(2) Includes the change in the allowance for loan losses and cancellation
of loans due to the repossession of the collateral.
14
INVESTMENT ACTIVITIES
The Corporation's investments are managed by the Treasury and
Investment Division, under the supervision of the Senior Vice President,
Treasury and Investments, who reports to the Corporation's Senior Executive Vice
President and Chief Financial Officer. Investment policy is set by the
Corporation's Asset Liability Management and Investment Committee (the ALCO),
which includes the President and Chief Executive Officer, the Senior Executive
Vice President and Chief Financial Officer, the Senior Executive Vice President
and Chief Lending Officer, the Executive Vice President - Sales, Distribution
and Mortgage Banking, the Senior Vice President - Treasury and Investments, and
the Corporation's Economist. Significant investment transactions are reported to
the ALCO.
The Corporation's investment policy is designed primarily to provide a
portfolio of high credit quality while seeking high levels of net interest
income within acceptable limits of interest rate risk, credit risk, capital and
liquidity. Under the Corporation's current policy, the Treasury and Investments
Division is authorized to purchase and sell federal funds, certificates of
deposit in other banks, bankers' acceptances of commercial banks that are
members of the FDIC, mortgage backed securities, U.S. and Puerto Rico
obligations, stocks and other investments. In addition, the Treasury and
Investments Division is authorized to invest in securities purchased under
agreements to resell. As part of the Corporation's asset and liability
management, the Treasury and Investments Division also engages in hedging
activities as approved by the Board of Directors and as set forth in the
Corporation's hedging policy monitored by the ALCO.
SOURCES OF FUNDS
First BanCorp.'s principal funding sources are branch deposits,
collateralized deposits, federal funds purchased and securities sold under
agreements to repurchase, and notes. Through its branch banking system First
BanCorp. offers individual non-interest bearing checking accounts, savings
accounts, personal interest-bearing checking accounts, certificates of deposit,
IRA accounts and commercial non-interest bearing checking accounts.
Deposit Accounts
Deposits represent First BanCorp.'s largest source of funding. The
Corporation's deposit accounts are insured up to applicable limits by the SAIF.
Management makes retail deposit pricing decisions periodically through the ALCO,
which adjusts the rates paid on retail deposits in response to general market
conditions and local competition. Pricing decisions take into account the rates
being offered by other local banks, LIBOR and mainland United States interest
rates. The following table presents the amount and weighted average interest
rates of deposit accounts as of each date indicated in the categories set forth
below, including the percentage of total assets represented by those deposits.
15
Weighted average
rates at
December 31, December 31,
1999 1999 1998 1997
(Dollars in thousands)
Non-interest bearing checking accounts $ 211,896 $ 173,104 $ 140,099
Saving accounts 2.93% 447,946 416,424 403,129
Interest bearing checking accounts 3.39% 162,601 130,883 121,452
Certificate accounts 5.60% 1,742,978 1,054,634 929,955
----------- ----------- ------------
Total $2,565,422 $1,775,045 $1,594,635
========== ========== ==========
Weighted average rate on interest
bearing deposits 4.94%
Total deposits as a percentage of
total assets 54.33% 44.18% 47.92%
Certificate accounts include institutional deposits which consist
mainly of brokered certificate of deposits, and certificates issued to agencies
of the Government of Puerto Rico. FDIC regulations adopted under FDICIA govern
the receipt of brokered deposits. Under these regulations, a bank cannot accept,
roll over or renew brokered deposits, which term is defined also to include any
deposit with an interest rate more than 75 basis points above prevailing rates,
unless (i) it is well capitalized or (ii) it is adequately capitalized and
receives a waiver from the FDIC. The Bank has no such restrictions since it is a
well capitalized institution.
The following table presents a maturity summary of certificates of deposits
with balances of $100,000 or more at December 31, 1999.
(In thousands)
Three months or less $ 439,795
Over three months to six months 237,927
Over six months to one year 246,672
Over one year 358,689
----------
Total $1,283,083
==========
Borrowings
The following table presents the amount and weighted average interest
rates of borrowings as of each date indicated in the categories set forth below.
Weighted average
rates at December 31, December 31,
---------------------- -----------------------------------
1999 1999 1998 1997
---- ------ ----- ----
(Dollars in thousands)
Borrowings:
Federal funds purchased and
securities sold under
agreements to repurchase 5.38% $1,447,732 $1,620,630 $ 965,869
FHLB-N.Y. advances 5.96% 50,000 2,600 29,000
Notes payable 5.59% 55,500 118,100 132,350
Other short-term borrowings 6.20% 152,484 86,595 231,505
Subordinated notes 7.72% 93,594 99,496 99,423
------------- ------------ -------------
Total 5.60% $1,799,310 $1,927,421 $1,458,147
========== ========== ==========
Total borrowed funds as a percentage
of total assets 38.11% 47.98% 43.82%
16
Weighted average interest rate during the period:
Securities sold under agreements to repurchase 5.07% 5.07% 5.08%
Other short-term borrowings 6.29% 6.39% 6.10%
CAPITAL
At December 31, 1999, total stockholders' equity for the Corporation
amounted to $294.9 million, an increase of $24.5 million as compared to $270.4
million at December 31, 1998.
Employees
At December 31, 1999 the Corporation employed 1,680 persons. None of
its employees are represented by a collective bargaining group. The Corporation
considers its employees' relations to be good.
17
Item 2. Properties
At December 31, 1999 First BanCorp. owned three main offices premises,
13 branch and office premises, four loan centers and an auto lot. All these
premises are located in Puerto Rico. In addition, at December 31, 1999, the
Corporation leased in Puerto Rico 32 branch premises, 31 loan and office centers
and seven other facilities. The Corporation leased three branch premises in the
Virgin Islands. Management believes that the Corporation's properties are well
maintained and are suitable for the Corporation's business as presently
conducted.
Main offices:
1. Headquarters Offices - Located at First Federal Building, 1519 Ponce de
Leon Avenue, Santurce, Puerto Rico, a 16 story office building.
Approximately 50% of the building and an underground three levels parking
lot are owned by the Corporation.
2. EDP & Operations Center - A five story structure located at 1506 Ponce de
Leon Avenue, Santurce, Puerto Rico. These facilities are fully occupied by
the Corporation.
3. Personal Lending and Branch Administration Center - A three story building
with a three levels parking lot located at 876 Munoz Rivera Avenue, corner
Jesus T. Pinero Avenue, Hato Rey, Puerto Rico. These facilities are fully
occupied by the Corporation.
Item 3. Legal Proceedings
The information required herein is incorporated by reference from page
73 of the annual report to security holders for the year ended December 31, 1999
(see Exhibit 13 to this Form 10-K).
Item 4. Submission of Matters to a Vote of Security Holders
No matters were voted upon during the fourth quarter of 1999.
18
PART II
Item 5. Market for Corporation's Common Equity and Related Stockholder Matters
a) Market Information
The information required herein is incorporated by reference from page 32
of the annual report to security holders for the year ended December 31, 1999.
b) Holders
The information required herein is incorporated by reference from page 32
of the annual report to security holders for
the year ended December 31, 1999.
c) Dividends
The Corporation has a policy providing for the payment of quarterly
cash dividends on its outstanding shares of common stock. Accordingly, the
Corporation declared a cash dividend of $0.06 per share for each quarter of
1997, $0.075 per share for each quarter of 1998 and $0.09 per share for each
quarter of 1999.
The Puerto Rico Internal Revenue Code requires the withholding of
income tax from dividends income derived by resident U.S. citizens, special
partnerships, trusts and estates and by non-resident U.S. citizens, custodians,
partnerships, and corporations from sources within Puerto Rico.
Resident U.S. Citizens
A special tax of 10% is imposed on eligible dividends paid to
individuals, special partnerships, trusts and estates to be applied to all
distributions unless the taxpayer specifically elects otherwise. Once this
election is made it is irrevocable. However, the taxpayer can elect to include
in gross income the eligible distributions received and take a credit for the
amount of tax withheld. If he does not make this election in his tax return,
then he can exclude from his gross income the distributions received and
reported without claiming the credit for the tax withheld.
Nonresident U.S. Citizens
Have the right to certain exemptions when a Withholding Tax Exemption
Certificate (Form 2732) is properly filled-in and filed with the Corporation.
The Corporation as withholding agent is authorized to withhold a tax of 10% only
from the excess of the income paid over the applicable tax-exempt amount.
U.S. Corporations and Partnerships
Corporations or partnerships not organized under Puerto Rico laws that
have not engaged in business or trade in Puerto Rico during the taxable year in
which the dividend is paid are subject to the 10% dividend tax withholding.
Corporations or partnerships not organized under the laws of Puerto
Rico that have engaged in trade or business in Puerto Rico corporations or
partnerships are not subject to the 10% retention, but they must declare the
dividend as gross income in their Puerto Rico income tax return.
19
Item 6. Selected Financial Data
The information required herein is incorporated by reference from page 17
of the annual report to security holders for the year ended December 31, 1999.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required herein is incorporated by reference from page 18
through 32 of the annual report to security holders for the year ended December
31, 1999.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The information required herein is incorporated by reference from page 33
of the annual report to security holders for the year ended December 31, 1999.
Item 8. Financial Statements and Supplementary Data
The information required herein is incorporated by reference from page 35
through 75 of the annual report to security holders for the year ended December
31, 1999.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
20
PART III
Item 10. Directors, Executive Officers and Control Persons of the Corporation
The information required herein is incorporated by reference to the
information under the captions "Information with respect to nominees for
directors of the Company, directors whose terms continue and executive officers
of the Company" and "Section 16(a) Compliance" in the Corporation's definite
proxy statement filed on March 21, 2000.
Item 11. Executive Compensation
The information required herein is incorporated by reference to the
information under the captions "Compensation of Directors", "Compensation of
Executive Officers", "Stock Options Plans", "Options/Grants in Last Fiscal
Year", "Aggregate Options/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Options/SAR Values", "Employment Agreements", "Defined Contributions Retirement
Plan", "Report of the Compensation Committee", "Compensation Committee
Interlocks and Insider Participation", "Other Employment Benefits" and
"Performance of Common Stock" in the definite proxy statement filed on March 21,
2000.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required herein is incorporated by reference to the
information under the caption "Benefical Ownership of Securities" in the
Corporation's definite proxy statement filed on March 21, 2000.
Item 13. Certain Relationships and Related Transactions
The information required herein is incorporated by reference to the
information under the caption "Business Transactions Between the Company and its
Subsidiaries and Executive Officers and Directors" in the Corporation's definite
proxy statement filed on March 21, 2000.
21
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) The following financial statements are included in Item 8 thereof:
Report of independent accountants
Consolidated Statements of Financial Condition at December 31, 1999 and
1998.
Consolidated Statements of Income for Each of the Three Years in the Period
Ended December 31, 1999.
Consolidated Statements of Changes in Stockholders' Equity for Each of the
Three Years in the Period Ended December 31, 1999.
Consolidated Statements of Comprehensive Income for each of the Three Years
in the Period Ended December 31, 1999.
Consolidated Statements of Cash Flows for Each of the Three Years in the
Period Ended December 31, 1999.
Notes to Consolidated Financial Statements.
(2) Financial statement schedules.
Schedules are omitted because they are not applicable or because the
required information is contained in the Consolidated Financial
Statements described in (a)(1) above or in the Notes thereto.
(3) Exhibits
The exhibits listed on the Exhibits Index on section (c) below are
filed herewith or are incorporated herein by reference.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended December 31,
1999.
(c) See Index to Exhibits on page 23 for the exhibits filed as a part of
this Form 10-K.
(d) Financial data schedules
Schedules are omitted because they are not applicable.
22
Index to Exhibits
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
No. Exhibit Page No.
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
3.1 Certificate of Incorporation (1)
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
3.2 By-Laws (1)
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
4.0 Form of Common Stock Certificate (1)
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
10.1 FirstBank's 1987 Stock Option Plan (2)
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
10.2 FirstBank's 1997 Stock Option Plan (2)
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
10.3 Employment Agreements (2)
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
11.0 Statement Report to Shareholders for fiscal year ended (3)
December 31, 1999.
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
13.0 Annual Report to shareholders for fiscal year ended -
December 31, 1999.
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
21.0 List of subsidiaries (direct and indirect) (2)
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
27.0 Financial Data Schedule -
- - ---------------------------------- ---------------------------------------------------------- ------------------------------
(1) Incorporated by reference from Registration statement on Form-S-4 filed
by the Corporation on April 15, 1998.
2) Incorporated by reference from the Form 10-K for the year ended December
31, 1998 filed by the Corporation on March 26, 1999.
(3) Information is included on page 52 of the Corporation's annual report
to security holders and is incorporated by reference herein (See Exhibit 13.0).
23
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934 the Corporation has duly caused this report to be signed by the
undersigned, thereunto duly authorized.
FIRST BANCORP.
By: /s/ Angel Alvarez-Perez Date: 03/28/00
Angel Alvarez Perez,
Chairman
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
/s/ Angel Alvarez-Perez Date: 03/28/00
Angel Alvarez-Perez,
Chairman
President and Chief Executive Officer
/s/ Annie Astor de Carbonell Date: 03/28/00
Annie Astor de Carbonell, Director
Senior Executive Vice President and
Chief Financial Officer
/s/ Jose Julian Alvarez Date: 03/28/00
Jose Julian Alvarez, Director
/s/ Rafael Bouet Date: 03/28/00
Rafael Bouet, Director
/s/ Jorge Diaz Date: 03/28/00
Jorge Diaz, Director
24
/s/ Francisco D. Fernandez Date: 03/28/00
Francisco D. Fernandez, Director
/s/ Armando Lopez Date: 03/28/00
Armando Lopez, Director
/s/ German Malaret, Date: 03/28/00
German Malaret, Director
/s/ Hector M. Nevares Date: 03/28/00
Hector M. Nevares, Director
/s/ Antonio Pavia Villamil Date: 03/28/00
Antonio Pavia Villamil, Director
/s/ Jose Teixidor Date: 03/28/00
Jose Teixidor, Director
/s/ Angel L. Umpierre Date: 03/28/00
Angel L. Umpierre, Director
/s/ Luis M. Beauchamp Date: 03/28/00
Luis M. Beauchamp,
Senior Executive Vice President and
Chief Lending Officer
/s/ Laura Villarino Tur Date: 03/28/00
Laura Villarino Tur,
Senior Vice President and
Controller