First BanCorp Signs Consent Orders

First BanCorp., San Juan, Puerto Rico, has announced the signing of consent orders with banking regulators related to incorrect accounting for mortgage-related transactions with Doral Financial Corp. and R&G Financial Corp., both of San Juan.The orders were issued by the Federal Reserve Board, the Federal Deposit Insurance Corp., and the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico. First BanCorp said the orders restrict its payment of dividends and require it to review its mortgage portfolio and submit plans on maintaining capital adequacy and liquidity, among other things. The pertinent mortgage transactions were initially reported as loan purchases by Doral and R&G, but it was later determined that they should have been accounted for as secured loans because they were not true sales, First BanCorp said. Luis Beauchamp, First BanCorp's president and chief executive, said the bank is working to reduce the amount of secured loans with Doral and R&G through the use of warehousing facilities, securitizations, and sales of loan participations. Both R&G and Doral, and their Puerto Rico banking subsidiaries, recently signed similar consent orders, under which they "neither admit nor deny any unsafe and unsound banking practices."