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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-17224
First Financial Caribbean Corporation
-------------------------------------
(Exact name of registrant as specified in its charter)
Puerto Rico 66-0312162
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
1159 F.D. Roosevelt Avenue,
Puerto Nuevo
San Juan, Puerto Rico 00920-2998
--------------------- ----------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, (787) 749-7100
including area code -------------
Former name, former address and Not Applicable
former fiscal year, if changed --------------
since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Number of shares of Common Stock outstanding at May 12, 1997 - 9,198,730
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FIRST FINANCIAL CARIBBEAN CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
PART I - FINANCIAL INFORMATION
<S> <C>
Item 1 - Financial Statements
Consolidated Balance Sheet as of March 31, 1997 and December 31, 1996..........................3
Consolidated Statement of Income and Retained Earnings - Three month period
ended March 31, 1997 and March 31, 1996........................................................4
Consolidated Statement of Cash Flows - Three-month period ended March 31, 1997
and March 31, 1996.............................................................................5
Notes to Consolidated Financial Statements.....................................................6
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations..........7
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings.............................................................................14
Item 2 - Changes in Securities.........................................................................14
Item 3 - Defaults Upon Senior Securities...............................................................14
Item 4 - Submission of Matters to a Vote of Security Holders...........................................14
Item 5 - Other Information.............................................................................15
Item 6 - Exhibits and Reports on Form 8-K..............................................................15
SIGNATURES..................................................................................................17
</TABLE>
FORWARD LOOKING STATEMENTS
When used in this Form 10-Q or future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases or other
public or shareholder communications, or in oral statements made with the
approval of an authorized executive officer, the words or phrases "would be",
"will allow", "intends to", "will likely result", "are expected to", "will
continue", "is anticipated", "estimate", "project", or similar expressions are
intended to identify "forward looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995.
The Company wishes to caution readers not to place undue reliance on
any such forward-looking statements, which speak only as of the date made, and
to advise readers that various factors, including regional and national economic
conditions, substantial changes in levels of market interest rates, credit and
other risks of lending and investment activities, competitive and regulatory
factors and legislative changes, could affect the Company's financial
performance and could cause the Company's actual results for future periods to
differ materially from those anticipated or projected.
The Company does not undertake, and specifically disclaims any
obligation, to update any forward-looking statements to reflect occurrences or
unanticipated events or circumstances after the date of such statements.
2
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FIRST FINANCIAL CARIBBEAN CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSAND OF DOLLARS EXCEPT FOR SHARE INFORMATION)
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
(unaudited) (audited)
----------- ---------
ASSETS
- ------
<S> <C> <C>
Cash and cash equivalents $ 42,598 $ 81,213
Mortgage loans held for sale, net 245,926 261,608
Securities held for trading, net 431,930 436,125
Securities held to maturity 174,509 109,055
Securities available for sale 8,009 12,007
Loans receivable, net 145,100 128,766
Accounts receivable and mortgage servicing advances, net 20,948 15,882
Accrued interest receivable 11,733 10,091
Servicing asset 22,586 20,969
Property, leasehold improvements and equipment, net 9,870 9,360
Cost in excess of fair value of net assets acquired 6,486 6,562
Real estate held for sale, net 2,979 2,246
Prepaid expenses and other assets 7,847 8,071
------------ ------------
$ 1,130,521 $ 1,101,955
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Loans payable $ 154,121 $ 196,397
Securities sold under agreements to repurchase 424,732 387,651
Deposit accounts 186,795 158,902
Notes payable 145,753 147,893
Advances from Federal Home Loan Bank 15,000 15,000
Convertible Subordinated Debentures 10,000 10,000
Accounts payable and other liabilities 28,217 26,992
Income tax payable 585 217
Deferred tax liability 9,115 8,372
------------ ------------
Total liabilities 974,318 951,424
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Commitments and contingencies
Stockholders' equity: ------------ ------------
Serial Preferred Stock, $1 par value, 2,000,000 shares
authorized; no shares outstanding --- ---
Common stock, $1 par value, 20,000,000 shares authorized;
9,124,730 shares issued; 9,111,730 shares outstanding 9,125 9,125
Paid-in capital 38,673 38,673
Retained earnings 108,497 102,925
------------ ------------
156,295 150,723
Unrealized (loss) gain on securities available for sale, net of
deferred tax (5) (81)
Treasury stock at par value, 14,000 shares (14) (14)
Unearned compensation under employment contracts (73) (97)
------------ ------------
Total stockholders' equity 156,203 150,531
------------ ------------
Total liabilities and stockholders' equity $ 1,130,521 $ 1,101,955
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
3
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FIRST FINANCIAL CARIBBEAN CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
(In thousand of dollars, except per share data)
Unaudited
<TABLE>
<CAPTION>
Quarter Ended
---------------------------------
March 31, 1997 March 31,1996
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<S> <C> <C>
Revenues:
Mortgage loans sales and fees $ 5,316 $ 6,883
Servicing income 3,979 2,751
Interest income 20,386 16,247
Rental and other income 392 154
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30,073 26,035
---------- --------
Expenses:
Interest 14,065 10,991
Employee cost, net (See Note g) 2,388 2,586
Taxes, other than payroll and income taxes 317 246
Maintenance 211 127
Advertising 868 825
Professional services 762 681
Telephone 458 471
Rent 586 531
Other, net (See Note g) 1,964 2,026
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21,619 18,484
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Income before income taxes and cumulative effect 8,454 7,551
---------- --------
Income taxes:
Current 590 437
Deferred 743 760
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1,333 1,197
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Net income 7,121 6,354
Retained earnings at beginning of period 102,925 81,892
Less cash dividends paid:
Convertible preferred stock --- 14
Common stock 1,549 1,347
---------- --------
Retained earnings at the end of period $ 108,497 $ 86,885
========== ========
Earnings per share:
Primary:
Net Income 0.78 $ 0.71
========== ========
Fully Diluted:
Net Income $ 0.75 $ 0.67
============ ========
</TABLE>
The accompanying notes are an integral part of these statements.
4
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FIRST FINANCIAL CARIBBEAN CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSAND OF DOLLARS)
<TABLE>
<CAPTION>
Three-month Period Ended March 31,
1997 1996
---- ----
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................................................. $ 7,121 $ 6,354
--------- --------
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization of interest-only strip receivable......................................... 892 304
Amortization of cost in excess of fair value of net assets acquired.................... 95 94
Amortization of servicing asset........................................................ 578 224
Depreciation and amortization.......................................................... 498 433
Allowances for losses.................................................................. 213 138
Origination and purchases of mortgage loans held for sale.............................. (152,209) (181,503)
Principal repayment and sales of loans held for sale .................................. 93,344 130,283
Purchases of securities held for trading............................................... (103,932) (46,576)
Principal repayments and sales of securities held for trading.......................... 186,489 118,485
Additions of interest-only strip receivable............................................ (4,707) (2,536)
Increase in accounts receivable and mortgage servicing advances........................ (5,279) (2,750)
Increase in servicing asset............................................................ (2,195) (2,804)
Principal repayments and sales of securities available for sale........................ 4,074 6,598
Increase in interest receivable........................................................ (1,642) (575)
Decrease in loans payable.............................................................. (42,276) (41,147)
Increase in interest payable........................................................... 1,337 472
Increase in securities sold under agreements to repurchase............................. 37,081 4,271
Decrease in payables and accrued liabilities........................................... (113) (1,661)
Increase (decrease )in income tax payable.............................................. 368 (361)
Deferred tax provision................................................................. 743 760
Amortization of unearned compensation under employment contracts....................... 24 24
--------- ---------
Total adjustments................................................................... 13,383 (17,827)
--------- ---------
Net cash provided by (used in) operating activities.................................... 20,504 (11,473)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of mortgage-backed securities and investments held to maturity................. (70,639) (24,043)
Principal repayments of investments held to maturity..................................... 5,185 186
Origination of loans receivable ......................................................... (29,907) (18,448)
Principal repayments of loans receivable................................................. 13,572 2,107
Purchase of property, leasehold improvements and equipment............................... (1,008) (455)
Additions to cost in excess of fair value of net assets acquired......................... (19) ---
Increase in real estate held for sale.................................................... (733) (184)
Decrease in other assets................................................................. 225 420
--------- ---------
Net cash used by investing activities.................................................. (83,324) (40,417)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance in common stock................................................................. --- 480
(Decrease) increase in notes payable..................................................... (2,140) 5,373
Increase in deposits..................................................................... 27,893 25,444
Dividends declared and paid.............................................................. (1,549) (1,361)
Increase (decrease) in advances from FHLB................................................ --- 4,997
--------- ---------
Net cash provided by financing activities.............................................. 24,204 34,933
--------- ---------
Net decrease in cash and cash equivalents................................................ (38,616) (16,957)
Cash and cash equivalents at beginning of period......................................... 81,213 59,872
--------- ---------
Cash and cash equivalents at the end of period........................................... $42,597 $ 42,915
========= =========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Noncash financing activities-conversion of preferred stock............................... $ - $ 620
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash used to pay interest................................................................ $ 12,728 $ 10,519
========= =========
Cash used to pay income taxes............................................................ $ 222 $ 798
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
5
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FIRST FINANCIAL CARIBBEAN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
a. The Consolidated Financial Statements (unaudited) have been prepared in
conformity with the accounting policies stated in the Company's Annual
Audited Financial Statements included in the Company's 1996 Annual Report
on Form 10-K, and should be read in conjunction with the Notes to the
Consolidated Financial Statements appearing in that report. All
adjustments (consisting only of normal recurring accruals) which are, in
the opinion of management, necessary for a fair presentation of results
for the interim periods have been reflected.
b. The results of operations for the three-month period ended March 31, 1997
are not necessarily indicative of the results to be expected for the full
year.
c. Cash dividends per share paid for the three-month period ended March 31,
1997 and 1996 were as follows:
<TABLE>
<CAPTION>
Three-month period ended
March 31,
------------------------------
<S> <C> <C>
1997 1996
---- ----
Series A Preferred Stock --- $0.2625
Common Stock $0.17 $ 0.15
</TABLE>
d. At March 31, 1997, escrow funds include approximately $30.1 million
deposited with Doral Federal Savings Bank ("Doral Federal"). These funds
are included in the Company's financial statements. Escrow funds also
include approximately $6.4 million deposited with other banks which are
excluded from the Company's assets and liabilities.
e. Certain reclassifications of prior year's data have been made to conform
to 1997 classifications. In connection with the adoption by the
Company, effective January 1, 1997, of SFAS No. 125 "Accounting for
Transfers of Servicing Assets and Extinguishment of Liabilities" ("SFAS
125"), the Company reclassified the asset previously shown on the
Company's Consolidated Balance Sheet as "Mortgage Servicing Rights" to
"Servicing Asset". In addition, the asset previously shown as "Excess
Servicing Fees Receivable" was reclassified as "Interest Only Strips"and
is now reflected in the Company's Consolidated Balance Sheet as a
component of "Securities held for trading, net". See Item 2 "Management's
Discussion and Analysis of Financial Conditions and Results of
Operations-Recent Developments-Accounting Changes".
f. The number of average shares of common stock used for computing the
primary and fully diluted net income per share was as follows:
<TABLE>
<CAPTION>
Three-month Period Ended
---------------------------------------
March 31, 1997 March 31, 1996
----------------- -----------------
<S> <C> <C>
Primary 9,111,730 8,948,665
Fully diluted 9,682,159 9,674,876
</TABLE>
g. Employee costs and other expenses are shown in the Consolidated Statement
of Income and Retained Earnings net of direct loan origination costs
which, pursuant to SFAS 91, are capitalized as part of the carrying cost
of mortgage loans and are offset against mortgage loan sales and fees when
the loans are sold. Employee costs would have been $8.3 and $7.6 million,
respectively, for the quarters ended March 31, 1997 and 1996, except for
the application of SFAS 91. Other expenses would have been $3.4 and $3.5
million, respectively, for the quarters ended March 31, 1997 and 1996,
except for the application of SFAS 91.
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Set forth below is a breakdown of direct loan origination costs that were
deferred pursuant to SFAS-91.
<TABLE>
<CAPTION>
Three-month Period Ended
------------------------------------
March 31, 1997 March 31, 1996
----------------- -----------------
<S> <C> <C>
Employee Costs $5,916 $5,021
Other Costs 1,511 1,434
------ ------
$7,427 $6,455
====== ======
</TABLE>
h. In June 1996, the Financial Accounting Standards Board ("FASB") issued
SFAS 125. SFAS 125 provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishments of
liabilities based on the application of a financial-components approach
that focuses on control. That approach requires the recognition of
financial assets and servicing assets controlled by the reporting entity,
the derecognition of financial assets when control is surrendered, and the
derecognition of liabilities when they are extinguished. Specific criteria
are established for determining when control has been surrendered in the
transfer of financial assets.
This Statement requires that liabilities and derivatives incurred or
obtained by transferors as part of a transfer of financial assets be
initially measured at fair value, if practicable. It also requires that
servicing assets and other retained interests in the transferred assets be
measured by allocating the previous carrying amount between the assets
sold, if any, and retained interest, if any, based on their relative fair
values at the date of the transfer. Servicing assets and liabilities must
be subsequently measured by (a) amortization in proportion to and over the
period of estimated net servicing income and loss and (b) assessment for
asset impairment or increased obligation based on their fair values.
SFAS 125 modifies the accounting for interest-only strips or retained
interests in securitizations, such as excess servicing fees receivable,
that can be contractually prepaid or otherwise settled in such a way that
the holder would not recover substantially all of its recorded investment.
In this case, it requires that they be classified as available for sale or
as trading securities. Interest-only strips and retained interests are to
be recorded at market value in accordance with SFAS No. 115. Changes in
market value of IOs are included in operations, if classified as trading
securities, or in shareholders' equity as unrealized gains or losses, net
of taxes, as if classified as available for sale.
Under the provisions of SFAS 125, management has determined that excess
servicing fees receivable retained by the Company as a result of
securitization transactions or bulk sales will be held as trading
securities as interest only strips ("IOs"). In addition, all residual
interests and mortgage backed securities previously retained by the
Company as part of its securitization transactions will also be held as
trading securities.
The provisions of this Statement, except as indicated below, are effective
for transfers and servicing of financial assets and extinguishment of
liabilities occurring after December 31, 1996, and must be applied
prospectively. Earlier or retroactive application is not permitted. In
December 1996, the FASB issued a statement that defers for one year the
effective date applicable to the provisions of SFAS 125 that deal with
secured borrowings and collateral. Additionally, the deferment provision
would apply to transfers of financial assets for repurchase agreements,
dollar rolls and securities lending.
Refer to Note e for certain reclassifications made by the Company as a
result of the adoption of SFAS 125.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company's funding requirements arise from loan originations and purchases,
repayments of debt upon maturity, payments of operating and interest expenses
and servicing advances. The Company's primary sources of liquidity are sales in
the secondary mortgage market of the loans it originates and purchases, short
term borrowings under warehouse, gestation and repurchase agreement lines of
credit (secured by pledges of its loans and mortgage-backed securities in most
cases until such loans are sold and the lenders repaid) and revenues from
operations. In the past, the Company has also relied on privately-placed and
publicly offered debt financings and public offerings of preferred and common
stock. Doral Federal, the Company's thrift subsidiary, also relies on retail
and wholesale deposits, borrowings from the Federal Home Loan Bank of New York
("FHLB-NY") as well as term notes backed by letters of credit of the FHLB-NY.
The interim Consolidated Statement of Cash Flows reflects the working capital
needs of the Company. The decrease in cash and cash equivalents of $38.6
million was due to the investment of a portion of cash and cash equivalents in
securities with longer maturities and higher yields. Operating activities
provided approximately $20.5 million of net cash during the three-month period
ended March 31, 1997, versus uses of approximately $11.5 million in the
comparable period of 1996. Originations and purchases of mortgage loans held
for sale for the first quarter of 1997 decreased by $29.3 as compared to the
1996 first quarter resulting in a decrease in the use of cash in addition to
increased sales of mortgage loans and mortgage-backed securities.
Investing activities used cash of approximately $83.3 million in the first three
months of 1997 due primarily to purchases of securities held to maturity by
Doral Federal of $70.6 million and originations of loans receivable of
approximately $29.9 million, partially offset by $18.8 million of sales and
principal repayments of securities held to maturity and loans receivable.
During the first three-months of 1997, financing activities provided
approximately $24.2 million of net cash due mainly to additional deposits
amounting to approximately $27.9 million received by Doral Federal, the
Company's thrift subsidiary.
As of March 31, 1997, Doral Federal exceeded all its regulatory capital
requirements (i.e., tangible and core capital of at least 1.5% and 3.0%,
respectively, of adjusted assets and total risk-based capital of at least 8% of
risk weighted assets). As of March 31, 1997, Doral Federal had tangible capital
and core capital of $24.2 million or approximately 8.28% of adjusted assets and
total risk-based capital of $25.1 million or 18.45% of risk weighted assets.
FFCC borrows money under warehousing lines of credit to fund its mortgage loan
commitments and repays the borrowings as the mortgages are sold. The warehousing
lines of credit then become available for additional borrowings. Included among
FFCC's warehousing lines of credit facilities are gestation or presale
facilities which permit the Company to obtain more favorable rates once mortgage
loans are in the process of securitization but prior to the actual issuance of
the mortgage-backed securities as well as to finance such mortgage-backed
securities upon their issuance. At March 31, 1997 and December 31, 1996, FFCC
had available warehousing lines of credit of $695 million and $595 million,
respectively. At March 31, 1997 and December 31, 1996, FFCC had used
approximately $154 million and $186 million, respectively, of credit available
under its warehousing lines of credit. FFCC's warehousing lines of credit are
generally subject to termination at the discretion of the lender.
FFCC also obtains short-term financing through repurchase agreement lines of
credit with financial institutions and investment banking firms. Under these
agreements, FFCC sells GNMA, FNMA or FHLMC-guaranteed mortgage-backed securities
or collateralized mortgage obligations and simultaneously agrees to repurchase
them at a future date at a fixed price. FFCC uses the proceeds of such sales to
repay borrowings under its warehousing lines of credit. The effective cost of
funds under repurchase agreements is typically lower than the cost of funds
borrowed under FFCC's warehousing lines of credit. At March 31, 1997, FFCC had
used approximately $424.7 million of credit under repurchase agreements. FFCC's
continued use of repurchase agreements will depend on the cost of repurchase
agreements relative to the cost of borrowing under its warehousing lines of
credit with banks.
Certain of the debt obligations of the Company contain various provisions that
may affect the ability of the Company to pay dividends and remain in compliance
with such obligations. These provisions include requirements concerning net
worth, financial ratios, limitations on capital distributions and other
financial covenants. These provisions have not had, and are not expected to
have, an adverse impact on the ability of the Company to pay dividends in the
future.
8
<PAGE> 9
The monthly weighted average interest rates of FFCC's borrowings for warehousing
lines of credit and for repurchase agreement lines of credit was 6.8% and 5.6%
respectively, for the three-month period ended March 31, 1997 compared to 6.7%
for warehousing lines of credit and 5.5% for repurchase agreements in each case
for the year ended December 31, 1996.
Doral Federal obtains funding for its lending activities through the receipt of
deposits, FHLB-NY advances and from other borrowings, such as term notes backed
by FHLB-NY letters of credit and repurchase agreements with brokerage houses. As
of March 31, 1997, Doral Federal held $197.8 million in deposits (including
$10.9 million in corporate accounts of the Company that are eliminated in the
preparation of the Company's Consolidated Financial Statements) at a weighted
average interest rate of 3.99%, approximately 28% of which consisted of
non-interest bearing deposits. Approximately $33.7 million of deposits consisted
of brokered certificates of deposit obtained through broker-dealers with
maturities ranging from three to five years. Doral Federal, as member of
FHLB-NY, has access to collateralized borrowings from the FHLB-NY up to a
maximum of 30% of all its total assets. Advances and reimbursement obligations
with respect to letters of credits must be secured by qualifying assets with a
market value equal to 120% of the advances. At March 31, 1997, Doral Federal had
$15 million in outstanding advances from the FHLB-NY at a weighted average
interest rate cost of 6.15%. In addition, as of March 31, 1997, Doral Federal
had $53.1 million outstanding in term notes secured by FHLB-NY letters of credit
at an average interest rate cost of 6.51%. Approximately $5 million principal
amount of such term notes bear interest at a fluctuating rate based on the
London Interbank bid rate for dollar deposits ("LIBID"). The interest rate of
such fluctuating note has effectively been fixed pursuant to an interest rate
swap agreement with a major brokerage house. The interest rate on all the
outstanding term notes are subject to a one-time upward adjustment to a rate
equal to 100% of LIBID for a term equal to the remaining term of the notes as a
result of the recent changes to Section 936 of the Internal Revenue Code. Of a
total of eight outstanding issues of term notes, investors have requested an
upward adjustment in four of such issues representing an aggregate principal
amount of $23.1 million of term notes. In all but one of such cases,
representing approximately $8.1 million principal amount of term notes, Doral
Federal was able to negotiate a rate adjustment below 100% of LIBID by agreeing
to waive its right to prepay the notes upon the occurrence of such an event.
Servicing agreements relating to the mortgage-backed securities programs of
FNMA, FHLMC and GNMA and certain other investors as well as mortgage loans sold
to certain other purchasers, require FFCC to advance funds to make scheduled
payments of principal, interest, taxes and insurance, if such payments have not
been received from the borrowers. Funds advanced by FFCC pursuant to these
agreements are generally recovered by FFCC within 30 days. During the
three-month period ended March 31, 1997, the monthly average amount of funds
advanced by the Company under such servicing agreements was approximately $3.7
million.
During the three-month period ended March 31, 1997, the Company collected an
average of approximately $1.3 million per month in net servicing fees, including
late charges. At March 31, 1997 and December 31, 1996, the servicing portfolio
amounted to approximately $3.2 billion and $3.1 billion, respectively. The
Company may, from time to time, determine to sell portions of its servicing
portfolio as well as to purchase servicing rights from third parties.
FFCC expects that it will continue to have adequate resources to finance its
operations. The Company will continue to explore alternative and supplementary
methods of financing its operations, including both debt and equity financing.
There can be no assurance, however, that the Company will be successful in
consummating any such transactions.
ASSETS AND LIABILITIES
At March 31, 1997, total assets were $1.130 billion compared to $1.102 billion
at December 31, 1996. This increase was due primarily to net increases in
interest earning and servicing related assets in connection with the Company's
mortgage loan production and securitization activities. Total liabilities were
$974 million at March 31, 1997 compared to $951 million at December 31, 1996.
The increase in total liabilities was primarily related to increased deposit
accounts held at Doral Federal.
As of March 31, 1997, Doral Federal had $293.2 million in assets compared to
$280.7 million at December 31, 1996. This increase was due primarily to a net
increase of $16.3 million in loans receivable. At March 31, 1997, Doral
Federal's deposit accounts totaled $197.8 million compared to $187.2 million at
December 31, 1996. These amounts
9
<PAGE> 10
include $10.9 million and $28.3 million, respectively, in corporate accounts of
the Company which are eliminated in the preparation of the Company's
Consolidated Financial Statements. Deposit accounts include $30.1 million as of
March 31, 1997 in non-interest bearing demand deposits representing escrow
funds and other servicing accounts from First Financial's servicing operations.
Changes in interest rates can have a variety of effects on the Company's
business. In particular, changes in interest rates affect the volume of mortgage
loan originations and acquisitions, the interest rate spread on the Company's
portfolio of loans and mortgage-backed securities, the amount of gain on sale of
loans and the value of the Company's loan servicing portfolio and
mortgage-backed securities holdings.
The Company does not generally hedge conventional loans in the pipeline or in
the process of origination because the Company does not generally permit
customers to lock-in an interest rate prior to closing. Instead, the interest
rates on loans are generally fixed at closing based on a certain spread over a
prevailing rate that adjusts weekly. For FNMA and FHLMC conforming loans and
FNMA and FHLMC mortgage-backed securities, the Company seeks to sell or obtain
commitments for the sale of such loans or mortgage-backed securities following
the funding of such loans. These loans are normally sold to institutional
investors or to FNMA and FHLMC. To the extent the Company does engage in
offerings of mortgage products which lock-in the interest rate until the closing
date, it attempts to obtain forward commitments at the time it fixes the rates
for the loans. Non-conforming conventional loans are normally sold in bulk to
local financial institutions or packaged into collateralized mortgage
obligations. The sale of non-conforming conventional loans normally takes longer
than the sale of conforming mortgage loans. Accordingly, the Company attempts to
manage this interest rate risk through the purchase of listed options on U.S.
Treasury Securities, as well as through the purchase of option contracts in the
over-the-counter market on other interest rate sensitive instruments.
In the case of GNMA securities, the Company normally holds such securities for
longer periods prior to sale to maximize its net interest income and to take
advantage of the tax exempt status of the interest on such securities under
Puerto Rico law. Prices for GNMA certificates in Puerto Rico tend to be more
stable than on the mainland U.S. because the tax exempt status of interest paid
on these securities under Puerto Rico law makes them more attractive to retail
investors. This relative stability of prices for Puerto Rico GNMA securities
allows the Company to carry out a less aggressive hedging strategy to attempt to
protect the value of these assets than what might otherwise be required. The
Company seeks to protect itself from interest rate risk associated with its
inventory of GNMA securities by purchasing listed options on treasury bond
futures contracts and other interest rate sensitive instruments, as well as
purchasing options on U.S. GNMA securities in the over-the-counter market. As of
March 31, 1997, the Company had in place $70.2 million of long-term repurchase
agreements secured by collateralized mortgage obligations backed by GNMA
certificates with a principal amount of approximately $80 million. The Company
does not obtain forward commitments or otherwise hedge such securities because
they are financed pursuant to long-term repurchase agreements. The Company has
the right to substitute similar securities under the repurchase agreements.
Declines in interest rates can adversely affect the Company's revenues by
increasing prepayment rates and causing an increase of the amortization of
Mortgage Servicing Rights ("MSR's ") and interest-only strip receivables ("IOs")
(previously classified as excess servicing fees receivable) or causing an
impairment to be recognized with respect to such assets. See "Recent
Developments-Accounting Changes" herein. Moreover, increased prepayment rates
can reduce the Company's servicing income by decreasing the size of the
Company's servicing portfolio. To date, the Company has not used synthetic
instruments to protect the value of its MSRs and IOs from future interest rate
fluctuations. The primary means used by the Company to reduce the sensitivity of
the Company's servicing income to possible reduction of its servicing portfolio
has been the development of a strong retail origination network that has allowed
the Company to increase or maintain the size of its servicing portfolio even
during periods of high prepayments.
The net interest income of the Company is also subject to interest rate risk
because its interest earning assets and interest-bearing liabilities reprice at
different times and varying amounts. Most of the Company's interest earning
assets, including its mortgage-backed securities held for trading, are fixed
rate interest-earning assets that are not subject to repricing (except for
replacement of assets through repayments, sales and new originations) while the
short-term borrowings used to finance these positions normally reprice on a
periodic basis (e.g., daily, monthly or quarterly). To protect against major
fluctuations in short-term interest rates, the Company purchases listed put and
call options and sells call options on financial instruments, including
Eurodollar contracts. This policy attempts to ensure a relatively stable
10
<PAGE> 11
short-term cost of funds. With respect to the loans receivable and securities
held to maturity of Doral Federal, Doral Federal attempts to obtain long-term
deposits and other long-term debt financing, including longer term brokered
certificates of deposit, advances from the FHLB-NY and term notes backed by
FHLB-NY letters of credit.
In the future, FFCC may utilize alternative hedging techniques including
futures, options or other hedge vehicles to help mitigate interest rate and
market risk. However, there can be no assurance that any of the above hedging
techniques will be successful. To the extent they are not successful, the
Company's profitability may be adversely affected.
INFLATION
FFCC is affected by inflation in the areas of loan production and servicing
fees. General and administrative expenses increase with inflation. However, the
increase in real estate values in Puerto Rico in recent years has been a
positive factor for the Company's mortgage banking business. The average size of
loans originated tends to increase as home values appreciate, which serves to
increase loan origination fees and servicing income faster than the cost of
providing such services. Interest rates normally increase during periods of high
inflation and decrease during periods of low inflation. See "Assets and
Liabilities" for a discussion of the effects of changes of interest rates on the
Company's operations.
RESULTS OF OPERATIONS FOR QUARTERS ENDED MARCH 31, 1997 AND 1996
Net income for the quarter ended March 31, 1997 increased to $7.1 million from
$6.4 million for the comparable period of 1996. Doral Federal contributed
approximately $891,000 in net income for the first quarter of 1997 compared to
$526,000 for the first quarter of 1996. AAA Financial Services, a NASD licensed
broker dealer which commenced operations in the third quarter of 1996
experienced losses of $125,000 in the first quarter of 1997.
Revenues from mortgage loan sales and origination fees decreased to $5.3 million
for the quarter ended March 31, 1997 from $6.9 million for the comparable period
of 1996. This decrease was due primarily to lower gains on sale of mortgages.
The total volume of loans originated and purchased was $182 million for the
three-month period ended March 31, 1997 compared to $200 million for the
three-month period ended March 31, 1996. The decrease was largely the result of
a decrease in purchase of loans from third parties which, decreased by
approximately $16 million. The total volume of loans purchased was approximately
$5 million for the three-month period ended March 31, 1997, compared to $21
million for the three-month period ended March 31, 1996. The decrease was the
result of the Company's decision to selectively decrease its purchases of loans
originated by third parties and rely primarily on its internal origination
capacity.
Net interest income increased by $1.1 million for the three-month period ended
March 31, 1997 versus the comparable period of 1996. Interest earning assets for
the first quarter of 1997 amounted to approximately $1.005 billion compared to
$810 million a year ago.
The weighted average interest rate spread was 220 basis points during the first
quarter of 1997 compared to 327 basis points for the comparable period of 1996.
The decrease is principally attributable to the interest expense related to the
issuance of the Company's 7.84% Senior Notes due 2006 issued in October 1996.
When FFCC sells the mortgage loans it has originated or purchased, it generally
retains the rights to service such loans and receives the related servicing
fees. Mortgage loan servicing fees are based on a percentage of the principal
balances of the mortgages serviced and are credited to income as mortgage
payments are collected. Loan servicing income increased 45% to $4 million for
the quarter ended March 31, 1997 compared to $2.8 million for the same period
in 1996. The increase in servicing income reflects the increase in the size of
the servicing portfolio together with an increase in other servicing related
fees. The Company's servicing portfolio at March 31, 1997 increased $97
million over the December 31, 1996 level and $355 million over the March 31,
1996 level.
The Company capitalized approximately $2.2 million in servicing assets during
the first quarter of 1997 related to loans originated and purchased as compared
to $2.8 million for the quarter end of March 31, 1996. At March 31, 1997, the
unamortized balance of the servicing asset (previously classified as MSRs)
approximates its fair value. The amortization
11
<PAGE> 12
of the servicing asset for the quarters ended March 31, 1997 and 1996 was
$578,000 and $224,000, respectively, and is recorded in the accompanying
Consolidated Statement of Income and Retained Earnings under "Other Expenses."
The Company creates IOs (previously classified as excess servicing fees
receivable) as a result of the sale of loans in bulk or securitization
transactions. IOs are created on the sale of loans by computing the present
value of the excess of the weighted average coupon on the loans sold over the
sum of: (i) the pass-through interest paid to the investor and (ii) a base
servicing fee, and adjusting such amount for expected losses and prepayment
assumptions. Amortization of IOs (previously classified as excess servicing fees
receivable) for each of the quarters ended March 31, 1997 and 1996 was
approximately $892,000 and $304,000, respectively. This amortization is recorded
as a reduction of interest income. SFAS No. 125 requires that effective January
1, 1997, assets previously classified as excess servicing fee receivable be
classified as IOs. Such IOs are reflected in the Company's Consolidated Balance
Sheet as part of Securities Held for Trading. See "Recent Developments-New
Accounting Standards".
Aggregate expenses for the quarter ended March 31, 1997, increased by
approximately $3.2 million compared to the first quarter of 1996, primarily as a
result of higher interest expense associated with the financing of the Company's
mortgage loans and mortgage-backed securities portfolios. Loan origination,
general and administrative expenses increased marginally to $7.6 million in the
first quarter of 1997 from $7.5 million a year ago.
12
<PAGE> 13
RECENT DEVELOPMENTS
New Accounting Standards
In June 1996, the Financial Accounting Standards Board ("FASB") issued SFAS No.
125 "Accounting for Transfers of Servicing of Financial Assets and
Extinguishments of Liabilities" ("SFAS 125"). SFAS 125 provides accounting and
reporting standards for transfer and servicing of financial assets and
extinguishments of liabilities based on the application of a financial component
approach that focuses on control.
Under SFAS 125, an entity recognizes only assets it controls and liabilities it
has incurred, discontinues recognition of assets only when control has been
surrendered, and discontinues recognition of liabilities only when they have
been extinguished. SFAS 125 requires that the selling entity continue to carry
retained interests, including servicing assets, relating to assets it no longer
recognizes. Such retained interests are based on the relative fair values of the
retained interests of the subject assets at the date of transfer. Transfers not
meeting the criteria for sale recognition are accounted for as a secured
borrowing with a pledge of collateral.
SFAS 125 requires an entity to recognize its obligation to service financial
assets that are retained in a transfer of assets in the form of a servicing
asset or liability. The servicing asset or liability is to be amortized in
proportion to, and over the period of, net servicing income or loss. Servicing
assets and liabilities are to be assessed for impairment based on their fair
value.
The provisions of SFAS 125 became effective on January 1, 1997. Management has
determined that the implementation of SFAS 125 will not have a material impact
on the Company's financial condition or results of operations.
In February 1997, the FASB issued Statement of Financial Accounting Standards
No. 128, "Earnings per share" ("SFAS 128"). SFAS 128 requires presentation of
earnings per share ("EPS") by all entities that have issued common stock or
potential common stock (that is, securities such as options, warrants,
convertible securities, or contingent stock agreements) if those securities
trade in a public market on either a stock exchange (domestic or foreign) or in
the over-the-counter market, including securities quoted only locally or
regionally. SFAS 128 also requires presentation of earnings per share by an
entity that has made a filing or is in the process of filing with a regulatory
agency in preparation for the sale of those securities in a public market. SFAS
128 does not require presentation of earnings per share for investment
companies or in statements of wholly-owned subsidiaries.
SFAS 128 shall be effective for financial statements for both interim and annual
periods ending after December 15, 1997. Earlier application is not permitted.
However, an entity is permitted to disclose pro forma EPS amounts computed using
this Statement in the notes to the financial statements in periods prior to
required adoption. After the effective date, all prior-period EPS data presented
shall be restated (including interim financial statements, summaries of
earnings, and selected financial data) to conform with the provisions of this
Statement.
The adoption of this statement did not have any effect in the Company's
financial statements presentation because the Company did not have any
outstanding common stock equivalents.
Proposed Repeal of Tax Exemption for GNMA Securities
The Company currently benefits from Puerto Rico tax laws that exempt from Puerto
Rico income taxes the interest received on mortgage loans secured by real
property in Puerto Rico and insured by the Federal Housing Administration or
guaranteed by the Veteran's Administration ("FHA-VA loans") and on GNMA
mortgage-backed securities backed by FHA-VA loans. This favorable tax treatment
has permitted the Company to sell tax-exempt Puerto Rico GNMA mortgage-backed
securities to local investors at higher prices than those at which comparable
instruments trade in the mainland United States and to reduce its effective tax
rate through the receipt of tax exempt interest. On April 10, 1997, a bill was
introduced into the legislature of Puerto Rico to repeal the exemption for
interest received on FHA-VA loans. Under the bill, interest on all FHA-VA loans
originated after June 30, 1997 would cease to be exempt. Individuals receiving
interest on FHA-VA loans originated after such date, however, would be taxed at
a preferential 17% rate that
13
<PAGE> 14
would also apply to Puerto Rico corporate debt obligations. The bill would
grandfather the tax exempt status of FHA-VA loans and securities backed by
such loans originated prior to July 1, 1997.
The bill is supported by the Governor of Puerto Rico and is part of a broader
initiative to reform the capital markets in Puerto Rico. The bill must be
approved by both houses of the Puerto Rico legislature and signed by the
Governor before becoming law. No assurance can be given whether the bill will
become law or what changes, if any, will be made to the bill before becoming
law. Management believes that the adoption of the bill, in its current form,
would not have a material adverse effect on the Company's financial condition or
results of operation.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
In the opinion of the Company's management, the pending and threatened
legal proceedings of which management is aware will not have a material adverse
effect on the financial condition of the Company.
ITEM 2 - CHANGES IN SECURITIES
Not Applicable.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Stockholders Meeting of First Financial Caribbean Corporation
was held on April 16, 1997. A quorum was obtained with 5,863,816 votes
represented in person or by proxy, which represented approximately 64.4% of all
votes eligible to be cast at the meeting. Eight directors of the Company,
Salomon Levis, Zoila Levis, Richard F. Bonini, Edgar M. Cullman, Jr., Frederick
M. Danziger, John L. Ernst, A. Brean Murray and Victor M. Pons, Jr., were
reelected for additional one-year terms. The Corporation's 1997 Employee Stock
Option Plan was also approved at the Annual Meeting. The following proposals
were voted upon at the meeting with the following results:
Proposal 1: Election of Directors
<TABLE>
<CAPTION>
NOMINEES FOR ONE-YEAR TERM VOTES FOR VOTES WITHHELD
- -------------------------- --------- --------------
<S> <C> <C>
Salomon Levis 5,847,730 16,086
Richard F. Bonini 5,847,730 16,086
Edgar M. Cullman, Jr. 5,845,754 18,062
Frederick M. Danziger 5,846,230 17,586
John L. Ernst 5,846,230 17,586
Zoila Levis 5,847,630 16,186
A. Brean Murray 5,830,646 33,170
Victor M. Pons, Jr. 5,837,186 26,630
</TABLE>
14
<PAGE> 15
Proposal 2: Approval of 1997 Employee Stock of Option Plan
<TABLE>
<S> <C>
For: 3,485,251
Against: 716,111
Abstain: 22,889
Broker Non-Votes: 1,639,565
</TABLE>
Proposal 3: Ratification of the Appointment of Price Waterhouse as the Company's
Independent Accountants for 1997.
<TABLE>
<S> <C>
For: 5,845,150
Against: 6,240
Abstain: 12,426
</TABLE>
ITEM 5 - OTHER INFORMATION
Dividend declaration
On April 16, 1997, the Board of Directors authorized a quarterly $0.20 per
share cash dividend to be paid on June 6, 1997 to shareholders of record as of
May 16, 1997 of the Company's Common Stock. The Common Stock dividend reflected
a $0.03 per share increase over the prior quarterly dividend.
Employment Agreements for Salomon Levis and Zoila Levis
The Company, the Chairman of the Board and Chief Executive Officer of the
Company, entered into an employment agreement dated, as of May 1, 1997,
with Salomon Levis that expires on December 31, 1999. Under the terms of the
Agreement, Mr. Levis is entitled to receive an annual salary of $1.5 million
plus incentive compensation equal to 15% of the Company's annual consolidated
net income after taxes and after adding back incentive compensation payable to
executives of the Company ("Adjusted Net Income"), in excess of an amount
equal to a 15% return on stockholders' equity. At the discretion of the Board of
Directors, up to 50% of the incentive compensation may be paid in Common Stock
of the Company, subject to applicable requirements of the NASD or any stock
exchange on which the Common Stock of the Company may be listed. Mr. Levis'
annual salary and incentive compensation is subject to a maximum of $4.5 million
per year.
The Company entered into an employment agreement, dated as of May 1, 1997,
with Zoila Levis, the President and Chief Operating Officer of the Company,
which expires on December 31, 1999. Under the terms of the Agreement, Zoila
Levis is entitled to receive an annual salary of $500,000 plus incentive
compensation equal to the sum of the following: (i) $300,000 if the Company
earns $10.0 million of Adjusted Net Income; (ii) $300,000 if the Company earns
Adjusted Net Income up to $20 million; and (iii) 5% of Adjusted Net Income in
excess of $20 million to the extent such Adjusted Net Income exceeds an amount
equal to a 15% return on stockholders' equity. The amounts payable under
(i)-(iii) are cumulative and not exclusive of each other. At the discretion of
the Board of Directors, up to 50% of the incentive compensation could be paid
in Common Stock of the Company, subject to applicable requirements of the NASD
or any stock exchanges on which the Common Stock of the Company may be listed.
Ms. Levis' annual salary and incentive compensation is subject to a maximum of
$1.7 million per year.
The Employment Agreements with Salomon Levis and Zoila Levis provide that
if such agreements are terminated following a change of control of the
Company, the named executive officer would be entitled to receive all
compensation due under the agreements for the calendar year in which such
termination occurs.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 10.35 - Employment Agreement, dated May 1, 1997, between
FFCC and Salomon Levis.
Exhibit 10.36 - Employment Agreement, dated May 1, 1997, between
FFCC and Zoila Levis
15
<PAGE> 16
Exhibit 10.71(a) - Amendment, dated March 1, 1997, to Employment
Agreement, dated as of December 31, 1996, between Doral Mortgage and
Edison Velez
Exhibit 10.72 - Employment Agreement, dated May 1, 1997,
between Doral Federal Savings Bank and Jose G. Vigoreaux
Exhibit 27 - Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
Not Applicable.
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST FINANCIAL CARIBBEAN CORPORATION
(Registrant)
Date: May 13, 1997 /s/ Salomon Levis
----------------------------------
Salomon Levis
Chairman of the Board
and Chief Executive Officer
Date: May 13, 1997 /s/ Richard F. Bonini
----------------------------------
Richard F. Bonini
Senior Executive Vice President
and Chief Financial Officer
Date: May 13, 1997 /s/ Ricardo Melendez
----------------------------------
Ricardo Melendez
Vice President
Principal Accounting Officer
17
<PAGE> 18
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ----
<S> <C> <C>
10.35 - Employment Agreement, dated May 1, 1997, between FFCC and
Salomon Levis
10.36 - Employment Agreement, dated May 1, 1997, between FFCC and Zoila
Levis
10.71(a) - Amendment, dated March 1, 1997, to Employment Agreement, dated
as of December 31, 1996, between Doral Mortgage and Edison Velez
10.72 - Employment Agreement, dated May 1, 1997, between Doral Federal
Savings Bank and Jose G. Vigoreaux
27 - Financial Data Schedule (for SEC use only)
</TABLE>
<PAGE> 1
Exhibit 10.35
FIRST FINANCIAL CARIBBEAN CORPORATION
1159 F.D. Roosevelt Avenue
Puerto Nuevo, Puerto Rico 00920
As of May 1, 1997
Mr. Salomon Levis
650 Munoz Rivera Avenue
Hato Rey, Puerto Rico 00918
Dear Mr. Levis:
You were previously employed pursuant to an Agreement (the "Prior
Employment Agreement") dated as of August 29, 1995 by First Financial Caribbean
Corporation, a Puerto Rico corporation ("FFCC"). You have had wide experience
during your employment by FFCC in the mortgage banking business, have been
employed by FFCC or its predecessors since 1983, and have served as Chairman of
the Board of Directors and Chief Executive Officer of FFCC since February 1,
1990. Because of your experience, FFCC deems it in its best interests to
continue to have the benefit of your services as Chairman of the Board and
Chief Executive Officer.
It is expected that in such capacity, in addition to your duties as
Chairman and Chief Executive Officer of FFCC you will continue to manage the
business of FFCC substantially in the manner in which you have prior to the
date hereof. The Board of Directors of FFCC has authorized the execution of
this Agreement with regard to your employment on the conditions outlined in the
following sections of this letter. This Agreement supersedes and cancels all
prior employment, personal service, consulting or similar agreement between you
and FFCC and its subsidiaries, divisions and ventures, including the Prior
Employment Agreement.
1. TERM OF EMPLOYMENT
The term of this Agreement shall be for a period commencing
retroactively to January 1, 1997 and ending December 31, 1999, unless sooner
terminated as herein provided.
2. POSITION AND RESPONSIBILITIES
You will serve as Chairman and Chief Executive Officer of
FFCC. By your acceptance of this Agreement, you undertake to accept such
employment and to devote your full time and attention to FFCC, and to use your
best efforts, ability and fidelity in the performance of the duties attaching
to such employment. During the term of your employment hereunder, you shall
not perform any services for any other company, which services conflict in any
way with your obligations under the two preceding sentences of this Section 2,
whether or not such company is competitive with the businesses of FFCC,
provided, however, that nothing in this Agreement shall preclude you from
devoting reasonable periods required for
<PAGE> 2
Mr. Salomon Levis
As of May 1, 1997
Page 2
(i) serving as a director or member of a committee of any
organization involving no conflict or potential conflict of interest with the
interests of FFCC;
(ii) delivering lectures, fulfilling speaking engagements,
teaching at educational institutions;
(iii) engaging in charitable and community activities; and
(iv) managing your personal and family investments,
provided that such activities do not interfere with the regular performance of
your duties and responsibilities under this Agreement.
You shall, at all times during the term hereof, be subject to
the supervision and direction of the Board of Directors of FFCC with respect to
your duties, responsibilities and the exercise of your powers.
3. COMPENSATION
(a) During the term of this Agreement you shall receive
an annual salary of $1,500,000 annually, payable no less often than monthly in
accordance with corporate policy.
(b) (i) During the term of this Agreement, you shall
also be entitled to receive an annual incentive bonus equal to 15% of the
amount of Adjusted Net Income in excess of a 15% Return on Equity Capital;
provided, however, that total salary and incentive compensation payable to you
pursuant to this Agreement shall not exceed $4.5 million per annum.
(ii) The incentive bonus shall be payable annually
by FFCC within 30 days following the date on which its Annual Report on Form
10-K for the fiscal year ended the prior December 31 shall have been filed with
the United States Securities and Exchange Commission; provided that such amount
shall only be payable if you shall have served as Chairman of the Board and
Chief Executive Officer to FFCC pursuant to this Agreement for the entire
fiscal year to which such payments relate. As used in this Section 3,
"Adjusted Net Income" means the annual consolidated net income by FFCC and its
subsidiaries after all taxes (including net income from equity interests held
by FFCC in any other venture and net income of any successor of FFCC which may
be formed by merger, consolidation or sale of substantially all of the assets
of FFCC) during the calendar year preceding the payment as determined in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved and as shown by FFCC's
published consolidated financial statements audited by its independent
accountants (hereinafter referred to as "GAAP"), such net income to be adjusted
(A) by adding back to such net income any payments made pursuant to Section
3(b)(i) hereof and payments of similar incentive compensation to other
executive officers of FFCC, and (B) by adjusting such net income by any
extraordinary items of income and expense such as merger related expenses. As
used in Section 3, (1) "Equity Capital" means FFCC's consolidated Stockholders
Equity including preferred stock at the December 31 immediately preceding the
beginning of the fiscal year for which the calculation is being made,
determined in accordance with GAAP and (2) "Return on Equity Capital" for any
fiscal year means the percentage determined by dividing FFCC's consolidated
net income after all taxes determined in accordance with GAAP for such fiscal
year by Equity Capital for such preceding December 31; provided that such
calculation shall be adjusted as set forth in the immediately
<PAGE> 3
Mr. Salomon Levis
As of May 1, 1997
Page 3
succeeding sentence. If FFCC sells its equity securities during the fiscal
year, Equity Capital shall be increased by the net proceeds to FFCC (after
expenses) of such sale multiplied by a fraction the numerator of which shall be
the number of days in such fiscal year which had elapsed from the date of the
closing of such sale to the end of such fiscal year and the denominator of
which shall be 365.
(iii) At the option of FFCC, and subject to any
applicable requirements of the National Association of Securities Dealers or
any stock exchange on which the Common Stock of FFCC may be listed, up to 50%
of the amount payable under Section 3(b) may be in the form of shares of FFCC
Common Stock. For purposes of computing the number of shares to be issued, the
shares of Common Stock will be assigned a value equal to the average of last
sales prices of the Common Stock as reported on the NASDAQ National Market
System for the five trading dates immediately preceding the date of issuance.
(c) You shall be entitled to participate in the other
benefit plans of FFCC upon the terms and conditions on which such benefits are
made available to other officers of FFCC. Nothing herein shall obligate FFCC
to continue any existing benefit plan or to establish any replacement benefit
plan.
(d) You shall be entitled to reimbursement for reasonable
travel and entertainment expenses incurred in connection with the rendering of
your services hereunder. Nothing contained herein shall authorize you to make
any political contributions, including but not limited to payments for dinners
and advertising in any political party program or any other payment to any
person which might be deemed a bribe, kickback or otherwise and improper
payment under corporate policy or practice and no portion of the compensation
payable hereunder is for any such purpose.
(e) Payments under this Agreement shall be subject to
reduction by the amount of any applicable federal, Commonwealth, state or
municipal income, withholding, social security, state disability insurance, or
similar or other taxes or other items which may be required or authorized to be
deducted by law or custom.
(f) No additional compensation shall be due to you for
services performed or offices held in any subsidiary, division, affiliate, or
venture of FFCC.
4. MISCELLANEOUS PROVISIONS RELATING TO THE BONUS AND OTHER MATTERS
(a) Your acceptance of this Agreement will confirm that
you understand and agree that the granting of the incentive compensation
referred to in Section 3(b) and the receipt of any incentive bonus thereunder
(the "incentive compensation"), and any action thereunder, does not involve any
statement or representation of any kind by FFCC as to its business, affairs,
earnings or assets, or as to the tax status of the incentive compensation or
the tax consequences of any payment thereof, or otherwise. You further agree
that any action at any time taken by or on behalf of FFCC or by its directors
or any committee thereof, which might or shall at any time adversely affect you
or the incentive compensation, may be freely taken notwithstanding any such
adverse effect without your being thereby or otherwise entitled to any right or
claim against FFCC, Doral or any other person or party by reason thereof.
<PAGE> 4
Mr. Salomon Levis
As of May 1, 1997
Page 4
(b) The incentive compensation is personal to you and,
except as provided or contemplated in Section 3(b) above, in the event of your
death or incapacity, is not transferable or assignable either by your act or by
operation of law, and no assignee, trustee in bankruptcy, receiver or other
party whosoever shall have any right to demand any incentive compensation or
any other right with respect to it. If, in the event of your death or
incapacity, your legal representative shall be entitled to demand the incentive
compensation under any of the provisions hereof then, unless otherwise
indicated by the context or otherwise required by any term hereof, references
to "you" shall apply to said representative.
(c) If and when questions arise from time to time as to
the intent, meaning or application of any one or more of the provisions hereof
such questions will be decided by the Board of Directors of FFCC or any
Committee appointed to consider such matters, or, in the event FFCC is merged
into or consolidated with any other corporation, by the Board of Directors (or
a Committee appointed by it) of the surviving or resulting corporation, and the
decision of such Board of Directors or Committee, as the case may be, as to
what is a fair and equitable settlement of each such question or as to what is
a fair and proper interpretation of any provision hereof or thereof, whatever
the effect of such a decision may be, beneficial or adverse, upon the incentive
compensation, shall be conclusive and binding and you hereby agree that the
incentive compensation is granted to and accepted by you subject to such
condition and understanding. You understand that the incentive compensation is
not held or set aside in trust and (1) FFCC may seek to retain, offset, attach
or similarly place a lien on such funds in circumstances where you have been
discharged for cause and shall be entitled to do so for (x) malfeasance
damaging to FFCC, (y) conversion to you of an FFCC opportunity, or (z) a
violation of FFCC's conflict of interest policy, in each case as determined in
the sole discretion of the Board of Directors, and (2) in the event FFCC is
unable to make any payment under this Agreement because of insolvency,
bankruptcy or similar status or proceedings, you will be treated as a general
unsecured creditor of FFCC and may be entitled to no priority under applicable
law with respect to such payments.
5. RESTRICTIONS ON COMPETITION
During the term of this Agreement and for a period of one year
after you cease to be an employee of FFCC or an affiliate of FFCC, you will
not, without the prior written consent of FFCC, (a) accept employment or render
service to any person, firm or corporation, directly or indirectly, in
competition with FFCC, or any affiliate thereof for any purpose which would be
competitive with the mortgage banking business within the Commonwealth of
Puerto Rico or any other geographic area in which FFCC or any affiliate of FFCC
by which you were employed, conducted operations (the "Restricted Area") or any
business as to which studies or preparations relating to the entry into which
were made by FFCC or any affiliate of FFCC by which you were employed within
two years prior thereto (collectively, the "Restricted Businesses") or (b)
directly or indirectly, enter into or in any manner take part in or lend your
name, counsel or assistance to any venture, enterprise, business or endeavor,
wither as proprietor, principal, investor, partner, director, officer,
employee, consultant, adviser, agent, independent contractor or in any other
capacity whatsoever for any purpose which would be competitive with the
Restricted Businesses in the Restricted Area. An investment not exceeding 5%
of the outstanding stock in any corporation regularly traded on any national
securities exchange or in the over-the-counter market shall not be deemed to
violate this provision, provided that you shall not render any services for
such corporation.
<PAGE> 5
Mr. Salomon Levis
As of May 1, 1997
Page 5
6. TERMINATION OF EMPLOYMENT
(a) Your employment hereunder may be terminated for
dishonesty, death, incapacity, or inability to perform the duties of your
employment on a daily basis, resulting from physical or mental disability
caused by illness, accident or otherwise or refusal to perform the duties and
responsibilities of you employment hereunder, or breach of fidelity to FFCC.
(b) At any time following a "Change in Control" of FFCC,
this Agreement may be terminated by FFCC or you on 30 days' written notice to
you or FFCC, as the case may be, such termination to be effective as of the end
of the calendar year during which such notice is given. As used herein, a
"Change in Control" shall be deemed to have occurred at such time as (i) any
person or group becomes the beneficial owner of more than 50% of the voting
power of FFCC's voting stock, or (ii) FFCC consolidates with or merges into any
other corporation or conveys or otherwise disposes of all or substantially all
of its assets to any person.
(c) If at any time you shall voluntarily terminate your
employment, then this Agreement, except for Section 5 hereof, shall terminate
and all further obligations of FFCC hereunder shall cease, provided that in any
termination pursuant to subsection (b) of this Section 6 you shall be entitled
to receive all compensation due to pursuant to Section 3 hereof for the
calendar year in which such date of termination occurs.
You agree that this Section 6 shall create no additional
rights in you to direct the operations of FFCC.
7. REGISTRATION RIGHTS
(a) Upon your written request or requests that FFCC
effect a registration on Form S-3 and any related qualification or compliance
with respect to all or a part of the securities granted to you pursuant to
Section 3 (b)(iii) hereof (the "Registrable Securities") and other senior
executives of FFCC holding similar registration rights (individually a "Holder"
and collectively, the "Holders"), FFCC will:
(i) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other
Holders;
(ii) as soon as practicable, effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities
of any other Holder or Holders joining in such request as are specified in a
written request given within 15 days after receipt of such written notice from
FFCC; provided, however, that FFCC shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 7: (1) if
Form S-3 is not available for such offering by the Holders; (2) if the Holders,
together with the holders of any other securities of FFCC entitled to inclusion
in such registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate price to the public
<PAGE> 6
Mr. Salomon Levis
As of May 1, 1997
Page 6
(net of any underwriters' discounts or commissions) of less than $250,000; (3)
if FFCC shall furnish to the Holders a certificate signed by an officer of FFCC
stating that in the good faith judgment of the Board of Directors of FFCC, it
would be seriously detrimental to FFCC and its shareholders for such Form S-3
registration statement to be filed, in which event FFCC shall have the right to
defer the filing of the Form S-3 Registration Statement for a period of not
more than 120 days after receipt of the request of the Holder or Holders under
this Section 7; (4) if FFCC has, within the 12-month period preceding the date
of such request, already effected two registrations on Form S-3 for the Holders
pursuant to this Section 7; (5) if FFCC shall have effected any registration
(other than on S-3 or any successor Form) within the six month period preceding
the date of such request; or (6) in any particular jurisdiction in which FFCC
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance;
and
(iii) Subject to the foregoing, FFCC shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All expenses incurred in connection with a
registration requested pursuant to this Section 7, including, without
limitation, all registration, filing, qualification, printer's and accounting
fees and the reasonable fees and disbursements of counsel for the selling
Holder or Holders and counsel for FFCC, but excluding any underwriters'
discounts or commissions associated with Registrable Securities, shall be borne
pro rata by the Holder or Holders selling securities pursuant to Form S-3
Registration.
(b) The rights to cause FFCC to register Registrable
Securities pursuant to this Section 7 may not be assigned or transferred in any
fashion.
8. WAIVERS AND MODIFICATIONS
No waiver by either party of any breach by the other of any
provisions hereof shall be deemed to be a waiver of any later or other breach
thereof, or as a waiver of any such or other provision of this Agreement. This
Agreement sets forth all of the terms of the understandings between the parties
with reference to the subject matter set forth herein and may not be waived,
changed, discharged or terminated orally or by any course of dealing between
the parties, but only by an instrument in writing signed by the party against
whom any waiver, change, discharge or termination is sought.
9. SEVERABILITY
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective under applicable law. In the
event that any provision, or any portion of any provision, of this Agreement
shall be held to be void and unenforceable, the remaining provisions of this
Agreement, and the remaining portion of any provision found void or
unenforceable in part only, shall continue in full force and effect.
<PAGE> 7
Mr. Salomon Levis
As of May 1, 1997
Page 7
10. ARBITRATION
Any dispute arising under this Agreement shall be submitted to
arbitration in New York, New York under the rules of the American Arbitration
Association.
11. NOTICES
Any notice or communication required or permitted to be given
hereunder shall be deemed duly given if delivered personally or sent by
registered or certified mail, return receipt requested, to the address of the
intended recipient as herein set forth or to such other address as a party may
theretofore have specified in writing to the other by delivering or mailing in
a similar manner. Any notice or communication intended for FFCC shall be
addressed to the attention of its Board of Directors.
12. GOVERNING LAW
This Agreement shall be construed in accordance with the laws
of the Commonwealth of Puerto Rico.
13. MISCELLANEOUS
This Agreement shall be binding upon the successors and
assigns of FFCC. This Agreement is personal to you, and you therefore may not
assign your duties under this Agreement. The headings of the Sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof or to affect the meaning hereof.
<PAGE> 8
Mr. Salomon Levis
As of May 1, 1997
Page 8
If the foregoing terms and conditions correctly embody your
mutual understanding with FFCC, kindly endorse your acceptance and agreement
therewith in the space below provided, whereupon this shall become a binding
agreement.
Very truly yours,
FIRST FINANCIAL CARIBBEAN CORPORATION
By: /s/ Richard F. Bonini
----------------------------------
Name: Richard F. Bonini
Title: Senior Executive Vice President
Accepted and Agreed to as of the
date first above set forth:
/s/ Salomon Levis
- -------------------------------
Salomon Levis
<PAGE> 1
Exhibit 10.36
FIRST FINANCIAL CARIBBEAN CORPORATION
1159 F.D. Roosevelt Avenue
Puerto Nuevo, Puerto Rico 00920
As of May 1, 1997
Mrs. Zoila Levis
1159 F.D. Roosevelt Avenue
Puerto Nuevo, Puerto Rico 00920
Dear Mrs. Levis:
We are pleased to detail herein below the provisions of your
employment agreement with First Financial Caribbean Corporation ("FFCC").
1. TERMS OF EMPLOYMENT
The term of this Agreement shall be for a period commencing
retroactively to January 1, 1997 and ending December 31, 1999, unless sooner
terminated as herein provided. This Agreement supersedes and cancels all prior
employment, personal service or similar agreements between you and FFCC and its
subsidiaries, divisions and ventures.
2. POSITION AND RESPONSIBILITIES
You will serve as President and Chief Operating Officer of
FFCC. By your acceptance of this Agreement, you undertake to accept such
employment and to devote your full time and attention to FFCC, and to use your
best efforts, ability and fidelity in the performance of the duties attaching
to such employment. During the term of your employment hereunder, you shall
not perform any services for any other company, which services conflict in any
way with your obligations under the two preceding sentences of this Section 2,
whether or not such company is competitive with the businesses of FFCC,
provided, however, that nothing in this Agreement shall preclude you from
devoting reasonable periods required for
(i) serving as a director or member of a committee of any
organization involving no conflict or potential conflict of interest with the
interests of FFCC;
(ii) delivering lectures, fulfilling speaking engagements,
teaching at educational institutions;
(iii) engaging in charitable and community activities; and
(iv) managing your personal and family investments,
provided that such activities do not interfere with the regular performance of
your duties and responsibilities under this Agreement.
You shall, at all times during the term hereof, be subject to
the supervision and direction of the Chairman of the Board and Chief Executive
Officer and the Board of Directors of FFCC with respect to your duties,
responsibilities and the exercise of your powers.
<PAGE> 2
Mrs. Zoila Levis
As of May 1, 1997
Page 2
3. COMPENSATION
(a) During the term of this Agreement you shall receive
an annual salary of $500,000 annually, payable no less often than monthly in
accordance with corporate policy.
(b) (i) During the term of this Agreement, you shall
also be entitled to receive an annual incentive bonus
equal to the sum of the following:
(1) $300,000 if FFCC earns $10.0
million of Adjusted Net Income (as
hereinafter defined);
(2) $300,000 if FFCC earns Adjusted
Net Income up to $20.0 million; and
(3) 5% of Adjusted Net Income in
excess of $20.0 million, to the extent such
Adjusted Net Income exceeds an amount equal
to a 15% Return on Equity Capital (as
hereinafter defined);
The amounts earned under (b)(i)(1) - (3) shall be cumulative and not exclusive
of each other, provided, however, that total salary and incentive compensation
payable to you pursuant to this Agreement shall not exceed $1.7 million per
annum.
(ii) The incentive bonus shall be payable
annually by FFCC within 30 days following the date on
which its Annual Report on Form 10-K for the fiscal
year ended the prior December 31 shall have been
filed with the United States Securities and Exchange
Commission; provided that such amount shall only be
payable if you shall have served as President to FFCC
pursuant to this Agreement for the entire fiscal year
to which such payments relate. As used in this
Section 3, "Adjusted Net Income" means the annual
consolidated net income by FFCC and its subsidiaries
after all taxes (including net income from equity
interests held by FFCC in any other venture and net
income of any successor of FFCC which may be formed
by merger, consolida- tion or sale of substantially
all of the assets of FFCC) during the calendar year
preceding the payment as determined in accordance
with generally accepted accounting principles applied
on a consistent basis throughout the periods involved
and as shown by FFCC's published consolidated
financial statements audited by its independent
accountants (hereinafter referred to as "GAAP"), such
net income to be adjusted (A) by adding back to such
net income any payments made pursuant to Section
3(b)(i) hereof and payments of similar incentive
compensation to other executive officers of FFCC, and
(B) by adjusting such net income for any
extraordinary items of income and expense such as
merger related expenses. As used in this Section 3,
(1) "Equity Capital" means FFCC's consolidated
Stockholders Equity including preferred stock at the
December 31 immediately preceding the beginning of
the fiscal year for which the calculation is being
made, determined in accordance with GAAP and (2)
"Return on Equity Capital" for any fiscal year means
the percentage determined by dividing FFCC's
consolidated net income after all taxes determined in
accordance with GAAP for such fiscal year by Equity
Capital for such preceding December 31; provided that
such calculation shall be adjusted as set forth in
the immediately succeeding sentence. If FFCC sells
its equity securities during the fiscal year, Equity
Capital shall be increased by the net
<PAGE> 3
Mrs. Zoila Levis
As of May 1, 1997
Page 3
proceeds to FFCC (after expenses) of such sale
multiplied by a fraction the numerator of which shall
be the number of days in such fiscal year which had
elapsed from the date of the closing of such sale to
the end of such fiscal year and the denominator of
which shall be 365.
(iii) At the option of FFCC, and subject to
any applicable requirements of the National
Association of Securities Dealers or any stock
exchange on which the Common Stock of FFCC may be
listed, up to 50% of the amount payable under Section
3(b)(i) may be in the form of shares of FFCC Common
Stock. For purposes of computing the number of
shares to be issued, the shares of Common Stock will
be assigned a value equal to the average of last
sales prices of the Common Stock as reported on the
NASDAQ National Market System for the five trading
dates immediately preceding the date of issuance;
(c) You shall be entitled to participate in the other
benefit plans of FFCC upon the terms and conditions on which such benefits are
made available to other officers of FFCC. Nothing herein shall obligate FFCC
to continue any existing benefit plan or to establish any replacement benefit
plan.
(d) You shall be entitled to reimbursement for reasonable
travel and entertainment expenses incurred in connection with the rendering of
your services hereunder. Nothing contained herein shall authorize you to make
any political contributions, including but not limited to payments for dinners
and advertising in any political party program or any other payment to any
person which might be deemed a bribe, kickback or otherwise and improper
payment under corporate policy or practice and no portion of the compensation
payable hereunder is for any such purpose.
(e) Payments under this Agreement shall be subject to
reduction by the amount of any applicable federal, Commonwealth, state or
municipal income, withholding, social security, state disability insurance, or
similar or other taxes or other items which may be required or authorized to be
deducted by law or custom.
(f) No additional compensation shall be due to you for
services performed or offices held in any subsidiary, division, affiliate, or
venture of FFCC.
4. MISCELLANEOUS PROVISIONS RELATING TO THE BONUS AND OTHER MATTERS
(a) Your acceptance of this Agreement will confirm that
you understand and agree that the granting of the incentive compensation
referred to in Section 3(b) (the "incentive compensation"), and any action
thereunder, does not involve any statement or representation of any kind by
FFCC as to its business, affairs, earnings or assets, or as to the tax status
of the incentive compensation or the tax consequences of any payment thereof,
or otherwise. You further agree that any action at any time taken by or on
behalf of FFCC or by its directors or any committee thereof, which might or
shall at any time adversely affect you or the incentive compensation, may be
freely taken notwithstanding any such adverse effect without your being thereby
or otherwise entitled to any right or claim against FFCC, Doral or any other
person or party by reason thereof.
(b) The incentive compensation is personal to you and,
except as provided as contemplated in Section 3(b) above, in the event of your
death or incapacity, is not transferable or assignable either by your
<PAGE> 4
Mrs. Zoila Levis
As of May 1, 1997
Page 4
act or by operation of law, and no assignee, trustee in bankruptcy, receiver or
other party whosoever shall have any right to demand any incentive compensation
or any other right with respect to it. If, in the event of your death or
incapacity, your legal representative shall be entitled to demand the incentive
compensation under any of the provisions hereof then, unless otherwise
indicated by the context or otherwise required by any term hereof, references
to "you" shall apply to said representative.
(c) If and when questions arise from time to time as to
the intent, meaning or application of any one or more of the provisions hereof
such questions will be decided by the Board of Directors of FFCC or any
Committee appointed to consider such matters, or, in the event FFCC is merged
into or consolidated with any other corporation, by the Board of Directors (or
a Committee appointed by it) of the surviving or resulting corporation, and the
decision of such Board of Directors or Committee, as the case may be, as to
what is a fair and equitable settlement of each such question or as to what is
a fair and proper interpretation of any provision hereof or thereof, whatever
the effect of such a decision may be, beneficial or adverse, upon the incentive
compensation, shall be conclusive and binding and you hereby agree that the
incentive compensation is granted to and accepted by you subject to such
condition and understanding. You understand that the incentive compensation is
not held or set aside in trust and (1) FFCC may seek to retain, offset, attach
or similarly place a lien on such funds in circumstances where you have been
discharged for cause and shall be entitled to do so for (x) malfeasance
damaging to FFCC, (y) conversion to you of an FFCC opportunity, or (z) a
violation of FFCC's conflict of interest policy, in each case as determined in
the sole discretion of the Board of Directors, and (2) in the event FFCC is
unable to make any payment under this Agreement because of insolvency,
bankruptcy or similar status or proceedings, you will be treated as a general
unsecured creditor of FFCC and may be entitled to no priority under applicable
law with respect to such payments.
5. RESTRICTIONS ON COMPETITION
During the term of this Agreement and for a period of one year
after you cease to be an employee of FFCC or an affiliate of FFCC, you will
not, without the prior written consent of FFCC, (a) accept employment or render
service to any person, firm or corporation, directly or indirectly, in
competition with FFCC, or any affiliate thereof for any purpose which would be
competitive with the mortgage banking business within the Commonwealth of
Puerto Rico or any other geographic area in which FFCC or any affiliate of FFCC
by which you were employed, conducted operations (the "Restricted Area") or any
business as to which studies or preparations relating to the entry into which
were made by FFCC or any affiliate of FFCC by which you were employed within
two years prior thereto (collectively, the "Restricted Businesses") or (b)
directly or indirectly, enter into or in any manner take part in or lend your
name, counsel or assistance to any venture, enterprise, business or endeavor,
whether as proprietor, principal, investor, partner, director, officer,
employee, consultant, adviser, agent, independent contractor or in any other
capacity whatsoever for any purpose which would be competitive with the
Restricted Businesses in the Restricted Area. An investment not exceeding 5%
of the outstanding stock in any corporation regularly traded on any national
securities exchange or in the over-the-counter market shall not be deemed to
violate this provision, provided that you shall not render any services for
such corporation.
<PAGE> 5
Mrs. Zoila Levis
As of May 1, 1997
Page 5
6. TERMINATION OF EMPLOYMENT
(a) Your employment hereunder may be terminated for
dishonesty, death, incapacity, or inability to perform the duties of your
employment on a daily basis, resulting from physical or mental disability
caused by illness, accident or otherwise or refusal to perform the duties and
responsibilities of you employment hereunder, or breach of fidelity to FFCC.
(b) At any time following a "Change in Control" of FFCC,
this Agreement may be terminated by FFCC or you on 30 days' written notice to
you or FFCC, as the case may be, such termination to be effective as of the end
of the calendar year during which such notice is given. As used herein, a
"Change in Control" shall be deemed to have occurred at such time as (i) any
person or group becomes the beneficial owner of more than 50% of the voting
power of FFCC's voting stock, or (ii) FFCC consolidates with or merges into any
other corporation or conveys or otherwise disposes of all or substantially all
of its assets to any person.
(c) If at any time you shall voluntarily terminate your
employment, then this Agreement, except for Section 5 hereof, shall terminate
and all further obligations of FFCC hereunder shall cease, provided that in any
termination pursuant to subsection (b) of this Section 6 you shall be entitled
to receive all compensation due to pursuant to Section 3 hereof for the
calendar year in which such date of termination occurs.
You agree that this Section 6 shall create no additional
rights in you to direct the operations of FFCC.
7. REGISTRATION RIGHTS
(a) Upon your written request or requests that FFCC
effect a registration on Form S-3 and any related qualification or compliance
with respect to all or a part of the securities granted to you pursuant to
Section 3 (b)(iii) hereof (the "Registrable Securities") and other senior
executives of FFCC holding similar registration rights (individually a "Holder"
and collectively, the "Holders"), FFCC will:
(i) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other
Holders;
(ii) as soon as practicable, effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities
of any other Holder or Holders joining in such request as are specified in a
written request given within 15 days after receipt of such written notice from
FFCC; provided, however, that FFCC shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 7: a) if
Form S-3 is not available for such offering by the Holders; b) if the Holders,
together with the holders of any other securities of FFCC entitled to inclusion
in such registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $250,000; c) if FFCC shall
furnish to the Holders a certificate signed by an officer of FFCC stating that
in the good faith judgment of the Board of Directors of FFCC, it would be
seriously detrimental to FFCC and its shareholders for such Form S-3
<PAGE> 6
Mrs. Zoila Levis
As of May 1, 1997
Page 6
registration statement to be filed, in which event FFCC shall have the right to
defer the filing of the Form S-3 Registration Statement for a period of not
more than 120 days after receipt of the request of the Holder or Holders under
this Section 7; d) if FFCC has, within the 12-month period preceding the date
of such request, already effected two registrations on Form S-3 for the Holders
pursuant to this Section 7; e) if FFCC shall have effected any registration
(other than on S-3 or any successor Form) within the six month period preceding
the date of such request; or f) in any particular jurisdiction in which FFCC
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance;
and
(iii) Subject to the foregoing, FFCC shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All expenses incurred in connection with a
registration requested pursuant to this Section 7, including, without
limitation, all registration, filing, qualification, printer's and accounting
fees and the reasonable fees and disbursements of counsel for the selling
Holder or Holders and counsel for FFCC, but excluding any underwriters'
discounts or commissions associated with Registrable Securities, shall be borne
pro rata by the Holder or Holders selling securities pursuant to Form S-3
Registration.
(b) The rights to cause FFCC to register Registrable
Securities pursuant to this Section 7 may not be assigned or transferred in any
fashion.
8. WAIVERS AND MODIFICATIONS
No waiver by either party of any breach by the other of any
provisions hereof shall be deemed to be a waiver of any later or other breach
thereof, or as a waiver of any such or other provision of this Agreement. This
Agreement sets forth all of the terms of the understandings between the parties
with reference to the subject matter set forth herein and may not be waived,
changed, discharged or terminated orally or by any course of dealing between
the parties, but only by an instrument in writing signed by the party against
whom any waiver, change, discharge or termination is sought.
9. SEVERABILITY
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective under applicable law. In the
event that any provision, or any portion of any provision, of this Agreement
shall be held to be void and unenforceable, the remaining provisions of this
Agreement, and the remaining portion of any provision found void or
unenforceable in part only, shall continue in full force and effect.
10. ARBITRATION
Any dispute arising under this Agreement shall be submitted to
arbitration in New York, New York under the rules of the American Arbitration
Association.
<PAGE> 7
Mrs. Zoila Levis
As of May 1, 1997
Page 7
11. NOTICES
Any notice or communication required or permitted to be given
hereunder shall be deemed duly given if delivered personally or sent by
registered or certified mail, return receipt requested, to the address of the
intended recipient as herein set forth or to such other address as a party may
theretofore have specified in writing to the other by delivering or mailing in
a similar manner. Any notice or communication intended for FFCC shall be
addressed to the attention of its Board of Directors.
12. GOVERNING LAW
This Agreement shall be construed in accordance with the laws
of the Commonwealth of Puerto Rico.
13. MISCELLANEOUS
This Agreement shall be binding upon the successors and
assigns of FFCC. This Agreement is personal to you, and you therefore may not
assign your duties under this Agreement. The headings of the Sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof or to affect the meaning hereof.
If the foregoing terms and conditions correctly embody your
mutual understanding with FFCC, kindly endorse your acceptance and agreement
therewith in the space below provided, whereupon this shall become a binding
agreement.
Very truly yours,
FIRST FINANCIAL CARIBBEAN CORPORATION
By: /s/ Salomon Levis
----------------------------------
Name: Salomon Levis
Title: Chairman of the Board and
Chief Executive Officer
Accepted and Agreed to as of the
date first above set forth:
/s/ Zoila Levis
- ---------------------------------------
Zoila Levis
<PAGE> 1
Exhibit 10.71(a)
March 1, 1997
Mr. Edison Velez
Doral Mortgage Corporation
650 Munoz Rivera Avenue
Hato Rey, Puerto Rico 00918
RE: EMPLOYMENT AGREEMENT DATED AS OF DECEMBER 31, 1996
Dear Mr. Velez:
This letter agreement serves to amend that certain Employment
Agreement dated as of December 31, 1996 (the "Agreement"), between you and
Doral Mortgage Corporation ("DMC").
The first sentence of Section 1 of the Agreement is amended to read as
follows: "The term of this Agreement shall be for a period commencing on
January 1, 1997 and ending on December 31, 1998, unless sooner terminated as
herein provided."
Except as expressly amended above, the Agreement shall continue in
full force and effect in accordance with its terms.
Please express your agreement with the above amendment by signing in
the space indicated below.
Very truly yours,
/s/ Salomon Levis
Salomon Levis
Chairman of the Board
Agreed and accepted as of
the date first above written:
By: /s/ Edison Velez
-----------------
Name: Edison Velez
<PAGE> 1
Exhibit 10.72
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
this 1st day of May 1997, by and among DORAL FEDERAL SAVINGS BANK, Catano,
Puerto Rico, a federally-chartered stock savings bank (which, together with any
successor thereto, is hereinafter referred to as the "Savings Bank") and JOSE
G. VIGOREAUX (the "Employee").
WHEREAS, the Board of Directors of the Savings Bank believes it is in
the best interests of the Savings Bank to enter into this Agreement with the
Employee in order to assure the Savings Bank the services of an executive with
the experience and abilities of the Employee; and
WHEREAS, the Board of Directors of the Savings Bank has approved and
authorized the execution of this Agreement with the Employee to take effect as
stated in Section 5 hereof;
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein contained, it is
agreed as follows:
1. Employment. The Employee is employed as the President and
Chief Operating Officer of the Savings Bank with supervision over the daily
operations of the Savings Bank, and with such other powers and duties as may
from time to time be prescribed by Chairman of the Board and Chief Executive
Officer or the Board of Directors of the Savings Bank. The Employee shall
report to the
<PAGE> 2
2
Chairman of the Board of Chief Executive Officer of the Savings Bank. The
Employee shall devote his best efforts and substantially all business time and
attention to the business and affairs of the Savings Bank and its subsidiaries
and affiliated companies.
2. Competitive Activities.
(a) The Employee agrees that during the term of his
employment hereunder, except with the express consent of the Board of
Directors, he will not, directly or indirectly, engage or participate in,
become a director of, accept employment from, or render advisory or other
services for, or in connection with, or become interested in, or make any
financial investment in any firm, corporation, business entity or business
enterprise competitive with or to any business of the Savings Bank; provided,
however, that the Employee shall not thereby be precluded or prohibited from
owning passive investments, including investments in the securities of other
financial institutions, so long as such ownership does not require him to
devote substantial time to the management or control of the business or
activities in which he has invested.
(b) The Employee agrees and acknowledges that, by virtue
of his employment hereunder, he will maintain an intimate knowledge of the
activities and affairs of the Savings Bank including trade secrets and other
confidential matters. As a result, and also because of the special, unique and
extraordinary services that the Employee is capable of performing for the
Savings Bank or its competitors, the Employee recognizes that the services to
be rendered by him hereunder are of a character giving them a peculiar
<PAGE> 3
3
value, the loss of which cannot be adequately or reasonably compensated for by
damages. The Employee therefore agrees that if he fails to render to the
Savings Bank the services required hereunder, the Savings Bank shall be
entitled to immediate injunctive or other equitable relief to restrain the
Employee from failing to render his services hereunder, in addition to any
other remedies to which the Savings Bank may be entitled under law; provided,
however, that the right to such injunctive or other equitable relief shall not
survive the termination by the Savings Bank of the Employee's employment.
3. Compensation.
(a) Salary. The salary during the term of this Agreement
shall be $125,000 per year subject to a periodic review at the discretion of
the Board of Directors. The Employee's salary shall be payable not less
frequently than monthly and not later than the tenth day following the
expiration of the month in question. Any adjustments in salary or other
compensation shall in no way limit or reduce any other obligation of the
Savings Bank hereunder. The Employee's salary in effect hereunder from time to
time shall not thereafter be reduced.
(b) Discretionary year-end Bonus. The Employee shall
also be entitled to annual year-end bonus, the amount of which is to be fixed,
at the discretion of the Board of Directors, based on the achievement by the
Savings Bank of the goals set forth in the Savings Bank's Business Plan and the
individual goals assigned to
<PAGE> 4
4
the Employee by the Board of Directors, both as in effect from time to time.
(c) Automobile. The Savings Bank will provide the
Employee with the use of an automobile for use in the affairs and business of
the Savings Bank.
(d) Expenses. During the term of his employment
hereunder, the Employee shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by him in performing services hereunder,
provided that the Employee properly accounts therefor in accordance with the
Savings Bank's then existing policy. Nothing contained herein shall authorize
the Employee to make any political contributions, including but not limited to
payments for dinners and advertising in any political party program or any
other payment to any person, which might be deemed a bribe, kick-back or
otherwise an improper payment or contribution under existing law or under the
Savings Bank's policy or practice and no portion of the compensation payable
hereunder is for such purpose.
(e) Withholding. Payments of any compensation under this
Agreement shall be subject to reduction by the amount of any applicable
federal, Commonwealth of Puerto Rico, state or municipal income, withholding,
social security, state disability insurance or similar or other taxes or other
items which may be required or authorized to be deducted by law or custom.
<PAGE> 5
5
4. Benefits.
(a) Participation in Retirement and Employee Benefit
Plans. The Employee shall be entitled while employed hereunder to participate
in, and receive benefits under, all plans relating to pension, thrift,
profit-sharing, group life insurance, medical coverage, education, cash or
stock bonuses, and other retirement or employee benefits or combinations
thereof, that are maintained for the benefit of the Savings Bank's executive
employees or for its employees generally.
(b) Fringe Benefits. The Employee shall be eligible
while employed hereunder to participate in, and receive benefits under, any
other fringe benefits programs which are or may become applicable to the
Savings Bank's executive employees or to its employees generally.
5. Term. The term of employment under this Agreement shall be a
period commencing on the date of this Agreement (the "Commencement Date") and
ending on April 30, 1999, subject to earlier termination as provided herein.
Beginning on May 1, 1999 and on each anniversary thereafter (each an
"Anniversary Date"), the term of employment under this Agreement shall be
extended for a period of one year unless either the Savings Bank or the
Employee gives contrary written notice to the other not less than 30 days in
advance of the date on which the term of employment under this Agreement would
otherwise be extended.
<PAGE> 6
6
Notwithstanding any other statement or provision in this
Agreement to the contrary, this Agreement will not be automatically extended
unless, prior thereto, the Board of Directors of the Savings Bank reviews a
formal performance evaluation of the Employee performed by the Chairman of the
Board and Chief Executive of the Savings Bank and reflected in the minutes of
the Board of Directors. In the event that, on any Anniversary Date, the
Savings Bank does not extend this Agreement (and the Employee has not given
voluntary notice of termination), the Employee shall have such rights as are
set forth in Section 7(a) below. Reference herein to the "term of employment"
under this Agreement shall refer to both such initial term and such extended
terms.
6. Vacations. The Employee shall be entitled, without loss of
pay, to absent himself voluntarily from the performance of his employment under
this Agreement, all such voluntary absences to count as vacation time, provided
that:
(a) During the term of employment under this Agreement,
the Employee shall be entitled to paid vacation in accordance with the plans,
policies, programs or practices of the Savings Bank as in effect from time to
time; and
(b) The timing of vacations shall be scheduled in a
reasonable manner by the Employee subject to approval by the Board of
Directors.
<PAGE> 7
7
7. Termination of Employment; Death.
(a) The Savings Bank's Board of Directors may terminate
the Employee's employment at any time, but any termination by the Savings
Bank's Board of Directors other than termination for cause, shall not prejudice
the Employee's right to compensation or other benefits under this Agreement.
If the employment of the Employee is involuntarily terminated, other than for
"cause" as provided in this Section 7(a) or by reason of death or disability as
provided in Sections 7(c) or 8, the Savings Bank shall pay the Employee his
salary and provide to the Employee the same insurance benefits as he was
receiving before the date of termination through the remaining term of this
Agreement.
The terms "termination" or "involuntarily terminated" in this
Agreement shall refer to the termination of the employment of Employee without
his express written consent.
In case of termination of the Employee's employment for cause,
the Savings Bank shall pay the Employee his salary through the date of
termination, and the Savings Bank shall have no further obligation to the
Employee under this Agreement. For purposes of this Agreement, termination for
"cause" shall include termination for personal dishonesty, incompetence,
willful misconduct, breach of a fiduciary duty, insubordination, failure to
perform stated duties, willful violation of any law, rule, or regulation (other
than traffic violations or similar minor offenses) or final cease-and-desist
order, or material breach of any provision of this Agreement.
<PAGE> 8
8
(b) (i) The Employee's employment may be terminated by
the Employee upon a failure of the Savings Bank to comply with any material
provision of this Agreement, which failure has not been cured within ten (10)
days after a notice pursuant to Section 11 of such non-compliance has been
given by the Employee to the Savings Bank.
(ii) The Employee may terminate his employment
hereunder if subsequent to a change in control of the Savings Bank and without
the Employee's express written consent, there is assigned to the Employee any
duties inconsistent with Employee's positions, duties, responsibilities and
status with the Savings Bank immediately prior to a change in control of the
Savings Bank, or there is a change in Employee's reporting responsibilities,
titles or offices as in effect immediately prior to a change in control of the
Savings Bank, or if the Employee is removed from any of such positions, except
in connection with the termination or employment for just cause, disability,
death or retirement or pursuant to subsections 7(d) through 7(g) hereof.
For purposes of this Agreement, a "change in control
of the Savings Bank" shall be deemed to have occurred if any "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934
(the "Exchange Act") or successor provisions to such sections in the event such
sections have been superseded), other than First Financial Caribbean
Corporation or a subsidiary or affiliate thereof, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Savings Bank representing more
<PAGE> 9
9
than 50% of the combined voting power of the Savings Bank's then outstanding
securities.
If the Employee shall terminate his employment
pursuant to this subsection 7(b)(ii) following a change of control of the
Savings Bank, the Savings Bank shall pay as severance to Employee an amount
equal to the amount of compensation provided in Section 3 hereof for the
remaining term of the Agreement; such payment to be made in a lump sum on or
before the 15th day following the date of termination.
(c) In the event of the death of the Employee during the
term of employment under this Agreement and prior to any termination hereunder,
the Employee's estate, or such person as the Employee may have previously
designated in writing, shall be entitled to receive from the Savings Bank the
salary of the Employee through the last day of the calendar month in which his
death shall have occurred, and the term of employment under this Agreement
shall end on such last day of the month.
(d) If the Employee is suspended from office and/or
temporarily prohibited from participating in the conduct of the Savings Bank's
affairs by a notice served under Section 8(e)(3) or (g)(1) of the Federal
Deposit Insurance Act ("FDIA"), 12 U.S.C. Section 1818(e)(3); (g)(1), the
Savings Bank's obligations under this Agreement shall be suspended as of the
date of service, unless stayed by appropriate proceedings. If the charges in
the notice are dismissed, the Savings Bank may in its discretion (i) pay the
Employee all or part of the compensation withheld while its
<PAGE> 10
10
obligations under this Agreement were suspended and (ii) reinstate in whole or
in part any of its obligations which were suspended.
(e) If the Employee is removed from office and/or
permanently prohibited from participating in the conduct of the Savings Bank's
affairs by an order issued under Section 8(e)(4) or (g)(1) of the FDIA, 12
U.S.C. Section 1818(e)(4) or (g)(1), all obligations of the Savings Bank under
this Agreement shall terminate, as of the effective date of the order, but
vested rights of the contracting parties hereto shall not be affected.
(f) If the Savings Bank is in default (as defined in
Section 3(x)(1) of the FDIA, 12 U.S.C. Section 1813(x)(1)), all obligations
under this Agreement shall terminate as of the date of default, but this
provision shall not affect any vested rights of the contracting parties hereto.
(g) All obligations under this Agreement shall be
terminated, except to the extent determined that continuation of this Agreement
is necessary for the continued operation of the Savings Bank: (i) by the
Director of the Office of Thrift Supervision (the "Director") or his or her
designee, at the time the Federal Deposit Insurance Corporation ("FDIC") or the
Resolution Trust Corporation ("RTC") enters into an agreement to provide
assistance to or on behalf of the Savings Bank under the authority contained in
Section 13(c) of the FDIA, 12 U.S.C. Section 1823(c), or Section 21A(b)(4) of
the Federal Home Loan Bank Act, 12 U.S.C. Section 1441a(b)(4), respectively, or
(ii) by the Director or his or her designee, at the time the Director or his or
her designee approves
<PAGE> 11
11
a supervisory merger to resolve problems related to the operation of the
Savings Bank or when the Savings Bank is determined by the Director to be in an
unsafe or unsound condition. Any rights of the parties that have already
vested, however, shall not be affected by any such action.
8. Disability. If the Employee shall become disabled as
defined in the Savings Bank's then current disability plan or if the Employee
shall be otherwise physically unable to serve as the President and Chief
Operating Officer of the Savings Bank, the Employee shall be entitled to
receive group and other disability income benefits of the type then provided by
the Savings Bank for other executive employees, of the Savings Bank. However,
the Savings Bank shall be obligated to pay the Employee compensation pursuant
to Sections 2(a) and (b) hereof only to the extent the Employee's salary would
exceed the disability income benefits received pursuant to this Section. In
addition, the Savings Bank shall have the right, upon resolution of its Board
of Directors, to discontinue paying cash compensation pursuant to Sections 2(a)
and (b) beginning six months following a determination that the Employee
qualifies for the foregoing disability income benefits.
9. No Assignments.
(a) This Agreement is personal to each of the parties
hereof, and neither party may assign or delegate any of its rights or
obligations hereunder without first obtaining the written consent of the other
party; provided, however, that if the Savings Bank merges or consolidates or
converts by operation of law, into
<PAGE> 12
12
another entity controlled by it or by First Financial Caribbean Corporation or
any affiliate of any of the foregoing, this Agreement may be transferred to
such surviving entity.
(b) This Agreement and all rights of the Employee
hereunder shall inure to the benefit of and be enforceable by the Employee's
personal and legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If the Employee should die while
any amounts would still be payable to the Employee hereunder if the Employee
had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the Employee's
devisee, legatee or other designee or if there is no such designee, to the
Employee's estate.
10. Notice. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered or sent by
certified mail, return receipt requested, postage prepaid, addressed to the
last known respective address of the party hereto (provided that all notices to
the Savings Bank shall be directed to the attention of the Chairman of the
Board and Chief Executive Officer of the Savings Bank with a copy to the
Secretary of the Savings Bank), or to such other address as either party may
have furnished to the other in writing in accordance herewith.
<PAGE> 13
13
11. Amendments. No amendments or additions to this Agreement
shall be binding unless in writing and signed by both parties, except as herein
otherwise provided.
12. Paragraph Headings. The paragraph headings used in this
Agreement are included solely for convenience of reference and shall not
affect, or be used in connection with, the interpretation of this Agreement.
13. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or unenforceability of the other provisions hereof.
14. Governing Law. This Agreement shall be governed by the laws
of the United States to the extent applicable and otherwise by the laws of the
Commonwealth of Puerto Rico.
15. Other Matters.
(a) Except as provided in Section 9(b), any amounts
payable hereunder are personal to the Employee and are not transferable or
assignable either by the Employee's act or by operation of law, and no
assignee, trustee in bankruptcy, receiver or other party whomsoever shall have
any right to demand any such amounts or any other right with respect thereto.
(b) If and when questions arise from time to time as to
the intent, meaning or application of any one or more of the
<PAGE> 14
14
provisions hereof, such questions will be decided by the Board of Directors of
the Savings Bank or any committee appointed to consider such matters, or, in
the event the Savings Bank is merged into or consolidated with any other
corporation or converted by operation of law into another entity, by the Board
of Directors (or a committee appointed by it) of the surviving or resulting
corporation, and the decision of such Board of Directors or committee, as the
case may be, as to what is a fair and equitable settlement of each such
question or as to what is a fair and proper interpretation of any provision
hereof or thereof shall be conclusive and binding up. The Employee understands
that payment of any amounts hereunder, including any bonus, is not held or set
aside in trust and that (1) the Savings Bank may seek to retain, offset, attach
or similarly place a lien on such funds in circumstances where the Employee has
been discharged for cause and, in addition, shall be entitled to do so for (x)
malfeasance damaging to the Savings Bank, (y) conversion by the Employee of an
opportunity of the Savings Bank, or (z) a violation of the Savings Bank's
conflict of interest policy, in each case as determined in the sole discretion
of the Savings Bank's Board of Directors and (2) in the event the Savings Bank
is unable to make any payment under this Agreement because of receivership,
insolvency, bankruptcy or similar status or proceedings, the Employee will be
treated as a general unsecured creditor of the Savings Bank and may be entitled
to no priority under applicable law with respect to such payments.
<PAGE> 15
15
16. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
San Juan, Puerto Rico, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
SECTION 16 OF THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES.
DORAL FEDERAL SAVINGS BANK
By: /s/ Salomon Levis
------------------------------
Salomon Levis
Chairman of the Board and
Chief Executive Officer
/s/ Jose G. Vigoreaux
-----------------------------
Jose G. Vigoreaux
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FIRST FINANCIAL CARIBBEAN CORPORATION FOR THE QUARTER
ENDED MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 42,598
<SECURITIES> 614,448
<RECEIVABLES> 32,231
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 16,814
<DEPRECIATION> 6,944
<TOTAL-ASSETS> 1,130,521
<CURRENT-LIABILITIES> 0
<BONDS> 155,753
0
0
<COMMON> 9,125
<OTHER-SE> 147,078
<TOTAL-LIABILITY-AND-EQUITY> 1,130,521
<SALES> 0
<TOTAL-REVENUES> 30,073
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,554
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,086
<INCOME-PRETAX> 8,454
<INCOME-TAX> 1,333
<INCOME-CONTINUING> 7,121
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,121
<EPS-PRIMARY> .78
<EPS-DILUTED> .75
</TABLE>
