BBVA USA Bancshares Inc. reported a net loss in the first quarter as it recorded a goodwill impairment charge and significantly increased its loan loss provision in light of the deteriorating economic environment from the coronavirus pandemic.
The Houston-based bank reported an adjusted net loss of $52.3 million in the first quarter, compared to adjusted net income of $141.0 million in the year-ago period. The figure excludes a goodwill impairment charge of $2.19 billion BBVA USA incurred in the quarter. On a GAAP basis, the bank's net loss for the quarter was $2.24 billion, compared to net income of $141.0 million in the year-ago quarter.
The goodwill impairment charge was recorded due to "drastic" changes in macroeconomic conditions and forecasts brought about by the pandemic. BBVA USA said the charge has no impact on its liquidity and regulatory capital ratios or its operations.
The provision for credit losses for the quarter surged year over year to $357.0 million from $182.3 million, with the increase attributed to the economic slowdown from the pandemic and a steep drop in oil prices. First-quarter net charge-offs increased year over year to $111.8 million from $101.5 million.
Net interest income after the provision for credit losses for the quarter fell year over year to $232.5 million from $500.8 million. However, noninterest income increased to $334.2 million from $257.8 million. The first-quarter net interest margin fell year over year to 2.80% from 3.41%.
Total loans at the end of the first quarter were $67.66 billion, up from $65.03 billion at the end of the year-ago period. Total deposits at the end of the first quarter increased year over year to $77.23 billion from $74.38 billion.
The Small Business Administration approved BBVA USA to lend $2.2 billion under the first round of the Paycheck Protection Program. Nearly all of the loans have been disbursed to customers, according to a news release.
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