Access to Capital Venture Capital, Private Equity, Financing and by yco10525

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									March 24, 2010 | Conrad San Juan Condado Plaza | 7:30 a.m. - 5:00 p.m.
 Access to Capital: Venture Capital, Private
Equity, Financing and Mutual Fund Industry

                  By: Carmen Rocafort
                  Senior Vice President
         Structured Finance & Corporate Banking
                        FirstBank
US Commercial Banks: Total Loan Portfolio

                 8,000,000

                 7,000,000

                 6,000,000

                 5,000,000
 $ In Millions




                 4,000,000

                 3,000,000

                 2,000,000

                 1,000,000

                        -
                             2003   2004   2005   2006   2007        2008          2009
                                                                Source: www.federalreserve.gov
PR Commercial Banks: Total Loan Portfolio

               70,000

               60,000

               50,000
 $ In $000's




               40,000

               30,000

               20,000

               10,000

                   -
                        2003   2004   2005   2006   2007    2008          2009

                                                           Source: www.ocif.gobierno.pr
PR Commercial Banks: Total Loan Portfolio Distribution

                               As of December 31, 2009

                                Other Loans Leasing
                                    4%        1%


                         Consumer
                                                        Residential Mortgage
                           10%
                                                                30%

          Commercial,
          Industrial &
           Agriculture
              20%
                                                      Commecial Real Estate
                               Construction                  26%
                                   9%




                                                                          Source: www.ocif.gobierno.pr
US Commercial Banks: Commercial & Industrial Loan Portfolio

                   1,800,000
                   1,600,000
                   1,400,000
                   1,200,000
   $ In Millions




                   1,000,000
                    800,000
                    600,000
                    400,000
                    200,000
                          -
                               2003   2004   2005   2006   2007        2008          2009
                                                                  Source: www.federalreserve.gov
PR Commercial Banks: Commercial & Industrial Loan Portfolio

               18,000

               16,000

               14,000

               12,000
   In $000's




               10,000

                8,000

                6,000

                4,000

                2,000

                   -
                        2003   2004   2005   2006   2007     2008           2009
                                                           Source: www.ocif.gobierno.pr
PR Commercial Banks: Commercial Loan Portfolio By Type
            $18,000

            $16,000

            $14,000

            $12,000
In $000’s




            $10,000

             $8,000

             $6,000

             $4,000

             $2,000

                $0
                               2006                  2007                 2008               2009
               Commercial & Institutional   Public Sector   Construction & Land   Commercial Real Estate
                                                                                                  Source: OCIF
PR Commercial Banks: Commercial Loans Portfolio By Amount

              $9,000
              $8,000
              $7,000
              $6,000
  In $000’s




              $5,000
              $4,000
              $3,000
              $2,000
              $1,000
                 $0
                       2006   2007            2008   2009
                              <$5MM   >$5MM                 Source: OCIF
PR Commercial Banks: Loan Loss Reserve % of Total Loans

                    3.50%

                    3.00%

                    2.50%
  (In Percentage)




                    2.00%
       Margin




                    1.50%

                    1.00%

                    0.50%

                    0.00%
                            2003   2004   2005   2006   2007     2008           2009

                                                               Source: www.ocif.gobierno.pr
PR Commercial Banks: Total Assets and Capital

              120,000                                                                     8,000

                                                                                          7,000
              100,000
                                                                                          6,000
               80,000
                                                                                          5,000
 (In $00's)




                                                                                                  (In $00's)
                                                                                                   Capital
   Assets




               60,000                                                                     4,000

                                                                                          3,000
               40,000
                                                                                          2,000
               20,000
                                                                                          1,000

                   -                                                                      -
                        2003   2004   2005        2006         2007   2008    2009

                                         Assets      Capital
                                                                             Source: www.ocif.gobierno.pr
PR Commercial Banks: Total Deposits
               $70,000

               $60,000

               $50,000

               $40,000
 (In $000’s)
  Deposits




               $30,000

               $20,000

               $10,000

                   $0
                         2000   2001   2002      2003   2004   2005    2006      2007     2008      2009
                                       Total Deposits                 Brokered CD's
                                                                                  Source: www.ocif.gobierno.pr
Commercial & Industrial Loans Spreads for Domestic Banks
                                           (Spreads over intended federal funds rate)

                      4.00

                      3.50

                      3.00

                      2.50
  Percentage Points




                      2.00

                      1.50

                      1.00

                      0.50

                      0.00
                             1986
                                    1987
                                           1988
                                                  1989
                                                         1990
                                                                1991
                                                                       1992
                                                                              1993
                                                                                     1994
                                                                                            1995
                                                                                                   1996
                                                                                                          1997
                                                                                                                 1998
                                                                                                                        1999
                                                                                                                               2000
                                                                                                                                      2001
                                                                                                                                             2002
                                                                                                                                                    2003
                                                                                                                                                           2004
                                                                                                                                                                  2005
                                                                                                                                                                         2006
                                                                                                                                                                                2007
                                                                                                                                                                                       2008
                                                                                                                                                                                              2009
                                                                                     Spread               Moving Average
                                                                                                                                                    Source: www.federalreserve.gov
                                    US Industrials Corporate Bonds 5yr Tenor
                                                            (Spread over 5yr T-Note)
                    1200


                    1000
(In Basis Points)




                    800
     Spread




                                                                                                                                                   A
                    600
                                                                                                                                                   BBB

                    400                                                                                                                            BBB-
                                                                                                                                                   BB
                    200


                      0
                                                                                                     Sep-07
                                                                                            Feb-07
                           Jan-03




                                                                                                                                Jun-09


                                                                                                                                         Jan-10
                                                        Oct-04




                                                                          Dec-05


                                                                                   Jul-06




                                                                                                              Apr-08


                                                                                                                       Nov-08
                                      Aug-03


                                               Mar-04




                                                                 May-05




                                                                                                                                         Source: Bloomberg
                                          US Industrials Corporate Bonds 5yr Tenor
                                                                      (Yields vs. 5yr T-Note)
                         14.00

                         12.00

                         10.00
                                                                                                                                                         BBB
(In Percentage Points)




                          8.00
                                                                                                                                                         BBB-
         Yield




                          6.00                                                                                                                           BB

                          4.00                                                                                                                           A

                                                                                                                                                         T-Note
                          2.00

                          0.00
                                                                                                           Sep-07
                                                                                                  Feb-07
                                 Jan-03




                                                                                                                                      Jun-09


                                                                                                                                               Jan-10
                                                             Oct-04




                                                                                Dec-05




                                                                                                                    Apr-08
                                           Aug-03




                                                                                         Jul-06




                                                                                                                             Nov-08
                                                    Mar-04




                                                                       May-05




                                                                                                                                                Source: Bloomberg
3Month Libor (US 0003M Index) & Prime Rate (PRIMB Index)




 Source: Bloomberg
Trends:

 •Loan growth has been negative among commercial banks in the US and PR.

 • Customers have less inventory to finance, have experienced declines in cash
 flow levels or reduced asset valuations. Also many projects and expansion plans
 have been postponed or delayed.

 •Banks have been tightening underwriting guidelines for the extension of credit.
 Focus on asset quality and the work out of construction loan portfolios which is
 key for the recovery of the industry.

 •Banks have increased pricing on new loans and renewals and generate other
 income to compensate for increase costs and offset the drag of non-performing
 loans.
New client behavioral patterns emerging given lessons
learned in the process of obtaining financing and raising
capital during a recession:
 •Local clients are becoming more selective when doing business with financial
 institution. Trend observed is for a reducing number of average banking
 relationships per commercial client.

 •Due to price increases refinancings have declined and occur mostly when
 there is a funding need that can not be postponed.

 •US. borrowers shifting gears and realizing the importance of having a strong
 relationship with a local bank in the markets in which they operate.

 • Lessened reliance on pricing as criteria for selection as opposed to other
 more intangible value added aspects of a banking relationship.
How can the process of obtaining bank financing can be
facilitated under current market conditions:
  •Develop a financing and capital plan that is in line with your business needs
  within a two to three year horizon.

  •Determine the desirable Debt to Equity structure for your business.

  •Up to date reliable financial information is key. Strive to maintain
  adequate accounting and financial reporting systems.

  •Establish a management succession plan for your business.

  •Maintain your banker informed of recent developments (positive and
  negative). Discuss and obtain feedback on potential future financing needs.
March 24, 2010 | Conrad San Juan Condado Plaza | 7:30 a.m. - 5:00 p.m.

								
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