First BanCorp (Puerto Rico) Q4 FY2024 earnings call

• Strong fourth quarter performance with net income of $76 million and pre-tax pre-provision income up 5%.
• Loan growth across segments, with total loans up $310 million in the quarter. Core deposits showed positive trends.
• Credit performance stable with non-performing assets at a record low of 61 basis points.
• Capital and liquidity position strong, with regulatory capital ratios increasing.
• Full year 2024 was a year of record results with revenue growth, earnings per share increase, and low non-performing assets.
• Technology initiatives to improve customer interaction were advanced.
• Board approved a 13% increase in quarterly cash dividend to $0.18 per share.

In the fourth quarter, total loans grew by $310 million (9.7% annualized) across all business segments including Consumer, Commercial, and Mortgage, with growth in both Puerto Rico and Florida regions. Core deposits other than broker and government were up 2% sequentially, and 4% including government. Net income for the quarter was $76 million, and pre-tax pre-provision income grew 5% to $117 million. Return average asset was 1.56%, and the efficiency ratio was close to 52%. For the full year 2024, net income was $299 million, earnings per share were $1.81, return on average assets was 1.58%, and return on equity was 19.1% (13.6% non-GAAP adjusted).

• Sustaining mid-single-digit loan growth guidance.
• Maintaining 100% net payout ratio including redeeming junior subordinated debentures and executing share repurchases.
• Quarterly cash dividend increased by 13% to $0.18 per share.

• Potential impact of macroeconomic changes and political developments on the business.
• Consumer credit weaknesses and potential volatility in allowance for credit losses.
• Uncertainty regarding deposit costs and competitive environment in Puerto Rico.

Q: About the 52% efficiency ratio for 2025, how focused are you on maintaining that and opportunities to adjust investments?

A: Aurelio Aleman mentioned they see consistent revenue components and are counting on margin improvement and portfolio growth, not halting investments but including technology and branch expansions. Orlando Berges added OREO gains will decrease in the second half of 2025.

Q: On quarter-to-quarter deposit growth, especially public funds, what drove the higher balances?

A: Aurelio Aleman said it was a combination of strategy for cash management services to government entities and municipalities, and support for reconstruction entities, with some seasonality in fund flows.

Q: On loan pricing, what's the current situation?

A: Orlando Berges stated loan pricing has come down a bit due to SOFR and Prime being down, especially on the Commercial side with floating components reprice with Prime and SOFR. Aurelio Aleman added the overall loan portfolio yield was down 12 basis points.

Q: About the $1.5 billion in cash flows from the investment portfolio, is it equally distributed?

A: Aurelio Aleman clarified it's not equally, with first quarter estimated $325-375 million, second quarter $240-260 million, third quarter around $400 million, and fourth quarter $525-550 million.