First BanCorp (Puerto Rico) Q1 FY2025 earnings call

Financial Performance

• Delivered strong quarter driven by margin expansion and operating leverage. ROA was 1.64%, prepack pre-provision income grew 7% to $125 million.

Balance Sheet

• Total loans slightly down; deposits at $1.2 billion. Pipeline healthy, core deposits stable, non-interest bearing deposits grew $70 million, Puerto Rico core deposits (excluding government) grew $75 million.

Credit Performance

• Stable with early delinquency down, consumer credit trends normalizing.

Capital Deployment

• Redeemed ~$50M in ventures, declared $30M in dividends, repurchased $22M in stock, plan to repurchase $28M in April, remaining $100M for second half of 2025.

Economic Highlights

• Business activity healthy, unemployment low, year-to-date fiscal tax collection up 3%, debit/credit card sales up. Invested in data, converting to FIS cloud.

Financial performance was strong with Return on Assets (ROA) at 1.64%. Prepack pre-provision income grew 7% to $125 million. Net income was $77 million ($0.47 per share). Net interest income was $212 million, up $3 million from prior quarter. Margin expanded 19 basis points to 4.52%, with adjusted margin at 4.48%. Total loans were slightly down, deposits were $1.2 billion. Core deposit loans were stable, non-interest bearing deposits grew $70 million, and Puerto Rico core deposits (excluding government) grew $75 million. Provision for credit losses increased $4 million due to projected deterioration in consumer real estate. NPA increased $11 million, net charge-off was $21.4 million.

Forward-Looking

• Full-year guidance remains unchanged with mid-single-digit growth for the year. Projected investment portfolio cash flows $260M in Q2, $1B in second half of 2025. Expect margin to improve 5-7 basis points per quarter over next few quarters.

• Uncertainty in economic environment due to tariffs and fiscal policies. - Potential deterioration in commercial real estate, including one-off Florida hospitality loan case, but no expected losses from that case.

Q: Frank Schiraldi asked about securities cash flows, CRE in Florida.

A: Orlando Berges and Aurelio Aleman responded that securities cash flows for Q2 are ~$260M, back half of 2025 ~1.3%-1.4%, and the Florida CRE case was a one-off in hospitality with good loan to value and no expected losses.

Q: Brett Rabatin asked about loan origination, credit risk in Florida.

A: Aurelio Aleman talked about loan origination mix (both construction/commercial growing, consumer slower), and credit risk in Florida portfolios being healthy with well-diversified books.

Q: Steve Moss asked about loan growth, consumer charge-offs, margin.

A: Orlando Berges and Aurelio Aleman responded that loan growth guidance remains unchanged, consumer charge-offs expected to improve, and the 4.48% adjusted margin is on a GAAP basis.

Q: Kelly Motta asked about deposits, buyback, expenses.

A: Orlando Berges responded that deposits are stable, buyback plans include $28M in April and remaining $100M for second half, and expenses were $123M with some seasonal adjustments.

Q: Timur Braziler asked about deposits, Florida condo exposure.

A: Orlando Berges responded that deposits are stable with no specific near-term exits, and no significant exposure to Florida condo market.