First BanCorp. Q3 FY2025 earnings call

• Strong financial results: Earned $100 million net income, adjusted EPS up 13% from prior year. - Loan growth: Total loans grew $181 million, surpassing $13 billion; commercial and construction lending, plus residential mortgage helped mitigate consumer credit slowdown. - Deposits: Grew $140 million on core franchise deposits, but faced higher competition, especially for government deposits. - Asset quality: Credit behaved as expected, with consumer charge-offs stabilizing, commercial credit trends healthy, and nonperforming assets down 7%. - Share repurchase: Board authorized $200 million share buyback program to execute through 2026. - Macro environment: Operating background stable with uncertainties like trade dynamics, federal shutdown, inflation; encouraged by labor market resilience in Puerto Rico, tourism improvement, and manufacturing investments.

During the third quarter, First BanCorp earned $100 million in net income. Adjusted normalized earnings per share grew 13% compared to the prior year. Net interest income reached $217.9 million, which is 8% higher than the third quarter of 2024. Total loans grew by $181 million, surpassing $13 billion for the first time since 2010. Core franchise deposits grew by $140 million. Asset quality showed credit behaving in line with expectations, with nonperforming assets down 7%. Revenue contribution: Net interest income was a significant component, with growth in commercial and residential loan portfolios contributing to overall results.

• Loan growth guide: Full year loan growth expected to be closer to 3%-4% range, will update for 2026 after fourth quarter report. - Margin: Fourth quarter margin expected to be flat, with net interest income growth from loan portfolio growth partially offset by projected Fed rate cuts. - Share buyback: Board authorized $200 million share buyback program to be executed through 2026, with intention to repurchase ~$50 million per quarter.

• Consumer credit demand slowdown: Auto industry below expectations, retail sales down YTD, impacting loan origination. - Competitive deposit pressures: Higher competition for deposits, particularly from government deposits, with some deposits moving with rates. - Macro uncertainties: Evolving trade dynamics, potential federal government shutdown, tariff-related inflationary pressures affecting businesses and consumers.

Q: Regarding the tax situation, is the benefit from deferred tax assets reversal a one-time thing?

A: There will be a benefit on normal operating losses, but not at the level of the DTA reversal, and effective tax rate will have some improvement going forward.

Q: Thoughts on consumer credit trends?

A: Consumer credit demand lower, unsecured credit demand down, but stability expected; portfolio growth from residential and commercial segments.

Q: Margin guidance for fourth quarter and deposit funding costs?

A: Margin expected to be flat; some government deposits will come down, but other core retail products not yet, with time deposits expected to see reduction.