Release Date: July 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- First BanCorp (FBP, Financial) reported a strong net income of $80 million, translating to a robust return on assets of 1.69%.
- The company achieved record net interest income, driven by solid loan production and well-managed expense growth.
- Commercial loan production in Puerto Rico and Florida was strong, contributing to a 6% annualized growth in total loans.
- Asset quality remained stable with nonperforming assets flat at 68 basis points of total assets and a decrease in net charge-offs.
- First BanCorp (FBP) continues to invest in technology, achieving an 8% annual rise in digital active customers over the past five years.
Negative Points
- Customer deposits saw a reduction, primarily due to fluctuations in a few large commercial accounts.
- The provision for the quarter decreased, but this was partly due to a reduction in net charge-offs and an improved macroeconomic forecast, which may not be sustainable.
- Other income decreased by $4.8 million compared to the prior quarter, largely due to seasonal factors and lower realized gains.
- Operating expenses are expected to increase in the second half of the year due to ongoing technology projects and business promotion efforts.
- There is uncertainty around economic conditions and potential impacts from US policy changes, which could affect both retail and commercial customers.
Q & A Highlights
Q: What is the expected tax rate for the full year 2025?
A: The expected effective tax rate for the full year 2025 is approximately 23%, based on the forecasted mix of exempt and taxable income. This improvement is partly due to the redemption of subordinated debentures, which were not providing tax benefits at the holding company level. - Orlando Berges Gonzalez, CFO
Q: Can you provide more details on the recent deposit decline and its causes?
A: The deposit decline was primarily due to fluctuations in a few large commercial accounts, driven by business purposes such as capital investments and tax payments. The decline was concentrated among 25 customers, with the top five accounting for $120 million. Retail deposits remained stable, with growth in net customers and accounts. - Aurelio Aleman-Bermudez, CEO
Q: What is the outlook for credit quality and charge-offs?
A: We believe the current level of charge-offs is sustainable, with an improving trend in the consumer portfolios. Overall, credit quality remains strong, and recent vintages are performing better due to prior credit policy adjustments. - Aurelio Aleman-Bermudez, CEO
Q: How do you plan to fund loan growth in the second half of the year?
A: We expect deposit stability in the second half, with over $1 billion in cash flows from the investment portfolio. The primary objective is to deploy these funds into loans, with any excess going back into securities. - Aurelio Aleman-Bermudez, CEO
Q: What is the expected composition of loan growth for the remainder of the year?
A: Loan growth is expected to be a combination of contributions from both Florida and Puerto Rico, particularly in the commercial sectors. We anticipate stability in consumer loans and some growth in residential mortgages. - Aurelio Aleman-Bermudez, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
