FBP - NYSE
First BanCorp.
FBP·NYSE
$23.66
-0.21%Financial ServicesBanks - Regional
First BanCorp. operates as a bank holding company for FirstBank Puerto Rico that provides various financial services for retail, commercial, and institutional clients. The company operates through six segments: Commercial and Corporate Banking, Mortgage Banking, Consumer (Retail) Banking, Treasury and Investments, United States Operations, and Virgin Islands Operations. The Commercial and Corporate Banking segment offers commercial loans, including commercial real estate and construction loans and floor plan financings; and other products, such as cash management and business management services. The Mortgage Banking segment engages in the origination, sale, and servicing of various residential mortgage loans; acquisition and sale of mortgages in the secondary markets; and purchase of mortgage loans from other local banks and mortgage bankers. The Consumer (Retail) Banking segment provides auto, boat, credit card, and personal loans; lines of credit; deposit products comprising interest bearing and non-interest bearing checking and savings accounts, individual retirement accounts, and retail certificates of deposit (CDs); and finance leasing and insurance agency services. The Treasury and Investments segment offers funding and liquidity management services. The United States Operations segment provides checking, savings, and money market accounts, as well as retail CDs; traditional commercial and industrial, and commercial real estate loans; and internet banking, cash management, remote deposit capture, and automated clearing house, and transactions services. The Virgin Islands Operations segment is involved in consumer, commercial lending, and deposit-taking activities. The company operates 64 branches in Puerto Rico, 8 branches in the U.S. Virgin Islands and British Virgin Islands, and 11 branches in the state of Florida. First BanCorp. was founded in 1948 and is headquartered in San Juan, Puerto Rico.
At a Glance
Live SnapshotMarket Cap$3.66B
EPS2.1600
P/E Ratio10.95
Earnings Date07/28/2026
Earnings Call Transcript
FBP • 2026 • Q1
Operator
As a reminder, this conference call is being recorded. I would now like to turn the call over to Ramon Rodriguez, Corporate Strategy and Investor Relations. Thank you. Please go ahead.
Ramon Rodriguez
Thank you, Julian. Good morning, everyone. Thank you for joining First BanCorp.'s conference call and webcast to discuss the company's financial results for the first quarter of 2026. I'm here with Aurelio Alemán, President and Chief Executive Officer, and Orlando Berges, Chief Financial Officer. Before we begin today's call, it is my responsibility to inform you that this call may involve certain forward-looking statements such as projections of revenue, earnings, and capital structure, as well as statements on the plans and objectives of the company's business.
Orlando Berges
Good morning, everyone. Aurelio mentioned this quarter we earned $88.8 million. That's $0.57 per share, which compares to $87.1 million, or $0.55 a share last quarter. Adjusted pre-tax, pre-provision income reached an all-time high of $131 million, which is almost 2% higher than last quarter and about 5% higher than the first quarter of last year. The return on average assets for the quarter was 1.89%. That compares to 1.81% last quarter, so we had an improvement there. The provision for the quarter was lower. We had some macroeconomic indicators, such as the unemployment rate and the CRE price index continue to show better trends, and that leads to some of the reduction.
Orlando Berges
We had a reduction in delinquency as Aurelio mentioned, and some of the consumer portfolios, the size of some of the consumer portfolios was down. On the other hand, we had an increase in qualitative reserves to account for the current geopolitical uncertainty in the Middle East. Income tax expense for the quarter was $25 million, which is $5 million higher than prior quarter. Mostly related to the higher pre-tax income. also at the end of last year, in the fourth quarter, we booked an adjustment to the effective tax rate for the final results for 2025. The estimated effective tax rate as of now it's just slightly higher. It's 21.9%, which compares to 21.6% we had in 2025. In terms of net interest income, we had a reduction of $1.8 million in the quarter.
Orlando Berges
The net interest income amounted to $221 million. That's $2.7 million related to two less days in the quarter. Net interest income compared to same quarter last year is 4% higher. Interest income on loans is $6.5 million lower than last quarter, which $3.8 million is due to the two less days in the quarter, and $2.8 million relates to the market interest rate reductions that affected the commercial portfolio pricing, specifically the floating rate components. Yields on the commercial portfolio declined 18 basis points. On the other hand, interest income on investment securities increased $2.8 million, mostly due to a 22 basis points improvement in yields, as we have continued to reinvest cash flows from maturing securities into higher yielding instruments. On the expense side, overall funding cost was $3.5 million.
Orlando Berges
$1.3 million of that reduction relates to the two less days in the quarter, and $1.2 million relate to rate reductions. The cost of interest-bearing checking and savings accounts came down four basis points for the quarter to 1.21%, which is mostly driven by government deposit cost reductions. Also, the cost of time deposits came down 5 basis points. The cost of broker deposits came down 7 basis points. The size of the broker deposit portfolio was also down in the quarter. Net interest margin expanded 7 basis points for the quarter to 4.75%, which is slightly higher than our regional guidance of 2-3 basis points per quarter.
Orlando Berges
Even though the interest rate environment remains uncertain, particularly in terms of the timing and magnitude of future rate adjustments, our balance sheet continues to be well-positioned for additional NIM expansion in line with our regional guidance. In terms of non-interest income, we reached $37.7 million, which is $3.3 million higher than last quarter. Most of the change was related to a $3.6 million collected on seasonal contingent commissions that we usually get in the first quarter of each year.
Orlando Berges
Operating expenses for the quarter were $127.1 million, very much in line, only an increase of $200,000 from last quarter. If we exclude the gains from OREO operation, expenses for the quarter were $128 million, which is about the same kind of adjustment of increase of $300,000, which compared to the $127.7 we had last quarter. Expenses were on the lower end of our guidance. Payroll expenses for this quarter were $2.1 million higher. That relates to a seasonal increase in payroll taxes, and also we had an increase in share-based compensation expense for stock grants that were issued during the quarter. The portion of these grants that are attributable to retirement eligible employees is charged to expense in the quarter. This increase in payroll expenses was offset by a decrease in business promotion.
Orlando Berges
Typically, business promotion efforts are lower during the first quarter and pick up in the second and fourth quarter of the year. The efficiency ratio for the quarter was 49.1%, which is slightly below the 49.3% we had in the fourth quarter. As we have mentioned before, based on our projected expense trends for ongoing technology projects and the pick-up in business promotion efforts that happen later in the year, we're raising our quarterly expense base for 2026 will be in that range of $128 million-$130 million, as we had previously mentioned. This is excluding OREO gains or losses. Our efficiency ratio, we estimated will still be in that range of 50%-52% considering the changes in expense and income components for the year. In terms of asset quality, credit quality continued to improve in the quarter.
Orlando Berges
Non-performing assets came down by $5.3 million. That includes $4.8 million reduction in non-accrual loans, and that was across all business lines. OREO balances also decreased by $1.2 million, but we did have a $700,000 increase in repossessed autos in the quarter. Inflows to non-accrual were $34.3 million, which is $12 million lower than last quarter, and that's mostly related to a $10 million commercial loan inflow that was recorded last quarter, fourth quarter of 2025.
Orlando Berges
Most importantly, loans in early delinquency decreased by $34.5 million or 24% during the quarter, which is mostly $31 million decrease in consumer loans delinquency, specifically auto loans, most of it. We have seen some stability in the consumer delinquencies, and we continue to monitor closely the behavior of the different vintages that were issued over the last few years. In terms of the allowance for credit losses, the allowance is $3.9 million lower.
Orlando Berges
They reached $245 million, which represent 1.87% of loans. This is slightly down from the 1.9% of loans we had at the end of last quarter. Similarly to what I mentioned regarding the reduction in the provision for credit losses, the decrease in the allowance was mostly related to the improvements in some of the projected macroeconomic variables, specifically the unemployment rate and the CRE price index, combined with a reduction in delinquencies and the size of the consumer loan portfolios.
Orlando Berges
However, the ACL includes a higher qualitative loan loss reserve, as I mentioned, in order to account for this wider range of potential macroeconomic outcomes that could come out of the unrest in the Middle East. Net charge-offs for the quarter were $21.1 million or 65 basis points of average loans, slightly higher than the 63 basis points we had in the prior quarter.
Orlando Berges
This is mostly related to a reduced appraised value of the collateral of a commercial non-performing loan that led to a $600,000 charge-off for the quarter on the commercial side. On the capital front, as Aurelio mentioned, strong profitability has allowed us to repurchase the $50 million in shares this quarter and declare the $31.5 million in dividends. Our regulatory capital ratios continue to grow a little bit as the capital actions were offset by the earnings generated in the quarter.
Orlando Berges
Tangible book value per share grew to $12.45, and the tangible common equity ratio expanded to 10.11%. Again, we still have approximately $2.28 in tangible book value per share and about 160 basis points in tangible common equity ratio, which is related to the other comprehensive loss adjustments that are related to the investment portfolio. Aurelio mentioned already, but we remain focused on supporting our clients and growing our business while delivering close to 100% of earnings to shareholders in the form of buybacks and dividends. With this, I would like to open the call for questions. Operator.
Operator
Thank you. As a reminder to ask a question, please press star followed by the number one on your telephone keypad. Again, to ask a question, please press star followed by one. Our first question comes from Brett Rabatin from StoneX. Please go ahead, your line is open.
Brett Rabatin
Hey, good morning, everyone.
Orlando Berges
Good morning, Brett.
Brett Rabatin
Okay. That's helpful. Your securities portfolio has been a source of strength in terms of improving yields as you've had cash flow to reinvest, 2.69% yield in the first quarter. Can you just refresh me on what you guys have coming up and how big of an opportunity that is maybe relative to the margin? Just any thoughts on the margin pace in the rest of the year?
Orlando Berges
On the lower yielding securities, we still have about $600 million in cash flows coming from maturities of securities yielding on average 165. That changes a little bit per quarter, but it's about $250 million, it's in the second quarter. We have the other $350 million, it's in the second half of the year. The average yield, it's fairly consistent. It's a little bit lower on the third quarter, a little bit higher on the fourth quarter, but overall, it's at 165. That's what we're looking at. We had an additional about $236 million or so that matured during the first quarter.
Orlando Berges
We did take advantage of a little bit of the second half of March where rates changed, behavior changed a bit and increased. We try to advance a little bit of cash flows into that. That should help on the numbers going forward. Think about that 600 plus a little bit of the 200 that we had in the first quarter that clearly is being replaced with things going from 250 to about 380 basis points higher. I'm sorry, 280 basis points higher, that's what I meant.
Operator
Our next question comes from Arren Cyganovich from Truist Securities. Please go ahead. Your line is open.
Arren Cyganovich
Got it. Okay. Thank you.
Operator
Our next question comes from Kelly Motta from KBW. Please go ahead. Your line is open.
Kelly Motta
Got it. That's really helpful. Last question from me, if I can sneak one last nitty-gritty one in. I appreciate, I believe you reiterated your expectations around margin, which last quarter was about 2-3 basis points of expansion per quarter, but off this higher base. One thing looking at your average balance sheet that stuck out was residential mortgage yields were a bit higher linked quarter. Wondering if you could provide any color around that, if there was any sort of one-time loan fees or anything that may have impacted that. Wondering if that's run-rateable. Thanks.
Operator
Our next question comes from Steve Moss from Raymond James. Please go ahead. Your line is open.
Steve Moss
Morning. Maybe just starting, Orlando, on the 5% margin here. Curious on your funding cost expectations going forward. Noticed that your public funds have continued to head lower. Just kind of curious maybe if there's a little bit more give on your liability side for the margin here.
Orlando Berges
You have to divide it by components. The clear ones are the time deposits. New time deposits on the books are lower rates than some of the older ones that are maturing. That's where you saw the 5 basis points pick up on the time deposits. Broker deposits, even though it's not a large portfolio, it's also being repriced at lower rates. We had that 7 basis points that we'll continue to see some small reductions. At the end, the deposits, you have to divide it, the typical interest-bearing checking account or savings account, with limited movement in rates the same way they did. It only went up 14% kind of beta when rates were going up. We wouldn't see significant rate reductions on those accounts.
Orlando Berges
Some of the reductions are seen on the government deposit accounts that are part of the interest-bearing component, because some of them are indexed, and as some of the market rates have come down, they will come down. It all depends on what happens with the market rates. I would say that with current expectations, we would see some reductions on time deposits. Not so much on some of the other deposit accounts.
Steve Moss
Okay. Maybe we should phrase it this way. In other words, just it's fair to assume your public funds will be roughly stable around the $3 billion-ish or close to $3 billion level is your expectation?
Orlando Berges
Yeah. We don't expect major changes on those numbers.
Steve Moss
Thank you.
Operator
Our next question comes from Manuel Navas from Piper Sandler. Please go ahead. Your line is open.
Manuel Navas
Hey, I wanted to dive back into the NIM for a moment. Just want to confirm, you're shooting for that 2-3 basis points per quarter increase from here?
Orlando Berges
Yes. That's what we're shooting at based on expectation of rate movements and portfolio movements.
Manuel Navas
Okay. Could funding costs improve if your core deposits continue to grow?
Orlando Berges
Yes. Because if our core deposits grow on a typical mix, that would mean that those are more on the savings and interest-bearing checking accounts. That assumes that, as we just mentioned, that would be a stability on the government side. That would mean that those deposits are lower cost deposits and definitely that mix could improve.
Manuel Navas
Okay.
Orlando Berges
The commercial side, it's very good, but the average yield on our consumer portfolios is above 10%. Obviously that's not the kind of yield on the commercial side.
Manuel Navas
Perfect. I appreciate that. How would rate cuts impact this kind of forward guidance if there were any? There's none in forward curve at the moment, but just if there was a rate cut, how would that shift your kind of expectations?
Orlando Berges
The 2-3 basis points included some rate cuts toward the end of the year. The impact, depending on the size, is obviously the investment portfolio reinvestment component. If rate cuts are more, it's going to be a smaller rate. On the other hand, we also get some repricing on some of the deposit side. That assumption, it includes some expectation of reductions toward the latter part of 2026.
Manuel Navas
I appreciate that.
Orlando Berges
Remember that also the floating rate component of the commercial side, it's about 50%, just under that. Obviously if rates are not cut, then we wouldn't have repricing on those. That's part of the assumption also that there's going to be some repricing if rate cuts do happen.
Operator
Our last question will come from Robert Rutschow from Wells Fargo. Please go ahead. Your line is open.
Robert Rutschow
I just wanted to follow up on the tech commentary. We can see relatively high growth rates in the outsourced tech spend and the professional expense. How much of the expense base would you consider to be tech spend? Is the growth rate of, say, the outsourced services indicative of the overall tech spend? Is it possible to segment your tech spend between back office maintenance, efficiency initiatives, and anything that's geared towards revenue growth? Thank you.
Robert Rutschow
Okay, great. Thank you.
Operator
We have no further questions. I would like to turn the call back over to Ramon Rodriguez for closing remarks.
Transcript from April 22, 2026
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