John Pelling - Investor Relations Officer Aurelio Aleman-Bermudez - President and Chief Executive Officer Orlando Berges-Gonzalez - Executive Vice President and Chief Financial Officer.

Alex Twerdahl - Sandler O’Neill Brett Rabatin - Piper Jaffray Companies Brian Klock - Keefe Bruyette & Woods Inc. Joseph Gladue - Merion Capital Group.

Good morning and welcome to the First BanCorp Fourth Quarter 2016 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to John Pelling, Investor Relations Officer. Please go ahead..

Thank you, Loura. Good morning, everyone, and thank you for joining First Bancorp’s conference call and webcast to discuss the company’s financial results for the fourth quarter and fiscal year-end 2016.

Joining here today from FBP are Aurelio Aleman, President and Chief Executive Officer; and Orlando Berges, Executive Vice President and 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.

The company’s actual results could differ materially from the forward-looking statements made due to the important factors described in the company’s latest SEC filings. The company assumes no obligation to update any forward-looking statements made during the call.

If anyone does not already have a copy of the webcast presentation or press release issued by First BanCorp, you can access them at our website, www.firstbankpr.com. At this time, I’d like to turn the call over to our CEO, Aurelio Aleman.

Aurelio?.

Thank you, John. Good morning, everyone, and thank you for joining us again to discuss our fouth quarter and the fiscal year-end 2016. On the call with me today is our CFO, Orlando Berges. As usual, I will cover some of the highlights of the quarter and the year, and Orlando will discuss the results in more detail, then we will open the call for Q&A.

Let’s move to Slide 5 of the presentation. We’re really very pleased with our results for the quarter and year-end 2016, especially considering the macro uncertainties we face over the course of last year and prior years.

The quarter, we generated $23.9 million in net income, or a $0.11 per share and pre-tax, pre-provision came in at $55 million, which is the best number to the last four quarters. We’re averaging about $52 million for the year, and remember, our goal is to sustainable $50 million.

On an annual basis, net income was $93.2 million, $0.43 per share and [PPA and I was] [ph] to await for the years, pre-tax again [PPA and I] [ph]was averaged $52 million for the past full quarter, which is – it’s a number that we focus on.

I think it’s important to say that, we achieved improvements in most of our key franchise metrics during the fourth quarter. We will cover that detail later during the presentation. Obviously, if I look at 2016, our challenge continues to be and it’s our priority for 2017 continue to managing our asset quality.

I think we’re approaching a very important year, a significant portion of the asset quality, it’s linked to the government. And as we can see, there’s progress in accelerating the resolution of the particular government that are related responsibilities.

On the capital front, we made some headwind, I have to say small actions, but moving in the direction. We initiated the year repurchasing the small portion on the TruPS, we brought current, the accrued and unpaid interest on the TruPS, completed a secondary offering in December and reinstated the dividend on our preferred shares.

So obviously capital continues to be the priority, we will like to see more actions and it is in the management plans, timing is not definitive at this stage, but it is the top priority as the quality and capital for 2017 matters. Moving on, please move to slide 6 to cover some of the loan portfolio highlights.

Origination levels for 2016, again considering the macro, we’re satisfied between renewal and new origination we exceeded $3.2 billion, which is a good number.

This last quarter originations were healthy, some timing on the closing of some of the commercial activity and renewals, but we saw better numbers on the consumer book, across most of the consumer products, auto, personal loans and credit cards.

And again, as I mentioned, we’re managing to keep the loan portfolio approaching the $9 billion through 2016 and we achieved that. The slight growth of $16 million in the quarter actually was primarily driven by our continuous growth in the Florida franchise volumes.

It is important to know that we did a very small sale this quarter of $16 million that also had an impact on the portfolio and we continue to take charge-off primarily in the Puerto Rico book that are replacing non-performing loans with performing loans.

Again, diversification is an important elements, allow us to sustain the portfolio and in parallel being able to achieve some of the rescaling activities as the opportunities come. The pipeline for 2017 continues to look stable and healthy.

We see sufficient economic activity today to actually sustain 2016 levels, obviously our goal is to do better in 2017. Moving to the next slide 7, there are some highlights on the deposits.

We have a multiple goal on the deposits, improve the cost, reduce the broker and improve the core and I think we actually progressed in all the goals of all the franchise, deposit net of brokered and government increased $29 million for the quarter, reflect the increases in Puerto Rico and the Virgin Islands, in Florida we experienced a decrease.

Again, we have mentioned before, we’re optimizing the cost of deposit and is part of the strategy. On a year-to-year basis core deposits grew $243 million in Puerto Rico, which obviously was a very important goal for us.

Reliance in brokered CDs, more importantly, the quarter contributed $119 million in reduction and for the year we cut down brokered CDs by $658 million, which is an important number. Now let’s cover some of the Puerto Rico exposure. Obviously I have to mention on the PROMESA front there’s a lot of public information out there.

I’m not going to bore you with the detail, it’s been disclosed very timely to the market. The Board, we view the Board, as working with the new government administration to deliver the five-year fiscal plan for for Puerto Rico, obviously we’ll know a lot more on Saturday and there’s a public meeting coming on Saturday on the Board.

We perceive a great sense of urgency and we perceive constructive work relation from both the Board and the new administration. On the other hand we do expect austerity measures in the near-term.

But again, ultimately with the right discipline the reduction framework should result in fiscal discipline, more manageable debt load and a framework for achieving economic growth in Puerto Rico. Our government exposure remained relatively flat this quarter and again 60% is related to municipalities, we continue to feel very comfortable.

And as of the end of the year, the net carrying value of the government assets have some adjustment when you look at non-performing government loans was down to $69.5 million, again monitoring these loans is a priority to achieve resolution on the non-performing assets related to government, they represent a significant portion of our non-performing book.

So we are monitoring this closely and hopefully resolution is linked to the government debt resolution. Now I’m going to pass the call over to Orlando and I will come back to questions later. Thank you..

Good morning everyone. As Aurelio mentioned, the fourth quarter net income was $23.9 million that equates to $0.11 a share, which compares with $24 million also $0.11 a share for last quarter, pre-tax, pre-provision was $55 million, up from the $50 million achieved last quarter, mix of component that we’ll see now.

Total assets at the end of the quarter were approximately $11.9 million, that’s down $153 million from September and it’s basically the result of some of the strategies we had previously mentioned on our call. We cancelled $300 million of repos that mature within the quarter.

We’ll see the impact on margin and also we’ve continued to reduce the size of the broker CD portfolio. So we use some of the liquidity to liquidate the repos and cancel some of the maturing broker CDs.

The result for the fourth quarter and the third quarter, both had some items that -- we believe this is probably part of our core trading performance or in some cases they don’t occur with that level of frequency. So we tend to look at the numbers with some of these adjustment to understand.

On the positive side for the quarter, we had $1.7 million in net insurance commissions that are on the sale of large -- some large annuity contracts, typically we do that every quarter, but this one was higher than the typical one.

Also we had $1.5 million gain, on a recovery of a CMO, a very old CMO that has been written off, the receivables we assumed to be needed to cover losses and there was a receivable that came back to us just at the end of the year.

The quarter also had a $2.7 million adjustment to reduce the credit card rewards liability based on the expiration of points that were accrued at the time we acquired that portfolio. You might remember that portfolio was acquired back in 2012. We converted in 2013 and the points were all granted for a year term.

These points really had an ultimate redemption pattern, which was different from what we have seen on the rest of the points, so the forfeiture was a $2.7 million impact.

On the negative side, the quarter included a $1.8 million in additional provision for loan losses for the sale of the small pool of non-performing commercial, $16 million of non-performing as Aurelio mentioned, we added $1.8 million to the provision and the quarter also had $600,000 in cost associated with the secondary stock offering that was done at the end of November.

Last quarter also had one large item, which you’ll remember, we did sell some securities in the third quarter and we had a $6.1 million gain. So if we adjust these items net of our tax effect, on a non-GAAP basis the adjusted net income for the fourth quarter was $21.6 million, which is $0.10 a share.

And the third quarter was $18.3 million, also adjusted net of tax effect. The provision for the quarter was $23.2 million, which compares with $21.5 million, the increase again is the $1.8 million taken on the small pool that was sold. Excluding that the provision is slightly down from last quarter, it would have been $21.4 million.

On the net interest income we had an improvement of net interest income of $2.9 million, our net interest income was $121.1 million in the quarter, which compares with the $118 million we achieved in the third quarter.

The increase, it’s two main components, we had a $1.7 million increase in interest income on loans, part of it due to $1.6 million on non-performing commercial loans that were fully paid off in the quarter that added our 6 basis points to the margin that amount collected.

We also had a pickup of $1.1 million in net interest income, which resulted from the use of the cash proceeds from the sales of the CMOs in the third quarter and some of the liquidity to repay the repos under maturing broker CDs.

The $300 million in repos that were repaid at an average cost of 3.63%, which was significantly high and then we reduced by $168 million, the average balance of broker CDs in the quarter. The average all-in cost of the broker CDs that mature in the quarter was basically 99 basis points, almost 1%.

Overall margin was up 24 basis points to 4.30%, again driven by what I just mentioned in terms of the change in mix of earnings assets and improvement from the cancellation of higher cost components, plus the interest collected on the loans that were non-performing.

The cost of deposits on the funding side were down, both cost of total deposits and cost of interest bearing deposits by 2 basis points and this reduction when combined with the cancellation of the repos and the reduction on broker CDs resulted in a decline of 5 basis points in the overall cost of interest bearing liability.

For the year, margin was 4.14%, and as Aurelio mentioned, we’ve continued to decline the size of the -- to reduce of the size of the broker CD portfolio down now by $638 million. Non-interest income for the quarter was $23.6 million, compared to $26 million in the third quarter.

The decrease again is related to the $6.1 million gain, which we had on the gain on sale of securities in the third quarter, which I said by two items, I just mentioned $1.7 million in commission and $1.5 million on the CMO gain.

Excluding the effect of those items on a non-GAAP basis, the net interest income for the quarter was $200 million improvement -- $200,000 improvement, I’m sorry, compared to the last quarter, mostly ATM and merchant fee components. On the expense side, expenses continue to be very much under control for the quarter.

Non-interest expenses amounted to $84.2 million, which is $4 million down from last quarter and that includes the effect of the $2.7 million recorded on the reversal of the credit card liability that I just mentioned. And included in the amounts are the $600,000 in secondary offering cost.

So if we eliminate or we adjust for that on a non-GAAP basis and also some $300,000 we have in severance payments under third quarter, expenses for the quarter are down $1.7 million compared to the third quarter.

That is mix of $1.4 million reduction in provision for possible losses on unfunded loan commitments; some of it was taken last quarter on some revolving credit facilities.

We had reductions of $400,000 in FDIC premium, which -- it’s a combination of the improved earnings trend, a reduction in broker CDs, the size of the assets in the balance sheet and so those are the key ones. And also we had some reduction in regulatory supervisory fee local ones related to the size of the balance sheet.

The only increase we did see was an increase in legal reserves related to, mostly to labor cases. Non-performing assets for the quarter showed a slight decrease of $9.5 million to $734 million at December, compared to $744 at September.

The decrease on the quarter is partly related to the sales of -- more sales of our non-performing pool of loans of $16 million and the charge-off.

However, inflows of non-performing were $67.9 million, which is an increase of $17 million in last quarter, all related to one large facility, an inflow of $33.7 million on one loan, it’s one of the legacy loan that has been in our book for way over eight years that’s been a classified asset for all this time and ended up in non-performing this quarter.

We did see, however, the residential and consumer loans migrations coming down in the quarter, as you can see on the chart that is included in this slide.

Overall, adversely classified commercial and construction loans decreased by $57 million in the quarter as compared to last quarter, now it’s been at $489 million and the Other Real Estate Owned also decreased by $1.8 million, which was driven by sales and adjustment to the value, obviously offset by some of the migration.

Net charge-off for the quarter was $31.7 million, or an annualized at 1.43% of loans, which compares to $41 million last quarter, which was 1.90% of loans.

The quarter’s net charge-off included $4.6 million in charge-off associated with again the sale of -- $16 million sales of the non-performing loans, excluding this impact, net charge-off were $27 million or 1.22% of average loans.

Remember that last quarter we did have a large charge-off of $13.7 million related to two of the facilities that we have that are hotel loans that are guaranteed by TDF, so that’s the big part of the reduction we saw this quarter.

The allowance ratio at the end of the quarter has been at 2.31%, which compares to 2.42% after some of these charge-off are not being so much in some of the other components.

Looking a little bit at the whole year 2016, we had significant improvement in results, we generated $93.2 million in net income, or $0.43 a share, I would really mentioned before which compared to $21 million.

Again, results for both years included a number of items, first of all the ones I previously mentioned on the quarter, we also had some additional adjustments on OTTI.

We had last quarter, last year we had a large bulk sales, so there were few items, again as we detailed on the press release, if we adjust for all these items, the net effect is, the non-GAAP adjusted net income for 2016 was $87.7 million, which compares to an adjusted non-GAAP net income in 2015 of $59.2 million, it’s a $29 million improvement from last year.

And the improvement reflects reduced loan loss provision in each base on the risk profile of the portfolio and a significant reduction in the expense base, which includes both improvements in credit related expenses and improvements in operational efficiency on the components, as well as some reduction in FDIC insurance cost.

For the year, the effective tax rate was 28.4%, and a question that I typical get, we should expect similar effective tax rates, there is some variability in our numbers always related to the fact that we will still have some DTA valuation allowance that affects depending on the composition of the items temporary and permanent influences.

At the end of the year, capital ratios remained very strong.

The book value of our share came down a little bit because of the other comprehensive income adjustments related to the fair value of the invest security portfolio as rates went up at the end of the year, but for regulatory capital ratios, the additional net income on the quarter improved ratios.

As you can see, if we compare from a year ago, the total capital ratio is up 140 basis points, Tier 1 is up 90 basis points and leverage is up 150 basis points. And you can also see on that chart, the pickup from quarter-to-quarter and on each of the components of the regulatory capital.

So with that I will open the call for questions and go into specifics of things you would like me to discuss in more details..

Thank you. [Operator Instructions] And our first question will come from Alex Twerdahl of Sandler O’Neill..

Hey, good morning, guys..

Yes, good morning, Alex..

First of all, I was wondering if you can just give us a little bit more color around the small goal bonds although you guys did during the quarter.

How many loans was it? What kind of loans? And sort of what made it worth selling today versus keeping?.

Well, as you did mention it was a small one primarily small note. We continue – we can constantly receive, as I mentioned before, incoming inquiries from different investors. And obviously, we place judgment based on trade-off.

And obviously, when we look at the original loss versus the book value, which is a consideration, and obviously the expenses behind handling the note, we kind of decided to move. We decided to move on that one and take the deal. So, it’s work. We can call it opportunistic very small increment loss to the carrying value that we have..

Okay. I mean, that make a lot of sense to me. If I look at Slide 16 and see that your net carrying amount for a lot of your commercial NPOs is 56.6% and you saw these loans were $0.60.

So I mean, is there – can we – is there more of a read through here, or we can think that maybe there’s slightly more opportunities on the Islands today to sell some of these loans and maybe just given where you’re carrying them, there could be some more deals that make sense since 2017?.

Aurelio Aleman-Bermudez:.

So, we do expect it to be up. Obviously, our expectation is that prices get better and we can trade that – and better trade-offs when you look at the larger portfolio. But as I mentioned before, it’s something, we have to believe in to the market.

We have to believe sending to incoming inquiries and place our best judgment on what is the best use of using some of the capital for this activity..

Great. And then, you guys did a couple of things on the capital side during 2016, turned back on the preferreds, repaid some of the troughs [ph]. Are there anymore, I know you have a little bit – your hands are little tied just because you sell there an agreement.

But are there anymore sort of like, ones and twos, with respect to bringing up the capital structure things that can be done based on, I mean, obviously a ton of capital today?.

Well, we again, as a management team and the Board, we would like to get there and achieve return to shareholders in line with market competitors with a goal, hopefully it’s not a long-term one, but we have to continue dealing with the challenges again as the market or the economic environment continue to stabilize and more confident is out there.

I think it will happen that could accelerate. It’s a priority and we will continue pursuing it. Hopefully, we can deliver better growth through to 2017. But there’s not a definitive timeframe to be able to achieve some of the next steps..

Okay.

And then my final question is just, are there any other opportunities on the interest expense side other repos that it can be repaid in 2017 to bring the expense down further?.

Well, there is a little bit, but some of the other repos still have a little bit time to go. We don’t have any component like the ones we had at the end of this year, which are significant.

It’s more on the mix of the deposit side, where we see the opportunity, as we continue to achieve growth on the number of – on the non-interest bearing deposits, which we were – we did a pretty, pretty decent job this year in Puerto Rico, that should help. But those one item – one-time items like the ones on the Repos, not on the short-term..

Okay, great. Thanks for taking my questions, guys..

Thank you, Alex..

And our next question will come from Brett Rabatin of Piper Jaffray..

Hey, good morning..

Good morning, Brett..

Wanted to just….

How are you?.

I’m great.

How are you, guys?.

Congrats. Congrats on your family..

Oh, thank you. I just want to go back to thinking about the components of the margin and the interest recovery obviously helped the margin by about 6 basis points. Would it be likely that the margin will get back down in the next few quarters.

And can you talk about the loan production yields versus the current portfolio and maybe some of the dynamics or margin?.

Okay. The – let’s divide it. Portfolio written loans, portfolio yields, we haven’t seen yet the pick up as much on spreads. Obviously, we have a large component that is a variable rate component on the commercial side. As LIBOR has gone up, we get a pick up related to that.

On the other hand we also have seen how the cost of for federal home loan bank and bankers and broker CDs have also gone up because of that. So it feels – we feel we can sustain the margin at that level of close to 410. But clearly, there are some components that it depends on how they start moving.

The one thing we did see in the quarter was that, there was some pick up on originations on the consumer side in Puerto Rico, which is higher yielding portfolio help, still not enough to compensate for one-offs in the portfolio. So that the overall portfolio went down. But those are higher yielding loans, which we do have the margin.

And the other component has to do with again, what I mentioned on the deposit side on what we can – how we can continue to shift and grow on the non-interest bearing and contraction accounts. So those are the key components.

I don’t expect that spread in our markets being Puerto Rico or Florida that will change a lot, the basics what could change in there to help in the number..

Okay. And then I wanted to make sure I understood the commentary around taxes and the the DTA.

What are you assuming for, I want to make sure I understood what the normal tax rate you were assuming would be this year, assuming nothing changed with any proposed – any potential changes? And then if tax rates were lower, can you talk maybe about the DTA and just what implications might be there?.

Well, for next year, we – assuming nothing changes, meaning, next year – fiscal year, meaning 2017, tax rate, we’re assuming on average would be around that 28% based on current information. So the mix of – we don’t expect significant changes on the mix of them versus taxable income.

And assuming that the key component is at the end is, how much we have in charge over provisioning and what percentage of the NOLs we still have with valuation allowance that are affected by the calculations. And in our case, the tax rate changes in the U.S. won’t have an impact on our DTA number.

Most basically all of our DTA in the states is fully valuated. Most of the DTA that you see on our book is related to Puerto Rico, and there hasn’t been any conversations on changes in tax rates in Puerto Rico. So I don’t foresee that as affecting the tax rate more and more – more of the impact is going to come from strategies we could implement.

And obviously, as I have mentioned a couple of times before, we continue in the right path. There are a lot of positive information coming in, in terms of the trends of earnings, which we believe should help down the line on how much we can start reversing of the remaining DTA.

We feel that, if we can achieve results in 2017, which will have some similarity to the trends we were seeing on 2016, that should help push that analysis towards the end of the year..

Okay, great. And then just last quick one, obviously, a stronger quarter.

Operating income was some noise and some various components, but pretty good results and your goal has been $50 million and given the fourth quarter any thoughts on that number, or your guidance for $50 million, or your goal of $50 million maybe been higher in the next few quarters?.

Aurelio Aleman-Bermudez:.

$:.

Okay, fair enough. Thanks for the color..

Thanks, Brett..

And the next question comes from Brian Klock of KBW..

Hey, good morning, gentlemen..

Hey, Brian..

Good morning. Brian. Good morning..

So, Aurelio, another year that you guys have done some heavy lifting, but we’re seeing the improvement in core earning, so good work on the top line..

Thank you..

And even on the expenses too, so it’s a good work on that. I guess, I think, I just had a follow-up question on the NIM.

Orlando, did you say that you can hold the NIM at 410, I guess, going into 2017, it seems like the core NIM even if you adjust for the interest recovery was in the mid-420, is it – did I hear you right, or is there some other pressure do you think might be there?.

Definitely, even if I adjust for that, the NIM would have been like 424 in the quarter..

Okay..

And clearly, you have a valid point. It depends a bit, Brian, on mix and size of the balance sheet in funding. That’s why I say, clearly, it’s going to be about 410, we expect for next year. And depending on the mix of funding, we should continue to see a number a little bit higher than that.

But we haven’t seen change – too much changes in spreads on pricing on loans in either of the markets. So that’s why we need to continue to monitor what it is and what happens with the investment portfolio, the higher yielding one still getting some repayments.

Although we have been able to replace some of it, you probably saw that, we did some purchases on the quarter towards the end of the quarter at an average of 256 on the portfolio. But still we did have some adjustments on the other comprehensive income related to the overall value.

So those combined put some profit and negative pressure on the numbers. So I don’t want to overpromise..

Okay. Gotcha. Understood..

You know Orlando right now..

That’s right. So I guess, thinking about and really I’m thinking about what’s going on from the fiscal situation again and thinking about what we have to have a budget in place by June. So it seems this year is finally a year that something has to be resolved.

I guess, when you think about it, you’re gaining good growth in the Mainland and there’s still probably some issues or just demand in Puerto Rico. Do you think that from talking to commercial customers that they still maybe on hold a little bit until that fiscal resolution is resolved.

And maybe we get some kind of maybe positive settlement beyond that once those things get resolve there.

What are you hearing when you’re talking to your commercial customers on the Island?.

Yes, I think people shared the view basically the drivers are there in place finally for things to move. And that drivers are decision makers that have to make decisions in the short-term between the fiscal Board and the administration. Congress involvement continues to be active. So things are expected to move.

Obviously, we know there are some deadlines coming in. There will be an extension probably, it’s been requested and probably would be granted of the state. It was an extension requested to the fiscal plan and so probably we don’t know what the Board would decide finally. But and so many things move. There’s probably actually 90 days to make decision.

So I think everybody is still kind of wait. We’re getting ready for reacting to the final results. We see. I think with the sense of urgency, which is very important, and obviously on the incoming interest of investors into Puerto Rico. We have to say that, it’s busy.

It’s busy, telephones are ringing and we’re having calls and meetings, because there’s a lot of income and interest in the Island so..

Great. Thanks for that color and thanks for your time, guys..

Okay. Thanks, Brian..

[Operator Instructions] And our next question will come from Joe Gladue of Merion Capital..

Thanks. Good morning..

Good morning, Joe..

Good morning, Joe..

Good morning. I’d like to just follow-up just a little bit on the capital discussion from earlier, just clearly with – there’s been a lot of changes in valuations and everything.

Could you just go over what your, I guess, priorities for in capital deployment if and when you get some greater flexibility in regards to dividends, buybacks, M&A, sort of stuff?.

Well, Joe, obviously we have done some baby steps or initial steps during getting to the top on the preferreds, obviously, next alternatives during our some common actions, potential buybacks, using some capital for balance sheet clean up, portfolio acquisitions.

So, I think this is very evolving and they have to be obviously [indiscernible] are the top and then business opportunity that could come to the market are a ideal element. So I – obviously, it’s very – it’s top priority now our management and Board on the agenda.

But we have to consider all the things that are around it, around those decisions and potential actions. But obviously, we don’t walk – we don’t like to see ourselves behind the competitors in the market in capital action. So we need to move the needle and get there too. But the stock if, it’s what it is.

The multiples of Puerto Rico are still heavily discounted. And obviously, we can see that that could improve as the macro improves. So all things will move in parallel, I have to say, but it’s very difficult to tell you a timeline or why it’s better than this at this specific moment..

Okay..

The thing is to have a big optionality underway. Yes..

Okay.

Just wondered if you could provide a little more color on what’s going on in the Florida market, for instance, the loan pipeline and what’s happening in that market with the pricing both on the loan and deposit side?.

Yes, the Florida market, we – as I mentioned before, we’re building a franchise on different neighborhoods of Miami-Dade Broward county. So we don’t know, as I look at the overall Florida market.

We focus on the neighborhoods that we see good economic activity, demographics improvement, demand for loans, local businesses, local consumers, professionals and some participations in larger transactions that are investment grade as we have opportunities. So the team is ready.

We have resi mortgage, consumer, commercial middle market, and corporate are the key and the core deposit franchise. It’s very competitive and but demand on loans is there and economic indicators are all in the right direction. So we see – we continue to see some additional opportunity for growth. The balance sheet is now $1.7 million.

And there are some opportunity to keep growing that franchise slowly, but surely. So we have invested in facilities, branches, and we still have some facilities improvement to be able to and we’re invested in – also in the technology platforms significantly.

So we think we can continue to achieve growth similar to what we have done in the past two years..

But pricing is – to your point, pricing and the market – the Florida market has been….

Competitive..

Really aggressive though..

Yes..

So you sometimes you have to shy away from some deals because of that/.

Okay.

And just wondering if there’s opportunities for adding personnel in that market whether in the Miami Broward area that you’re focused on, or there’s some disruptions in other areas if you would consider adding personnel in those areas?.

Well, we’ve added some people in our commercial group, especially on the smaller middle market kind but it’s low or middle for us. We brought in some groups from the market, which were in other institutions to basically continue to evolve that market.

We continue to look at our possible branch expansion, but that’s something that it’s- we’re more careful on that. And on the market sometimes it’s a little bit more challenging on de novo.

But definitely, we have been adding some resources coming from other institutions to help in some of the strategy development in both the commercial and the residential side..

Okay, all right. Thank you, guys. That’s it for me. This concludes our question-and-answer session. I would like to turn the conference back over to John Pelling for any closing remarks..

Thank you. I just want to give you an update on our investor calendar for February. We will be attending the KBW Conference in Boca, February 9 and 10. Merion Capital has an Investor Field Trip down to Puerto Rico February 16, and [indiscernible] hosting on Investor Field Trip to Puerto Rico February 22 and 23.

With that, we appreciate your continued interest in First Bank, and this will conclude the call. Thank you..

Thank you, all..

Thank you..

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect..