FBP - Earnings call transcript Q1 2020

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Operator

Good morning and welcome to the First BanCorp 1Q 2020 Results Conference Call. [Operator Instruction] After today's presentation, there will be an opportunity to ask questions. [Operator Instruction]

And I'd like to turn the conference over to Mr. John Pelling, Investor Relations Officer, First BanCorp. to over and you you, sir. Thank

John Pelling

XXXX. Vikram. joining First you, the financial first Good webcast morning, for you company's quarter the for thank and results BanCorp's discuss everyone to Thank conference and call

and Joining you today Officer. President Officer; First BanCorp Vice Orlando Executive Chief Chief Aleman, Berges, are and and Executive Aurelio from President Financial

structure, statements statements anyone the business. to webcast SEC forward-looking as access website, statements have of earnings any call may this we today's made the forward-looking begin them you, revenue, on of statements call, important Before company as actual does from the in of a during certain our well copy to it could described company's filings. such call. the forward-looking you the not inform and update objectives the due made projections latest release, is can materially at differ already capital If to The my assumes the responsibility presentation and factors The no results press or Xfirstbankpr.com. obligation as involve plans company's company's

Additionally, we pandemic filed on investor well. as a our website deck COVID response

Aurelio At like to CEO, the to Aleman. Aurelio? call this our over turn I'd time,

Aurelio Alemán

you're all Thank you, Good and morning, everyone. a healthy. John. safe Hope

operating with managed pandemic and the this restrictive Before actually Florida ECR around a on present to locked discuss our Rico matter place and I employees of the to detail in going of put think in customers, into how subsequently more the less down, rules. is at quarter, the we mid-March have we impact Puerto need which hand, were and in which

X. So let's please Slide to move

during to standpoint. to crisis dedicated the and during and both in from families supporting to by want personally and hard families take of impacted economic our my been and down. those this every the our general clients day work who our opportunity First all the has on excellent been many team I hearts employees, pandemic frontline to out and teams my humanitarian thank all, acknowledge go lock This the have

one this adjust prepared disaster, and we recent for to have the plans prepared of the safely, right learn act accordingly, experiences in say but really no through on I as move our event, was our to managing our natural we based really felt type direction. teams process

unprecedented Going couple again just earthquakes. having back a events, years a modern here recession, long endured decade nature of for

Our disbursing to the safety and other learn customers, implemented to respond each implemented personally working testing protocol. results cleaning how for testing contact teams to that recently, very truly divided which contact crisis, our We restrict COVID-XX -- implement to working -- on-premises, we employees positive Most team, and immediately. to work, did actually. to are areas remote limit began tracing we

and operating digital with strength been have extremely pleased I our readiness.

their customers Our providing channels on automation borrowers, are contacting digital implemented programs, our distancing. to social limitation certain of process. of We the moratorium swiftly supporting our level

We of PPP also strong rollout numerated the a performance support SBA the consider of the FIS platform. very what program in the achieved, I with

and loans covers over is regions. the $XXX we lending all over Puerto more of As of our in share which that commercial and X,XXX than yesterday, market have Rico approved actually fair million, the

plans credit this I want the the crisis think, have people, we emphasize, should that. I like, short-term. of moratorium definitely in entering mitigate product to And vigilant support shareholders. strengths rollout position The open from and federal today, the in began -- a PPP, all our help we certain and our markets really deterioration clients for place We to relatively to remain of quality as institutional we're obviously,

as and at in results In ECR down, which I in lock some X economic $X.XX Florida, when the was $XX a initiated of we mentioned. million now. were the of income impacted look Obviously, million Well, effect net Rico that the look Orlando in we first share. by or detail. Slide which implemented CECL, the And under results Please, of by Puerto obviously, reserve move and $X.X fact the then of that will we greater at driven forecast COVID. generated deteriorated that, almost the spite build cover into when you

The it's actually Also, a grew $X.X though slightly the loan the commercial the important million driven start disrupted strong reduce reach was by to the that strategy even Puerto and our by of Origination construction over Rico, portfolio. offset residential loan with to we in consumer Florida million highlight toward origination $XXX end very quarter. pipeline. in and portfolio

in to increase little During the grow last of lending by was very present. in NPAs two closing driven no they halted this Rico, place the products. Florida or more quarter, $XX a flat, Rico I'll it and talk primarily so grew are reductions bit Puerto auto later. that in in not are about origination and limited weeks million that Puerto We're reductions sales most was in lock -- remained the slight mortgages down volumes auto deposits ECR. continue taking not in there mortgage actually and in relatively

feel the here yes, to handle Again, we're cycle. main really I line the bottom there is, was message is that think really -- the well we but results, we prepared

this strength. significant from have crisis and a managing entering we're crisis position experience of We

the highest country. the among in any are bank in capitals Our

lot and strong CECL we pre-provision a with among little our generated of for current quarter the reserve so also support We up above supports a Our with to bit are coverage the this highest this dividend. $XX of capital income reserve along crisis. retail of the bank, there capital million are and any

on closings. coming talk to quarter, a very cover to Obviously, really the weeks I about two quarter originations say, are it to because was every have more solid pace, a was a last the Slide important want loan pages pipeline. quarter. with a bit X. good It let's always great So I Yeah, at in for

PPP. straight, are and they so closings, obviously PPP some and less was that no mortgages mortgage mostly commercial are no rules In auto focus Florida, limited ECR restrictive, to and and originate loans. we actually Rico closing Puerto activity pending, sales The on commercial continue activity

at look forward we'll happening keep reopening different reopening on second When businesses. but up the the to-date happen guidance to you will quarter. back as China, timelines think be in the from Well, you table, or what curves come you learning reopening other from I cannot this we or what's timelines outside, should of a in the When line specific volumes fine. that, the we're give market, design, from -- into

We continue renewals. to manage

on USVI We the lines continue revolving week. reopening announced and actually support next growth to

Rico that the and couple next Government see. sector expectation of in and announcement a day the down Puerto put high reopens We on sometimes Rico should are the flexibility on happen all waiting that from rules early week. for the of to some private lock is update next the Puerto There

experienced POS, markets obviously not debit card ATH, reduced are surprisingly, on also gradually this open volumes credit and again. begin likely we in increasing mobile until Internet most again to our and ATM, Additionally, continue

supported cover supported see incentive. XX place guidance standpoint, want for around to regulatory different time crisis to XXX They some can are there by from mitigants for from a this strong what matters. Puerto credit Definitely we which Rico in also the by great -- moratoriums quality a next I CARES the are act, days. and the prior to local

so the we I a an experiences on lot on understanding process. from efficiency we crisis, from prior moratorium gather learn think So

in analyzing and contacting We situation their immediately began program. March implementing our borrowers, the

done thank a -- really all have for lot I effort. We and this team my

of We consumer a have done analyze lot every large portfolios. the borrower and we have

product offered to have As of approximately XX% release we yesterday, billion. $X.X the portfolio, of

in over to approved below want I X,XXX Protection and to are million. have below We as and yesterday $XX,XXX. Program $XXX,XXX XX% these $XXX in XX%, of Paycheck say of amounts loans amounts Highlight,

supporting are, segment. small the we're totally we So

continue we our at until available on setting applications Today, SBA. are funds

So that feel supported obviously is wind customer monitoring this We to program. continue, will late-stage of but our credit the for reacting we're even be some getting products term. out, borrowers the some run near have every quality these there at in availability will are still by should application are now the is we farms day

allocated in to the that just Puerto the to economy the I to addition, by board and stimulate important highlight pandemic. those $XXX to government Rico want fiscal approximately support In the and impacted the addition know million

you there some be should mitigant here. those positive all add initiatives, when three large So

to questions later. hand for to come Orlando you Now Thank the I'm call cover going to back we'll and the details all. financial

Orlando Berges

morning, everyone. Good

compared which quarter, the So fourth have tax $XX $XX.X $X.X quarter. a all made last compares income of a share. Aurelio transaction from pre-provision net non-GAAP in in generated did is with adjusted also quarter resulted $X.XX quarters, the million associated $X.XX million mentioned, to we last of reference income million you'll which net We That $X.XX or items share. $XX $XX.X of a million, share but a or in He expenses remember unusual several quarter. million the this to per with

results $X.XX debt of million, Number by is pandemic This securities items. of include of had a quarter $X.XX. securities build a reserve $XX.X the for scenarios. Moody's quarter. economic the two earnings million forecasted $XX.X basically COVID $X.X gain impact approximately effect per we build and improved for tax This loans driven million, which after-tax exempt the one, an on share And share the that sale had on of large by an reserve

talk or includes on new you Important estimated losses, credit about -- losses CECL, of the rules it's lot to which it this as as commitments quarter we as was lot's expected well losses. clarify for a adoption includes on securities. loans when credit the of of know, a debt unfunded And any it's important accounting

credit upon of regional allowance of standard. As for the CECL losses recorded overall million X, we of January $XX adoption

it being up For and build the I the have is million economic provision reserve the the we million, -- for normal basically this under been made would scenario reserve up includes close coverage -- just which total $XX.X reference and the would million, quarter. think $XX.X provision for to to, the the provision charge-offs which approximately quarter quarter, would $XX.X have what ended been

stimulus just reasonable the a ones market, Rico losses. macroeconomic are losses. supportable expected that are time couple economic to do and economic incorporate provision projections, and reasonable, of an we revert calculations projection four which on as Puerto the stimulus based variables, of in the and two And as years and -- well historical time in to the supportable the key on -- This impact for, the pandemic, we the Florida federal determine to used are frames. or mentioned that as give it's frames I take economic Moody's years then for

as million allowance CECL related and as related other to debt commitments at million loans, about that had securities. unfunded credit to grown Overall, quarter of million $XX we X.XX% that from has $XXX to of loans $XXX of includes component our losses stands $XXX represents The related loan loans December. significantly on $X March million -- which allowance for million the at the end, allowance

quarter. In for the terms income, the in represents million in amount million. the mostly this it's The income. the a quarter, non-interest was sorry, decrease interest on income, interest of variable quarter quarter to for day the day And for compares rate had net of which impact us at the the less in first I'm repricing $X.X $XXX.X -- the One income loans we one plus quarter. interest the of the net million, last terms approximately $XXX.X during of $XXX,XXX net quarter, reduction, for impact in commercial

rate mentioned growth in Aurelio did due $XXX in assets and last $XXX lower limited, and earning that interest loan fourth compared lock compared million rate the quarter environment we the second as for the in downs of were average half earning we at some the ultimate Margin million reductions. originations to quarter. Again the stood have to -- of quarter the but as lower quarter, This affected average assets XXXX. number had to

of the a in decrease reflected forward, expect on customers size as should on slow the second the is Aurelio -- estimate, portfolios Rico going reference of when to full of sheet. and when loan with rates, we in Going quarter. made reality, effect it's open difficult the reductions higher to, balance Puerto the Moratoriums yielding a reopens still component consumer we as -- come to the into portfolio, down some that happen of there bit a it's what's some but

our since cost accounts Overall, interest we reduction categories in on an X cost all been showing time XX% however overall on the take deposits bearing adjusted maturities deposit of for the on to deposits. basis the deposits work on improving -- show and this represent points continue Time on adjustments interest fund of the product quarter. have depends of longer to it of

the Fed went market discount all way lower how of rates. quarter in disruptions up Federal and such as quarter, down lines stability Loan In the cost Home on as testing window also we've and CDs. Bank on waiting well of advances the as had on some saw We a as brokered funding, -- for

part represent on about package And has and there From we perspective, have disruption the been quarter. year really local the continue liquidity, cash throughout we some of liquidity liquidity pre-liquid securities levels inflow a of from have high So the XX.X% seeing. based -- to are to federal latter funds expect stimulus levels of assets. of we on comfortable that the

we is last few gain $X.X quarter. move sale up the $XX.X to components, we non-interest This up had income. If major on income which was is $X.X of from Non-interest million million the million, securities. tax-exempt

we a felt it's rates, at the prepayment we sell -- During sharp that the sold end the the quarter, portfolio. we portfolio, reality quarter part risk of the and with subject in of to significant decided portion that of reduction we had to our

ended $XXX we we for portfolio. sale about selling -- up MBS of available in had agencies million US the So agencies that

prior quarter, Also on of had the the auto mortgage We ends of the in based that end see associated component first did being year, income, at so, volumes some of of insurance seasonal received it. the in and was up years. however were income we related with the which we of on mostly volume quarter to an reductions lower the produced commission in $X.X contingent insurance the some originations it million quarter each increase

reality heard, from all we and There a of come always mentioned part card, down by all reduction POS card, decrease in Aurelio but debit the first on fee-based we it in is as components a a side. income, there variance saw on $X.X million, and those is is fee that disruptions Transaction seasonal. the downs some remember from credit non-essential realize commercial last were on gain sale on $X.X the we where did mortgage the quarter, lock million category. that's other quarantine loans, non-accrual of basis this part Important, large the so on quarter, of

valuation In terms primarily than Santander. connection and FirstBank. advisory we employees legal, and a last We last costs which components $XX.X million million, restructuring acquisitions $XX.X which had quarter, related number with the the of included $X.X included and pending separation to million lower offered program to voluntary fees, expenses, non-interest merger amounted expenses $XX is of a also of decrease million in eligible in other of quarter, to

in on decrease the expenses, million write-downs million OREOs. $X of to primarily saw also $X.X We value OREO related

point, first compensation Christos by benefit higher Employee all line everyone full in expenses driven grew mostly else, quarter. to line we're start are all adjustments and it's, reassessment could in $X day volume by in with reducing discretionary business doing one this are expense that bonds million, seasonal partially we offset -- payroll the that items of and happen. At spending less included quarter, the taxes

see So the we how we we depending to are on volume originate. can that ready act, estimates

increase lot in -- by was remained of Non-accrual loans In million only increase consumer had more increase reality $XXX,XXX March. non-accrual portfolio, asset first million the mostly million growing and of auto. achieved we also $X.X collection years construction primarily had quarter. million it's the Keep a in over decrease we commercial the $X.X last of the in non-accruals, and in of a $X.X It in $X.X $XXX.X million relatively as non-performing bit loans, it's quarter that of flat. mind a quality, we terms to couple

come loans than mentioned, not quarter that past XX were So is based second to implementing mostly depending on current -- reasons. the on always -- But have make Aurelio loans, that the to the of for from percentage due, moratoriums moratoriums there days non-performing Migration we portfolio. less from continue been payments. type a criteria loans loans on of those to would the moratoriums there or that to meet for again, is considered financial we're did not or

basis So for for changes charge-offs. Same also quarter affect expect thing second significant stops, the related big we Charge-offs don't all were changes could if the loans than the non-performing. don't in we someone million on category. lower $X.X moratoriums it second basically quarter. on points quarter have and But quarter, we this to quarter, average XX expect the second place last as in

the time, open like this I'd call At to questions. for

Operator

Thank you, sir.

Instructions] Please the Poonawala of [Operator America. Bank question-and-answer begin have session. a now will line Ebrahim from from first the go We We of question ahead.

Ebrahim Poonawala

would loss the guess, build, you the just about, guess, if that Orlando, would can of a you So you One, talk terms five, I that you've that rates in with driven number, to last a just the have quarter. that if modern in if terms standpoint, reserve loss I can can we if start expect experienced aspects otherwise during what might talk build? over the about much to the of do, X.X%. have XX from higher that modern you result to otherwise led let's -- then just years, led

And from secondly, this about when hurricane of the compare, Aurelio, sheet the you look of your to borrowers our to kind this? crisis balance of had is, we've the if previous talk and that CRE and and at you capacity relative per C&I island can ability borrowers both just just how through navigate these does

Orlando Berges

Okay.

Let's the calculation. start with

know, CECL. we you implemented As

in reasonable account Our because CECL into required we In difficult that predict have Puerto years over called that defined what a timeframe. longer CECL feel methodology it's Puerto as takes or been two very a we Rico, supportable by Rico to the timeframe. as has economy

that, E&P see the impact key are portfolios. index key unemployment unemployment, population key, and the are key years, on macroeconomic how like and Moody's that that are it's meaning So ones that we ones. that of using comfortable different use something for HPI of variables it's We feel for what estimated The like calculation, impact key something things and we is projections but the two some made. can Moody's price house

years, is revert two components we Puerto rates. we historical that were that to in components are Rico we rate on and of see some lows for above much unemployment that numbers it's unemployment, a a two that After we examples higher these then so our XX% good Like use the what what today.

we the The what year, factors the economic from the of CECL reversion reasonable So estimates one that of we supportable components much significant under day end be would the and it as frames those accounting. we're historical they amounts when of we the had again are reason by for change numbers. similar change, on they how combine time at two when that impacts what because the those sort to not, of run going than so higher losses have

in Moody's that, immediate coming -- as quarters large well impact or on over down. is Keep assuming estimating we it's and be starts unemployment mind that, are one would the first, as the then two

which of do immediate losses. commercial the calculation the very So handled estimated hurricane, one. impact the would last What business with portfolios, most well those kind the the on is have impact commercial recent time happen an

that They or had very either operation covered of on it were the hurricane the different so in reopening frames, not and question --- would business implication, reserves on resulting from a reasonable key they here manage the able and dates sectors. would well. The in large, to the the had that be by they manage damages kind we're were time insurance what they opening what is, have

the the in have you -- the a industries. take of commercial by you bit major there, you little we of of -- go a the did break down portfolio, older include portfolio look, If breakdown presentation, if to a can

that you a can what we So have. see bit

we mentioned see that the clearly, The the run the in some meaning trying a bit rentals, have could assess mostly. allowance, press of industry it part increase of the in some and airlines retail we're to of calculations, estate challenge centers the that car of example, impact of that a of the on a -- kind could transportation CECL when bit and some those carrying that real you for release, business, on meaning shopping we industries, the now it’s these it's reopening

and kind those the beginning on industries So reflected that's impact. of calculations. loss estimated higher expecting At the we're

Aurelio Alemán

Okay.

correctly, understood process it on you to is that So question compares want make part if the on how sure. of to the to second to Maria, Ebrahim, you me have a comment just

Ebrahim Poonawala

of the Yeah. could lock And that? of in so both if of terms significant it from like Puerto you federal significant is you for locally. a can -- this has the Rico, to downs, been bridging talk about that some level just and if How talk time stimulus feels there period

Aurelio Alemán

$XX on in to quarter, And happened based impact Maria next the and a -- I'm bit did expect was million short time Maria in industries. quarter. Okay. about to the compared what because we in a going recovery What within term, the remember, provision different the of curves next actually second that of the we

or normal. have year -- that no because of And be a European the because to electrical things reopening what's the was you will take based it we sales expectations on assume away. little bit certain curve others with to easier reconstruction. sector coming in going to when predict to actually back impact on going in was we're proceeds more right The improving mean, come size others a damage, it I grid of the back

place moratoriums, a were effect. -- it month conditions bit store, similar example, different here, into start are for we to to took actually didn't So a able but limited in not where about immediately in little support, very and, things we have the put have we obviously

the XX already act Here actually started the provided on out. we additional we came programs, some regulatory March Then guidance because on TDRs. CARES had flexibility

had at point on the lot a we storm. are today than more the there tools So

XX what great or believe requested have other some So going restructure are closing we're that loans going months probably our numbers have that's recovery not borrowers, later, the extend -- the of deterioration you large become will days have they this probably or cases going of and only because, to to six to alternative flexibility days, to -- XXX volumes short-term the are to amount in is the the that be or TDR. and time it's close it’s to we that have mitigants

more more when have I to mitigate. say, -- have we tools So we

are Obviously, programs, have the the coming personal flow we We or now. also that business which during of end companies. what payments need had reopening doing defined. it's from the understand significant. key, with they cash the is don't to to and the everybody we apply at as work reassess, are quarter going continue the do day, to curves think it's insurance to else what continue it's hurricane them from second is I the be Obviously, But, to we supporting

I think, other is are industries process in how which states or is are every we learning all China day, the behaving, US the in how are other ahead behaving. behaving and how

parts are there XX mitigants our question. driven if So next reopening, is I a of operating have that XXX by are, we the basically days lot clients your are to does they that unlimited so conditions, moving but think answer they for enough working even to on days support

Ebrahim Poonawala

my for Thanks taking helpful. questions. Very Yeah.

Operator

you. Thank

have line We Keefe, go ahead. the question & Glen from Woods. from next Manna Please Bruyette of

Glen Manna

us much moving well. were was language forward, the So quarantining. had it forward of right acquisition. but moving is describe Santander So quarantines and just just release a but project giving kind I would given close a you just had can't to pace press Maybe I thought There the could that give on detail, you that, -- realize or I'm some question say the by you now 'XX. slower the -- not XQ at process How unlikely in I doing middle the are you of too the you?

I that if date any to from XX if October provisions are there effective the guys that, filing documents it to that, correctly, And correct? of in back wouldn't from the part months close second by the the recall you close then? extend as deal. had Is And

Aurelio Alemán

transaction, we clear. are we fairly with our definitely is Yeah. into think deal. I different through the I'll pandemic What's question happening account. request working first at the said, the and the say can looking we're about statement What as taking from regulators

in -- we closing have We an of mid time closing XXXX of -- date October, provided XXXX. estimated middle deal the announced

working pace to because are So is progress what of we're stage, see the People but that this obviously, is, different. saying we at yes, market the unlikely

answer that's question. to So the the first

in language XX-day a to the The -- a extent. contract days question are I close to yes, elements lot a document. There is process second answer second call, as NPAs not the public pretty things expires XX has is, clear of in agreement, if correctly, excluded, the how well, closing there would And be. a to remember I'm but and prices extend I think obviously is the going determining, whenever that of that to agreement lot the how actually other in the date the discuss that the it's how --

Glen Manna

that had Okay. I net we Great. Thank asset the you. kind And, case? were last Orlando, still that you of trends out sensitivity NII said that tracking spoke, the think Is the when simulations you put in K.

Orlando Berges

thing Ks of The that I the Yes. is it's on only happened, that already say, some was December remember based would it, XX information.

the depending The reopening go can we forward-looking happens back only is and Some on of when numbers scenario growth kind on level. with those originating come be on significantly. of challenge to normal it would the already happening as down rates to have what

on Puerto did most mentioned, Rico, they shut down Aurelio door locked the originations. loans loans in As -- the on down

the thing, on second it of some bit when So And reopened. to businesses. don't the know all a depends going we be that's is

coming to another try need rates estimate there to So, is is point. component that than we in a here, other this challenge which at

Glen Manna

future? that during for some hurt eliminate how to the last up SVP -- And Okay. But what's and that's and back of to you happened, portfolio I we happen to the think what us just may have of all crisis help tried the you the that then the in crisis the spots last the soft going look kind portfolio think Aurelio strengthen lastly, maybe you've could just tell done resiliency that to again. of

Aurelio Alemán

higher June XXXX can you before Well, go NPAs of to, back in last had levels back the we crisis.

that comparison prior financial a other in about table have the the crisis. We talks presentation

quality it capital, I'm the but different we're the three significantly line proud diversification the risk of not of. the really So, portfolio, of business on reserves the and is, across across our of profile improve only book regions,

portfolio. a construction have much moderate We

relationships We also. have less bulky

you if delinquency any the so. risk comparisons. obviously of go take So you to prior and end they've of from a the quality better periods back the even it's are asset of any year, always profile And the prior-year metrics XXXX levels

equation. strength So starting side the with of on we're both a great

Orlando Berges

The add, really would the were Glen, on that so crisis in other thing the I XXXX it's back remember high. market and

significant to the as recession. were a place a reality and on everything XXXX we market in policies is after that there to origination The adjusted they implication based values continue values, since started loan loan and to then much happening is reduction. better were So

So fact that as a is residential the improves construction construction. that and mentioned more the the CRE And positioning by on we some Aurelio portfolios. have portfolios of selling

that compared where So prior as to lot a cycles. we stand improves

Operator

you. Thank

We line from have Piper from of ahead. Alex Sandler. go Please next question the Twerdahl

Alex Twerdahl

us year going of policies could time terms what's questions of the are guys about NPLs on Just kind is put gets whether to policies correctly kind not I from transaction a I'm interesting, deal kind just their with in was that -- or back are Santander Santander? the loan today you help modified. in and into identical couple things, modifications that So if of remember the any that if who going wondering, of and to of to put not you on context of one of acquiring

maybe way. could that benefiting actually winds it there a -- in what potentially of loan sort whether teeter-totter you are could credits guys of little delay up, that up and little the looks or then think of you bit a kind some you if not like And transaction in that, that the wind

Aurelio Alemán

we're Yeah. there reality -- not The yet.

we we're is there looking lot on today. We of to what focused hand have we continue a things have to into, our we consider but just, that -- on

and you what the mentioned. is can are that the So agreement in review for the language conditions, different like one avenues you there

Orlando Berges

policies continue wording Yeah. they be consistent on they had to be have to to had have deviations agreement -- agreement, The withdrawn. follow the to they have a any

-- normal there that, point. sort to Moratoriums at of at like are judge difficult would the So are are be things so end this business. a

Alex Twerdahl

on based how they But Maria. Okay. Hurricane did after

and true? their for should there consistent, and some have guys therefore, with You that holding sense you’re changes be might should no be what comfortable that criteria be

Orlando Berges

Yeah.

Alex Twerdahl

it the little like to forward, bigger a to talked happen reserve Puerto GDP and island. on to Next reserve but Rico the the bit is seems you or relative going what's to sort going to Orlando the the much to down off, first question, of shape model about CECL a unemployment back input CECL, me in of

off, is correct? First that

for can just for us of around different the second secondly, you sort outcomes the And think help quarter. the provision

scenario model Just it or that kind CECL provision a quarter from getting it have as fair here? change there be a increase this actually to is the what of for down what in similar expectation go, you or to meaningfully we saw where that to to is would

Orlando Berges

Okay.

I each it's one, of the as are, portfolios first the and question, market. mentioned, take of HPI, parts that it's yes, others tailored ones -- key market remember of unemployment unemployment, different only very takes by to Rico one On components a you variables We like different it industry it have and but obvious. not of critical -- different it's Puerto affect the down in the the that sector CRE that's some is and some portfolio, broken component has

Rico or projection if case fact that the end stayed towards the Puerto that slowed they significantly flat. reduction November, on that down the taking is of projecting has So were XXXX you're population -- of the

those second up, through little as So there going it's in down clearly XX. in the well goes levels unemployment, the it's and some Rico it of mid mid-XXXX -- mix on slowly go Florida quarter, after those up starts But Puerto to quarter a then one going down basically bit of it's it's coming is as also more change that also, market. the coming staying variables, start at to all but component the up and first the going going assumption

factors to you those it's but number, when changes immediate. the that these negative all remember, its the ones not are are leading have, change change So and the the absolute it's

an has that impact So negative immediately.

relevance the the the on macroeconomic that's of movement estimated So how happens.

assume there Clearly, do originations of it's, has that We a assuming is if the we a scenario projected scenario? as mean what I quarter, to of be, are are levels movement would of number one exactly factors. the repayments. same lot with one, then Second the this -- number and projected is level

because payments is seasoned mortgage. a take are mind, look complexity loans get loans at on component, let's get this that portfolio If loans the seven, the which carry seasonality of smaller the left of have and of for if years, in frame on as that, the estimated you eight have I loans estimate. reserve, that been an around is those part that Keep I like when time payments loans CECL those

at While longer it risk, it's estimated but full new a new even less a has though the have new life. loan still loan policies life with

the quarter, that statement at significant really then remain would were the so Alex, charge in that this you factors your are and obviously is down which economic correct. and on -- the out point, been don't are scenarios in are off, same see first charge-offs, that variables everything difficult based allowance closely the originations there, many changes estimating But were there we changed. is if So would we have preliminary that

no stayed we to change payment bit level economic scenarios, it's point. provisioning not Any the to I factor be clearly could but say get that with expect is in shut worse smaller levels, quarter, scenario, then because change don't for would much it's bar So at this is which to It no feel mix think technically mix. be. worse better. biggest portfolio much whole of change the the we to lower same should origination provision. economic be whether changes get we expect would of the we solid or going a or because what a it down in If originate the or that this those reductions all then, -- It could

Alex Twerdahl

final the the and some on just through of we me. same month help balances kind can just out How exclude the sort Rico question so maybe for If And amortization think them think for of for of portfolio the Puerto are page your balances, the Can be you just halted loan about of, essentially pace of kind PPP That's in a context of sort of the and a Okay. quarter. we in second you put originations half. us if helpful. should then loan last the with loan the that.

Aurelio Alemán

Yeah.

level so I we close of repayments the basically that's balances loan that stay. and One so Right not moratoriums is you think, mitigates XX% will will consider that here. the positive contraction. to one to retail receiving now have there it's of portfolio, be the element, negative

continue activity. but element prior to loan Second Florida loan as see activity, will same quarters, is levels there obviously not of at the a

the or the a Obviously, on yield to And create of of somewhere the the our on we we answer by recoveries. know to level and it $XXX estimate What we of get at month -- then, the to, it's exceeded end the Obviously, May. don't to I reopened a loan, going level million probably reopening PPP, origination, it's already have basis we of that trying that but will final by end that determine Monday. days be, that. recovery low

And basis reasons like obviously that mortgage no in at of but this expect mortgage or reopened, week for to closed Puerto than is business the had Rico, being and commercial activity business the industry the we stage. is later that down XX the private next partially for, some be no pushing May

Puerto most open not are actively So are the in states, Rico. able being pushing as for another to in component, reopen, of dealers they

reopening be curves So then difficult it and honest on estimate it's very the a with recovery depends because you, volumes. to of

Alex Twerdahl

then final a $XXX their Okay. that, would -- sizes? of million to, there is just on million be loans on associated that loan for to you me breakout with way alluded PPP, weighted the based question those fee the the And kind $XXX average million that $XXX Understood. that potentially is

Aurelio Alemán

business it obviously more applications. obviously, We it granular we, don't will the was investor I loan. round the I we have now we the say but to at move Hopefully at think is but below in some We have borrowers sophisticated still update ahead funds available, deck our it. loan $XX,XXX average lead. still, then, million receiving fairly on with point are of continue, time, first XX% smaller that it. And

end, when in continue our the So focus lower the to receive experience, end on the once it, you higher available. look is not least applications at we at will

Orlando Berges

as fee not whole the only we it. of of we're estimated Obviously, part at do a this that estimated can't we I'm it's only on it, Alex, It's point, the The need challenge -- thing. -- matter loan life spread also the ultimate estimated terms One loan, of thing one years. year fee over it's over the thing, in one is how life profitability results. out the of two in the of fees because the

come the trying with take would challenges to all other both that back how the we're components, assess that's long information. to So customers it for

for months. obviously we pay interest And first-six the know that doesn't the loan

sort taken have that of already six-month number you that account. should into So a there be

trying what we're expected on to ones life combined what the the to the up we it come what then those And are of two those So yield and the recognition does with piece. loans. to expected

Alex Twerdahl

Yeah.

just little of in the be that elsewhere banks on this you that the to stimulus obviously, Okay. -- powerful. viewed is Do Rico, or or think Puerto that country Rico. higher very program do are X% the like weighted year of side, in and the things And just -- far might -- average may provided kind then point actually a or loans unemployment, to in bit two cares go might a place Puerto expect it by than benefits But the additional where a unemployment be these life the shorter the you of loan? bill on the is talking, lot way be percentage also

Aurelio Alemán

of obviously, is remember the XX% loans I and I forgivable XX%. say XX%, high. between expectations think this will

loan. remaining be of is to is going because you're makes that's second what yet exactly So then the processing, know terms there what program, of start is, forgiveness be it which difficult why when Once phase we applied, so remain this is to could is determined. the the us a

Orlando Berges

need is going start guess paying My not going some everyone anything forgivable to do the that start making to that prior component, months for they it's to otherwise after is that because six payments.

the but those, other that the showed portion of or use something reduced years longer ones, there ones for probably. some which the are the else a of that So two would, for component stay would the in term, it

Alex Twerdahl

Thanks Okay. my for taking questions.

Operator

sir. John you, over Over remarks. Mr. concludes like question-and-answer I'd closing turn to conference Pelling. to you, Thank to session. now Pelling back any for our This the

John Pelling

Vikram. you, Thank

and June May to hosting scheduled Conference -- for on Puerto front Tour investor Bank the attend XX. Deutsche the was Sandler our On Investor to on doing or XXth Rico

will those We be telephonically. doing

when you point, want We our Thank thank seeing the to markets we all look this conclude reopened. you continued you. we your to At of for forward Now, again support. will call.

Operator

you now presentation. conference Sir. concluded. The call you, Thank attending Thank for has today's

may You disconnect. now

First BanCorp. (FBP) 1 May 202020 Q1 Earnings call transcript