FBP - Earnings call transcript Q1 2021

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Operator

Good morning, and welcome to the First BanCorp.

First Quarter 2021 Results Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to John Pelling, IR Officer. ahead. go Please

John Pelling

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

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

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

Aurelio Alemán

joining Good everyone, John. some discuss morning to Thank you, Slide to today. and our thanks to Please for call X move highlights. let's of the

market Timing approval amount today The the Board's privately you be seen, program. transactions. and we're hopefully be the in have a really share into to as to will or go open quarter, I pleased announce the exact in may subject Before earlier of detail $XXX negotiated conditions. repurchase very market repurchase of million

announcement. capital very, continued position and earnings forward return committed we with to move and very we're our this shareholders, to our accretion, Given capital to are pleased the outside excess

about the and results, in the before the is touch Now on pandemic Rico. to I'd how macro, like financial progressing talking integration Puerto

place the estimates billion, material and clear also Act we financials. to in in the the efforts also when Puerto revenues. recovery, annual significant many, is months. customers, first flowing it's probably front, the to Having the the The Rico the seen the But softening presence many hand, the CARES to budget exceeding And continue finally, where the continue our Board government our driving through in benefit Florida, to loan the improving recently are approved up. in the at XX% cement reconstruction we see near later our clear is that's is Interim, takes in a able show of programs, and the airline over improving the the in most see around first efforts definitely was February. demand island of the our significant Recently, post recovery, the island expanded trend XX% signs, support very similar Fund positioned strengthen sales subsequent X macro are stimulus very that there We're very is should as from Fiscal add growth as Florida other we're island term. conditions. to we've we continues government revenue individual tourism, and their improve with we the disclosed these recovery deposits. traction. been seen getting to stimulus programs, economy all stimulus up net occupancy, $XX continues the the later we're the significant have time showing in actually, And the -- look all deploy into view, and pleased the the amount, how this the -- reopening optimistic showing. from passengers, On years General are and When the Rico Commonwealth hotel economic trends. in pleased to have and, for evidence position GDP. that pandemic are the Obviously, which quarter In reconstruction in trends continue Puerto year to metrics, you on pick

has say to pandemic a good have challenges. that done We the job the government managing

might a in spring Rico and know, in you Puerto experienced rules and protocols safety As in we travel cases experienced following recently travel pickup we as break. tightening a

spiked, potential those other of positive, for the the the recovery on While hand, trends. sustaining is while a number vaccinated cases

made has front, vaccinated As reported fully XX% by with vaccination the shot. approximately the health the and department, XX% population the of significant the on first island progress with

support continued these numbers believe really good the So recovery. are to we

say according finished quarter, past just the platforms, Moving to in conversion to happy I'm integration. card are progressing This consumer converted lending the and we credit and we April. that we the to schedule. commercial

some also consolidated in of and implemented the rationalization, We made voluntary Also, branches branch the progress separation we the which during have our X we phase second previously was announced. quarter. program,

do the the on by to remain integration So complete of the with we and the end we're schedule full quite pleased summer. progress

that to date. forward Looking

Finally, and the We of prior loans it $XXX benefit making year. with of our million for originated million $XXX $XXX most focus -- the PPP million. of processed also forgiveness were remittance applications obviously in number quarter of we was out to regard terms in that clients. originated of And a actually, the actually program, to disbursed the it

end flow continue at obviously, which been We of coming will originating the we the program has processing for down of the also program. the rest until clients processing through year, continue end the And so Pipeline loans year. expire will and forgiveness will May, of our to probably end of will the support will loans. the applications, PPP PPP continue we the

not generated for it Slide or quarter. -- though the cover of quarter quarter. $XX X have remain pre-provision in Pretax basically $XX close of days asset to compared going for fewer to and going $XX a some just that see unchanged reserve million million operations. per X detail. last million, improving macroeconomic to let's forecasts to Definitely, I'm release is trends the quality metrics Orlando driver $X.XX move at cover $XX quarter. the highlights stable. earnings of will of key So was Pleased this lightly. million I'm to the share We even of to

is I we in expected think moratoria expire, NPAs we there's metrics lot broker positive last Definitely, excluding see of sustained liquidity it's or $XXX liquidity and supporting the also as that mentioned about obviously, pickup contributor to big excluding market, of million, some improved. X%. we a have these deposits, being as deposit call core a -- the the government, -- so grew which was

that half being seasonality origination economy the all and that solid, touch let's saw a going programs So and billion. loan. commercial this traction, reached just second getting you the to The both always on definitely subsiding quarter, think -- And parallel, -- we're bit the later top we're -- as the that so also. remain when look was versus commercial reaching they projects through credit we graph supported have at as ratios, are there's happening the think, graph. our side expect capital stimulus is Please half buyback the And additional baseline obviously, to But we reconstruction it the we're support a activity that little we're Slide on the you seasonality deals though right are of half I the the Definitely, we considering X the challenge of year and we and pleased move they see the definitely, optimistic seasonality what year, including forward. this liquidity, gain -- with full the in I second $X.X the on solid, if $X.X of getting of really the very year, traction have now. see than some strong more also about they more about with obviously, year loan year. in is expect the the to which reopening good. are card we Even billion on of we economy the in in

loan and the loan it look PPP was mortgage a focus. at primary by was decline in we mentioned, when also I X%, portfolio. the And the portfolio, declined As

before, in is originations noninterest conforming in income have which sell market. gains. was the And from I mortgages it to focus mortgage As the secondary and also quarter good our mentioned originate we a

some the liquidity. credit commercial repayments on to have lines also due We

have reduction. we if lines, compared usage at also the look credit probably to we low prior So to years, contributed which

up. by continue growth very consumer the hand, the contributed. brings quarter, optimistic auto active construction and also other up, portfolio an this this both being to the in of We activity be credit $XX segment, geographic continues in And achieve competitor, the to so sector. additional diversity. to are unsecured, the able the and we're increased obviously pick It Florida Florida. but also debit, million, portfolio should finance Florida which we On commercial pick our will and focused definitely card, lease

On adoption continues the digital front, grow. to

continue registers platforms. to the We quarter. Digital grew respectively, users continue to enhance do investments banking the and and X% during X%, active to

with now will I So for call Orlando, to return Thanks to the all. over turn questions. would I and back that,

Orlando Berges

the also a Well, the quarter compares as Santander $X.XX was loans $XX we $XX a million this to $X.XX That's the with side, net the the which results or quarter. for share touched provision The But start, Good acquisition. quarter quarter last million associated income results the with share, The to million on $X.X on positive had include morning, the Aurelio compared we to $X.XX everyone. quarter. transaction $XX impact provision quarter. compared had this. last on up last we release million for had $XX share per just and had, million expenses

on in We've a deterioration index not originally index. some have aggressively on the projections. reflected being unemployment impact seen impacts quarter, seen as considering the well We've price expectations macroeconomic as as lower of less. we seen As CRE as was the has home the

down And other we down Aurelio basis net in $X.X it's mentioned. affected, was $XXX accelerated in a which In mentioned. in has as As needs million of to interest this the income points investment and by income the we portfolio also of resulting was loans had versus interest down continued bit $X.X quarter. XX $XXX therefore he the of the XX million banking the in points Part the of The recognition the liability what of in that But XX basis on fee $X.X we item liabilities work the quarter. quarter fourth $X.X income in as the hand, continue we affecting quarter, the have led the down provisioning a reduction X a million quarter margin. expense was to On for yield reinvestment accelerated reduction down million, a fourth saw alternatives, on XXXX. points quarter. the see have -- the million But was consumer down portfolio the quarter, million in in days obviously, in interest quarter. in general in Margin to million, the was of has a all we interest million reduced in the of deposits income, less by portfolio The investment on overall combined quarter. quarter. of portfolio little of amortization $XX about that if this the XXXX increased repaid deposits, Mortgage reductions come still for the XX last points, impacted were to in quarter the results consider interest basis average, had X.XX% premiums, where net on as we more interest-bearing come that's was $X.X the X of $X to in cost which, Prepayments in quarter side. have which on X other We've pressure. points portfolio cost down, resulted million. basis the quarter, is down recognized the X.XX% the in yield. up PPP hand, income from resulting the was compared with rate some Clearly, to our market, for net points basis basis the that to there result, the is market, seen considerably the we

what margin improved has end approximately funding of this levels from in the have million December. $XX our million from quarter, even cash the of than However, mix At still Liquidity investment the last which high, low impact. offset interest cost though considerably, portfolio of extremely had the quarter. increase $XXX in noninterest-bearing resulting was grown remain assets, and helps higher some we

-- have funding component this things. number million, first on quarter, sustaining, at So a prior this fairly the but million in originated interest in for program. quarter which and large on $XXX,XXX a quarter. quarter of We the based couple the offset rate we still a lending year quarter. connection to We last that contingent the as was Noninterest recorded that very of the the originated did clearly the on loans fee insurance low of stable. sale pressure happens Main $X.X year, income it Street we margins commissions was volumes the puts every it of Mortgage down income, the last was under compared $X.X income banking with collected

have these bit to were made that spreads resulted a in mortgages, gains seen and have continued the sell sales, on in those mentioned, the we of little We market bit and Aurelio quarter. as originate a has sales in little of on but compression the lower that

to compared $XXX employee as of in On release. first compared expenses we as COVID quarter. a was were excluding of expenses you million, down what to million On compensation That merger quarter. we expenses the non-GAAP this quarter in and $XXX,XXX. the Last have expenses last still million expense quarter, $XX.X items, $XX.X $XXX side, million $X.X merger expenses saw included these the had were Main the million. components, $XXX basis, million were

origination quarter as $X.X for limits. first this higher higher other year, the each -- payroll were a million have have reached X last hand, the taxes less level taxes payroll not had which of we quarter the resulted originated quarter. During quarter, than on the a But of as The a that. employees combined reduction. that we resulting quarter. of loan result days, volume deferred offset higher reduced the of PPP And in were that $X.X of in had that cost expenses also of the some million, loans And $XXX,XXX in

side, credit all still impact start -- $XX On $X.X we that a pandemic were see we a the related volumes seen of expenses -- in side. during offset by savings the we million last Same had we fully received normalize, losses. some XXXX, $X.X These had mentioned before, it's even but payments though had on for some as for The little to credit million year. we volumes. valuation to originated in starting we're related properties OREO we $XXX allowance at pre-pandemic, to card OREO of losses And credit we incentive down have bit had allowance million. increase of to that still not impacts levels had in some reason normalization was volumes million

we function For down portfolios ones $XXX CRE the variables, That again and on is in is which reserve, improvement of to Release a million. declined allowance loans, million release the was $XXX correlate allowance had and charge-offs. $XX.X loans, commercial GDP which we on reserve quarter. macroeconomic specifically, unemployment, reflects million main also the million $XX.X the the million $X.X on at When $XX being million the the and HPI this a the so last index. look the from

which allowance the case, mostly mortgages, obviously, and, residential of release million the driven case by portfolio. is decreased this in $X.X macroeconomic the on the On the of of reduction a provision, $X.X size million,

$X.X if consumer the the had we million would a On pretty million. at exclude a a number was on still as which X.XX% allowance. net non-GAAP of we for be March X.XX%, X.XX% loans, basis, that a decrease The but XX the had to a very on on of PPP And end the healthy of of ratio the continues is year. the of of charge-off allowance to coverage side, compared the be healthy, million allowance provision we $X.X $X.X

million. million. in down asset $XXX loans were to down the nonperforming quality, decreased nonperforming quarter, The million the On $X $X.X

last million were migration $XX first mortgage XX-day increase only in has as before, commercial from shown a million some quarter was -- $XXX spike million mentioned the normal on $X.X down some fairly to quarter million also quarter. half migrations compared saw the NPLs out expecting of result side reductions million. positive to have TDRs of residential compared delinquency in in decreased million, last far, loans to $X.X trends. coming Aurelio to $X trends. we we for NPL $XX.X million. the so to The million as But we was were but And of increase The year moratoriums. seen As the saw to we quarter. $XXX of delinquency Early XX- of last also $XX

on longer March, of do market last in of decline On have equity reality, result securities reductions are and account Clearly, the the But of in capital end the on of we questions. capital With change as in the are in as thus which value available side. open nature. strong. impact a making of see regulatory that, ratios the have the front, temporary did few months. rates which intention to a capital through income for value on I resulted the like per some the of the we quarter comprehensive We share the remained maturity, and recorded investment call the this common sale, book February the increasing to curve the securities know, the securities of during and other the holding market in you over value function ability that purchased tangible the would for that the

Operator

Instructions]. [Operator

Our comes Twerdahl first Alex question from from Sandler. Piper

Alex Twerdahl

to doing the you like like little it about First an quarter? It off, kind $XX Is expires program? share use accelerated a the at million of you guys year. authorized. wanted you consider repurchase a over intention to do like a $XXX -- would in something buyback, bit that just ask million looks the Or

Aurelio Alemán

we continue conditions we are as to and amount As are move timing. on. to driver we required, the mentioned, exact are the a will of Alex, on market alternatives determine move all disclosures And Obviously, table. on the

comes you that have as something up about immediately. it we as -- to we will So soon know disclose,

Alex Twerdahl

Okay. actually And the when market shares? repurchasing can you in being start

Aurelio Alemán

the expect expect. May by market, in be We X we to

Alex Twerdahl

drill a commentary And to for of little on loan then growth wanted some bit Okay, in in I half. great. your second the the potential more on rebound

wanes, can whether alluded I a of explode, to growth quarters little those And you're to some really really about growth out the that elaborate think there Maybe that that loan of could this that, be there obviously, much some to a the make of you on are then take could loan stimulus of maybe to if helpful you next year. as you lot bit drive sheet how couple more little positioning helping And on as to bit economy it's certainly be or people reconstruction maybe a projects, some talk next that year of the the projects. earlier would later reopening. think balance in possibly over as able sure monetize to you or order it can.

Aurelio Alemán

It's all, combination Well, the first conditions a it's execution. both. at of and of market end,

some If in years sales by time runoff deposits. actually, business we trend continue you extremely business, necessarily actually Auto runoff point in shown obviously, look first in high also doesn't all purchases. that There the increase. being Rico know, its grow. consumer at Look, at and to to increase our as liquidity in growth you accelerated. are we we the of the achieve mortgage the into look time, that obviously, Even is is in saw into They now the we level. the sustainable consumer, right in are will when hands, is seen though for that continue have the portfolio, it many new have at -- are At an being closing expect delivered. Puerto And construction refinancing. being

incremental in groups, the have -- that to there, get it. on continue. we to business you you see are to should obviously, back expect and be expect, be to from time Obviously, some the which we are do consumer this we in to good at also -- benefiting disbursements liquidity There's go some utilization them out and going you were quarter small loans, to and lending to that small expect to the traction the help commercial when done Commercial deals deals expect They there. also have lines. business, the be get be so be PPP commercial after unsecured that the recovery. We will have And we look credit the quarter, out trying you competing, just that, deal. -- take winner. us

portfolio, protect but going our infrastructure large which of have to take not opportunities. private a also and have in Rico looking housing. projects, only clients. into We reconstruction new is in care We're schools, There Puerto in we also in on,

projects So the to weeks couple a with municipalities are $X restated CDBG simplified ago. the billion a still the related were deployed of to starting that rules funds more number have see, for significant Maria. we're funds, of

out there, completed commercial So And we're really to we're on execute. At same also team's we time, that the we integration. recognize we're the expect obviously, out -- that happy we there. say working It's quarter. being this integration

same on incremental try to what make it's see look that showing. obviously, -- opportunities grow Florida, top And used to strategies way, compete active this goes and it of market to portfolio. I prior and the -- because the the happening continue quarter, we focus And business have we be don't is same you in not then the obviously, I that for obviously So to be years, to participant also. back market. an

Okay.

Operator

question comes KBW. Glen next from from Our Manna

Glen Manna

long the XX It's work and buyback. all years. time coming, done recognition on the guys Congratulations last the this bank that is the over been you of at a a have

Aurelio Alemán

Thanks, Glen.

Glen Manna

got competitors return go thinking XX% down the your a the about the the of you stimulus on out specifically entering island, point, of how of CETX, do new that CETX today. the said on could capital think long-term just a to And long-term it forward, island? the know time? over perennial inflection capital to This all be And given buyback ratio, island, state is recession. I Some growth. of have moving we range But could on kind the

Aurelio Alemán

show be in as some in time, a economy years, Rico banks been point different about very to on it's it always recovery. in that for the seeing. -- designated you that and Puerto we're beneficial obviously, better to look the that get If is the at probably in the the to what we XX have Obviously, and time the mentioned continues cycles, we've economy opportunity had based to again, to times activity the been. has funds for the money and tough At position. do level last Well, in

very but So you it's at and are the taking to elements a predict, look all possibility. difficult when place, evidence that

Orlando Berges

any I in seen Yes. see improvement number reason not. the significant why It's don't trends of over and the years components.

So as as was capital as there the that high see need definitely continues, not for ratios before. we it much being

So we Common mentioned. X see a these ratios the space Tier that of on key you some like Equity

Glen Manna

and XXXX? Okay. day and through in kind January assess of you compare And X banks at you how look as kind would been X moving CECL reserving assumptions in CECL of level, assuming down our we the your to credit current back that day level we've of what versus were

Orlando Berges

were levels, the before we forward. CRE look Still, are the it's at HPI, in The to moving we Unemployment, are you day the it's did seeing what same unemployment components. be and X. we We're moving direction, to going get going there. feel, at still levels the to new going have projections direction. similar when index, than worse in CECL

changes is and unexpected But that there all way same and is we will on thing normalization there being able a no see projected, see with the as still economic to economy front take -- mean, show that that. I want virus be to lockdowns, the bit of to we've the -- trends the So the little expectation assuming of us that and with seen more the continue that of we there.

be those able macroeconomic to we that before we are of in we levels get -- economic projected So terms saw that should seeing to numbers.

So on would we direction. -- in that are not track yet it but there,

Glen Manna

how quick charges. premium questions. be you've Okay. the two premium securities the looks million $XX in million $XX merger on in then am And about still original a book? recognized Is much cleanup good It the that was like pretax projection. could amortization, projection? And left then just

Orlando Berges

I couldn't understand question. first your

You said merger taxes?

Glen Manna

you those the and charges. merger merger, still of number? Is in think you now. a be the I million XX% I $XX million No, pretax would announced When there think about said you good have $XX

Orlando Berges

about $XX transaction. million announced we was with of probably million What associated had were The calculating... expenses you was $XX the more

Aurelio Alemán

synergies. The

Orlando Berges

based Synergies had synergies what based ongoing on running we Santander and on mentioned, the expenses.

in million was we So expenses, what it were expecting. $XX

Aurelio Alemán

started XXXX, Glen. Which in

Glen Manna

Right.

good still that's a million? that $XX number, So

Aurelio Alemán

And million Yes. $XX the also.

Glen Manna

am, much Okay. left it the Could premium on how on And is go that? we see down?

Orlando Berges

you amortization, what, -- about to related else? to are you're something or portfolio portfolio, Premium the investment mean, talking you about talking

Glen Manna

Yes, about talking the portfolio, yes. investment I'm

Orlando Berges

most is there that available associated is thing in have market. of purchases premiums were The the level -- coupons on that recent the a premium with

that, with the the at of that need would I give premiums in the not of see, So a premium I we the exactly portfolio Q last it's have in rates. a But because portfolio with a of the number you over specifically function point, had check something premiums mentioned this have we purchases going haven't of level the few that to the number. is releases. level involved can back of a rates what happens have and of months include since on most then on I'll to to coming probably them. on down, disclose number trends don't all little bit reduction. I there

Operator

Instructions]. [Operator

Our Krautmann Jonathan from Rubric Capital next question comes Management. from

Jonathan Krautmann

with initiatives are areas, business you and and guess, increase will affect are White Washington, that congressional infrastructure whether lot D.C. pharmaceutical the to efforts going has it D.C. what administration, like leadership, Washington, key there? But in manufacturing the here that the watching folks a I spending. good as or various as far on and in it's House a partner PR new the There's seems

Aurelio Alemán

-- about else. specifically eyes. that the matter. definitely, anything to This benefit our corporations a -- Well, The obviously, more applies manufacturing open that than talk tax has tax reform, time corporations that every been they the long-term we

could -- it's Puerto been how always challenges impact. time. some for there's ever. a the visibility changes It's Rico that these than been faces it's think been of more and a I So risk potential lot mitigated, time, Probably better this

right also this think we XX% make plus that understand still education, key a so behind it's and we the a the the that I of the the sure and So Manufacturing, have we right it. component, all focus on is provide to GDP, feedback Board. is supply chain Fiscal

know is important. So a is opportunity. it's it and tourism Obviously, growing we future

Act an Foreign opportunity. from XX/XX also are investment

I feedback provide in of the making So to private implications have the we that watching to continue feedback those Rico. say in would X have sectors providing it Congress that potential elements and terms could what sure are and Puerto

obviously, What in I think challenges. stimulus everybody pay very the or definitely the increasing of, we objective U.S. the improving of to have received. all is tax expensive the is aware that for collections

So definitely, sector but primary will it's the be yes, our concern. priority, a manufacturing

Operator

I conference That concludes over to our the remarks. would question-and-answer John to session. Pelling back any closing turn for like

John Pelling

you, Thank Betsy. Okay.

On will comments May have Relations in be Seaport Financial on Do participating to any Conference front, add? the we Virtual the Investor XX. you

Aurelio Alemán

I to this deployment add program able just announce initiate be our reach milestone capital again, and want buyback to and these Yes. able our to to pleased how -- we initiatives. are that, be initiate

to all investors. thanks our So

John Pelling

the Thank call. this you. conclude At point, we'll

Operator

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

now disconnect. may You

First BanCorp. (FBP) 26 Apr 212021 Q1 Earnings call transcript