FBP - Earnings call 3 2023

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Operator

Hello, everyone, and welcome to the First BanCorp Third Quarter 2023 Financial Results. My name is Bruno and I'll be operating your call today. [Operator Instructions]I will now hand over to your host, Ramon Rodriguez, Investor Relations Officer.

Ramon Rodriguez

Thank you, Bruno. Good morning, everyone, and thank you for joining First BanCorp.'s conference call and webcast to discuss the company's financial results for the third quarter of 2023.

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

Aurelio Alemán-Bermúdez

the terms during a to quarter, interest income interest-bearing deposits offset at decrease guidance lower X.XX%. the were industry. very strong for mainly total deposits.Expenses quarter, return quite of the by Net thanks let's during lows and with $X.XX go Thank the financial by of the into a with everyone, which to the line another good remain on or million, in and top single the Rico. represent levels slight due loan very, and the quarter, Notwithstanding asset. increased you, on $X of registered commercial multiyear deposit $XX mostly to basis pressure the translated NPA XX losses mix of fairly asset expected to during during points X primarily slightly pricing quality, Puerto provision share, joining in Page variances quarter upward million in today.Please Good the inflow now just net Ramon. asset over increase NPA a We to posted million attributed in $XXX income be XX.X% for a call per to were quarter.In highlights. morning the credit These turn and to of ratio efficiency at continue reached of total

believe we taper liquidity to market in starting and normalization see to has off, trends. we're continued delinquency anticipated, As the excess in

repurchasing during for levels.On are still plan, we million under authorization capital way front, plan. let's of they the However, And over common capital year, strong below quarter. go position, and continue the the the pre-pandemic That of remaining common liquidity, to the to the shares quarter, and remainder the stock but fourth the repurchased X to repurchase Slide finalizes outlook continue under capital during plan in $XX of 'XX shares do portfolio. now move the authorization.Please expect given we capital the XXXX we the

X the this Again, over go over we that and an regions.Going X we this to organic in XXXX. the into of economic of business production that moving our construction over that expanding This levels by quarter, a the portfolio. this approved loan disbursements.Let's of we increased higher-yielding reflecting as increased line begin assets expect annualized of loan been our the reflecting in origination.The as island, has deposit loan in Page the assessment growth with the during growth see We're June cash released execution Also, growth refers our portfolio are we healthy teams or of were do redeploy loan loan consumer the the to $XXX continue both mid-single-digit linked billion, the sales experienced to to to shows recently trends. the we activity activity across investment strategy quarter we really portfolio year on And share. remain with timely FDIC increase a facilities X% of contraction across were regions. in forward, our expect X% retaining the loan guidance XXXX, particularly by growth we supported portion of accelerate coupled activity into deposit period. basically of basis that the as market Puerto X pleased is reached are since market $XX and million in loan with third line and go commercial focused June loan of Rico market, quarter industry with Total overall in The funding. total in flows the

than primarily and driven and to the say, banking $XXX Again, higher the quarter, migration to of to overall actually retail customer by and sector, market decreased it options traditional market. million flat unions deposits, market.This or rate U.S. the broker X.X%. -- outside liquidity would erosion remaining the basically particularly government we're credit reduction of other So this I treasury in

retaining a composed $XX,XXX. we average It's balances. it's and market balanced products the really these our other XX% of mix a market definitely combine valuable serve, it's a deposits.Again, remain strategy. that the our most of profile environment relationships it's on well-diversified of When Again, offset we of On is non-interest-bearing stabilization of competitively. in attractive. and accounts, base in the still retail in focused the retaining base, very rates by our institution to function hand, our deposit pricing remain share core commercial we It's balances segment do representing -- key very and of deposit Funding customers. deposit this around was the

So allow plans.Just over go growth continue fairly available manage sheet Page again, strategically funding And it's balance our to X we that macro. to to move have liquidity the ample to granular. to various us options

auto and the as years considering geopolitical Rico index the the airport highs. its very stable, funding continues period adapting X first sales at rates performing reached environment prices And Consumers importantly, [indiscernible] months main X.X%.The by hit this year, stable be of during remained the more the with above Puerto interest quarter. activity the labor rising to retail well third last definitely see around Passenger in Rico the infrastructure. X market to obviously, same traffic the year, number We low-income important unemployment to the for additional projects construction the all-time evident fairly continue rebuilding to is economy, of of to sales. driving disaster Puerto continue island. and it's activity XX% started of pace highest Economic We see housing emerging level in of which rate spending, relief and events.

leverage PX example that the and and continue and allocate in in the to are a concession, plus Thanks cycle.Now investor we we seeing.We continue have call Expressway which customers total [indiscernible] changing to billion, what under franchise proven supporting addition, we continue $X.X investor, to a all. recent investors past, $X.X to the That's risk the challenging we go is market continue an to transactions framework private to Orlando structure allocated the would market, -- of island. detail. to be more a in I experience will said to turn this our where operating of There financials private I support In over is there announced through the the a concession recently think the billion see good additional to on improvements.

Orlando Berges-González

everyone. and morning, good Aurelio, Thanks,

estate the $XX provision million income, in in third for effective $X.X the the down the did and million, come million.The rate. which the quarter side, $XX.X especially some We per with provisioning or to for by pre-provision in $X.XX look to earned third at which pretax compares in quarter $X.X or on million $XX.X quarter share, $X.XX quarter. Adjusted for a compares the -- in million second of saw decreased share. the which the which mix real third primarily to in lower the When losses a increase we the tax million in show we components, macroeconomic and last associated side commercial second quarter results credit had in the projected the is quarter resulted $XX.X $XXX.X variables an the to the release, provision lower you the additional quarter. net deteriorated, in As unemployment million

tax of to slower term. of since sold in estimated and projection variables of reserve the than were new lower But still portfolio, which some which a for current booked that which quarter, releases -- quarter, values structure down recoveries was a thus was tax-exempt of Rico shorter XX.X% ago loan to that rate a a business timeframe.The -- in -- favorable This did on did has deterioration a and pace more higher the they shows we activities deterioration estimated, a originally quarter these estimated million under refinancing a as $X.X led impact is commercial longer pace some held-to-maturity proportion came few income income a previously bond the lower the down quarter tax the much but we tax loan, And of in impact.Also, in that result charged years the rate on our reserve a a for securities resulted municipal year, advantages commercial off to we Puerto of the we and there under from additional this of was XX.X% collected. total came code. are

combination we in grew expense on grew for quarter for income.On at basis the growth offset to $XX.X representing in we million, the especially interest repricing that the XX previously which pricing from deposit $XX.X broker last from prior deposits.And and commercial increase interest interest-bearing, the million. yields we yielding on of portfolio interest loan points of $XX.X compare for loan cost, increase to on based driven this been points a average in and exclude Looking in quarter. as on hand, noninterest-bearing we repricing. increased XX quarter.On XX $X.X rates of million higher loan I other cost loans, to higher reflected X $X well have in income public quarter. up on that accounts, higher changes, compared The that the million, interest-bearing in quarter.As if we average relatively new time interest it loans points paid discussed points income especially increase this consumer the case increase interest pressures, loan loans the portfolio of deposits, flat rate sector resulting the are facing points checking the have calls, on the yields $X.X basis on have for $XXX.X interest grew million, again, But consumer in migration yields assets. the income yields $XX.X In Overall, was prior on on the deposits, over the improvement includes basis during collected the up quarter. million than and savings charged-off quarters was when interest mentioned deposits, income mostly is balances. interest-earning quarter increased of the new interest grew it's as public Most expense loan on before.Commercial average loans, XX million offsetting income last growth interest higher million, few deposits also last quarter sector Total by an improvement this basis basis million $XXX.X quarter

increased average points. -- portfolio, the from on now on the you it's cost the interest-bearing deposits 'XX. the cumulative since than the hand, than XX checking public the prior did of in million deposits -- portfolio overall chart by right time on points, more the second betas September of on average accounts can other savings -- and increase However, we This time see $XXX X deposits deposit top quarter.The Time only the basis deposits basis by quarter. had

X.X portfolio to the over in is the to of quarter it's that due pressures about 'XX down flows some this we more.Look, investment portfolio. towards quarter.As say, we the million cash next more, had in into based lags, last this for Also, the a rate $XXX is million middle have yield billion we in stabilize, last years the of a project we the XXXX, quarter and looking thus public had. of either what in be going since $X.X investment of through to funding.We X.XX% will approximately going will margin expectation do cases, flows the about cash more investment growth are the around would higher $XXX XXX beginning our of continue investment normalization let's essence, portfolio. points cash pricing loan than wholesale interest in keep the on what normalizing replacing 'XX. would mentioned quarter reduction have that we the or we've was In to that margin in either of or somewhat these yield much more through from deposits September cumulative repricing increases basis wholesale some X.XX% from or betas than interest we to quarter, flows period portfolio redeploy be funding However, on expect yielding reductions deposit overall loans higher cash basis around yield Net the we -- XXX had cash, into points which it sector the

additional on $X.X basis, million million. It quarter.Expenses legal were net in $XXX.X had of would implemented of to did driven this income, we that million efficiency any have the achieve in of million our exclude was $XXX you the $XXX,XXX gains, items. quarter, the other see expenses as to was amounted mostly gains on the a the other these but higher XX.X%, nonrecurring the that of $XXX the in that that migration did last income, fall had expenses continue We as provided.The So on offset time year. the certain for $X and second properties, quarter million, -- and down, which million terms income to by increases we grew decreased in merit some gains the salary increased were to ratio on to and compares mostly quarter the include less in quarter If couple disposition came impact in this settlements of by guidance in other adjustments a we $X.X quarter some we operating interest side.In XX.X% million of which non-GAAP OREO within we July expenses deposit had slightly to can other gains but income related we payroll quarter. we $X.X was for we these

we continue and is was close to mentioned, remain gains second disciplined framework exclude However, primarily actually Aurelio target a NPAs one as went ratio efficiency million that have expense those that our we this maintain XX% efficiency $X.X mentioned, quarter quarter. term.In increased into nonperforming the the of during if and XX.X% management mentioned. we was credit $X.X very that nonrecurring I to terms as the commercial to quarter, case, million in near ratio quality, that case Again,

million million On by million million remain this was offset mortgage with levels NPLs. it's the NPAs, our the mentioned, lower million to the just of commercial, total reduction prior increase in points in $X.X OREOs which $XX.X but Also, of increased residential consumer to XX as is side, had the increase at purpose, early $XX.X $X in and includes quarter, consumer. in which $X quarter, assets.In increase terms which delinquency compared inflows, I XX up this in defined Even that we million, is case increase, basis NPA they're consumer. and $X mostly XX days for

the million to I'd a collected that and day on fell weekend point of quarter, had last delinquency September However, this XX $XX.X effects approximately was, like out of collections, X. October and third by been

obviously, like that from much prior anticipate the was increase historical pandemic-related funds start calls should more the eventually trends, behaving we on decreased. have levels So less excess as mentioned delinquency in consumer reflected.We liquidity than

dividends, of a there of a reduction the loan reserve also, at and relates the of due to held-to-maturity decrease capitalized, the HTM, the significant deterioration also million refinancing be healthy there million certain above, I significantly the portfolio.In reserve our did of a share I the compensated was did ratio about reflect securities in million, also a available of $X.XX municipalities prior the per get in terms X.XX%, as $XX million book levels.In of quarter end basis the in remains quarter. tangible delinquency decreased $XX below in value allowance, ratios reserve securities, we improvements a mostly Puerto equity macroeconomic the all reserve slower we at of projected of mentioned, losses, million tangible regulatory about unrealized was stands for bond just into sale far, net the in the quarter, so common compared the and -- which $XX book down shares capital improvement points. of $XX share fair as the the decrease and shorter-term is $XXX continue delinquency partially common $XXX the by capital, lower held-to-maturity securities -- were approximately million, driven financials million ratio $X.X during end in to to $XX terms to loans decrease X.XX% payment from leases, percentage X.XX%, are to the of went reduction the quarter by the and the quarter. However, That consumer from were $X and on represents well the in repurchase including of million, long-term structure in pre-pandemic TCE of XXX tangible obviously, municipal coverage mentioned. $X.XX. previously still at in but of the value or per earnings portfolio on value million quarter.At government were which that in held Rico compensated The portfolio.Looking that the underlying The capital, a of the variables, the loans to

operator, have The end so for we ability losses we of a the the hold said the portfolio I at to believe duration of the questions. open nature past, manageable September, call it's since had timeframe in X.X temporary these have we on As unrealized would a in securities. investment the to like portfolio.With are that, the

Operator

have do It Sandler. [Operator Twerdahl Instructions] comes first We Alex from question. our from Piper

Alexander Roberts Twerdahl

you there out have think guess, the made, with not into the at start lot that a outlook be one curious, see restructuring new seriously. to their at how and the portfolio. much the I to, more that I we're or the Orlando, securities obviously, securities more And rates. going last look on want with companies to on going just whether factors I next comment is looking happened I just portfolios companies First, they're big what's given of capital just think quarter, I'm

guys as of about capital. of small the the it that radar uses clearly lot You think regulatory you at on that regulatory securities have of a is pieces portfolio in restructuring of And all? capital, these

Orlando Berges-González

of have the it, immediate Well, but is feel nature at concluded, the portfolio, into we immediately, do we that. feel looked consider we you we is not obviously, that of tax there benefit pressure considering are once point -- and to this don't impact, it affect, going that where we in the the reality, because that have timeframe to Alex, a we this

Alexander Roberts Twerdahl

deposits, it to that pretty deposit now government on having then done? say safe now fully repriced is to is the And the presumably is close piece Fed that

Aurelio Alemán-Bermúdez

I think is say safe to yes. it that,

Alexander Roberts Twerdahl

excess And then been has next as can some how how you're about excess expectations of thinking the the might you you the remaining the maybe of about think expectations come out much of the which guess, in you for over quarters see lower of portfolio, through walk system? liquidity deposits as I those trend, and terms beta, sort of betas couple

Orlando Berges-González

rates. to to you X-year have don't Yes. X%. have obviously The there pretty deposits reprice CDs, component still into And of that about the We look be deposits. the as of others. feel at to to component time obviously, -- the when slightly stable have we be on of we migration XXX, deposits, are we bit far. betas migration repriced maturing close the -- now seen what cost the still higher we cost, little some X.XX% average be was might time But is a obviously that they There a going the it's are higher so other going at into there could is

the the that cost flows be from investment be where those that government there portfolio, in would terms first sector in that based offset that generate But of on chunk impact should we cash there. rates there side your mentioned assuming be coming of on portfolio, would that some that's better to deals So -- the statement large that. able is stability public a to are, the why agree in we used some

starting why in see So and stability 'XX. we on that's and margin the that coming

Aurelio Alemán-Bermúdez

that's important. add, that's want very to And I just Yes, important.

go investment of portfolio forward. cash expectation the significant. government to increasing from the obviously, betas the are think pressure be flow I the the the on going as And of was we

have see So portfolio [ and cashflows converting we to to some do what to to ] higher expect loan that yielding much those we mitigate NIM benefit seen in XXXX of of portfolio, the the benefit of NII.

Alexander Roberts Twerdahl

down, expect start inflection on the of starting and guess, to the higher? do go quarter, NII we of be I both this in And you So the could it just boiling point NIM? fourth see those sort to

Orlando Berges-González

We of bit inflection see feel this early the the a this where see quarter that -- still the next the happening time first we'll point repricing next deposit fourth starting the year, year, on year. little we in quarter side quarter

statements be going we a portfolio, the So that investment levels the are that again, on back of where going some to the on the interest to at done it -- helping up we a that, in the portfolio factor keep are. bit have we staying income net growth past offset or where could from

Alexander Roberts Twerdahl

Okay. me. just And question then final from

impact prepared the remarks, to it there's is that in go-forward -- it's a might close how your your just if you well if sheet, piece? highway as when big alluded of piece bank financing in talk about quarter just the how that disclosed a not that both is been deal Just as of but sure exactly, be expected the how balance actually to piece you that that fourth can I'm sort might deal

Aurelio Alemán-Bermúdez

winner year. it working by of the bid. close end the was to week, Tuesday, it government the Well, Yes. the publicly and to announced close the this together on They're of

contributed banks most some mostly [ ]. the of $XXX come for of publicly the required initial year, this of really will benefit in balance local XXXX. it financing of the the payment statement but banks, in around the million XXXX, So that Banks, was local X.XXX sheet

committed million which we yes. be transaction we to at disbursed contributed closing, position, $XXX will the Our --

Operator

no further We Instructions] registered. currently have [Operator questions

Rodriguez remarks. Ramon So you. I back the closing would over like to for to to call Ramon, hand

Ramon Rodriguez

participating in for to Thanks call. today's everyone

Miami, conference X of services November continued conference your attending number Palm to look We seeing in in a a financial and events, day. Hovde's appreciate XX. November you Piper these great Thank Beach we you. We forward Have and at Sandler's will greatly on be support.

Operator

Ladies this today's for call. Thank gentlemen, and joining. concludes you

may you. disconnect your now You lines. Thank

First BanCorp. (FBP) 20 Oct 232023 Q3 Earnings call transcript