FBP - Earnings call transcript Q1 2024

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Operator

Hello, everyone, and welcome to the First Bancorp First Quarter 2024 Financial Results Call. My name is Seb, and I'll be the operator for your call today. [Operator Instructions] I will now hand the floor over to Ramon Rodriguez to begin the call.

Ramon Rodriguez

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

Before we begin today's call, it is my responsibility to inform you that this call may involve certain forward-looking statements such as projections of revenue, earnings and capital structure as well as statements on the plans and objectives of the company's business. could the from the important SEC results made forward-looking company's actual filings. to due factors company's differ the materially statements latest The described in

our during update assumes fbpinvestor.com. have already At Aurelio website like can of CEO, or I'd forward-looking obligation access company presentation copy If to to this webcast call release, The statements does time, no a over made turn at press the the not them call. anyone our to any Alemán. the you at

Aurelio Alemán-Bermúdez

Let's Page the of the slide highlights. $XXX X.XX%, of posted the We're another of pretax start asset We strong increased with to move million. to a pre X to on income to strong operating results. definitely discuss very year return quarter pleased provision

do dedication nice reflect, We and our progress. resulting continue and around what our expenses, ratio a as growth institutions and an results more to XX%. clients the These placed I we support work managing of consider in their hard by job efficiency our of trust in colleagues our importantly, the continue obviously, to

of like to we as in the see seeking for in stabilization but grew I'd year. time yields on up encouraged by of thank and the million, to did commercial yielding higher of the balance longer linked quarter, continued were primarily million for loan higher by do cashes and commercial We $XX We to our loan that by a Total during this in expected and continue decreases $XX driven negative basis the maturity however, operation, which healthy by loans of quarter region mostly slightly X% available a accretive a for by activity total case like internal as positioned offset partially both assets, Rico reinvested were well Florida up guidance, within rates. the in should with auto $X case today's portfolio. NPAs to the support. were balances. Puerto deposits year, Consistent points to customers core the investment due margin remain saw environment we opportunities their production. OREO all we million we them benefit deposit of U.S. into do the the into from assets, lower-yielding loan be higher those sheet basis is the by migration redeploy XX to overall balance for in our very quarter, believe, deposits migration

continue We demand. have a to high

game our capital, continues. of plan terms In

of core during loan of to for in expect while return our registering and form businesses. XXX% earnings buybacks the dividends mid-single-digit over We the main year, growth the

in and quarter, the common quarterly During current left repurchased did $XX per have in our XX%–$X.XX $XXX then still million our dividend by authorization. we increase share shares. We million

updating cycle July. We future are additional we plan, capital regarding during our color to earnings and report of the capital once second currently quarter we more our expect in provide actions

that the disciplined and we Let's experience provide that the the highlights clear turn backdrop positive to reserve strategic franchise. execution our function of Well, a continue additional island X Slide some to financial of plan. our economic of it's to in

island. we ELA is construction As of and driving the level past, economic in continues unprecedented in support activity said and the the

the funds were For first months disaster million dispersed. couple about relief of of the year, of $XXX

is stable labor record very levels. activities market remains look positive, Consumer is or good continues we When at economy, sentiment increasing at and tourism business in shape. the overall

enabling providing in strategy clients progress broad options. also In be market to our data channels, to continue digital make we value-added ideal the fair to the it's omnichannel convenient investment our and continue all leveraging of providing delivery while investing terms growing business the which relationship-centric goal our continue to self-service the are to our whether client We of share best size on-site by the the achieve experience, that the with we we believe most between of and will in serve, and our model franchise, the advice balance continuing franchise both.

business our mentioned multiyear our modernization part of to of In XXXX the systems we months, cloud-based we over to and efforts migrate with that will and a excited that about experience before, mainframe deliver very feel nCino pioneer very partner and complemented core banking priorities clients. more This which began technology terms coming in progress, deployment open we're be I modern commercial banking convenient to environment. by our to and cloud proud to it. efforts It's

Our continue over in market the now will capital. that, our wisely shareholders and to franchise, ample our investing will us enable value share framework position turn go more capital growing excess to With returning call by and to to disciplined deliver responsibly detail. I expense the Orlando to management financial

Orlando Berges-González

Well, the results. operating as we strong Aurelio mentioned, year started posting

the which on assets million per $X.XX share. a $XX.X return mentioned, quarter, That quarter average $X.XX for to compares We he or This, share. strong return. as into last are million X.XX% a is in with also $XX.X translate

from Our last had pre-provision quarter. million slightly adjusted increased pretax to $XXX $XXX.X million we

expenses the XXXX. compared assessment quarter the achieved effective was for this to that The to in $X.X for the same rate losses the achieved on of down which million, than million sale on the previously to loans. related in Also as XX.X%, $X.X credit recorded lower quarter quarter provision mostly XX.X% consumer last quarter quarter. is quarter, similar largely was the $X.X what That's That's The positive first were driven we the tax assessment. recoveries for booked special during was very million. $XX.X million charged-off by we we the prior

had $XXX.X represented net quarter. last saw would quarter million, interest up we down In where a income, net quarter which less terms but this last one reduction net day, of interest reached million slightly been income, income interest relatively that is $X.X just flat, in quarter, we have from otherwise from

also earning it the up during impact basis XX days of XX balances points case change by was interest number $X assets expense, net interest went net average, on portfolios the million is on was offset improved. of In income led quarter. which of impacted was and increase the million by in obviously of yields the which was $X.X days, $X Aurelio based the loan million on The on yield the mentioning. average Part $XXX on basis but expenses increase in to in also the $XXX,XXX portfolio for grew quarter. the increase portfolios, of points a that the portfolio loan on and a number by in the increase interest the the offset million. income, The a $X.X That of cost, million

$X.X in look points to $X.X million that Also, deposits mostly higher If at to balances related for deposits. increased average expense, we in of Aurelio we it's on grew also interest expenses $XXX increase time XX increase increase. and by Time a to That average as million deposits, basis million interest the increased continue customer million. $XXX expect expense. cost broker mentioned,

are However, million we were as $XX of down already at March end the in compared broker deposits December. to where

cost and pressure quarter, excluding public on points we X the The basis the basis pricing increased decreased time, cost on funds did deposits, deposits. and During broker customer during of experience X point. the mild quarter of a increase interest-bearing other this

again. year, at in for We and longer beginning stay not the gradually are assumption that of down the part the had will the up now interest come assuming or cumulative start start peak of go That deposit latter suggests but working to don't under year, like levels rates their betas be higher that the at near originally. to assumed rates we are what the will very should

as will stabilizes we also, We rates margins interest the net reemploy was changes, flows consistent quarter attractive these pricing guidance. XX%, deposit stabilize spreads starting into X all from and basis the while the margin continue our improve from of that quarter. result interest That's points for to to is investment a up which portfolio As the cash last with margin. normalize see

recent million. it another investment $XXX being the happened in second next the the cash and quarter, year, most in the of $XXX the year which over estimates million to second the Our half of $XXX about approximately million, show maturities, end portfolio of through most of be quarter flows

$X.X terms commission quarter. Florida we had achieved collected premise each this we in did on income, gain they In million flat. a the sale that the $X noninterest region, fairly have we a of offset annual insurance it contingent We quarter, bank Last on was so million of other.

$XXX.X We $X.X quarter other quarter had a on transactions. expenses The fee-based fourth income million. Operating slight on the increase were million for expenses lower. are

of quarter $XXX,XXX last in increasing in additional million. assessment. had beginning with to stock-based that FDIC the at year quarter. What the employee mentioned million and $XXX included was quarter If $XXX.X payroll first assessment, include before, this quarter of increase in of quarter. exclude to the the than special we compensation typical quarter impact million were assessment million, are $XXX,XXX which $X.X million, the the while each the expenses were expenses is related Last quarter Now $X.X first $XX from compensation I the the we an taxes in also did basically first a higher

activities. On the million other business $X.X down hand, however, based business on project promotion promotion was

Aurelio net that for We million–$XXX quarter line continue is on the continue We target. the was we the guidance provided mentioned, OREO these assume special income, quarter, we also quarter the in the been efficiency gains quarter. changes would the million XX% interest additional exclude gain of XX.X%, quarter efficiency FDIC within assessment that and have XX.X%. the $X.X expenses If on with our hover ratio which we guidance maintain OREO. OREO. second see gains, guidance such $XXX achieved the We did we exclude for were million for ratio to The had meaningful to on we around no XX%. in prior

to million NPAs of which The points basis assets. during asset a quality, in participation loan total quarter the was the region. by increased migration of represents increase commercial terms on the million, $XXX.X Florida million $XX.X $X.X XX In driven

orders. were by driven was mentioned and repossessed on That as offset million, just up $XX.X inflows in The lot to million $XX.X of a OREO Florida $X.XX region. million million I that $XX.X in $X.X the reductions by million

some increases consumer million had inflows. of also We $X.X in loan

at basis other remained hand, X.XX%, $X the $XX.X versus million $XXX allowance the prior in which early million residential at declined million last but is reductions points we the points flat were consumer residential million–$XXX.X The annualized auto in XX net mortgage coverage loan. loans, the million to fully net and the relatively lower Obviously, end loans $X.X million, quarter, $XX.X million X basis at consumer mostly quarter. Net quarter, If points reductions recovery quarter. charged-off XX of basis charge-offs $X.X stood is fourth was loans. which up in charge-off than of sale recovery, the just quarter delinquency the with of the in On were rate the this from million, in the average delinquencies. of mortgage point of $XX.X exclude XX basis for versus

significantly Aurelio well-capitalized already. front, ratios capital above Regulatory made the On remained reference level. strong,

We have capital plans continued with share stocks. our and buybacks common through distribution

Our an tangible tangible X.X%, loss to the book per slightly securities. decreased X.XX%, ratio from other the but value on to of component adjusted common comprehensive increased the the fair slightly share agreed value primarily increase

book As intangible and tangible equity of March, other adjusted on of common the points XXX the ratio. over comprehensive basis represents $X.XX loss value

on have call losses open With we we would will we recover to I the this, the have rates, that portfolio. mentioned t for before, on the duration questions. As based continue stable assuming like to adjusted the

Operator

Twerdahl Alex Our Instructions] from [Operator comes from Piper question Sandler. first

Alexander Roberts Twerdahl

of remarks, prepared is mix of that higher, costs like higher or loans expectation pretty going good that it amount cash you safe close funding flat A it a into the for for ceiling. narrative from earlier? Orlando to bit your you're be or from lower-yielding costs almost year. here say be pretty the shift, or and to NIM deposit the from sounds billion that securities next to here securities that the longer either mixing to $X alluded Is to trajectory higher-yielding over pretty is saying assuming

Orlando Berges-González

the increases We're investment either Alex. going up further right the portfolio. going or increases. through again, is portfolio expectation cost There's assuming to through it's some are we of have the the have, of time the some repricing be benefit what funds We're you Yes, loans going not reinvestment going on deposits. of expectation, to mentioned, to which rate see

should result similar be The net chunk of stay levels we the deposits are some where at margin. The that would additional now. other

moving. to see beginning point had we year, As that that of end of were we of year, the based before, mentioned inflection are expecting happen a we're the and rates bit this on starting last way at to

Alexander Roberts Twerdahl

pipeline. little just the on maybe Then more a bit loan commentary

you've you'd this still expect distributions year. past, Is disbursements some the in case? the alluded to see place where think the I a that being construction additional portfolio to

Aurelio Alemán-Bermúdez

still Yes, case. the that is

Alexander Roberts Twerdahl

over expectations the loan overall growth couple of for quarters? just Then next

Aurelio Alemán-Bermúdez

digits, We auto. commercial and stick mortgage provided of to unsecured beginning primarily the Which probably the driven by at of flat basically the mid-single down. what consumer year, we some other and construction yielding

Alexander Roberts Twerdahl

ask, eight when or therefore, were comparable with handles. and of real couple there there the were you lot of going on XXXX, going Then to one the just of concerns three banks commercial real here? yields putting is less loans, Were Or higher handles. on next risk handles of repricing island? banks In they just Puerto estate years XXXX, Rican that were from the guys on loans aren't over estate commercial pretty structurally the wanted loans seven to to just I of a risk up loans here from three repricing just

Aurelio Alemán-Bermúdez

will fixed decided loans. Obviously, on that less don't competed there is repricing that that booking to market. compete rate I We market. risk. I say we've loans, in remember not

put I manageable. into in the that slide returning I slide presentation sure repricing a in risk. or and that is it. the back make had about investor consider that We think we describe low talks the repricing prior deck the

Operator

is question Motta Kelly from from KBW. next The

Kelly Motta

deposits One like spot quarter. this noninterest-bearing bright It looks stabilized has somewhat.

somewhat. look that to impacted you ahead, Wondering from sources mix the continue you're you a help have you I deposit should if to going a the in slowed into CDs shift, migration think higher As pressure cost seeing bit. by we're mentioned know do repricing. that slowdown be

Orlando Berges-González

Kelly, commercial, Yes. saw, and if Time Definitely. down this slightly deposits up we deposits, you $XX $XX the customer meaning including mix, time quarter, look deposits retail were million. at were What million.

of deposits. the markets, time We down we a have million, a different anymore. are funds operations increase did less or the public up, stable saw seeing little on $XX depending not into every movement into entities. more portfolio quarter, seen of a month shift the this size Clearly, The large that bit the bit that little we

deposit so. Our lot be the expectation is treasury going as 'XX there into going side to and is we saw we markets this in 'XX, what a to year of and the that stability money saw a compared

Kelly Motta

nice to quite uptick turning banking was Then fee income, your income bit. well a mortgage there up in commission insurance a was as as

here. future mortgage of expected quarters? this Just to be wondering repeatable if good or there is unusual necessarily was a not anything If level in banking activity

Orlando Berges-González

largest quarter commission change originated The at volumes continued year. beginning commissions of different that following of a of there obviously of It's contingent was the always happens year. level a that, the component the the year. quarter the are from insurance first the through It that in this Based each of insurance doesn't year paid on repeat companies. the function is through

we happening of being expectation we're need every that $X more in in That Obviously, to level that rates. bit is conforming the affect million better expectation. don't a that, saw in see if stable. the something the what's know not to sold. with terms with in quarter. Other we a originations see rates to going what saw We The be of little is it's We conforming a quarter. than this that's could going at market. continuation paper spike It's recent

Kelly Motta

guys talking Maybe there. about loans. investor last realize recovery Rico peers charged-off nice with on your I me. like an some consumer you focus particularly last you for were on and quarter, like to there It some after question in a looks Puerto feel previously was normalization able

the of consumer as and be you as puts look the as wondering normalization more health thinking this in as well at about talk how ahead Puerto if of stage environment? we credit we takes the this should to Just Rican could about any

Aurelio Alemán-Bermúdez

Yes.

be this getting of we'll consumer last Still, moving topic by as more last to levels. the last That expecting since the actually utilized. provided to pre-pandemic that year. liquidity think excess happen early year, still second half covering I accounts the year or happen being out normalization the into started in to was pandemic

few similar lot the score happened believe which underwriting very cards is longer. unsecured were that levels to personal credit liquidity industry necessarily that what by of not what some and a which to of or higher quarters, cases. is on last of artificially the expect by U.S. driven more in in the a banks, loans, we We Primarily components utilization

continue. We expect that to

you I in in side, see think important consumer very in reflected It's a the accumulated. the understand the NPAs to immediately. recovery cycle. will it's also short are very losses term, those not short you in are short. a see Whatever

Operator

We have will Ramon. floor to on the no further so the I back questions hand call,

Ramon Rodriguez

everyone to you in call. today's for Thank participating

on Financial continued Services you May to Wells forward of support. this greatly XX. we in number you. We Conference at Fargo a look day. event, appreciate attending great Have a Chicago and will Thank seeing be We your

Operator

all today's This Thank conference for much joining. very concludes you call.

First BanCorp. (FBP) 23 Apr 242024 Q1 Earnings call transcript