FBP - Earnings call transcript Q3 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning all, and thank you all for attending the First BanCorp Q3 2024 Financial Results Conference Call. My name is Brica, and I will be your moderator for today. [Operator Instructions] I would now like to pass the conference over to your host, Ramon Rodriguez, Investor Relations Officer at First BanCorp. Thank you.

You may proceed Ramon.

Ramon Rodriguez

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

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

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

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

Aurelio Alemán-Bermúdez

in the guidance. commercial strongest operate continues our down before. of Thank you, you This joining range quarter the loan of Adjusted which be ratio mostly share, thank Credit solid the we million, XX% $XXX on increase an everyone, Ramon, to a our environment, morning, quarter return originations to today. in expenses, slightly in strong our earning pretax to line call assets for X.XX%. or and reported have another franchise due $XX.X to $X.XX in per demand with and morning, for resulting our healthy pre-provision in our Still, million we for year. actually in income organization continues good as net resulted was in discussed efficiency

third quarter. by commercial to $XXX unexpected the grew prepayments despite higher $XX approximately portfolio million loan amounted that in Our million levels of

we continue made But though closer pipeline our the just primarily that continue to. and we loan growth Even very reference now XXXX X% to guidance. portfolio actually grow a and we our towards strong prepayment work higher-than-forecasted loan to by driven I expect to in see X% to

In market as and NII flows behaving did broker we opportunities cycle. coming is deposit expected on the to and deposits the terms the from we billion some with broker deposits will target continue of the dynamics our achieving We're $XX.X started pricing seems other of Most XXXX deposit, be remained as noninterest-bearing deposits. CDs. product decline expected in as capitalize than period. of and monitoring government Core at prepay deposit in environment which potential over rate starts improvement

during of We also just the should for bodes quarter rate assets. additional well asset the environment favorable be down improved coming Asset basis total with improvement. assets quality coming to points commercial XX nonperforming to think and quality customers

and Finally, quite our position liquidity capital strong. remains

and the paid capital our This quarter, redeeming $XX of in debentures our of actions dividends. sustain to able million by commitment $XX.X form XXX% we deliver of in earnings some outstanding to million common were

to of ratios the from these our of deploy the XX%, by short book. duration suits rate grew best degree the backdrop quarter long-term and the book actions, that flexibility of improved per capital enjoy capital and share tangible in interest accounting We for Even our our benefiting nice a franchise. during and value the bond expect

to Page bit Let's talk environment. the turn to about a little X

out September backdrop X.X%. reflecting XXXX, Actually and Rico employment stable the what came positive in payroll employment also in of We good trend of at continue of a we Puerto to just economic consider quarter a improvement in reflected quality. originations historical and year-over-year is experience X.X%. also in lowest asset

loan the platform which pipeline lending commercial experience Our ] in technology. in relationship, digital provides our did actually team launch We platform, completely remains focused and commercial September Encino a on our workflow. building executive [ expanding

priority We loan fund deploying and our generate continue continue in growth to excess sheet, franchise continued an managing accretive to a investment serve technology lot into our to capital, better and organic to balance ongoing customers. of we while capital opportunities. --

of quarter to proud forward are expect in We XXXX. our results. our updating We on we all thank and what during you to look third employees, January

Thank I you. call Orlando, and back some answer we'll over will to the turn now be to questions.

Orlando Berges-González

Good morning, everyone.

the portfolios million million in share, based for As on the compares the in Aurelio for trends the for loan quarter. for on $X.XX allowance quarter, increased consumer The the share $XX and to last the size which net income provide million $X.X to charge-off $X.XX a mentioned, we a required credit quarter portfolio. $XX provision reported or increases of losses

had versus a taxable before. some change the also on reductions the slight predicted We income rate bit tax as relationship reduction, effective from what had of we a

quarter. $XXX.X last to which million $X.X was million, Net as interest quarter income increased for the compared

This a day, of that component basis lower income. quarter, have deals continue did investment the on cost is increases the going interest down see on September. stayed $X.X in in income was as yields portfolio, have in other on we had improvement Overall million $X were net floating income basis the interest But million to the hand, we the million yields are loans. in down additional funds We of Loan reduction affect were approximately repayments and the quarter. of impact to XX in. flat portfolio. X which we small $X.X also points. an point the the Obviously, coming maturities And did rate on

interest change wholesale fund the down mostly from investment lower-yielding from the of the the in points deployment Net higher reflecting securities X.XX% cash mix basis asset and loans to flows funding to bringing expanded cost. the yielding margin X the

forward, to of to Regarding margin the quarter similar going see flat, we improvements into what to 'XX expect in margin fourth net going 'XX. interest be this the quarter with

which lag have XXXX down on we repricing of some higher from impact repricing higher come the portfolio cash are it's typically portfolio, done funding the compensated be XX rate at rates well been the subordinated of basis we [ probably have which new additional as have lower component. any lower-yielding cost. basis an repurchasing but points points would the and And them. a repricing at downward cities commercial have a year stood floating renewals maturities, Also, flows cost. of Those in by and will broker debentures, led repricing ] deposits investment expectation to be the the this greening not cost Our in the going the XXX as

the will So that improve margin.

quarter the the an fairly of million flat claims million, are $XXX million last securities maturities XXXX. approximately of But the into see was otherwise, other Expenses in another $XXX.X perspective, in of and 'XX. these were the repayments in estimates and deep the be half in collect in flows income of or will we 'XX older that we'll the portfolio In stable. insurance terms we're than and income. quarter. of million repricing cash the higher first And securities Other fairly $X.X in to put either quarter quarter, of had first through $XXX seen our which fourth loans for $XXX,XXX enter is

increases million for $X.X had realized -- sale, commercial quarter, last were have quarter gain while, quarter. as a $X.X on the similar large million merit in If sold not which last which costs $X.X we includes quarter a the million expenses to this $XXX.X an We as related that day and this personnel quarter. -- OREO, been we was about gains compared we day quarter. increase million, nothing million the OREO in were that quarter. compares books OREO additional to million on as for higher exclude $XXX.X payroll This to last $X.X well

projects the in of Encino project the consulting to technology We saw like mentioned. Aurelio related also increases some costs just

electricity months remaining expense the higher we're costs that rental expenses higher agreement rental had of the branch X charging the because will end of be We of at X the and last closed over December. to year,

$XXX and in report full slightly $XXX Aurelio continues we next year projects, than but ongoing more couple XXXX several be results. Based our guidance ratio of million the technology for stage of higher that expense XX%. to would As base we quarters will around as our our mentioned, provide the current ends, to year on the million -- for be estimate the we range, technology efficiency before the

of points nonperforming of terms consumer basis loans is a sale had of was loan million Commercial represent we nonperforming increased mostly on million Rico. in were quality, down we asset commercial in to In reduction XX were points XX million, $XX.X which nonperforming of Inflows on million. $X.X loan had basis million. $X.X $XX but The on of reduction $X.X the assets. lower, an inflows Puerto that total accrual

to relationship nonperforming. a included inflows quarter Rico second that remember that migrated $XX.X in commercial Puerto might was million You

decrease On in loan commercial delinquency of million. million. increased the $X in portfolio other consumer the $X.X $X hand, a while million, portfolio almost loans $X was registered the has million early decrease exactly, The

this from quarter in increase However, of delinquency to renewal, day in payments, was at was October. in and end the it the it's early a so come commercial process but mature really up the of at will case out now

from declined improvements $XX.X we terms of financial most $XXX of reduction macroeconomic In that commercial several allowances million also to allowance the and to the borrowers that coming of of and the improve with million down the the it's of losses, $X.X credit forecast residential in have. million commercial conditions due the

consumer the see portfolio recent by the continue X.XX% quarter On to ACL did is other the the trends to to trends. commercial as residential portfolios. down the and X.XX% the mortgage $X.X ratio increase ACL loss in allowance of due The on ratio the overall credit hand, we good million from

for compares basis basis commercial the the in $X.X average charge-off were net million just Included that of or quarter. which mentioned the $X X to quarter on approximately compared XX million sale nonaccrual the Net the it's third in increase. the represents increased to of the quarter. points I charge-off, points points loan charge-off XX Consumer quarter million last basis of $XX loans, as

On XXX% in ratios payment dividends. as to debenture of -- the increase and the as based regulatory subordinated of We on the capital the continue quarter as significantly as well the earnings dividends, the earnings mentioned, into deploy, the capital well over to we capitalized. did continue we excess did unit above increased be but did repurchase and front, common Aurelio

Still, X.XX% books, for reached a the ratio XX% over which $XXX fair of represent $X.XX The tangible well the increased million in we as the $XX.XX ratio. per AOCL of book have the and securities and of value increase basis TCE value around as points tangible book remaining combination the the on value mostly earnings of by the share quarter. TCE XXX the to

concludes deployment other in our prepared the best our with our mentioned, as will capital of accordance a We This with shareholders capital in with interest our Aurelio and that it's, remarks. continue plans. way franchises

open Operator, please would you for the Thanks. questions. call

Operator

Instructions] with We on the line have question Timur the from first [Operator Braziler Fargo. Wells

Timur Braziler

balance My first is around question sheet. the

increasing sheet what hold NII wondering wondering being ability your when between cash thoughts sounded start and as flow NII the to Just a what relates can growth balance here? 'XX balance the bond it NII driven grow then just is? correlation reinvestment And in are the sheet little the around is release, in it grow in I'm for by pull to 'XX the actually

Orlando Berges-González

There are the there. The will continue from flows X and to portfolio reprice. will investment things continue come to cash

has necessarily or cash, necessarily is now, that flow and of why reinvested As either been that sheet growing. of that's loans not in balance cash the in stay most

would a as loans. maintain funds. that like Aurelio the We folic it's for we at to the that level growth put be for sheet and is mentioned, size this X% stable collateral on we're until year. balance will like continue And average a investment expecting to we that feel continue portfolio And ] to into what needs liquidity will monies [

as At the reinvesting the had will will the on mentioned, some of were on be that mature. that there money some sheet the broker Timur cities of some I books point, and growth we we that start balance

coming still point, portfolio. We the are good letting in liquidity investment them we go. at this And of have They're from funds. high cost

that earnings. XXXX. But increase So we part that's to of sheet something need maximize we clearly, latter should not balance start seeing the to necessarily,

Timur Braziler

Okay.

part incremental expecting that that deposit kind growth latter of in see growth that when So some XXXX, of here corollary the as is near well? to Or deposit you're we term? could

Orlando Berges-González

exclude flow, have a for deposit exclude bit a and deposit won decide or growth, deposit Yes, It's brokers typically When up talk when sorry, we more down. a bit growth a or about bit -- of flat. sort little we little little I Brokers, typically bit I'm discussion, less. little totally government. I been this I

to Florida fund operations. -- used it being the is our Some of Florida

and what we government, that manage it's sort base of So of we of kind a stable have.

bit. up little it or So comes a down

noninterest or we a were the little million, just So you deposits a million and bit this shift quarter there saw $XX $XX of slightly down between bearing. looking other at had interest

that the deposit the obviously, the stay from coming little reinvestment grow bit market, component we in a the that interest and maybe but And to increases see a sort the that expect feel all allocated liquidity the from growth funds typically on But portfolios don't in of we the will of amount is portfolios. market now. the that is general, gone of by But only significant market. humongous most of and were

are into terms of that have market in So that the some into programs what's FEMA kind market. funds are construction-related is infrastructure coming discussed and still we in pandemic of coming funds of coming other some and the the the of remaining that

Timur Braziler

then for I'm there? of out from looks we and had in some of consumer I island me, the just it the kind ]? uptick looking Rican although are banks benefits we some on Got [ at consumer health Have wondering now quarter the the general it. trends consumer credit. what like last for troughed this Puerto of guess an And broader the pandemic just

Aurelio Alemán-Bermúdez

show continue improvement. card then That that XXXX now by with and credit peak, about normalization. we the we XXXX. reaching is on I should we what portfolio in we the normalization actually we're some the this started talk that consumer And moves as delinquency as of the is going of XXXX, about to expecting we think about metrics a the pandemic, took the with -- forward, the coupled year, some see the in on out, in were in Early demand. pocket talking for behavior we consumer increase liquidity started today we're slight some whatever primarily post the seeing early XXXX happens

So we're risk not increasing appetite.

that. We have been very doing firm in

and of metrics and we tolerance, say portfolio We delinquency I that expect goals improvement XXXX. with losses. over loss and each portfolio for will have of stability from And some delinquency

Operator

Moss Your next Raymond question from James. Steve comes with

Stephen Moss

here. -- on the morning. ,maybe here securities on Good starting XXXX. starting Maybe the on you here in portfolio I following on million the $XXX first just or up the just heard quarter the of maturing Orlando

the Just first wondering of kind flows what quarter? cash are expected beyond the

Orlando Berges-González

-- maturities it's full the be million this $XXX XXXX, $XXX and quarter XXXX, $X.X going that the -- million including and we million repayments. including billion the the -- million That's Yes, first $XXX we're quarter. in and estimating the in somewhere billion first it's full based quarter, are we 'XX, and for $XXX on to between $X

Stephen Moss

the X% minus? coupon And around assuming I'm that, or plus on

Orlando Berges-González

the about to -- and probably going be minus. really It's it's It's between XXX. component maturing XXX somewhere is

'XX. not something, overall the it's yield, about 'XX but in So XXX, it's later it, some XXX and things -- also that it's of until mature

Stephen Moss

kind about a kind seeing of sense deposit as of the point basis cut, the Okay. Great. how And thinking curious Appreciate -- terms the to that. and with want repricing you're pace with you're I to in of rate XX what here, just then Fed here of cut? get

Orlando Berges-González

be have X obviously, repricing, The noninterest-bearing beta XX% of components. deposit to had in typical XX%. up to account, those a So about coming divided

already follow deposits, But some reprice some rates whatever are the that come repricing time So XX% down coming the on lower terms. pattern. We to Then we feel But side, that terms new going In faster. adjusting we're those issuance. slightly had that of beta ones were at will assuming government betas same those than to are up. obviously, will going do that the clearly, be that's the about maybe that in XX%. following have started case have of we components

the were It years. didn't X not people longer to terms mostly Clearly, deposit. in things of much time making X.X was average originated. We have being

take that we've but those rates doesn't going some our start forward. it So already table of repricing, to for long terms repriced

of some the portfolios floating on be the we the typical mentioned also But lending fourth quarter are repricing. long expecting sort same So higher the for a that I cities not be a we lag the see portfolio margin quarter repricing always of again, being some deposit are those side, why the obviously, because I the other the benefit. either of that repriced cost broker of That's mean, lower on term on hand, will that rate faster third the are eliminating on some deposit. on are line that or at eliminated I of to that full

Stephen Moss

Okay. that commercial Great. strong all quite in just kind appreciate originations color. terms here. And I remain of of

pipeline And are sounds curious of seeing the has there? the it most kind improved. where Just like you demand

in So the probably fourth terms originations coming an quarter. for is of total uptick

Aurelio Alemán-Bermúdez

the to the move of a construction commercial into combination book. side, On deals there is that continues

of consumer, of are it's commercial are right for book transactions that to commercial some looking new also Some the class government asset contributor growing there's that now. also not related is street, that expect very being distribution on concentration projects. we the in We're the be clients. There C&I a that industry There's is side. industry, deals, stable to it's some coming the also combination new And auto just into CDBG continues as There the than on actually to itself. market will components active so any The the that Florida more necessarily supermarkets, deals we And say pipeline. during the activity a quarter. happening.

Operator

[ have ] with Frank now Sandler. Shiroti We Piper

Unknown Analyst

you terms think deposits in side, generally a cost? to deposits us a I the is as about guys just that those X still I sector What quarter is of portion indexed. large you on deposit -- down lag sector in lag public on reasonable of remind it public could guess, coming are on far talked Wondering know as specifically the if Orlando. the

Orlando Berges-González

Yes.

the have account. faster, of yes, have lags of longer average, you reprice way they clearly, didn't the because have, that You will some on but on same necessarily reprice depending others type

of it's quarter a lag, proxy, So average X good the Frank.

Unknown Analyst

And then on loan question just -- terms in another growth.

mentioned continued place year. in strong pipeline, the You close this prepayments the with growth mid-single is quarter, I in expect guess quarters? coming still loan and X% this to so to future stronger -- reasonable digits the a

Aurelio Alemán-Bermúdez

in terms was say they origination we which what by in year, targeted our is Yes. but or -- hampered Obviously, year that when at ] and yes. this would mid-single decided has are the look economic is with on for you year [ anticipate I goal yes. than see expected repayments line been we next what good to the activity what bringing, early based of but well, to now, next digit a for volumes, number

Unknown Analyst

lastly, Orlando, the expense And just on you I expenses the on of couple next, Okay. quarters. then expectations mentioned think, over

the to just I XXX, beyond? XXX make you think that we to guys, XX%. want efficiency that just is as and Was ratio about correctly heard that And So targeted that sure then it Is of XQ? XQ I near and into back when over that thinking assume you to up given XXXX? reasonable reasonable about that of get Is then kind trends to time. the just bit ticks expense little a XX% that maybe term, guide in the

Orlando Berges-González

that excludes XXX, of it. of and between OREO. based still positive some quarter some fourth the the mentioned of of coming OREO 'XX. Look, numbers obviously any fourth estimate of would We're 'XX offset quarter stage these the projects. it's some what of portfolio. out we XXX kind seeing of That on I

we $X.X As you saw OREO had in million quarter, this gains.

of XX%. that's would part be the numbers, and on the that So

we why loan earnings that portfolios. pickup feel with the the dynamics that's on repricing through investment and the So the year of from

a basis, of component. of XX% levels those OREO GAAP with so the sort including And on holds expenses,

be couple bit OREO, it first the definitely. clearly in of If quarters, you a exclude would higher

Operator

line the our have KBW. on with Motta We from Kelly final question

Kelly Motta

you earnings. debt is a hoping on thoughts reasonable look stepping bit to more earnings in plus that's expectation that you've on here we next expand was about as sub as know I Wondering could CETX, maybe given of out capital with out this I a as repurchase back did the well return. Historically, paid out quarter. buyback XX% if the you year? paying XXX%

Aurelio Alemán-Bermúdez

to keep said Well, we Kelly, optionality. before, I like as

approved for last on focus on the So execution. we'll optionality. paying we We we that and the what plan the keep to have a quarter, definitely, But still this decided plenty happens. capital has drops space quarter see

is the as today, but I mind, think is keep into be move to we -- that and now for that continues XXXX. This position XXX% change in XXXX. our obviously goal to could

Kelly Motta

then Understood. prepayment Islands? us remind Virgin And can with deposit what That's helpful. you commercial was I some happened that's and the know outflow, the really there where was.

drove be both balance wondering thinking unique anything should how there's about that and quarter of this the that on if we sheet that? Just sides on variance of going kind

Orlando Berges-González

They island, side. some [ X on funds repayment to funds rebate The it's their things. We have Virgin use government did have ] a the lines.

came the back, Island thing a So the that season. is deposits on there third from the is seasonality if to have that other you But Virgin go down quarter, component you -- had typically, slow they bank. in is a the the

see compares of similar a sector. it across you If September, components. It the saw quarter quarter. million X back the reduction what about had that's so year, a had and has this down component comes account the is X year. million or or to third go like in it big last we was quarter and was again, which we $XX you there retail nothing this quarter. unusual, from sort reduction a last And to different June was positive of island tourism movements The to $XX not -- -- we with in And business and

Kelly Motta

ahead? in it. pick point. here helpful. asked the Most move any and on I questions that, that line could answered really expectation Got this guess as we banking That's rates, mortgage have my been up look of revenue at with

Aurelio Alemán-Bermúdez

monthly really good think proxy. is we rates with move applications the The well. reported and in a I as industry market the Yes, move

would nonconforming are market and some paper by share takes the more the I could conforming and and nonconforming or of on on the rates overall picture. and noninterest shifting some a more from that would We the change, based that have so market growth origination good portfolio bring into place stabilized the where has based achieved rates pretty this year, driven income and consider on

rates if see side. other conforming So definitely you will rates the in it go portfolio, go see the the lower piece then or increase the that side, to you in

portfolio the very is So healthy.

the asset We best we had are quality portfolio. ever that that achieving in

with the performance any we of see opportunity grow probably that next the business. pleased very And to be will taken we're So year.

Kelly Motta

it. question then for And me. Got last

NII the of around factor down it of margin commentary rate these the to repricing Can in you Your and X of cuts. book response in the floats? loans is some remind us how much

Orlando Berges-González

Yes.

We book do with have is it's a repricing commercial XX%. it's XX% the base. It's of But other the And XX%, portfolio on commercial that about card SOFR CRE book. credit mostly It's some the floating, rate is fixed. basically C&I, fixed The consumer than have side, XX%. that prime. the

our have based. We treasury base basically and prime XX% it's X%,

the obviously, prime-based in we saw September. loans impact the So have as of second half

come Some of the through quarter. as already the has some movement had other SOFR SOFR down base, we've

Operator

Ramon for I now And has question-and-answer today's final to hand back remarks. Rodriguez would session. that to like confirm can some it concluded I

Ramon Rodriguez

Thanks call. to everyone today's for participating in

X We on be you and Piper's in great Have seeing will ] a we forward these November Hot greatly attending and Financial on support. Conference at your We Conference appreciate number Miami of in continued events, April Services look to November [ day. a XX.

Operator

now from disconnect I call have the call. conference enjoy your can the you First for all may you BanCorp. confirm Please now day, joining we concluded. Thank with rest and today today's of

First BanCorp. (FBP) 23 Oct 242024 Q3 Earnings call transcript