On Wednesday, First BanCorp (NYSE:FBP) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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View the webcast at https://events.q4inc.com/attendee/331310542
Summary
First BanCorp reported net income of $89 million for Q1 2026, an increase of 21% year-over-year, with a return on average assets of 1.9%.
Total loans declined slightly to $13.1 billion due to seasonal factors and a decrease in consumer credit demand, while core deposits grew by 4.9% on a linked quarter basis.
Credit performance remained strong with low levels of non-performing assets and a 24% decline in early stage delinquencies from the prior quarter.
The company maintained a 16.9% CET1 ratio despite a 92% net payout through buybacks and dividends.
First BanCorp sustained its loan growth guidance of 3-5% and reported a 6% increase in total loan originations year-over-year.
The company is focusing on technology investments, including AI, to enhance service delivery and operational efficiency.
Net interest margin expanded by 7 basis points to 4.75%, exceeding original guidance, and non-interest income increased due to seasonal contingent commissions.
Operating expenses remained stable, with projected quarterly expenses for 2026 expected to be in the range of $128 to $130 million.
Management discussed ongoing economic stability in Puerto Rico, with continued commercial activity and a resilient labor market.
First BanCorp plans to focus on capital allocation to support organic growth, competitive dividends, and share repurchases.
Full Transcript
OPERATOR
Good morning and welcome to the first First BanCorp Q1 2026 financial results conference call. All participants are in a listen only mode. After the speaker’s remarks, we will conduct a question and answer session. To ask a question at this time, you will need to press STAR followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Hermon Rodriguez, corporate strategy and Investor Relations. Thank you. Please go ahead. Thank you.
Julianne
Julianne Good morning, everyone. Thank you for joining First BanCorp’s conference call and webcast to discuss the Company’s financial results for the first quarter of 2026. I’m here with Aurelio Leman, President and chief executive officer and Orlando Verges, 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. The Company’s actual results could differ materially from the forward looking statements made due to the important factors described in the Company’s latest SEC filings. The Company assumes no obligation to update any forward looking statements made during the call. If anyone does not already have a copy of the webcast presentation or press release, you can access them at our website at fbp investor.com at this time I’d like to turn the call over to our CEO Aurelio Aurelio Aleman.
Aurelio Aleman (President and Chief Executive Officer)
Thank you Hermon Good morning. Good morning everyone and thanks for joining our call today. We started 2026 with very strong momentum generating 89 million in net income or 57 cents per share. That is actually up 21% when compared to same quarter last year. Core operating trends remain also very strong during the quarter with pre-tax pre-provision income reaching all time high of 131 million, that is of 5% from a year ago. This performance resulted in a 1.9% return on average assets. This marks our 17th consecutive ROA above 1.5%, definitely demonstrating our commitment to sustain profitability. Moving to the balance sheet, total loans declined slightly to 13.1 billion. That is actually consistent to prior year seasonality and accounts for the expected softening in credit demand within the consumer lending segment that we mentioned before. That said still better than pre pandemic levels when we look at consumer demand. On the other hand, core deposit for the quarter were strong other than broker and public funds which we don’t call core were up by 4,9% 4.9% on a linked Quarter annual basis, reinforcing the strength of the relationship during franchise while allowing us to actively manage funding costs. Driving core client deposit growth is a key priority for us and we’re very encouraged by the execution of during the quarter in terms of new clients and accounts. Credit performance remained a key strength for the franchise during the quarter with charge off very stable, record low levels of non performing assets and very encouraging early stage delinquency trends which actually declined 24% from the prior quarter. And finally, our consistent approach to capital deployment resulted in a net payout of 92% during the quarter achieved through buybacks and dividends. Even after this action, we ended the quarter with a 16.9 CET1 ratio. Let’s turn to slide 5 to talk about the environment and highlights of the franchise. You know, we’re pleased to say that business activity and economic conditions across the market continue stable and progressing in line with our expectation. The labor market continues to show resilience, other economic indicators in the main market such as economic activity index continue to be stabilized and recent great delinquency indicates consumer stability. We are encouraged by what we see around in addition to the restructuring, sorry reconstruction activities, reshoring activity and expanded US military presence in the island. While there is a recovery efforts remain in place expanding on a consumer first quarter industry. Auto sales declined 19% when compared to the first quarter last year. Definitely evidence in the expected reduction in consumer credit demand for auto. That said, it is important to note that retail auto sales continue to be 6.5% above the pre pandemic 10 year average. So still better than the prior cycle. We’re definitely prepared to serve our customers in this environment. Very, very, you know many, many, many parts moving regarding you know, potential impact of oil cost which you are monitoring which could be, you know, rising energy costs and other potential impact on inflation which could impact consumer activity and commercial activity more broadly in the future. Hopefully that ends soon. And while the macroeconomic environment continues to be dynamic, we remain focused on managing what we can control in housing, the service delivery platform, technology investment to be more agile and efficient and focusing on providing the best quality of service that we could. When we look at business highlights, total loan originations were up by 6% when compared to prior year. Seasonally adjusted commercial loan pilots actually remain healthy. Actually if I compare pipeline today with same time prior year, we are actually in a better position. So we sustain our loan growth guidance of 3 to 5% that we initiated that we mentioned in the last call in terms of Omni channel strategy, active data users continue to grow year over year, data transaction volumes continue to grow, self service payment continue to increase, sustaining demonstrating sustained engagement of clients in the platforms. We are even spending time and effort on AI understanding what we can do to improve internal processes and also improve the way we service our clients. We continue to also do franchise investment in our brand channels to continue to optimize how we service our client. We believe that AI will definitely play a key role in the execution of this strategy, providing clients with faster, more personalized service offerings and enabling our colleagues to to spend more time in value added customer interaction rather than dealing with routine transactions and processes. We’re working very close to our key vendors to ensure that we adopt what’s coming in all this new venture overall capital allocation priority remain unchanged. Also. This includes supporting organic growth which is a priority in and paying a competitive common stock dividend and returning excess capital through share repurchase. As always, we thank you for your interest in first bank and your support and with that I’ll turn the call to Orlando and we’ll come back for questions later. Thank you.
Orlando Verges (Chief Financial Officer)
Good morning everyone. This quarter we earned 88.8 million 57 cents per share which compares to 87.1 million or 55 cents a share. Last quarter. Adjusted pre tax pre provision income reached an all time high of 131 million, which is almost 2% higher than last quarter and 5% higher than the first quarter of last year. The return on average assets for the quarter was 1.89%. That compares to 1.81% last quarter. So we had an improvement there. The provision for the quarter was lower. We had some macroeconomic indicators such as the unemployment rate and the commercial real estate (CRE) price index continue to show better trends and that leads to some of the reduction. Also we had reductions in delinquency as Aurelio mentioned, and some of the consumer portfolios. The size of some of the consumer portfolios was down. On the other hand, we had an increase in qualitative reserves to account for the current geopolitical uncertainty in the Middle East. Income tax expense for the quarter was 25 million, which is 5 million higher than prior quarter, mostly related to the higher pre tax income. But also at the end of last year in the fourth quarter we booked an adjustment to the effective tax rate for the final results for 2025. The estimated effective tax rate as of now it’s just slightly higher. It’s 21.9% compared to 21.6% we had in 2025. In terms of net interest income we had a reduction of 1.8 million in the quarter, the net interest income amounted to 221 million. That’s 2.7 million related to two less days in the quarter. But net interest income compared to same quarter last year is 4% higher. Interest income on loans is 6.5 million lower than last quarter which 3.8 million it’s due to the two less days in the quarter and 2.8 million relates to the market interest rate reductions that affected the the commercial portfolio pricing, specifically the floating rate components. Yields on the commercial portfolio decline 18 basis points. On the other hand, interesting common Investment securities increased 2.8 million mostly due to a 22 basis points improvement in yields as we have continued to reinvest cash flows from maturing securities into higher yielding instruments. On the expense side, overall funding cost was 3.5 million which is 1.3 million related. 1.3 million of that reduction relates to the two less days in the quarter and 1.2 million relate to rate reductions. The cost of interest rate checking and savings accounts came down 4 basis points for the quarter to 1.21% which is mostly driven by government deposit cost reductions. But also the cost of time deposits came down 5 basis points and the cost of broker deposits came down 7 basis points. The size of the broker deposit portfolio was also down in the quarter. Net interest margin expanded 7 basis points for the quarter to 475, which is slightly higher than our original guidance of 2 to 3 basis points per quarter. Even though the interest rate environment remains uncertain, particularly in terms of the timing and magnitude of future rate adjustments, our balance sheet continues to be well positioned for additional NIM expansion. In line with our original guidance. In terms of non interest income we reached 37.7 million which is 3.3 million higher than last quarter. Most of the change was related to a 3.6 million collected on seasonal contingent commissions that we usually get in the first quarter of each year. Operating expenses for the quarter were 1:27.1 million, very much in line only an increase of 200,000 from last quarter if we exclude the gains from OREO operation, expenses for the quarter were 128 million, which it’s about the same kind of adjustment of increase of 300,000 which compared to the 127.7 we had last quarter. Expenses were on the lower end of our guidance. Payroll expenses for this quarter were 2.1 million higher. That relates to a seasonal increase in payroll taxes and also we had an increase in share based compensation expense for stock grants that were issued during the quarter the portion of these grants that are attributable to retirement eligible employees is charged to Expense in the quarter. This increase in payroll expense was offset by a decrease in business promotion. Typically, business promotion efforts are lower during the first quarter and pick up on the second and fourth quarter of the year. The efficiency ratio for the quarter was 49.1%, which is slightly below the 49.3 we had in the fourth quarter. As we have mentioned before, based on our projected expense trends for ongoing technology projects and the pickup on business promotion efforts that happen later in the year, we rate the rate. Our quarterly expense base for 26 will be in that range of 128 to 130 million. As we had previously mentioned, this …
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