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FIRST BANCORP /PR/ (FBP)·Q1 2025 Earnings Summary

Executive Summary

  • EPS of $0.47 beat consensus $0.43, driven by a 19 bps net interest margin expansion to 4.52% and lower funding costs; adjusted pre-tax pre-provision income rose 7% sequentially to $125.1M . EPS consensus mean was $0.43; actual $0.47 (beat). Values retrieved from S&P Global.*
  • Reported “revenue” versus S&P Global consensus was a miss ($223.3M actual vs $242.8M consensus), despite higher net interest income ($212.4M) and seasonal insurance commissions lifting non-interest income ($35.7M) . Revenue consensus mean was $242.8M; actual $223.3M (miss). Values retrieved from S&P Global.*
  • Efficiency ratio improved to 49.58% (from 51.57%), reflecting positive operating leverage; ROAA strengthened to 1.64% .
  • Capital deployment is a catalyst: $50.6M junior sub debt redeemed, $21.8M repurchased in Q1; management targeted ~$50M buybacks completed by end of April with optionality for ~$100M in 2H 2025, and declared a $0.18 dividend payable June 13, 2025 .

What Went Well and What Went Wrong

What Went Well

  • Margin expansion and funding cost relief: NIM up 19 bps to 4.52% as deposit costs fell and wholesale borrowings declined; adjusted margin ~4.48% excluding one-offs (prepayment/late fees) .
  • Positive operating leverage: Efficiency ratio improved to 49.58% on lower card processing and business promotion expenses; adjusted pre-tax, pre-provision income rose to $125.1M (+7%) .
  • Seasonal revenue tailwind: Non-interest income lifted by $3.3M contingent insurance commissions; management highlighted “another quarter of strong performance” and “encouraging margin expansion” .

What Went Wrong

  • Provision and credit optics: Provision increased to $24.8M (from $20.9M), driven by deterioration in forecasted CRE price index and higher qualitative overlays; NPAs rose $11.1M to $129.4M on a $12.6M Florida hospitality nonaccrual inflow .
  • Consumer credit normalization: Annualized net charge-offs were 0.68% (vs 0.78% in Q4, but up vs 0.37% in Q1 2024), with consumer portfolios remaining the main driver despite recoveries from a bulk charged-off sale .
  • S&P “revenue” miss: S&P Global-defined revenue tracked below consensus despite strong net interest income; this may temper near-term sentiment even with EPS beat. Values retrieved from S&P Global.*

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Diluted EPS ($)$0.44 $0.46 $0.47
Net Interest Income ($MM)$196.5 $209.3 $212.4
Non-Interest Income ($MM)$34.0 $32.2 $35.7
Net Interest Margin (GAAP, %)4.16% 4.33% 4.52%
Efficiency Ratio (%)52.46% 51.57% 49.58%
ROAA (%)1.56% 1.56% 1.64%

Estimates vs Actuals (S&P Global):

MetricQ1 2024Q4 2024Q1 2025
EPS Consensus Mean ($)0.380.410.43
EPS Actual ($)0.440.460.47
Revenue Consensus Mean ($MM)230.0236.5242.8
Revenue Actual ($MM)218.3222.1223.3
Values retrieved from S&P Global.*

KPIs and Asset Quality:

MetricQ1 2024Q4 2024Q1 2025
NPA / Total Assets (%)0.69 0.61 0.68
ACL / Loans (%)2.14 1.91 1.95
Net Charge-Offs (Annualized, %)0.37 0.78 0.68
CET1 Ratio (%)15.90 16.32 16.62

Balance Sheet and Deposits (snapshot):

MetricQ4 2024Q1 2025
Total Loans ($B)$12.75 $12.68
Core Deposits ex. brokered & government ($B)$12.87 $12.90
Non-Interest-Bearing Deposits ($B)$5.55 $5.63

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Margin (GAAP)2025 quarterly trajectoryQ3’24 call: flat 4Q’24, improvement into 2025 +5–7 bps per quarter in 2025 (from 4.48% adjusted base) Raised/Specified
Expenses (ex-OREO)Next couple quarters~$123–$124MM run-rate (late-2024) ~$125–$126MM; efficiency ~50–52% Maintained/higher run-rate
Share RepurchasesQ2 2025, 2H 2025Optionality to return ~100% earnings (Q3’24) ~$50M completed by end of April; optional ~$100M in 2H subject to conditions Resumed/Specified
DividendQ2 2025$0.16 (Q4’24 declared) $0.18 per share; payable June 13, 2025 Raised
Funding CostsNear termDeposit repricing lag guided (~1 quarter on public funds) Further declines in cost of interest-bearing deposits; wholesale cost reduced via debenture redemption/FHLB repayment Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Digital/Technology initiativesLaunched nCino/Salesforce for commercial lending; advancing digital capabilities Converted core systems to centralized FIS cloud; continued digital adoption Expanding footprint
Tariffs/Macro policyRate cuts expected; deposit repricing lag (~1 quarter) Elevated uncertainty on tariffs/policy; qualitative ACL overlays increased Cautious tone
Deposits & fundingCore deposit stability, slight growth; manage brokered CDs down Core deposits +$29M; lower cost of deposits; government deposits -$82.1M Stable/improving mix
Loan growthPipeline strong; 2024 growth trimmed to ~4% from 5% due to prepayments Mid-single-digit 2025 growth maintained; Q1 loans down $71.7M on a large payoff Maintained target
Capital returnDebenture redemptions; dividend increase; 100% payout aspiration $50.6M juniors redeemed; buybacks resumed; $0.18 dividend Continued

Management Commentary

  • CEO: “We began the year with another quarter of strong performance… encouraging margin expansion, positive operating leverage, and solid profitability metrics… posted a return on average assets of 1.64%.”
  • CFO: “Net interest income… up $3 million versus the prior quarter… margin expanded 19 basis points to 4.52%… adjusted margin… 4.48%… we estimate margin should improve approximately 5 to 7 basis points per quarter for the remaining months of this year.”
  • CEO on capital: “Redeeming approximately $50.0 million of junior subordinated debentures, resuming our common share repurchase program, and sustaining a competitive dividend payout ratio.”

Q&A Highlights

  • Margin trajectory and securities cash flows: ~$260M of 2Q runoff at ~1.5% yields, ~$1B in 2H’25 at ~1.35–1.40% yields; management anticipates 5–7 bps quarterly NIM improvement depending on rate cuts .
  • Deposits outlook: Stability across core transactional and noninterest-bearing flows; noted some “chunky” early-year outflows previously earmarked for projects .
  • Loan growth mix: Expect growth across construction and commercial, with slower consumer and improving residential; mid-single-digit 2025 growth maintained despite policy uncertainty .
  • Consumer credit normalization: Expect improvement in charge-off rates versus 2024 as older vintages run off; Q1 benefited from $2.4M recoveries on bulk sale .
  • Florida CRE exposure: New $12.6M hospitality nonaccrual viewed as collateralized with good LTV; no condo construction exposure .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Efficiency Ratio (%)2025~52% target (prior commentary) ~50–52% expected given income/expense trajectory Maintained
Net Interest Margin (%)2025Improvement into 2025 (Q3’24) +5–7 bps per quarter from 4.48% adjusted base Raised/Specified
Expense Run-Rate ($MM, ex-OREO)Near term$123–$124 (late-2024) $125–$126 Slightly higher
Share Repurchase ($MM)Q2 2025, 2H 2025Optional 100% payout aim ~$50 in April; ~Optional $100 in 2H Resumed/Specified
Dividend ($/share)Q2 2025$0.16 (Q4’24) $0.18 declared; payable June 13, 2025 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current PeriodTrend
Digital adoptionnCino launch; digital user growth FIS cloud conversion; continued digital progress Advancing
Tariffs/macroRate path, deposit lag Tariff/policy uncertainty; higher qualitative ACL More cautious
Regional trendsVirgin Islands seasonality, PR loan growth PR core deposits +$75M; VI deposits +$38.9M; FL deposits -$84.9M Mixed
Regulatory/legalFDIC special assessment (2024) No new special items noted in Q1 2025 Stabilized
Capital actionsDebenture redemption; buybacks $50.6M junior sub debt redeemed; buybacks resumed Ongoing

Estimates Context

  • EPS beat: $0.47 vs consensus $0.43; sustained ROAA of 1.64% and efficiency improvement support upward estimate revisions for EPS, particularly if NIM expands per plan . Values retrieved from S&P Global.*
  • Revenue miss: S&P-defined revenue of $223.3M vs $242.8M consensus; analysts may reassess “revenue” methodology for banks given strong net interest income and seasonal fee uplift . Values retrieved from S&P Global.*
  • Target price consensus: ~$24.17 (unchanged across periods). Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Margin expansion is the primary earnings lever: deposit cost relief, debenture redemption and securities runoff at ~1.5%/1.35–1.40% yields should add 5–7 bps per quarter to NIM, supporting EPS beats if credit trends hold .
  • Credit normalization watch: consumer charge-offs are moderating; Q1 net charge-offs dipped to 0.68% annualized (from 0.78%) aided by recoveries, but vigilance is warranted as ACL/loans upticked to 1.95% on macro overlays .
  • Capital deployment is accretive: buybacks resumed ($21.8M in Q1; ~$50M targeted by end-April) and a higher dividend to $0.18 add support to per-share metrics and investor returns .
  • Deposits stable with improving mix: core deposits rose $29M and noninterest-bearing increased ~$70M; continued mix shift can further ease funding costs and enhance spread .
  • Florida CRE exposure manageable: the $12.6M hospitality nonaccrual is collateralized; no condo construction exposure; regional diversification and underwriting discipline mitigate concentration risk .
  • Near-term trading lens: EPS beat and NIM path are positive catalysts; S&P “revenue” miss and higher provision may cap upside until margin trajectory evidences across subsequent quarters .
  • Medium-term thesis: A strong CET1 (16.6%), liquidity (basic ratio 18.76%) and digital investments (FIS cloud) underpin sustained ROE and optionality to return capital while growing mid-single-digit loans .

Notes: All financial and qualitative claims above are sourced from company filings and the Q1 2025 earnings call. EPS and revenue consensus comparisons are based on S&P Global data; values retrieved from S&P Global.*