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FIRST BANCORP /PR/ (FBP)·Q3 2025 Earnings Summary

Executive Summary

  • EPS beat with non-recurring boost; core still modest beat: Diluted EPS was $0.63 vs $0.49 consensus (+$0.14), aided by a $16.6M deferred-tax allowance reversal and a $2.3M employee retention credit; adjusted EPS was $0.51, still above consensus by ~$0.02 . Values retrieved from S&P Global.*
  • “Revenue” (Street definition: NII + non-interest income – provision) missed: $231.1M vs $255.6M consensus (–9.6%), as provision and softer fee income offset record NII; NIM rose just 1bp amid deposit cost/mix pressure . Values retrieved from S&P Global.*
  • Loan growth held up on commercial/mortgage; consumer slowed: Loans +$181M q/q (to $13.05B) on Puerto Rico and Florida C&I/mortgage, while consumer demand—especially auto—underperformed plans; core deposits +$139M; NPAs fell 7% .
  • Outlook/guidance tweaks: FY loan growth trimmed to ~3–4% (from mid-single-digit); Q4 NIM guided “flat”; expense run-rate reiterated at $125–$126M; FY25 effective tax rate guided to ~22.2% .
  • Capital return stays a catalyst: Board authorized a new $200M buyback (base cadence ~$50M/quarter through 2026) and declared a $0.18 dividend; strong CET1 of 16.7% supports ongoing returns .

What Went Well and What Went Wrong

  • What Went Well

    • Record net interest income and resilient margin: NII reached $217.9M; NIM improved to 4.57% with continued reinvestment of low-yielding securities into higher-yield assets; CEO: “another exceptional quarter” underscoring consistent returns .
    • Healthy loan/deposit dynamics and asset quality: Loans +$181M linked; core deposits +$138.7M; NPAs down $8.6M to 0.62% of assets; CFO cited stabilization in consumer charge-offs and very low commercial charge-offs .
    • Capital strength and returns: TBVPS rose 6% to $11.79; TCE ratio to 9.73%; $50M buyback in Q3; new $200M authorization through 2026; “opportunistic” execution planned (~$50M per quarter) .

  • What Went Wrong

    • Revenue miss vs Street: “Revenue” (NII+fees–provision) fell short vs consensus as provision remained sizable ($17.6M) and card processing fees dipped; NIM expansion undershot earlier 5–7bp cadence . Values retrieved from S&P Global.*
    • Consumer softness—esp. auto: Management flagged industry-wide auto sales down 7% YTD; Q3 originations below plan, pressuring mix and limiting NIM upside .
    • Deposit cost/mix headwinds: Higher competition/price on government/time deposits raised costs; time deposits +$166M while non-maturity deposits fell $45M, muting margin expansion .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Net Income ($M)$73.7 $80.2 $100.5
Diluted EPS ($)$0.45 $0.50 $0.63
Adjusted Diluted EPS ($)$0.45 $0.50 $0.51
“Revenue” ($M, NII+Fees–Provision)$219.3 (calc. from 202.1+32.5–15.2) $226.2*$231.1*
Net Interest Income ($M)$202.1 $215.9 $217.9
Net Interest Margin (GAAP, %)4.25 4.56 4.57
Efficiency Ratio (%)52.41 49.97 50.22
Provision for Credit Losses ($M)$15.2 $20.6 $17.6
Net Charge-offs (% avg loans, ann.)0.78 0.60 0.62
CET1 Capital Ratio (%)16.18 16.61 16.67

Notes: “Revenue” for Q2–Q3 2025 marked with asterisks are Street/S&P Global figures; for Q3 2024, value is calculated from the company’s disclosed components. Values retrieved from S&P Global.*

KPIs and Balance Sheet

  • Loans (end of period): $13.05B (+$181.4M q/q), with increases in commercial/construction (+$159.6M) and residential mortgages (+$32.6M); consumer –$10.8M .
  • Core deposits ex. brokered/government: $12.79B (+$138.7M q/q); brokered CDs $628.3M (+$101.8M q/q) .
  • Asset quality: NPAs $119.4M (0.62% of assets), down $8.6M; ACL/loans 1.89% (–4bps q/q) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loan GrowthFY 2025Mid-single-digit (prior calls) ~3–4%Lowered
Net Interest MarginQ4 2025+5–7 bps per quarter in 2H25 (reiterated Q2) “Sort of flat” for Q4Lowered/tempered
Expense Base (ex-OREO/one-offs)Next couple quarters~$125–$126M (Q2 reiteration) ~$125–$126MMaintained
Effective Tax RateFY 2025~23% (Q2 call) ~22.2%Lowered
Capital ReturnThrough 2026~$50M/qtr buybacks baseline (implied) New $200M authorization; ~$50M/qtr base planIncreased authorization
DividendOngoing$0.18/share declared prior$0.18/share declaredMaintained

Earnings Call Themes & Trends

TopicQ1 2025 (Apr 24)Q2 2025 (Jul 22)Q3 2025 (Oct 23)Trend
Margin trajectoryGuided +5–7 bps per quarter in 2H25 Reiterated cadence; $1B+ H2 cash flows to reinvest Q4 NIM “flat,” deposit betas/asset sensitivity timing headwind Moderating vs earlier plan
Consumer/auto demandExpect consumer growth slower; pipelines healthy; one Florida CRE NPA Consumer early delinquencies slightly up; deposit outflows concentrated in a few large accounts Auto sales –7% YTD; consumer originations below plan Normalizing, softer auto
Deposits & pricingStability improving, focus on core Outflows concentrated in ~25 large customers; costs down on some categories Govt/time deposit costs up; competition from smaller players; expect some cost relief with rate cuts Competitive; mixed but stabilizing
Capital deploymentDebenture redemptions; resumed buybacks Continued buybacks; capital ratios up New $200M buyback; plan ~$50M/qtr through 2026 Accelerated returns
Tech/AI & efficiencyCloud migration completed; digital adoption rising Continued tech investment; omnichannel traction “Actively deploying AI and automation” to speed underwriting, improve fraud detection, efficiency Ongoing modernization

Management Commentary

  • “We delivered another quarter of exceptional financial performance underscored by record net interest income, disciplined loan growth, and well-managed asset quality.” — CEO, Aurelio Alemán .
  • “We had a $16.6 million reversal of valuation allowance on deferred tax assets…based on new legislation…allowing LLCs to be treated as disregarded entities.” — CFO, Orlando Berges-González .
  • “We are encouraged by…resiliency of the labor markets in Puerto Rico…continued improving trend of tourism…ongoing expansion of the manufacturing sector.” — CEO .
  • “Our intention is…opportunistically executing on our capital actions…with the base assumption of repurchasing approximately $50 million per quarter through the end of 2026.” — CFO .

Q&A Highlights

  • Tax and one-time items: Effective tax rate to ~22.2% for FY25 after DTA allowance reversal; ongoing slight benefit expected, but not at reversal levels .
  • Deposit costs/betas: Government-indexed deposits should reprice down with rate cuts; retail/time deposit reductions expected with a lag; competitive pressure mainly from smaller players .
  • Margin outlook: Q4 NIM guided “flat,” with asset-side repricing moving faster than liabilities due to asset sensitivity; incremental NII expected from loan growth .
  • Credit: Consumer charge-offs “normalizing”; no systemic industry-wide concerns identified by management; early delinquency increase tied to a single Florida commercial case timing .
  • Strategy/M&A: Capital deployment prioritizes organic growth; mainland (Florida) M&A only if deposit-franchise accretive and complementary .

Estimates Context

MetricQ3 2025 ConsensusQ3 2025 ActualSurprise
EPS (Primary, $)0.486*0.63 +0.144 (+30%)
EPS (Adjusted, $)—0.51 —
“Revenue” ($M)255.6*231.1*–24.5 (–9.6%)
EPS # of Estimates6*——
Revenue # of Estimates5*——

Notes: “Revenue” defined by S&P as NII + non-interest income – provision (aligns with company components); adjusted EPS excludes $16.6M DTA allowance reversal and $2.3M ERC. Values retrieved from S&P Global.*

Where estimates may need to adjust:

  • Street models likely lower FY “revenue” (given provision and tempered NIM in Q4) and slightly higher EPS given lower effective tax rate (~22.2%) and ongoing buybacks; loan growth trimmed to 3–4% may reduce NII growth vs prior mid-single-digit plan .

Key Takeaways for Investors

  • Core profitability intact; headline EPS beat boosted by one-offs—focus on adjusted EPS ($0.51) and PPNR trajectory (stable efficiency ~50%, record NII) .
  • NIM upside moderates near term (Q4 “flat”) as asset sensitivity and deposit mix/price pressures offset reinvestment gains; watch deposit betas on the way down .
  • Growth mix shift: Commercial/mortgage driving balance growth; consumer/auto softer—expect FY loan growth ~3–4% (lower than prior guide) .
  • Asset quality remains benign: NPAs down, NCOs 0.62%; ACL/loans 1.89%—supports steady credit cost outlook .
  • Capital return is a durable support: New $200M buyback, cadence ~$50M/qtr, dividend maintained; CET1 16.7% provides cushion .
  • Tax tailwind: Effective tax rate ~22.2% could provide modest EPS benefit vs prior ~23% expectation .
  • Trading setup: Near-term multiple support from dependable capital return and stable credit; upside lever remains deposit cost relief and commercialization of AI/automation-driven efficiencies over 2026 .

Citations: All company figures and quotations are from First BanCorp.’s Q3 2025 earnings materials and prior-quarter filings/calls: . Values marked with asterisks (*) are retrieved from S&P Global.