First BanCorp (Puerto Rico) Q3 FY2024 earnings call

• Reported strong Q3 results with net income $73.7M and $0.45 per share. • Adjusted pretax pre-provision down to $112M due to higher expenses, but efficiency ratio remained in 52% range. • Loan portfolio grew $63M despite $102M in commercial prepayments, expected loan growth now ~4% in 2024. • Core deposits at $12.7B, monitoring deposit flows and pricing opportunities. • Asset quality improved with nonperforming assets at 63 basis points. • Liquidity and capital position strong, redeemed $50M debentures and paid dividends. • Launched nCino platform for digital commercial lending. • Expense base expected $123-124M in next quarters, efficiency ratio around 52%. • Allowance for credit losses down $7.5M to $247M.

First BanCorp reported net income of $73.7 million or $0.45 per share for Q3 2024, resulting in a return on assets of 1.55%. Net interest income was $202.1 million, up $2.5 million from the previous quarter. The loan portfolio grew by $63 million despite $102 million in unexpected commercial prepayments. Core deposits other than broker and government deposits remained at $12.7 billion. Asset quality improved with nonperforming assets at 63 basis points of total assets. Net interest margin expanded 3 basis points to 4.25%.

• Loan growth expected to be ~4% in 2024 instead of initial 5% target due to higher prepayments. • Net interest margin expected flat in Q4 2024, improving in 2025. • Anticipate rates to drop further, with impact on margin from repricing of loans and deposits. • Expense base for next couple of quarters estimated $123-124M.

• Unexpected commercial prepayments could affect loan growth projections. • Lag in deposit repricing may impact net interest margin. • Consumer credit normalization post-pandemic could influence consumer portfolio performance. • Seasonality and deposit outflow in the Virgin Islands could affect balance sheet dynamics.

Q: Thoughts on when the balance sheet can start increasing and correlation with NII growth in 2025?

A: Cash flows from investment portfolio will continue, balance sheet may start growing later in 2025 as investment portfolio reprice and loans are reinvested.

Q: Broader health of Puerto Rican consumer?

A: Expect normalization post-pandemic liquidity boost, consumer portfolio showing stability with slight delinquency improvement ahead.

Q: Reminder on securities portfolio maturities and deposit repricing lag?

A: $480M in securities maturing in Q4 2024 and $350M in Q1 2025; deposit repricing lags with some components repricing faster than others.

Q: Commercial origination demand and consumer trends?

A: Commercial demand from construction, auto, C&I, and government projects; consumer portfolio stable with normalization post-pandemic.

Q: Capital return and Virgin Islands dynamics?

A: Focus on capital plan optionality; Virgin Islands had seasonality and deposit outflow similar to prior year, no unusual factors.