First BanCorp. Q1 2026 Earnings Call Summary

Achieved record pre-tax pre-provision income of $131 million, driven by a 4.9% annualized growth in core client deposits and active management of funding costs.

Attributed slight loan portfolio declines to expected seasonality and a softening in consumer credit demand, specifically within the auto sector where industry sales fell 19% compared to the third quarter of last year.

Maintained a 1.9% return on average assets, marking the 17th consecutive quarter above 1.5%, supported by stable charge-offs and a 24% reduction in early-stage delinquencies.

Leveraged a resilient Puerto Rican labor market and increased economic activity from reconstruction efforts, reshoring, and expanded U.S. military presence to offset inflationary pressures.

Prioritized technology investments in AI and cloud migration to transition from routine transaction processing to high-value customer interactions and improved internal efficiency.

Maintained a robust capital position with a 16.9% CET1 ratio, enabling a 92% net payout to shareholders through dividends and $50 million in share repurchases.

Reiterated full-year loan growth guidance of 3% to 5%, assuming commercial pipeline strength in Puerto Rico and Florida offsets the contraction in the high-yield consumer book.

Projected net interest margin expansion of 2 to 3 basis points per quarter, supported by the reinvestment of $600 million in maturing securities into higher-yielding instruments.

Anticipates quarterly operating expenses will remain in the $128 million to $130 million range due to ongoing technology projects and seasonal marketing efforts.

Guidance assumes a stable credit environment with potential upside from tax refunds, though management remains watchful of rising energy costs and geopolitical uncertainty in the Middle East.

Expects technology spending to remain at elevated levels for the next 18 to 24 months before declining as cloud migration and vendor-driven AI applications mature.

Increased qualitative reserves within the allowance for credit losses to account for macroeconomic uncertainty stemming from unrest in the Middle East.

Noted that while auto sales have declined, they remain 6.5% above the pre-pandemic 10-year average, suggesting a normalization rather than a collapse in demand.

Reported a $0.6 million charge-off related to the reduced appraisal value of collateral for a single commercial nonperforming loan.

Highlighted that Puerto Rico’s energy grid is now less than 20% dependent on oil, mitigating some inflationary risk from rising global energy prices.