Q2 2023 First BanCorp Earnings Call

And then welcome to the <unk> second quarter 2023 financial results <unk>. My name is Kathy and I Hope you have much rights today's call Oh lines have been placed on mute during a presentation portion of the cold enough that you need to keep a question and answer <unk>. If you would like to ask a question. Please press stop qualify one on your telephone keypad I would now like to <unk>.

Nicole <unk> <unk> remind Rodriguez Investor Relations Officer. Please go ahead.

Thank you and good morning, everyone and thank you for joining Firstbank Orbs conference call and worker to discuss the company's financial results for the second quarter of 2023.

Joining you today from first Bang for our <unk> President.

President and Chief Executive Officer in Orlando, <unk>, Executive Vice President and Chief Financial Officer.

Four we begin today's call. It is my responsibility to inform you that this call mainville certain forward looking statements. So just predictions of revenue earnings 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 little important factors described and the company's latest SEC filings. The company assumes no obligations 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 F B B investor Dot com.

At this time I'd like to turn the call over to us.

Alrighty well in mind.

Thank you I'm on good morning to everyone and thanks for joining <unk>.

Once again I have to say that we are very pleased to report strongly souls, while we're franchise.

<unk>, so any blinks emiliano 39 cents per share during the quarter, which translated into a solid 151 person we've done on acid.

Pre tax Beverly Sean was flat continue strong.

When compared to previous border.

Slightly they'll join in it but I think also said by lower expenses on heightened noting that his revenues.

The pro ratio for great losses increased to 2.2 million and credit gladly remain stable with non-performing as representing your 63 races point of total assets.

<unk>, a great quarter with most kpis moving in the right direction.

This year, we just begin the celebration of our 75th anniversary.

For the company.

It does.

We are going to be celebrating lewin disable how the year I I'll take the opportunity to cycle or might beams at <unk> for the word Glen commitment to organization lowered clients on the communities. We serve a great for several of the year to continue moving forward on.

On the capital front, we completed our capital planning process during the second quarter.

And very pleased that Overbore approve an additional 225 million commercial repurchase program.

We expect to repurchase 50 million in Como stopped during the second half of 2023.

<unk> 75, mainly unrelated to the remaining amount of the previously approved.

Just throw them that we will resume early in July .

Power Apple copied that procedural remain significantly above would capitalized thresholds, which allow us to continue growing the franchise.

On the recording operating environment, what preserving their value.

Now, let's please move to pay five to discuss some high level of the balance sheet.

The loan portfolio grew for for the sake of security quarter.

Underscore by solid go through American commercial loan growth.

Rose was actually in line with our mid single digit grow guidance that we provided earlier in the year <unk>.

Consumer lump grew 88 million or 10% link water and wildlife and commercial loans increasingly one meal or 5% liquid down her legs.

This long railroad, partially offset but we expect a reduction on the residential mortgage portfolio with the quarter.

Happened to be $19 million lump rush on DVD continue very consistent during the first of the year and I think the good news is we continue to see very strong fibre lines for the remainder of the year, particularly on the main market.

I think it's important dimension, we continue to operate with our sir but the <unk> vital optimistic of vitamin that we see we have not changed <unk> moving forward where may might be.

We have said in the past, we'll put a well diversified portfolio.

Portfolio.

<unk> within the <unk> establish vial risk management function when we're seeing by overboard.

Our commercial Longbow, especially if it really is comprised of borrowers multiple industry money will expensive glasses as you can see in the grasp on the right side.

Limited.

Obviously update exposure and I will say, meaning might refinance at risk over the next two years.

<unk> say, we remain vigilant to the potentially bubble bath.

Policy or potentially as low down in the U S economy may have a greater lonely man.

What I really very guarded by the Elizabeth David in the island.

Uneconomic growth.

The short term.

Let's turn to page six to this goes over funding profile W.

An important element these days the potted performance.

Overall bottle deposit increase 787 hundred 68, malian during the quarter.

Clearly broker cities in government the bullshit decreased by pneumonia for male.

Mostly the even by reduction in demand deposit accounts across all regions offset by increases in the.

In the time deposit.

Category.

149 million customers continue to relocate cash into high gear using alternative.

<unk>, which are fully call up their lives increased by 761 million.

Primarily input totally equal over all the bullshit rules allow us to continue to replace them with their borrowers who took out in the first quarter related ratio of liquidity.

Or negate the way people here remains very strong little news liquidity avail.

Available liquidity increase to 5.6 billion during the quarter and now represents over 117% of uninsured the buses.

Eight the policy the deposit base composition was very solid with a 36% non interest bearing ratio and I've already said <unk>.

Approximately $25000.

We do expect that industry wide core deposit reservoir remained relatively stable over to take over the year.

We continue to focus on our <unk> strategy center around existing client sure.

Launching new brought out attracting new customers and providing contributor quality service.

Expand their branch network and fell service digital channels.

I've already I've already borrowed the offerings.

Eh, let's move to slide seven seven to this cause.

We see the operating environment.

A you know like.

<unk> reported by strong labor market compared to prior years and equal system for all federal disaster funds for investment.

Preliminary employment fee for June showed up <unk> was up 2.4%.

When compared to the prior year unemployment state 611 person.

Unimportant.

Let's see that would continue to monitor his passenger activity.

Which are the main airport can do to increase traffic in June of 22% when compared to do last year.

The economic activity.

Consider an indicator of economic growing the island.

Register a may.

Size is highest reading since June 2015, and they will sell 1.8% when compared to the prior year.

This is a DVD continued to be solid manufacturing sector is stable strong consumer confidence reflected by stronghold of sales and strong retail sales that are that are being reported during the first several of the year.

And I think it's important to highlight that we were very curious to see the accelerate the deployment of disaster relief fund.

We actually have double the base of disbursements when compared to the.

Through the first five months of a year may <unk>.

January domain. Besides the 1.8 billion virtuous approximately 900 million prior year. So that that is really funds are do moving we see it in the construction activity out there.

A during the quarter. We also continued to make progress in our Omnichannel strategy deploying our small business data lending offering to our radios.

And we also relaunch a new corporate portals.

Which we actually serve us it's a very important tool for expanding the sales capability Sunday that experience with our customers.

Now I will turn the call to Orlando do over some of the details of the financial will come back for questions.

Thank you <unk> good morning, everyone.

Second order was a very stable water what are we face the net interest income pressures that we had mentioned in the prior quarter earnings discussion. We also saw some increases in the in the provision for praise the Lord put ended up with a with a lower expense space net income without L. You mentioned with 70.

Seven maybe on the 39 cents per chair.

If we exclude some non-recurring gains we had to make water dot net income was non-GAAP getting going with $66.8 million.37, a chair.

Justin pretax Preprovision income was $180 million.

Basically the same as last quarter and and also his hotel you mentioned strong.

Return on acid at 151, 151%.

The probation for the water with 7 million higher.

It's mostly related to the growth of the portfolios and and the impact of the project or a deterioration on commercial real estate values at a national level, which could.

Could potentially.

Affect our markets, even though we don't see it at this point, but but still has been incorporated as part of the analysis of the abbreviation.

The effective tax rate for the quarter was down to 31%.

Which is like 1% lowered last quarter was 31.2, it's mostly related to read out to reduce federal taxes.

Estimates us.

Funding cause have grown in R. U S operations.

In terms of net interest income.

With a quarter was it was $199.8 billion, which is 1.1 million lower than the last quarter input.

Interest income was higher by 9.8 million baht interest expense.

10.9 million in the quarter.

In the commercial portfolio interest income grew 3.4 million.

Raven basically by repricing and hired yielding new loan originations.

The <unk> the commercial portfolio grew 15 basis points this quarter and the average balance what's up 2007 1 million.

You mentioned, the ending balance the growth of loans with a 140 million this quarter.

In terms of consumer loans.

Interest income increased 3.9 million, mostly related to earlier that 71.8 billion growth and the average balances.

But we also added 13 basis points increasing yields.

And are there shouldn't be a big water reflects.