Q1 2025 First Bancorp Earnings Call
Hello, everyone and thank you for joining the first Bancorp first quarter 2025 financial results Conference call. My name is Marie and I will be coordinating your call today.
Marie: Hello, everyone, and thank you for joining the First Bancorp First Quarter 2025 Financial Results Conference Call. My name is Marie and I will be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. And if you change your mind, please press star followed by two.
Speaker Change: During the presentation you can register your question by pressing Star followed by one on your telephone keypad and if you change your mind. Please press star followed by two I will now hand over to your host where I'm wondering do you guess Investor Relations officer to begin. Please go ahead.
Ramon Rodriguez: I will now hand over to your host, Ramon Rodriguez, Investor Relations Officer to begin. Please go ahead.
Ramon Rodriguez: Thank you, Marie. Good morning, everyone, thank you for joining First Bancorp's conference call and webcast to discuss the company's financial results for Q1 2025. Joining you today from First Bancorp are Aurelio Aleman, President and Chief Executive Officer, Orlando Berges, Executive Vice President and Chief Financial Officer. Before we begin today's call, it is my responsibility to inform you that this call may involve certain forward-looking statements such as projections of revenue, earnings, and 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 due to the important factors described in the company's latest SEC filings. The company assumes no obligation to update any forward-looking statements made during the call.
Aurelio: Thank you Mary good morning, everyone and thank you for joining first Bancorp's conference call and webcast to discuss the Companys financial results for the first quarter of 2025, joining you today from first Bancorp are aurelio.
Unknown Executive: Thank you, Mary.
Unknown Executive: Good morning, everyone.
Aurelio Aleman: And thank you for joining First Bancorp's conference call and webcast to discuss the company's financial results for the first quarter of 2021.
Ramon Rodriguez: Joining you today from First Bancorp are Aurelio Aleman, President and Chief Executive Officer and Orlando Verges, Executive Vice President and Chief Financial Officer. Before we begin today's call, it is my responsibility to inform you that this call may involve certain forward-looking statements, such as projections of revenue, earnings, and capital structure, as well as statements on the plans and objectives of the company's bank. The company's actual results could differ materially from the forward-looking statements made due to the important factors described in the company's latest SEC filings. The company assumes no obligation to update any forward-looking statements made during the contract.
Aurelio: President and Chief Executive Officer, and Orlando area, as Executive Vice President and Chief Financial Officer.
Aurelio: Before we begin today's call. It is my responsibility to inform you that this call may involve certain forward looking statements such as projections of revenue earnings and 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 may be it will be important factors described in the Companys latest.
Aurelio: SEC filings the company assumes no obligation 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 Investor <unk> Com.
Ramon Rodriguez: If anyone does not already have a copy of the webcast presentation or press release, you can access them at our website at fbpinvestor.com. At this time, I'd like to turn the call over to our CEO, Aurelio Aleman.
Unknown Executive: If anyone does not already have a copy of the webcast presentation or press release, you can access them at our website at svpinvestor.com.
Aurelio Aleman: At this time, I'd like to turn the call over to our CEO, Aurelio Aleman. Thank you, Ramon, and actually good afternoon to everyone and thank you for joining our call. I usually I will start with, you know, a brief discussion on the financial performance and then we'll move.
Speaker Change: At this time I would like to turn the call over to our CEO Aurelio demand.
Speaker Change: Yes.
Aurelio Aleman: Thank you, Ramon. Actually good afternoon to everyone, and thanks for joining our call today. I usually start with a brief discussion on the financial performance, and then we'll move on to some highlights on economic matters. Again, we delivered what I consider a very strong quarter for the franchise, driven by the margin expansion and the positive operating leverage, quite strong profitability, ROA, and ROE. Return on asset was solid at 1.64%, and pre-tax pre-provision income grew by 7%, reaching $125 million during the quarter. The franchise continues to perform quite well as we enter 2025, with the trend of the balance sheet, the trend of capital, and obviously a proven track record to successfully navigate unforeseen conditions while supporting our clients. That's really the main goal. Turning to the balance sheet, total loans were slightly down on a linked quarter basis.
Speaker Change: Thank you Ramon.
Speaker Change: Good afternoon, everyone and thanks for joining our call today.
Speaker Change: I, usually start with a brief discussion on the financial performance and then we'll move on to some highlights.
Aurelio Aleman: Highline. Again, you know, we deliver what I consider a very strong quarter for the franchise driven by the margin expansion and the positive operating leverage, quite strong profitability ROA and ROE.
Speaker Change: The matters.
Speaker Change: Again, we delivered.
Speaker Change: A very strong quarter for the franchise agreement.
Speaker Change: And Sean I mean positive operating leverage.
Sean: I'll answer probably WD are only on our own.
Speaker Change:
Unknown Executive: Unknown Executive, First Bancorp Prices continue to perform quite well as we enter 2025, you know, with trend, the trend of the balance sheet, the trend of capital. and obviously a proven track record to successfully navigate unforeseen conditions. while supporting our client.
Speaker Change: International will tell you that 164 pre tax.
Speaker Change: Pre provision income grew by seven.
Speaker Change: Person, reaching $1 5 million.
Speaker Change: The pressure prices continue to perform quite well as we enter 2025 with brand strength the balance sheet is from capital.
Speaker Change: Obviously, a proven track record to successfully navigate unforeseen conditions.
Speaker Change: While supporting our clients and that's really the main goal.
Speaker Change: Turning to the balance sheet total loans were slightly down on a linked quarter basis.
Unknown Executive: Unknown Executive, First Bancorp Unknown Executive, First Bancorp I think I mentioned last quarter that we were expecting a repayment that didn't happen. On the other hand, you know, our nations were healthy and reached 1.2 billion. a in line with usually the first quarter On the other hand, you know, the pipeline is we have a healthy pipeline in place. to work with our clients, supporting them in this curriculum. You know, as we know, it's difficult to predict closing off. He lives usually.
Aurelio Aleman: I think I mentioned last quarter that we were expecting a repayment that didn't happen and took place this quarter. Originations were healthy and reached $1.2 billion, in line with usually the Q1. We have a healthy pipeline in place, it actually continues to build as we continue to work with our clients, supporting them in this current operating cycle. As we know, it is difficult to predict closing of chunky deals usually. At this time, we continue to sustain our mid-single digit growth for the year. That remains unchanged. Core deposit flows were stable. We saw a nice pickup in non-interest bearing, which grew $70 million. When you look at deposits in Puerto Rico, they have a net grow, what we consider core, excluding government, of $75 million.
Speaker Change: I think I had mentioned last quarter that we were tight.
Speaker Change: And repayment that didn't happen until late this quarter on the other hand originations were healthy and reached $1 2 billion.
Speaker Change: Usually the first quarter.
Speaker Change: On the other hand, the byte language, we have a healthy pipeline in place actually continues to bill.
Speaker Change: We continue to work with our advice report.
Speaker Change: And this quarters operating cycle.
Speaker Change: As we know it's difficult.
Speaker Change: Walt to predict closing of chunky deals usually.
Speaker Change: But at this time, we continued to sustain our mid single digit.
Aurelio Aleman: Aurelio Aleman, Ramon Rodriguez, Unknown Executive, First Bancorp core deposit flows were stable. We saw a nice peak of in non interest bearing, which grew 70 million. And when you look at deposits in Puerto Rico, They have an enroll, what we consider core, excluding government, of $75 million.
Speaker Change: Growth for the year that remains unchanged.
Speaker Change: Core deposit flows were stable, we saw a nice vehicle in non interest bearing which grew $70 million.
Speaker Change: When you look at deposits in Puerto Rico today.
Speaker Change: They have an angle, while we considered core excluding governmental $75 million.
Aurelio Aleman: Actually, we actually lose 2 large chunky deals on the deposit side, on the pricing side of about $125 million. It was going to be much better, but I think we're very pleased that the granularity continues to improve. Credit performance was stable, and we continue to see the normalization that we talk about in the consumer credit plans. Early delinquencies down when compared to prior quarter. Finally, regarding capital, as we always say, we continue to be opportunistic in our approach how to deploy. We redeem approximately $50 million in sub-debentures and declare $30 million in common stock dividends. In addition, we decided to resume our stock purchase program during the quarter, and we repurchased $22 million in Q1 in addition to the drops.
Speaker Change: And actually if we adjust.
Unknown Executive: and actually, you know, if we had just We actually lost two large, chunky deals. Unknown Executive, First Bancorp is going to be much better, but I think we're very pleased that they are on the rally. credit performance was stable. And we continue to see the normalization that we talked about in the consumer credit Early delinquency is down when compared to prior.
Speaker Change: Luckily we are truly lose too.
Speaker Change: Large chunky deals on the deposit side on the pricing side.
Speaker Change: $75 million.
Speaker Change: To be much better, but I think we were very pleased that <unk> continues to improve.
Speaker Change: Sure.
Speaker Change: Credit performance was stable and we continue to see the normalization that we talk about the consumer credit trends.
Speaker Change: Early delinquencies down when compared to prior quarter.
Aurelio Aleman: and finally regarding capital. We always say we continue to be opportunistic in our approach how to deploy. We redeemed approximately $50 million in subsidies. and declared 30 million in common stock dividends in a day. We decided to resume our stock purchase program during the quarter and we repurchased 22 million in the first quarter in addition to the drops. and we expect to complete another 28 million during April, which will reach the goal for the second quarter of 50 million income. a just as a reminder, we still have a hundred million left of the prior year approval.
Speaker Change: Finally, I think capital.
Speaker Change: As we always say, we want to be opportunistic in our approach.
Speaker Change: How to deploy.
Speaker Change: We redeem approximately 50 million of debentures.
Speaker Change: <unk> declared a $30 million almost of dividends. In addition, we decided to resume our stock purchase program during the quarter.
Speaker Change: And we repurchased one 2 million in the first quarter. In addition to the drop.
Aurelio Aleman: We expect to complete another $28 million during April, which will reach the goal for the Q2 of $50 million in common stock. Just as a reminder, we still have $100 million left of the prior year approval, which obviously, as we continue to be opportunistic, we're looking to deploy in the H2 of this year. Please, let's turn to slide five. Again, the financial results are a product of execution of the teams and a stable economic backdrop, which continues to show positive metrics. Business activity continue healthy. Obviously, consumer confidence, as of today, is about to be determined based on new policies, fiscal policies and tariffs, which are under evaluation. See everybody pending to see what the impact is going to be in that confidence. On the other hand, year-to-date fiscal government tax collection are up by 3%.
Speaker Change: We expect to complete another $28 million during April which will reach the goal for the second quarter of $50 million in golf.
Speaker Change: Just as a reminder, we still have.
Speaker Change: Mainly on the left of the prior year approval, which you know obviously.
Aurelio Aleman: you know, obviously, as we continue to be opportunistic, we're looking to deploy.
Speaker Change: We continue to be opportunistic and we're looking to deploy.
Speaker Change: Okay.
Speaker Change: This year.
Speaker Change: Please let's turn to slide five.
Unknown Executive: Please let's turn to slide five. Again, the financial resorts are a product of, you know, execution of the teams and a stable economic backdrop, which continues to show. business activity, continue healthy.
Speaker Change: Okay.
Speaker Change: Again, the financials the solids are brought in.
Speaker Change: The duration of the teams.
Speaker Change: Stable economic backdrop, which continues to show.
Speaker Change: Positive metrics.
Speaker Change: Okay.
Speaker Change: Based on activity continued healthy.
Speaker Change: Obviously consumer confidence.
Unknown Executive: Lee Consumer Confidence. You know, As of today, it's about to be determined based on new policy.
Speaker Change: Yes.
Speaker Change: Today is about to be determined based on new policies.
Speaker Change: Policies.
Speaker Change: Alright, which I only see.
Speaker Change: See everybody binding to see what the impact is going to be in that country now.
Speaker Change: On the other hand year to date fiscal government escalation of our all but 3% unemployment rate again another low.
Aurelio Aleman: Unemployment rate, again, another low register in Q1. When we look at quarter-to-date, debit and credit card sales were 3% on Q1 in 2024. This version of Federal Disaster Relief Fund continue, and we continue to participate in affordable housing projects primarily, and looking into some infrastructure improvement too. On the digital front, we have continued to invest. This quarter, we achieved the very important step in converting to the centralized FIS cloud our core system. Now all our core systems are in the cloud. Our franchise investment continue in the digital environment, which digital adoption continue to progress in line with our objective. Again, capital utilization first priority is really try to grow the balance sheet and obviously improve our products and improve our infrastructure.
Speaker Change: Low low registered in the first quarter.
Speaker Change: And when we look at quarter to date, David Greg ourselves were 8% in the first quarter in 2024.
Unknown Executive: Unknown Executive, First Bancorp This version of Federal Disaster Relief Fund, you know, continue, and we continue to participate in affordable housing projects primarily. Unionstone Infrastructure. on the digital front, you know, we have continued to invest.
Speaker Change: Did these guys now that you've had a really strong continue and will continue to participate in affordable housing projects, primarily and looking at some infrastructure improvement too.
Speaker Change: On the data.
Speaker Change: We have continued to invest in this quarter, we achieved a very important step in converting to a centralized cloud.
Unknown Executive: Order. We are a very important step in converting to the centralized FIS cloud.
Speaker Change: Our core system.
Aurelio Aleman: who is also the spokesperson of the Chalmers Foundation for I just wanna quickly mention that even in our ongoing we're still looking at how to that environment, which is that a lot. Aurelio Aleman, Ramon Rodriguez, Unknown Executive, First Bancorp We still believe it's early to assess the broader economic implication of the changes in human policy we'll have in Puerto Rico. But again, we'll keep you updated. I think we all bankers are. in the same place looking at potential implications to our economies. So, as I mentioned, you know, full year guidelines remain unchanged. will provide an update in the next call.
Speaker Change: All of these all of course at designing the Clos.
Speaker Change: Pending our franchising business continue in the in that environment.
Speaker Change: <unk> continued to progress in line with our objective.
Speaker Change: And then capital utilization first.
Speaker Change: Iot is really trying to grow the balance sheet, and obviously move our products improve our infrastructure.
Aurelio Aleman: We still believe it's early to assess the broader economic implication of the changes in policy will have in Puerto Rico. Again, we'll keep you updated. I think all bankers are just in the same place looking at potential implications to our economies and our customers. As I mentioned, full year guidance remain unchanged, and I guess we'll provide an update in the next call in July. Despite this concern, we remain committed to our disciplined approach of delivering consistent results and creating shareholder value. Now with that, I pass it to Orlando Berges to give you a little more detail on the financial results. Thanks for joining today.
Speaker Change: We still believe this early to assess the relative economic implications of the changes in policy will have in Puerto Rico.
Speaker Change: But again, we'll keep you updated I think we.
Speaker Change: All bankers charge offs.
Speaker Change: In the same place looking at potential implications to two hours our economy on our customers.
Speaker Change: So as I mentioned full year guidance remains unchanged and against wood.
Speaker Change: And updated in the next call.
Speaker Change: In July.
Speaker Change: So despite these concerns we remain committed to our disciplined approach of delivering consistent results and create shareholder value.
Aurelio Aleman: So despite this concern, you know, we remain committed to our discipline approach of delivering consistent results.
Orlando Verges: Now, with that, I pass it to Orlando. a little more detail. Thanks, Aurelio.
Speaker Change: Now with that I pass to Orlando to give you more detail on the financial results. Thanks for joining today.
Orlando Berges: Thanks, Aurelio. Good afternoon, everyone. Aurelio just mentioned we recorded another strong quarter, highlighted by the net interest income expansion. We earned $77 million in net income, which is $0.47 per share compared to the $76 million or $0.46 we had last quarter. This translate with our average assets of $164. The provision for credit losses for the quarter increased $4 million. It's primarily some projected deterioration on the Commercial Real Estate Price Index, I'm sorry, that affected the allowance for credit losses for commercial and construction loans. Some higher adjustments we did to the qualitative framework due to the uncertainty of the economic environment considering all the things that are going on with the tariffs. Net interest income for the quarter was $212 million, which is up $3 million versus the prior quarter.
Speaker Change: Sure.
Speaker Change: Thanks.
Orlando Verges: Good afternoon, everyone. So Aurelio just mentioned we recorded another strong quarter, highlighted by the net interest income expansion. We earned 77 million in net income, which is 47 cents per share, compared to 76 million or 46 cents we had last quarter. These translate to return on average assets of 164. The provision for credit losses for the quarter increased $4 million is primarily some projected deterioration on the consumer real estate, the commercial real estate price index, I'm sorry, that affected the the allowance for credit losses for commercial and construction loans. and some higher adjustments we did to the qualitative framework due to the uncertainty of the economic environment considering all the things that are going on with the tariffs.
Speaker Change: Good afternoon, everyone.
Speaker Change: And then you just mentioned we recorded another strong quarter highlighted by the net interest piece of it.
Expansion.
Speaker Change: We earned $7 million and net income, which is <unk> 47 per share.
Speaker Change: Compared to the 76 million or <unk> 46, we had a.
Speaker Change: Last quarter.
Speaker Change: Translate to.
Speaker Change: We don't average assets of $1 64.
Speaker Change: The provision for credit losses for the quarter increased $4 million.
Speaker Change: Primarily.
Speaker Change: Projected deteriorates on the on the consumer real estate.
Speaker Change: Commercial real estate price index, Im sorry that affected the allowance for credit losses for commercial and construction loans.
Speaker Change: And some higher adjustments, we made to acquire <unk> framework due to the uncertainty of the economic environment.
Speaker Change: Considering all the things that are going on with the tariffs.
Orlando Verges: Net interest income for the quarter was $212 million, which is up $3 million versus the prior quarter. The income does include a $1.2 million prepayment penalty collected on a prepaid commercial loan, but it's also a net of $2.7 million impact from two less working days in the quarter. Funding costs drive a lot of this. It was down $5.8 million in the quarter, including the day's impact, as the cost of the interest-bearing checking and savings accounts decreased seven basis points to 145 basis points as a cost. and the cost of time deposits came down 12 basis point to 3.39 We also raised our reductions in wholesale borrowing cost to do the full quarter effect of the redemption during the fourth quarter of the 50 million in coordinated the ventures and And a decrease in the average balance of federal loan bank advances We had some maturities During the month of March that were repaid in this quarter In addition, we had in the quarter an improvement of 11 basis points in the yield of cash and investment security.
Speaker Change: Net interest income for the quarter was $212 million, which is up $3 million versus the prior quarter.
Orlando Berges: The income does include a $1.2 million prepayment penalty collected on a prepaid commercial loan. It's also a net of $2.7 million impact from 2 less working days in the quarter. Funding cost drive a lot of this. It was down $5.8 million in the quarter, including the days impact as the cost of the interest-bearing checking and savings accounts decreased 7 basis points to 145 basis points is the cost. The cost of time deposits came down 12 basis point to 3.39%. We also registered reductions in wholesale borrowing costs due to the full quarter effect of the redemption during Q4 of the $50 million in subordinated debentures, and a decrease in the average balance of Federal Home Loan Bank advances. We had some maturities due during the month of March that were repaid this quarter.
Speaker Change: The income does include a $1 2 million prepayment penalties collected.
Speaker Change: Prepaid commercial loan.
Speaker Change: But it's also net of $2 7 million.
Speaker Change: Impact from from two less working days in the quarter.
Speaker Change: Funding cost.
Speaker Change: But drive a lot of these.
Speaker Change: It was down $5 8 million in the quarter, including the data impact.
Speaker Change: The cost of the interest bearing checking and savings accounts decreased seven basis points to two one.
Speaker Change: 45 basis points of cost.
Speaker Change: And the cost of time deposits came down 12 basis points to 339.
Speaker Change: We also raised our without jumping wholesale borrowing cost.
Speaker Change: The full quarter effect of the redemption during the fourth quarter of that $50 million.
Speaker Change: We're delighted debentures.
Speaker Change: And a decrease in the average balance of <unk>.
Speaker Change: Advances we.
Speaker Change: We had so much of it is doing.
Speaker Change: During the month of March that were repaid this quarter.
Orlando Berges: In addition, we had in the quarter an improvement of 11 basis points in the yield of cash and investment securities. Some of the lower yielding cash flows from the investment portfolio were reinvested or kept at the Fed account, which is a higher rate. On the other hand, the loan portfolio yields did decrease 2 basis points, mostly on the commercial, which decreased 9 basis points due to the repricing of the floating rate component of the portfolio. Which was compensated by increases in the yield of the consumer portfolios for that net effect. The net interest margin dynamics continued to play out well. Margin expanded 19 basis points in the quarter to 4.52%. However, this expansion did include an increase of 4 basis points, which was related to the prepayment penalty I just mentioned, and some higher income on late fees in the consumer portfolios.
Speaker Change: In addition, we had in the quarter an improvement of 11 basis points in the deal Gotcha and investment Securities.
Speaker Change: Some of the lower yielding cash flows from the investment portfolio were reinvested.
Orlando Verges: Aurelio Aleman, Ramon Rodriguez, Unknown Executive, First Bancorp On the other hand, the loan portfolio yields did decrease two basis points, mostly on the commercial, which decreased nine basis points due to the repricing of the floating rate component of the portfolio, which was compensated by increases in the yield of the consumer portfolio.
Speaker Change: Or kept at the fed account, which is a high rate.
On the other hand, the loan portfolio yields decreased two basis points.
Speaker Change: Mostly on the commercial which decreased nine basis points due to a repricing of the floating rate component of the portfolio, which was compensated by increases in the deal there'll be of the consumer portfolios.
Orlando Verges: Go with that medity thing. The net interest margin dynamics continue to play out well. Margin expanded 19 basis points in the quarter to 452. However, this expansion did include an increase of four basis points, which was related to the prepayment penalty adjustment. and some higher income on late fees in the consumer portfolio. The adjusted margin eliminating some of these items was really 448, which is a 15 basis points pickup from last quarter. This increase reflects our plan-changing asset mix as we deploy the cash flow from the investment, lower-yielding investment portfolio to higher-yielding earning assets and also the repayment of the borrowings, the higher-cost borrowings.
Speaker Change: But that net effect.
Speaker Change: The net interest margin dynamics continue to play out well margin expanded 19 basis points in the quarter to $4 52.
Speaker Change: This expansion includes selling.
Speaker Change: An increase of four basis points, which was related to the prepayment penalty I just mentioned and some higher income on late fees in the consumer portfolios.
Orlando Berges: The adjusted margin eliminating some of these items was really 448, which is a 15 basis points pickup from last quarter. This increase reflects our planned change in asset mix as we deployed the cash flow from the lower yielding investment portfolio to higher yielding earning assets, and also the repayment of the borrowings, the higher cost borrowings. We also had the benefit of the additional reductions in funding costs we achieved as I just mentioned. This quarter, we received approximately $352 million in cash flows that were yielding around 1.5%, which obviously reprice it at higher rates with benefits coming in the future quarters.
Speaker Change: The adjusted margin eliminating some of this items.
Speaker Change: What's really $4 48, which is up 15 basis points pick up from last quarter.
Speaker Change: This increase reflects our planned change in asset mix.
Speaker Change: As we deploy that cash flow from the investment in lower yielding investment portfolio to higher yielding earning assets.
Speaker Change: Also the repayment of the borrowings stay higher cost borrowings.
Orlando Verges: We also had the benefit of the additional reductions in funding costs we achieved, as I just mentioned. This quarter, we received approximately $352 million in cash flows that were yielding around 1.5%, which obviously repriced at higher rates with benefits coming in the future quarter. At this point, assuming a normal flow of deposits and stability on the lending side of the loan portfolio, we believe that NIM should continue expanding over the next few quarters. We benefit from additional repricing opportunities on the investment portfolio cash flows, either through lending, higher yielding securities, or even the cash at the Fed, as well as the cancellation of some of the higher cost funding.
Speaker Change: We also had the benefit of the additional reductions in funding costs, we achieved.
Speaker Change: I just mentioned.
Speaker Change: This quarter, we received approximately $352 million in cash flows that were yielding around one 5%, which obviously, we price it at higher rates with benefits coming in future quarters.
Orlando Berges: At this point, assuming a normal flow of deposits and stability on the lending side on the loan portfolio, we believe that NIM should continue expanding over the next few quarters as we benefit from additional repricing opportunities on the investment portfolio cash flows, either through lending, higher yielding securities, or even the cash at the Fed, as well as the cancellation of some of the higher cost funding. The projected investment portfolio cash flows for Q2 amount to approximately $260 million, with a run of yield above 1.5%. We also expect approximately $1 billion in additional cash flows during H2 of the year that will also be priced at higher yields.
At this point, assuming a normal flow of deposits and stability on the airports on the lending side on the loan portfolio. We believe that our named should continue expanding over the next few quarters.
Speaker Change: We bought it from benefit from additional repricing opportunities on the investment portfolio cash flows.
Speaker Change: Either through lending higher yielding securities or even the cash at the fed as.
Speaker Change: As well as the cancellation of some of the higher cost funding.
Orlando Verges: The projected investment portfolio cash flows for the second quarter amount to approximately $260 million with a runoff yield of 1.5%. And we also expect approximately $1 billion in additional cash flows during the second half of the year that will also be priced at a higher yield. Depending on the timing and amount of rate cuts in the second half of the year, we estimate that margin should improve approximately five to seven basis points per quarter for for the remaining of months of this In terms of other income items, it was stable, but we did have a 3.5 million increase related to continued insurance commission that were collected during the quarter that happens in the in the first quarter of every year.
Speaker Change: The projected investment portfolio cash flows for the second quarter amount to approximately $260 million with a runoff gol above one 5%.
Speaker Change: And we also explained approximately $1 billion <unk> cash flows during the second half of the year that will also reprice at higher yields.
Orlando Berges: Depending on the timing and amount of rate cuts in H2 of the year, we estimate that margin should improve approximately 5 to 7 basis points per quarter for the remaining months of this year. In terms of other income items, it was stable, we did have a $3.45 million increase related to continuing insurance commission that were collected during the quarter. That happens in Q1 of every year. Some additional income we had from purchase tax credits. On the expenses were $123 million, which is $1.5 million lower than last quarter. Business promotion was $2.1 million lower based on the seasonality of marketing efforts. Also, we had lower debit and credit card processing expenses due to $2.2 million in expense reimbursements we received in the quarter.
Speaker Change: Depending on the timing and amount of rate cuts in the second half of the year, we estimate that our margin should improve.
Speaker Change: Approximately five to seven basis points per quarter for the remaining of.
Speaker Change: Yes.
Speaker Change: <unk> of this year.
Speaker Change: In terms of other income items.
Speaker Change: It was stable, but we did have 345 million increase related to.
Speaker Change: Contingent insurance Commission that were collected during the quarter that happens in the in the first quarter of every year.
Orlando Verges: And some income, some additional income we had from purchase tax credit.
Speaker Change: Some income some additional income we have from purchase tax credits.
Orlando Verges: On the expenses, expenses were $123 million, which is $1.5 million lower than last quarter. Business promotion was $2.1 million lower based on the seasonality of marketing efforts. But also, we had debit and credit card processing expenses due to $2.2 million in expense reimbursements we received in the quarter. On the other hand, compensation expense was $2.5 million higher in the quarter, which is related to seasonal payroll taxes and $2.9 million in bonuses and sub-based compensation usually take place in the first quarter, which offset a reduction of $1.6 million related to two less working days in the quarter.
Speaker Change: On the expenses.
Speaker Change: <unk> expenses were $123 million, which is about $1 $5 million lower than last quarter.
Speaker Change: Business promotion was $2 1 million lower based on the seasonality of marketing efforts, but also we had David and credit card.
Speaker Change: Lower dividend credit card processing expenses due to $2 2 million in expense reimbursements, we received in the quarter.
Orlando Berges: On the other hand, compensation expense was $2.5 million higher in Q1, which is related to seasonal payroll taxes and $2.9 million in bonuses and stock-based compensation usually take place in Q1, which offset a reduction of $1.6 million related to 2 less working days in Q1. If we were to normalize compensation and card expenses for Q1 would have been $123.9 million. If we exclude OREO, they would have been $125.1 million, which are within the guidance range we had provided in the last call. Just to remind you, last Q4, expenses including OREO, were $125.6 million. The efficiency ratio for Q1 was 49.6%, which compares with 51.6% in Q4.
Speaker Change: On the other hand compensation expense was $2 $5 billion or higher in the quarter, which it's related to see solar payroll taxes, and $2 9 million in bonuses and stock based compensation.
Speaker Change: Usually take place in the first quarter, which offset.
Speaker Change: A reduction of a $1 6 million related to two less working days in the quarter.
Orlando Verges: If we were to normalize compensation and card expenses, expenses for the quarter would have been $123.9 million. And if we exclude Aurelio, they would have been in 125.1 million, which are within the guidance range we had provided in the last call. Last quarter, just to remind you, last quarter expenses, including Aurelio were $125.6 million. The efficiency ratio for the quarter was 49.6%, which compares with 51.6 in the fourth quarter. But if we adjust some of these income and expense items that don't happen every quarter, the efficient efficiency ratio would have been an approximately 51.3%, roughly in line with with our target.
Speaker Change: If we werent to normalized compensation non card expenses.
Speaker Change: Expenses for the quarter would have been $123 9 million.
Speaker Change: And if we exclude Oreo they would have been $125 1 million, which are within the guidance range. We had provided in the last call.
Speaker Change: Last quarter, just to remind you last quarter expenses, excluding Oreo were $125 6 million.
Speaker Change: The efficiency ratio for the quarter was 49, 6%.
Speaker Change: Which compares with 51 six in the fourth quarter.
Orlando Berges: If we adjust some of these income and expense items that don't happen every quarter, the efficiency ratio would have been approximately 51.3%, roughly in line with our targets. Based on our estimates, we expect that our expense base for the next couple of quarters, excluding the OREOs, will continue to be in the range of $125, $126. Our efficiency ratio will be around the 50% to 52%, considering the changes in expenses and projected income components. In terms of credit quality, the NPAs did increase in the quarter $11 million, which is basically due to an inflow of one nonaccrual commercial real estate loan in the Florida region that amounted to $12.6 million. On the other hand, we had reductions in residential mortgage non-performing and OREO balances, which offset some of this increase. The NPA ratio was 68 basis points to total assets for the quarter.
Speaker Change: But if we adjust some of these income and expense items that don't happen every quarter the efficient.
Speaker Change: Ratio would have been approximately 51, 3%.
Speaker Change: Roughly in line with with our targets.
Orlando Verges: Based on our estimates, we expect that our expense base for the next couple of quarters excluding the Aurelios will continue to be in the range of $125,000-$126,000. and our efficiency ratio will be around the 50 to 52% considering the changes in expenses and projected income components.
Speaker Change: Based on our estimates we expect that our expense base for the next couple of quarters, excluding the Oreo. So we will continue to be in the range of about 125 to 126.
Speaker Change: And our efficiency ratio will be around $52, 52%, considering the changes in expenses that I would predict that income components.
Speaker Change: In terms of credit quality.
Orlando Verges: In terms of credit quality, the NPA did increase in the quarter $11 million, which is basically due to the inflow of one non-accrual commercial real estate loan in the Florida region that amounted to $12.6 million.
Speaker Change: Net NPA did increase in the quarter $11 million, which is basically due to inflow of our one non accrual.
Speaker Change: Commercial real estate loan.
Speaker Change: In the Florida region that amounted to $12 six.
Orlando Verges: On the other hand, we had a residential reductions in residential mortgage, non-performing and Aurelio balances, which have set some of this increase. The NPA ratio was 58 basis points to total assets for the quarter. Just to mention, this non-performing loan that migrated in the Florida region did not impact the allowance for credit losses because it's collateralized by a good value collateral at this point. The inflows to non-performing for the quarter were $43.4 million, which is $6.3 million higher than last quarter, basically related to this one CRE case that went into non-performing. But we did have reductions of $6.5 million in consumer loan inflows.
On the other hand, we had a.
Speaker Change: Residential reductions in residential mortgage nonperforming and Oreo balances, which offset some of this.
Speaker Change: Increase.
Speaker Change: The NPA ratio was 50 68 basis points to total assets for the quarter.
Orlando Berges: Just to mention, this non-performing loan that migrated in the Florida region did not impact the allowance for credit losses because it is collateralized by a good value collateral at this point. The inflows to non-performing for the quarter were $43.4 million, which is $6.3 million higher than last quarter, basically related to this one CRE case that went into non-performing. We did have reductions of $6.5 million in consumer loan inflows. In general, I would say credit metrics are holding up well. Loans in early delinquency were down $21.8 million during the quarter. We have started to see some normalization trends in consumer credit with consumer loans in early delinquency decreasing by $19.5 million when compared to prior quarter. The allowance for the quarter did increase by $3.4 million to $247.3.
Speaker Change: Just to mention this this nonperforming loan that migrated in the Florida region did not impact the allowance for credit losses.
Speaker Change: Because it's called outdoor lights, but a good value good value collateral at this point.
Speaker Change: The inflows to nonperforming for the quarter were $43 4 million, which is $6 3 million higher than last quarter basically related to this one CRE case that went into nonperforming.
Speaker Change: But we did have reductions of $605 million in consumer loan inflows.
Orlando Verges: In general, I would say credit metrics are holding up well loans in early delinquency were down 21.8 million during the quarter. We have started to see some normalization trends in consumer credit, with consumer loans in early delinquency decreasing by 19.5 million when compared to prior quarter. The allowance for the quarter did increase by $3.4 million to $247.3 million. And this reflects the higher qualitative adjustments that we incorporated to consider the uncertainty in the economic environment. The ratio of the allowance group for basis points allowance to loans group for basis points to 195 for Cinefix. However, we did see some improvements in the unemployment rate projections on the shorter term, which led to five basis points reduction in the allowance for consumer loans.
Speaker Change: In General I would say grade metrics are holding up well loans in early delinquency were down $21 8 million during the quarter.
Speaker Change: We have started to see some normalization trends in consumer credit.
Speaker Change: Consumer loans in early delinquency decreasing by $19 5 million when compared to prior quarter.
The allowance.
Speaker Change: For the quarter did increase by $3 4 million to 249 three.
Orlando Berges: This reflects the higher qualitative adjustments that we incorporated to consider the uncertainty in the economic environment. The ratio of the allowance grew 4 basis points. Allowance to loans grew 4 basis points to 1.95%, mostly in the commercial side driven by the forecasted deterioration on the Commercial Real Estate Price Indexes. However, we did see some improvements in the unemployment rate projections on the shorter term, which led to 5 basis point reduction in the allowance for consumer loans, which ended up at 3.78% of loans. Net charge-off for the quarter were $21.4 million, or 68 basis points of average loans. It's down $3.2 million from last quarter. This reduction includes a recovery of $2.4 million we recognize related to a bulk sale of consumer charge-off loans we had in the quarter.
Speaker Change: And this reflects the.
Speaker Change: The higher qualitative adjustments.
Speaker Change: That we incorporated two to consider the uncertainty in the economic environment.
Speaker Change: The ratio of the allowance.
Speaker Change: <unk> grew four basis points allowance to loans grew four basis points to 195.
Speaker Change: Mostly in the commercial side.
Speaker Change: Driven by by the forecast data.
Speaker Change: <unk> on the commercial real estate price index.
Speaker Change: However, we did see some improvement in the unemployment rate predictions on the shorter term, which led to five basis points reduction in the allowance for consumer loans.
Orlando Verges: which ended up at 3.78% of loans. Net charge off for the quarter were 21.4 million or 68 basis points of average loans, it's down 3.2 million from last quarter. But this reduction includes includes a recovery of 2.4 million we recognize related to a bulk sale of consumer charge off loans we had in the quarter.
Speaker Change: Which ended up at $3, 78% of loans.
Speaker Change: Net charge offs for the quarter were $21 4 million or 68 basis points of average loans is down $3 2 million from last quarter.
Speaker Change: This reduction includes includes a recovery of $2 $4 million we recognize.
Speaker Change: Related to a bulk sale of consumer charge off loans, we had in the quarter.
Orlando Berges: Excluding this recovery, net charge-off to average loans would have been 76 basis points, which is slightly lower than the 78 basis points charge-off rate we had in Q4. On the capital front, as Aurelio mentioned, we executed on our capital deployment priorities during the quarter. We redeemed approximately $50 million in subordinated debentures on top of what we have already redeemed in prior quarters. It's only $11 million left of those debentures. We also declared $29.6 million in dividends and repurchased $21.8 million in common stock. In terms of our capital impact, these actions were offset by the earnings, obviously, which at the end resulted in higher regulatory capital ratios when we compare them to last quarter. During the quarter, we also registered a 7% increase in tangible book value per share to $10.64.
Orlando Verges: Excluding this, this recovery net charge off to average loans would have been 76 basis points, which is slightly lower than the 78 basis points charge off rate we had in the fourth quarter.
Speaker Change: Excluding.
Speaker Change: This this recovery net charge off to average loans would have been 76 basis points, which is slightly lower than the 78 basis points charge off rate, we had in the fourth quarter.
Speaker Change: On the capital front as Aurelio mentioned, we executed on our capital deployment priorities during the quarter, we redeemed approximately 50 million in subordinated debentures.
Orlando Verges: On the capital front, as Aurelio mentioned, we executed on our capital deployment priorities during the quarter. We redeemed approximately $50 million in subordinated debentures on top of what we have already redeemed in prior quarters. It's only $11 million left of those debentures. We also declared $29.6 million in dividends and repurchased $21.8 million in common stocks. In terms of capital impact, these actions were offset by the earnings, obviously, which at the end resulted in higher regulatory capital ratios when we compare them to last quarter. During the quarter, we also registered a 7% increase in tangible book value per share to $10.64, and the tangible common equity ratio expanded to 9.1%.
Speaker Change: Top of the call.
Speaker Change: What we have already redeem of prior quarters.
Speaker Change: $11 million left of those debentures.
Speaker Change: We also declared a $29 6 million in dividends and repurchased $21 8 million in common stocks.
Speaker Change: In terms of our capital impact these actions were offset by the earnings obviously.
Speaker Change: At the end result that entire regulatory capital ratios, when we compare them to last quarter.
Speaker Change: During the quarter. We also are ready to start with 7% increase in tangible book value per share to $10.64.
Orlando Berges: The tangible common equity ratio expanded to 9.1%, mostly due to an $884 million improvement in the fair value of the securities that lower the amount of adjusted other comprehensive loss. The remaining other comprehensive loss represents $2.91 on tangible book value per share and about 220 basis points in the tangible common equity ratio. As Aurelio just mentioned, we will continue with our strategy of deploying excess capital as thoughtful as possible to improve franchise and shareholder value, and we continue with our execution of our plans. This concludes our prepared remarks. Operator, please, we'd like to open the call for questions.
And at the time.
Speaker Change: The annual common equity ratio expanded to nine 1%.
Orlando Verges: Mostly due to an $88.4 million improvement in the fair value of the securities that lower the amount of adjusted order comprehensively. The remaining other comprehensive loss represents $2.91 on tangible book value per share, and about 220 basis points in the tangible common equity ratio.
Speaker Change: Mostly due to an 88 $4 million improvement in the fair value of the securities that lowered the outspend.
Speaker Change: Adjusted other comprehensive loss.
Speaker Change: The remaining other comprehensive loss represents $2 91, Samsung tangible book value per chair.
Speaker Change: 220 basis points and the tangible common equity reach.
Orlando Verges: As Aurelio just mentioned, we will continue with... with our strategy of deploying excess capital as thoughtful as possible to improve franchise and shareholder value, and we continue with our execution of our plan.
Aurelio Demand: So Aurelio mentioned, we will continue with.
Aurelio Demand: With our Australia, youll deploying excess capital thoughtful as possible to improve franchise and shareholder value.
Aurelio Demand: We continue with our execution of our plans.
Unknown Executive: This concludes our prepared remarks. Operator, please.
Aurelio Demand: This concludes our prepared remarks.
Aurelio Demand: Later please.
Unknown Executive: We'd like to open the call for questions. Thank you. To ask a question, please press star followed by one on your telephone keypad. Now, if you change your mind, please press star followed by two. When preparing to ask your question, please ensure that your device is unmuted locally.
Aurelio Demand: Wed like to open the call for questions.
Operator: Thank you. Our first question comes from the line of Frank Schiraldi of Piper Sandler. Please go ahead.
Speaker Change: Thank you can I ask a question. Please press star followed by one on your telephone keypad now if you change your mind. Please press star followed by two.
Aurelio Demand: To ask your questions. Please ensure that your device is admitted locally.
Frank Schiraldi: Our first question comes from the line of Frank Schiraldi of Piper Sandler. Please go ahead. afternoon, just Orlando, I think you mentioned some numbers around securities book in terms of yield in terms of cash flowing. And I think you said one and a half percent for the second quarter. Did you share what those, you know, yields are coming off in the back half of the year? The yields on the second half of the year are slightly lower, they're going to be talking from the top of my head, but they're going to be around 135 to 140.
Fracture Aldi: Question comes from the line of fracture Aldi of Piper Sandler. Please go ahead.
Frank Schiraldi: Hey. Good afternoon. Orlando, I think you mentioned some numbers around securities book in terms of yield, in terms of cash flowing, and I think you said 1.5% for Q2. Could you share what those yields are coming off in H2?
Aurelio Demand: Hi.
Speaker Change: Good afternoon.
Aurelio Demand: <unk>.
Aurelio Demand: Orlando I think you've mentioned.
Aurelio Demand: Some numbers around the securities book in terms of the year open terms.
Aurelio Demand: Cash flowing.
Aurelio Demand: And I think you said one 5%.
Aurelio Demand: For the second quarter could you share but.
Aurelio Demand: Those.
Aurelio Demand: Yields are coming on.
Aurelio Demand: In the back half of the year.
Aurelio Demand: Got it.
Orlando Berges: The yields on H2 are slightly lower. Talking from the top of my head, they're going to be around 135 to 140.
Aurelio Demand: The yields on the second half of the year slightly lower they are going to be.
Aurelio Demand: Doug it's upon the top of my head, but theyre going to be around $1 35 to 140, what's under the second half of the year.
Unknown Executive: What's on the second half of the Okay.
Frank Schiraldi: Okay. Could you share just a ballpark in terms of that assumption you gave around margin expansion, I think 5 to 7 bps, of what that assumes in terms of pickup on that? What you expect the new, I don't know if it's a mix of loans and securities you assume these cash flows are going into, but what kind of pickup do you anticipate? What sort of blended rate are you looking for on the new origination to get to that sort of margin expansion?
Aurelio Demand: Okay.
Frank Schiraldi: And then could you share just a ballpark in terms of that assumption you gave around margin expansion, I think five to seven bits, what that assumes in terms of pickup on that, you know, what you expect the new, I don't know if it's a mix of loans and securities you assume this is going, these cash flows are going into, but what kind of pickup do you anticipate? What sort of origination to get to that sort of margin expansion? We're assuming, there are a few things, obviously, we're assuming it's going to be a big couple of somewhere around 150 to 300 basis points.
Aurelio Demand: And then could.
Aurelio Demand: Could you share just just a ballpark in terms of that assumption you gave around margin expansion I think five to seven bps.
Aurelio Demand: What that assumes in terms of pick up.
Aurelio Demand: On that one.
Aurelio Demand: What you expect the new I don't know if its a mix of loans and securities. You assume this is going into these cash flows are going into but what kind of pick up do you anticipate what sort of blended rate are you looking for.
Aurelio Demand: The new.
Aurelio Demand: Origination.
Aurelio Demand: Get to that sort of margin expansion.
Orlando Berges: There are a few things, obviously. We're assuming it's going to be a pickup of somewhere around 150 to 300 basis points. Remember that assumption considers that there might be some rate reductions in the year. At this point, it's become a little bit unpredictable. When we had done our original estimates for 2025, we were assuming 2 cuts in the H2 of the year. Maybe we're looking at 3 now. That reflects what would be what we can keep on the investment portfolio cash, and obviously, depending on what's the growth on the loan portfolio, it could move a little bit higher than that. Also, it all depends. We were able to move funding costs this quarter a little bit more than we had anticipated. That helped the margin pick up this quarter.
Aurelio Demand: I mean, there are few things obviously, we're assuming it's going to be up a couple of somewhere around 250 to 300 basis points.
Aurelio Demand: But.
Unknown Executive: But you know, remember that, that assumption considers that there might be some rate reductions in the year at this point, it's become a little bit unpredictable. But when we had done our original estimates for 2025, we were assuming two cuts in the second half of the year, maybe we're looking at three now. So, you know, that reflects what would be what we can keep on the investment portfolio cash. And obviously, depending on what's the growth on the loan portfolio, it could move a little bit higher than that. But also, you know, it all depends, we were able to move funding costs this quarter, a little bit more than we had anticipated.
Aurelio Demand: Remember that that assumption considers that there might be some.
Aurelio Demand: Rate reductions in the year at this point, it's become a little bit unpredictable, but.
Aurelio Demand: When we had we had done our original estimates for 2025, we were assuming two cuts in the second half of the year, maybe we're looking at three now.
Aurelio Demand: So.
Aurelio Demand: That reflects.
Aurelio Demand: What what would be what we can keep on the investment portfolio.
Aurelio Demand: And obviously, depending on what's the growth of the loan portfolio.
Aurelio Demand: Could move a little bit higher than that but.
Aurelio Demand: But also.
Aurelio Demand: It all depends we were able to move funding cost this quarter a.
Aurelio Demand: A little bit more than we had anticipated.
Unknown Executive: That helped the margin pickup of this quarter. So depending on that, you know, the next quarter, you know, assumptions are based on those numbers I just gave you.
Aurelio Demand: That held the margin pick up this quarter.
Orlando Berges: Depending on that, the next quarter assumptions are based on those numbers I just gave you.
Aurelio Demand: So depending on that.
Aurelio Demand: Next quarter.
Aurelio Demand: Assumptions are based on those.
Aurelio Demand: The numbers I just gave you.
Frank Schiraldi: Okay. Just one more on that line of questioning. In terms of the 1.5% in Q2, H2, 1.3% to 1.4% in terms of the cash flows. Just looking out beyond 2025, is it similar levels of cash flowing out of that book and at sort of similar yield coming off? Can you share any sort of detail there?
Aurelio Demand: Okay, and just one more on that line of questioning in terms of.
Unknown Executive: Okay, and just just one more on that line of questioning in terms of, you know, the one and a half percent in the second quarter, back after the year one three, the one four in terms of the cash flows, just looking out beyond 2025. Is it similar levels of cash flowing out of that book and, and at sort of similar yield coming off? Can you share any any sort of detail there? I don't, I don't have with me the additional, Frank, I need to get that the future years. Remember that duration in the portfolio is not high.
Aurelio Demand: The one 5%.
Aurelio Demand: Quarter back half of the year 1314 in terms of the cash flows.
Aurelio Demand: Just looking out beyond 2025.
Aurelio Demand: Is it similar levels of cash flowing out of that book.
Aurelio Demand: At sort of similar.
Aurelio Demand: Yield coming off.
Aurelio Demand: Any sort of.
Aurelio Demand: Detailed there.
Orlando Berges: I don't have with me the additional, Frank Schiraldi. I need to get that the future years. Remember that duration in the portfolio is not high, the amounts through March 2025 was $1.5 million. That includes that $1.5 billion. I'm sorry. That includes that $1 billion I just gave you, and the $260 million. It's $250 million more in Q1 2026. I don't have the full report with me here to give you some more indications of the full year.
Aurelio Demand: I don't I don't have with me the additional.
Aurelio Demand: Frank I need to get that in the future years.
Aurelio Demand: Remember that duration in the portfolio is not high so.
Aurelio Demand: That's.
Frank Schiraldi: So that's the amount. the amounts from from through through March through March of next year was a million five that includes that that billion billion five I'm sorry that includes that billion I just gave you and the 260 so it's 250 more million in the first quarter of 20 of 2026. But I don't have the full report with me here to give you some some more indications of the full year. Okay, all right. So at least for the first quarter, you said 250 million. And the first quarter, it's it's about 250. Yes. Okay, I appreciate it.
Aurelio Demand: The amount.
Aurelio Demand: The amounts.
Aurelio Demand: From.
Aurelio Demand: From.
Aurelio Demand: Through through March.
Aurelio Demand: Through March of next year was a million five that includes that billion billion five I'm sorry that includes that billion.
Aurelio Demand: I just gave you.
Aurelio Demand: And the 260, so it's 250 more million in the first quarter of 'twenty 2026, but I don't have the full report with me here to give you some some more indications of the full year.
Frank Schiraldi: Okay. All right. At least for Q1, you said $250 million.
Aurelio Demand: Okay, alright so.
Aurelio Demand: At least in the first quarter, you had said 250.
Aurelio Aleman: Yeah, in Q1, it's about $250, yes.
Aurelio Demand: And the first quarter.
Aurelio Demand: 250, yes.
Frank Schiraldi: Okay. I appreciate it. Just lastly, if I could just sneak in one more, in terms of the commercial mortgage loan, or even just commercial mortgage in general in Florida, I think you had the one large payoff. You had talked about, I think, and it fell from Q4 to Q1. Just in terms of the general thoughts around CRE, your CRE in Florida, something that you guys are looking to continue to grow. Where are you seeing the stress? If you could just talk about that large payoff. I guess that's by design, just maybe a little more detail there. Thanks.
Aurelio Demand: Okay.
Aurelio Demand: Okay I appreciate it and then just lastly, if I could just sneak in one more in terms of the <unk>.
Frank Schiraldi: And then just lastly, if I could just sneak in one more in terms of the commercial mortgage loan, or even just commercial mortgage in general in Florida, I think you had the one large payoff. And you talked about I think it fell from a queue to one queue.
Aurelio Demand: Commercial mortgage loan.
Aurelio Demand: Or even just commercial mortgage in general in Florida, I think you had the one large payoff.
And you had talked about I think it fell from <unk>, but just in terms of the general general thoughts around.
Unknown Executive: But just in terms of the general thoughts around CREE, your CREE in Florida, something that you guys are looking to continue to grow? And then kind of where you're seeing, where are you seeing the stress? And if you could just talk about that large payoff? You know, is that I guess that's by design, maybe a little more detail there. Thanks.
Aurelio Demand: Corey.
Aurelio Demand: Three in Florida.
Aurelio Demand: It's something that you guys are.
Aurelio Demand: Looking to continue to grow.
Aurelio Demand: And then kind of where are you seeing where are you seeing the stress and if you could just talk about that large payoff.
Aurelio Demand: Is that I guess thats by design, maybe a little more detail there. Thanks.
Aurelio Aleman: The large payoff was in Puerto Rico, and the NPA was in Florida regarding CRE. The large payoff was a refinancing that we did not participate in, and based on terms, expected terms. The one in Florida, I think we put some details in the release. We believe it's a one-off case. It's only hospitality sector, really good loan-to-value. We actually don't expect any losses in that one.
Unknown Executive: You know, the large player was in Puerto Rico.
Aurelio Demand: Payables in Puerto Rico.
Aurelio Demand: The and the NPA was in Florida.
Aurelio Demand: CRE.
Aurelio Demand: Payoff loss.
Aurelio Demand: It refinancing.
Aurelio Demand: That we participated.
Unknown Executive: Aurelio Aleman, Ramon Rodriguez, Unknown Executive, First Bancorp and based on terms, expected terms. and the one in Florida, you know, I think we'll put some details in the release, you know, it's a we believe is a one off case. is on the hospitality side. really good amount of value. We actually don't don't expect any, any loss. Okay. All right. I appreciate it.
Aurelio Demand: Based on terms expected terms.
Aurelio Demand: And they are wanting in Florida.
Aurelio Demand: I think we put some details in the release.
Aurelio Demand: So we believe it's a one off case.
Aurelio Demand: And then the hospitality sector.
Aurelio Demand: The really good loan to value.
Aurelio Demand: We actually don't expect any in the losses in that one.
Frank Schiraldi: Okay. All right. I appreciate it. Thanks.
Aurelio Demand: Okay, Alright, I appreciate it again.
Aurelio Demand: Okay.
Aurelio Aleman: On the CRE front, we continue to originate. We have a good pipeline, and obviously under our underwriting criteria, we continue to move up the balance sheet. Yeah.
Unknown Executive: And on the theory front, you know, we continue to remade, we have a good pipeline. And obviously, under our underwriting criteria, we continue to move up the challenge.
Aurelio Demand: And on the CRE front, we continue to originate we have a good pipeline and obviously on the hour on the hour underwriting growth Etfs, we continue to move up.
Aurelio Demand: Yes.
Operator: Our next question is from Brett Rabatin of Hovde Group. Please go ahead.
Brad Barton: Our next question is from Brad Barton.
Brett Robotin: Our next question is from Brett Robotin of Hovde Group. Please go ahead. Hey, thanks for the time. I wanted to ask on the loan origination side, you know, I know commercial can be a little lumpy, you know, and obviously 4Q is really strong.
Aurelio Demand: Please go ahead.
Brett Rabatin: Hey, thanks for the time. Wanted to ask on the loan origination side. I know commercial can be a little lumpy, and obviously Q4 was really strong. If I heard correct, that the guidance for the year is that mid-single digit number. Just wanted to see if you think that the commercial side that's on slide 13, if that grows from here, or if you'll see more on the consumer side. Just looking for some color on where you guys see the originations coming from.
Aurelio Demand: Hey.
Aurelio Demand: Thanks for the time wanted to ask on the loan origination side.
Aurelio Demand: I know commercial can.
Aurelio Demand: It can be a little lumpy and obviously <unk> was really strong, but if I heard correct that the guidance for the year is kind of that mid single digit number and just wanted to see if you think that the commercial side.
Unknown Executive: But if I heard correct that, you know, the guidance for the year is kind of that mid single digit number and just wanted to see if you think that the commercial side that's on slide 13, if that grows from here, you know, or if you'll see more on the on the consumer side, just looking for some color on where you guys see the originations coming from. Yeah, actually, you know, we think this year, you know, different to practice different to prior years. Obviously, where we see the opportunities where we see the performance of the books, and we believe, you know, both construction and commercial will grow.
Aurelio Demand: On slide 13 that grows from here.
Aurelio Demand: Or if you will see more on the on the consumer side as well.
Aurelio Demand: Looking for some color on.
Aurelio Demand: Where do you guys see the originations coming from.
Aurelio Aleman: Yeah, actually, we think this year, it's different to prior years. Obviously, where we see the opportunities, where we see the performance of the books, and we believe both construction and commercial will grow. We believe the consumer will grow at a slower pace than prior years. We believe that actually we're going to see some growth in residential, which we already actually experienced this quarter. Which was not the case if you look back, very slight growth over the past year or so. That's the way we see the mid-single digit growth being combined. Yeah.
Aurelio Demand: Actually we think this year different it's different to prior years.
Aurelio Demand: Obviously, where we see the opportunities where we see the performance of the books and we believe both construction and commercial will grow.
Aurelio Demand: We believe the consumer will grow at a slower pace than in prior years.
Unknown Executive: Aurelio Aleman, Ramon Rodriguez, Unknown Executive, First Bancorp And we believe that actually we're going to see some growth in residential, which we already actually experienced this quarter, which was not the case, if you look back, very slight growth over there. So that's the way we see it. I mean, think of the growth being combined.
Aurelio Demand: And we believe that actually we're going to see some growth in residential which we already actually experienced this quarter.
Aurelio Demand: Which was not the case, if you look back very slight growth over there over the last year or so.
Aurelio Demand: That's the way, we see that mid single growth being being combined.
Brett Rabatin: Okay. I noticed you guys didn't roll out the Apple Pay. Any color on if that was by choice? What was the function there, and then if you guys might be looking to do that going forward?
Aurelio Demand: Okay.
Unknown Executive: Okay.
Unknown Executive: And then I noticed you guys were didn't roll out the apple pay with any color on if that was, you know, by choice or what was the function there and then if you guys might be looking to do that going forward. Yeah, we have about, you know, we'll say a dozen of improvements to the data functionality that are currently being worked on. We, we did launch, you know, Samsung Pay and Google Pay. For the MasterCard debit side, we do have we are, we are dual brand, we do both Visa and Aurelio Aleman, Ramon Rodriguez, Unknown Executive, First Bancorp combined with, you know, some of all the other functionalities that we continue to enhance in our, in our digital front.
Aurelio Demand: And then I noticed you guys were.
Aurelio Demand: Didn't rollout the Apple pie.
Aurelio Demand: Any color.
Aurelio Demand: If that was by choice.
Aurelio Demand: Yeah.
Aurelio Demand: What was the function there and then if you guys might be looking to do that going forward.
Aurelio Aleman: Yeah. We have about, I would say 12 improvements to the data functionality that are currently being worked on. We did launch Samsung Pay and Google Pay for the Mastercard debit side. We are dual brand. We do both Visa and Mastercard. The Apple Pay project is ongoing. We have some vendors that are involved in the execution, and there's priorities on timing of those. You should see that happening during this year.
Aurelio Demand: Yes, we have I'll say adoption of improvement to the digital functionality that are currently being worked on we we did launch Samsung pay and Google pay.
Aurelio Demand: For the Mastercard debit side, we do have we are.
Aurelio Demand: We have a dual brand, we do both visa and Mastercard.
Aurelio Demand: The Apple pay project is ongoing we have some vendors that are involved in the execution.
Aurelio Demand: Priorities or timing of those.
Aurelio Demand: Should we see that happening during this year.
Brett Rabatin: Okay
Aurelio Demand: Combined with <unk>.
Aurelio Aleman: some of other functionalities that we continue to enhance in our digital front. Yeah.
Aurelio Demand: All the other functionalities that we continue to enhancing our digital.
Aurelio Demand: The firm.
Brett Rabatin: Okay. Aurelio, would you consider, if you just think about Puerto Rico versus Florida, I know sometimes you've said you think there's probably more risk credit-wise in Florida than there is in Puerto Rico. What do you think today, just in terms of where you see the credit risk, particularly on the commercial side?
Unknown Executive: Okay.
Aurelio Demand: Okay.
Unknown Executive: Um, and then Aurelio, would you consider You know, if you just think about Puerto Rico versus Florida, you know, I know sometimes you've said you think there's probably more risk. CreditWise in Florida than there is in Puerto Rico, what do you think today, you know, just in terms of where you see the credit risk, particularly on the commercial side? Well, I you know, I think I make comments regarding competitive landscape and obviously Florida, it's it's a it's more competitive on the deposit side, Puerto Rico is competitive.
Aurelio Demand: And then would you consider.
Speaker Change: If you just think about Puerto Rico versus Florida, I know, sometimes you've said you think there's probably more risk.
Aurelio Demand: Credit wise in Florida than there is in Puerto Rico.
Speaker Change: Where do you think today just in terms of where you see the credit risk, particularly on the commercial side.
Aurelio Aleman: Well, I think I made comments regarding competitive landscape. Obviously, Florida, it's more competitive on the deposit side. Puerto Rico, it's competitive but at a different level. Florida has a multiple number of competitors and very large banks also there. In terms of credit, we continue to see a healthy pipeline. We have our underwriting guidelines. The portfolios have performed, if you look at the segregation of the ACL, portfolio have performed really well in Florida. Cases that we see, obviously it's a smaller portfolio than Puerto Rico. You have less variety. At this point, we continue to see Florida as a healthy portfolio. We have very limited office there, small. It's a well-diversified book.
Speaker Change: Well I think I made comments regarding competitive landscape, obviously, Florida.
Speaker Change: It's a it's more competitive on the deposit side, Puerto Rico, it's competitive.
Speaker Change: But at a different level.
Speaker Change: A familiar has a multiple number of competitors have very very large banks also there.
Speaker Change: In terms of in terms of granted.
Aurelio Aleman: Aurelio Aleman, Ramon Rodriguez, Unknown Executive, First Bancorp You know, we continue to see a healthy pipeline, you know, we have our underwriting guidelines, the portfolio has performed, you know, if you look at the segregation of the ACL, portfolio has performed really well in Florida, you know, cases that we see, obviously, is a smaller portfolio. University of Puerto Rico. So you have this variety. But, you know, at this point, you know, we continue to see Florida as a healthy portfolio.
Speaker Change: We continue to see a healthy pipeline, we have our underwriting guidelines.
Speaker Change: The portfolio has performed well.
Speaker Change: Let the segregation of the ACO portfolio have performed really well in Florida.
Speaker Change: Cases that we see or is it is a smaller portfolio that Puerto Rico. So you have less of a variety.
Speaker Change: Okay.
Speaker Change: Bob.
Speaker Change: At this point, we continue to see protein as a healthy portfolio.
Speaker Change: We have very limited very limited office, they're small.
Speaker Change: And he said well diversified book so.
Aurelio Aleman: Aurelio Aleman, Ramon Rodriguez, Unknown Executive, First Bancorp Puerto Rico, when we say slower rates on the CRE, remember there was no construction built for many years in Puerto Rico. And asset values didn't, you know, increase rapidly. So loan-to-values are quite healthy. in a Puerto Rico portfolio, so that's why. And yes, you know, there's opportunities for growth, but you know, we keep ourselves to our to our underwriting guidelines. try not to deviate from those.
Aurelio Aleman: Puerto Rico, when we say slower risk on the CRE, remember there was no construction built for many years in Puerto Rico. Asset values didn't increase rapidly, so loan-to-values are quite healthy in the Puerto Rico portfolio. That's why. Yes, there's opportunity for growth, but we keep ourselves to our underwriting guidelines and try not to deviate from those.
Speaker Change: Puerto Rico, when we say, it's lower rates on the CRE as I remember there was novel structure built for many years in Puerto Rico.
Speaker Change: And asset values did increase.
Speaker Change: Increase rapidly.
Speaker Change: So loan to values are quite healthy.
Speaker Change: In our Puerto Rico portfolio. So that's why.
Speaker Change: And yes, there is opportunity for growth, but we keep ourselves to lower lower underwriting islands and try not to deviate from those.
Brett Rabatin: Okay. Appreciate all the color, guys.
Speaker Change: Okay.
Okay.
Unknown Executive: Appreciate all the co-work, guys. Thank you.
Aurelio Aleman: Mm-hmm. Thank you, Wes.
Speaker Change: Appreciate all the color guys.
Speaker Change: Thank you Brett.
Operator: Our next question comes from the line of Steve Moss of Raymond James. Please go ahead.
Speaker Change: Our next question comes from the line of Steve.
Steve Moss: Our next question comes from the line of Steve Moss of Raymond James, please go ahead. Good morning. morning, morning, maybe just following up on low growth here. Morning, maybe follow up on loan growth here. Just kind of curious, you know, with pipeline building, I hear you guys a little bit more uncertainty in the market, but do you think loan growth will happen, you know, pick up this quarter, it sounds like it will be a little bit positive. But do you think it'll be more back half weighted as we think about the mid single digit growth?
Speaker Change: Raymond James Please go ahead.
Steve Moss: Good morning.
Speaker Change: Hi, good morning.
Aurelio Aleman: Morning.
Steve Moss: Morning. Maybe just following up on loan growth here. Morning. Maybe following up on loan growth here, just kind of curious, with pipeline building, I hear you guys a little bit more uncertainty in the market, but do you think loan growth will happen, pick up this quarter? It sounds like it will be a little bit positive, but do you think it'll be more back-half weighted as you think about the mid-single-digit growth?
Good morning, Good morning, maybe just following up on loan growth here.
Speaker Change: Morning, maybe following up on loan growth here, just kind of curious.
Speaker Change: Pipeline building.
I hear you guys, a little bit more uncertainty in the market, but do you think loan growth will happen.
Speaker Change: This quarter it sounds like will be a little bit positive.
Speaker Change: I think it would be more back half weighted as you think about the mid single digit growth.
Aurelio Aleman: Well, in the last call, we actually said that we see loan growth in H2 of the year. Steve, if I recall, we did cover that item. To be honest, in today's environment with the conclusion of tariffs is going to be the answer to your question because some investors are sitting on the sidelines waiting to see if I close this or I don't close this. That's happening all over the industry, not only in Puerto Rico. I think it's the conclusion which will happen over the next 90 days, it will bring conclusion to that. The pipelines continue to build. If I look at my pipeline today versus the one that I have in January, it's actually better, which is a positive, but obviously, the uncertainty on the market is different. That's just a reality that we have to deal with.
Speaker Change: Well in the last call, we actually said, we see loan growth in the <unk>.
Aurelio Aleman: Well, you know, in the last call, we actually said that we see long growth, you know, in the second half of the year. If I recall, we did cover that. a, you know, to be honest, you know, we, you know, in today's environment with, you know, the conclusion of tariff. is going to be the answer to your question because, you know, some investors are sitting on the sidelines waiting to see if I close this or I don't close this. So that's happening all over the industry, not only in Puerto Rico. So, so, you know, I think it's the conclusion which will happen over the next 90 days, it will bring conclusion to that the pipelines continue to build.
Speaker Change: Half of the year.
Speaker Change: If I recall, we did cover that item.
Speaker Change: To be honest.
Speaker Change: In today's environment with the conclusion of authority.
Speaker Change: It's going to be the answer to your question because so many vessels are sitting on the sidelines waiting to see like both these are idled closely so that's happening all over the industry not only in Puerto Rico.
Speaker Change: So I think.
Speaker Change: The conclusion, which will happen over the next 90 days.
Speaker Change: Bring conclusion to that.
Speaker Change: The pipeline continues to build so if I if I look at my pilot today versus the one that I have in January is actually better.
Aurelio Aleman: So if I if I look at my pilot today versus the one that I have in January, it's actually better, which is a positive, but obviously, the uncertainty on the market. That's just a reality that we have to deal with. Obviously, if you go back to the pandemic, same thing happened. All of a sudden, we didn't know how to project. That's what I said in my remarks. We have a good pipeline, we're not modifying our guidance. But only policies impact will tell how markets would behave. And it's not gonna be just a first bank thing, it's gonna be a market thing.
Speaker Change: Which is a positive about obviously the uncertainty on the market is different.
Speaker Change: That's just a reality that we have to deal with.
Aurelio Aleman: Obviously, if you go back to the pandemic, same thing happened. All of a sudden, we didn't know how to project. That's what I said in my remarks. We have a good pipeline. We're not modifying our guidance. Only policy's impact will tell how markets will behave. It's not going to be just a First Bank thing. It's going to be a market thing. We're very closely working with our clients to continue moving the needle and supporting them. Market could change perspective of risk and perspective of investors entering into deals or not. That's just a reality that we have to deal with in every cycle.
Speaker Change: Obviously, if you go back to the pandemic same thing happened all of its other we didn't know how of the project.
Speaker Change: What I said in my remarks.
We're not.
Speaker Change: Have a good pipeline with non modifying our our guidance.
Speaker Change: Only only policy, but I will tell how markets will behave and it's not going to be just that first thing it's going to be a market thing. So so we're very closely with our working with our clients to to continue moving moving the needle and supporting them, but market could could change.
Unknown Executive: So we're very closely working with our clients. continue moving the needle and supporting them. But, you know, market could change a perspective of risk and perspective of investors intending to do this or not. So that's just a reality that we have to deal with in every cycle. But yes, for now, our mid-single digit guidance continues. got it. I appreciate that color.
Speaker Change: Respective of risk and perspective of investors and getting into deals or not so that's just a reality that we have to deal with in the recycling.
Steve Moss: Okay.
Aurelio Aleman: Yes, for now.
Speaker Change: And Claude Yes for now that's tolerable.
Steve Moss: Appreciate that color.
Aurelio Aleman: Our mid-single digit guidance continues.
Speaker Change: Our mid single digit guidance continues.
Speaker Change: Yeah.
Steve Moss: Got it. I appreciate that color. In terms of just kind of curious, on the, I think the phrase was some normalization of consumer credit. I see the consumer charge-offs were up year over year. Just kind of curious how you guys are thinking about consumer charge-offs for the full year.
Speaker Change: Got it I appreciate that color.
Unknown Executive: And then in terms of just kind of curious, you know, on the, you know, I think the phrase was some normalization of consumer credit. You know, I see like the consumer charge offs were up year over year, just kind of curious how you guys are thinking about consumer charge offs for the full We, you know, we expect an improvement. from is that, you know, balances could grow and absolute amounts could grow, but charge of rate should increase. Remember, Steve, that we saw a ramp up of charge off through through 2024. Aurelio Aleman, Ramon Rodriguez, Unknown Executive, First Bancorp The benefit is going to start coming as some of these older vintages that behave worse are getting run off.
Speaker Change: And then in terms of just kind of curious.
On the.
Speaker Change: Price was some normalization of consumer credit.
Speaker Change: I see like the consumer charge offs were up year over year, just kind of curious how you guys are thinking about consumer charge offs for the full year.
Aurelio Aleman: We expect an improvement on that metric. Yes. From prior year. We expect a reduction prior year on the charge-off rate. On the rate itself, obviously, balances could grow and absolute amounts could grow, but charge-off rate should improve year over year.
Speaker Change: We we expect an improvement on that metric.
Speaker Change: From prior year, we expected reductions prior year on the Tokyo remember right on the rate itself. Obviously, it's a balance that could grow in absolute amounts grew globally charge off ratios should improve year over year remember, Steve that we saw a ramp up of charge off through through.
Orlando Berges: Remember, Steve, that we saw a ramp up of charge-off through 2024 on the consumer side.
Speaker Change: 2024.
Speaker Change: On the consumer side so.
Steve Moss: Yeah.
Orlando Berges: When you compare to Q1, we're looking more to prior quarters because that's where we say that the benefit is going to start coming as some of these older vintages that behave worse are getting run out. We have that. Remember, we also had the sale of some charge-off loans that improved the debt charge-off on the consumer side.
Speaker Change: So when you compare to first quarter rates were looking more to prior quarters, because that's where we we say that.
Speaker Change: The benefit is going to start coming out some of these older vintages.
Speaker Change: Startup that behave worse are getting run off so we have that.
Unknown Executive: So we have that. And remember, we also had the sale of charge-off loans that improved the debt charge-off on the consumer. Yes. Okay. Great, I appreciate that color there.
Speaker Change: Remember, we also had the sale of.
Speaker Change: The charge off loans.
Speaker Change: Net charge offs on the consumer side.
Steve Moss: Yes. Okay. Great. I appreciate that color there. Just one last one for me, just for clarification, the five to seven basis points of margin expansion is off the 448 adjusted margin, correct?
Speaker Change: Yes, okay.
Speaker Change: Great I appreciate that color there and just one last one for me just FERC.
Steve Moss: And just one last one for me just for clarification, the five to seven basis points of margin expansion is off the 448 adjusted margin, correct? That is correct. Perfect. Well, that's all for me. I appreciate all the call here. Thank you very much.
Speaker Change: Clarification.
Speaker Change: Five to seven basis points of margin expansion is off the $4 48 adjusted margin.
Speaker Change: Correct.
Orlando Berges: That is correct.
Speaker Change: That is correct that is correct.
Steve Moss: Okay, perfect. Well, that's all for me. I appreciate all the color here. Thank you very much.
Speaker Change: Okay.
Speaker Change: Perfect.
Speaker Change: That's all from me I appreciate all the color here. Thank you very much.
Speaker Change: Okay.
Operator: Our next question comes from the line of Kelly Motta of KBW. Please go ahead.
Speaker Change: Okay.
Kelly Motta: Our next question comes from the line of Kelly Motta of KBW, please go ahead. Hey, good afternoon. Thanks so much for the question. Um, maybe piggybacking off that, that margin outlook, I really appreciate all the color on on the securities repricing as well as you know, your outlook there for five to seven basis points of expansion during the quarter.
Speaker Change: Our next question comes from the line of Kelly Motta of <unk>. Please go ahead.
Kelly Motta: Hey, good afternoon. Thanks so much for the question. Maybe piggybacking off that margin outlook, I really appreciate all the color on the securities repricing as well as your outlook there for 5 to 7 basis points of expansion during the quarter. Just turning to the other side of the balance sheet, I would imagine given your securities flows, that the overall size is going to be dictated by what you're seeing on the deposit side. On that note, what are you seeing on the deposit side? I think one of your competitors said that there's some better deposit trends, that flows have been improving. Wondering what you're seeing in your overall outlook here given what you're seeing from your customers so far. Thanks.
Kelly Motta: Hey, good afternoon. Thanks, so much for the question.
Speaker Change: Maybe piggybacking off of that.
Speaker Change: Margin outlook I really appreciate all the color on.
On the Securities repricing is five <unk>.
Speaker Change: Outlet there for five to seven basis point expansion during the quarter.
Unknown Executive: Just just turning to the other side of the balance sheet, I would imagine given your securities flows that the overall size is going to be dictated by what you're seeing on the deposit side. So on that note, what are you seeing on the deposit side, I think one of your competitors said that, you know, there's some some better deposit trends that flows have been improving, wondering what you're seeing and your overall outlook here. Given given what you're seeing from your customers so far.
Speaker Change: Justin just turning to the other side of the balance sheet I would imagine given your securities or is that.
The overall size is going to be dictated by what youre seeing on the deposit side. So on that note. What are you seeing on the deposit side I think one of your competitors said that.
Speaker Change: There is some better deposit trends that have.
Speaker Change: They have been improving wondering what you're seeing in your overall outlook here.
Speaker Change: Given what you're seeing from your customers so far thanks.
Unknown Executive: Thanks. You know, we're seeing more stability than the two prior years. We're seeing, you know, some more transactional activity, actually some some growth in what we could see the core transactional and non-interest bearing. Obviously, you know, we have an appetite for government deposits, which we are there, and we continue to support. You know, they're 100% collateralized. That is our appetite. that would change, you know, will change our appetite. But for now, you know, we see stability, we see the market, you know, fairly stable on that front, when we compare market numbers to 2024, there was a contraction, slight contraction, we added, we have a slightly a and you know, we continue to monitor this is really the very critical strategy for for all of or are definitely, definitely stable.
Aurelio Aleman: We're seeing more stability than the 2 prior years. We're seeing some more transactional activity, actually some growth in what we consider core
Speaker Change: We're seeing more stability than the two prior years.
Speaker Change: We're seeing from our transactional activity actually grew.
Speaker Change: Growth in what we can see that core transaction on our non interest bearing.
Orlando Berges: Transaction on a non-interest bearing. Obviously, we have an appetite for government deposits, which we are there, and we continue to support as long as they are 100% collateralized. Has to be. That is our appetite. If that would change, we'll change our appetite. For now, we see stability. We see the market fairly stable on that front. When we compare market numbers to 2024, there was a slight contraction. We have a slight increase. We continue to monitor. It's really the critical strategy for all of us, but are definitely stable.
Speaker Change: A.
Speaker Change: Obviously, we have an appetite for government deposits, which we are there and we continue to support.
Speaker Change: Yes.
Speaker Change: There are 100% quality of life to be.
Speaker Change: That is our appetite.
Speaker Change: Would change changeover.
Speaker Change: Since our appetite, but for now we see stability, we see the market fairly stable on that front, when we compare might get numbers too.
Speaker Change: Any forward there was a contraction like contract we had.
Speaker Change: We have a slight increase.
Speaker Change: And we continue to monitor is really the critical strategy for all of us.
Speaker Change: Definitely that's really stable.
Kelly Motta: Got it. That's really helpful. Then maybe just a small modeling question on the expense side. I appreciate the outlook on a quarterly basis ahead. It looks like insurance and supervisory fees were about $2 million lower linked quarter. Was there any reversal there? Just wondering if Q4 is a better run rate going forward from here and any dynamics that may have impacted Q1.
Speaker Change: Got it.
Unknown Executive: Got it. That's, that's, that's really helpful.
Speaker Change: Really helpful.
Speaker Change: And then maybe just a small modeling question on the expense side I appreciate it.
Unknown Executive: And then maybe just a small modeling question on the expense side. I appreciate the outlook on a quarterly basis ahead. It looks like insurance and supervisory fees were about $2 million lower in length quarter. Was there anything, any reversal there?
Speaker Change: The outlook on a quarterly basis that had it looks like ensuring supervisory fees.
Speaker Change: We're about $10 million lower linked quarter was there anything any.
Speaker Change: Reversal there.
Unknown Executive: Just wondering if 4Q is a better run rate going forward from here and any dynamics that may have impacted 1Q. I'm thinking here, there was nothing Are you looking versus last year or you're looking versus December? versus December. Because remember that last year, last year we had a special assessment from the FDIC. Let me see. I don't remember anything specific.
Speaker Change: I'm just wondering if <unk> is a better run rate going forward from here and any any dynamics that may have impacted one.
Speaker Change: Okay.
Orlando Berges: I'm thinking here. There was nothing. Are you looking versus last year, or you're looking versus December?
Speaker Change: I'm thinking here there was nothing.
Speaker Change: Are you looking versus last year or Youre looking versus December.
Kelly Motta: Versus December.
Orlando Berges: Because remember that last year we had a special assessment from the FDIC. Let me see. I don't remember anything specific, Kelly. I would have to look for-
Speaker Change: December because remember that last year.
Speaker Change: Here, we had a slight tell us has been from the FDIC.
Speaker Change: Let me see I don't remember anything specific.
Unknown Executive: Kelly, I would have to look, look for for for more details to provide you. Got it. Appreciate it.
Kelly Motta: Kelly I would have to look look for.
Kelly Motta: Okay
Orlando Berges: some more details to-.
Kelly Motta: That's okay.
Orlando Berges: provide you.
Kelly Motta: So more details to that.
Kelly Motta: <unk> you.
Kelly Motta: Got it. Appreciate it. Just a point of clarification for me on the buyback. I think you had said you've done $28 million in April. Based on your commentary, would you expect to still continue to be active in the shares here, opportunistic for the rest of the quarter, or I need to go back and look at the transcript. I thought you may have implied you might be out for the quarter. Just wanted to clarify that point.
Kelly Motta: Got it I appreciate it.
Unknown Executive: Les, just a point of clarification for me on the buyback. I think you had said you've done $28 million in April. Based on your commentary, would you expect to still continue to be active in the shares here opportunistic for the rest of the quarter?
Speaker Change: Just a point of clarification for me on the buyback I think you had said <unk>.
Kelly Motta: $28 million in April based on your commentary would you expect to.
Kelly Motta: Still continuing to be active in in the shares here.
Kelly Motta: Opportunistic for the rest of the quarter or.
Unknown Executive: Or I need to go back and look at the transcript. I thought you may have implied you might be for the quarter. Just wanted to clarify that point. Yeah, our goal for this quarter was 50 million. And we are we're going to complete that by the end of April. And, you know, we always keep the optionality. Right now the plan is to deploy that 100 million in the second half. But you know, it's a it's always a consideration if if a unique opportunity shows up on the market that we act, we have the flexibility. but the goal is to complete the $50 million.
Speaker Change: I need to go back and look at the transcript I thought you may have implied you might be out for the quarter.
Kelly Motta: I wanted to clarify that point.
Orlando Berges: Our goal for Q1 was $50 million, and we're going to complete that by the end of April. We always keep the optionality. Right now, the plan is to deploy that $100 million in H2. It's always a consideration if a unique opportunity shows up on the market that we act. We have the flexibility.
Kelly Motta: Yes, our goal towards this quarter.
Kelly Motta: It was $50 million and we are we're going to complete that by.
By the end of April.
Speaker Change: And we.
Kelly Motta: We always keep the optionality.
Kelly Motta: Right now the plan is to deploy that $100 million in the second half but is it.
Kelly Motta: It's always a consideration.
Kelly Motta: No.
Kelly Motta: A unique opportunity shows up on the market.
Kelly Motta: We have the flexibility.
Kelly Motta: Got it.
Orlando Berges: is to complete the $50 million. Yeah. Mm-hmm.
Kelly Motta: Got it completely differently.
Kelly Motta: Yes.
Kelly Motta: Got it. Last one. That 448 adjusted margin, that's on a GAAP basis, right? Not an FTE. I believe you said the interest recovery was 4 basis points.
Kelly Motta: Got it.
Unknown Executive: Got it.
Unknown Executive: And last one that 448 adjusted margin that that's on a gap basis, right? Not an FTE. I believe you said the interest recovery was four basis points. That's that's right. It's on a gap basis, not a full taxable equivalent. Awesome.
Kelly Motta: But that $4 48 adjusted margin that's on a GAAP basis right not an FTE.
Kelly Motta: He said the interest recovery four basis points.
Orlando Berges: That's right. It's on a GAAP basis, not a full taxable equivalent.
Kelly Motta: That's right it's on a GAAP basis.
Kelly Motta: Taxable equivalent.
Kelly Motta: Awesome. Thank you so much.
Kelly Motta: Okay.
Unknown Executive: Thank you so much. Thank you, Kelly.
Kelly Motta: Thank you so much.
Orlando Berges: Thank you, Kelly.
Kelly Motta: Thank you. Thank you Kelly.
Operator: Our next question comes from the line of Timur Braziler of Wells Fargo. Please go ahead.
Speaker Change: Our next question comes from the line of <unk> of Wells Fargo. Please go ahead.
Timor Braziler: Our next question comes from the line of Timor Braziler of Wells Fargo. Please go ahead. Hi, good afternoon. I want to first follow up on the deposit line of questioning. I think if I heard correctly, there was some chunkiness and in deposit flows, one cue. I'm just wondering if you look at that portfolio, if there's anything that's expected to exit the bank here in the near term, and just talking to maybe more near term deposit trend.
Timur Braziler: Hi, good afternoon. I want to first follow up on the deposit line of questioning. I think if I heard correctly, there was some chunkiness in deposit flows in Q1. I'm just wondering if you look at that portfolio, if there's anything that's expected to exit the bank here in the near term. And just talking to maybe more near-term deposit trends, can you just remind us what kind of the seasonal cadence is for First Bank and what the expectation is maybe over these next couple of quarters on the deposit side?
Speaker Change: Hi, good afternoon.
Speaker Change: I wanted to first follow up on the deposit line of questioning.
Speaker Change: I think if I heard correctly, there were some chunky knits and in deposit flows <unk> I'm just wondering as you look at that portfolio. If there is anything that expected to exit the bank here in the near term and just talking to maybe more near term deposit trend.
Unknown Executive: Can you just remind us what kind of the seasonal cadence is for First Bank and what the expectation is maybe over these next couple of quarters on the deposit? The I mean, if you look, we we had a couple of cases that were deposited at the deposits we got at the end of the year, meaning at the end of the year meeting in the last quarter of the year, one one Florida customer, one Puerto Rico customer that they mentioned that there were, you know, the monies were your mark for some specific projects, and they would have been moved.
Speaker Change: Can you just remind us what kind of the seasonal cadence for first bank and what the expectation is maybe over these next couple of quarters on the deposit side.
Orlando Berges: We had a couple of cases that were deposits we got at the end of the year, meaning in Q4. One Florida customer, one Puerto Rico customer, that they mentioned that the monies were earmarked for some specific projects, and they would have be moved. We thought it was going to be at the end of last year. Did not happen. It happened early this year. That was chunky component that moved out. There's nothing specifically on what we have in the portfolio today other than there's always going to be some kind of variability on the deposits on the public fund side because they have large components that come in and out.
I mean.
Speaker Change: We had a couple of cases that were deposited deposits. We got at the end of the year.
Speaker Change: At the end of the year meeting in the last quarter of the year.
Speaker Change: One one Florida.
Speaker Change: Customer when Puerto Rico customer that Dave mentioned that there were the monies were earmarked for some specific projects and they would have removed.
Unknown Executive: We thought it was going to be at the end of last year did not happen. It happened early this year. So that was a chunky component that that moved out. But there's nothing specifically on what we have in the portfolio today, other than there's always going to be some kind of, of variability on the deposits on the public fund side. Because they have large components that come in and out. But on the commercial and retail side, we don't have any like what we knew from what we had at the end of the year on those two specific customers.
Speaker Change: We thought it was going to be at the end of last year did not happen. It happened early this year so that was.
Speaker Change: Chunky component that moved out.
But there is nothing specifically on what we have in the portfolio today other than there is always going to be some kind of.
Speaker Change: Or my ability under deposits on the public fund side.
Speaker Change: Because they have large components that come in and out.
Orlando Berges: On the commercial and retail side, we don't have any like what we knew from what we had at the end of the year on those two specific customers.
Speaker Change: But on the on the commercial and retail side, we don't have any any.
Speaker Change: Like what we knew from from what we had at the end of the year on those two specific customers.
Speaker Change: Sure.
Timur Braziler: Okay. Then to that, maybe just going back to the Florida conversation, you had talked about the $12.6 million hospitality credit. It looks like there was another one that was called out that migrated to classified. Can you just maybe talk through what that loan was? More recently, there's some news on just the Florida condo market and how much more expensive that's become. Can you just remind us of what exposure, if any, you have to the condo market in Florida?
Speaker Change: Okay and then.
Unknown Executive: Okay, and then to that, um, maybe just going back to the Florida conversation, you had talked about the $12.6 million hospitality credit. It looks like there was another one that was called out that that migrated to classify. Can you just maybe talk through what that loan was?
Speaker Change: Ed.
Speaker Change: Maybe just going back to the Florida conversation you had talked about the $12 6 million dollar hospitality credit it looks like there was another one that was called out that that migrated to classify can you just maybe talk through what that loan was in more recently there is some news and just the Florida.
Unknown Executive: And, you know, more recently, there's some news on just the Florida condo market and how much more expensive that's become. Can you just remind us of what exposure expenditure you have to the condo market in Florida? to the condo market. Well, this one in hospitality was not condo. I'm trying to remember which one was moved to classified because that was the one that was moved. There's nothing significant that I remember. Let me take a look at here, other than this. It's only that one case of Florida. But condo market, in terms of exposures, we don't have any in Florida.
Speaker Change: Condo market and how much more expensive that becomes can you just remind us of what exposure. If any you have to the condo market in Florida.
Speaker Change: Okay.
Orlando Berges: To the condo market? Well, this one in hospitality was not condo. I'm trying to remember which one was moved to classified because that was the one that was moved. There's nothing significant that I remember. Let me take a look at here. Other than this.
Speaker Change: To the condo market.
Speaker Change: Well, there's one in hospitality was not condo.
Speaker Change: I'm.
Speaker Change: Trying to remember, which one was moved to classified because that was the one that was moved.
Speaker Change: There is nothing significant that I remember, let me take a look at here.
Ramon Rodriguez: It's only that one case of Florida.
Speaker Change: Other than this suddenly that one case of Florida, but but.
Orlando Berges: Condo market, in terms of exposures, we don't have any in Florida.
Speaker Change: Condo market in terms of exposures, we don't have any Florida, we don't have any on the construction, we do have suddenly the mortgage portfolio, but it's very small.
Ramon Rodriguez: We don't have any under construction. We do have some in the mortgage portfolio, but it's very small.
Unknown Executive: We don't have any on the construction. We do have some in the mortgage portfolio, but it's very small. Great.
Speaker Change: Okay.
Timur Braziler: Great. Thank you.
Speaker Change: Great.
Unknown Executive: Thank you.
Ramon Rodriguez: Thank you.
Speaker Change: Thank you.
Operator: We currently have no further questions, so I will hand back to Ramon Rodriguez for closing remarks.
unknown: We currently have no further questions I will hand back to rambling Rodriguez for closing remarks.
Ramon Rodriguez: We currently have no further questions, so I will hand back to Ramon Rodriguez for closing remarks. Thanks to everyone for participating in today's call.
Ramon Rodriguez: Thanks to everyone for participating in today's call. We will be attending Wells Fargo Financial Services Conference in Chicago on 13 May. We look forward to seeing a number of you at this event, and we greatly appreciate your continued support. Have a great day. Thank you.
unknown: Thanks to everyone for participating in today's call, we will be attending Wells Fargo Financial services Conference in Chicago on May 13, we look forward to seeing a number of you at this event and we greatly appreciate your continued support have a great day. Thank you.
Ramon Rodriguez: We will be attending Wells Fargo Financial Services Conference in Chicago on May 13th. We look forward to seeing a number of you at this event, and we greatly appreciate your continued support.
Unknown Executive: Have a great day. Thank you.
Operator: This concludes today's call. Thank you for joining. You may now disconnect your lines.
unknown: This concludes today's call. Thank you for joining you may now disconnect your lines.
Unknown Executive: This concludes today's call. Thank you for joining.
Unknown Executive: You may now disconnect your line.
unknown: Okay.
unknown: [music].