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    FBP
    Earnings call· Mar 2026(Q1 FY26)

    FIRST BANCORP /PR/ Q1 FY26 earnings call FBP

    Apr 22, 2026 Source

    Executive summary

    First BanCorp Q1 FY26 — Strong Profitability and Capital Deployment

    First BanCorp delivered a strong Q1 FY26, marked by record pretax pre-provision income and robust profitability, with ROAA reaching 1.9%. The company maintained a high CET1 ratio of 16.9% while returning 92% of earnings to shareholders through buybacks and dividends. Despite a slight decline in total loans due to consumer lending softness, core deposit growth and improving credit quality trends underscore the franchise's resilience.

    Highlights

    5

    • Net income increased 21% year-over-year to $89 million, or $0.57 per share.

    • Pretax pre-provision income reached an all-time high of $131 million, up 5% from a year ago.

    • Return on average assets (ROAA) was 1.9%, marking the 17th consecutive quarter above 1.5%.

    • Core deposits (excluding brokered and public funds) were up 4.9% on a linked-quarter annualized basis.

    • Maintained a strong CET1 ratio of 16.9% after a 92% net payout through buybacks and dividends.

    Concerns

    3

    • Total loans declined slightly to $13.1 billion, consistent with prior year seasonality and expected softening in consumer lending demand.

    • Industry auto sales declined 19% compared to Q3 last year, indicating reduced consumer credit demand.

    • Increased qualitative loan loss reserves to account for geopolitical uncertainty in the Middle East.

    Guidance & targets

    5
    CategoryTargetConfidence
    Loan growth
    3% to 5%
    high materiality
    High
    Quarterly expense base (excluding OREO)
    $128 million to $130 million
    medium materiality
    High
    Efficiency ratio
    50% to 52%
    medium materiality
    High
    Net Interest Margin (NIM) expansion
    2 to 3 basis points per quarter
    high materiality
    High
    Technology spend growth rate
    sustain for 18 to 24 months, then decline
    low materiality
    Medium

    Segment performance

    1
    SegmentRevenueYoYQoQMargin
    Puerto Rico
    Commercial loan originations were very strong, up almost 11% year-over-year, driven by overall economic activity and deal timing, especially in infrastructure and construction. The energy sector's dependence on oil is now below 20%, reducing impact from rising oil costs. Tourism remains strong, and construction activity is active.
    Commercial loan originations: up 11% YoY
    		————

    Operational metrics

    37
    Pretax pre-provision income
    $131 millionup 5% YoY
    Q1 FY26

    Reached an all-time high.

    Return on average assets
    1.89%1.81% QoQ
    Q1 FY26

    Marks 17th consecutive quarter above 1.5%.

    Net payout ratio
    92%
    Q1 FY26

    Achieved through buybacks and dividends.

    Core deposit growth
    4.9%linked quarter annual basis
    Q1 FY26

    Reinforcing strength of relationship-driven franchise.

    Net interest income change
    down $1.8 millionup 4% YoY
    Q1 FY26

    Net interest income amounted to $221 million.

    Interest income on loans change
    down $6.5 million
    Q1 FY26

    Affected commercial portfolio pricing, specifically floating rate components.

    Commercial portfolio yield decline
    18 bps
    Q1 FY26

    Decline in yields on commercial portfolio.

    Interest income on investment securities change
    up $2.8 million
    Q1 FY26

    Mostly due to improved yields as cash flows were reinvested.

    Investment securities yield improvement
    22 bps
    Q1 FY26

    Improvement in yields on investment securities.

    Overall funding cost change
    down $3.5 million
    Q1 FY26

    Reduction in overall funding cost.

    Cost of interest-bearing checking and savings accounts
    1.21%down 4 bps QoQ
    Q1 FY26

    Cost of interest-bearing checking and savings accounts.

    Cost of time deposits
    down 5 bps
    Q1 FY26

    Cost of time deposits.

    Cost of broker deposits
    down 7 bps
    Q1 FY26

    Cost of broker deposits, with portfolio size also down.

    Noninterest income
    $37.7 millionup $3.3 million QoQ
    Q1 FY26

    Most of the change related to seasonal commissions.

    Operating expenses (reported)
    $127.1 millionincrease of $200,000 QoQ
    Q1 FY26

    Very much in line with expectations.

    Operating expenses (excluding OREO)
    $128 millionincrease of $300,000 QoQ
    Q1 FY26

    Compared to $127.7 million last quarter.

    Payroll expenses change
    up $1 million
    Q1 FY26

    Increase due to seasonal factors and stock grants.

    Nonperforming assets
    down $5.3 million
    Q1 FY26

    Credit quality continued to improve.

    Nonaccrual loans reduction
    $4.8 million
    Q1 FY26

    Reduction across all business lines.

    OREO balances reduction
    $1.2 million
    Q1 FY26

    OREO balances decreased.

    Repossessed autos increase
    $700,000
    Q1 FY26

    Increase in repossessed autos.

    Inflows to nonaccrual
    $34.3 milliondown $12 million QoQ
    Q1 FY26

    Inflows to nonaccrual loans.

    Early delinquency loans reduction
    $34.5 milliondown 24% QoQ
    Q1 FY26

    Most importantly, loans in early delinquency decreased.

    Tangible book value per share
    $12.45
    Q1 FY26

    Tangible book value per share grew.

    Tangible common equity ratio
    10.11%
    Q1 FY26

    Tangible common equity ratio expanded.

    Other comprehensive loss adjustment impact on TBV
    $2.28
    Q1 FY26

    Impact on tangible book value per share related to investment portfolio.

    Other comprehensive loss adjustment impact on TCE ratio
    160 bps
    Q1 FY26

    Impact on tangible common equity ratio related to investment portfolio.

    Securities maturing in Q2
    $250 million
    Q2 FY26

    Cash flows from maturing lower-yielding securities.

    Securities maturing in H2
    $350 million
    H2 FY26

    Cash flows from maturing lower-yielding securities.

    New securities yield
    280 bps higher
    Q1 FY26

    Yield on new investments replacing maturing securities.

    Puerto Rico energy dependence on oil
    below 20%
    Q1 FY26

    Reduced dependence due to conversion to LNG and renewables.

    Puerto Rico auto sales vs pre-pandemic
    6.5% above
    Q1 FY26

    Retail auto sales continue to be better than the prior cycle.

    Puerto Rico auto sales decline
    19%vs Q3 last year
    Q1 FY26

    Industry auto sales decline, with an adjusted figure for Q1 comparison.

    Puerto Rico new auto units
    95,000
    Q1 FY26

    Assumed number of new auto units.

    New clients added
    4,000
    Q1 FY26

    New client acquisition driven by sales efforts and branch expansions.

    Floating rate component of commercial loans
    just under 50%
    Q1 FY26

    Percentage of commercial loans with floating rates, impacting sensitivity to rate cuts.

    Effective tax rate
    21.9%21.6% in 2025
    Q1 FY26

    Estimated effective tax rate for 2026.

    Industry KPIs

    13
    MetricValueDetails
    Loans$13.1 billionUSD
    Depositsup 4.9%%
    Rotce ROE1.9%%
    Cet1 ratio16.9%%
    Capital returns$50 million buybacks, $31.5 million dividendsUSD
    Fee income lines$37.7 millionUSD
    Allowance reserves$245 millionUSD
    Net interest income$221 millionUSD
    Net interest margin4.75%%
    Net charge offs npls65 bpsbps
    Total operating expenses$127.1 millionUSD
    Provision for credit losseslower
    Efficiency ratio operating leverage49.1%%

    Risks & headwinds

    4
    Softening in consumer lending segmentQ1 FY26

    Total loans declined slightly to $13.1 billion; industry auto sales declined 19% compared to Q3 last year.

    Mitigation: Proactively managing risk in the segment; expecting additional commercial and mortgage growth to offset consumer contraction.

    Rising energy costs and potential inflation impactFuture

    Potential impact of oil cost, rising energy costs and other potential impact on inflation.

    Mitigation: Monitoring closely; Puerto Rico's energy dependence on oil is now below 20%, reducing impact.

    Geopolitical uncertaintyQ1 FY26 onwards

    Higher qualitative loan loss reserve included in ACL.

    Mitigation: Increased reserves to account for wider range of potential macroeconomic outcomes from Middle East unrest.

    Interest rate environment uncertaintyOngoing

    Uncertainty in terms of the timing and magnitude of future rate adjustments.

    Mitigation: Balance sheet remains well positioned for additional NIM expansion; NIM guidance includes some rate cut assumptions for late 2026.

    What to watch in Q2 FY26

    5

    Loan growth

    FY26
    CurrentTotal loans declined slightly to $13.1 billion
    TargetAchieve 3-5% loan growth

    Why it matters

    Loan growth is a key driver of Net Interest Income and overall bank profitability.

    So we sustains our loan growth guidance of 3% to 5% that we initiated that we mentioned in the last call.

    Q&A highlights

    6

    What needs to happen to achieve the 3-5% loan growth guidance, and are consumer payoffs expected to slow?

    Management expects consumer payoffs and originations to settle by year-end. They anticipate additional commercial growth in Puerto Rico and Florida, along with mortgage portfolio growth, to offset the contraction in the consumer portfolio. Auto sales, while lower, remain above pre-pandemic levels.

    “Well, it's going to take til the end of the year to consumer payoff and originations to settle. So some of that additional contraction in the consumer portfolio is a reality.”

    asked by Brett Rabatin · answered by Aurelio Alemán-Bermúdez

    2 min read5 chapters

    Detailed Narrative

    01

    Profitability & Efficiency Highlights

    First BanCorp achieved an all-time high pretax pre-provision income of $131 million in Q1 FY26, representing a 5% year-over-year increase. The company reported a robust 1.9% return on average assets, marking its 17th consecutive quarter above 1.5%. Net interest margin expanded by 7 basis points quarter-over-quarter to 4.75%, surpassing the original guidance of 2 to 3 basis points expansion per quarter. The efficiency ratio improved slightly to 49.1% from 49.3% in the prior quarter.

    02

    Loan & Deposit Dynamics

    Total loans experienced a slight decline to $13.1 billion, attributed to expected seasonality and a softening in the consumer lending segment, particularly auto sales. Despite this, commercial loan pipelines remain healthy, and the company expects growth in the mortgage portfolio. Core deposits, excluding brokered and public funds, demonstrated strong growth, increasing by 4.9% on a linked-quarter annualized basis, driven by successful new client and account acquisition efforts.

    03

    Credit Quality Trends

    Credit performance remained a key strength, characterized by stable charge-offs and record low levels of nonperforming assets. Early-stage delinquencies saw a significant improvement, declining by 24% quarter-over-quarter, primarily due to a $31 million decrease in consumer auto loan delinquencies. The allowance for credit losses decreased slightly to $245 million, or 1.87% of loans, but includes a higher qualitative reserve to account for geopolitical uncertainties.

    04

    Capital Management & Shareholder Returns

    The company maintained a strong capital position with a CET1 ratio of 16.9% at quarter-end. Capital deployment included repurchasing $50 million in shares and declaring $31.5 million in dividends, resulting in a net payout of 92% of earnings. Tangible book value per share grew to $12.45, and the tangible common equity ratio expanded to 10.11%, with management noting a $2.28 per share impact from other comprehensive loss adjustments.

    05

    Economic Environment & Strategic Focus

    Business activity and economic conditions across core markets, including Puerto Rico and Florida, continue to be stable, supported by a resilient labor market and ongoing reconstruction efforts. The company is actively investing in technology, including AI, to enhance service delivery, improve internal processes, and provide more personalized customer interactions. A significant portion of the infrastructure is migrating to cloud-based solutions, with tech spend expected to sustain for 18-24 months before declining.

    AI-generated summary of the company’s earnings call. Not investment advice.