Skip to content
    FBP
    Earnings call· Jun 2026(Q2 FY26)

    FIRST BANCORP /PR/ FBP

    Jul 22, 2026 Source

    Executive summary

    First BanCorp. Q2 FY26 — Strong Core Performance and Loan Growth

    First BanCorp. delivered another quarter of strong core performance, marked by significant loan growth, particularly in commercial activity, and robust profitability metrics. The company's asset-sensitive balance sheet continued to benefit from the rate environment, driving NIM expansion. Management remains focused on organic growth, strategic investments in technology, and disciplined capital deployment through buybacks and dividends, while closely monitoring early delinquency trends.

    Highlights

    5

    • Net income increased 24% year-over-year to $96.1 million, or $0.62 per diluted share.

    • Pretax pre-provision income reached an all-time high of $138 million, up 11% from a year ago.

    • Total loans grew 5% on a linked-quarter annualized basis to $13.3 billion, driven by commercial activity.

    • Loan originations were $1.7 billion, reflecting a 21% year-over-year increase.

    • GAAP Net Interest Margin (NIM) expanded by 12 basis points quarter-over-quarter to 4.87%.

    Concerns

    2

    • Nonperforming assets grew $5.1 million quarter-over-quarter, mainly due to a $14.8 million C&I loan inflow in Florida.

    • Early stage delinquency increased by $32.9 million quarter-over-quarter, primarily driven by a $20.7 million rise in the auto and finance leases portfolio.

    Guidance & targets

    5
    CategoryTargetConfidence
    Full-year loan growth
    3% to 5%
    high materiality
    High
    Net Interest Margin (NIM) expansion
    3 to 5 basis points per quarter
    high materiality
    Medium
    Quarterly operating expenses (excluding OREO)
    $128 million to $130 million
    medium materiality
    Medium
    Annual effective tax rate
    Closer to 21%
    low materiality
    Medium
    Efficiency ratio
    Closer to the lower end of 50% to 52% range
    medium materiality
    Medium

    Segment performance

    1
    SegmentRevenueYoYQoQMargin
    Puerto Rico
    Commercial activity in Puerto Rico is a primary driver of loan growth. The hospitality sector shows significant and sustainable positive trends, attracting investor confidence. Construction activity and reshoring/manufacturing investments continue to provide economic support.
    Unemployment rate: 5.6%
    		————

    Operational metrics

    26
    Pretax pre-provision income
    $138 millionUp 11% YoY
    Q2 FY26
    Return on average assets (ROAA)
    2.02%Up from 1.89% QoQ
    Q2 FY26
    Net income (adjusted)
    $93 million
    Q2 FY26
    Diluted EPS (adjusted)
    $0.60
    Q2 FY26
    Income tax expense
    $24 millionDown from $25 million QoQ
    Q2 FY26
    Overall deposit cost
    2 basis pointsDeclined QoQ
    Q2 FY26

    Proactively managed funding costs.

    Cost of core deposits (ex-brokered and public funds)
    3.26%Decreased 8 bps QoQ
    Q2 FY26
    Cost of interest-bearing checking and savings accounts
    1.26%Increased 5 bps QoQ
    Q2 FY26

    Driven by higher rates on certain government accounts.

    Cost of brokered deposits
    9 basis pointsDecreased QoQ
    Q2 FY26
    Other income
    $35.7 millionDown from $37.7 million QoQ
    Q2 FY26
    Operating expenses (excluding OREO gains)
    $128.2 million
    Q2 FY26
    Nonperforming assets (excluding specific C&I loan)
    $9.7 millionDecreased QoQ
    Q2 FY26
    Inflows to non-accruals (excluding specific C&I loan)
    $8.4 millionLower QoQ
    Q2 FY26
    Early stage delinquency
    $32.9 millionUp QoQ
    Q2 FY26

    Management views this as a seasonal normalization after Q1 improvements due to tax refunds.

    Early stage delinquency (consumer portfolio)
    $10.3 millionLower vs. December 2025
    Q2 FY26
    Tangible book value per share
    $12.68Grew QoQ
    Q2 FY26
    Tangible common equity ratio
    10.08%Decreased 3 bps QoQ
    Q2 FY26
    AOCI impact on tangible book value per share
    $2.36
    Q2 FY26

    Related to other comprehensive loss adjustments from the investment portfolio.

    AOCI impact on tangible common equity ratio
    166 basis points
    Q2 FY26

    Related to other comprehensive loss adjustments from the investment portfolio.

    Loan originations
    $1.7 billionUp 21% YoY
    Q2 FY26

    Reflects strong activity and pipeline.

    Total deposits growth
    $274 millionUp QoQ
    Q2 FY26
    Active EBITDA users growth
    6%YoY
    Q2 FY26

    Reflects continued customer engagement through multichannel strategy.

    Deposit transactions captured by digital channels
    95%
    Q2 FY26

    Indicates high adoption of digital asset service channels.

    Investment portfolio repricing (H2 2026)
    $400 million
    H2 2026

    Expected cash flows from maturing securities to be reinvested into higher-yielding instruments.

    Investment portfolio repricing (2027)
    $100 million
    2027

    Expected cash flows from maturing securities to be reinvested into higher-yielding instruments.

    Total investment portfolio repricing (next 18 months)
    $1.2 billion
    Next 18 months

    Total amount of securities expected to reprice.

    Industry KPIs

    11
    MetricValueDetails
    Loans$13.3 billionUSD
    DepositsUp $274 millionUSD
    Cet1 ratio17%%
    Capital returns$50 millionUSD
    Allowance reserves$245 millionUSD
    Net interest income$229.1 millionUSD
    Net interest margin4.87%%
    Net charge offs npls49 basis pointsbps
    Total operating expenses$127.3 millionUSD
    Provision for credit lossesRelatively flat
    Efficiency ratio operating leverage48.1%%

    Risks & headwinds

    3
    Early stage delinquency increaseQ2 FY26

    Up $32.9 million QoQ, with $20.7 million in auto and finance leases.

    Mitigation: Management views this as a seasonal normalization after Q1 improvements and does not expect significant further uptake. They continue to closely monitor consumer behaviors.

    Nonperforming asset inflowQ2 FY26

    $14.8 million C&I loan in Florida region.

    Mitigation: The loan is described as well collateralized. Excluding this, nonperforming assets decreased by $9.7 million.

    Impact of tariffs on industrial sales

    Industrial sales continue to reflect the impact of tariffs.

    Mitigation: Not explicitly stated, but the company focuses on diversified loan growth and strategic investments to offset broader economic headwinds.

    What to watch in Q3 FY26

    5

    NIM expansion

    Q3 FY26
    Current4.80% (adjusted Q2 FY26)
    Target3-5 bps expansion

    Why it matters

    NIM trajectory is a key driver of profitability for banks, and continued expansion indicates strong asset sensitivity in the current rate environment.

    We expect for the remainder of 2026 our margin to expand by 3 to 5 basis points per quarter out of the 4.80% base.

    Q&A highlights

    5

    What types of originations are driving the strong loan growth, and what are the competitive dynamics and spreads like?

    Loan growth was primarily commercial, including acquisitions, CRE, construction, and C&I, with a good mix across middle-market assets. There were also significant government transactions related to debt refinancing. The auto consumer portfolio showed better stability than anticipated. The growth is diversified across asset classes.

    “On the commercial side, I think it's a good mix of some acquisitions by the larger player, some CRE, some construction, C&I. So it's a good mix of assets around development of warehousing, hotels, actually small piece on the health care part of it.”

    asked by Arren Cyganovich · answered by Aurelio Alemán-Bermúdez

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Profitability and Returns

    First BanCorp. reported net income of $96.1 million, or $0.62 per diluted share, marking a 24% year-over-year increase. Pretax pre-provision income reached a record $138 million, up 11% from the prior year. The company achieved a 2.02% return on average assets, extending its streak of ROAA above 1.5% to 18 consecutive quarters, highlighting consistent financial performance.

    02

    Accelerated Loan Growth and Robust Originations

    Total loans reached $13.3 billion, growing 5% on a linked-quarter annualized basis, primarily fueled by commercial activity in Puerto Rico. Loan originations were strong at $1.7 billion for the quarter, representing a 21% year-over-year increase. Management expects this level of activity to continue, reinforcing their full-year loan growth target of 3% to 5%.

    03

    Net Interest Margin Expansion and Deposit Dynamics

    Net interest income grew 3.7% quarter-over-quarter to $229.1 million. The GAAP net interest margin expanded by 12 basis points to 4.87%, or 5 basis points to 4.80% when excluding non-recurring📎 refinancing fees. The company proactively managed funding costs, with overall deposit costs declining 2 basis points. Core deposit costs (excluding brokered and public funds) decreased 8 basis points to 3.26%, while interest-bearing checking and savings costs increased slightly.

    04

    Asset Quality and Delinquency Trends

    Credit performance remained sound with net charge-offs at 49 basis points of average loans, down from 65 basis points in the prior quarter, mainly due to a decrease in the auto portfolio. Nonperforming assets increased by $5.1 million, driven by a single $14.8 million C&I loan in Florida, though excluding this, NPAs decreased by $9.7 million. Early stage delinquency rose by $32.9 million, primarily in auto and finance leases, but management views this as a seasonal normalization.

    05

    Capital Strength and Deployment

    The company maintained a strong CET1 ratio of 17%, providing ample capacity for strategic investments. First BanCorp. completed $50 million in share buybacks and paid a $0.20 per share dividend during the quarter. Management reiterated its commitment to delivering close to 100% of earnings to shareholders through buybacks and dividends, with future capital plans to be discussed in the next quarter.

    06

    Strategic Investments and Market Outlook

    First BanCorp. continues to invest in technology, including leveraging AI for process automation and customer experience enhancement. The Puerto Rico market shows positive trends with 5.6% unemployment, ongoing construction, and encouraging reshoring investments. The hospitality sector, in particular, demonstrates strong and sustainable growth, attracting significant investor confidence.

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