First Ban(FBP) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents First Bancorp's unaudited consolidated financial statements as of March 31, 2025, and for the quarter then ended, along with explanatory notes Consolidated Statement of Financial Condition Highlights (As of March 31, 2025 vs. December 31, 2024) | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Total Assets | $19,106,983 | $19,292,921 | ($185,938) | | Total Loans, net | $12,428,129 | $12,502,614 | ($74,485) | | Total Investment Securities | $4,669,661 | $4,934,304 | ($264,643) | | Total Liabilities | $17,327,641 | $17,623,685 | ($296,044) | | Total Deposits | $16,822,529 | $16,871,298 | ($48,769) | | Long-term borrowings | $331,143 | $561,700 | ($230,557) | | Total Stockholders' Equity | $1,779,342 | $1,669,236 | $110,106 | Consolidated Statement of Income Highlights (Quarter Ended March 31, 2025 vs. 2024) | Account | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $212,397 | $196,520 | $15,877 | | Provision for Credit Losses | $24,810 | $12,167 | $12,643 | | Non-interest Income | $35,734 | $33,983 | $1,751 | | Non-interest Expenses | $123,022 | $120,923 | $2,099 | | Net Income | $77,059 | $73,458 | $3,601 | | Diluted EPS | $0.47 | $0.44 | $0.03 | Note 2 – Debt Securities The debt securities portfolio, comprising AFS and HTM securities, showed a $475.5 million net unrealized loss on AFS securities as of March 31, 2025, primarily due to interest rate changes Debt Securities Portfolio Summary (As of March 31, 2025) | Security Type | Amortized Cost (in thousands) | Fair Value (in thousands) | Net Unrealized Loss (in thousands) | | :--- | :--- | :--- | :--- | | Available-for-Sale (AFS) | $4,788,924 | $4,312,884 | ($475,524) | | U.S. Gov't & GSEs | $1,738,032 | $1,679,582 | ($58,110) | | Mortgage-backed securities (MBS) | $3,049,892 | $2,632,302 | ($417,414) | | Held-to-Maturity (HTM) | $312,807 | $305,501 | ($7,306) | | Puerto Rico municipal bonds | $92,522 | $96,008 | $3,486 (Gain) | | MBS | $220,285 | $209,493 | ($10,792) | - The Corporation expects no credit losses on its U.S. government and agency debt securities, attributing unrealized losses to interest rate changes, not credit quality. The company does not intend to sell these securities before recovery[44] - The Allowance for Credit Losses (ACL) for AFS securities was $0.52 million, primarily for a Puerto Rico government obligation and private label MBS. The ACL for HTM securities was $0.84 million, entirely for Puerto Rico municipal bonds[47][54] Note 3 – Loans Held for Investment Total loans held for investment were $12.68 billion as of March 31, 2025, with nonaccrual loans increasing to $98.5 million, mainly due to a Florida commercial mortgage loan Loan Portfolio Composition (As of March 31, 2025) | Loan Category | Puerto Rico & VI Region (in thousands) | Florida Region (in thousands) | Total (in thousands) | | :--- | :--- | :--- | :--- | | Residential mortgage | $2,334,653 | $503,193 | $2,837,846 | | Construction | $193,791 | $40,650 | $234,441 | | Commercial mortgage | $1,781,402 | $720,287 | $2,501,689 | | Commercial & Industrial (C&I) | $2,289,278 | $1,070,590 | $3,359,868 | | Consumer | $3,736,076 | $5,478 | $3,741,554 | | Total Loans | $10,335,200 | $2,340,198 | $12,675,398 | Loan Delinquency Status (As of March 31, 2025) | Status | Amount (in thousands) | | :--- | :--- | | Current | $12,408,673 | | 30-89 Days Past Due | $131,216 | | 90+ Days Past Due & Accruing | $37,048 | | Nonaccrual | $98,461 | - Nonaccrual loans in the Florida region increased significantly to $21.4 million as of March 31, 2025, from $8.6 million at year-end 2024, primarily due to a $12.5 million commercial mortgage loan being placed on nonaccrual status[66][71] Note 4 – Allowance for Credit Losses (ACL) The Allowance for Credit Losses (ACL) for loans and finance leases increased to $247.3 million as of March 31, 2025, driven by qualitative adjustments for economic uncertainty ACL Roll-Forward (Quarter Ended March 31, 2025) | Description | Amount (in thousands) | | :--- | :--- | | Beginning Balance (Dec 31, 2024) | $243,942 | | Provision for Credit Losses | $24,837 | | Charge-offs | ($28,210) | | Recoveries | $6,700 | | Ending Balance (Mar 31, 2025) | $247,269 | - The ACL as a percentage of total loans held for investment increased to 1.95% at Q1 2025 from 1.91% at Q4 2024[116] - Net charge-offs for Q1 2025 were $21.4 million, compared to $11.2 million for Q1 2024. The increase was partly due to lower recoveries from bulk sales of charged-off consumer loans ($2.4 million in Q1 2025 vs. $9.5 million in Q1 2024)[115] Note 11 – Stockholders' Equity Stockholders' equity increased to $1.78 billion at March 31, 2025, following $21.8 million in stock repurchases and $50.6 million in debenture redemptions - The Board approved a $250 million repurchase program on July 22, 2024. In Q1 2025, the company executed $21.8 million in common stock repurchases and $50.6 million in redemption of junior subordinated debentures[148] - As of May 5, 2025, the Corporation had approximately $100.0 million remaining under its repurchase authorization[149] - A quarterly cash dividend of $0.18 per common share was declared for Q1 2025, an increase from $0.16 per share in Q1 2024[152] Note 19 – Regulatory Matters, Commitments and Contingencies The Corporation and FirstBank exceeded all minimum regulatory capital requirements as of March 31, 2025, with $2.1 billion in off-balance sheet commitments and a $7.4 million FDIC special assessment First BanCorp. Regulatory Capital Ratios (As of March 31, 2025) | Ratio | Actual | Minimum for Capital Adequacy | | :--- | :--- | :--- | | CET1 Capital Ratio | 16.62% | 4.5% | | Tier I Capital Ratio | 16.62% | 6.0% | | Total Capital Ratio | 17.96% | 8.0% | | Leverage Ratio | 11.20% | 4.0% | - Commitments to extend credit totaled approximately $2.1 billion as of March 31, 2025, including $0.8 billion in retail credit card lines[197] - The Corporation's total estimated FDIC special assessment related to the 2023 bank failures is $7.4 million, with $4.2 million remaining to be paid[202] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2025 financial results, including $77.1 million net income, a 36 bps net interest margin expansion to 4.52%, and comprehensive risk management strategies Executive Summary The Corporation reported $77 million net income and 1.64% return on average assets for Q1 2025, driven by margin expansion, core deposit growth, and $102.0 million in capital deployment - Reported net income of $77 million and return on average assets of 1.64% for Q1 2025[209] - Core customer deposits increased by $29 million, including a $70 million rise in non-interest-bearing deposits[209] - Capital deployment in Q1 2025 totaled approximately $102.0 million, including redemption of TruPS, common stock dividends, and share repurchases[212] Results of Operations Net income for Q1 2025 was $77.1 million, primarily due to a $15.9 million increase in net interest income and a 36 bps net interest margin expansion to 4.52% Key Performance Indicators (Q1 2025 vs. Q1 2024) | Indicator | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Return on Average Assets | 1.64% | 1.56% | | Return on Average Common Equity | 17.90% | 19.56% | | Efficiency Ratio | 49.58% | 52.46% | - Net interest income increased by $15.9 million YoY to $212.4 million, and net interest margin expanded 36 bps to 4.52%, driven by a favorable change in asset mix and lower funding costs[221] - The provision for credit losses increased to $24.8 million, impacted by lower recoveries from bulk loan sales and a $2.7 million increase in qualitative adjustments for economic uncertainty[221] Financial Condition Total assets decreased by $185.9 million to $19.1 billion at March 31, 2025, with a slight decrease in the loan portfolio and a $252.4 million reduction in AFS securities - Total assets stood at $19.1 billion as of March 31, 2025, a decrease of $185.9 million from year-end 2024[251] - The total loan portfolio was $12.7 billion, down $71.7 million from year-end, with a decrease in commercial loans in Puerto Rico partially offset by growth in Florida and the Virgin Islands[253] - The available-for-sale debt portfolio is expected to generate approximately $1.5 billion in cash inflows over the next twelve months, which will be redeployed into higher-yielding assets or used to repay maturing brokered CDs[262] Risk Management The Corporation maintains a comprehensive risk management framework, with $6.2 billion in available liquidity, a 16.62% CET1 ratio, and an increase in non-performing assets to $129.4 million - As of March 31, 2025, the Corporation had $6.2 billion in available liquidity sources, equivalent to 133% of estimated uninsured deposits (excluding fully collateralized government deposits)[277] - The tangible common equity ratio improved to 9.10% as of March 31, 2025, from 8.44% at year-end 2024[315] - Non-performing assets increased by $11.1 million to $129.4 million, mainly due to a $12.6 million commercial mortgage loan in Florida moving to nonaccrual status[358] - Direct exposure to the Puerto Rico government, its municipalities, and public corporations was $288.1 million as of March 31, 2025[384] Quantitative and Qualitative Disclosures About Market Risk This section refers to the market risk disclosures within the Management's Discussion and Analysis section of the report - The report directs readers to the Risk Management section of the MD&A for detailed information on market risk[393] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the reporting period, March 31, 2025[394] - No material changes to internal control over financial reporting occurred during the first quarter of 2025[395] PART II. OTHER INFORMATION Legal Proceedings This section refers to Note 19 of the financial statements for a discussion of legal proceedings, which are not expected to have a material adverse effect - For details on legal proceedings, the report refers to Note 19 of the consolidated financial statements[397] Risk Factors There have been no material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K[399] Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2025, the Corporation repurchased 1.38 million shares of common stock for $21.8 million, with $127.7 million remaining under the repurchase program Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | Remaining Authorization (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Jan 2025 | 327 | $18.16 | - | $200,000 | | Feb 2025 | - | - | - | $200,000 | | Mar 2025 | 1,376,489 | $18.27 | 1,194,567 | $127,692 | | Total | 1,376,816 | - | 1,194,567 | - | - The total shares purchased include 182,249 shares withheld to cover tax obligations upon the vesting of equity-based awards for employees[404]