First Ban(US:FBP)2025-07-22 13:30markdown [Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) First BanCorp. reported strong Q2 2025 performance with increased net income, robust loan production, stable credit trends, and disciplined expense management, as reflected in key financial metrics [Overall Performance](index=1&type=section&id=Overall%20Performance) First BanCorp. reported a strong second quarter of 2025, with net income increasing to $80.2 million, or $0.50 per diluted share, driven by record net interest income, solid loan production, stable credit trends, and disciplined expense management. The Corporation also continued its capital deployment plan, including share repurchases and dividend payouts, while maintaining a robust balance sheet - Net income for Q2 2025 was **$80.2 million**, or **$0.50** per diluted share, an increase from **$77.1 million** (**$0.47** per diluted share) in Q1 2025 and **$75.8 million** (**$0.46** per diluted share) in Q2 2024[1](index=1&type=chunk) - Return on average assets was **1.69%**, driven by record net interest income, solid loan production, stable credit trends, and disciplined expense management[2](index=2&type=chunk) - Earnings per share and pre-tax pre-provision income grew by **9%** year-over-year, with an efficiency ratio sustained at **50%**[2](index=2&type=chunk) - Core loan growth was **6%** linked quarter annualized, primarily from strong commercial loan production in Puerto Rico and Florida[3](index=3&type=chunk) - Capital deployment included **$28 million** in common share repurchases, redemption of junior subordinated debentures, and a high common stock dividend payout ratio[4](index=4&type=chunk) [Key Financial Data](index=1&type=section&id=Key%20Financial%20Data) The Corporation's financial highlights for Q2 2025 show improvements in net interest income and net income compared to both the previous quarter and the prior year, alongside strong profitability and capital ratios Financial Highlights (Q2 2025 vs. Q1 2025 vs. Q2 2024) | Metric | Q2 2025 ($ millions) | Q1 2025 ($ millions) | Q2 2024 ($ millions) | YTD June 2025 ($ millions) | YTD June 2024 ($ millions) | | :-------------------------- | :------ | :------ | :------ | :------------ | :------------ | | Net interest income | 215.859 | 212.397 | 199.628 | 428.256 | 396.148 | | Provision for credit losses | 20.587 | 24.810 | 11.605 | 45.397 | 23.772 | | Non-interest income | 30.950 | 35.734 | 32.038 | 66.684 | 66.021 | | Non-interest expenses | 123.337 | 123.022 | 118.682 | 246.359 | 239.605 | | Income before income taxes | 102.885 | 100.299 | 101.379 | 203.184 | 198.792 | | Income tax expense | 22.705 | 23.240 | 25.541 | 45.945 | 49.496 | | Net income | 80.180 | 77.059 | 75.838 | 157.239 | 149.296 | | Net interest margin | 4.56% | 4.52% | 4.22% | 4.54% | 4.19% | | Efficiency ratio | 49.97% | 49.58% | 51.23% | 49.78% | 51.84% | | Earnings per share - diluted ($) | 0.50 | 0.47 | 0.46 | 0.97 | 0.90 | | Book value per share ($) | 11.43 | 10.91 | 9.10 | 11.43 | 9.10 | | Tangible book value per share ($) | 11.16 | 10.64 | 8.81 | 11.16 | 8.81 | | Return on average equity | 17.79% | 17.90% | 20.80% | 17.85% | 20.17% | | Return on average assets | 1.69% | 1.64% | 1.61% | 1.66% | 1.59% | [Quarterly Performance Analysis (Q2 2025 vs Q1 2025)](index=1&type=section&id=Quarterly%20Performance%20Analysis%20%28Q2%202025%20vs%20Q1%202025%29) This section analyzes First BanCorp.'s Q2 2025 performance against Q1 2025, detailing improvements in profitability and capital, alongside changes in balance sheet, asset quality, and liquidity [Profitability](index=1&type=section&id=Profitability) First BanCorp. saw an increase in net income and net interest income in Q2 2025 compared to Q1 2025, driven by lower interest expenses and a decrease in provision for credit losses. Non-interest income, however, declined due to seasonal factors - Net income increased by **$3.1 million** to **$80.2 million**, and diluted EPS rose from **$0.47** to **$0.50**[8](index=8&type=chunk) - Net interest income increased by **$3.5 million** to **$215.9 million**, partly due to an additional day in Q2 2025 and a **4 basis point** increase in net interest margin to **4.56%**, primarily from a decrease in the cost of funds[8](index=8&type=chunk) - Provision for credit losses decreased by **$4.2 million** to **$20.6 million**, mainly due to lower net charge-offs in consumer loans and finance leases, and improved macroeconomic forecasts[8](index=8&type=chunk) - Non-interest income decreased by **$4.8 million** to **$30.9 million**, primarily due to **$3.3 million** in seasonal contingent insurance commissions recorded in Q1 2025[8](index=8&type=chunk) - Non-interest expenses slightly increased by **$0.3 million** to **$123.3 million**, resulting in an efficiency ratio of **49.97%** (up from **49.58%**)[8](index=8&type=chunk) [Balance Sheet](index=1&type=section&id=Balance%20Sheet) Total loans increased significantly in Q2 2025, driven by commercial and industrial (C&I) loan growth across Florida and Puerto Rico. However, core deposits and government deposits experienced a reduction - Total loans increased by **$189.7 million** to **$12.9 billion**, with C&I loans increasing by **$156.1 million** (Florida: **$78.4 million**, Puerto Rico: **$64.4 million**)[8](index=8&type=chunk) - Core deposits (excluding brokered and government deposits) decreased by **$240.9 million** to **$12.7 billion**, mainly due to fluctuations in large commercial accounts in Puerto Rico[8](index=8&type=chunk) - Government deposits decreased by **$71.7 million** to **$3.4 billion**, primarily in Puerto Rico[8](index=8&type=chunk) - Brokered certificates of deposits (CDs) increased by **$44.1 million** to **$526.5 million**[8](index=8&type=chunk) [Asset Quality](index=1&type=section&id=Asset%20Quality) Asset quality improved in Q2 2025, with a decrease in non-performing assets and a lower annualized net charge-offs ratio, despite some inflows to nonaccrual status - Allowance for credit losses (ACL) coverage ratio slightly decreased to **1.93%** from **1.95%**[8](index=8&type=chunk) - Annualized net charge-offs to average loans ratio decreased to **0.60%** from **0.68%**, mainly due to lower net charge-offs in consumer loans and finance leases[8](index=8&type=chunk) - Non-performing assets decreased by **$1.4 million** to **$128.0 million**, despite a **$4.3 million** construction loan in the hospitality industry entering nonaccrual status[9](index=9&type=chunk) [Liquidity](index=2&type=section&id=Liquidity) Available liquidity decreased in Q2 2025, with a reduction in cash and cash equivalents, though the Corporation maintains substantial access to additional funding sources - Cash and cash equivalents amounted to **$736.7 million**, down from **$1.3 billion**[10](index=10&type=chunk) - Total available liquidity (cash, free high-quality liquid securities, and FHLB lending capacity) was **17.58%** of total assets, down from **18.76%**[10](index=10&type=chunk) [Capital](index=2&type=section&id=Capital) The Corporation's capital ratios remained strong and exceeded regulatory requirements, with an increase in the tangible common equity ratio - Declared **$29.0 million** in common stock dividends and repurchased **$28.2 million** in common stock[11](index=11&type=chunk) - Capital ratios exceeded required regulatory levels, with CET1 capital, Tier 1 capital, total capital, and leverage ratios at **16.61%**, **16.61%**, **17.87%**, and **11.41%**, respectively[11](index=11&type=chunk) - Tangible common equity ratio (non-GAAP) increased to **9.56%** from **9.10%**, driven by a decrease in tangible assets, quarterly earnings, and an increase in the fair value of available-for-sale debt securities[11](index=11&type=chunk) [Detailed Financial Review](index=3&type=section&id=Detailed%20Financial%20Review) A detailed review of First BanCorp.'s Q2 2025 financial results, focusing on the components and drivers of net interest income, non-interest income, non-interest expenses, and income taxes [Net Interest Income](index=3&type=section&id=Net%20Interest%20Income) Net interest income increased in Q2 2025, primarily due to a decrease in interest expense on interest-bearing liabilities, particularly borrowings, and an increase in interest income on loans. The net interest margin also improved Net Interest Income (Quarter Ended) | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | December 31, 2024 ($ millions) | September 30, 2024 ($ millions) | June 30, 2024 ($ millions) | | :---------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Interest income | 278.190 | 277.065 | 279.728 | 274.675 | 272.245 | | Interest expense | 62.331 | 64.668 | 70.461 | 72.611 | 72.617 | | Net interest income | 215.859 | 212.397 | 209.267 | 202.064 | 199.628 | | Net interest margin - GAAP | 4.56% | 4.52% | 4.33% | 4.25% | 4.22% | | Average rate on interest-bearing liabilities - GAAP | 2.14% | 2.23% | 2.35% | 2.45% | 2.45% | - Net interest income increased by **$3.5 million** to **$215.9 million** in Q2 2025, including **$1.6 million** from an additional day[14](index=14&type=chunk) - Interest expense on interest-bearing liabilities decreased by **$2.4 million**, driven by a **$2.5 million** decrease in borrowings interest expense (due to FHLB advance repayment and TruPS redemption) and a **$1.2 million** decrease in interest-bearing checking/savings accounts[16](index=16&type=chunk) - Interest income on loans increased by **$1.2 million**, primarily from commercial and construction loans (**$0.9 million** increase due to higher average balance and additional day effect)[16](index=16&type=chunk) - Net interest margin increased by **4 basis points** to **4.56%**, mainly reflecting a decrease in the cost of funds and a shift in asset mix towards higher-yielding investment securities and loan growth[17](index=17&type=chunk) [Non-Interest Income](index=4&type=section&id=Non-Interest%20Income) Non-interest income decreased in Q2 2025, primarily due to seasonal contingent insurance commissions recognized in the prior quarter and lower realized gains from purchased income tax credits Non-Interest Income (Quarter Ended) | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | December 31, 2024 ($ millions) | September 30, 2024 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Service charges and fees on deposit accounts | 9.756 | 9.640 | 9.748 | 9.684 | 9.725 | | Mortgage banking activities | 3.401 | 3.177 | 3.183 | 3.199 | 3.419 | | Insurance commission income | 2.538 | 5.805 | 2.274 | 3.003 | 2.786 | | Card and processing income | 11.880 | 11.475 | 12.155 | 11.768 | 11.523 | | Other non-interest income | 3.375 | 5.637 | 4.839 | 4.848 | 4.585 | | Total non-interest income | 30.950 | 35.734 | 32.199 | 32.502 | 32.038 | - Non-interest income decreased by **$4.8 million** to **$30.9 million** in Q2 2025[18](index=18&type=chunk) - The decrease was mainly due to **$3.3 million** in seasonal contingent insurance commissions recorded in Q1 2025 and a **$2.3 million** decrease from lower realized gains on purchased income tax credits[18](index=18&type=chunk) [Non-Interest Expenses](index=5&type=section&id=Non-Interest%20Expenses) Non-interest expenses saw a slight increase in Q2 2025, driven by higher credit and debit card processing expenses, partially offset by a decrease in employees' compensation and benefits Non-Interest Expenses (Quarter Ended) | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | December 31, 2024 ($ millions) | September 30, 2024 ($ millions) | June 30, 2024 ($ millions) | | :-------------------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Employees' compensation and benefits | 60.058 | 62.137 | 59.652 | 59.081 | 57.456 | | Occupancy and equipment | 22.297 | 22.630 | 22.771 | 22.424 | 21.851 | | Business promotion | 3.495 | 3.278 | 5.328 | 4.116 | 4.359 | | Professional service fees | 11.609 | 11.486 | 11.810 | 12.538 | 12.431 | | Taxes, other than income taxes | 5.712 | 5.878 | 5.994 | 5.665 | 5.408 | | FDIC deposit insurance | 2.235 | 2.236 | 2.236 | 2.164 | 2.316 | | Net gain on OREO operations | (0.591) | (1.129) | (1.074) | (1.339) | (3.609) | | Credit and debit card processing expenses | 7.747 | 5.110 | 7.147 | 7.095 | 7.607 | | Communications | 2.208 | 2.245 | 2.251 | 2.170 | 2.261 | | Other non-interest expenses | 7.001 | 7.600 | 6.451 | 6.929 | 6.315 | | Total non-interest expenses | 123.337 | 123.022 | 124.533 | 122.935 | 118.682 | - Total non-interest expenses increased by **$0.3 million** to **$123.3 million** in Q2 2025[20](index=20&type=chunk) - The increase was mainly due to a **$2.6 million** rise in credit and debit card processing expenses, as Q1 2025 included **$2.2 million** in reimbursements[20](index=20&type=chunk) - This was partially offset by a **$2.1 million** decrease in employees' compensation and benefits, primarily due to lower bonuses and payroll taxes, despite an increase in salary compensation[24](index=24&type=chunk) [Income Taxes](index=5&type=section&id=Income%20Taxes) Income tax expense decreased in Q2 2025 due to a lower estimated annual effective tax rate and the release of a tax contingency accrual - Income tax expense was **$22.7 million** in Q2 2025, down from **$23.2 million** in Q1 2025[22](index=22&type=chunk) - The decrease was driven by a lower estimated annual effective tax rate (**22.8%** in Q2 2025 vs. **23.7%** in Q1 2025) and a **$0.5 million** tax contingency accrual release[22](index=22&type=chunk)[23](index=23&type=chunk) [Credit Quality](index=6&type=section&id=Credit%20Quality) This section provides an in-depth analysis of First BanCorp.'s credit quality, covering trends in non-performing assets, early delinquencies, allowance for credit losses, and net charge-offs [Non-Performing Assets](index=6&type=section&id=Non-Performing%20Assets) Total non-performing assets decreased in Q2 2025, primarily due to reductions in OREO and consumer loans, despite some new nonaccrual inflows Non-Performing Assets (Quarter Ended) | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | December 31, 2024 ($ millions) | September 30, 2024 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Total nonaccrual loans held for investment | 100.098 | 98.461 | 87.467 | 89.344 | 96.173 | | OREO | 14.449 | 15.880 | 17.306 | 19.330 | 21.682 | | Other repossessed property | 11.868 | 13.444 | 11.859 | 8.844 | 7.513 | | Other assets | 1.576 | 1.599 | 1.620 | 1.567 | 1.532 | | Total non-performing assets | 127.991 | 129.384 | 118.252 | 119.085 | 126.900 | | Past due loans 90 days and still accruing | 29.535 | 37.117 | 42.390 | 43.610 | 47.173 | | Nonaccrual loans held for investment to total loans held for investment | 0.78% | 0.78% | 0.69% | 0.72% | 0.78% | | Non-performing assets to total assets | 0.68% | 0.68% | 0.61% | 0.63% | 0.67% | - Total non-performing assets decreased by **$1.4 million** to **$128.0 million** as of June 30, 2025[28](index=28&type=chunk) - This decrease was mainly due to a **$3.0 million** reduction in OREO and other repossessed assets and a **$2.5 million** decrease in consumer loans and finance leases[28](index=28&type=chunk) - Inflows to nonaccrual loans held for investment decreased by **$9.0 million** to **$34.4 million** in Q2 2025[28](index=28&type=chunk) [Early Delinquency](index=7&type=section&id=Early%20Delinquency) Total loans in early delinquency slightly increased in Q2 2025, driven by consumer auto loans, partially offset by decreases in residential mortgage and commercial/construction loans - Total loans held for investment in early delinquency increased by **$2.8 million** to **$134.0 million** as of June 30, 2025[30](index=30&type=chunk) - Consumer loans in early delinquency increased by **$6.3 million** to **$104.8 million**, primarily due to a **$9.5 million** increase in auto loans[30](index=30&type=chunk) - Residential mortgage loans in early delinquency decreased by **$2.7 million**, and commercial and construction loans decreased by **$0.8 million**[30](index=30&type=chunk) [Allowance for Credit Losses](index=8&type=section&id=Allowance%20for%20Credit%20Losses) The Allowance for Credit Losses (ACL) for loans and finance leases increased slightly, driven by commercial and construction loan growth, while the provision for credit losses decreased due to improved macroeconomic forecasts and lower net charge-offs Allowance for Credit Losses Activity (Quarter Ended) | Metric | Q2 2025 ($ millions) | Q1 2025 ($ millions) | | :------------------------------------------------ | :------ | :------ | | ACL, beginning balance | 247.269 | 243.942 | | Provision for credit losses - expense (benefit) | 20.381 | 24.837 | | Net recoveries (charge-offs) | (19.072) | (21.510) | | ACL, end of period | 248.578 | 247.269 | | ACL on loans to amortized cost | 1.93% | 1.95% | - ACL for loans and finance leases increased by **$1.3 million** to **$248.6 million** as of June 30, 2025[32](index=32&type=chunk) - The increase was mainly in ACL for commercial and construction loans (**$2.7 million** increase) due to C&I loan growth, and residential mortgage loans (**$0.8 million** increase)[33](index=33&type=chunk) - Provision for credit losses on loans and finance leases decreased by **$4.4 million** to **$20.4 million** in Q2 2025, driven by improved macroeconomic forecasts and lower net charge-offs[34](index=34&type=chunk) - The ratio of ACL for loans and finance leases to total loans held for investment was **1.93%**, down from **1.95%**[36](index=36&type=chunk) [Net Charge-Offs](index=9&type=section&id=Net%20Charge-Offs) Net charge-offs decreased in Q2 2025, primarily due to a reduction in consumer loans and finance leases net charge-offs and C&I net recoveries Annualized Net Charge-Offs to Average Loans Ratio (Quarter Ended) | Loan Type | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :-------------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Residential mortgage | -0.00% | 0.00% | 0.04% | -0.01% | 0.01% | | Construction | -0.02% | -0.02% | -0.17% | -0.02% | -0.02% | | Commercial mortgage | -0.01% | -0.01% | -0.01% | -0.01% | -0.07% | | C&I | -0.09% | -0.01% | 0.02% | 0.15% | -0.08% | | Consumer loans and finance leases | 2.12% | 2.31% | 2.59% | 2.46% | 2.38% | | Total loans | 0.60% | 0.68% | 0.78% | 0.78% | 0.69% | - Net charge-offs were **$19.1 million** in Q2 2025, or an annualized **0.60%** of average loans, down from **$21.4 million** (**0.68%**) in Q1 2025[39](index=39&type=chunk) - The **$2.3 million** reduction was driven by a **$1.7 million** decrease in consumer loans and finance leases net charge-offs and **$0.8 million** in C&I net recoveries[39](index=39&type=chunk) [Allowance for Credit Losses for Unfunded Loan Commitments](index=9&type=section&id=Allowance%20for%20Credit%20Losses%20for%20Unfunded%20Loan%20Commitments) The Allowance for Credit Losses (ACL) for off-balance sheet credit exposures increased in Q2 2025 - ACL for off-balance sheet credit exposures increased to **$3.4 million** as of June 30, 2025, from **$3.1 million** as of March 31, 2025[40](index=40&type=chunk) [Allowance for Credit Losses for Debt Securities](index=9&type=section&id=Allowance%20for%20Credit%20Losses%20for%20Debt%20Securities) The Allowance for Credit Losses (ACL) for debt securities slightly decreased in Q2 2025 - ACL for debt securities was **$1.3 million** as of June 30, 2025, down from **$1.4 million** as of March 31, 2025[41](index=41&type=chunk) [Statement of Financial Condition](index=10&type=section&id=Statement%20of%20Financial%20Condition) An overview of First BanCorp.'s financial position as of Q2 2025, detailing changes in assets, liabilities, stockholders' equity, liquidity, and non-GAAP tangible common equity [Assets](index=10&type=section&id=Assets) Total assets decreased in Q2 2025, primarily due to a significant reduction in cash and cash equivalents, partially offset by increases in investment securities and total loans - Total assets were approximately **$18.9 billion** as of June 30, 2025, a decrease of **$209.5 million** from March 31, 2025[42](index=42&type=chunk) - Cash and cash equivalents decreased by **$591.6 million**, mainly due to overall deposit decreases, loan growth, and net cash outflow for investment securities purchases[47](index=47&type=chunk) - Investment securities increased by **$178.9 million**, driven by purchases of higher-yielding U.S. agencies' residential MBS and U.S. Treasury securities, and a **$41.2 million** increase in fair value of available-for-sale debt securities[47](index=47&type=chunk) - Total loans increased by **$189.7 million**, with commercial and construction loans rising by **$167.8 million**, residential mortgage loans by **$16.5 million**, and consumer loans by **$5.4 million**[47](index=47&type=chunk) - Total loan originations increased by **$231.5 million** to **$1.3 billion** in Q2 2025, with significant growth in commercial and construction loans in Puerto Rico and residential mortgage/commercial loans in Florida[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) [Liabilities and Stockholders' Equity](index=11&type=section&id=Liabilities%20and%20Stockholders%27%20Equity) Total liabilities decreased in Q2 2025, primarily due to a reduction in total deposits and borrowings. Stockholders' equity increased, driven by net income and fair value adjustments to debt securities - Total liabilities decreased by **$275.6 million** to approximately **$17.1 billion** as of June 30, 2025[49](index=49&type=chunk) - Total deposits decreased by **$268.5 million**, including a **$240.9 million** decrease in core deposits (mainly non-interest-bearing deposits in Puerto Rico) and a **$71.7 million** decrease in government deposits[52](index=52&type=chunk) - Brokered CDs increased by **$44.1 million** due to new issuances[52](index=52&type=chunk) - Other borrowings decreased by **$11.1 million** due to the redemption of junior subordinated debentures[52](index=52&type=chunk) - Total stockholders' equity increased by **$66.1 million** to **$1.8 billion**, driven by net income and a **$41.2 million** increase in the fair value of available-for-sale debt securities, partially offset by dividends and share repurchases[49](index=49&type=chunk) - Corporation's estimated CET1 capital, Tier 1 capital, total capital, and leverage ratios were **16.61%**, **16.61%**, **17.87%**, and **11.41%**, respectively, exceeding regulatory levels[50](index=50&type=chunk) [Liquidity Position](index=12&type=section&id=Liquidity%20Position) The Corporation's core liquidity decreased, but it maintains significant available funding capacity from various sources, providing robust overall liquidity - Cash and cash equivalents amounted to **$736.7 million**, down from **$1.3 billion**[53](index=53&type=chunk) - Total core liquidity (cash and free high-quality liquid securities) amounted to **$2.3 billion**, or **12.17%** of total assets, down from **$2.7 billion** (**14.25%**) in Q1 2025[53](index=53&type=chunk) - Available lending capacity at the FHLB was **$1.0 billion**, and borrowing capacity at the FED Discount Window Program was approximately **$2.7 billion**[53](index=53&type=chunk)[54](index=54&type=chunk) - Aggregate available liquidity to meet needs was **$6.0 billion**, representing **133%** of estimated uninsured deposits (excluding fully collateralized government deposits)[54](index=54&type=chunk) - Estimated uninsured deposits (excluding fully collateralized government deposits) were **$4.5 billion**, or **28.10%** of total deposits, down from **$4.6 billion** (**28.44%**) in Q1 2025[55](index=55&type=chunk) [Tangible Common Equity (Non-GAAP)](index=12&type=section&id=Tangible%20Common%20Equity%20%28Non-GAAP%29) The Corporation's tangible common equity ratio improved in Q2 2025, reflecting a decrease in tangible assets and positive financial performance Tangible Common Equity Reconciliation (Quarter Ended) | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | December 31, 2024 ($ millions) | September 30, 2024 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Total common equity - GAAP | 1845.455 | 1779.342 | 1669.236 | 1700.885 | 1491.460 | | Goodwill | (38.611) | (38.611) | (38.611) | (38.611) | (38.611) | | Other intangible assets | (4.535) | (5.715) | (6.967) | (8.260) | (9.700) | | Tangible common equity - non-GAAP | 1802.309 | 1735.016 | 1623.658 | 1654.014 | 1443.149 | | Total assets - GAAP | 18897.529 | 19106.983 | 19292.921 | 18859.170 | 18881.374 | | Tangible assets - non-GAAP | 18854.383 | 19062.657 | 19247.343 | 18812.299 | 18833.063 | | Tangible common equity ratio - non-GAAP | 9.56% | 9.10% | 8.44% | 8.79% | 7.66% | | Tangible book value per common share - non-GAAP | 11.16 | 10.64 | 9.91 | 10.09 | 8.81 | - The tangible common equity ratio (non-GAAP) increased to **9.56%** as of June 30, 2025, from **9.10%** as of March 31, 2025[56](index=56&type=chunk) - This improvement was driven by a decrease in tangible assets, quarterly earnings less dividends and repurchases, and a **$41.2 million** increase in the fair value of available-for-sale debt securities[56](index=56&type=chunk) [Exposure to Puerto Rico Government](index=13&type=section&id=Exposure%20to%20Puerto%20Rico%20Government) This section details First BanCorp.'s direct and indirect financial exposure to the Puerto Rico government, including municipal loans, obligations, and public sector deposits [Direct Exposure](index=13&type=section&id=Direct%20Exposure) Direct exposure to the Puerto Rico government remained stable in Q2 2025, primarily consisting of municipal loans and obligations, with a smaller portion in public corporations and a residential pass-through MBS - Direct exposure to the Puerto Rico government was **$286.9 million** as of June 30, 2025, a slight decrease from **$288.1 million** as of March 31, 2025[59](index=59&type=chunk) - Approximately **$196.2 million** consisted of loans and obligations of municipalities supported by assigned property tax revenues[59](index=59&type=chunk) - **$50.3 million** consisted of loans and obligations supported by specific municipal revenues[59](index=59&type=chunk) - The exposure also included **$8.7 million** in a loan to a Puerto Rico Electric Power Authority affiliate and **$28.9 million** in loans to public corporations[59](index=59&type=chunk) [Indirect Exposure](index=13&type=section&id=Indirect%20Exposure) Indirect exposure to the Puerto Rico public sector remained consistent, primarily through public sector deposits and unfunded loan commitments for low-income housing projects - Public sector deposits in Puerto Rico amounted to **$2.9 billion** as of June 30, 2025, consistent with March 31, 2025[61](index=61&type=chunk) - Approximately **21%** of public sector deposits were from municipalities and municipal agencies, and **79%** from public corporations, central government, and U.S. federal agencies[61](index=61&type=chunk) - Outstanding balance of construction loans funded through conduit financing for Low-Income Housing Tax Credit (LIHTC) programs was **$69.7 million**, with **$83.2 million** in unfunded loan commitments[62](index=62&type=chunk) [Non-GAAP Disclosures and Reconciliations](index=14&type=section&id=Non-GAAP%20Disclosures%20and%20Reconciliations) This section provides reconciliations and explanations for First BanCorp.'s non-GAAP financial measures, offering additional insights into core operating performance and capital adequacy [Overview of Non-GAAP Measures](index=14&type=section&id=Overview%20of%20Non-GAAP%20Measures) First BanCorp. uses non-GAAP financial measures to provide additional insights into its core operating performance and capital adequacy, believing these measures enhance analysis for investors and analysts - Non-GAAP financial measures are used to enhance the ability of analysts and investors to analyze trends and understand performance, particularly by excluding items not reflective of core operating performance (Special Items)[64](index=64&type=chunk)[65](index=65&type=chunk) - Examples of non-GAAP measures include adjusted net income, adjusted earnings per share, adjusted pre-tax, pre-provision income, tangible common equity, tangible book value per common share, and adjusted net interest income/margin[65](index=65&type=chunk) [Special Items](index=14&type=section&id=Special%20Items) The financial results for Q2 2024 and the six-month period ended June 30, 2024, included a special assessment expense from the FDIC related to losses in the Deposit Insurance Fund - A **$0.2 million** charge (**$0.1 million** after-tax) was recorded in Q2 2024, and **$1.1 million** (**$0.7 million** after-tax) for the six-month period ended June 30, 2024, for the FDIC special assessment expense[66](index=66&type=chunk) - This assessment was imposed by the FDIC due to losses in the Deposit Insurance Fund following certain financial institution failures in H1 2023[66](index=66&type=chunk) [Adjusted Pre-Tax, Pre-Provision Income](index=15&type=section&id=Adjusted%20Pre-Tax%2C%20Pre-Provision%20Income) Adjusted pre-tax, pre-provision income, a non-GAAP metric, showed a slight decrease quarter-over-quarter but a significant increase year-to-date, reflecting underlying operational performance trends - Adjusted pre-tax, pre-provision income is defined as income before income taxes, adjusted to exclude provisions for credit losses and certain Special Items[67](index=67&type=chunk) Adjusted Pre-Tax, Pre-Provision Income Reconciliation ($ millions) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Income before income taxes | 102.885 | 100.299 | 96.029 | 96.386 | 101.379 | | Add: Provision for credit losses expense | 20.587 | 24.810 | 20.904 | 15.245 | 11.605 | | Add: FDIC special assessment expense | - | - | - | - | 0.152 | | Adjusted pre-tax, pre-provision income | 123.472 | 125.109 | 116.933 | 111.631 | 113.136 | | Change from prior period (amount) | (1.637) | 8.176 | 5.302 | (1.505) | 2.609 | | Change from prior period (percentage) | -1.3% | 7.0% | 4.7% | -1.3% | 2.4% | - Adjusted pre-tax, pre-provision income for the six-month period ended June 30, 2025, was **$248.6 million**, an **11.1%** increase from **$223.7 million** in the same period of 2024[72](index=72&type=chunk) [Tangible Common Equity Ratio and Tangible Book Value per Common Share](index=15&type=section&id=Tangible%20Common%20Equity%20Ratio%20and%20Tangible%20Book%20Value%20per%20Common%20Share) These non-GAAP measures are used to assess capital adequacy, showing an improvement in Q2 2025, reflecting a stronger capital position relative to tangible assets - Tangible common equity is total common equity less goodwill and other intangible assets; tangible assets are total assets less goodwill and other intangible assets[68](index=68&type=chunk) - Tangible common equity ratio increased to **9.56%** as of June 30, 2025, from **9.10%** as of March 31, 2025[56](index=56&type=chunk)[57](index=57&type=chunk) - Tangible book value per common share increased to **$11.16** as of June 30, 2025, from **$10.64** as of March 31, 2025[57](index=57&type=chunk) [Net Interest Income Excluding Valuations, and on a Tax-Equivalent Basis](index=15&type=section&id=Net%20Interest%20Income%20Excluding%20Valuations%2C%20and%20on%20a%20Tax-Equivalent%20Basis) The Corporation presents net interest income, interest rate spread, and net interest margin on a tax-equivalent basis and excluding derivative valuations to provide a more comparable view of performance within the banking industry - These adjustments facilitate comparability and analysis by recognizing income tax savings on tax-exempt assets and removing the effect of derivative fair value changes[69](index=69&type=chunk) - Net interest margin on a tax-equivalent basis and excluding valuations was **4.71%** in Q2 2025, up from **4.65%** in Q1 2025[85](index=85&type=chunk) [Net Income and Reconciliation to Adjusted Net Income (Non-GAAP)](index=16&type=section&id=Net%20Income%20and%20Reconciliation%20to%20Adjusted%20Net%20Income%20%28Non-GAAP%29) Adjusted net income, a non-GAAP measure, aligns closely with GAAP net income for Q2 2025 and Q1 2025, as there were no significant special items impacting these periods Net Income Reconciliation to Adjusted Net Income ($ millions) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | YTD June 30, 2025 | YTD June 30, 2024 | | :------------------------------------------ | :------------ | :------------- | :------------ | :---------------- | :---------------- | | Net income, as reported (GAAP) | 80.180 | 77.059 | 75.838 | 157.239 | 149.296 | | Adjustments: FDIC special assessment expense | - | - | 0.152 | - | 1.099 | | Income tax impact of adjustments | - | - | (0.057) | - | (0.412) | | Adjusted net income (non-GAAP) | 80.180 | 77.059 | 75.933 | 157.239 | 149.983 | | Earnings per share - diluted (GAAP) | 0.50 | 0.47 | 0.46 | 0.97 | 0.90 | | Adjusted earnings per share - diluted (non-GAAP) | 0.50 | 0.47 | 0.46 | 0.97 | 0.90 | - For Q2 2025 and Q1 2025, GAAP net income and adjusted net income were identical, as no special items were reported for these periods[71](index=71&type=chunk) [Additional Information](index=16&type=section&id=Additional%20Information) This section provides supplementary information including conference call details, a safe harbor statement, company overview, and investor contact information [Conference Call / Webcast Information](index=16&type=section&id=Conference%20Call%20%2F%20Webcast%20Information) First BanCorp. hosted an earnings conference call and live webcast on July 22, 2025, with replay options available for investors - An earnings conference call and live webcast were held on Tuesday, July 22, 2025, at **10:00 a.m.** (Eastern Time)[73](index=73&type=chunk) - Replays of the webcast and telephone conference are available until July 22, 2026, and August 21, 2025, respectively[73](index=73&type=chunk) [Safe Harbor Statement](index=17&type=section&id=Safe%20Harbor%20Statement) The press release contains forward-looking statements subject to various risks and uncertainties, and readers are cautioned not to place undue reliance on them. The Corporation disclaims any obligation to update these statements - The press release includes forward-looking statements regarding future economic, operational, and financial performance, identified by words like 'expect,' 'anticipate,' and 'intend'[74](index=74&type=chunk) - Readers are cautioned not to place undue reliance on these statements, which are subject to various risks and uncertainties, including changes in interest rates, economic conditions, regulatory policies, and cybersecurity incidents[74](index=74&type=chunk) - The Corporation disclaims any obligation to update forward-looking statements, except as required by federal securities laws[74](index=74&type=chunk) [About First BanCorp.](index=18&type=section&id=About%20First%20BanCorp.) First BanCorp. is the parent company of FirstBank Puerto Rico, a commercial bank operating in Puerto Rico, the U.S. and British Virgin Islands, and Florida - First BanCorp. is the parent corporation of FirstBank Puerto Rico, which operates in Puerto Rico, the U.S. and British Virgin Islands, and Florida[76](index=76&type=chunk) - Its common stock trades on the New York Stock Exchange under the symbol FBP[76](index=76&type=chunk) [Contact Information](index=18&type=section&id=Contact%20Information) Contact details for investor relations are provided for inquiries regarding First BanCorp.'s financial performance - Ramon Rodriguez, Senior Vice President of Corporate Strategy and Investor Relations, is the contact for First BanCorp. inquiries[77](index=77&type=chunk) [Exhibit A - Financial Tables](index=19&type=section&id=Exhibit%20A%20-%20Financial%20Tables) Exhibit A provides detailed condensed consolidated financial statements and supplementary data, including statements of financial condition, income, selected financial ratios, net interest income reconciliations, average interest-earning assets and liabilities, loan portfolio breakdowns by geography, non-performing assets by geography, allowance for credit losses, annualized net charge-offs, and deposits