First Ban(US:FBP)2021-07-23 18:53Financial Data and Key Metrics Changes - The company reported a net income of $70.6 million or $0.33 per share for Q2 2021, an increase from $61 million or $0.28 per share in the previous quarter [15][23] - Pre-tax pre-provision income rose to $96.6 million, up from $86.4 million in the last quarter [15][23] - The efficiency ratio improved to 60.6%, and adjusted for merger and COVID-related expenses, it was at 55% [16][34] - The allowance for credit losses decreased to $339 million, down $34 million from the prior quarter [38][40] Business Line Data and Key Metrics Changes - The consumer portfolio grew, driven by auto loans which increased by $98 million [18] - Non-interest income was impacted by a lack of contingent insurance commission received in the previous quarter, but transaction volumes on debit and credit cards increased [30] - Interest income from commercial and construction loans grew by $2.5 million, while interest expense decreased by $1.7 million [27][28] Market Data and Key Metrics Changes - The economic activity in Puerto Rico and Florida is approaching pre-pandemic levels, with improved consumer confidence reflected in retail sales and credit card activity [8][9] - Digital adoption increased, with registered users up 4% quarter-over-quarter and 20% year-over-year [10] - Government collections are on the rise, indicating improved economic activity [9] Company Strategy and Development Direction - The company is on track to complete full integration of operations, with significant synergies expected to be reflected in Q4 numbers [12] - Focus on digital transformation and enhancing customer support through integrated platforms [21] - The company aims to capture additional market share through its expanded franchise [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic recovery and its positive impact on the loan portfolio [21] - The company is well-positioned for the second half of the year, anticipating continued improvements in credit quality and economic conditions [21] - Management noted the importance of ongoing government stimulus in supporting customer liquidity [8] Other Important Information - The company repurchased 7.96 million shares for approximately $100 million under a $300 million repurchase program [17][45] - The total non-performing assets decreased by $29.3 million to $256 million, with non-accrual loans down to $183 million [42][44] Q&A Session Summary Question: Regarding expenses and guidance for future levels - Management expects to reach normalized expense levels of $117 to $119 million by Q4 2021, with savings from branch consolidations and service eliminations [48][50] Question: Outstanding merger expenses - Remaining merger restructuring charges are estimated to be between $4 million and $5 million for the second half of the year [52][53] Question: Capital management and buyback plans - The capital plan will be revisited next quarter, with potential adjustments based on franchise performance [55][56] Question: Asset quality metrics and loan loss reserves - Management aims for normalized reserve levels around 2.6%, with a target to reduce non-performing loans further [59][60] Question: Construction loan pipeline and timing - The construction pipeline is improving, linked to housing demand and investor activity, with expectations for continued growth [63][64]