First Ban(US:FBP)2025-10-23 15:00Financial Data and Key Metrics Changes - The company reported a net income of $100 million for Q3 2025, reflecting a 13% growth in normalized earnings per share compared to the prior year [4][12] - Return on average assets for the quarter was 2.1%, significantly higher than the previous quarter [12] - Net interest income reached $217.9 million, an 8% increase compared to Q3 2024 [15] Business Line Data and Key Metrics Changes - Total loans grew by $181 million or 5.6% linked quarter annualized, surpassing $13 billion in total loans for the first time since 2010 [5] - Core franchise deposits increased by $140 million, despite higher competition in the market [7] - The commercial and construction lending segments showed steady loan production, mitigating the slowdown in consumer credit demand [6] Market Data and Key Metrics Changes - Total retail sales in the industry were down 7% year to date as of September, with Q3 sales down 17% compared to the same period last year [6] - The company experienced a 7% reduction in non-performing assets, indicating stable asset quality [8][24] Company Strategy and Development Direction - The company plans to continue executing its growth strategy, focusing on organic growth and regional diversification [10][11] - An additional $200 million share buyback program was authorized, reflecting the strategy of returning 100% of annual earnings to shareholders [9][25] - The company is considering M&A opportunities in the Florida market to enhance its franchise [50] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the resiliency of the labor markets in Puerto Rico and the ongoing expansion of the manufacturing sector [10] - The company anticipates loan growth guidance for the year to be closer to the 3% to 4% range, influenced by evolving market conditions [11] - Management noted that while consumer credit demand has slowed, stability is expected in the consumer portfolio [31] Other Important Information - The effective tax rate for the full year is estimated to be around 22.2%, reflecting some expected improvements [91][92] - The company recorded a $16.6 million reversal of valuation allowance on deferred tax assets due to new legislation in Puerto Rico [13] Q&A Session Summary Question: Is the tax situation a one-time benefit? - Management indicated that while the reversal of deferred tax assets is a one-time event, there will be ongoing benefits from normal operating losses [28] Question: What is the health of the consumer in Puerto Rico? - Management noted that auto sales are normalizing and consumer credit demand is lower, but overall stability is expected in the consumer portfolio [30][31] Question: What are the expectations for deposit costs with upcoming rate cuts? - Management expects some reduction in deposit costs due to rate cuts, but noted that the timing of these changes may vary [46] Question: How does credit performance at other banks influence the company's reserves? - Management stated that they maintain a firm risk appetite and focus on their own portfolio performance, without seeing systemic impacts from competitors [47][48] Question: What are the company's priorities for capital deployment? - The company prioritizes organic growth but is open to M&A opportunities that complement its existing franchise [50] Question: Has there been any new competition from outside Puerto Rico banks? - Management confirmed that competition is primarily from smaller local players rather than new entrants from outside [56]