First Ban(US:FBP)2023-07-27 21:38Financial Data and Key Metrics Changes - The company reported net income of $70.7 million or $0.39 per share, translating to a return on assets of 1.51% [95] - Net interest income for the quarter was $199.8 million, which was $1.1 million lower than the previous quarter [69] - The effective tax rate decreased to 30.1%, down from 31.2% in the previous quarter [69] - Operating expenses decreased by $2.4 million to $112.9 million compared to $115 million in the previous quarter [78] Business Line Data and Key Metrics Changes - The commercial loan portfolio interest income grew by $3.4 million, with a yield increase of 15 basis points [71] - Consumer loans saw an interest income increase of $3.9 million, driven by a $71.8 million growth in average balances [71] - The loan portfolio grew by approximately $140 million during the quarter, with consumer loans increasing by $88 million (10% linked-quarter annualized) and commercial loans increasing by $71 million (5% linked-quarter annualized) [100] Market Data and Key Metrics Changes - Total deposits increased by $768 million during the quarter, with government deposits rising by $761 million primarily in Puerto Rico [106] - The average cost of non-brokered time deposits grew by 63 basis points to 2.5% during the quarter [72] - The liquidity position remains strong, with total unused liquidity increasing to $5.6 billion, representing over 117% of uninsured deposits [107] Company Strategy and Development Direction - The company continues to operate with a conservative risk appetite while maintaining a well-diversified and balanced portfolio [102] - There is a focus on core deposit strategy, including increasing client share and launching new products [107] - The company is investing in technology and process improvements, particularly in migrating to cloud-based IT systems [61] Management's Comments on Operating Environment and Future Outlook - The economic backdrop in Puerto Rico is supported by a strong labor market and a consistent flow of federal disaster funds [108] - The company remains vigilant regarding the potential impact of monetary policy and economic slowdown on credit and loan demand [104] - Management expects interest income to continue growing in the next couple of quarters due to loan repricing and portfolio growth [75] Other Important Information - The provision for credit losses increased to $22.2 million, reflecting stable credit quality with non-performing assets at 63 basis points of total assets [96] - The company completed its capital planning process and approved a $225 million common share repurchase program [98] - The allowance for credit losses stands at $281 million, reflecting growth in the portfolio and projected deterioration in commercial real estate values [83] Q&A Session Summary Question: What are the expectations for government deposit balances over the next couple of quarters? - Management expects government deposits to remain stable, with some fluctuations based on ongoing projects related to energy [31] Question: Can you provide details on the average balance of public funds for the quarter? - The average balance of government deposits in Puerto Rico was $2.9 billion, up from $2.2 billion at the end of the last quarter [24] Question: What is the timeline for capital expenditures and how will delays affect expenses? - Delays in capital projects are ongoing, and expenses will remain lower for the next couple of quarters as projects progress at a slower pace [22]