First BanCorp. reports $70.7M in 1Q23 net income
FirstBanCorp., parent company of FirstBank Puerto Rico, reported net income of $70.7 million, or $0.39 per diluted share, for the first quarter of 2023, representing a 14% drop when compared to the $82.6 million, or $0.41 per diluted share, reported for the first quarter of 2022.
In an interview with News is my Business, First BanCorp. CEO Aurelio Alemán attributed the year-over-year drop to a “one-time” event related to a credit provision stemming from the release of a reserve that had been established due to the COVID-19 pandemic.
When compared to the fourth quarter of 2022, the current result also reflects a slight drop from the $73.2 million, or $0.40 per diluted share.
However, return on average assets for the first quarter of 2023 remains strong at 1.55%.
Net interest income reached $200.9 million for the first quarter of 2023, compared to $185.6 million for the first quarter of 2022, and $205.5 million for the quarter ended Dec. 31, 2022.
The results for the first quarter of 2023 include a reduction of approximately $2.5 million in net interest income associated to the effect of two fewer days. In addition, there was an increase in interest expense because of a higher cost of deposits combined with a higher level of borrowings, partially offset by the upward repricing of variable-rate commercial loans, higher yields in the consumer loan portfolios, and higher average loan balances, the financial institution explained.
“We begin 2023 with very encouraging financial results for the franchise which once again prove the resiliency of our business model amidst changing market conditions. We delivered a strong Return on Average Assets of 1.55%, further strengthened our liquidity position, and registered our fifth consecutive quarter of loan growth,” Alemán said.
“We generated $70.7 million in net income and achieved a pre-tax pre-provision income of $118.1 million, up 6% when compared to the first quarter of 2022 and slightly down when compared to the previous quarter,” the CEO said.
“We registered healthy loan originations driven by steady consumer and commercial credit demand, particularly in Puerto Rico, where commercial and consumer loans grew by $92.3 million and $78.9 million, respectively, during the quarter,” Alemán said.
Total loans increased $28 million from the prior quarter to $11.6 billion as of March 31. The increase consisted of a $79.5 million growth in consumer loans, primarily auto loans and leases, partially offset by decreases of $32.9 million in residential mortgage loans and $18.6 million in commercial and construction loans. The increase consisted of a $141.5 million growth in the Puerto Rico region, partially offset by decreases of $108.6 million in the Florida region and $4.9 million in the U.S. Virgin Islands region.
“Our credit metrics continued to improve with early delinquency indicators decreasing across most portfolios and non-performing assets registering a decrease to 0.68% of total assets,” Alemán said.
Core deposits, which exclude brokered and government deposits, decreased by $142.7 million during the quarter reflecting reductions of $139.4 million in Florida and $14.6 million in the USVI, partially offset by an increase of $11.3 million registered in Puerto Rico.
“Over two-thirds of the deposit reduction took place in the first two months of the quarter and was primarily driven by Florida customers looking for higher yielding deposit alternatives outside the traditional banking sector,” he said.
“Our deposit base remained very stable following the March industry events as we opened more new deposit accounts during March than any of the prior 12 months. Our diversified deposit franchise is strategically distributed between retail and commercial customers, with low average balances per deposit account, and with over 70% of deposits insured or fully collateralized,” the banking executive explained.
First BanCorp. continued to execute its capital deployment strategy by repurchasing approximately $50 million in shares of common stock and raising the common stock dividend by 17% to $0.14 per share during the quarter.
“Considering the industry-wide uncertain environment, we opted to pause share buybacks during the second quarter, and we expect to resume share repurchases during the second half of the year,” he said.
“We believe that our robust capital and liquidity position coupled with our unwavering commitment to meet the banking needs of our customers will enable us to continue delivering shareholder value for the foreseeable future. We operate a well-diversified organization that serves as a vital source of credit to small businesses and consumers across multiple industries and are very fortunate to have their support and that of the communities we serve,” Alemán added.
