First BanCorp reports growth in Q3 driven by strong loan performance
The bank is also advancing its digital transformation efforts, with more than 60% of its customers now enrolled in digital platforms.
First BanCorp, parent company of First Bank Puerto Rico, reported a net income of $73.7 million for the third quarter ended Sept. 30, equivalent to $0.45 per diluted share, a slight decrease from the $75.8 million ($0.46 per diluted share) reported in the second quarter of 2024.
This decline was largely attributed to increased credit loss provisions, which rose from $11.6 million to $15.2 million. However, the bank’s return on average assets (ROAA) remained strong at 1.55%, reflecting its ability to generate consistent earnings relative to its asset base.
“Our third quarter results reflect our commitment to deliver consistent performance and our ability to generate organic capital on the back of a stable environment in our main market,” said CEO Aurelio Alemán. “We posted a strong return on assets of 1.55%, maintained positive credit performance and stable deposit trends, and made good progress on our capital deployment strategy.”
The bank’s loan portfolio experienced growth in the third quarter, driven by strong origination activity, according to the bank’s financial report.
Loan originations reached $1.2 billion, contributing to a 2% increase in total loans, which now stand at $12.5 billion. This growth included several loan portfolios, except for credit card use.
“Our loan portfolio grew by $63 million despite higher levels of unexpected commercial prepayments that amounted to approximately $122 million in the third quarter,” Alemán said.
Despite a slight decline in total deposits, which fell by $76.8 million to $15.8 billion, the bank’s core deposits remained stable at $12.7 billion.
“Net interest income and the margin continued to expand after reaching a trough in the first quarter. We continue to expect that our bond book repricing opportunities will allow for some net interest income expansion in 2025,” Alemán said.
Net interest income rose by $2.5 million to $202.1 million compared to $199.6 million during the prior quarter, mainly due to higher loan volumes and an increase of approximately $1.2 million associated with an additional day in the quarter. The net interest margin also increased slightly to 4.25%, compared to 4.22%, the bank reported.
During the quarter, First BanCorp “deployed more than 100% of its quarterly earnings for the redemption of $50 million in junior subordinated debentures and the payment of common stock dividends,” Alemán said
“Our franchise is delivering solid results, we have a strong capital base, and we have ample flexibility to prudently allocate that capital into opportunities that best serve the long-term interests of our clients, communities and shareholders,” he added.
Noninterest expenses increased by $4.2 million to $122.9 million, primarily due to higher payroll expenses and a decrease in net gains from other real estate-owned (OREO) operations. Despite these increases, the bank maintained its focus on cost control, achieving an efficiency ratio of 52.4%, only slightly higher than the 51.2% reported in the second quarter.
Alemán noted that Puerto Rico’s stable economic environment, supported by a strong labor market and increased business activity, continues to contribute to the bank’s performance.
The island’s unemployment rate remained low at 5.5%, while the tourism sector saw record-level activity. Additionally, federal support for reconstruction activities contributed to the positive economic backdrop, with more than $3.3 billion in reconstruction funds disbursed in 2024, up 14% year-to-date as of August.
“The economy remains on solid footing driven by positive labor market trends and increased business activity. This environment continues to support credit demand and has enabled our strongest quarter of commercial loan originations this year,” he said.
The bank is also advancing its digital transformation efforts, with more than 60% of its customers enrolled in digital platforms. Digital banking usage increased by 2.7% compared to the previous quarter, and more than 42% of commercial and retail deposits were captured through digital channels.
