First BanCorp (FBP) Q2 2025 earnings summary

Executive summary

• Net income for Q2 2025 was $80.2 million ($0.50 per diluted share), up from $77.1 million in Q1 2025, with a return on average assets of 1.69% and a top-quartile efficiency ratio of 49.97%, reflecting strong franchise performance and disciplined expense management.

• Total loans grew 6% annualized to $12.9 billion, led by commercial loan production in Puerto Rico and Florida, while core deposits declined by $240.9 million due to large commercial account fluctuations; retail deposits remained stable.

• Asset quality remained stable to improving, with non-performing assets at 0.68% of total assets and annualized net charge-offs at 0.60%, down from 0.68% in Q1 2025.

• Capital deployment included $29 million in dividends, $28.2 million in share repurchases, and redemption of $11.1 million in junior subordinated debentures.

• Tangible book value per share increased to $11.16, and CET1 capital ratio was 16.61%, well above regulatory requirements.

Financial highlights

• Net interest income reached a record $215.9 million, up $3.5 million sequentially, with net interest margin rising to 4.56%.

• Non-interest income fell to $30.9 million, mainly due to lower insurance commissions and tax credit gains.

• Non-interest expenses were $123.3 million, up $0.3 million, with higher card processing costs offset by lower payroll and OREO gains.

• Provision for credit losses was $20.6 million, down from $24.8 million in Q1 2025, reflecting lower net charge-offs and improved macroeconomic forecasts.

• Book value per share rose to $11.43; tangible common equity ratio was 9.56%.

Outlook and guidance

• Management expects continued growth in commercial, construction, and residential mortgage portfolios, supported by positive macroeconomic trends and stable unemployment rates.

• Approximately $1.3 billion in investment portfolio cash flows are expected to be redeployed into loans or higher-yielding securities in the second half of 2025.

• Operating expenses are expected to be in the $125-126 million range per quarter, excluding OREO gains/losses, with efficiency ratio guidance at 50-52%.

• The company plans to continue capital deployment through dividends and share repurchases, with $66.6 million remaining authorized as of August 5, 2025.

• Projected effective tax rate for the full year is 23%.