First BanCorp (FBP) Q4 2023 earnings summary

Executive summary

• FY 2023 net income was $302.9M ($1.71 diluted EPS); Q4 net income was $79.5M ($0.46 diluted EPS).

• FY loans grew $627.7M, or 5.4%; Q4 loans rose $233.0M, or 1.9%, to $12.2B, while core deposits declined $261.9M, or 2.0%.

• Q4 non-performing assets fell $4.3M to $125.9M; provision expense and consumer charge-offs increased.

Financial highlights

• FY net income was $302.9M versus $305.1M in 2022; diluted EPS was $1.71 versus $1.59, and net interest income was $797.1M versus $795.3M.

• Q4 net interest income declined $3.0M QoQ to $196.7M; NIM was 4.14% versus 4.15%, as higher funding costs and lower average earning assets outweighed loan yield gains.

• Q4 provision for credit losses rose to $18.8M from $4.4M; annualized net charge-offs increased to 0.69% from 0.48%.

• Q4 non-interest income rose to $33.6M, including a $3.0M Florida banking-premise sale gain; non-interest expense was $126.6M, including a $6.3M FDIC assessment.

• Q4 adjusted pre-tax, pre-provision income was $110.0M versus $113.4M; FY adjusted pre-tax, pre-provision income was $459.5M versus $475.3M in 2022.

Outlook and guidance

• 2024 priorities include gaining share in key segments, sustaining expense discipline, redeploying low-yielding securities, and proactively managing an expected credit-cycle correction.

• A significant portion of unfunded construction loan originations is expected to disburse during 2024; planned investments target simpler commercial lending, franchise resilience, and expanded digital offerings.

• Consumer lending faces credit-cycle correction amid lower excess liquidity and inflation; reserve coverage, risk management, strong labor conditions, and federal support are viewed as mitigants.

• Capital priorities include funding organic loan growth, maintaining strong capital, sustaining buybacks and dividends, and investing in the franchise.