Earnings call transcript: First BanCorp beats EPS forecast in Q2 2025

First BanCorp (FBP) reported better-than-expected earnings for the second quarter of 2025, with earnings per share (EPS) of $0.50, surpassing the forecast of $0.46. The company reported a revenue shortfall, with actual revenue of $246.81 million against a forecast of $251.5 million. The mixed financial results led to a 4.07% increase in the company’s pre-market stock price to $22.75. According to InvestingPro data, FBP has demonstrated strong financial health with an overall score of 3.1 out of 4, earning a "GREAT" rating. The company’s trailing twelve-month revenue stands at $884.83 million, with a 2.45% growth rate.

Key Takeaways

• First BanCorp’s EPS exceeded expectations by 8.7%.
• Revenue fell short of forecasts by 1.86%.
• The company’s stock price rose 4.07% in pre-market trading.
• Continued investment in technology and innovation.
• Strong commercial loan growth in Puerto Rico and Florida.

Company Performance

First BanCorp demonstrated solid financial performance in Q2 2025, with net income of $80 million, translating to an EPS of $0.50. The company achieved a return on assets (ROA) of 1.69% and maintained a net interest margin of 4.56%, reflecting a 4 basis point increase. The efficiency ratio was at the lower end of the target range, indicating effective cost management.

Financial Highlights

• Revenue: $246.81 million, below the forecast of $251.5 million.
• Earnings per share: $0.50, surpassing the forecast of $0.46.
• Net interest income: $215.9 million, an increase of $3.5 million from the previous quarter.
• Efficiency ratio: 50%, at the low end of the target range.

Earnings vs. Forecast

First BanCorp’s EPS of $0.50 exceeded the forecast by 8.7%, marking a positive surprise for investors. However, revenue fell short by 1.86%, indicating challenges in meeting sales expectations. This mixed result highlights the company’s ability to manage costs and improve margins, despite revenue pressures.

Market Reaction

Following the earnings announcement, First BanCorp’s stock price increased by 4.07% in pre-market trading, reaching $22.75. This movement reflects investor optimism driven by the EPS beat and improved margins. The stock has shown impressive momentum, delivering a 19.72% year-to-date return and trading near its 52-week high of $22.39. InvestingPro analysis suggests the stock is currently trading above its Fair Value, with analysts setting price targets between $24 and $25. For deeper insights into FBP’s valuation and 8 additional exclusive ProTips, consider exploring the comprehensive Pro Research Report available on InvestingPro.

Outlook & Guidance

Looking ahead, First BanCorp anticipates mid-single-digit loan growth for the full year and projects a 5-7 basis point increase in margins in upcoming quarters. The effective tax rate is expected to be 23% for the year, with over $1 billion in investment portfolio cash flows projected for the second half of 2025. The company remains committed to deploying 100% of earnings in dividends, buybacks, and other capital returns. InvestingPro data highlights FBP’s strong shareholder focus, with a 12.5% dividend growth in the last year and a current dividend yield of 3.29%. The company has maintained an impressive track record of raising dividends for seven consecutive years.

Executive Commentary

"We continue to be return focused and allocate our capital where it makes more sense to our customers and shareholders," stated CEO Aurelio Aleman. He also noted, "The economic conditions and business activity in Puerto Rico and Florida are trending favorably," highlighting the company’s strategic focus on these regions.

Risks and Challenges

• Potential revenue shortfalls if market conditions worsen.
• Dependence on economic conditions in Puerto Rico and Florida.
• Policy uncertainties that may impact financial markets.
• Competition in the banking sector affecting loan growth.
• Interest rate fluctuations impacting net interest margins.

Q&A

During the earnings call, analysts inquired about the decline in deposits, which was primarily attributed to high-net-worth commercial customers. The company assured that these movements are non-recurring. Analysts also focused on loan growth prospects in Florida and Puerto Rico, with management expressing confidence in sustainable growth and improving consumer portfolio trends.

Full transcript - First Bancorp (FBP) Q2 2025:

Operator: Hello, and welcome, everyone, to the First BanCorp 2Q twenty twenty five Financial Results. My name is Becky, and I’ll be your operator today. I will now hand over to your host Ramon Rodriguez, IR Officer to begin. Please go ahead.

Ramon Rodriguez, IR Officer, First BanCorp: Thank you, Becky. Good morning, everyone, and thank you for joining Firstline Corp’s conference call and webcast discuss the company’s financial results for the second quarter of twenty twenty five. Joining you today from FirstBank Corp. Are Aurelio Aleman, President and Chief Executive Officer and Orlando Berrijes, Executive Vice President and Chief Financial Officer. Before we begin today’s call, it is my responsibility to inform you that this call may involve certain forward looking statements such as projections of revenue, earnings and capital structure as well as statements on the plans and objectives of the company’s business.

The company’s actual results could differ materially from the forward looking statements made due to the important factors described in the company’s latest SEC filings. The company assumes no obligation to update any forward looking statements made during the call. If anyone does not already have a copy of the webcast presentation or press release, you can access them at our website at fbpinvestor dot com. At this time, I’d like

Aurelio Aleman, President and Chief Executive Officer, First BanCorp: to turn the call over to our CEO, Aurelio Aleman. Thank you, Ramon. Good morning to everyone and thanks for joining our earnings call today. As usual, I will begin with discussing our financial performance and for the second quarter and then provide some high level macro observations and also share some business highlights for the franchise. We are very pleased to report another strong quarter.

The financial results underscore the strength of the franchise and ability to deliver consistent return to our shareholders. We earned $80,000,000 in net income, which translated into a strong return on asset of 1.69% driven by record net interest income, solid loan production and well managed expense growth. Pre tax pre provision income was slightly below prior quarter, but up 9% when compared to prior year. And more importantly, we did sustain our top quartile efficiency ratio at 50%, actually in the low end range of our range of 50% to 52%. Turning to the balance sheet, we’re very encouraged to see commercial domination activity pick up during the quarter, a clear indication of a stable macro across our markets and obviously the successful execution of our teams.

We grew total loans by 6% linked quarter annualized mostly driven by strong commercial loan production in Puerto Rico and Florida. Commercial lending pipelines actually continue to be strong as we enter the second half of the year, which is crucial for our strategy. Moving on to deposits. We did see a reduction in customer deposits during the quarter, mostly driven by frustration in a few large commercial accounts, while retail deposit accounts remained fairly stable. When we actually look at the detail of this decline, it was concentrated on very high balance large commercial customers.

As an example, five customers accounted for $120,000,000 of that reduction. In terms of asset quality, the environment continues stable. I will say stable to improving from a credit standpoint with more recent metrics moving in the right direction. Recent vintages performing better than prior vintages. Non performing assets remained flat at 68 basis points of total asset and net charge offs came down during the quarter.

This highlights the benefit of prior year’s credit policy calibration and improvement in consumer vintages. Finally, our capital continues to build quite nicely even though we continue to execute on our capital deployment plan during the first half of the year. Consistent with the strategy that we announced year to date, we have deployed over 107% of earnings in the form of dividend buybacks and relation with TruPS and we definitely feel this action best suits the long term interest of the franchise and our shareholders. So let’s turn to Page five to provide some highlights on the macro. Talking about main market, we believe the economic conditions and business activity in Puerto Rico and Florida are trending continue to trend favorably.

Obviously, there’s economic concerns and uncertainty around tariff and changes in U. S. Policies and the potential effect this represent obviously creates a degree of uncertainty for both retail and commercial customers. But we continue to see investments and commitment moving forward. The labor market remains strong, resilient, reflecting the lowest unemployment rate in decades.

And after a few months of government transition, we’re seeing some encouraging trends in disaster relief inflow, which continue to support economic activity and infrastructure development in the island. So those projects, which we also participate as it relate to affordable housing. In terms of the franchise, our key investments are technology and we continue to increase that investment to achieve long term growth for our business, while also contributing to deliver our best in class efficiency ratio. Definitely, the franchise investment remains here improving our interaction with customer and provide them with a seamless experience to our multiple channels. The successful execution of our omnichannel strategy has been evidenced by the actually 8% annual rise in the interactive customers achieved consistently over the past five years, coupled with a steady reduction in branch active customers over the same period.

When we look at our strategic priorities for the franchise, supporting economic development of our market is a main priority, lending to both consumer and corporations. If we break down our loan growth for the first of the year, commercial credit demand has been very strong, while residential mortgage slightly increased and consumer credit demand has been relatively steady. Based on current lending pipeline reduction in broader market uncertainty and our outlook for improving consumer health in Puerto Rico, we remain confident that we can achieve our mid single digit loan growth guidance for the full year. We still have half of the year to catch up. The compression track record speak for itself.

We continue to be return focused and allocate our capital where it makes more sense to our customers and shareholders. As we do every year, we are reviewing our capital plan and we will provide an update when we report third quarter results in October. Remember that we still have $100,000,000 left of our 2024 buyback authorization, which we expect to opportunistically execute over the next two quarters aiming to achieve our target of deploying 100% of our earnings to shareholders in the form of capital actions. Thank you for your interest and support and thanks to our colleagues for their collective achievements supporting our customers. I will now turn the call to Orlando to go over financial resource in more detail.

Orlando?

Orlando Berrijes, Executive Vice President and Chief Financial Officer, First BanCorp: Good morning to everyone. So Aurelio mentioned we had a strong second quarter, highlighted by a net income of $80,000,000 which is $0.50 a share. The return on asset that he mentioned that increased to 169,000,000 and an expansion of the net interest margin to $456,000,000 for the quarter. The provision for the quarter decreased 4,000,000 from $24,800,000 in the first quarter, which was driven by reductions in net charge offs in consumer net charge offs and improvements in the macroeconomic forecast, specifically the projected unemployment rate in Puerto Rico, which has an impact on predicted losses. The income tax expense for the quarter includes a benefit of 500,000 related to a reversal of a tax contingency accrual, but also the effective tax rate, it’s coming in lower based on a higher proportion of exempt income.

Considering the projected consolidated income for the year, we believe that the effective tax rate for the year should be around the 23%. In terms of net interest income, it increased to $215,900,000 in the quarter, 3,500,000.0 higher than last quarter. This quarter includes a $1,600,000 improvement for an extra day in the quarter. However, as we discussed in the previous quarter earnings call, the net interest income for the first quarter included $1,200,000 in fees and penalties that were collected on the early cancellation of a $74,000,000 commercial mortgage loan. This quarter we didn’t have anything similar to that.

On average, the commercial and construction loan portfolios grew $100,000,000 this quarter, but yields were down four basis points to 67% when considering normalization of the second quarter yield first quarter yields, I’m sorry, based on the $1,200,000 in fees collected in as I just mentioned. In the case of the consumer portfolios, the average balances were slightly down $2,000,000 basically on the unsecured lending. Auto and leasing portfolios grew $24,000,000 on average. The yields on the overall consumer portfolios were down from 10.68% to 10.57% in part due to a change in the mix as auto lower yielding than some of the other unsecured lending portfolios. Regarding the investment securities portfolio, we’re starting to see the pickup in yields.

We saw a growth of six basis points in the quarter as we continue to reinvest the lower yielding maturing cash flows into higher yielding instruments. This quarter we purchased $397,000,000 in securities at an average yield of $478,000,000 On the funding side, we completed the redemption of the remaining junior subordinated debentures and paid down at the April the first quarter, 180,000,000 in maturing for the Home Loan Bank advances that were higher cost funding. The result, the overall cost of interest bearing liabilities decreased $2,300,000 for the quarter and the average cost was 2.14 which is nine basis points lower. In the case of deposits, even though at the end of the quarter, they were down as Aurelio mentioned on average interest bearing deposits excluding broker were $110,000,000 higher than last quarter. The cost of interest bearing transaction accounts was 138,000,000 which is six basis points lower than last quarter.

And the cost of the time deposits was three thirty six, which is three basis points lower. All of this translates into a net interest margin of four fifty six, which is four basis points higher than the four fifty two reported last quarter on a GAAP basis. However, as we discussed in the prior earnings call, if we exclude the items I mentioned before, the fees on the loan that was canceled, the normalized margin for the first quarter was really four forty eight thus resulting in an eight basis points increase in margin this quarter as compared to the first quarter. In terms of guidance, we continue to sustain the five to seven basis points pickup in each in the margin in each of the next quarter as we mentioned during the first quarter call. Assuming the normal flow of deposits, we’re confident we’ll be able to continue to reinvest in common cash flows from a lower yielding securities into higher yielding assets over the coming months and into 2026.

Investment portfolio cash flows are expected to reach just over $1,000,000,000 in the second half of twenty twenty five, about $460,000,000 of that in the third quarter and $600,000,000 in the fourth quarter. In terms of the other income, it was $30,900,000 which is down $4,800,000 versus the prior quarter. But most of the increase was related to seasonal contingent insurance commissions we received in the first quarter and lower realized gains on purchase of income tax credits. On the other hand, we were slightly better in service charges on deposit accounts and mortgage banking fees for the quarter. Operating expenses were $123,300,000 relatively in line with the $123,000,000 we had last quarter.

Compensation expense was down $2,100,000 driven by bonuses and stock based compensation that was recognized during the first quarter and also the decrease in the payroll taxes as employees reached the maximum taxable amounts. On the other hand, we had an increase in credit card and debit and credit card processing expenses due to expense reimbursements we received from the networks in the first quarter. And this quarter we also had a reduction of $500,000 in the gains on OREO operations. Excluding OREO expenses would have been about almost $124,000,000 it’s $123,900,000 which compares to $124,200,000 in the first quarter. The efficiency ratio as Aurelio mentioned was 50% pretty much in line with last quarter.

Expenses for the quarter were below the guidance range we had provided in the prior earnings call, but based on projected expense trends for ongoing technology projects and business promotion efforts that are geared towards the second half of the year, we do expect that our base for the next couple of quarters will be closer to the guidance that we provided before that 1.25% to 1.26% range excluding the OREO gains or losses. The efficiency ratio, we still believe it’s going to be between that 50% to 52% range considering the expenses changes and the income changes that are being forecasted. In asset quality NPAs decreased $1,400,000 in the quarter. We had a $2,500,000 reduction in non accrual consumer loans and a $3,000,000 reduction on OREO and other repossessed assets. On the other hand, we had a $4,000,000 migration to non performing and then construction loan portfolio in the Puerto Rico region.

The NPA ratio remained flat at 68 basis points of assets. Inflows to non accrual were $34,400,000 which is down $9,000,000 versus the prior quarter, mostly $12,600,000 commercial mortgage loan that went into non accrual in the first quarter in Florida. Inflows for consumer and residential mortgage loans combined were down about $400,000 this quarter. In general, as we mentioned before, metrics seem to be holding up well. Loans in early delinquency registered slight increase of about $2,800,000 to $134,000,000 mostly in the auto portfolio.

And as Aurelio mentioned, we continue to monitor consumer credit closely and we’re seeing improvement in recent vintages, which is a result of the credit policy adjustment that was done back in 2023. The allowance for the quarter increased $1,300,000 to $248,600,000 Mostly the allowance increased based on the growth in the commercial portfolio during the quarter. But we did have reductions in the allowance for consumer loans resulting from the improved unemployment rate forecast in Puerto Rico. The ratio of the allowance the overall allowance decreased two basis points to 193, but it’s mostly due to a six basis point reduction in the allowance for the consumer portfolio. Net charge offs for the quarter were $19,100,000 60 basis points of average loans, which is down from 68 basis points in the first quarter.

But keep in mind that the first quarter net charge off included $2,400,000 in recoveries that were related to the bulk sale of consumer charge off loans. If we were to exclude that sale, the net charge off for the first quarter would have been 76 basis points. So we had a 16 basis point reduction as compared to that number. On the capital front, as Aurelio commented, we executed on our capital deployment strategies during the quarter by redeeming the remaining subordinated debentures, declaring the $29,000,000 in dividends and repurchasing $28,000,000 in stock. Just to clarify there, you remember we had a plan of $50,000,000 per quarter.

And during the first quarter, we purchased redeemed the $50,000,000 of the drops, but also based on the way the market was moving, we accelerated some repurchases of the second quarter amounts and we repurchased $22,000,000 in the first quarter. So we completed the second quarter the $28,000,000 to reach the 50,000,000 And on top of that, redeemed the remaining $11,000,000 or so of the remaining drops. In terms of tangible book value per share, it increased 5% during the quarter to 11.16 The TCE ratio expanded to 9.6% mostly due to $41,000,000 increase in the fair value of the investment portfolio. So far this year, the fair value has improved $125,000,000 The remaining valuation allowance AOCL that we have on the books represent our $2.69 intangible book value and over 200 basis points on the tangible common equity ratio. Again, will continue to deploy our excess capital in a thoughtful manner, always looking for the best interest of the franchise and the shareholder.

This concludes our prepared remarks. Operator, please open the call for questions.

Operator: Thank Our first question comes from Brett Rabatin from Hovde Group. Your line is now open. Please go ahead.

Brett Rabatin, Analyst, Hovde Group: Hey, good morning gentlemen. Hi, Wanted to just make sure from a housekeeping perspective, the tax rate that you guys expect, I thought I heard 23%. Is that for the full year or was that for the back half of 25%?

Orlando Berrijes, Executive Vice President and Chief Financial Officer, First BanCorp: For the full year, Brett. That would be the estimated tax rate effective tax rate based on the forecasted mix of exempt and taxable income and some of the other components for the year. Keep in mind that we do have just one comment. In mind that one of the benefits of the redemption of the props is that they were sitting at the holding company level and the expense the interest expense there because we don’t have a profit at the holding company level was really not getting any tax benefit. So that’s part of the reason we’re getting some of the effective tax rate improvements.

Brett Rabatin, Analyst, Hovde Group: Okay. That’s helpful. And then just the comments on the deposit decline that seem to be kind of high net worth or commercial. Any additional color there? Do you think that migration has run its course?

Or can you give us any other color around what you’re seeing on larger deposits?

Aurelio Aleman, President and Chief Executive Officer, First BanCorp: There is a lot of moving parts primarily. It’s really recurring business purpose, actually capital investments. There are some tax payments that took place. There is even settlements. There’s significant number of those variances that we saw this quarter, we believe are non recurring in nature.

And there is some high yielding seeking behaviors too in that very high balances segment. So but when you look at it, it was highly concentrated. As I mentioned, five customers represent the one hundred and twenty percent and twenty five customers, the overall variance is around 25 customer overall. So commercial from the commercial segment itself. From the retail side, very stable.

Net net customers are growing and net accounts are growing, which is an important metric that we follow.

Brett Rabatin, Analyst, Hovde Group: Okay. And then just on credit, I mean credit outside of the kind of the consumer is just really, really good. Would you guys expect the level of charge offs to increase from here? Or do you think this is a sustainable level for the overall portfolio?

Aurelio Aleman, President and Chief Executive Officer, First BanCorp: We believe it’s sustainable to improving the trend on the charge off for the consumer portfolios.

Orlando Berrijes, Executive Vice President and Chief Financial Officer, First BanCorp: Okay.

Brett Rabatin, Analyst, Hovde Group: Great. Thanks. Appreciate all the color guys.

Aurelio Aleman, President and Chief Executive Officer, First BanCorp: Thank you. Thanks, Fred.

Operator: Thank you. Our next question comes from Timur Brazilia from Wells Fargo. Your line is now open. Please go ahead.

Timur Brazilia, Analyst, Wells Fargo: Hi, good morning. Back on the deposit commentary, I think last quarter the comments were that the deposit stability, you’re seeing more deposit stability versus the last couple of years. Were these outflows surprising? Is this kind of excess liquidity that you were expecting to leave at some point and it just culminated in 2Q? And then the comment on the 25 customers overall, is that the total in this larger commercial segment?

Or is that the total that made up the composition of the 2Q decline?

Aurelio Aleman, President and Chief Executive Officer, First BanCorp: No, it’s the total that made the composition of the decline. We have a lot more customers on that segment. It’s just top customers that show variances altogether. Some of them were surprised because the movement took place, but some of them are just recurring business purposes that it just a lot of things that happened in the same time in the same quarter. Also tax events of tax payments on the April 2, we saw some of that.

We believe most of them are not recurring. But obviously, you combine that with higher for longer rates that high yielding behavior as long as rates are high, that high living behavior will continue. And we do have certain parameters up to which point we compete also.

Timur Brazilia, Analyst, Wells Fargo: Got it. And I guess as we look into 3Q specifically with your comments around maintaining the mid single digit loan guide that implies some accelerating on the loan growth front. If I’m not mistaken, I think 3Q is a little bit more challenging from a deposit standpoint from seasonality. Can you just give us some parameters on what the expectation is internally for funding the second half loan growth?

Aurelio Aleman, President and Chief Executive Officer, First BanCorp: The second half, we believe stability that we’re going to achieve the stability in the deposits. There’s again, there’s some deltas on the government side that are difficult to predict when they come in and out. There are some variances sometimes on the government accounts, on the large accounts, money flowing in and flowing out in terms of the most some of the payments that come in from different funds. No tax deltas should happen in the second half or minimum. We will say stability, obviously, a lot of the liquidity that you’re going to see coming in the second half, which Orlando mentioned, is more than $1,000,000,000 from the cash flows on the investment portfolios that the primary objective is to deploy that in loans, not necessarily securities, but the excess will go back to securities.

Timur Brazilia, Analyst, Wells Fargo: Got it. Okay. That’s good color there. And then just lastly for me on the loan growth. It’s been a good start to the year out of the Mainland.

Just the composition that you’re expecting in the second half of the year, is that going to be more so from Puerto Rico on the commercial side? Or is the expectation still up here that the Mainland is going to drive much of the near term loan growth?

Aurelio Aleman, President and Chief Executive Officer, First BanCorp: It’s a combination. It’s a combination. Florida will continue to contribute as well as the Puerto Rico commercial sector is where we see most of the growth, stability in the consumer and actually some growth in residential mortgage, which we have already have achieved some this year.

Steve Moss, Analyst, Raymond James: Great. Thanks for the color.

Aurelio Aleman, President and Chief Executive Officer, First BanCorp: Okay.

Operator: Thank you. Our next question comes from Steve Moss from Raymond James. Your line is now open. Please go ahead.

Steve Moss, Analyst, Raymond James: Hey, this is Chase on for Steve. Good morning.

Orlando Berrijes, Executive Vice President and Chief Financial Officer, First BanCorp: Good morning.

Steve Moss, Analyst, Raymond James: So first, I was curious where loan yields have been coming in these days.

Orlando Berrijes, Executive Vice President and Chief Financial Officer, First BanCorp: You could you could you repeat that question? I couldn’t hear you well.

Steve Moss, Analyst, Raymond James: Oh, sorry. I was just curious where loan yields have been coming in these days.

Orlando Berrijes, Executive Vice President and Chief Financial Officer, First BanCorp: Well, I was saying, if you look at the yields on the C and I portfolio came down four basis points. The yield on consumer portfolios are very much similar. The difference has been more than anything the change on mix. As you know, credit cards are based out of prime, personal loans. We have two components, typical unsecured personal loans in that 13% range and the small loans under special legislation in Puerto Rico are closer to the 30%.

The auto portfolio, it’s on the 8% range. So we’ve seen some reductions on the commercial side, not so much on the consumer side. And mortgage, it’s a market function. It’s similar to what you see in The States that we’re seeing that 6.5% to 6.5% kind of deals sort of in general depending on the type of product.

Steve Moss, Analyst, Raymond James: Got you. Thanks for that color. And one last one for me. How much room do you think there is to continue pushing down funding costs? And do you expect to pay down your remaining FHLB advances as they mature?

Orlando Berrijes, Executive Vice President and Chief Financial Officer, First BanCorp: I mean, are a few components. What we have in broker deposits that we used to fund the Florida operation or part of the Florida operation, Those will continue to come down as the market is lower than what some of the things have matured. Time deposits, there is a little bit of space, but it’s coming as it’s been coming down, clearly rates staying at these levels consistently will stop that a little bit. The Federal Home Loan Bank advances would be a function of needs at the time and funding timeframes management. As you saw, we paid down the $180,000,000 in

Aurelio Aleman, President and Chief Executive Officer, First BanCorp: the first

Orlando Berrijes, Executive Vice President and Chief Financial Officer, First BanCorp: quarter. We didn’t need the funding with the cash flows coming in from the investment portfolio, we might have some opportunities. There is some opportunities. In reality, the Federal loan bank advances the what matures in within the next three months, it’s only $30,000,000 So we will probably pay those down. But there is about $90,000,000 on the six months to a year timeframe that we’ll see based on the funding mix.

But yes, the idea is to get those costs down eliminating some of it or just repricing some of it.

Steve Moss, Analyst, Raymond James: All right. Thanks for the color.

Ramon Rodriguez, IR Officer, First BanCorp: That’s all my questions. Thank you so much.

Orlando Berrijes, Executive Vice President and Chief Financial Officer, First BanCorp: Thanks.

Operator: Thank you. Our next question comes from Kelly Motta from KBW. Your line is now open. Please go ahead.

Kelly Motta, Analyst, KBW: Hey, good morning. Thanks for the question.

Orlando Berrijes, Executive Vice President and Chief Financial Officer, First BanCorp: Good morning, Kelly.

Kelly Motta, Analyst, KBW: I think maybe going back to the loan growth in the mid single digits, you guys had some nice loan growth this quarter. Looks like, as you called out, a lot of it was in commercial and C and I. Just wondering if you were seeing any changes in the utilization rate and in terms of the loan growth in the back half of the year, How your expectations are do you feel better about it than you did maybe the same time three months ago? Just wondering kind of your overall level of confidence in the mid single digit loan growth and kind of any utilization rate factors that we should be considering here?

Aurelio Aleman, President and Chief Executive Officer, First BanCorp: I can tell you, the pipeline looks pretty good. We look at it today, actually a little better when we look at it at the beginning of this year or the end of the last year. So from that standpoint, we’re pretty confident on the continuous, you know, movement of of that pipeline into into closing. Regarding line utilization, I don’t have, you know, the data. I don’t wanna, you know, just do it from the top of my head.

You know, we can get back to you on that or the overall, you know, in our investor presentation when we update.

Kelly Motta, Analyst, KBW: Got it. That’s that’s helpful. And then just on a high level on the efficiency, you continue to kind of target that, I think, 2% efficiency ratio. And for the past several quarters now, you’ve been coming in quite below that. As we look ahead to next year, are there any significant investments in technology or things you’re looking at to drive longer term efficiencies that we should be considering when building out a longer term expense run rate here?

Aurelio Aleman, President and Chief Executive Officer, First BanCorp: Well, we’ve been doing we’re making those investments for some time and those will continue. I think we provide some highlights earlier in the year of completing important steps in our cloud migration and eliminating the mainframe that existed in Puerto Rico until the first quarter as an example. The adoption of cloud based technology, the movement of everything that we still have in the open environment here will continue. Investment in additional self-service tools and functionality in the applications, the digital applications across different businesses and products including mortgage, auto and deposits will continue. It’s been a significant amount of the expense base for some time.

So it will continue to be some obviously process automation related as the new tools bring some AI components into it. So I will say, we don’t expect a big peak of those because we continue to sustain the levels that we’ve been doing, being very active in those investments like last year, DENSINA platform implementation was one of them. Some of the process automation on the risk management tools.

Kelly Motta, Analyst, KBW: Got it. Thanks so much. I’ll step back.

Aurelio Aleman, President and Chief Executive Officer, First BanCorp: Thanks Kelly. Thanks.

Operator: Thank you. We currently have no further questions. So I’ll hand back to Ramon Rodriguez for closing remarks.

Ramon Rodriguez, IR Officer, First BanCorp: Thanks to everyone for participating in today’s call. We will be attending Raymond James Financial Services Conference in Chicago on September 3. We look forward to seeing a number of you at this event and we greatly appreciate your continued support. Have a great day and thank you. Thank you all.

Operator: This concludes today’s call. Thank you for joining. You may now disconnect your lines.

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