First BanCorp. New

Good day and welcome to the first Bancorp 2Q21 results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question from the queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to John Pelling, Investor Relations Officer. Please go ahead.

Thank you, Sarah. Good morning, and thank you for joining First Bank Corp's earnings conference call webcast to discuss the company's financial results for the second quarter of 2021. Joining you today from First Bank Corp are Aurelio Alleman, President and Chief Executive Officer, and Orlando Berges, 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 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 OneFirstBank.com. At this time, I'd like to turn our call over to our CEO, Aurelio Alleman.

Aurelio. Thank you, John. Good morning, everyone, and thanks for joining us today. Please, let's move to slide five to cover some of the highlights. Before we go into the highlights for the quarter, I would like to touch on the macro environment, on the progress we made on the integration and the support to our customers through the pandemic. On the macro front, pandemic relief funds continues to play a very important buffer for economic activity in the island and all our three regions. Macro indicators continue to show month-over-month improvements. Passenger movement at San Juan in Puerto Rico is above pre-pandemic levels since April. And despite a recent slight increase in reported cases, As of June, vaccination rates on the island are over 60% now. The significant amount of stimulus continues to strengthen our customers, driving growth in deposit and also softening long demand in the near term. The economy in Puerto Rico and Florida continues to show strong signs of recovery with economic activity approaching pre-pandemic levels. Obviously, we have seen improved consumer confidence, evidenced by increasing retail sales, credit card activity, debit card activity, auto sales. And in addition, in the case of Puerto Rico, hotel occupancy and ADRs are now at pre-pandemic levels. Government collections were also on the rise, continue to show improvement of the economic activity. We also seen in parallel the progress the fiscal board is making on the government debt restructuring, which is, I think, a positive for the macro in Puerto Rico. Regarding digital adoption, our registered users continue to increase. We experienced a 4% increase this recent quarter and a 20% increase on a year-over-year basis, which is a good number. Our data channels continue to play an important role in deposit gathering, reducing branch transactions, across the network. A very important milestone for us, we consider this a huge milestone this quarter. Regarding the integration and conversion, we are on schedule to complete the full integration now during this quarter. A few weeks ago, early July, we completed all system conversions. Again, for us, this was really a huge milestone to move forward. This actually, this final conversion allowed us for finalizing the branch consolidation in Puerto Rico. We actually did consolidate the six branches in this phase. We're really quite pleased with the progress and look forward to capturing additional market share going forward through our now expanded fully integrated franchise. Now we have certainty that most of the pending benefits regarding synergies will be reflected in the four-quarter numbers. Finally, with regard to the PPP program, you know, as we know, it ended in May and final transactions were processed in June. Through the life of the program, we originated 745 million or over 14,000 loans supporting commercial clients across the three regions. Now the focus through our fully integrated digital platform, self-service, We have processed forgiveness to 81% of the clients that participated in RAN 1, equivalent to $377 million. Also, during this quarter, we disbursed the last $74 million in new SBA PPP loans and received principal forgiveness remittance of approximately $151 million. I think this is also important. Obviously, it was a great product, but obviously it was competing with with the day-to-day core business of small business lending. Now let's move to slide six to really cover the highlights for the quarter. It was definitely a solid quarter for the franchise, generating $70.6 million in net income, or 33 things per share, compared to $61 million last quarter. Definitely the improving macroeconomic trends are a contributor. driving a reserve release of $26 million this quarter. But on the other hand, you know, the core earnings, pre-tax, pre-provision income increased over $10 million to a new high of $96.6 million. Our efficiency ratio for the quarter improved to 60.6. And actually, if we adjust that for merger and COVID-related expenses, we were at 55% level, which is actually our goal. Asset quality metrics, you know, in all fronts improved. MPAs decreased 29 million now to 1.2 percent of assets. Inflows to non-accrual also decreased, and delinquencies improved across all products. Again, you know, as I mentioned, the significant amount of stimulus continued to strengthen customer liquidity. Deposits, excluding government, grew significantly. 558 million or 4 percent during this quarter. On the capital front, capital ratios are very strong and improving. And during the second quarter, we repurchased 7.96 million shares for approximately $100 million under the previously announced $300 million repurchase program. So we're very pleased with how the quarter