First BanCorp. New

Good morning. Thank you for attending today's first Bancorp 4Q 2022 Financial Results Conference Call. My name is Alexis, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to the Corporate Strategies and Vestor Relations Officer, Ramon Rodriguez. You may proceed.

Thank you, Alexis. Good morning, everyone, and thank you for joining First Bank Corp's conference call and webcast to discuss the company's financial results for the fourth quarter and full year 2022. Joining you today from First Bank Corp are Aurelio Aleman, President and Chief Executive Officer, and Orlando Verges, Executive Vice President and Chief Financial Officer. Before we begin today's calls, it is my responsibility to inform you that this call may involve certain poor-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 fppinvestor.com. At this time, I'd like to turn the call over to our CEO, Aurelio Aleman.

Thanks, Ramon. Good morning to everyone, and thanks for joining our earnings call today. Please turn to page four to discuss the highlights of the quarter. We close out by offering a solid return asset of 158%. We earned 73.2 million, or 40 cents per share in net income, achieved 122.2 million in pre-tax, pre-provision income, and reached an efficiency ratio of 48%, even lower than prior quarter. The margin expanded by six basis points, while on the other hand, net interest income decreased by 2.3 million, primarily related to an increase in the interest expense portion. Stable credit trends continue. supporting asset quality improvement with non-performing asset decreasing by 14.1 million to 129.2, which is a decade low at 69 basis point of total assets. Also good news on the early delinquency side, which also improved during the quarter and still below pre-pandemic levels. In terms of capital deployment, we continue our plan. During the fourth quarter, we repurchased 3.5 million shares of common stock for the total purchase price of $50 million and paid $22 million in common stock dividends. Our consistent earning generation capacity, discipline, and sales management have definitely allowed us to continue returning capital while allocating resources to organically grow the project. Let's move on to the balance sheet page five to discuss loan and deposit trends. On the asset side, total loan and leases grew by $254 million. Now the portfolio stands at $11.6 billion during the quarter. And this really happened across all business segments, commercial, consumer, and actually residential. This was actually our strongest quarter in terms of loan portfolio performance, excluding PPP loans, which are almost finished now. Commercial and construction grew by 141 million on 3% linked quarter. Total originations, including renewals and credit card utilization activity, was very healthy at 1.4 billion, up 16% versus the prior quarter. That is our priority, deployed capital to achieve profitable loan growth and capture additional market share across all the lending segments. It's really the core principle of our plan. and we're encouraged by the trends that we see in the main market and also by the pipelines that we have today for 2023. In line with industry trends, core deposits decreased by $250 million, or 2.3% during the quarter, which was actually slightly better than the local market trend for the quarter. As expected, you know, we continue to see excess liquidity gradually tapering off within household balance sheets. However, Our deposit balances for both retail and commercial customers remain above pre-pandemic levels. We are focused on leveraging our expanded sales, distribution channels, and digital channels to grow our market share on the deposit market and the products and services related to it. That said, you know, liquidity levels remain high with a ratio of cash plus liquid securities to total assets above 19% still. Please let's move to page six to discuss the highlights of the full year. You know, we're really very proud of the work that the team performed during 2022. Over the course, you know, of 2022, the teams were very hard to deliver outstanding results for the franchise. We raised the organic loan growth of $762 million when we excluded PPP loans and the strategic reduction of residential mortgage, earned $305 million in net income, achieved a record pre-tax preparation income of $475.3, which is up 21% when compared to 2021. and reach a decade low non-performing asset ratio of 0.69%. In terms of the franchise, we continue our investments in people, technology, process improvement. We made great progress by moving forward our only channel outreach strategy with the investment in digital self-service platforms to optimize the distribution capabilities and products. When we look at some of the metrics, we continue to improve digital engagement. Retail banking registration were up 4% during the quarter, 17% during the year. Adoption of our newly launched business digital banking applications continue to increase. Our new business digital lending functionality has improved our penetration to the small and medium business and SBA segments. And also, we continue to capture over 40% of all deposits through the service channels. All these milestones have been achieved within the context of our more efficient traditional branch network. During 2022, we also consolidated five additional branches, including two during the first quarter. Moreover, our efficiency ratio reached a historic low of 48.3 during the year, highlighting our ability to execute ongoing capital investments in technology, improve distribution channels, best-in-class talent, all without compromising the operating leverage of the organization. Definitely, this result translated into one of our best performing years on record for the franchise, while, you know, strongly supporting our communities, our colleagues, and returning approximately $363 million, or 119% of 22 earnings, to our shareholders, to both common stock buybacks and the payment of a very competitive common dividend. Our strong capital position enables us to continue delivering value to our shareholders while at the same time providing ample loss absorption capacity in the event of an economic downturn. Please let's move to page seven to discuss some highlights on the outlook of our macroeconomic environment. Definitely, you know, global expectations point to an economic slowdown in the U.S. But we remain cautiously optimistic on economic conditions in our main market in Puerto Rico. Labor market performance continues to sustain an upward trend, paid-out employment reaching a decade high in November 22 of 4% year-over-year, and the Economic Activity Index, our monthly indicator that tracks the economy, closes the quarter of 22 above 2021 levels. Even when accounting for the impact of hurricane fuel in September, which disrupted the market for a couple of weeks. Most importantly, our growth thesis continues to be sustained by the large amount of federal disaster relief funds still pending to be disbursed. Over $45 billion in disbursed obligated funds has been earmarked to support broad-based economic development and rebuilding initiatives designed to improve the island infrastructure and overall capital stock. Public data shows that the experiment reached $3.2 billion during the 11-month period ending in November, which is actually 96% above what was registered in 2021. The rollout of these funds is expected to gradually increase over the next decade, with the most recent estimates reflecting approximately $5 billion are the estimates for 2023. That would be great. The timely development of these funds coupled with the government improvement fiscal position and focus on economic development is really what is driving the tailwinds that we're seeing. Finally, and most importantly, this year we commemorate our 75th anniversary for the institution. Proud of our people and all that we have accomplished over this period and look forward to many more years of collaborating, supporting our clients and the communities. and growing the franchise. We do have multiple initiatives to celebrate this accomplishment and show our gratitude to the communities, employees, customers. I will now turn the call to Orlando to go into more detail on the financial results.