First BanCorp. New

results for the fourth quarter and full year 2024. 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 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 filing. 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.

Thank you, Ramon. Good morning to everyone and thanks for joining our earnings call today. I will begin by briefly discussing the business performance for the fourth quarter. Then we'll move on to provide some high-level highlights of how we performed during the full year. We're quite excited how we closed 2024 and with another quarter of consistent execution and strong financial performance. We earned 76 million in net income and grew pre-tax, pre-provision income by 5% to 117 million, primarily driven by net interest margin income expansion and our discipline expense management process. Return average asset was again strong at 1.56%, and the organization continued to operate at an efficiency ratio close to 52%, which is in line with our guidance. Turning to the balance sheet, the quarter was strong. Total loans grew by $303 million of 9.7% per quarter annualized, driven by growth actually across all business segments, consumer, commercial, and mortgage, and between Puerto Rico and the Florida region primarily, particularly within the commercial and construction lending segments. However, we saw we were expecting some portfolio repayments in the quarter, which came a little bit lower. We anticipate that some of that will come in, you know, between the first and second quarter of this year in the range of probably $5,200 million. In terms of deposit, core deposit trends were also very encouraging with total deposits other than broker and government up 2% sequentially. from private quarters and 4% when we include, you know, government deposits. As we have seen in private quarters, we did some, we see some seasonality in deposit inflows during the quarter that, you know, they are temporary nature or they have to do with the variability of the government sector funding of reconstruction activity. Credit performance was Relatively stable during the quarter with non-performing asset hitting another record low of 61 basis points of total assets. On the capital front and liquidity, our liquidity and capital position remains very strong. We sustain our commitment to deliver over 100% of earnings in the form of capital actions by redeeming 50 million of our outstanding junior debentures and paying 26.3 million in common dividends. Even when accounting for these actions, our regulatory capital ratios increased during the quarter and remained significantly above what capitalized. We still have $200 million left in our capital plan authorization, which we expect to continue deploying through 2025 in a manner that best suits the long-term interests of the franchise. Please let's turn to slide five to provide some highlights of the year. The solid performance of the quarter cap a year of record results for the franchise in the back of a positive economic backdrop of our operating markets. We raised, actually, total record revenue, 6% increase in any per share, and reached a multi-year low in non-performing assets. The portfolio expanded by 4.7%. Of $569 million, we added $267 million in core customer deposit and distributed 100% of earnings to shareholders. Loan growth was actually quite in line with our guidance of mid-single-digit growth. Consistent with our strategy, our well-positioned balance sheet allows us to capitalize on bond book and non-repricing opportunities under the current rate environment. while proactively managing funding costs that actually will continue through 2025. We're considering stable deposits going forward. Our asset mix will continue to skew towards higher yielding assets, which coupled with gradually declining funding costs should drive additional net interest income expansion in 2025. Over the course of 2024, our franchise made great progress advancing technology initiatives to improve our interaction with customers through both the convenience of digital channels and service-focused relationships with officers. We are achieving the targets we set to measure our strategic success, and we're seeing the benefit of the investment we made in technology to accelerate our growth and improve how we serve our communities and customers. As we look ahead, the operating environment for 2025, actually, the operating environment seems conductive of another year, of positive performance and organic capital generation. If we look at the key economic metrics in the environment, during the fourth quarter, payroll employment continued to improve, tourism metrics and passenger activity at our main airport reached record levels again, and disaster relief fund disbursement rate raised to another year of sequential increments in 2024. And we do expect this trend to continue as per the Puerto Rico planning board is forecasting another year of economic growth in 2025. So given this backdrop for 2025, we're sustaining our meeting of the longer of guidance. We're sustaining our 100% net payout ratio of our capital. That includes the redeeming the remaining $61 million towards unit-oriented ventures and executing recent offshore repurchase opportunities and definitely maintaining a sustainable dividend payout policy. In line with this guidance, we were very pleased to announce earlier this week that our board approved 13% increase in our quarterly Comstock dividend that was raised to $0.18 per share. Again, we will continue to monitor general macro, how things develop, political changes as we execute our strategy, as we execute our capital deployment plan. And to close, I have to say that I'm really, really proud of what our teams have accomplished so far. We are very positive and look forward to a very positive 2025 with optimism and excitement of what lies ahead of us. Now I will turn the call over to Orlando to go over some more detail, and we will be back for questions. Thanks to all.

Good morning, everyone. As Aurelio mentioned, we recorded very strong results during the quarter, earning $75.7 million in net income, or $0.46 a share, which compares with $0.45 a share in the third quarter. We saw the results for the quarter saw improvements in net interest income, which were partially offset by the higher provision for credit losses. The provision for the fourth quarter was 5.7 million higher than last quarter, but this was mostly related to a 5.5 million release we had in the allowance for residential mortgage loans during the third quarter based on the consistent positive outlook on microeconomic variables. but also this quarter we provided for the higher loan portfolios that we achieved at the end of the quarter. In general, the economic outlook remained fairly consistent going forward from what we had in the third quarter in terms of estimating the allowance. The income tax expense for the quarter was $20.3 million, which is $2.3 million lower than last quarter. At the end, we ended up with a higher proportion of exempt income for the year, which resulted in a slightly lower effective tax rate. The effective tax rate was just under 24% for the year 24, and we're expecting that tax rate for 25 will be in that same range from 24 to 24.5%. For the full year 24, net income was $299 million, very similar to the 303 we achieved in 23. but earnings per share were $1.81 for this year, which is 10 cents higher than we had in 23, which is the benefit of the share count reduction based on the buybacks we have done over the last few years. Return on average assets for the year was 158, and return on equity was 19.1% on a gap basis, If we were to eliminate the other comprehensive loss impact from the capital on a non-GAAP basis, the adjusted return equity would be 13.6%. As I mentioned, that interest income for the quarter was $7.2 million higher than last quarter, reaching $209.3 million. You might recall from last quarter's earnings call, we had mentioned that we were expecting that the net interest margin for the fourth quarter would be similar to the third quarter. However, we were able to achieve an eight basis points improvement in margin from 425 to 433 in this fourth quarter. At that time, we were expecting loan repricing impact would offset some other improvements. Even though we did see that repricing impact on the floating rate commercial loans, the commercial portfolio grew on average 192 million more than compensated for this pricing reduction, while we achieved $37 million in growth in the residential and consumer portfolios. Also, growth in deposits for the quarter allowed us to reinvest about $220 million of maturing investment securities at a rate of 540. We look at cash flows. During the quarter, cash flows for the investment portfolio were $470 million, And that includes 367 million in securities that mature with an average deal of 65 basis points. So the pickup in margin in yield was quite significant as compared to those 65 basis points. The deposits on interest for retail and commercial transaction accounts grew 348 million on average for the quarter. These deposits have an average cost of 1.52%. On the other hand, higher cost time deposits and brokerage CDs decreased by $130 million. Also, during the quarter, Unior Superventures with a cost of 78 million decreased by, with a cost of 7.78%, I'm sorry, decreased $50 million on average. And we did redeem an additional $50 million at the end of the fourth quarter. The impact would be seen now in 2025. The reduction in borrowings and broker CDs resulted in an interest expense reduction of $2.8 million for the fourth quarter. As we look ahead into 2025, we still see opportunities for both net interest income and margin expansion. we redeploy what we estimate to be somewhere between 1.5 to 1.6 billion of investment portfolio cash flows in 25 that are currently yielding about 1.25% towards other either loans or higher yielding securities or paying down some of the higher cost borrowings. If we were to assume normal flow of deposits, we expect that margin could improve around 20 basis points by the end of 2025. In terms of other income, it was fairly online. It was down a bit, mostly from a decrease in insurance income due to lower production. On the expense side, expenses were $124.5 million. million increase from the third quarter. Oreo gains this quarter were $1 million or $300,000 less than last quarter. Excluding Oreo, expenses for the quarter were $125.6 million, which is $1.3 million higher than last quarter and higher than the top-range guidance we had provided. The increase was in part related to business promotion initiatives that took place at the end of the year and were a bit higher than we had originally anticipated. However, we did register operating leverage as increasing net interest income was enough to offset increase in expenses, resulting in a lower efficiency ratio of 51.6% for the quarter. Based on the current stage of several ongoing technology projects, branch network expansions planned for 2025, we estimate that our expense base for the next couple of quarters would be in the range of $125 to $126 million, excluding any Oreo gains. We continue to estimate that our efficiency ratio will be around 52% considering the changes in expenses and income components. In terms of asset quality, NPAs decreased $800,000. That now represents 61 basis points of assets. Most of the reduction was due to a repayment of $1.8 million on accrual commercial loans. Inflows for the quarter were $1.6 million lower than last quarter, mostly consumer, even though we have seen some early delinquency increases. The macro is fairly stable, and the labor market is healthy, but consumer credit continues to show weaknesses. Overall loans in early delinquency increased $9.6 million from last quarter, with consumer loans increasing $14 million, obviously offset by a decrease of $5.4 million in commercial loans. We continue to proactively manage this great cycle on the consumer side and the advantages that had impacts, and we're estimating somewhere in the middle part of the year towards the end of the year to achieve the stability we had anticipated on the consumer. The allowance for credit losses decreased $3.1 million to $244 million during the quarter, mostly from $4 million reduction in the allowance for commercial loans based on the Improvements we have seen on both the financial condition of borrowers and obviously the macroeconomic forecast, particularly on the consumer real estate indexes, which have continued to show improvement. The allowance for the consumer portfolios did increase $1 million due to the recent loss trends. Overall, the allowance came down to 1.91% of loan from 1.98. As we continue to see this great trend good credit trends in the commercial and residential mortgage portfolio. However, the allowance and consumer loan has gone up to 3.85% of loans based on lost trends that we have had in the portfolio. Net charge for the quarter were 24.6 million or 78 basis points of average loans, pretty much in line with the prior quarter. Consumer charge-off increased 1.3 million, but we had a 1.2 million decrease in commercial charge-off. On the capital front, regulatory ratios increased during the quarter, and we continue to operate significantly above the regulatory well-capitalized levels. We deployed, as Aurelio mentioned, 100% of our quarterly earnings for the redemption of 50 million in the Union of Subordinated Ventures and 26 million payment of common dividends. are consistent with the guidance we have provided. The tangible book value per share did decrease to 991, and TCE decreased to 8.4, which was mostly due to an 82 million decrease in the fair value of available for sale investment portfolio. The remaining just another comprehensive loss that we have on the books still represent $3.41 in tangible book value per share. and over 258 basis points in intangible common equity ratio. You know, we, as Aurelio mentioned, we will continue to deploy R6 Capital in a thoughtful manner, always looking for the long-term best interest of our franchise and our shareholders. This concludes our remarks. Operator, please open the call for questions.