First BanCorp. New

Good morning and welcome to the first Bancorp Q1 2026 Financial Results Conference Call. All participants are in a listen-only mode. After the speaker's remarks, we will conduct a question and answer session. To ask a question at this time, you will need to press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Germán Rodríguez, Corporate Strategy and Investor Relations. Thank you. Please go ahead.

Thank you, Julian. Good morning, everyone. Thank you for joining First Bank Corp's conference call and webcast to discuss the company's financial results for the first quarter of 2026. I'm here with Aurelio Alemán, President and Chief Executive Officer, and Orlando Vérez, 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 fbbinvestor.com. At this time, I'd like to turn the call over to our CEO, Aurelio Aleman.

Thank you, Ramon. Good morning. Good morning, everyone, and thanks for joining our call today. We started 2026 with very strong momentum, generating $89 million in net income, or $0.57 per share. That is actually up 21% when compared to same quarter last year. Core operating trends remain also very strong during the quarter, with pre-tax preparation income reaching all-time high of $131 million. That is 5% from a year ago. This performance resulted in a 1.9% return on average assets. This marks our 17 consecutive ROAs above 1.5%. Definitely demonstrating our commitment to sustain profitability. Moving to the balance sheet, total loans declined slightly to $13.1 billion. That is actually consistent to prior year seasonality. and accounts for expected softening in credit demand within the consumer lending segment that we mentioned before. That said, you know, still better than pre-pandemic levels when we look at consumer demand. On the other hand, core deposit for the quarter were strong, other than broker and public funds, which we don't call core. We're up by 4.9%, 4.9% on a lean quarter on one basis. reinforcing the strength of the relationship during franchise while allowing us to practically manage funding costs. Driving core client deposit growth is a key priority for us, and we're very encouraged by the execution during the quarter in terms of new clients and accounts. Credit performance remain a key strength for the franchise during the quarter with, you know, charge-off very stable. record low levels of non-performing assets and very encouraging early stage delinquency trends, which actually declined 24% from the prior quarter. And finally, our consistent approach to capital deployment resulted in a net payout of 92% during the quarter, a gift through buybacks and dividends. Even after this action, the quarter, we ended the quarter with a 16.9 CETE1 ratio. Let's turn to slide five to talk about the environment and highlights of the franchise. You know, we're pleased to say that business activity and economic conditions across the markets continue stable and progressing in line with our expectation. The labor market continues to show resilience. Other economic indicators in the main markets, such as economic activity index, continue to be stabilized, and recent credit delinquency indicates consumer stability. We are encouraged by what we see around, you know, in addition to the restructuring of, I'm sorry, reconstruction activities, reshoring activity, and expanded U.S. military presence in the island while, you know, the disaster recovery efforts remain in place. Expanding on a consumer, first quarter industrial auto sales declined 19% when compared to the first quarter last year, definitely evidencing the expected reduction. in consumer credit demand for auto. That said, it is important to know that retail auto sales continue to be 6.5% above the pre-pandemic 10-year average. So we're still better than the prior cycle. We're definitely prepared to serve our customers in this environment very, very, you know, many, many, many parts moving regarding, you know, potential impact of oil costs, which you are monitoring, which could be, you know, rising energy costs and other potential impact on inflation, which could impact, you know, consumer activity and commercial activity more broadly in the future. Hopefully that ends soon. And while the macroeconomic environment continues to be dynamic, we remain focused on money and what we can control. in housing the service delivery platform, technology investments to be more agile and efficient, and focusing on providing the best quality of service that we could. When we look at business highlights, total loan originations were up by 6% when compared to prior years, seasonally adjusted. Commercial loan pilots actually remain healthy. Actually, if I compare pipelines today with same time prior year, we are actually in a better position. So we sustain our long growth guidance of 3% to 5% that we initiated, that we mentioned in the last call. In terms of omni-channel strategy, active users continue to grow year over year. Data transaction volumes continue to grow. Self-service payments continue to increase. Sustaining, you know, demonstrating sustained engagement of clients in the platforms. We are spending time and effort on AI, understanding what we can do to improve internal processes and also improve, you know, the way we service our clients. We continue to also, you know, do franchise investment in our brand channels to continue to optimize how we service our clients. We believe that AI will definitely play a key role in the execution of this strategy, providing clients with faster, more personalized service offerings and enabling our colleagues to spend more time in value-added customer interaction rather than dealing with routine transactions and processes. We're working very close to our key vendors to ensure that we adopt what's coming in this new venture. Overall, capital allocation priority remain unchanged also. This includes supporting organic growth, which is a priority, and paying a competitive common stock dividend and returning excess capital through share pre-purchase. As always, we thank you for your interest in First Bank and your support. And with that, I'll turn the call to Orlando. We'll come back for questions later. Thank you.