First BanCorp Sets New Records Amid Challenging Market Conditions
Good morning, and welcome to the First BanCorp second quarter 2026 financial results conference call. The company's Corporate Strategy and Investor Relations Officer, Ramón Rodríguez, kicked off the presentation by highlighting the strong core performance delivered by the bank in the first half of the year.
Aurelio Alemán, President and Chief Executive Officer, took over to discuss the impressive quarterly results. With a net income of $96 million, or $0.62 per share, up 24% from the same quarter last year, the company has demonstrated remarkable growth across its franchise. This significant increase in earnings underscores the bank's ability to generate attractive returns for its shareholders.
Pre-tax pre-provision income reached an all-time high of $138 million, a notable 11% rise from a year ago. This achievement reflects the company's successful execution of its business strategy and its commitment to delivering strong financial performance. The impressive return on average assets (ROA) of 2% marks the bank's 18th consecutive quarter with an ROA above 1.5%, solidifying its position as one of the strongest and most consistent performers in the industry.
The company's loan growth accelerated during the quarter, driven primarily by commercial activity in Puerto Rico. Total loans reached $13.3 billion, a 5% increase on a linked-quarter annualized basis. This growth was also reflected in total loan originations, which surged to $1.7 billion during the quarter, representing a 21% year-over-year increase.
Aurelio Alemán stated that given what the company sees in its pipeline, it expects this level of activity to continue for the remainder of the year. This reinforces their path to achieve their full-year growth objective for 2026. Total deposits grew by $274 million during the quarter, primarily driven by an increase in environment deposit and a slight increase in core customer deposit.
Credit performance remains sound, with lower net charge-off and non-performing assets remaining near historical lows. However, early-stage delinquency did come up during the quarter, but it was flat to prior year in June and actually below in December 2025.
Regarding capital deployment, the company completed its $50 million of share buybacks and paid a $0.20 per share dividend. Despite these actions, they ended the quarter with a very strong common equity tier 1 (CET1) ratio of 17%, leaving ample room to continue investing strategically in their franchise technology, enhance competitiveness, and improve customer experience.
Aurelio Alemán emphasized that despite global noise and war, the company continues to see an environment that is positive and stable, supportive of loan activity. He highlighted the encouraging trends in Puerto Rico's market, including a 5.6% unemployment rate, pre-construction activity providing economic support, and the island benefiting from reshoring and manufacturing investments.
The CEO noted that while industry-wide sales reflect the impact of tariffs, recent trends suggest that the market is beginning to normalize, with June industry-wide auto sales down only 3% year-over-year. He believes that sales are stabilizing, which bodes well for the company's core business, loan growth, and overall performance.
In conclusion, First BanCorp's strong core performance in the second quarter of 2026 has set new records amidst challenging market conditions. The bank's ability to generate attractive returns for its shareholders, accelerate loan growth, and maintain sound credit performance underscores its position as a leader in the industry.
