First BanCorp’s third quarter results reflected a mixed operating environment, as the company delivered year-over-year revenue growth but missed Wall Street’s top-line expectations. Management attributed the quarter’s performance to continued discipline in commercial and construction lending, which offset lower-than-anticipated consumer loan demand, particularly in the auto sector. CEO Aurelio Alemán-Bermúdez highlighted, “Most of the improvement came from record net interest income and well-managed expense base and disciplined loan production,” while also noting that consumer credit demand, especially in auto loans, slowed significantly after sector-specific tariffs impacted industry-wide sales.

Is now the time to buy FBP? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From First BanCorp’s Q3 Earnings Call

• Brett Rabatin (Hovde Group) asked if the tax benefit from the deferred tax asset reversal was a one-time event. CFO Orlando Berges-González clarified that while the large reversal will not recur, the company will see a modest ongoing benefit in its effective tax rate.
• Brett Rabatin (Hovde Group) questioned the health of the consumer in Puerto Rico, particularly in light of auto loan normalization. CEO Aurelio Alemán-Bermúdez responded that consumer credit remains stable but growth will be limited, with future expansion focused on residential and commercial segments.
• Timur Braziler (Wells Fargo) probed the competitive dynamics in deposit pricing, especially on the government side. Alemán-Bermúdez explained that much of the government deposit book is contractually indexed, while competition is strongest from smaller, local banks rather than large new entrants.
• Kelly Motta (KBW) asked about external competition in Puerto Rico’s banking sector. Alemán-Bermúdez indicated that most competition is from existing local players and credit unions, with U.S. Treasury securities attracting high-end customers, rather than new bank entrants.
• Unknown Analyst (Truist Securities) inquired about the outlook for loan growth and share repurchase cadence. Alemán-Bermúdez confirmed that commercial and residential lending pipelines are robust, and the company expects to continue its opportunistic share buybacks, aiming for $50 million per quarter.

Catalysts in Upcoming Quarters

In upcoming quarters, our analyst team will closely watch (1) whether commercial and residential lending pipelines can compensate for ongoing weakness in consumer credit demand, (2) the degree to which deposit costs moderate as rate cuts are implemented and competitive pressures abate, and (3) the pace and execution of the newly authorized share repurchase program. Additional focus will be placed on how Puerto Rico’s manufacturing investments and federal funding affect local loan demand and asset quality.

First BanCorp currently trades at $19.25, down from $20.52 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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