First BanCorp’s second quarter results received a negative market reaction, as revenue growth missed Wall Street’s expectations despite a year-on-year increase. Management attributed the performance to robust commercial loan production in Puerto Rico and Florida, record net interest income, and stable asset quality. CEO Aurelio Aleman-Bermudez highlighted the bank’s efficiency ratio improvements and strong loan pipelines, but also noted that a decline in deposits was mainly due to large, nonrecurring withdrawals by a handful of commercial clients. The company’s expense controls and improved credit metrics were key factors underpinning profitability, while ongoing investment in technology continued to support operational efficiency.

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

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 First BanCorp’s Q2 Earnings Call

• Brett D. Rabatin (Hovde Group) asked whether the lower effective tax rate would continue for the full year, and CFO Orlando Berges-González confirmed the rate should be around 23% based on current projections.
• Brett D. Rabatin (Hovde Group) inquired about the nature of deposit outflows and whether they were recurring. CEO Aurelio Aleman-Bermudez responded that the declines were largely nonrecurring, tied to a small number of large commercial accounts.
• Timur Felixovich Braziler (Wells Fargo) questioned deposit stability for the second half, and Aleman-Bermudez expressed confidence that deposit levels would stabilize, with liquidity from investment portfolio cash flows supporting growth.
• Timur Felixovich Braziler (Wells Fargo) asked about expected composition of loan growth, to which Aleman-Bermudez indicated both Puerto Rico and Florida commercial sectors would contribute, alongside stable consumer and some residential mortgage growth.
• Kelly Ann Motta (KBW) sought clarity on management’s confidence in achieving mid-single-digit loan growth. Aleman-Bermudez highlighted strong pipelines and improved outlook compared to earlier in the year.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be monitoring (1) whether commercial loan production in Puerto Rico and Florida continues at its current pace, (2) stabilization of deposit trends following recent outflows, and (3) progress on digital adoption and efficiency targets as technology investments ramp up. We are also watching for any shifts in credit quality and the pace of capital deployment, particularly regarding remaining share buyback authorizations.

First BanCorp currently trades at $21.31, down from $21.89 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).

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