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First BanCorp. to remain cautious in Puerto Rico, pursue growth in Florida

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First BanCorp. to remain cautious in Puerto Rico, pursue growth in Florida

During the company's April 26 earnings call, San Juan, PuertoRico-based First BanCorp.executives pointed to business waiting on the sidelines that could boost its performanceduring the rest of 2016, given more clarity around Puerto Rico's fiscal situation.

President and CEO Aurelio Alemán-Bermudez said that the companywill continue to be "more cautious" with respect to its loans in PuertoRico. "This macro uncertainty hurts every business segment," he said.Still, Alemán-Bermudez stated that in addition to healthy volume, there is a lotof potential business "waiting on the sidelines." If clarity comes froma potential Congressional intervention or if a solution arises out of the debt negotiations,he said that suspended activity could generate more volume and alleviate challengesin the local market.

"There is still a lot of activity, a lot to do, a lot ofbusiness to look after," he added.

CFO Orlando Berges-González noted that in terms of net interestmargin, there will be pressure from nonperforming loans. However, reduction of thebrokered certificates of deposit portfolio could compensate for some of that impact,he added. Looking forward, Berges-González said that the margin "should staywithin this level." He pointed to First BanCorp.'s cash and money-market investmentsthat provide space for the company to reduce its brokered CD deposits.

First BanCorp. executives said that core deposit growth has primarilycome from Puerto Rico. While they have seen reductions in the Florida market, managementsaid that there is "stiff competition for deposits" in that area and thatgrowth in Puerto Rico has compensated for those decreases.

In terms of its broader growth in Florida, Alemán-Bermudez saidthat First BanCorp. is definitely pursuing opportunities to increase its businessin that market. He said that First BanCorp. is adding talent and capacity to itsteams in Florida. Berges-González said the company has been increasing originationsin the Florida market.

First BanCorp. reported net income of $23.3 million, or 11 centsper share, for the first quarter of 2016. That compares to $25.6 million, or 12cents per share, for the first quarter of 2015. The S&P Capital IQ consensusestimate for normalized EPS for the company's 2016 first quarter was 8 cents.