First BanCorp's Q2 2025: Navigating Key Contradictions in Deposits, Loans, and Funding Costs

Deposit stability and outflows, loan growth expectations, deposit growth and stability, changes in funding cost expectations, and operational efficiency ratios are the key contradictions discussed in First BanCorp.'s latest 2025Q2 earnings call.



Strong Financial Performance:
- First BanCorp reported net income of $80 million for Q2 2025, translating into a return on assets (ROA) of 1.69%.
- The financial results were driven by record net interest income, solid loan production, and well-managed expense growth.

Loan Growth and Market Stability:
- Total loans grew by 6% linked quarter annualized, primarily driven by strong commercial loan production in Puerto Rico and Florida.
- The growth was attributed to a stable macroeconomic environment and successful execution by the company's teams.

Deposit Trends and High-Yielding Behavior:
- There was a reduction in customer deposits during the quarter, mostly due to fluctuations in large commercial accounts, while retail deposits remained stable.
- This was influenced by high-yielding behavior and recurring business purposes, such as capital investments and tax payments.

Asset Quality and Credit Metrics Improvement:
- Nonperforming assets remained flat at 68 basis points, and net charge-offs decreased during the quarter.
- The improvement was due to prior year's credit policy calibration and better performance in recent consumer vintages.

Capital Deployment and Shareholder Returns:
- The company executed on its capital deployment strategy, deploying over 107% of earnings through dividends, buybacks, and TruPS.
- This action aligns with the company's long-term interest in maintaining a strong financial position and supporting shareholder returns.