The Attractiveness of First Bancorp's Dividend Yield and Financial Resilience

For income-focused investors, regional banks often represent a compelling blend of stability and yield. Among these, First Bancorp (FBP) has emerged as a standout performer in 2025, offering a dividend yield that, while recently adjusted, remains competitive, and a financial profile that underscores its resilience in a challenging economic environment. This analysis explores why FBP could be a strategic addition to portfolios prioritizing consistent income and long-term capital preservation.

A Dividend Yield with Room for Growth

First Bancorp's dividend yield has shown volatility in late 2025, dropping to 1.85% as of November 25 from 3.18% in September. This decline, however, masks a critical development: the company increased its quarterly dividend to $0.23 per share in June 2025. The drop in yield likely reflects a surge in the stock price following this announcement, rather than a weakening in the company's ability to sustain payouts. For income investors, this underscores a key principle-dividend yield is a function of both the payout and stock price. A rising share price, driven by strong fundamentals, can reduce the yield while increasing the absolute value of dividends received.

FBP's commitment to shareholder returns is further evidenced by its recent $250 million share repurchase program. This move, combined with the dividend hike, signals management's confidence in the company's financial health and its prioritization of shareholder value. For income-focused investors, such actions often correlate with a company's ability to maintain or grow dividends over time.

Financial Resilience in a High-Interest-Rate Environment

FBP's Q3 2025 results highlight its ability to thrive in a high-interest-rate environment, a critical factor for regional banks. The company reported net income of $100.5 million, or $0.63 per diluted share, a 13% increase compared to Q3 2024. This growth was driven by a 4.57% net interest margin (NIM), up from previous quarters, and a $13.1 billion loan portfolio-a $181 million increase, marking the first time since 2010 the company surpassed the $13 billion threshold.

Capital strength further bolsters FBP's appeal. Its Common Equity Tier 1 (CET1) capital ratio of 16.67% and leverage ratio of 11.52% exceed regulatory requirements, providing a buffer against economic downturns. Additionally, the company's tangible book value per share rose to $11.79, reflecting a 9.73% tangible common equity ratio. These metrics suggest FBP is well-positioned to absorb potential losses while maintaining its dividend-paying capacity.

Loan Quality and Risk Management

A critical concern for regional banks is loan quality, particularly in a rising-rate environment. FBP's Q3 2025 results indicate a balanced approach to risk. While the allowance for credit losses (ACL) coverage ratio stood at 1.89% and annualized net charge-offs increased to 0.62%, non-performing assets decreased by $8.6 million to $119.4 million. This reduction, driven by a shrinking OREO (Other Real Estate Owned) portfolio, suggests effective asset management.

Moreover, FBP's efficiency ratio of 50.22% highlights disciplined cost management, a key factor in maintaining profitability. For income investors, this efficiency translates to a higher likelihood of consistent earnings and, by extension, sustainable dividends.

Risks and Considerations

While FBP's financials are robust, investors should remain cognizant of potential risks. The ACL coverage ratio, at 1.89%, is relatively low compared to industry averages, indicating a thinner cushion against future credit losses. Additionally, the drop in dividend yield from 3.18% to 1.85% may concern some income investors, though this metric is more reflective of stock price dynamics than operational weakness.

Conclusion

For income-focused investors seeking exposure to regional banks, First Bancorp offers a compelling case. Its recent dividend hike, coupled with strong capital ratios, disciplined cost management, and a growing loan portfolio, positions it as a resilient player in a sector often sensitive to macroeconomic shifts. While risks such as loan quality and yield volatility exist, FBP's proactive approach to shareholder returns and its financial strength make it a worthy consideration for those prioritizing income with a margin of safety.