San Juan, Puerto Rico – First BanCorp, the holding company for FirstBank in Puerto Rico, has a significant presence in the region with 58 branches in Puerto Rico, eight branches in the US and British Virgin Islands, and an additional eight branches in Florida. As a result, the bank’s exposure to Puerto Rico positions it as a key player in the region’s economic landscape.

Despite facing challenges in Puerto Rico’s troubled economy, First BanCorp has maintained strong earnings. In the first quarter of the year, the bank reported over $12 million in net loan loss provisions. However, concerns arise over the bank’s strategy of buying back stock at a premium exceeding 100% of the tangible book value per share.

One area of focus is the bank’s net interest income, which has remained relatively stable. With Puerto Rico’s economic uncertainties, attention is drawn to the bank’s financial performance and balance sheet strength to ensure its resilience against potential economic shocks.

Financial data reveals that First BanCorp’s net interest income increased to $268.5 million, with interest expenses also on the rise. Despite a slight decrease in net interest income, the overall impact remains manageable.

The bank’s financial report highlights a pre-tax profit of $97.4 million, with a net profit of $73.5 million resulting in an earnings per share of $0.44. Moreover, First BanCorp currently pays a quarterly dividend of $0.16, retaining the majority of its earnings on the balance sheet for future stability.

A closer examination of the bank’s loan book, totaling $12.05 billion, reveals a significant focus on Puerto Rico and the Virgin Islands. The bank’s exposure to consumer loans, especially in Puerto Rico, raises concerns, although manageable with appropriate risk management strategies.

Furthermore, the bank’s efforts to address non-accrual loans and past-due accounts, particularly in residential mortgages, indicate potential challenges. With a detailed analysis of the loan portfolio, including provisions for loan losses and foreclosures on residential real estate loans, First BanCorp navigates through these financial obstacles.

While the bank’s attractive earnings profile draws attention, concerns linger over the premium valuation compared to tangible book value. As First BanCorp continues to prioritize stock buybacks at a significant premium, investors are advised to cautiously evaluate the bank’s current valuation and capital allocation strategy.

In conclusion, the current market valuation suggests a ‘hold’ recommendation for First BanCorp. While the bank’s earnings multiples are appealing, the premium to tangible book value and the emphasis on stock repurchases raise considerations for potential investors.