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First BanCorp (FBP - Free Report) came out with quarterly earnings of $0.63 per share, beating the Zacks Consensus Estimate of $0.58 per share. This compares to earnings of $0.51 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of +8.62%. A quarter ago, it was expected that this holding company for FirstBank Puerto Rico would post earnings of $0.54 per share when it actually produced earnings of $0.62, delivering a surprise of +14.81%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

First BanCorp, which belongs to the Zacks Banks - Foreign industry, posted revenues of $260.12 million for the quarter ended September 2026, missing the Zacks Consensus Estimate by 3.75%. This compares to year-ago revenues of $248.71 million. The company has topped consensus revenue estimates two times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

First BanCorp shares have added about 31.9% since the beginning of the year versus the S&P 500's gain of 13.3%.

What's Next for First BanCorp?While First BanCorp has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for First BanCorp was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.62 on $273.86 million in revenues for the coming quarter and $2.40 on $1.07 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks - Foreign is currently in the top 26% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, Nu Holdings Ltd. (NU - Free Report) , has yet to report results for the quarter ended September 2026.

This company is expected to post quarterly earnings of $0.23 per share in its upcoming report, which represents a year-over-year change of +35.3%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

Nu Holdings Ltd.'s revenues are expected to be $5.73 billion, up 37.3% from the year-ago quarter.

FirstBank has raised its dividend four times in five years, but nearly every loan on its books ties back to a single Caribbean island economy with a growing pile of auto delinquencies and volatile government deposits.

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First BanCorp (NYSE:FBP) has raised its dividend three years running, and every one of those payments depends on the economy of one Caribbean island. FirstBank lends mainly in Puerto Rico and runs smaller operations in Florida and the U.S. and British Virgin Islands. The bank’s geographic breakdown puts Puerto Rico at $10.05 billion, compared with $2.55 billion for the United States. A downturn on the island would hit nearly the whole book, and no mainland region is big enough to buffer it.

A Dividend That Keeps Climbing The quarterly payout was $0.05 in 2020. It rose to $0.14 in 2023, $0.18 in 2025 and $0.20 starting with the February 2026 payment. At $26.51 a share, the stock yields 2.8%. The dividend takes up only about 33% of trailing EPS of $2.36. The left earnings largely fund buybacks. CEO Aurelio Alemán said:

“Our thoughtful and consistent approach to capital deployment resulted in a net payout ratio of 92% during the quarter achieved through share buybacks and dividends.”

Why Capital Strength Equals Dividend Safety A bank’s dividend needs regulatory support as well as management’s approval. Regulators set minimum capital levels and review payout plans, so how much capital a bank holds determines how much it can pay out. First BanCorp ended the second quarter with a CET1 ratio (core equity measured against risk-weighted assets) of 17% and a tangible common equity ratio of 10.08%. Size limits its flexibility, though. With a market value of roughly $4.05 billion, it lacks the funding options available to a large mainland regional bank.

How Puerto Rico’s Big Three Banks Compare Metric First BanCorp Popular Inc. (NASDAQ:BPOP | BPOP Price Prediction) OFG Bancorp (NYSE:OFG) Dividend yield 2.8% 1.89% 2.55% Return on assets (TTM) 1.95% 1.25% 1.81% Trailing P/E 11 11 10 Price-to-book 2.06x 1.59x 1.55x Popular and OFG Bancorp depend on the same island economy. First BanCorp offers the highest yield and the highest return on assets of the three. It also trades at the highest multiple of book value, so investors are already paying for that profitability.

Island Risks Investors Cannot Ignore The local economy looks solid. Unemployment is at 5.7%, companies have announced about $2.2 billion in reshoring projects, and FEMA and HUD funds are still flowing. On the July call, Alemán said:

“Loan growth is accelerating in the second half of the year as business activity in Puerto Rico continues.”

Consumer credit and deposits show weak spots. Retail auto sales were down about 19% year to date as of the Q1 report. In the second quarter, early-stage delinquencies rose about $32.9 million, mainly from a $20.7 million jump in auto finance. Roughly two-thirds of the $274 million deposit increase came from government accounts, which management called volatile. The bank also has $297.5 million in direct Puerto Rico government obligations. Alemán played down the delinquency increase:

“We don’t expect significant upticks from here in those delinquency levels.”

Verdict: The $0.20 Dividend Looks Safe The dividend looks secure. Because it uses only about a third of earnings and the bank has a 17% CET1 ratio, buybacks would be cut long before the dividend if conditions worsened. The stock is up 31.05% this year, even withstanding a 7.02% drop over the past month. One number to track: net charge-offs fell to 49 basis points in the second quarter from 65 basis points the quarter before. If they climb back above 65 while auto delinquencies keep rising, expect buybacks to shrink in the October capital plan.

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First BanCorp. NYSE: FBP reported higher second-quarter 2026 earnings and record pre-tax pre-provision income, with management citing stronger loan growth, expanding net interest income and stable credit trends across the franchise.

The Puerto Rico-based banking company earned $96.1 million, or $0.62 per diluted share, for the quarter, compared with $88 million, or $0.57 per share, in the prior quarter. President and Chief Executive Officer Aurelio Alemán said net income was up 24% from the same quarter last year.

Pre-tax pre-provision income reached an all-time high of $138 million, up 5% from the previous quarter and 11% from a year earlier. Return on average assets was 2.02%, compared with 1.89% in the first quarter. Alemán said it marked the company’s 18th consecutive quarter with ROA above 1.5%.

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CFO Said Ortiz said quarterly results included approximately $3.4 million of additional interest income tied to two refinancings, one commercial loan and one municipal bond, which led to accelerated recognition of deferred fees or discounts. Excluding that impact, net income would have been about $93 million, or approximately $0.60 per diluted share.

Loan Growth Accelerates as Commercial Activity Strengthens Total loans reached $13.3 billion, up 5% on a linked-quarter annualized basis. Alemán said growth was driven primarily by commercial activity in Puerto Rico, while consumer portfolios showed better stability than expected.

Total loan originations were $1.7 billion during the quarter, a 21% increase from the prior year. Management said the pipeline supports continued activity through the remainder of 2026 and reaffirmed its full-year loan growth target of 3% to 5%.

During the question-and-answer session, Alemán said commercial originations reflected a mix of activity, including acquisitions, commercial real estate, construction, C&I, warehousing, hotels, healthcare and government-related refinancing. He also noted solid activity in Florida, including from the company’s Boca Raton office opened late last year.

Asked about business momentum in Puerto Rico, Alemán highlighted hospitality as a particularly strong sector, citing positive trends in average daily rates, occupancy and visitors, as well as ongoing hotel projects. He said investor confidence in the island remained strong despite broader political and macroeconomic uncertainty.

Net Interest Income Rises, Margin Guidance Moves Higher Net interest income increased 3.7% from the prior quarter to $229.1 million, compared with $221 million in the first quarter. Ortiz said the increase included the $3.4 million benefit from fee and discount acceleration. Excluding that impact, interest income on loans rose $1.7 million, while interest income on investments and cash increased $4.5 million.

The company continued to reinvest cash flows from maturing securities into higher-yielding instruments. Ortiz said the yield on the investment portfolio increased by 18 basis points, excluding the refinancing-related benefit.

Funding costs were managed lower overall, with total deposit costs declining by two basis points from the previous quarter. The cost of time deposits, excluding brokered deposits and public funds, decreased by eight basis points to 3.26%, while the cost of interest-bearing checking and savings accounts rose by five basis points to 1.26%, driven by higher rates on certain government accounts.

Ortiz said the company’s net interest margin, excluding the accelerated fee and discount recognition, would have been approximately 4.80%, up five basis points from the prior quarter. Management now expects margin expansion of three to five basis points per quarter for the rest of 2026, assuming no rate cuts in the second half of the year.

In response to an analyst question, Ortiz said approximately $400 million of securities are expected to reprice in the second half of 2026 at a current yield of about 1.92%, with about $1.2 billion of repricing expected over the next 18 months.

Deposits Increase, Expenses Stay Near Guidance Total deposits increased by $274 million during the quarter. Alemán said the increase was primarily driven by government deposits, with a slight rise in core customer deposits. He noted that government deposits can be volatile due to reconstruction-related funds moving in and out of accounts, but said liquidity remains solid.

Noninterest income was $35.7 million, down from $37.7 million in the prior quarter, mainly due to seasonal commissions typically received in the first quarter. Operating expenses were relatively flat at $127.3 million. Excluding gains from OREO operations, expenses were $128.2 million, which Ortiz said was at the lower end of guidance.

The efficiency ratio improved to 48.1% from 49.1% in the previous quarter. Management expects quarterly expenses for the remainder of 2026, excluding OREO gains or losses, to range from $128 million to $130 million, reflecting merit increases, business promotions and technology-related project expenses.

Alemán said the company continues to invest in technology, cloud transformation, artificial intelligence and branch expansion. He said AI efforts are focused on automating routine processes, improving customer service and shortening process life cycles.

Credit Trends Remain Stable Despite Higher Early Delinquencies Credit performance remained broadly sound, though early-stage delinquency rose during the quarter. Ortiz said early-stage delinquency increased by approximately $32.9 million from the prior quarter, mainly due to a $20.7 million increase in the auto finance leases portfolio. However, he said early delinquency in the consumer portfolio was still about $10.3 million lower than in December 2025.

Non-performing assets increased by $5.1 million from the previous quarter, primarily due to the inflow of a $14.8 million C&I loan in Florida. Ortiz said the loan is well collateralized. Excluding that relationship, non-performing assets declined by $9.7 million, with reductions in residential mortgages, consumer loans and repossessed autos.

The allowance for credit losses was $245 million, or 1.85% of total loans, relatively flat from the previous quarter. Ortiz said increases tied to loan growth and higher auto finance lease delinquencies were offset by improved macroeconomic projections and better delinquency in unsecured consumer loans.

Alemán said the increase in auto delinquencies appeared seasonal, following a first-quarter improvement attributed to consumer liquidity from tax refunds and other factors. He said delinquency levels were better than in December and in line with prior years.

Capital Remains Strong as Buybacks and Dividends Continue First BanCorp ended the quarter with a Common Equity Tier 1 ratio of 17%. The company completed $50 million of share repurchases and paid a $0.20 per-share dividend during the quarter, according to Alemán.

Ortiz said tangible book value per share rose to $12.68, while the tangible common equity ratio declined three basis points to 10.08% due mainly to growth in tangible assets. He said regulatory capital ratios remained well above required levels, with earnings offsetting capital deployment and risk-weighted asset growth.

Asked about potential M&A, Alemán said the company remains open to opportunities that would be a strategic fit and align with its operating model, but emphasized that organic growth remains the primary focus. He said management continues to evaluate capital deployment options and will provide more detail when it updates its capital plan later in the year.

About First BanCorp. (NYSE:FBP)First BanCorp NYSE: FBP is a financial holding company headquartered in San Juan, Puerto Rico. Through its principal banking subsidiary, FirstBank Puerto Rico, the company offers a comprehensive range of banking services including commercial and consumer lending, deposit products, cash management solutions and treasury services. It also provides mortgage origination and servicing, equipment leasing, investment management, and insurance agency services.

In its commercial banking segment, First BanCorp serves small and midsize enterprises as well as large corporate clients, delivering tailored credit facilities, letters of credit, and foreign trade financing.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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