On Thursday, Piper Sandler adjusted its outlook on First BanCorp (NYSE:FBP) shares, reducing the price target to $21.00 from the previous $22.00 while maintaining a Neutral rating. The adjustment reflects a detailed analysis of the bank's recent financial performance, which included earnings per share (EPS) that aligned with the firm's expectations and surpassed the consensus estimate by $0.04.
The differences in performance compared to the firm's projections were attributed to lower provisioning by $0.01, reduced taxes by $0.01, but these were partially negated by a $0.02 decrease in net interest income (NII).
First BanCorp saw its fully taxable equivalent net interest margin (FTE NIM) grow by 2 basis points to 4.34%, which fell short of the anticipated 12 basis points expansion. Despite a 1.2% increase in NII, this figure did not meet the firm's 3% growth expectation.
The bank's deposit balances, excluding brokered and government deposits, experienced a slight decline of 0.3%, with total deposits decreasing by 1.1%. On the other hand, loan balances saw a modest rise of 0.5%, which was half of the projected 1% growth.
The bank's core return on assets (ROA) was reported at 1.58%. Tangible book value (TBV) rose significantly by 14.6%, aided by a favorable adjustment in accumulated other comprehensive income (AOCI). Credit trends remained positive, with net charge-offs (NCOs) increasing by 9 basis points to 0.78%, but non-performing loans (NPLs) and non-performing assets (NPAs) showed a decline.
First BanCorp also undertook strategic financial management during the third quarter, repurchasing $50 million of junior subordinated debt. The bank's capital ratios continue to be robust. According to Piper Sandler, the stock's weakness on Thursday was likely due to the shortfall in NIM and NII. Additionally, the stock traded down in sympathy with Popular, Inc. (NASDAQ:BPOP), which also experienced a downturn.
In other recent news, First BanCorp, the parent company of FirstBank Puerto Rico, reported a stable Q3 financial performance. The company announced a net income of $73.7 million or $0.45 per share, despite a few challenges such as unexpected commercial prepayments and increasing expenses. The bank's core deposits remained steady at $12.7 billion, while the loan portfolio saw a modest increase of $63 million.
First BanCorp is also showing signs of commitment to future growth and shareholder returns, with digital initiatives and a capital return policy. The bank anticipates a loan growth of 4% for the year, with balance sheet growth projected in late 2025.
The bank's strategic initiatives include the launch of the nCino platform, aimed at enhancing the commercial lending workflow. Furthermore, the company plans to continue returning 100% of earnings through dividends and potential buybacks, reinforcing its commitment to maximizing shareholder value. These recent developments reflect First BanCorp's focus on strengthening its financial position amidst economic challenges.
InvestingPro Insights
First BanCorp's recent financial performance, as analyzed by Piper Sandler, can be further contextualized with real-time data from InvestingPro. The bank's P/E ratio of 10.4 (adjusted for the last twelve months as of Q3 2024) suggests that it's trading at a relatively low valuation compared to its earnings. This aligns with an InvestingPro Tip indicating that FBP is "Trading at a low P/E ratio relative to near-term earnings growth."
Despite the recent price target reduction, FBP has demonstrated strong performance over the long term. InvestingPro data shows a remarkable 52.23% total return over the past year, corroborating the InvestingPro Tip of "High return over the last year." This long-term strength is further supported by the bank's consistent dividend growth, with InvestingPro noting that FBP "Has raised its dividend for 6 consecutive years."
However, investors should be aware of recent market reactions. The stock has experienced a 10.02% decline in total return over the past week, which aligns with the InvestingPro Tip that the "Stock has taken a big hit over the last week." This recent downturn may present an opportunity for investors, especially considering the bank's solid fundamentals and long-term performance.
For readers interested in a more comprehensive analysis, InvestingPro offers 11 additional tips for First BanCorp, providing a deeper understanding of the company's financial health and market position.
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