8-K: First BanCorp Reports Record 2025 Earnings, Strong Q4

First BanCorp announced a net income of $87.1 million for Q4 2025, contributing to a record $344.9 million for the full year, driven by revenue growth and stable credit performance.

Summary

• Net income for the fourth quarter of 2025 was $87.1 million, or $0.55 per diluted share, compared to $100.5 million, or $0.63 per diluted share, for the third quarter of 2025, and $75.7 million, or $0.46 per diluted share, for the fourth quarter of 2024.
• For the year ended December 31, 2025, net income was a record $344.9 million, or $2.15 per diluted share, an increase from $298.7 million, or $1.81 per diluted share, for the year ended December 31, 2024.
• Total revenues for the year 2025 crossed $1.0 billion.
• Net interest income increased by $4.9 million to $222.8 million in Q4 2025 compared to Q3 2025.
• Net interest margin increased by 11 basis points to 4.68% in Q4 2025 from 4.57% in Q3 2025.
• Non-performing assets decreased by $5.3 million to $114.1 million in Q4 2025, reaching an all-time low level.
• Total loans grew by $80.8 million to $13.1 billion in Q4 2025, driven by growth in commercial and industrial (C&I) loans in Puerto Rico.
• Core customer deposits (excluding brokered and government deposits) increased by $266.5 million to $13.1 billion in Q4 2025.
• The Corporation repurchased $50.0 million in common stock and declared $28.3 million in common stock dividends during Q4 2025.
• Capital ratios exceeded required regulatory levels, with the Common Equity Tier 1 (CET1) capital ratio at 16.76% as of December 31, 2025.

Sentiment

Score: 8

Explanation: The company reported record full-year earnings and revenues, strong capital and liquidity, and improved efficiency. While Q4 net income was down quarter-over-quarter due to one-time items, the underlying operational performance and full-year results are very positive. Some increase in provision for credit losses and nonaccrual loan inflows are minor concerns but overall credit quality remains strong.

Positives

• Record net income of $344.9 million for the full year 2025, representing a 15% increase year-over-year.
• Record total revenues exceeding $1.0 billion for the full year 2025, a 7% increase year-over-year.
• Diluted earnings per share grew by 19% to $2.15 for the full year 2025.
• Return on average assets improved to 1.8% for the full year 2025, up 23 basis points year-over-year.
• Net interest income increased by $4.9 million to $222.8 million in Q4 2025.
• Net interest margin expanded by 11 basis points to 4.68% in Q4 2025, driven by deployment of cash flows to higher-yielding assets and decreased cost of government deposits.
• Non-performing assets reached an all-time low level, decreasing by $5.3 million to $114.1 million in Q4 2025.
• Efficiency ratio improved to 49.33% in Q4 2025 from 50.22% in Q3 2025, remaining below the 52% operating target.
• Core customer deposits increased by $266.5 million to $13.1 billion in Q4 2025, mainly in non-interest-bearing deposits in Puerto Rico.
• Strong capital position with CET1 capital ratio at 16.76%, significantly above well-capitalized levels.
• Tangible book value per share grew by 4.2% to $12.29 in Q4 2025.
• Total available liquidity sources increased to approximately $6.3 billion, covering 132% of estimated uninsured deposits.
• A $1.1 million ($0.7 million after-tax) reversal related to the estimated FDIC special assessment was recorded in Q4 2025.
• A $1.8 million realized gain from purchased income tax credits contributed to non-interest income in Q4 2025.

Negatives

• Net income for Q4 2025 decreased to $87.1 million from $100.5 million in Q3 2025, primarily due to one-time tax benefits and an Employee Retention Credit recognized in Q3 2025.
• Provision for credit losses increased to $23.0 million in Q4 2025 from $17.6 million in Q3 2025, mainly related to loan growth in commercial and construction portfolios and a prior quarter benefit in residential mortgage loans.
• Total loans grew by 3% for the full year 2025, slightly below original expectations, attributed to elevated commercial loan payoffs and a deceleration in consumer loan production.
• Government deposits decreased by $422.6 million to $3.0 billion in Q4 2025, mainly in the Puerto Rico region.
• Cash and cash equivalents decreased by $241.0 million to $658.6 million in Q4 2025.
• Inflows to nonaccrual loans held for investment increased by $14.0 million to $46.2 million in Q4 2025, driven by two C&I loans in Puerto Rico.
• Loans in early delinquency (30-89 days past due accruing) increased by $2.1 million to $145.0 million in Q4 2025, mainly due to a $7.0 million increase in consumer auto loans.

Risks

• The effect of changes in the interest rate environment and inflation levels on the level, composition, and performance of assets and liabilities, impacting net interest income, net interest margin, loan originations, deposit attrition, overall results, and liquidity.
• Volatility in the financial services industry, which could result in bank deposit runoffs, liquidity constraints, and increased regulatory requirements and costs.
• Uncertainty regarding FirstBank's ability to retain core deposits and generate sufficient cash flow through wholesale funding sources, potentially requiring the sale of investment securities at a loss.
• Adverse changes in general political and economic conditions in Puerto Rico, the U.S., and the U.S. and British Virgin Islands, including unemployment rates, market liquidity and volatility, trade policies, housing absorption rates, real estate markets, and U.S. capital markets.
• The impact of litigation or the threat of litigation, including any settlements or judgments against the Corporation, and potential resulting adverse publicity or other reputational harm.
• The impact of government financial assistance for hurricane recovery and other disaster relief on economic activity in Puerto Rico, and the timing and pace of disbursements of funds.
• The ability to identify and prevent cyber-security incidents, such as data security breaches, ransomware, malware, denial of service attacks, hacking, identity theft, and state-sponsored cyberthreats, and the occurrence of and response to any incidents.
• General competitive factors and other market risks, as well as the implementation of existing or planned strategic growth opportunities, including risks related to business acquisitions, dispositions, strategic partnerships, and system conversions.
• Uncertainty regarding the implementation of Puerto Rico's debt restructuring plan and the revised fiscal plan, and any potential impact of future economic or political developments and tax regulations in Puerto Rico.
• The impact of changes in accounting standards, or determinations and assumptions in applying those standards, and of forecasts of economic variables considered for the determination of the Allowance for Credit Losses (ACL).
• The ability of FirstBank to realize the benefits of its net deferred tax assets and to generate sufficient cash flow to pay dividends to the Corporation.
• Environmental, social, and governance (ESG) matters, including climate-related initiatives and commitments, as well as the impact and potential cost of any policies, legislation, or initiatives in opposition to ESG policies.
• The impacts of natural or man-made disasters, widespread health emergencies, geopolitical conflicts (e.g., Ukraine, Middle East), terrorist attacks, or other catastrophic external events.
• The risk that additional portions of unrealized losses in the debt securities portfolio are determined to be credit-related, resulting in additional charges to the provision for credit losses, and potential for additional credit losses from further downgrades of the U.S.'s Long-Term Foreign-Currency Issuer Default Rating.
• The impacts of applicable legislative, tax, or regulatory changes or changes in legislative, tax, or regulatory priorities, including as a result of the One Big Beautiful Bill Act, signed into law on July 4, 2025, and uncertainties regarding the U.S. debt ceiling and federal budget.
• The risk of possible failure or circumvention of internal controls and procedures and the risk that risk management policies may not be adequate.
• The risk that the FDIC may further increase the deposit insurance premium and/or require further special assessments, causing an additional increase in non-interest expenses.
• Any need to recognize impairments on financial instruments, goodwill, and other intangible assets.
• The risk that the impact of any of these uncertainties on capital would preclude further growth of FirstBank and preclude the Board of Directors from declaring dividends.
• Uncertainty as to whether FirstBank will be able to continue to satisfy its regulators regarding asset quality, liquidity plans, maintenance of capital levels, and compliance with applicable laws, regulations, and related requirements.

Future Outlook

Management anticipates a broadly constructive economic backdrop for 2026. The Corporation remains committed to its capital deployment priorities and 2026 targets, which include delivering approximately 3% to 5% organic loan growth, sustaining a 52% efficiency ratio, maintaining strong profitability, and returning close to 100% of annual earnings back to shareholders.

Management Comments

• "Our fourth quarter results marked a strong finish to a record year for the franchise underscored by record revenues, positive operating leverage, and stable credit performance." Aurelio Alemn, President and Chief Executive Officer of First BanCorp.
• "By virtually all measures, 2025 was an exceptional year for the organization. We crossed $1.0 billion in total revenues, generated record net income of $345 million, grew earnings per share by 19%, and posted a strong 1.8% return on average assets, all while reaching an all-time low level of non-performing assets." Aurelio Alemn.
• "Looking ahead, the economic backdrop going into 2026 is broadly constructive. We remain committed to our capital deployment priorities and 2026 targets as these measures will continue to drive sustainable franchise growth and industry-leading returns." Aurelio Alemn.

Industry Context

The company is actively repositioning its balance sheet towards higher-yielding investment securities and strengthening its liquidity and capital levels, reflecting a proactive approach to a dynamic operating environment. The decrease in the cost of interest-bearing non-maturity government deposits suggests favorable funding cost trends, while the downward repricing of variable-rate commercial loans indicates competitive pressures or a changing interest rate landscape. The continued investment in strategic technology initiatives and focus on omnichannel strategy aligns with broader industry trends towards digital transformation and enhanced customer experience.

Comparison to Industry Standards

• The efficiency ratio of 49.33% in Q4 2025 is below the company's operating target of 52%, indicating strong cost management and operational efficiency compared to internal benchmarks.
• The Common Equity Tier 1 (CET1) capital ratio of 16.76% is significantly above well-capitalized regulatory levels, demonstrating robust capital adequacy relative to industry standards.
• The return on average assets of 1.81% for FY 2025 is described by management as 'top-quartile profitability' and contributing to 'industry-leading returns', suggesting strong performance compared to peers.
• Total available liquidity sources of approximately $6.3 billion, covering 132% of estimated uninsured deposits (excluding fully collateralized government deposits), indicates a very strong liquidity position relative to potential demands.

Legal Proceedings

• An ongoing litigation which could result in a potential loss of title of a commercial OREO property in the Virgin Islands region was mentioned as impacting Q3 2025 results and contributing to a favorable variance in Q4 2025 due to a valuation adjustment.
• General risk of litigation or the threat of litigation, including any settlements or judgments against the Corporation, and the potential resulting adverse publicity or other reputational harm.

Stakeholder Impact

• Shareholders: Positive impact due to record full-year earnings, 19% EPS growth, increased tangible book value per share, $50.0 million in common stock repurchases, and $28.3 million in common stock dividends declared.
• Customers: Positive impact from continued commitment to consistent service and advancement of strategic technology initiatives aimed at improving interaction and providing a seamless experience.
• Employees: Positive impact from management's gratitude for their commitment and the recognition of a $2.3 million Employee Retention Credit in Q3 2025.
• Creditors/Depositors: Enhanced security due to strengthened liquidity and capital levels, with total available liquidity covering 132% of uninsured deposits.

Next Steps

• Continue capital deployment priorities.
• Aim for 3% to 5% organic loan growth in 2026.
• Sustain a 52% efficiency ratio in 2026.
• Maintain strong profitability in 2026.
• Return close to 100% of annual earnings to shareholders in 2026.
• Continue franchise investments towards improving customer interaction through multiple channels.

Key Dates

Recommendation

The company delivered record full-year net income and revenues, demonstrating robust financial health and operational efficiency. Key metrics like net interest margin, efficiency ratio, and non-performing assets show positive trends. The strong capital position, active share repurchase program, and commitment to returning earnings to shareholders make it an attractive investment. While there was a slight Q-o-Q dip in net income due to one-time tax benefits in the prior quarter, the underlying performance and positive outlook for 2026 suggest continued growth and value creation.

Keywords

First BanCorp, FBP, Earnings, Financial Results, Q4 2025, Full Year 2025, Net Income, EPS, Net Interest Margin, Loans, Deposits, Non-Performing Assets, Capital Ratios, Liquidity, Puerto Rico, Banking, Financial Services, Commercial Banking, Consumer Loans, Mortgage Banking, SEC Filing, 8-K