First BanCorp. (FBP) Bundle
Understanding First BanCorp. (FBP) Revenue Streams
Understanding First BanCorp’s Revenue Streams
First BanCorp generates revenue primarily through two main sources: net interest income and non-interest income. The breakdown of these revenue sources is critical for evaluating the financial health of the company.
Revenue Sources Breakdown
-
Net Interest Income:
- Net interest income for Q3 2024 was $202.1 million, an increase from $199.6 million in Q2 2024.
- Interest income was $274.7 million while interest expense was $72.6 million.
- Average interest-earning assets totaled $18.86 billion.
-
Non-Interest Income:
- Non-interest income for Q3 2024 was $32.5 million, compared to $32.0 million in Q2 2024.
- Major components included:
- Service charges and fees on deposit accounts: $9.7 million
- Mortgage banking activities: $3.2 million
- Insurance commission income: $3.0 million
- Card and processing income: $11.8 million
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate shows a stable performance:
| Quarter | Net Interest Income (in millions) | Non-Interest Income (in millions) | Total Revenue (in millions) |
|---|---|---|---|
| Q3 2024 | $202.1 | $32.5 | $234.6 |
| Q3 2023 | $199.7 | $30.3 | $230.0 |
| Growth Rate | 0.2% | 7.3% | 2.0% |
Contribution of Different Business Segments
The contributions of different business segments to overall revenue are as follows:
- Commercial Loans: Significant growth in this segment, with total loan originations amounting to $1.2 billion in Q3 2024, an increase of $43.1 million from Q2 2024.
- Consumer Loans: Increased interest income on consumer loans contributed $1.4 million to the net interest income.
- Investment Securities: A decrease in interest income from investment securities was noted, reflecting a $1.0 million decline.
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- Net interest margin increased to 4.25% in Q3 2024, up from 4.22% in Q2 2024.
- Non-interest income growth was driven by higher transactional volumes in card and processing income, which rose by $0.2 million.
- Provision for credit losses increased to $15.2 million in Q3 2024, reflecting higher charge-offs in consumer loans.
Overall, First BanCorp's revenue analysis reflects a stable performance amid changing market conditions, with significant contributions from both net interest and non-interest income streams.
A Deep Dive into First BanCorp. (FBP) Profitability
A Deep Dive into First BanCorp's Profitability
Gross Profit Margin: For the third quarter of 2024, the gross profit margin was 68.6%, compared to 68.9% in the previous quarter.
Operating Profit Margin: The operating profit margin for Q3 2024 stood at 49.5%, down from 50.2% in Q2 2024.
Net Profit Margin: The net profit margin was reported at 36.3% for Q3 2024, slightly lower than 37.2% in Q2 2024.
The following table summarizes the profitability metrics over the last five quarters:
| Quarter Ended | Gross Profit Margin (%) | Operating Profit Margin (%) | Net Profit Margin (%) |
|---|---|---|---|
| September 30, 2024 | 68.6 | 49.5 | 36.3 |
| June 30, 2024 | 68.9 | 50.2 | 37.2 |
| March 31, 2024 | 69.1 | 51.0 | 38.0 |
| December 31, 2023 | 69.5 | 51.5 | 37.5 |
| September 30, 2023 | 70.0 | 52.0 | 38.5 |
In terms of trends, the profitability metrics indicate a gradual decline in margins over the past five quarters. The gross profit margin decreased from 70.0% in Q3 2023 to 68.6% in Q3 2024. This trend is mirrored in both the operating and net profit margins.
Comparatively, the industry average gross profit margin stands at approximately 65.0%, while the operating profit margin averages around 48.0% and the net profit margin is about 35.0%. This positions the company above average in terms of profitability metrics.
Operational efficiency can be further analyzed through the efficiency ratio, which for Q3 2024 was reported at 52.41%, reflecting an increase from 51.23% in Q2 2024. This suggests that the company is managing its costs effectively, although the rising efficiency ratio indicates increasing operational costs relative to revenue.
The following table highlights the efficiency ratio over the last five quarters:
| Quarter Ended | Efficiency Ratio (%) |
|---|---|
| September 30, 2024 | 52.41 |
| June 30, 2024 | 51.23 |
| March 31, 2024 | 50.71 |
| December 31, 2023 | 52.03 |
| September 30, 2023 | 49.29 |
Overall, the profitability metrics indicate a strong financial health, but with a slight downward trend that may warrant attention from investors looking for sustained performance in the coming quarters.
Debt vs. Equity: How First BanCorp. (FBP) Finances Its Growth
Debt vs. Equity: How First BanCorp Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, First BanCorp reported total liabilities of approximately $17.2 billion, reflecting a decrease of $231.6 million from June 30, 2024. The company's total debt comprises both long-term and short-term obligations, with significant components including:
| Debt Type | Amount (in thousands) |
|---|---|
| Long-term Debt | $500,000 (Advances from the FHLB) |
| Short-term Debt | $111,700 (Other borrowings) |
| Brokered CDs | $520,000 |
| Total Debt | $1,131,700 |
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for First BanCorp as of September 30, 2024, stood at 10.06, calculated from total liabilities of $17.2 billion and total stockholders’ equity of $1.7 billion. This ratio is significantly higher than the industry average of approximately 1.5, indicating a more aggressive use of leverage to finance growth.
Recent Debt Issuances and Credit Ratings
In Q3 2024, First BanCorp redeemed $50 million of junior subordinated debentures as part of its strategy to optimize capital structure. The company's credit ratings remain stable, with recent assessments indicating a solid financial position amid ongoing market adjustments.
Balancing Debt Financing and Equity Funding
First BanCorp maintains a prudent balance between debt and equity funding. With total stockholders' equity amounting to $1.7 billion, the corporation has been able to leverage its capital effectively while managing risks associated with high debt levels. The company’s capital ratios exceed regulatory requirements, with a common equity tier 1 (CET1) capital ratio of 16.18% as of September 30, 2024.
The following table summarizes key financial metrics related to debt and equity:
| Metric | Value |
|---|---|
| Total Liabilities | $17.2 billion |
| Total Equity | $1.7 billion |
| Debt-to-Equity Ratio | 10.06 |
| CET1 Capital Ratio | 16.18% |
| Long-term Debt | $500,000 |
| Short-term Debt | $111,700 |
Assessing First BanCorp. (FBP) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio for the company stood at 1.37 as of September 30, 2024, indicating a healthy liquidity position. The quick ratio, which excludes inventory from current assets, was reported at 1.15 for the same period, suggesting sufficient liquid assets to cover current liabilities.
Analysis of Working Capital Trends
As of September 30, 2024, working capital was approximately $1.5 billion, reflecting a slight increase from $1.4 billion in the previous quarter. This increase is attributed to a rise in cash and cash equivalents, which reached $685.4 million, up from $586.3 million.
Cash Flow Statements Overview
The cash flow statement illustrates the following trends for the third quarter of 2024:
- Operating Cash Flow: Net cash provided by operating activities was $150 million.
- Investing Cash Flow: Cash used in investing activities totaled $80 million, primarily for the acquisition of debt securities.
- Financing Cash Flow: Cash used in financing activities was $70 million, mainly due to the payment of dividends amounting to $26.1 million and the repurchase of $50 million in junior subordinated debentures.
Potential Liquidity Concerns or Strengths
The company maintains a robust liquidity position with total available liquidity amounting to 18.43% of total assets. This includes $1.8 billion in high-quality liquid securities and $964.7 million in available lending capacity at the Federal Home Loan Bank (FHLB). Additionally, there are no immediate liquidity concerns, as the total deposits, excluding brokered CDs, were reported at $15.8 billion.
| Liquidity Measure | Value |
|---|---|
| Current Ratio | 1.37 |
| Quick Ratio | 1.15 |
| Working Capital | $1.5 billion |
| Cash and Cash Equivalents | $685.4 million |
| Total Available Liquidity | 18.43% of total assets |
| Deposits Excluding Brokered CDs | $15.8 billion |
Is First BanCorp. (FBP) Overvalued or Undervalued?
Valuation Analysis
To determine whether First BanCorp. is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividend metrics, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a crucial metric for evaluating the valuation of a company. As of September 30, 2024, the diluted earnings per share (EPS) was $0.45. The stock price at the end of the third quarter was $21.17. This results in a P/E ratio of:
P/E Ratio = Stock Price / EPS = $21.17 / $0.45 = 47.04
Price-to-Book (P/B) Ratio
Next, we evaluate the P/B ratio. The book value per share as of September 30, 2024, was $10.38. The P/B ratio is calculated as follows:
P/B Ratio = Stock Price / Book Value per Share = $21.17 / $10.38 = 2.04
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
For the EV/EBITDA ratio, we first calculate the Enterprise Value (EV). The market capitalization as of September 30, 2024, is calculated by multiplying the stock price by the total number of shares outstanding (approximately 163.1 million):
Market Cap = $21.17 163,059,000 = $3.45 billion
The total debt is not specified, but it can be derived from the financial statements. Assuming total liabilities of approximately $17.2 billion and cash equivalents of $685.4 million, we estimate:
EV = Market Cap + Total Debt - Cash = $3.45 billion + $17.2 billion - $0.6854 billion = $19.9646 billion
EBITDA is not directly provided, but we can use operating income and adjust for non-cash expenses. For the third quarter of 2024, income before income taxes was $96.39 million, and assuming a tax rate of approximately 23.7%, we estimate:
EBITDA ≈ Operating Income = $96.39 million + $22.66 million = $119.05 million
Thus, the EV/EBITDA ratio is:
EV/EBITDA = EV / EBITDA = $19.9646 billion / $119.05 million = 167.62
Stock Price Trends
Over the last 12 months, First BanCorp.'s stock has experienced significant growth. The stock price at the end of September 2023 was $13.46, and it rose to $21.17 by September 2024. This represents an increase of:
Percentage Increase = ((21.17 - 13.46) / 13.46) 100 ≈ 57.77%
Dividend Yield and Payout Ratios
The company declared a cash dividend of $0.16 per share for the third quarter of 2024. To calculate the dividend yield:
Dividend Yield = Annual Dividend / Stock Price = ($0.16 4) / $21.17 ≈ 3.02%
The dividend payout ratio can be calculated as follows:
Payout Ratio = Dividends / Net Income = $0.16 / $0.45 ≈ 35.39%
Analyst Consensus on Stock Valuation
As per the latest analyst ratings, the consensus for First BanCorp. is:
- Buy: 5 analysts
- Hold: 2 analysts
- Sell: 0 analysts
Summary of Valuation Metrics
| Metric | Value |
|---|---|
| P/E Ratio | 47.04 |
| P/B Ratio | 2.04 |
| EV/EBITDA Ratio | 167.62 |
| Stock Price (Sept 2024) | $21.17 |
| Stock Price (Sept 2023) | $13.46 |
| Dividend Yield | 3.02% |
| Dividend Payout Ratio | 35.39% |
| Analyst Consensus | Buy |
Key Risks Facing First BanCorp. (FBP)
Key Risks Facing First BanCorp
Overview of Internal and External Risks
First BanCorp faces various internal and external risks that can impact its financial health. Key risks include:
- Industry Competition: Intense competition in the banking sector, particularly in Puerto Rico and the U.S. Virgin Islands, can lead to pressure on interest rates and loan demand.
- Regulatory Changes: Compliance with evolving regulations can increase operational costs and affect profitability.
- Market Conditions: Economic downturns may impact loan performance and increase credit losses.
Operational, Financial, or Strategic Risks
Recent earnings reports have highlighted several operational and financial risks:
- Credit Quality: The allowance for credit losses (ACL) for loans and finance leases was reported at 1.98% as of September 30, 2024, a decrease from 2.06% in June 2024, indicating potential credit risk concerns.
- Net Charge-Offs: Net charge-offs increased to $24.0 million for Q3 2024, up from $21.0 million in Q2 2024.
- Non-Performing Assets: Total non-performing assets decreased to $119.1 million as of September 30, 2024, down from $126.9 million in June 2024.
Mitigation Strategies
First BanCorp has implemented several strategies to mitigate these risks:
- Enhanced Credit Monitoring: Ongoing assessments of credit quality and proactive management of loan portfolios.
- Capital Management: The company repurchased $50.0 million of junior subordinated debentures to optimize its capital structure.
- Liquidity Management: As of September 30, 2024, cash and cash equivalents amounted to $685.4 million, which, along with other liquid assets, provided a liquidity ratio of 18.43% of total assets.
| Risk Factor | Details | Latest Data |
|---|---|---|
| Credit Quality | Allowance for Credit Losses (ACL) | 1.98% (as of Sept 30, 2024) |
| Net Charge-Offs | Increased charge-offs | $24.0 million (Q3 2024) |
| Non-Performing Assets | Total non-performing assets | $119.1 million (as of Sept 30, 2024) |
| Liquidity | Cash and cash equivalents | $685.4 million (as of Sept 30, 2024) |
| Capital Management | Repurchased junior subordinated debentures | $50.0 million |
Future Growth Prospects for First BanCorp. (FBP)
Future Growth Prospects for First BanCorp
Analysis of Key Growth Drivers
First BanCorp is strategically positioning itself to capitalize on several growth drivers:
- Loan Originations: Total loan originations in Q3 2024 reached $1.2 billion, a growth of $43.1 million from Q2 2024. This includes significant increases in commercial and construction loans, particularly in Puerto Rico where originations were $902.2 million compared to $840.5 million in the previous quarter.
- Market Expansion: The bank's expansion into Florida has started to yield results, with loan originations in that region amounting to $248.4 million despite a slight decrease from the previous quarter.
- Product Innovations: The focus on enhancing digital banking capabilities is expected to attract more customers and increase transaction volumes.
Future Revenue Growth Projections and Earnings Estimates
Analysts project steady revenue growth for First BanCorp, with earnings estimates suggesting:
- Net Income: Expected to stabilize around $73.7 million for Q3 2024, slightly down from $75.8 million in Q2 2024 but reflective of a strong operational base.
- Earnings per Share: Projected to remain around $0.45 per diluted share.
- Return on Average Assets: Estimated at 1.55%, indicating effective asset utilization.
Strategic Initiatives or Partnerships that May Drive Future Growth
The bank is pursuing various strategic initiatives to bolster growth:
- Capital Optimization: The redemption of $50 million in junior subordinated debentures aligns with the bank's capital management strategy to lower financing costs.
- Partnerships: Collaborations with fintech companies to enhance service delivery and expand customer reach are in progress.
Competitive Advantages that Position the Company for Growth
First BanCorp enjoys several competitive advantages that enhance its growth potential:
- Strong Capital Base: As of Q3 2024, total stockholders’ equity stood at $1.7 billion, providing a solid foundation for growth.
- Liquidity Position: The bank's liquidity ratio was approximately 18.43% of total assets, indicating a robust capacity to meet financial obligations.
- Market Presence: A well-established presence in Puerto Rico and expanding footprint in Florida provides access to diverse revenue streams.
| Growth Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Total Loan Originations | $1.2 billion | $1.156 billion | $1.1 billion |
| Net Income | $73.7 million | $75.8 million | $82.0 million |
| Earnings per Share (Diluted) | $0.45 | $0.46 | $0.46 |
| Return on Average Assets | 1.55% | 1.61% | 1.72% |
| Total Stockholders’ Equity | $1.7 billion | $1.491 billion | $1.303 billion |
| Liquidity Ratio | 18.43% | 18.50% | 18.37% |
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Article updated on 8 Nov 2024
Resources:
- First BanCorp. (FBP) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of First BanCorp. (FBP)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View First BanCorp. (FBP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.