First BanCorp. (FBP): Business Model Canvas [10-2024 Updated]

Understanding the business model of First BanCorp. (FBP) reveals how this financial institution effectively meets the diverse needs of its customers while maintaining a robust operational framework. With a strong focus on community development and personalized banking services, FBP leverages key partnerships and resources to deliver value across multiple customer segments. Dive deeper into the intricacies of FBP's business model canvas to discover how it navigates the competitive banking landscape.

First BanCorp. (FBP) - Business Model: Key Partnerships

Collaborations with government-sponsored enterprises

First BanCorp. actively collaborates with government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac for mortgage financing. In the third quarter of 2024, the bank executed $38.2 million in GNMA securitization transactions and $43.5 million in whole loan sales to U.S. GSEs. These partnerships facilitate the bank's ability to offer competitive mortgage products while managing risk and enhancing liquidity.

Partnerships with local businesses for loan referrals

First BanCorp. has established partnerships with various local businesses to generate loan referrals. In the third quarter of 2024, the bank reported total loan originations of $1.2 billion, with significant contributions from commercial and construction loans. These partnerships not only enhance the bank's reach in the community but also support local economic development.

Partnership Type	Details	Impact on Loan Originations (Q3 2024)
Local Businesses	Referral programs for commercial and consumer loans	$1.2 billion total loan originations
Community Organizations	Engagement in local events and sponsorships	Increased brand visibility and customer loyalty

Relationships with Federal Home Loan Bank for liquidity

First BanCorp. maintains a strong relationship with the Federal Home Loan Bank (FHLB) to enhance its liquidity position. As of September 30, 2024, the bank had $964.7 million available for credit from the FHLB based on the value of collateral pledged. This partnership provides a reliable source of liquidity, enabling First BanCorp. to manage its funding needs effectively.

Liquidity Source	Amount Available (as of Sept 30, 2024)
Federal Home Loan Bank	$964.7 million
Cash and Cash Equivalents	$685.4 million
High-Quality Liquid Securities	$1.8 billion

First BanCorp. (FBP) - Business Model: Key Activities

Providing banking services including loans and deposits

First BanCorp. offers a range of banking services, primarily focusing on loans and deposits. As of September 30, 2024, the total loans held by First BanCorp. amounted to approximately $12.5 billion, reflecting an increase of $62.8 million from the previous quarter. The breakdown of loans is as follows:

Loan Type	Amount (in thousands)
Residential Mortgage Loans	$2,820,147
Commercial Loans	$5,884,535
Consumer Loans	$2,847,968
Finance Leases	$893,374

The total deposit base as of September 30, 2024, was $15.8 billion, with a mix of government and core deposits. Notably, core deposits (excluding brokered CDs and government deposits) decreased by $36.8 million to $12.7 billion.

Mortgage banking activities and investment management

First BanCorp. engages in mortgage banking activities, originating loans that contribute significantly to the bank's revenue. In the third quarter of 2024, total loan originations, including refinancings, amounted to $1.2 billion, marking an increase of $43.1 million from the previous quarter. The geographic distribution of loan originations is as follows:

Region	Loan Originations (in thousands)
Puerto Rico	$902,200
Virgin Islands	$34,700
Florida	$248,400

Investment management activities are also part of First BanCorp.'s services, managing a portfolio of securities and investments to optimize returns for the bank and its clients. As of September 30, 2024, total securities held amounted to approximately $6.5 billion.

Risk management and credit assessment processes

Risk management is critical to First BanCorp.'s operations, particularly in assessing credit risk. The allowance for credit losses (ACL) for loans and finance leases was 1.98% of total loans as of September 30, 2024. The bank reported net charge-offs of $24.0 million for the third quarter, representing an annualized 0.78% of average loans.

First BanCorp.'s credit assessment process includes evaluating borrowers' creditworthiness and monitoring macroeconomic indicators to adjust risk exposure. As of September 30, 2024, the total exposure to the Puerto Rico government was approximately $309 million, with significant portions secured by property tax revenues.

First BanCorp. (FBP) - Business Model: Key Resources

Experienced banking personnel and management team

First BanCorp. employs a skilled workforce, with a focus on experienced banking personnel and a robust management team. As of September 30, 2024, the total number of employees was approximately 2,100, ensuring strong operational capabilities across their banking services.

Diverse loan portfolio including residential and commercial loans

First BanCorp. boasts a diversified loan portfolio valued at approximately $12.5 billion as of September 30, 2024. This portfolio includes:

Loan Type	Amount (in thousands)
Residential Mortgage Loans	$2,820,147
Commercial Loans	$5,884,535
Finance Leases	$893,374
Consumer Loans	$2,847,968

The portfolio is further segmented by geography, with the majority originating from Puerto Rico, followed by the Virgin Islands and Florida.

Strong capital base and liquidity reserves

As of September 30, 2024, First BanCorp. maintained a strong capital base with total stockholders' equity amounting to $1.7 billion. The capital ratios were as follows:

Capital Ratio	Percentage
Total Capital Ratio	18.25%
Common Equity Tier 1 (CET1) Ratio	16.18%
Tier 1 Capital Ratio	16.18%
Leverage Ratio	10.96%

Liquidity was also robust, with cash and cash equivalents of $685.4 million, supplemented by high-quality liquid securities totaling $1.8 billion, leading to an overall liquidity ratio of approximately 18.43% of total assets.

First BanCorp. (FBP) - Business Model: Value Propositions

Competitive interest rates on loans and deposits

First BanCorp offers competitive interest rates on both loans and deposits, which is a critical component of its value proposition. As of the third quarter of 2024, the net interest margin stood at 4.25%, reflecting a slight increase from 4.22% in the previous quarter . The average rate on interest-bearing liabilities was 2.45%, indicating a favorable spread for the bank . The corporation's total interest income for the quarter was approximately $274.7 million, contributing to a net interest income of $202.1 million .

Financial Metrics	Q3 2024	Q2 2024	Q3 2023
Net Interest Margin	4.25%	4.22%	4.24%
Average Rate on Interest-Bearing Liabilities	2.45%	2.45%	1.87%
Total Interest Income	$274.7 million	$272.2 million	$263.4 million
Net Interest Income	$202.1 million	$199.6 million	$199.7 million

Personalized banking services tailored to customer needs

First BanCorp emphasizes personalized banking services, catering to the specific needs of its diverse customer base. The bank's offerings include customized loan structures and a suite of financial products designed to meet individual customer demands. This approach is evident in the bank's total loan originations, which reached approximately $1.2 billion in the third quarter of 2024, showcasing a focus on both commercial and consumer lending . Notably, commercial and industrial loans accounted for a significant portion, totaling $3.25 billion as of September 30, 2024 .

Loan Originations	Amount (Q3 2024)
Total Loan Originations	$1.2 billion
Commercial and Industrial Loans	$3.25 billion
Residential Mortgage Loans	$2.81 billion

Commitment to community development and support

First BanCorp demonstrates a strong commitment to community development through various initiatives and support programs. The bank actively participates in local community projects and provides financing solutions aimed at enhancing economic growth in Puerto Rico and the Virgin Islands. As part of its community engagement, First BanCorp has allocated resources towards grants and partnerships that foster local development . This commitment reflects positively on its brand image and strengthens customer loyalty, contributing to its overall value proposition.

Community Support Initiatives	Details
Grants and Partnerships	Allocated resources for local economic development
Community Projects	Involvement in local infrastructure and support programs
Impact on Brand Image	Enhanced customer loyalty and community trust

First BanCorp. (FBP) - Business Model: Customer Relationships

Focus on customer service and satisfaction

First BanCorp. emphasizes customer service and satisfaction as a core component of its business model. The bank reported a net income of $73.7 million for Q3 2024, reflecting a commitment to maintaining strong customer relationships and service quality . The efficiency ratio stood at 52.41%, indicating effective management of non-interest expenses relative to income .

Regular communication through multiple channels

First BanCorp. utilizes various communication channels to stay connected with its customers. The bank's total non-interest income for Q3 2024 was $32.5 million, which includes income from services such as card processing and customer service fees . The bank also reported service charges and fees on deposit accounts amounting to $9.7 million during the same quarter . This highlights the bank's proactive approach to engaging customers through different platforms.

Loyalty programs and incentives for long-term customers

First BanCorp. implements loyalty programs aimed at rewarding long-term customers. The bank's total deposits were approximately $16.35 billion as of September 30, 2024 . This figure suggests a solid base of loyal customers who may benefit from incentives such as higher interest rates on savings accounts or bonuses for maintaining certain balances. Additionally, the bank has increased its focus on providing dedicated services to enhance customer retention and satisfaction.

Key Metrics	Q3 2024	Q2 2024	Q3 2023
Net Income	$73.7 million	$75.8 million	$82.0 million
Efficiency Ratio	52.41%	51.23%	50.71%
Total Non-Interest Income	$32.5 million	$32.0 million	$30.3 million
Service Charges on Deposit Accounts	$9.7 million	$9.7 million	$9.5 million
Total Deposits	$16.35 billion	$16.53 billion	$16.56 billion

First BanCorp. (FBP) - Business Model: Channels

Branch network across Puerto Rico and the Virgin Islands

First BanCorp operates a robust branch network, comprising 45 branches primarily located in Puerto Rico and the U.S. Virgin Islands. This extensive network facilitates direct customer interaction and service delivery, enhancing customer accessibility to banking services. As of September 30, 2024, First BanCorp reported total deposits of approximately $15.8 billion, with core deposits, excluding brokered and government deposits, standing at $12.7 billion.

Online banking platform for easy access and transactions

First BanCorp's online banking platform is a critical channel, offering customers convenient access to banking services. The platform allows customers to manage accounts, transfer funds, pay bills, and access various banking products seamlessly. As of Q3 2024, the bank has seen a significant increase in digital engagement, with over 60% of transactions conducted through online and mobile platforms.

Mobile app for on-the-go banking services

The FirstBank mobile app complements the online banking platform by providing on-the-go banking services. The app supports features such as mobile check deposit, real-time transaction alerts, and personal finance management tools. In Q3 2024, the mobile app recorded over 300,000 downloads, reflecting a growing trend in mobile banking adoption among customers.

Channel	Details	Statistics
Branch Network	Number of branches	45 branches in Puerto Rico and the Virgin Islands
Online Banking	Percentage of transactions conducted online	Over 60%
Mobile App	Number of app downloads	Over 300,000 downloads

First BanCorp. (FBP) - Business Model: Customer Segments

Individual consumers seeking personal loans and mortgages

First BanCorp. serves individual consumers primarily through personal loans and mortgage products. As of September 30, 2024, the total residential mortgage loans amounted to approximately $2.82 billion, comprising $2.17 billion from Puerto Rico, $0.16 billion from the Virgin Islands, and $0.49 billion from the United States. The bank's focus on personal loans has seen a steady demand, as evidenced by a net interest income of $202.1 million in Q3 2024.

Small to medium-sized enterprises needing business financing

First BanCorp. caters to small and medium-sized enterprises (SMEs) by providing various business financing options, including commercial and industrial loans. As of Q3 2024, commercial loans totaled $5.88 billion, with $2.17 billion in commercial and industrial loans, $2.47 billion in commercial mortgage loans, and $0.21 billion in construction loans. The total loan originations, which include refinancings and renewals, reached $1.2 billion in Q3 2024, marking an increase of $43.1 million from the previous quarter.

Government and non-profit organizations for community projects

First BanCorp. also focuses on government and non-profit organizations, providing financing for community projects. The bank's commitment to community development can be seen in its $1.8 billion in loans categorized for community reinvestment. The efficiency ratio, which measures the bank's ability to generate income from its operations, was reported at 52.41% for Q3 2024, indicating a robust operational performance that supports these community initiatives.

Customer Segment	Loan Amounts (in billions)	Key Financial Metrics
Individual Consumers	$2.82	Net Interest Income: $202.1 million
Small to Medium-sized Enterprises	$5.88	Loan Originations: $1.2 billion
Government and Non-Profit Organizations	$1.8	Efficiency Ratio: 52.41%

First BanCorp. (FBP) - Business Model: Cost Structure

Employee salaries and benefits as major expenses

For the third quarter of 2024, First BanCorp reported employee compensation and benefits expenses amounting to $59.1 million. This reflects an increase from $57.5 million in the previous quarter, driven by annual salary merit increases and an additional working day in the quarter.

Costs associated with maintaining physical branches

The occupancy and equipment expenses for First BanCorp in the third quarter of 2024 were $22.4 million, which is slightly up from $21.9 million in the second quarter. This category includes rent and maintenance costs for physical branches, which are essential for the bank's operations and customer service delivery.

Marketing and promotional expenditures for customer acquisition

First BanCorp allocated $4.1 million for business promotion expenses in the third quarter of 2024, which is a decrease from $4.4 million in the previous quarter. This spending is crucial for customer acquisition strategies and brand visibility in the competitive banking sector.

Expense Category	Q3 2024 Amount (in millions)	Q2 2024 Amount (in millions)	Q3 2023 Amount (in millions)
Employee Salaries and Benefits	$59.1	$57.5	$56.5
Occupancy and Equipment Costs	$22.4	$21.9	$21.8
Marketing and Promotional Expenditures	$4.1	$4.4	$4.8
Total Non-Interest Expenses	$122.9	$118.7	$116.6

First BanCorp. (FBP) - Business Model: Revenue Streams

Interest Income from Loans and Mortgages

For the third quarter of 2024, First BanCorp reported net interest income of $202.1 million, reflecting a slight increase compared to $199.6 million in the second quarter of 2024. This increase was attributed to a $3.8 million rise in interest income from loans, primarily driven by:

• $1.6 million increase in interest income on commercial and construction loans.
• $1.4 million increase in interest income on consumer loans and finance leases.
• $0.8 million increase in interest income on residential mortgage loans.

As of September 30, 2024, total loans held for investment amounted to $12.39 billion, with various segments contributing as follows:

Loan Type	Amount (in thousands)
Residential Mortgage Loans	$2,820,147
Commercial Loans	$5,884,535
Consumer Loans	$2,847,968
Finance Leases	$893,374

Non-Interest Income from Fees and Commissions

First BanCorp's non-interest income for the third quarter of 2024 totaled $32.5 million, up from $32.0 million in the previous quarter. This increase was mainly due to:

• $11.8 million from card and processing income.
• $9.7 million from service charges and fees on deposit accounts.
• $3.2 million from mortgage banking activities.
• $3.0 million from insurance commission income.

The breakdown of non-interest income for Q3 2024 is as follows:

Source of Non-Interest Income	Amount (in thousands)
Service Charges and Fees on Deposit Accounts	$9,684
Mortgage Banking Activities	$3,199
Insurance Commission Income	$3,003
Card and Processing Income	$11,768
Other Non-Interest Income	$4,848

Investment Income from Securities and Other Financial Instruments

First BanCorp's investment income is derived from securities and other financial instruments, which contributed to its revenue streams. For the third quarter of 2024, the interest income from investment securities was $11.6 million, which reflects a decrease of $1.0 million due to a $168.7 million decrease in the average balance of these securities.

Overall, First BanCorp has maintained a diverse revenue stream structure, which supports its financial stability and growth strategy as of 2024.

Article updated on 8 Nov 2024

Resources:

1. 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.
2. 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.