First BanCorp (FBP) Q1 2025 Earnings Call

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DATE

Tuesday, Apr 22, 2025

CALL PARTICIPANTS

Aurelio Aleman: President and Chief Executive Officer

Orlando Berges: Executive Vice President and Chief Financial Officer

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Net Income: $77 million ($0.47 per share), compared to $76 million ($0.46 per share) in Q4 2024

Return on Assets: 1.64% for Q1 2025

Net Interest Margin: Expanded by 19 basis points to 4.52% (4.48% adjusted) in Q1 2025

Efficiency Ratio: Improved to 49.6% from 51.6% in Q4 2024

Loan Growth: Total loans slightly down; originations reached $1.2 billion in Q1 2025

Non-Interest Bearing Deposits: Grew $70 million in Q1 2025

Capital Deployment: Redeemed approximately $50 million in subordinated debentures during Q1 2025, declared $29.6 million in dividends, and repurchased $22 million in common stock

Tangible Book Value: Increased 7% to $10.64 per share in Q1 2025

SUMMARY

First BanCorp. reported solid Q1 2025 results, driven by margin expansion and positive operating leverage. Management maintained its mid-single-digit loan growth guidance for the year 2025, expecting growth to materialize in the second half. The company continues to deploy excess capital through various initiatives, including share repurchases and dividend payments.

Net interest income increased by $3 million to $212 million in Q1 2025, benefiting from lower funding costs and improved yields on cash and investments.

Credit quality metrics remained stable, with early delinquencies decreasing by $21.8 million during Q1 2025.

Management projects 5-7 basis points of quarterly NIM expansion for the remainder of 2025 on a GAAP basis, assuming potential rate cuts in the second half.

The company converted to a centralized FIS cloud for its core systems, advancing its digital transformation efforts in Q1 2025.

INDUSTRY GLOSSARY

OREO: Other Real Estate Owned, foreclosed properties held by the bank

ACL: Allowance for Credit Losses, reserves set aside for potential loan losses

Full Conference Call Transcript

Operator: Discuss the company's financial results for the first quarter of 2025. Joining you today from First BanCorp. are Aurelio Aleman, President and Chief Executive Officer, and Orlando Berges, Executive Vice President and Chief Financial Officer. We begin today's call, it is my responsibility to inform you that this call may involve certain forward-looking statements such as projections of revenue, earnings, and capital structure, as well as statements on the plans and objectives of the company's business. The company's actual results could differ materially from the forward-looking statements made due to the important factors described in the company's latest SEC filings. The company assumes no obligation to update any forward-looking statements made during the call. If anyone does not already have a copy of the webcast presentation or press release, you can access them at our website at fbbinvestor.com. At this time, I'd like to turn the call over to our CEO, Aurelio Aleman.

Aurelio Aleman: Thank you, Ramon, and actually, good afternoon to everyone and thanks for joining our call today. I usually will start with a brief discussion on the financial performance, and then we'll move up to some highlight economic matters. Again, you know, we delivered what I consider a very strong quarter for the franchise driven by the margin expansion and the positive operating leverage. From profitability ROA and ROE, Return on Assets was solid at 1.64%. And prepack pre-provision income grew by 7%, reaching $125 million during the quarter. The project continues to perform quite well as we enter 2025 with the strength of the balance sheet, the strength of capital, and obviously a proven track record to successfully navigate unforeseen conditions while supporting our clients. That's really the main goal. Turning to the balance sheet, total loans were slightly down on a liquid basis. I think I mentioned last quarter that we were excited about a repayment that didn't happen and took place this quarter. On the other hand, our relations were healthy and reached $1.2 billion in line with usually the first quarter. On the other hand, the pipeline is healthy and continues to build as we continue to work with our clients supporting them in this current operating cycle. As we know, it's difficult to predict the closing of chunky deals usually, but at this time, we continue to sustain our mid-single-digit growth for the year. That remains unchanged. Core deposit loans were stable. We saw a nice pickup in non-interest bearing, which grew $70 million. And when you look at deposits in Puerto Rico, they have an end grow, what we consider core, excluding government, of $75 million. And actually, if we adjust, we actually lose two large chunky deals on the deposit side, on the pricing side of about $125 million. So it's going to be much better, but I think we're very pleased that the granularity continues to improve. Credit performance was stable, and we continue to see the normalization that we talk about in the consumer credit trends. Early delinquency is down when compared to the prior quarter. And finally, regarding capital, as we always say, we continue to be opportunistic in our approach to how to deploy. We redeemed approximately $50 million in some of the ventures and declared $30 million in common stock dividends. In addition, we decided to resume our stock purchase program during the quarter, and we repurchased $22 million in the first quarter. In addition to the drops, we expect to complete another $28 million during April, which will reach the goal for the second quarter of $50 million in common stock. Just as a reminder, we still have $100 million left of the prior year approval, which, obviously, as we continue to be opportunistic, we're looking to deploy in the second half of this year. Please let's turn to Slide five. Again, the financial results are a product of execution of the teams and a stable economic backdrop, which continues to show positive metrics. Business activity continues healthy. Obviously, consumer confidence is, as of today, about to be determined based on new policies, fiscal policies, and tariffs, which are under evaluation. Everybody is pending to see what the impact is going to be on that confidence. On the other hand, year-to-date fiscal government tax collection is up by 3%. Unemployment rate, again, another long time, another low register in the first quarter. And when we look at quarter-to-date, debit and credit card sales were 3% in the first quarter in 2024. This version of it has to really fund, continue, and we continue to participate in affordable housing projects, primarily looking into infrastructure improvement too. On the data front, we have continued to invest. This call, we achieved a very important step in converting to the centralized FIS cloud our courses, and now all our courses are inside that cloud. And then our project investment continues in the detailed environment, which the data adoption continues to progress in line with our objective. And then capital utilization, the first priority is really to try to grow the balance sheet and obviously improve our products and improve our. We still believe it's early to assess the broader economic implication of the changes in unit policy we'll have in Puerto Rico. But, again, we'll keep you updated. I think we all bankers are just in the same place looking at potential implications to our economies and our core customers. So as I mentioned, full-year guidance remains unchanged. And I guess we'll probably update in the next call in July. So despite this concern, we remain committed to our disciplined approach of delivering consistent results and creating shareholder value. Now with that, I pass it to Orlando to give a little more detail on the financial results.

Orlando Berges: Thanks for joining today. Thanks, Aurelio. Good afternoon, everyone. So Aurelio just mentioned, we recorded another strong quarter highlighted by the net interest expansion. We earned $77 million in net income, which is $0.47 per share, compared to the $76 million and $0.46 we had last quarter. This translates to our average assets of 1.64%. The provision for credit losses for the quarter increased $4 million. It is primarily some projected deterioration on the consumer real estate.

Operator: The commercial real estate price index. I'm sorry.

Orlando Berges: That affected the allowance for credit losses for commercial and construction loans. And some higher adjustments we did to the qualitative framework due to the uncertainty of the economic environment under considering all the things that are going on with the tariffs. Net interest income for the quarter was $212 million, which is up $3 million versus the prior quarter. The income does include a $1.2 million prepayment penalty.

Aurelio Aleman: Collected on a prepaid commercial loan. But it's also net of a $2.7 million impact from two fewer working days in the quarter. Funding cost drives a lot of this. They were down $5.8 million in the quarter, including the days' impact. As the cost of the interest-bearing checking and savings accounts decreased seven basis points to 1.45% as a cost. And the cost of time deposits came down twelve basis points to 3.39%. We also registered with options in wholesale borrowing cost due to the full quarter effect of the redemption during the fourth quarter of the $50 million in subordinated debentures and a decrease in the average balance of FedHorn loan advances. We had so much rate is due during the month of March that we're repaid this quarter. In addition, we had in the quarter an improvement of eleven basis points in the yield of cash and investment securities. Some of the lower-yielding cash flows from the investment portfolio were reinvested or kept at the fed account, which is a higher rate. On the other hand, the loan portfolio yields decreased two basis points, mostly on the commercial, which decreased nine basis points due to a repricing of the floating rate component of the portfolio. Which was compensated by increases in the yield of the consumer portfolios. Or that net effect. The net interest margin dynamics continue to play out well. Margin expanded nineteen basis points in the quarter to 4.52%. However, this expansion did include an increase of four basis points, which was related to the prepayment penalty I just mentioned and some higher income on late fees in the consumer portfolios. The adjusted margin eliminated some of these items was really 4.48%, which is a fifteen basis points pickup from last quarter. This increase reflects our plan changing asset mix as we deploy the cash flow from the lower-yielding investment portfolio to higher-yielding earning assets and also the repayment of the borrowings, the higher-cost borrowings. We also had the benefit of the additional reductions in funding cost we achieved as I just mentioned. This quarter, we received approximately $352 million in cash flows that were yielding around 1.5% which obviously repriced at higher rates with benefits coming in the future quarters. At this point, assuming there are normal flow of deposits and stability on the loan portfolio, we believe that NIM should continue expanding over the next few quarters. We benefit from additional repricing opportunities on the investment portfolio cash flows. Either through lending, higher-yielding securities, or even the cash at the fed as well as the cancellation of some of the higher-cost funding. The projected investment portfolio cash flows for the second quarter amount to approximately $260 million with a run-up GL of 1.5%. And we also expect approximately $1 billion in additional cash flows during the second half of the year that will also reprice at higher yields. Depending on the timing and amount of rate cuts in the second half of the year, we estimate that margin should improve approximately five to seven basis points per quarter for the remaining months of this year. In terms of other income items, it was stable, but we did have a $3.45 million increase related to contingent insurance commission that we collect during the quarter that happens in the first quarter of every year. And some additional income we had from purchase tax credits. On the expenses, expenses were $123 million which is $1.5 million lower than last quarter. Business promotion was $2.1 million lower based on the seasonality of marketing efforts. But also, we had debit and credit card lower credit debit and credit card processing expenses due to $2.2 million in expense reimbursements we received in the quarter. On the other hand, compensation expense was $2.5 million higher in the quarter. Which is related to seasonal payroll taxes and $2.9 million in bonuses and sub-base compensation. Usually take place in the first quarter. Which offset a reduction of $1.6 million related to two fewer working days in the quarter. If we were to normalize compensation and card expenses, expenses for the quarter would have been $123.9 million. And if we exclude OREO, they would have been $125.1 million, which are within the guidance range we provided in the last call. Last quarter, just to remind you, last quarter, expenses including OREO were $125.6 million. The efficiency ratio for the quarter was 49.6%, which compares with 51.6% in the fourth quarter. But if we adjust some of these income and expense items that don't happen every quarter, the efficiency ratio would have been approximately 51.3%. Roughly in line with our targets. Based on our estimates, we expect that our expense base for the next couple of quarters, excluding the OREO, will continue to be in the range of $125 to $126 million. And our efficiency ratio will be around 50% up to 52% considering the changes in expenses and projected income components. In terms of credit quality, NPA did increase in the quarter by $11 million, which is basically due to an inflow of one nonaccrual commercial real estate loan in the Florida region that amounted to $12.6 million. On the other hand, we had reductions in residential mortgage nonperforming and OREO balance offset some of this increase. The NPI ratio was 68 basis points to total assets for the quarter. Just to mention, this nonperforming loan that migrated in the Florida region did not impact the allowance for credit losses because it's collateralized, but good value collateral at this point. The inflows to nonperforming for the quarter were $43.4 million, which is $6.3 million higher than last quarter. Basically related to this one CRE case that went into nonperforming. But we did have reductions of $6.5 million in consumer loan inflows. In general, I would say credit metrics are holding up well. Loans in early delinquency were down $21.8 million during the quarter. We have started to see some normalization trends in consumer credit, with consumer loans in early delinquency decreasing by $19.5 million when compared to the prior quarter. The allowance for the quarter did increase by $3.4 million to $247.3 million. And this reflects the higher qualitative adjustments that we incorporated to consider the uncertainty in the economic environment. The ratio of the allowance grew four basis points. Allowance to loans grew four basis points to 1.95%. Mostly in the commercial side. Driven by the forecasted deterioration on the commercial real estate price indexes. However, we did see some improvements in the unemployment rate projection on the shorter term, which led to a five basis point reduction in the allowance for consumer loans. Which ended up at 3.78% of loans. Net charge-off for the quarter was $21.4 million or 68 basis points of average loans. It's down $3.2 million from last quarter. This reduction includes a recovery of $2.4 million we recognized related to a bulk sale of consumer charge-off loans we had in the quarter. Excluding this recovery, net charge-off to average loans would have been 76 basis points. It's slightly lower than the 78 basis points charge-off rate that we had in the fourth quarter. On the capital front, as Aurelio mentioned, we executed our capital deployment priorities during the quarter. We redeemed approximately $50 million in subordinated debentures. On top of what we have already redeemed in prior quarters. It's only $11 million left of those debentures. We also declared $29.6 million in dividends and repurchased $21.8 million in common stock. In terms of capital impact, these actions were offset by the earnings, obviously. Which at the end resulted in higher regulatory capital ratios when we compare them to last quarter. During the quarter, we also registered a 7% increase in tangible book value per share to $10.64. And the tangible common equity ratio expanded to 9.1% mostly due to an $84 million improvement in the fair value. The securities that lower the outstanding amount of adjusted or comprehensive loss. The remaining comprehensive loss represents $2.91 on tangible book value per share. And about 220 basis points in the tangible common equity range. Aurelio just mentioned, we will continue with our strategy of deploying Access Capital. Thoughtful as possible to improve franchise and shareholder value and we continue with our execution of our plans. This concludes our prepared remarks. Operator, please we'd like to open the call for questions.

Operator: Thank you. When preparing to ask your question, please ensure that your device is unmuted locally. Our first question comes from the line of Frank Schiraldi of Piper Sandler. Please go ahead.

Frank Schiraldi: Hey. Good afternoon. Just Orlando, I think you mentioned some numbers around securities book in terms of deals, in terms of cash flowing. I think you said 1.5% for the second quarter. Did you share? But those, you know, yields are coming off in the back half of the year.

Orlando Berges: The yields on the second half of the year are slightly lower. They're gonna be talking from the top of my head, but they're gonna be around 1.35% to 1.40%. What's on the second half of the year.

Frank Schiraldi: Yeah. And then could you share just a ballpark in terms of that assumption you gave around margin expansion, I think five to seven bps. What that assumes in terms of pickup on that, you know, what you expect the new know if it's a mix of loans and securities you assume this is going at these cash flows are going into. But what kind of pickup do you anticipate? What sort of blended rate are you looking for on the new origination to get to that sort of margin expansion.

Orlando Berges: We're assuming there are a few things, obviously. We're assuming it's gonna be a big bubble. Somewhere around 150 to 300 basis points. But you know, remember that that assumption considers that there might be some rate reductions in the year. At this point, it's become a little bit unpredictable. But when we had done our original estimates for 2025, we were assuming two cuts in the second half of the year. Maybe we're looking at three now. So, you know, that reflects what would be what we can keep on the investment portfolio, cash and obviously, depending on what's the growth on the loan portfolio. It could move a little bit higher than that. But also, you know, it all depends. We were able to move funding cost this quarter a little bit more than we had anticipated. That helped the margin pick up this quarter. So depending on that, you know, the next quarter will you know, assumptions are based on those numbers I just gave you. Okay. And just just one more on that line of questioning. In terms of you know, the 1.5% in this second quarter or the back half the year, 1.3% to 1.4% in terms of the cash flows. Just looking out beyond 2025, is it similar levels of cash flowing out of that book and at sort of similar yield coming off. Is there any any sort of detail there?

Orlando Berges: I don't have with me the additional Frank. I need to get that a future years. Remember that duration in the portfolio is not high. So that's the amount from through March through March of next year was a million five. That includes that billion I just gave you and the 260. So it's 250 more million in the first quarter of 2026. But I don't have the full report with me here to give you some more indications of the full year.

Frank Schiraldi: Okay. Alright. So at least for the first quarter, you said 250 million. In the first quarter, it's about 250. Yes. Okay. I appreciate it. And then just lastly, if I could just sneak in one more. In terms of the commercial mortgage loan, or even just commercial mortgage in general in Florida, I think you had the one large payoff. And you talked about, I think, and it fell from 4Q to 1Q. But just in terms of the general thoughts around CRE your CRE in Florida, something that you guys are looking to continue to grow. And then kinda where you're seeing where are you seeing the stress? And if you could just talk about that large payoff of you know, is that I guess that's by design, just maybe a little more detail there. Thanks.

Aurelio Aleman: You know, there's the large payout was in Puerto Rico. The and the MPA was in Florida. Regarding CRE. The large payoff was a refinancing. That we did not participate in. Based on terms, expected terms. And the one in Florida, I think we put some details in the release, you know, it's a we believe there's a one-off case. On the hospitality sector. Really good long to value. We actually don't expect any losses in that one. Okay. Alright. I appreciate it. You're welcome. Thank I know the CRM, you know, we continue to originate. We have a good pipeline and obviously under our their our underwriting criteria. We continue to move up the balance sheet. Yeah.

Operator: Our next question is from Brett Rabatin of Hovde Group. Please go ahead.

Brett Rabatin: Hey. Thanks for the time. Wanted to ask on the loan origination side. You know, I know commercial can be a little lumpy. And obviously 4Q is really strong, but I if I heard correct that, you know, the guidance for the year is kind of that mid-single-digit number and just wanted to see if you think that the commercial side that's on slide thirteen, if that grows from here, you know, or if or if you'll see more on the consumer side, just looking for some color on where you guys see the originations coming from.

Aurelio Aleman: Yeah. Actually, you know, we think this year you know, different to it's different to prior years. Obviously, where we see the opportunities, where we see the performance of the books, and we believe, you know, both construction and commercial will grow. We believe the consumer will grow at a slower pace than prior years. And we believe that actually we're gonna see some growth in residential. Which we already actually experienced this quarter. Which was not the case if you look back, very slight growth over the for the machine year. So that that's the way we see the mix in the growth being combined. Yeah.

Brett Rabatin: Okay. And then I noticed you guys were didn't roll out the app. Any color on if that was, you know, by choice or what was the function there? And then if you guys might be looking to do that going forward.

Aurelio Aleman: Yeah. We have about, you know, we'll say a dozen of improvement to the data point functionality that are currently being worked on. We did launch, you know, Samsung Pay and Google Pay for the Mastercard debit side. We do have we are dual brand. We do both Visa and Mastercard. The Apple Pay project is ongoing. We have some vendors that are involved in the execution and, you know, there's priorities of timing of those. But, you know, you should see that happening during this year. Combined with proper, you know, some of other functionalities that we continue to enhance in our digital front.

Brett Rabatin: Okay. And then, Aurelio, would you consider you know, do you just think about Puerto Rico versus Florida? You know, I know sometimes you've said you think there's probably more risk credit-wise in Florida than there is in Puerto Rico. What do you think today, you know, just in terms where you see the credit risk particularly on the commercial side?

Aurelio Aleman: Well, you know, I think I make comments regarding competitive landscape. And, obviously, Florida, it's more competitive on the deposit side. Puerto Rico is competitive. You know, but at a different level. Florida has a multiple number of competitors on very, very large banks also. There. In terms of credit, you know, we continue to see a healthy pipeline. You know, we have our underwriting guidelines. The portfolios have performed if you look at the segregation of the ACL. Portfolio has performed really well in Florida. You know? Cases that we see, obviously, is a smaller portfolio. Than Puerto Rico, so, you know, you have less water already. But, you know, at this point, you know, we continue to see Florida as a healthy portfolio. We have very limited barely limited office there, small and it's a well-diversified book. So Puerto Rico, when we say slower risk on the CRD, remember, there was no construction built for many years in Puerto Rico, and asset values didn't increase rapidly. So loan to values are quite healthy. In a Puerto Rico portfolio. So that's why and, yes, you know, there's opportunity for growth, but, you know, we keep ourselves to our underwriting guidelines. And try not to deviate from those. Mhmm.

Brett Rabatin: Okay. Appreciate all the color, guys.

Aurelio Aleman: Thank you, bud.

Operator: Our next question comes from the line of Steve Moss of Raymond James. Please go ahead.

Steve Moss: Good morning. Good morning. Morning. Maybe just following up on loan growth here. More than maybe following up on loan growth here. Just kinda curious you know, with pipeline building, I hear you guys a little bit more uncertainty in the market, but do you think loan growth will happen, you know, pick up this quarter? It sounds like it'll be a little bit positive.

Aurelio Aleman: Well, you know, in the last call, we actually said that we see long growth in the second half of the year. If I recall, we did cover that item. You know, to be honest, you know, we. If I close this or I don't close it. So that's happening. All over the industry, not only in Puerto Rico. So, you know, I think it's the conclusion which will happen over the next ninety days. Will bring conclusion to that. The pipelines continue to build. So if I look at my pipeline today versus the one that I have in January, it's actually better. Is a positive. But, obviously, the uncertainty on the market is different. It's that that's just a reality that we have to deal with, you know, Obviously, if you go back to the pandemic, same thing happened. You know? All of a sudden, we didn't know how to project. You know? That's what I said in my remarks. You know? We're not we're not you know, we're not you know, we're not you know, we have a good pipeline. We're not modifying our guidance. But, you know, only policies impact will tell how markets would behave. It's not gonna be just a First BanCorp. thing. It's gonna be, you know, a market thing. So we're very closely with our working with our clients to continue moving the needle and supporting them. But, you know, market could change a perspective of risk and perspective of investors and turning into deals or not. So that's just a reality that we have to deal with in a recycle. But, yes, for now, our mid-single-digit guidance continues. Got it. I appreciate that color.

Steve Moss: And then in terms of just kind of curious, you know, on the you know, I think the price was some normalization of consumer credit. You know, I see, like, the consumer charge-offs were up year over year. Just kinda curious how you guys are thinking about consumer charge-offs for the full year.

Orlando Berges: We, you know, we expect an improvement on that metric. Yes. From prior year. We expect a reduction prior year on the charge of on the rate on the rate itself, obviously. It's a balance that could grow and absolute amounts could grow, but charge-off rate should improve year over year.

Aurelio Aleman: Remember, Steve, that we saw a ramp-up of charge-offs through 2024. On the consumer side. Yeah.

Orlando Berges: So when you compare to first quarter, it's we're looking more to prior quarters. Because that's where we say that the benefit is gonna start coming as some of these older vintages that started be that behaved worse. Are getting blown off. So we have that. And remember we also had the sale of numb charge-off loans that improve the debt charge-off on the consumer side.

Steve Moss: Yes. Okay. Great. I appreciate that color there. And just one last one for me just for clarification. The five to seven basis points of margin expansion is off the 4.48% adjusted margin. Correct?

Orlando Berges: That is correct. That is correct.

Steve Moss: Okay. Perfect. Well, that's all for me. I appreciate all the call here.

Aurelio Aleman: Thank you very much.

Operator: Our next question comes from the line of Kelly Motta of KBW. Please go ahead.

Kelly Motta: Hey. Good afternoon. Thanks so much for the question. Maybe piggybacking off that margin outlook. I really appreciate all the color on the securities repricing as well as your outlook there for five to seven basis points expansion during the quarter. Just turning to the other side of the balance sheet, I would imagine given your securities close that the overall size is going to be dictated by what you're seeing on the deposit side. So on that note, what are you seeing on the deposit side? I think one of your competitors said that there's some better deposit trends that flows have been improving. Wondering what you're seeing in your overall outlook here given what you're seeing from your customers so far. Thanks.

Orlando Berges: You know, we're seeing more stability than the two prior years. We're seeing, you know, from more transactional activity, actually, some growth in what we consider core transactional and non-interest bearing. Obviously, you know, we have an appetite for government deposits, which we are there. And we continue to support. As long as, you know, they are 100% collateralized have to be. That is our appetite. That would change, you know, we'll change our appetite, but for now, you know, we see stability. We see the market fairly stable on that front. When we compare market numbers to 2024, there was a contraction, slight contraction. We had a slight increase. And, you know, we continue to monitor. It's really the critical strategy for all of us. But are definitely stable.

Kelly Motta: Got it. That's really helpful. And then and make just a small modeling question on the expense side. I appreciate the outlook on a quarterly basis ahead. It looks like insurance and supervisory fees were about $2 million lower linked quarter. Was there anything any reversal there? Just wondering if 4Q is a better run rate going forward from here in any dynamic that may have impacted 1Q.

Orlando Berges: I'm thinking here there was nothing are you looking versus last year or you're looking versus December?

Kelly Motta: Versus December. Because remember that last year, last year, we had a special assessment from the FDIC? Let me see. I don't remember anything specific. Kelly. I would have to look for that. Some more details to provide you.

Kelly Motta: Got it. Appreciate it. Last just a point of clarification. For me on the buyback. I think you had said you've done $28 million in April. Based on your commentary, would you expect to still continue to be active in the shares here opportunistic for the rest of the quarter or I need to go back and look at the transcript. I thought you may have implied you might be out for the quarter. Just wanted to clarify that point.

Orlando Berges: Yeah. Our goal for this quarter was $50 million. We are we're gonna complete that by the end of April. And, you know, we always keep the optionality. Right now, the plan is to deploy that $100 million in the second half. But, you know, it's always a consideration if you know, if a unique opportunity shows up. On the market that we act. We have the flexibility. So but they got it. Probably the $50 million.

Kelly Motta: Got it. And last one that 4.48% adjusted margin, that's on a GAAP basis. Right? Not an FTE. I believe you said the interest recovery was four basis points.

Orlando Berges: That's right. It's on a GAAP basis, not a full it's taxable equivalent.

Kelly Motta: Awesome. Thank you so much.

Orlando Berges: Thank you. Thank you, Kelly.

Operator: Our next question comes from the line of Timur Braziler of Wells Fargo. Please go ahead.

Timur Braziler: Hi. Good afternoon. I want to first follow-up on the deposit line of questioning I think if I heard correctly, there was some chunkiness and deposit flows in 1Q. Just wondering if you look at that portfolio, if there's anything that expected to exit the bank here in the near term and just talking to maybe more near-term deposit trends can you just remind us what kind of the seasonal cadence is for First BanCorp. and what the expectation is maybe over these next couple of quarters on the deposit side?

Orlando Berges: The I mean, if you look we had a couple of cases that were deposited at the deposits we got at the end of the year. Meaning at the end of the year, meaning in the last quarter of the year, one Florida they were know, the monies were earmarked for some specific projects. And they would have been moved to. We thought it was gonna be at the end of last year. It did not happen. It happened early this year. So that was a chunky component that moved out. But there's nothing specifically on what we have in the portfolio today other than there's always gonna be some kind of variability on the deposits on the public funds side. Because they have large components that come in and out. But on the commercial and retail side, we don't have any like what we knew from what we had at the end of the year. On those two specific customers.

Timur Braziler: Okay. And then to that, maybe just going back to the Florida conversation you had talked about the $12.6 million hospitality credit. It looks like there was another one that was called out that migrated to classified. Can you just maybe talk through what that loan was? And, you know, more recently, there's some news on just the Florida condo market and how much more expensive that become. Can you just remind us of what exposure, if any, you have to the condo market in Florida?

Orlando Berges: To the condo market? But, well, this one in hospitality was not condo. I'm trying to remember which one was moved to classified because that was the one that was moved. There's nothing significant that I remember. Let me take a look at here. Other than this actually, that one case of Florida. But condo market, in terms of exposures, we don't have any Florida. We don't have any on the construction. We do have some in the mortgage portfolio, but it's very small.

Timur Braziler: Great. Thank you.

Orlando Berges: Thank you.

Operator: We currently have no further questions, so I will hand back to Ramon Rodriguez for closing remarks.

Ramon Rodriguez: Thanks to everyone for participating in today's call. We will be attending Wells Fargo Financial Services Conference in Chicago on May thirteenth. We look forward to seeing a number of you at this event. And we greatly appreciate your continued support. Have a great day.

Operator: Thank you. This concludes today's call. Thank you for joining. You may now disconnect your lines.

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