FBP: Loan Growth, Asset Quality Show Steady Improvement; Raising EPS Estimates Despite Poorer NIM Outlook; Maintaining Price Target; Reaffirming Neutral Rating.
First BanCorp reported 2Q19 net income to common shareholders of $40.6 million, compared to the $42.6 million recorded in 1Q19. On a per share basis, 2Q19 results were $0.19 compared to $0.20 in the prior quarter. Once again, there were several special items in the results. These include a $0.8 million ($0.5 million after-tax) insurance recovery related to storm damage in the British Virgin Islands facilities. The prior quarter included a $6.4 million ($4.0 million after-tax) hurricane loan loss reserve release, and a $2.3 million expense recovery related to employee benefits. The 2Q19 special items had a $0.5 million positive after-tax impact on results compared to the $6.3 million positive after-tax impact in 1Q19. Excluding these items from both quarters, adjusted net income available to common shareholders for 2Q19 was roughly $40.8 million or $0.18 per share compared to $37.0 million or $0.17 per share in 1Q19. The adjusted 2Q19 earnings of $0.18 were in line with our $0.18 estimate and a penny below the $0.19 median Street estimate. The quarter was characterized by lower-than-expected net interest income, a lower-than-expected loan loss provision, and a higher effective tax rate than we had expected.