First Bancorp (NYSE:FBP) Q3 2020 Earnings Conference Call - Final Transcript
Oct 30, 2020 • 10:00 am ET
the transaction. Definitely, it was a long time in the making. And as you see, we really improved our market position in all key areas. As you recall, the transaction was announced back in October 2019, and closing and completing was impacted by the COVID pandemic, definitely. But since then, some of the deal metrics have improved from announcement. We still expect 35% EPS accretion to consensus estimates. The revised TBB at closing is estimated at 4%, lower than our original estimate. And we expect less than two years of earnback now. This improvement is driven by slightly smaller loan portfolio, additional reserve delivered at closing and the rate marks due to the rate environment. While cost savings are estimated at $48 million, we definitely work harder to see the areas that we can achieve more. But we're also focused on growing the franchise. So it's a balancing act as we move forward and achieve our goals of being more efficient and increased market share. I think together, we have an excellent team and we're working diligently to integrate and to turn on the growth engines as opportunities comes in the economy. I want to touch on the integration. We made a lot of progress on the first 45 days. Integration is underway. In those 45 days, we completed the conversion and integration of the mortgage business, the insurance agency and several administrative functions.
The plan is to complete the integration process by the end of the second quarter 2021. And these do consider -- remember that we continue to operate under COVID limitation and distancing, and obviously a process of this magnitude takes time. We also announced this month as part of the program -- as part of the synergies and integration, we announced a voluntary separation program that provides an opportunity for early retirement to approximately 160 employees of the combined institutions. This program will be executed over the next three quarters, starting in the fourth quarter. Other potential synergies identified include the opportunity of consolidating eight to 10 branches. Definitely, the incremental utilization of digital channels could drive other efficiencies. But again, we don't want to hamper our potential to grow our market share with the now expanded market distribution that we have. So we'll continue to move and report on this effort. Now let's move to Slide 7. The new combined balance sheet is solid and well diversified. The $2.6 billion acquired loan portfolio definitely complements ours nicely and the deposit books improves our funding. Now the loan-to-deposit ratio stands at 78%. And obviously, we have an expanded customer base to cross-sell and move to other products. Let's move to Slide eight to talk about the economy. I think in the quarter, we clearly saw the correlation of the reopening in our markets and the trends of economic recovery was clearly reflected in the third quarter. Remember that in the case of Puerto Rico, we had some severe tightening in the second quarter, and some of