First Bancorp (NYSE:FBP) Q3 2020 Earnings Conference Call - Final Transcript

Oct 30, 2020 • 10:00 am ET

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First Bancorp (NYSE:FBP) Q3 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] The first question comes from Ebrahim Poonawala with Bank of America. Please go ahead.

Analyst
Ebrahim Poonawala

Good morning, guys.

Executive
Aurelio Aleman

Good morning, Ebrahim.

Analyst
Ebrahim Poonawala

So in your prepared remarks, Aurelio, you mentioned a bunch of times around the focus on capital return and optimism about things getting better barring any sort of negative developments on COVID. Like by my math -- like when you look at your largest competitor, their Tier one leverage ratio is about 8%. You're at 11%. There's about 300 basis points of excess capital, very conservatively. As a shareholder, you would want the bank to act now given where the stock is. Just talk to us around level of urgency. With the deal being done, do you think regulators are on board to the -- I know you can't talk about your regulatory discussions. But there should be a sense of urgency, I would imagine, in executing this given where the stock is. So just if you could talk about that.

Executive
Aurelio Aleman

Yes. I think, Ebrahim. Thank you for the question. Yes, we have a sense of urgency. We understand the importance of [more]. On the other hand, it's really about the environment. You have to see what's happening around the world and we have to see what's happening in the U.S. and we have the elections. Commenting on that, I think Puerto Rico is also positioned with Congress to benefit either case, so things will continue independently of who wins we believe. But the COVID risk is still out there. Hopefully, we don't have to go back to more lockdowns or closing. We have seen the impact. Yes, there's another stimulus that -- there's a high probability that will come. But I think we have a lot more visibility first quarter on this, okay? There's also some regulatory guidelines regarding these matters that are being issued through the end of the year.

So it is a priority for the management team. Yes, we recognize the excess capital. We -- I think we need to get through the end of the year, close of the year, see where the economic trends are in the next round. We have a couple of quarters that -- we increased -- we provisioned incrementally in a material amount. We are well covered. But all that depends on the economic forecast. So I think that's the -- we need an additional step of time in this matter to be prudent and make sure that, yes, the economy is stabilizing. And as we are learning to work on the COVID environment, we know that you can operate, you know that you can be -- we're going to achieve your business. You have to spend some money for that to happen. But in some environments, we're watchful of additional restrictions. So that is a caveat here, okay?

Analyst
Ebrahim Poonawala

No, understood. Thanks for that. And I guess just moving on, Orlando, on Slide 11, looking at pre-provision earnings, if you give the full quarter impact of Santander, implies about