Piper Sandler has adjusted its price target for shares of First BanCorp (NYSE: FBP), reducing it to $21.00 from the previous $22.00.
The firm held its Neutral rating on the stock steady.
The adjustment came after the company reported its quarterly earnings, which aligned with Piper Sandler's expectations and surpassed the consensus estimate by $0.04. The differences in the forecast were attributed to lower provisioning and taxes, which were partly offset by a decrease in net interest income (NII).
First BanCorp's fully taxable equivalent net interest margin (FTE NIM) experienced a slight expansion of 2 basis points, reaching 4.34%, which fell short of the anticipated 12 basis points. While the NII saw an increase of 1.2%, it did not meet the firm's growth expectation of 3%. Additionally, there was a slight decrease in deposit balances excluding brokered and government accounts by 0.3%, with total deposits dropping by 1.1%.
The bank's loan balances saw a modest uptick of 0.5%, which was half of the projected growth rate. Despite this, First BanCorp's core return on assets (ROA) was reported at 1.58%, and tangible book value (TBV) rose significantly by 14.6% due to a favorable adjustment in accumulated other comprehensive income (AOCI).
Credit trends remained positive, with nonperforming loans (NPLs) and nonperforming assets (NPAs) declining, although net charge-offs (NCOs) increased by 9 basis points to 0.78%.
In the third quarter, First BanCorp also repurchased $50 million of its junior subordinated debt, and the firm noted that the company's capital ratios continue to be robust.
Piper Sandler suggested that the stock's weakness on the day may have been a reaction to the shortfall in NIM and NII, as well as a general downtrend in sympathy with peer Banco Popular (BPOP).
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