Allowance for loan losses increased slightly to $248.6 million, with a decrease in consumer loan allowance due to improved unemployment forecasts.
First BanCorp reported net income of $80 million for 2Q 2025, with a return on assets of 1.69% and net interest margin expansion to 4.56%.
Net interest income increased to $215.9 million, $3.5 million higher than last quarter, despite no fees from early loan cancellations this quarter.
Nonperforming assets remained flat at 68 basis points of total assets; net charge-offs decreased to 60 basis points from 68 basis points in 1Q.
Operating expenses were $123.3 million, stable quarter-over-quarter, with an efficiency ratio maintained at 50%.
Tangible book value per share increased 5% to $11.16; tangible common equity ratio expanded to 9.6% due to $41 million increase in investment portfolio fair value.
Total loans grew 6% linked quarter annualized, driven by strong commercial loan production in Puerto Rico and Florida.
Impact of Rising Interest Rates on Mortgage Portfolio and Earnings
Management highlighted that higher interest rates have positively influenced investment income and mortgage persistency, contributing to strong earnings despite a slight decline in net income from $204 million to $195 million year-over-year.
The company benefits from a high-quality insured portfolio with embedded equity, which reduces default-to-claim transition probability, providing a buffer against potential credit deterioration.
The second quarter saw a 3% increase in U.S. mortgage insurance in force to $247 billion, with a stable weighted average FICO score of 746, indicating maintained credit quality amid rising rates.
Persistency remained high at 86%, supported by nearly half of the portfolio having a note rate of 5% or lower, which is expected to sustain elevated levels in the near term.
Management emphasized that the macroeconomic environment, including interest rates, is favorable for the company's buy, manage, and distribute operating model, enabling high-quality earnings.
Adjusted Funds From Operations (AFFO) was $53.1 million or $0.24 per share in Q2 2025.
GNL reported Q2 2025 revenue of $124.9 million and a net loss attributable to common stockholders of $35.1 million.
Gross outstanding debt was reduced to $3.1 billion, down $2 billion from Q2 2024, with 85% fixed-rate debt and a weighted average interest rate of 4.3%.
Liquidity increased to approximately $1 billion with $1.1 billion capacity on the revolving credit facility.
Net debt to adjusted EBITDA ratio improved significantly to 6.6x from 8.1x a year ago.
AFFO generated during Q2 2025 was approximately $16 million.
Core FFO per diluted share for Q2 2025 was $0.36 versus $0.37 in Q2 2024, with a $0.01 decrease due to higher net interest expense from refinancing activity.
No final debt maturities until 2028 and $450 million available under revolving credit line.
Portfolio trading at roughly $200 per square foot valuation with an implied yield on cost after CapEx of more than 10%.
Repurchased approximately $68 million of 9.25% bonds, recognizing a $7.5 million loss on early extinguishment of debt but expected to save $7.5 million in total interest over 3 years.
Sale of three nonstrategic projects and downtime from lease expirations offset growth from higher economic occupancy and rental rate growth.
Dafinchi