First BanCorp Lifts Dividend 11%, Signaling Financial Strength

SAN JUAN, Puerto Rico – January 26, 2026 – First BanCorp. (NYSE: FBP), the holding company for FirstBank Puerto Rico, today announced a significant 11% increase in its quarterly cash dividend, signaling strong confidence in its financial health and commitment to shareholder returns. The Board of Directors declared a new quarterly dividend of $0.20 per common share, up from the previous $0.18.

This increased dividend is payable on March 13, 2026, to shareholders of record at the close of business on February 26, 2026. The move elevates the annualized dividend rate to $0.80 per common share, a welcome development for investors seeking stable income from the regional banking sector.

“We are pleased to announce an increase in the quarterly cash dividend payment on the Corporation’s common stock from $0.18 to $0.20 per share starting in the first quarter of 2026,” said Aurelio Alemán, President and CEO of the Corporation. “The dividend increase, together with our share buyback program, underscores our ongoing commitment to execute our strategic priorities, enhancing long-term shareholder value, and sustaining a solid capital position.”

A Declaration of Financial Fortitude

The double-digit dividend hike is more than just a routine adjustment; it serves as a clear statement from First BanCorp.'s leadership about the bank's robust operational performance and positive outlook. For a financial institution with operations spanning Puerto Rico, Florida, and the U.S. and British Virgin Islands, such a move is underpinned by solid financial metrics and a belief in sustained profitability.

This latest increase continues a multi-year trend. The company has now raised its dividend for eight consecutive years, building a reliable track record that appeals to long-term investors. This history of consistent growth separates First BanCorp. from many peers and reinforces the narrative of a well-managed institution navigating the economic landscapes of its diverse markets effectively.

Underpinning the Payout: A Look at Performance

First BanCorp.'s decision is firmly rooted in its recent financial success. An examination of its third-quarter 2025 results reveals the fundamental strength that enables such a generous return of capital to shareholders. The bank reported a net interest margin (NIM) of 4.57%, a key indicator of lending profitability that showed improvement both sequentially and year-over-year. This demonstrates the bank's ability to effectively manage its assets and liabilities in a dynamic interest rate environment.

Profitability metrics further bolster the case. The company posted a healthy adjusted return on average assets (ROAA) of 1.7% and non-GAAP adjusted earnings per share of $0.51 in the third quarter. These figures indicate efficient operations and strong earnings power. Simultaneously, the bank has diligently managed its expenses, with its efficiency ratio improving to 52% and remaining below the 60% threshold for over six years.

Crucially, the bank's capital base remains exceptionally strong. The tangible common equity (TCE) ratio expanded to 9.7%, and all regulatory capital ratios sit comfortably above the levels required to be considered “well-capitalized.” This solid capital cushion not only protects the bank against economic shocks but also provides the flexibility to reward shareholders without compromising its stability.

A Competitive Return in a Crowded Field

For investors, the dividend increase makes First BanCorp. an even more compelling proposition. Based on the new annualized rate of $0.80 per share, the stock's forward dividend yield is approximately 3.87%. This figure is notably attractive when compared to the financial services sector average of roughly 2.68%, offering a significant premium.

Furthermore, the dividend appears highly sustainable. The bank's payout ratio, which measures the proportion of earnings paid out as dividends, stands at a conservative level of around 34%. This low ratio suggests that First BanCorp. retains a substantial portion of its earnings to reinvest in the business and absorb potential losses, leaving ample room for future dividend growth. This combination of a high yield and a safe payout ratio is a desirable characteristic for any income-oriented investment portfolio.

The dividend hike is also just one piece of a broader capital allocation strategy. The company is actively returning capital through an ongoing share buyback program, with its Board having approved an additional $200 million for repurchases in late 2025. This dual approach of dividends and buybacks provides a powerful, multifaceted return of value to shareholders.

Navigating a Nuanced Market Outlook

Despite the positive internal metrics and shareholder-friendly actions, the broader market and analyst sentiment present a more complex picture. The stock’s price showed a muted reaction on the day of the announcement, suggesting that the market may have already anticipated a positive development. In the days prior, the stock experienced a decline, indicating some investor caution.

Recent analyst coverage reflects this nuanced view. Earlier in January, Piper Sandler initiated coverage with a “Neutral” rating. While acknowledging the bank's impressive return profile and strong fundamentals, the firm suggested these positives are largely reflected in the current stock price, which trades in line with or above its peers. The analysis implied that a more significant catalyst might be needed to drive substantial upside from current levels.

This perspective underscores a key challenge for the bank: communicating its value in a market that is constantly looking forward. While management has cited a “stable economic backdrop” in its core markets, it has also prudently pointed to potential headwinds, including persistent expense and consumer credit pressures. This measured approach reflects a management team that is rewarding shareholders today while keeping a watchful eye on the economic currents that will shape its performance tomorrow.