FIRST BANCORP (FBP): what the price requires

At today's price, FIRST BANCORP (FBP) is priced for 17.9% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/FBP

Headline

FieldValue
TickerFBP
CompanyFIRST BANCORP
Current price$26.64/sh

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basisfinancials
Return on equity needed17.9%
Return on equity now17.5%
ROE gap+0.4pp
Price-to-book2.09x

Solve inputs: computed at a 10.6% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~2.1pp.

Reconcile: at the x-ray's 9.3% required return this reads ~15%; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history+1.01σ
cohort percentile (of 119 peers)87
sustained it ~10 years at this level54%
implied end-window share0%

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.05x3expensive
Earnings0.73x2justifies
Relative0.53x3justifies
Growth1.16x2expensive

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.9%); the inversion above states its own rate.

Per-Model Detail (n=10)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
Bank Fair Value (P/TBV)—$37.810.70xyesTBVPS $12.33 × 3.07x (ROE (TTM) 18.1% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption), credit 1.91% allowance/loans → ×0.99)
Relative ValuationRelative$23.601.13xyesP/E 10x (static sector reference · 2026-04), scenarios: 8.4x / 10.0x / 11.6x (bear / base = reference held flat / bull), EV/EBITDA N/Ax
Simple DDMGrowth——no—
Two-Stage DDMGrowth$29.150.91xyesStage 1: 20% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$24.701.08xyesBV/sh $12.60, ROE (TTM) 18.1%, ke 9.3%
Two-Stage Excess ReturnAsset$34.130.78xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$19.031.40xyesRev $1.3B, growth 3% (input: historical growth; tapered), Terminal P/S: 2.8x / 3.3x / 3.8x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$50.360.53xyesEPS $2.25, growth 22% (input: historical EPS growth), PEG=0.52 (Undervalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset——no—
Graham NumberAsset$25.261.05xyes√(22.5 × EPS $2.25 × BVPS $12.60) — Graham's conservative floor
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$72.600.37xyesEPS $2.25 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative——no—
PEG Fair ValueRelative$75.550.35xyesEPS $2.25 × (PEG 1.5 × growth 22.4% (input: historical EPS growth)) → PE 33.6x
Earnings YieldEarnings$24.321.10xyesEPS $2.25 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Share count CAGR (buyback)-5.5%

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

Bull Case

First BanCorp is a mature bank, not a growth story, and that is the right frame for reading a price that sits above where most of the static methods land. A mature bank is judged on the return it earns on its book of equity and how reliably it returns capital, not on a revenue ramp. Read this one that way and the premium stops looking like a warning. The market is paying roughly two times book value, and a multiple like that normally demands an extraordinary return on equity. First BanCorp has recently been earning around 17.5%, which is precisely the kind of return that defends a 2x-book price. The unusual part is that all four families of method, the asset-based lenses, the earnings-power lenses, the peer-multiple lenses, and the forward-growth lenses, sit at or below today's price rather than fighting it. For a bank trading above book, that breadth of agreement is rare, and it is the cleanest argument the bull has.

The recent prints show where that return comes from. First-quarter 2026 net income was $88.8 million, or $0.57 per diluted share, up about 21% from $0.47 a year earlier, on a return on average assets of 1.89% and a net interest margin of 4.75% that widened from 4.68% the prior quarter. A 1.89% return on assets and a 4.75% margin are top-tier numbers for a bank of any geography, and they are a direct function of First BanCorp's position as one of a handful of dominant institutions in the concentrated Puerto Rico market. That market structure is the engine the static frames struggle to price, because a reverse-DCF that caps sustainable returns at a ceiling will always understate a franchise that is actually clearing that ceiling.

The capital story is what turns the return into compounding. The bank holds a CET1 ratio near 16.93% and a tangible common equity ratio above 10%, well in excess of regulatory minimums, which is the relevant solvency frame for a bank rather than any net-debt lens. In the first quarter it repurchased $50.0 million of stock and declared $31.5 million of dividends, a net payout near 92% of earnings. Share count has been shrinking at roughly 6% a year. A high return on equity paired with near-full capital return and a falling share count is the mechanism by which book value per share rises faster than the headline numbers suggest, and it is what a buyer at 2x book is actually underwriting: not a faster bank, but a high-return one that keeps handing the return back.

Bear Case

The variable with the most leverage over this thesis is one the price does not appear to discount at all: the Puerto Rico economy. First BanCorp is a single-island bank, and a single-island bank carries a macro risk a geographically diversified one does not. A downturn there hits loan demand, credit quality, and deposit growth at the same time, with no mainland region to offset it. The island's own forecasters describe 2026 as flat to slightly positive, slower and more measured growth rather than recession, but the structural pressures are real and persistent: a population that has shrunk more than 15% over two decades, a workforce still contracting, and an economy where federal transfers run above a fifth of output and are normalizing down from the extraordinary post-disaster and pandemic aid. A bank earning a 1.89% return on assets in that setting is earning it inside an economy with a thin and aging demand base, and the top-of-peer multiple credits the return as if the setting were neutral.

The competitive structure is the second edge of the same sword. The outsized 4.75% net interest margin is partly a function of a concentrated market with limited players, where First BanCorp fights a small set of rivals, principally Popular and OFG Bancorp, for the same deposits and the same loans. Concentration supports fat margins when it holds, but it is exactly the thing that gets competed down if a rival presses on deposit pricing or a larger mainland bank decides the island is worth entering. A 4.75% margin is not a moat in the way a low-cost deposit base is; it is a price that competition can move.

Then there is what the price requires. At roughly 2x book the market is paying for the elite return to persist, and the return the price leans on, near 17.5%, sits well above the level the modeling framework treats as a durable ceiling for a bank. The history of banks earning returns that far above their cost of equity is that the excess fades: only a little over half of comparable high-return banks sustain that pace across a decade. If the return mean-reverts toward a more ordinary mid-teens or lower figure, as deposit competition tightens or the local economy softens, the price-to-book that return supports compresses with it. The bull case rests on a high return holding; the bear case is simply that high bank returns are the ones most reliably competed away, and the price has left little room for that to happen.

Valuation

Price-to-book is the right lens for a bank, and at $25.21 First BanCorp trades near 2x book, the top of its peer group. Normally a 2x multiple implies a return on equity that is hard to sustain. Here it is backed by a return recently running around 17.5%, well above the level the framework treats as a durable bank ceiling. That gap matters for how to read the methods. Because the bank's real return sits above the modeling cap, the reverse-DCF band runs low and wide, and the implied return reads as a bound rather than a cleanly solved point: at or beyond the elite tier, not resolvable as a single sustainable figure. The price-to-book the market is paying is the less ambiguous signal, and it is rewarding a return the static frame cannot fully credit.

What is unusual is the agreement. The price sits at or above where the asset-based, earnings-power, peer-multiple, and forward-growth families each land, which is why this reads as a value-and-asset-supported name rather than a single-frame growth bet. For a bank above book, that unanimity is the strongest case for the premium: when book value, earnings power, peer multiples, and a growth-DCF all sit under the price at once, the market is paying for a return it can see in the numbers rather than one it has to imagine. The solvency frame reinforces it. This is a deposit-funded balance sheet where the meaningful question is regulatory capital and payout capacity, not leverage, and a CET1 ratio near 16.93% with a tangible common equity ratio above 10% leaves ample room to keep funding the dividend and the buyback that compound book value per share. The one thing the agreement cannot vouch for is durability: the multiple already assumes the 17.5% return holds, and that is the assumption the rest of the report turns on.

Catalysts

The most recent catalyst was the first-quarter 2026 report, for the quarter ended March 31, 2026. First BanCorp posted net income of $88.8 million, or $0.57 per diluted share, up about 21% from $0.47 a year earlier and ahead of the $0.55 it earned the prior quarter, with a return on average assets of 1.89% and a net interest margin that widened to 4.75% from 4.68%. Net interest income of $221.0 million landed close to expectations, and management framed the margin expansion as running ahead of its earlier guidance, helped by funding-cost dynamics and securities reinvestment.

Capital return was the second theme. During the quarter the company repurchased $50.0 million of stock and declared $31.5 million of dividends, a net payout near 92%, against a CET1 ratio of 16.93% and a tangible common equity ratio above 10%. That combination of a high return and near-full capital return is the engine compounding book value per share against a shrinking float. Sentiment has tracked it: Raymond James reiterated an outperform rating and raised its target to $27 on April 27, 2026, while Keefe, Bruyette & Woods had trimmed its target to $24 the prior October, leaving a consensus that clusters in the low-to-mid $20s.

The forward catalysts are the local economy and the durability of the margin. The thesis depends on Puerto Rico staying healthy enough to support loan growth and credit quality, and on the 4.75% margin holding against deposit competition and the rate path. The next quarterly print is the test of whether the elite return on assets and margin persist, and any sign of margin compression or rising credit costs would matter more here than at a diversified bank, because there is no second region to absorb it.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 2026 earnings release, April 2026 · First BanCorp Q1 2026 earnings call, April 22, 2026 · Benzinga analyst ratings, April 2026

View the full interactive FBP report on boothcheck