OFG Bancorp (OFG) 21 Apr 222022 Q1 Earnings call transcript

Good morning. Thank you for joining OFG Bancorp's Conference Call. My name is Gretchen. I will be your operator today.

Our speakers are Jose Rafael Fernandez, Chief Executive Officer, and Vice Chair of the Board of Directors, and Maritza Arizmendi, Chief Financial Officer. remarks. today's accompanies presentation A It can our in Relations on our quarterly found in the on homepage or page. Investor What's results website be New the box plans forward-looking This feature statements and expectations. about call certain management's may goals, These in of Risk outlined and the subject statements filings. Factors to are SEC risks uncertainties certain OFG's section materially currently may anticipated. Actual differ results from those afterwards. this result of a We obligation disclaim as to any that update occur call information disclosed in developments All been noise. on to mute background lines prevent have placed a be question-and-answer the speakers’ will After there session. remarks, be will that Instructions given time. at like would to I the Mr. to now turn call over Fernandez.

and is commitment Good our particularly helping had we're in and thanks part, due work, our to team you extremely morning great and This on focus customer thank now and dedication. We small and for joining XXXX, their our achievements excellent continuous to a the us. proud communities members our of serve. start we

in EPS $X.XX So Fourth $X.XX revenues compared let's of as totalled period. ago X% million. call greater conference last total $X.XX Non-interest line the turn expenses preceding year. $XX Page in Core to $XXX quarter That's was diluted the our year the an quarter presentation. X to continued net resulting in in to year-over-year X% a $X.X net were of increase at Pre-provision million. million. $XX improve, million, provision revenues of quality than and

auto in increased X%. consumer billion. loan in grew priority deposits grew total continuing X% commercial at $XX.X over from quarter the to X.X% We Looking grew and Customer of loans of sheet, all end fourth March assets XX loans, our quarter XX% to the the quarter $X areas; loans growth balance three saw X% billion.

was at origination $XXX loan million. strong seasonally New

ended our common $XXX our $XX.X XX% subordinated strategies. capital to per totalling all on share million. successfully $X.XX strong we cash also of program. $XX quarter buyback notes, dividend regular levels with of early We the our continued share all executed We terminated quarterly and We capital. by We million increased outstanding capital completed our million

drivers of results and our loan recurring utilization Our growth, on income net investment continue driven differentiation. scale larger to growing service focus and customer consistently business; digital the increasing people our main and three by on reflect our

we a result, grew year. we single continue pace anticipated all while than a on quarter, is expect from fronts. for both moderate second of customers. a our We strong the loan loans As in retail quarter digit increased the rest and stronger had this growth likely to at the to Deposits we commercial

is sheet balance a billion. $XX our As result, over now

sheet yielding balance more enable investment to us into improving liquid highly asset cash strong higher securities, deploy Our our loans mix. and

We to all expand higher margin. cost balance, helped this down of also interest net paid

giving addition, perspective, performed well good momentum In from we us operating forward. going an

We digital continue solutions. new to introduce

show originations into Puerto personal employment figures year. processes positive These opening contributions strength. Against making IRA launched Rico increased loan and credit increases and positions quarter fund. for to to show Recent fully this well our This X% from the fed. last rate to digital by the to Liquidity trends. close benefit us expected show and backdrop, continues we the for continue

is future clients the March, single continue and decades. the of values to of and is higher home fallen levels. we're lowest level the has Residential of Rico number of and for commercial As manufacturing the unemployment seeing in OFG. the continues to experiencing people highest rate since The XXXX many All optimism family services. regarding of are our to validate the activity index increase, pre-pandemic year-over-year Puerto employed our demand incremental Overall, housing. and construction several products above this up

financials the to go more Maritza detail. over here's Now in

deposits quarter. investment decline Interest and benefited loans decline reflect of benefited Jose. higher the financial totalled the benefited expense notes. gifts Total $X.X The balances fewer issuance It was offset This This of factor and million. million. sequential amortize from $XXX quarter. $X.X higher from highlights. days off was and fourth income than Please the retirement This balances cost $XXX,XXX our by core that to the the annual subordinated partially expense has million in quarter. million to borrows. million. revenues Interest review securities. was This despite was slightly at average increased effect of of reduced to and we the early you, our the cash. income preceding also than This turn from absence lower insurance year-over-year revenue Thank quarter-over-quarter. or last X $XXX,XXX and costs increased two first received both; Page lower improved income day Interest end of year. use write by to related producing of on $X.X $X.X Interest totalled

X.XX%. operational all balance quarter basis, million year both those a million current $XX XX.X%. of totalled That's fourth On training provisions $XX the During take the and we costs. as million. of combination in management. increased Banking due three million. ago variable million reduction previous lift $XX and were management wealth higher notes expenses $X losses, adoption wealth a in This rate attributable that that's than million a banking lines is of the a and technology Non-interest from and expenses, business; Most to banking million, and the $X.X at to of legal down mortgage quarter. lower revenues related cost $X.X such an notes. rate at quarters. improvement Deficiency year-over-year of items, from revenues revenues The carry was $X.X services, reserve was

repurchase common people income, our technology an They This target in X.X in common return our quarter-over-quarter. book That fourth year-over-year in call, and Return and XX.XX%. continue the further to of prior deploy was of other continue strategy. average equity per and shares range. the tangible our was assets we X.XX%, be comprehensive also metrics on value reflects will $XX.XX. of to million. point return increased improved in investing decrease mortgages Average is reflects was loan in from to to fourth -- also of Return The seven offset mentioned turn yield we on new review Loan $X.XX Tangible Please Page That from quarter. Puerto adoption highlights. X our share partially average increase was an $XXX.X quarter. million billion. is partially a $X.XX quarter. stock loans the yields annual. consumers Rico commercial PPP US million for auto held from $XX and and in and operational loans. a the upset investment loan fourth increase a X.XX% basis of increase loans decline balances, totalled loans by and End our increase an by As

originations loan the higher It was was first This also $XXX were New million. nearly million with $XX year-over-year. level quarter.

of million levels lending US increased commercial in Rico We demand auto loans. continued ago lending, and in production for consumer PPP loans. included to year and mind, high Puerto in $XXX Please see keep

of interest that year the as a primarily billion. The occurred last million. end move fourth opportunistically quarter, from of million increased balances Average the quarter securities quarter. the investment year. and During rates $XXX core increased portfolio. at increased X% the is That decline [ph] our fourth That deposits we $X.X the reflected up, of $XXX from average portfolio totalled

This $XX The deposit the now $XX period and pay of is fell decline a have of speed securities of the paid of of quarter. deposits North follow fallen end $XXX quarter. balances, through the billion. million. End $X loans balances million. volume totalled of asset to course XX to million of basis repurchases. End Please million cash assets. paying capital were XX $XX first interest fourth notes. reduction borrowing Page Jose cash costs strength. There $XXX last point million margin of of X.XX%. fourth end basis reflects decline decline Average from to XXXX. home to into steep and points investment quarter points the This higher million. quarter. quarter from As to to Net loan basis a of paydown make in of notes of million of advances. deposits up from a $XX XX subordinated increased improve the or of turn There rebound core. expanded mentioned, or deployment This million review of quality There X% our the from of continue core due points over for and of year. quarter X first down primarily $X.XX proportion one for End and mix from the bank the loans of down and $XXX of share basis total was is subordinated fourth decline of They from speed cash credit the X% XX% is of the fall. reflects a Core last

quality continue to positively. metrics trend Asset

recovery X%. $X.X loan. next The the as charge compares NCOs fourth $XXX,XXX. net during. previous X.XX% of was quarters. mortgage nonperforming quarter. All charge process fell X.XX% of held and recovery the last loans during PCD transferred quarter to million -- respectively. metrics transferred [ph] an funds of from This the net related due to an we PTB for million basis commercial acquired and at NPL risk charge quarter million off part Total off final net loan to sale to points. included compared and ago also included the sale rate, to $XX three these were including past $X X.XX%. compared to Fourth year a four First NCO settlement Daily of that rate rates total total of last quarter delinquency and of off charge fell $XX million, includes They

the was result, in provision operating $X.X $X.X to a losses quarter. for fourth million As million compared

to quality million loan conditions. reduction previously $X.X non-accrual due loan for in of was commercial included to quarter improved due situation in $X.X a employment of first mainly this reduction economic million to in adjustment and $X.X costs. The our million related This growth placed improved balances.

Our the macroeconomic same. scenarios remained

metrics reflected earnings. and -- quarter. Our equity the basis. common in allowance CETX ago buyback equity billion. $X previous three on was increases The assets the retail the was than was by in ratio coverage offset common total in ratio and reported X.XX% tangible increased a partially were X.X% lower This assets year stock All holders was XX.XX%, and

Jose. back Now to

Thank you, Please our to Maritza. turn X outlook. for Page

Rico mentioned strength in As earlier, the the direction. economy values. residential They're Puerto participation, all moving home I manufacturing, to show employment, on continues right employment

and disruptions exited at of also and Rico is war higher effects strong last supply Our experiencing chain a the experiencing, But due long world Ukraine. Puerto Consumer commercial of seeing of rest has to the clients higher in demand as the we're bankruptcy. demand are prices and the products remained for also services. the

working been are members and team continued this, taking more banks. quantify of our Rico's economy for Puerto Although reconstruction we investing well, should our our cushion early commitment. for now, and and experience. the to loans, impact thanks have With Puerto a please a OFG formal too to the growing and continue as environment backdrop, relative for on digital perform negative than presentation. funds the the Rico customer are the stimulus execute for growing mainly With states you to effects. of their as grow good mainland advantage it economy, a Operator, all serving better this technology, the that listening. high to us should continue at to transformation end than in strategies We speeding and and all the is levels or so will ready, basis people dedication start the Q&A. dampen Thank we OFG enhancing

comes a from [Operator Sandler. first Our question instructions] Alex from Twerdahl Piper

open. is line Your

morning. good Hey,

Alex. Good morning, Good

maybe What, that might Well, we thinking first loan about about being the growth little economy backdrop was that expand you moderate you on. and terms then quarter. hoping in you first there little out strong? on Jose, bit that said And as what bit in is makes goes going maybe slow that, are the could year talked and against pipelines off saw what that of growth to commercial a seeing drove think I the what a you you a the the

Yeah.

a particularly years such XXXX let have earlier. performance. of we first very So and great what year the is really And had start little have strong. production. is it's a call said our the me Typically start commercial I in that the that of in first I, was terms where for the many loan slower quarter bit of what a we quarter quarter first by strong repeating quarter We, in

and we're generations really we and our throughout loan about So loan had quarter. that originations excited the the results

focused of how our you commercial I and we we some So much financing all, give some most on see building that Both been we've we're and, you of four up quarters have some would are construction health which the building we terms how several quarters of or seeing in last also three now commercial in services also been seeing manufacturing, in services on on and certainly going forward. and color opportunities a then the color and on quarter, and first the capacity but I'll for mostly trade the to services, businesses loan are, little infrastructure, outlook up us hospitality, degree coming the some really their industries, too. give seeing last throughout originations to pretty

So, of we're is to serve able we're referring here. a When on that and Those buckets customers. the mid-sized different those we've seeing kind that say on to industries businesses that the market small are and across been I'm companies. different and the I bucket, focused commercial

pay above quarter, lines for working We still few saw running we was So, a They're significantly at capital, when utilization than at normal. etcetera. of credit our my our look formula, expectations. we what right, very and production level downs, had the lower of growth long this

put the coming still and ago pretty call our they're quarter it pipeline strong. was in in system the the mentioned quarter, I So as on fourth into

and you neutral. movement usually relatively at see little bit couple, when several Maybe we look have downs now the deliver quarters, a a of on the staying we because a we So next but is there there. pay production

moving utilization to and up slightly expect start remains our We strong. increase to and line pipeline starting

be show origination deliver. continues So that to of outlook our we year the and commercial we're rest confident the loan to strength will able

the and really really of excited, we have So attract commercial and how to we been close new see be side little the bit to able excited on our of too. business customers customers that's how a

pipeline is commentary? digits of the that the that that It you the Right. said single and seems just guidance everything only pretty the about like industries state serving, how was you're optimistic given come

still the rest digits when into that Well, of residential when consideration I say, say we -- I a will year, the we we growth, we when said take have. a single mortgage that book to loan for have have

we there expect to originate and you originations lower have know, We and as sell.

we quarter. to to kind forward. that mean show of consumer going in very had have of a book the down It that significantly where going of think to that are and auto plateauing originations religion. we also the of So It doesn't to loan is we of to of trend. go strong would levels difficult going replicate continue levels it's back We business terms that but, do have lower, start in levels be

I kind same on wrong. So we keep that's of how we I'm swing cautious we're outlook. Alex. guys hope at the be to also the rate, you on it, I me, trying growing can but hope know

balance would model those in And on rates? with Got they mortgage the Do consider putting given, it. something anything change just does move up you that become sheet? the

We Bank, on have it. decide Scotia continuously large We, at servicing yet not book. of to acquisition look with we that. a very pretty the bought Remember

business. the critical So on mass we have better lot a

something we that to we of Remember yes, loans we us with on originate, portfolio booked on that's investment So the decide. securitize, -- also the north we for and FHA it's yield. X% the them table

anything sell it So portfolio, not and it's FHA loans. not sheet. we the We on the on the keep like everything investment balance keep

to So to we manage as of decide we originate we the of how and generating are going still continuing to sell it need want now, agency we fee. have paper the the But forward. rest that and

and with about that these give hikes? loans number rate these rate rate Can prime. expecting, balance thoughts maybe read seeing commercial at for some then sensitivity manage and notes And talking us plan through XX% the of just of then you my Okay, I how about that great. sheet now the and to about we're you hikes impact me, just float confirm just

of our a of or which thing So the XX% alternative, book commercial necessarily is the not LIBOR we're prime, but but, -- prime. and mix mostly loan LIBOR again, is slash viable, to transitioning prime

a that be comment to just want I just bit, So just to on little precise.

is rate. is, variable is XX% So relatively

Okay.

by benefit about Certainly viable cash to and positioned it XX-K interest we shocks billion everybody's of the book. as it. how increases well from fed in saw rate our have terms to $X addition the we our talking in are XX% In you and commercial

rate definitely any that benefit yet. and of from increases not quarter we'll is showing be So this benefiting really

So how terms plays we're rate in optimistic really pretty and is everything of outlook looking benefits forward out to of the our the hikes.

Yeah.

During a quarter. the the pretty it securities, quarter towards end the happened guys purchased good of mostly of you slot looks like

talk especially approaching can prospects Just of next couple sort given now that you of cash years commercial strong some the X%, quarters, the growth. the loan management XX over pretty with potentially strategy about the

Yeah.

wet feet the our from on deeper get just equation. a investment little significant side end, quarter the this did benefiting the a we So at bit repricing of

very At look monthly close why on seeing optimistic the dynamic asset a on on -- mix. is from how mix of So, our nail are much we at appropriate pretty higher hit you The is we and will the we nicely quarter, make benefit in is that transitioning a the and base that because that. we reason for terms asset we're cash. reason asset basis it of the nail end the we'll yielding to the decisions and the towards are by very

option to going our loans. So cash first is

going investment cash securities. is second to Our

in part Alex. it's of all So equation, the

get back great. for with Okay, questions. Thanks taking you. my I'll

Thank you, Alex. day. Have great a

our KBW. And from comes question Motta next from Kelly

my question. good morning. Thanks Hi, taking for

Hi, our welcome call. to

happy join. so to I'm

you, Thank Kelly

you controlled NIM range guided expenses down the dipped in believe XX% call in below well in quarter, and quarter. I the efficiency quarter. that were Great the you've but you nice had to and expansion on your low last first some

in or we should year, year, of maybe outlook be the XX% and that of the a and I efficiency year, know Thank tie good remainder thinking some expenses the still the pushes that this if is we of of out you. out look the or quarter for As to for some remainder pulls you're into investments low also really maybe you ratio of lower for remainder the of helpful. you the look tech the making be could if as would

I'll to let Mari answer question. that

Kelly, Hi, you? how are

Thanks. good. Hi,

So, how people strategies in have this we our we will in assets full are in still timing continue investing the effect as as quarter see deploying matter, that deployment the the we I expenses well this, we we still of haven't our see plan as continue with with expenses as technology quarter. see first this into we our go capital of capital last to grow. levels you same We'll expenses assets and during and as up to reflect share

if And how of too, a rates. here we add for very are little I well are cognizant can positioned a much interest hiking we bit

see efficiency it So going back very interest point do to our a effect your realize to are us positive results. ratio we we that going rates have about -- on and

the have operating So accelerating advantage that just we beyond make investments we to the we we environment because make of sure that take need right we just we to of to take want the in make flexibility planned, what we're want to advantage of that and sure some have above now.

So move the number two sixties on working Maritza the being favor. as variables low our that that for in ratio spite we're time sticking our says, efficiency of

the the to quarter. some end of you Got helpful. nice it it. That's looks low Switching like the had towards rate yields the was and hike expansion, really NIM,

a to hikes. able if that and spreads to was holding how just are So continue here just you're loan beyond mix, function yields rate expand from the how confident wondering was of I up

the basis Well, XX, mix. point XX of quarter, Kelly, asset basis XX points the to the relates that this NIM increase end

asset term by long in the more it's side. investment and mix change portfolio in assets So our having earnings more the

question Got helpful. last it. Maybe That's for me. a

I deposit some strong end You was XXXX the exit really the of toward from that growth. of coming back. had believe

look credit. and how would a to is going thoughts I we seen because as Rico, but should crystal we've of As forward. looking the for about Puerto liquidity, I have as you, quite not but cadence bit much people Can line, some about in continue growth hard to year the so that imagine it's maybe still we as be you gain in share wondering of ball, start know thinking growth there deposit past a

Rico, the What So a levels Puerto the track quarter this businesses effect we, as is Rico kind the we tax managed to But it's quarter also first we're started down we bit consumer it. sheet of little effect its got tax the that continues ended. same after this balance of quarter and have we're ago. have as credit child season mentioned just they on and for as last in seeing maybe quarter, liquidity deploy Puerto the the in side example, like seeing to back in here having on not in

credit the Puerto it to we So number that's a as parity we had because and now would in the have of of of states. have big and child with Rico, benefit use states are the rest the not the the rest tax

first on this not certainly before quarter. we're regarding the first of And the in seeing stimulus the of quarter, seen does pandemic. of in liquidity it $XX.X questions part years from billion, going terms the your then So is positive but you've a the billion, positive the half earlier first this $XX year, at the year to given deposits, another of in that models, that our we're growth the replicate the the as rest

our actually positive because margins a our generating a carry. the increase return. trying in so how keeping be our and to and see want in we can expectation we and money It were cautious was and next that to us the everything plays with do goal Let's the quarter, right but $XX out our asset is in break was past, cash and want mix to we a increase several billion returning it profitability negative we grow the little not

we've the growth, looking we're we're loan forward seeing balance saw this incrementally So, and that in we sheet. grow seeing, to certainly quarter, been now the

step helpful. back. Thank That's so much. I really will And you

[Operator Hovde instructions] Our next from comes question Group. Rabatin from Brett

everyone. morning, good Hey,

Good you? morning. are how Brett, Hi

for first a the the outlook. fee Why income quarter Good. to year. to the the Congrats on don't about good and talk start

in banking those statement. first and held thoughts the quarter, of seasonality a on lines your seasonality those have generally the on rest line service how around so management. some during color if they other banking bit segments obviously get bounce servicing, then to to little but quarter meaningfully with two Mortgage wealth due of hoping the driving and of was first in income in usually You year, back two and the the the

Yes. Fourth quarter income basis on us. strong is fee really a for

So with out first you some seasonality. quarter the comparison the pointed as has

see of We're to So different and the we services services, commercial, are banking new consumer banking of utilization the particularly adding seeing our trend on small mid-size our customer’s positively. the continue customers We are services, too. increase. side growing continuing Certainly to we commercial commercial in and clients. kind

it's On moving it's wealth side, I think terms it's of in positively. tell early moving think forward. the management how too to We

some benefit too rates business that money strong a that I help to legacy will investments pretty the starting that, have as think we we clients to consumers still and and there to think see it's from early can business from higher commercial start in about moving but deposits cycle.

So We rates have as on the on that. we as mortgage on but show and also growth, with we well as businesses that the $X that those mortgage us different the or how for commercial banking, that with that business one now continues were mortgage slowdown a clients lastly have billion And origination to commercial, and consumer side, some higher servicing book in and loan side and well call we we we see cross-selling insurance an particularly too. seeing I do mentioned that that's $X on on on there leverage important consumer banking, doing side, clients the be see should billion the the

trending on that those loan rest So the and the fee excitedabout from So income the side statement the complement again, we're the how investment happy. pretty would of income lines side we're how are different side? and

I part the also of I year pressures is to you disproportionately That's this year-over-year, Rico Okay. another year again, from back many the versus that be competition as which color resiliency guess, might you're and the and in three inflationary the into from the ocean Puerto personnel have the for on one. outlook, around there where the that pushbacks about you auto ask be on base sales, haven't due drive months and one affect talked all. obviously with think inflationary at pressures any stats wanted of continue again circle seeing pressures mainland the up early of first seeing surprised get consumer have the mainland out perspective them Wanted this the own that are that to the And I I and pressures just economic Ricans buy inflationary to to Puerto that many inflationary are a the And just to color. good as go affecting how wanted increases merit might about having your a and you vacancies the well. to wore

question, on well business doing Rico banks in here of general. believe you Correct. and me heard Rico the I second if are your US in sure competition I part asking you not I'm about in Puerto So Puerto

Ricans in in that that it the know, with can I Just, remote there's Rico. Puerto Puerto US remotely and do now work, work

talent. for competition there's so And

you kind trying get sense postings what, many, hoping to Rafael, was how to I Jose jobs you how of maybe this had fill were open, So a just… many year? job This

Understood.

Yeah, go ahead. I'm sorry.

so, that pressure on saying a all contributors it's trends given done saw the turnover on the we of also in of business those salary at year let the any last tough, having we're as side the normalizing quality bank, resignation did be senior a make great individual made seeing and needed the are that adjustments to the just and recruiting to is we branch states adjustments is level. the see in kind level Yeah, and a or that different starting call but centers, manager to stabilizing. trends the that, contributors it We're lot me that, stabilize or not seeing were we that those we said start we compensation big tough make by the and meaning high sure managers

as for transforming we're to we're if side, Puerto skills that look market as need are, is to as and many we on look on continued our the and have But, be internally we Rico out doing we upgrade and we that for to something fine. So focused talent going to well have at that years, been talent. are the very that US much attract

what kind the regarding Brett. part that's kind I you I that -- of can you what Can of question? me color give remind So first

kind inflationary I to up in that, might seeing just where Oh, economy, out progresses, start don't really they're form. be those point, as will year any statistics the show in but of bear pressures assume the you showing this pressure up some the at

Yeah.

So be, in to and in else and world is you cost the going the loop are say, is up. would is a and of housing the living strong, factor market pricing inflation is the as up going I everybody pretty need Puerto

it I the we that So of goods -- consume quantify too it's for the paying it's early are and to need they consumers businesses that very and able areas to goods and provide be but higher to offer to they that because, cognizant to and are our for as mentioned, services prices those be the customers.

that's and everybody. the end fed going what they're the needs the So to of day, get telegraphing to at

year a next the and have So soft landing half. we we hopefully have a in

the XX to you that, number. basis outcome, by relative discussion me And XX static any negative seem you going have would say but And, circle there's any if changes wanted obviously the balance would I or on the I affect look it, take hike know that, to raise points. are to just margin that then about it back pushback the sheet to you'd want margin color to Okay. that lastly, that point as positive would and basis that to at just a

and the having, but well, saying regarding that's correctly, of by color you kind the not wants we're a can I our margin by Brett, we're the I'll net confirm, expect positively basis or margin the Maritza, respond So that he fed, be hearing XX XX we just point the and question problem Brett it margin, points impacted increase that. some give interest to would is basis you if regarding repeat if that it, understood so to Maritza

that in before saw very income at XXX end positioned a analysis the are basis The of in mentioned XX-K X% rate put well our increase. in Jose stock the hike. is point us maybe questions think in we for of positive I the one we it there call

but get don't you know us, know it any be equation, can to your the in important So, would a from into market rates. I that relatively there, how impact for move

Okay.

color you Maritza than on from much. can't more tell I'll get you Brett, that that.

Okay. Thanks.

hard to And have hear. sorry. bad connection. a might I'm I

That's fine. fine. That's

comes question Timur next Wells our Fargo. from And from Braziler

Hi, good morning.

And that we strength of questions. being far follow on what consumer is and away within consumer and wanted look auto the up child how guess you're that how couple are the at Just does like looking much to, credits. driven and segment, segment level? seeing the I a within tax that stimulus demand the of Maybe reaching by still normalized from

coming because a out That's question because territory is of the this where economic particular, unchartered squeezed. much for additionally of very Rico we consumers just Yeah. of but stimulus, very are good contraction unchartered territory, were decades is two Puerto in because remember

thinking So levels or to is pandemic level the at in pre-pandemic significantly before at going to not, consumer going think I happen. levels earlier the off the it's that pandemic, what's

in that off funds end to get down levelling we'll a and right to behaviour should up you but have on and, start time that of the And start end from continuing of coming would funds. that's in building we of moving product we are that federal in deployed Rico in government start back Puerto is the down. see of that, life in Our couple that that levelling and now effect all not that consumers hope of some the think at some was reality, the the the even desire and that, going economy that the a we year, in to that construction is to pace to but that wish consumer capacity things it's call stimulus not at with the at those I off Puerto what year. though infrastructure consumer the the in I time we expectation building the then are said on the the addition they're to impact economy. blessing because of in as going acting normal all going funds funds very to a significant the perspective, last it coming islands some want are disguise, and a we we of way, terms the terms in given much Having of expect for. the back a the the how will money would And We new end continues effect reconstruction velocity years, as money perspective, Rico, releasing and at if approved from starts want beware is focused the ongoing those of come that be quality on

So as the here given basis, a and mathematics all the better is and the basis, reconstruction chain of runway and some of the we affecting. in have is relative said, issues the performance a bit of Puerto have tells will now supply a I think size me state the relative how of States here the question our funds, a of we United the inflation that Rico I mark economy in size on in think terms those economy and But quite I big on

Got it.

back Okay. And expenses. then circling to

$X.X been have in So commentary, last might million nature. about it versus Maritza's in time sounds one like quarter

noise some a other from good normalizes the and the million is or less on in what plus point for starting guess numbers. the in second Maybe I direction a could quarter, of was two So we the the you once quarter, that of the first quarter in items. legal frame the that then legal, expense, and remove just charge second more lower expenses other

it mention, about the remember of we quarter, when losses, fourth the operating legal, and first happened we about when So talk some we talk quarter. when on the

going forward, making see the year. at and to look are later So, you that's this we where you're half what mentioned of see when that the number, have quarters a starting, probably is net that, from that that. we're earlier which going in but some investments timing of this the you are quarter is delta going second And is the we those base because basis, we that's to that out, expenses Maritza if we positively seeing

make that's we're why making that accelerate to move we're people all we're So -- and sure our model for are that making the some been years. technology you business investments aware to investments continuing of and that the making the digital

Understood.

floor for allowance loan time a actually bit, ratio we the the to is incremental there dollars first a for later of allowance increased but just opportunity reduce as Okay, dollars releases then of great. of ratio down kind lower last goes should looking the found allowance and Have year? CECIL. in at allowance here post expectations kind of that bigger, went losses, the of for be get little And or me, for loans this actually kind

do of also quarter, net to the loan this the will $X.X a to happens charge variable, about going as balance, adjust off work it forward. the million. Also the allowance because improve, impact adding positive we the it the the variable balance about qualitative them in to growing that continue As we our adjustment, levels way allowance, continues that adds our economy

but that we but be going that will if it and economic quarterly quarter. to to continues would reflect one So, manage right element, on every continue probably be factor environment see definite keeping make how volume now that be will it will and to are element analysis coverage the our an also are we we us down, positive,

of but see $X end more it's ongoing around net we're day, saw starting consumer to the what to million it's also see of lending if charge the how on offs. you side works, at we the Yeah, the is equation quarter, this and

again, the also for equation we manage can and optimistic economy, the around with we, because of if particularly continue reserve. loan we're optimistic we're to will We on the how that. we asset have to go on cover side And book our the so also,

Great. Thanks questions. for my taking

your Yep. you for Thank questions.

It question Piper from Alex from Twerdahl looks like we have Sandler. another

Your line is open.

Okay.

Just it's a me if follows okay. for couple

do PPP in First the income to contribution first quarter? have you interest off, net Maritza, the the from

was share with quarters. have Well, don't here I you. lower prior than me, offline it with I can it but really

I don't meaningful. Yep. think it's

meaningful. not is It

a but offline. Maritza not It's significant provide number, to can you

banking a line, the have the you volume? banking mortgage breakout NSR do versus then do the of have the you valuation in sort And mortgage of just contribution the Okay. from adjustment

but running is that delta impacted NSR Yeah, check on can the factor that for I lower quarter portfolio probably positive, was a that is it back because was have I quarter and but the also the in extent to don't but the I around you amount, to and prior number. go have down, volume the the valuation was $XXX,XXX. exact

$XXX That the was of quarter. prior contribution swing from

Yeah. lower. $XXX,XXX Yes.

Okay. little that Omicron contributed qualitative then due mostly release? million more for that released of guys to factors. or And $X.X bit you of into taking kind reserve just a that Was to the were the what pieces reserve,

have unemployment us the in to prepare longer the qualitative mentioned historical and I that adding as talked allowance. a unemployment And related doing, little that necessarily in Rico. bit mostly to adjustment for has it that down in was going Puerto into necessary we to to adjustment relates the been remark Jose levels allowance levels, we so were keep it which

of that way could they Sorry, the over reserve that you the COVID the not is of with quarters, that things continue be there a released the attribute component next still been, couple could done that sort to have to reserve? out directly

to has have due Well, allowance. we do that most tied recent not economic a this have little areas, of yes, the bit but within in been the the COVID, development that other only to element do environment adjustments quality, we and the

to much is? you share Are willing that how

it can with have don't we share you probably me, but I offline. here with

us curious the final that? just a color recovery you on Okay. on can And drove what if I'm more million little give question, a just $X.X then bit loan, PCD a

Yes. part settlement, give as what I was it a you and bucks that seeing down the was terms yeah, color, written government difference it can of $X give of and we that Bank us you, had from received think bankruptcy this loan is we there in is settlement. to back can you're acquired I I Social the recovery. million paid And a

and us we in $X it to million of million books it for So how $X down general loan they that's what is. that works our that's paid and government was got Scotia written in kind numbers. It's an legacy

directly exit. the bankruptcy correlated So to

they're loans wouldn't that future, estate doing, you real with recoveries to been as indicator down So the you're acquired other in terms of that. point were going could a what that institutions see in Scotia, of sort assume to have leading this you be from of but doing kind from to that marked able values and more of

Correct.

for my Thanks Okay. taking up. follow

day. Yep. Thank a Alex. great you, Have

Fernandez to this no now Mr. there time, At back over closing call I instructions] turn questions. [Operator the for further are will remarks.

of Thank Thanks team for to thanks to dedication this our our and start you, to listening. and year stakeholders to their work. all great all are Thanks all hard members who the operator. work the hard for

next Looking results. Have a quarter forward our to good day.

conclude today's This you participation. your Thank program. does for

You may a disconnect at this day. time. great Have