OFG,OFG.PA,OFG.PB - Earnings call transcript Q2 2021

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Operator

Good morning. Thank you for joining OFG Bancorp's conference call. My name is Christie and 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. A presentation accompanies today's remarks that can be found on our Investor Relations website on the homepage in the What's New box or on the Quarterly Results page. certain about feature and goals, may expectations. call forward-looking management's statements plans This subject uncertainties risks Risk statements to These are and of SEC Factors OFG's outlined filings. section the in differ those materially Actual results currently may anticipated. from a to obligation afterwards. disclosed call that any disclaim result update developments We of in information this as occur any All lines prevent have on placed noise. been to mute background the remarks, there speakers' will session. After be a question-and-answer be will time. given that at Instructions like Mr. now would to call to I turn over the Fernandez.

Jose Rafael Fernandez

our per environment puts turn funds future. three, morning commercial call and coinciding much an OFG quarter OFG's the for as reflects as you had regarding as digitalization at page service size From with of with Mainland XX% pandemic the to key a the is these one XX% U.S. last here outstanding in clearly presentation. COVID on scale well the compared Rico's factors than conference the average optimism at in Good reflects and to made of is note stimulus funds of vaccination the our meaningful position. an joining income Puerto amount us. Rico that to We quartile state, the also funds competitive massive now All given funds. COVID differentiation. Two, managed as and on I banks several market. larger reconstruction the today territories that a are continues to to serving well second as how stimulus three economy. time Please this our states quarter, of share. years Puerto of Rico's payments more OFG with One, levels are levels in thank island performance operating top three compare picture this federal starting reconstruction the our to big amount past of well focus benefiting on it customer comments has economy and and the in and And our generating dose. It's strategic important and only excellent and different This are received Puerto $X.XX that be perspective, economy vaccinated fully validate population least from

results Our businesses. second-quarter across this confirm all

take more in an quarter. grew due statement Let's increase our core a at income more by than compared X%. to X% as services enhanced cost Banking economic the look financial Interest than funds. Results more $XXX of were rose income and XX% increased to than revenues were reduction million, of a first revenues Total X%. activity.

trends quality improve. continue Asset to

eliminated Earnings quarterly losses which recent As to redeem million a stock, net benefited outstanding of deployment result, series all provision our preferred our of for $X.X benefit preferred of million. dividends. excess also a of credit capital was three in by $X.X

We will explore to this to deploy continue ways excess liquidity.

the reflecting sheet. balance of XX $X.X Customer $XXX liquidity commercial customers. deposits Looking increased to at part the even June greater both consumer on and million billion,

residential X.X% mortgage in Loans both of loans. and of loan balances. of and PPP mainly was paydowns our portfolio $X.X billion, commercial to and auto result, a growth As due by round grew. declined decline forgiveness in first offset cash our assets that to Most

to origination $XXX from New first increased the loan quarter XX% million.

as We this total upon better helping customers, year. Please of At purpose, goals. year. now part well of are our fulfilling financial is achieve their and than we first our namely half for our OFG, see second built four. people banking page the our to clients. starting more to the Originations of turn the believe communities commercial on All our bodes half of optimism the the billion $X.X

all-digital PPP loans, solution. quarter, for XX% round our proprietary about forgiveness second of of again processed our quickly first for our the our During using customers, we once

us model potential their clients and to help business to and is Our strategies. closer finance putting operations commercial them existing

our high about XX the As this levels pandemic levels. has customers launch small and is businesses strategy digital retail to series utilization of and subsiding a among our its customers. mobile continued growing by banking optimize here, we improve help the educational validates acceptance This and both their commercial our utilization potential. day videos general. in and online of market their continue XX Online digital at and effort, will well services our though business part Even banking of pre-pandemic capabilities long-standing and

For COVID our facilitate we vaccinations. people, continue to

of As members XX% Monday, vaccinated. of our team fully are already

we This levels year, XXXX that started during quarter. a proud we the expect XX%. children third program reach of average vaccination scholarship we scholarship the the to awarded are increased We college In for by XX% to staff. our announce

we lower income communities to working high responsibility technological and several our social on on have development. communities, helps personal in new For program been launched quarter the One programs. school corporate second their students improve

At rewarding there end more the the nothing purpose. We that day, being of team achievements. a on proud part than these delivers of is are extremely of its all

for to This quarter's overall more. harder to OFG performance energizes us aspire work at and

go the more Now, Maritza in to here financials over is detail.

Maritza Arizmendi

than higher in interest approximately Net revenues year-ago by page financial increase which highlights. the loans Thank to core to first you Most the lower from from quarter also income to X% reflects to the and were day compared first review offset one of Jose. of due both PPP about from from increase mortgages commercial Total the income first revenues Please That's residential higher This more loans. due an our five quarters. turn $XXX from $X,XXX and benefited income and was auto to quarter. interest forgiven extra loans. paydowns non-PCD million.

an from due financial growth and and from services grew quarter banking activity. In first increase year-over-year. million banking services commercial a first the total is from was to of That the of asset increased insurance Revenue was XX% economic the in due first services income. and and reflected XX% decline $XX million financial year-over-year. XX% also This from totaled expenses increased from $X quarter year-over-year. revenues expanding $X.X and services. XX% million. This core values addition, Non-interest Revenues largely quarter to higher

and a related for cost to similar have write-down, million expenses would a been quarter. savings, reflected to the Adjusting write-down expenses ratio technology Second our $X.X first the our savings. increased efficiency variable announced previously higher quarter

announced see to line our the continue with in plans year. expenses We for previously

year-ago Our and Return goal higher It They baseline by first exceeded mid significantly the of our also was end of also the X.XX%. ratio XXXX the first from more continue XX%. up average more exceeded is and our year-ago baseline on to This our efficiency of was was X%. first range. improve assets quarters the Return than quarter. were XX.X%. also our lower than target year tangible the to XX% significantly for the target and equity than common to average to on year

We book per and year-ago XX% was the totaled operational from is continue to a highest This highlights. mortgage loans. review mostly the page Average $XX first X.XX%, balances quarter of five quarter. on loan Higher our value have the is PPP residential decline Tangible capital. to mortgage That new increase due mentioned paydowns and an sequentially share first to last The the mix our six basis over first turn $XX.XX. That's residential to quarter. consumers. of expand Please million the increase from $X.X from build reflect auto liquidity levels X% by part quarters. points change This loan of to forgiveness I as and us increased offset to in enable primarily than yield quarter, the XX before. commercial of was billion. paydowns the higher

are from mortgage legacy portfolio consists mortgage of residential new loans U. conforming paper. our all Almost and loan agency Oriental Our originations BBVA mortgage loans S. Scotiabank acquisition. mortgage and residential

production And and Mac we So we typically production into convert loan sell them. our securities don't we portfolio. to most portfolio. the Mae Ginnie add retain FHA residential convert Fannie and into in new our and them Mae Freddie loan Instead

loans of increase accounts from first savings Core bearing fall. Increases continue billion. basis basis X% nine the deposits these Ginnie second cost There They and to points new quarter, quarter. portfolio. second from gains in is interest $X.XX During our $XXX points priced securities quarter. an all XX% origination Mae first of investment million loan from in we Total This maturing the totaled an $XX That mortgage. were higher are accounts, into partially million to quarter. acquisitions. customer added of million. the was for NOW commercial CDs. increase reflects were CDs. build by in of business of major consumer warehouses, followed were quarter. decline was offset older reduction deposits by residential core money a new categories. auto, This or new accounts and the and $XXX continued XX XX% non That in making the or That's expand inventory first led new Approximately and buying of commercial rate the reductions Average store, by the operations, is

balances in is quarter. from increase totaled deposits, As billion. the $X.X million the of $XXX a cash result XX% increase That an or average first of

Most remaining points credit Our basis current first NIM page into year. to believe the continue from interest through turn reduced was rates was X.XX%, range our margin to NIM strategy this actions to still nine to once approximately by lower to look is for our this decline review expectations from offset cost up. points. and points level basis or of a of only that is excess strength. capital investment for move We by of of XX deploy deposit. quarter. basis cash quality Net capital in lending, Please liquidity amount the interest seven of opportunities four The the increased

Asset liquidity Reconstruction significant and strength individuals. quality provided stimulus improve. to and continued to businesses

paydown to their used Some and this lines credit. of loans

a at historical at also five effects and loan in rates quarters, Non-performing total five if Our lowest basis of its you quarters. level the in X.XX% exclude points. The net XX program. of pandemic-related and deferral were only respectively hit off was our at X.X% charge at delinquency rate X.XX% level their lowest early

offs credit a about global of for $X.X result losses these, based recovery. $X.X on a release. is Allowance on net concerns continues consistent There million in reserve million. charge of uncertainty COVID million are provision benefit coverage few This As net for economic net elevated. $XX.X was a

increase in reported redemption was a due the X.XX%. to of excluding to This Series The million Preferred on of equity offset B. and stockholders retainers. XX.XX%. A common continues billion, The basis continues by decline a $XX equity loans. was quarter. Our And from the of the Stock X.XX%, first reaching X.XX% good climb And to was a CET tangible allowance portion ratio climb, and PPP ratio which coverage to was $X.X

Jose. is here Now,

Jose Rafael Fernandez

you, eight Thank Please Maritza. our for to turn page conclusion.

after Our performance we Scotia year the what to anticipated acquisition. this a see had quarter reflects

efficiency larger scale, Our approach [AUDIO business ad GAP] improved

Operator

Ladies and stand by. please gentlemen,

Jose Rafael Fernandez

conclusion. page turn Please for to eight our

we this acquisition. Scotia after to performance quarter anticipated had what Our the reflects year a see

and approach strategic business our franchise positioning coming to is scale, adding larger fruition, Our improved to value.

incremental seeing on OFG, of the for are the first slowly future, the We, the Rico's Puerto than we optimism quarter now surely Following to and ready. of more invest giving this quarter, but economic business at sector part confirmation us are revival.

in We you lot form members capital for have our look our cash strategies. question-and-answer. management of on for closely powder That who but for continue their listening. a to side have growth please the customers ends also to we Thanks at will dry the loan our goals. helped formal the to Thank open of team call Operator, achieve deploy all presentation.

Operator

[Operator Twerdahl of first question Alex is your Piper from Instructions]. And Sandler.

Alex Twerdahl

morning. Good Hi.

Jose Rafael Fernandez

Good you? Alex. morning are How

Alex Twerdahl

you guys? I And am well.

Jose Rafael Fernandez

Good.

Alex Twerdahl

you the for the me. on know inflection growth? and in growth commentary, your had on answer. some past that on loan of But point that to loan hone the now you think Based this question I commercial quarter. are do just we I have reached First want think I commercial

Jose Rafael Fernandez

very when we So we that growth seen loan are definitely the with happy have look, in we this quarter. commercial

incremental activity remarks, businesses, seeing that small is our the expect, we and my more we as getting look business both sector which from the middle are on are optimism And the we for at on said are starting robust to a ready seeing. with I what when are we we revival. the are economic the think that commercial I encouraged pipelines seeing we and activity

but the economic So reconstruction the I and and by last coming certainly not model. optimism, business revival business least funds is our the supported think in

a we and fact are doing to on us I getting is of gets that kind closer good well a from too. clients benefiting lot that think model done and actually fast, traction commercial we the it easy we focus our have and business that

economy years We continues expansion. will I So the answer is rebuilding moment. to it starts positive wish the I convincing as mirror. with But that if could inflection more the the and give to it the this knows? see certainly point, look view will move for rear this to come incrementally you hopefully to Who a is continue probably the from

Alex Twerdahl

growth you dig then C&I commercial little And out versus if could CRE? more. or was I bit construction the what break Can a just into

Jose Rafael Fernandez

most are are at new I larger look or business demand are do commercial has or it grown are medium would Those size business Loans, capacity. clients. their construction we When of to mostly there some. as mostly, businesses constructing stores C&I kind and is lines clients building new say, our they model, C&I. warehouses loans, of some small the The need and smaller operate acquisitions. the that

when new look money would for, their are we I into be of businesses originations meaning we So to call, it, XX% say at what businesses. by new our money, deployed own

through refinancing is and going XX% cycle. their just a other more cycle, The their business

C&I their mentioned, I it expanding businesses break is grows. most down. when So the how it that we And just commercial, what again, as operations at that's economy lending of look the large are from apart construction, we

Alex Twerdahl

gears then could quickly NII Maritza, and contribution NIM. just Got you maybe the breakout switching from it. this And the to PPP just quarter?

Maritza Arizmendi

we PPP is some continue The down It points effect two an about as our $XXX,XXX only. increased yes. incremental loan we as that basis forgiveness have of to was program going only loans. there. fees there for quarter, Well, this were And forgive

basis significant the points. Are this it's So Alex? two not during you there? only quarter, you Did answer, get

Jose Rafael Fernandez

help you out? us can Operator,

Operator

is One line moment. Alex, open. And your

Alex Twerdahl

me. hear Can you

Jose Rafael Fernandez

Yes, can. we

Maritza Arizmendi

Yes, we can.

Alex Twerdahl

Okay. I guys did Maritza. the Thank are XX%. sitting now on answer, And then, Yes. you get you.

is respect some any position? there Your cash balance that the strategy just activating sheet huge Is update with to to of cash.

Jose Rafael Fernandez

we decision take the to our a end options we will to At are accordingly. the the review we at July, street is, Yes. of made going deployment any look month the now. update mean it were I to of going certainly and communicate capital

yes, So clear, Alex. we are

We have a significant cash position.

earnings We and momentum. earnings have strong strong

building are capital lot a of we So also.

our back convey will way a deployment a consequential earlier and come get anticipated. So to probably than continue we on our move on how capital it and message decision strategies, we to in board with we the will to forward more

Alex Twerdahl

Okay.

So now when had this other well a as year dividend saying like that continuing on are think a on the I year second time buyback sort for you reassessing this just mean earlier like some talk there's about possibilities to and a capital you I theme, of alluded the for table, as you example? maybe

Jose Rafael Fernandez

the table have we when at always We on look this. Yes. everything

are everything things we terms terms at look the as performance our will growth. And and I in our we So said, capital of in how again. of know moving along

you So be at all we will options to more focused, at if want call it, to time. look this

Alex Twerdahl

on to And back Understood. Okay. the margin. then

securities funds more the Just when of repaying I to being and reducing update Anything cash? just strategy with the sort position, of additional of activating aside, that look of that kind some of growth, or hoping was capital deployment some overall like cost some, any at maybe purchases for aggressive loan cash on of there that? cash is with

Jose Rafael Fernandez

Yes.

be mentioned to originate, FHA we that So call on converting Ginnies to interest going today. are are levels books We the rates patient look in to portfolio. at we the of we the keep cash we deploying the very loans our are where that on portfolio, of investment investment them way we them and given

are we low-yielding there mortgage just cash just not backed So go to going securities. into duration long and out deploy

will So be there. we patient

commercial the activities. certainly into looking lending We cash our are on side, see momentum We mentioned. I into definitely deploying as

good now have see of higher seen consumer also the auto for side. momentum we origination We levels the while on and a

looking seriously And in business to us we for in see mortgage books. So deploy prices can, origination more but with might lending home non-conforming price we we start stabilizing also only at and the to will strategies if will into all look to across increase then areas, keep continue starting there. not we the

going in mentioned at So look those Cost capital are yes, will lending take the I to now. all continue it. funds, management play the are of look strategies from And side. a at we that it we to

effect the this saw You quarter.

quarter. to next the in effects we it's additional that something see will We look. And continue

need out that average at here I everybody in for that's you the across returns understand Rico. us both market. a in great above generate guys looking Puerto we new there new think also think to board. island three-bank have banking we market. the are for And It's opportunities I And operating to

Alex Twerdahl

should just next would over hit couple months? that I balances the just that the cash to least Right. the on then to same cash sheet that until Credit Rico? actually grow people's Child bank about think as I with least at And starting think And the continue Puerto in balance week, Tax early here. of Is accounts, in suggest at last the

Jose Rafael Fernandez

not for necessarily we pay processed, Puerto it's significant but The federal to Rico going benefits don't it immediate. be it's remember, has taxes. So way

So effect kids impact definitely in amounts going caps to Puerto to be to the Rico later has U.S. because an the qualify Puerto and probably terms will of in it's and Rico limitations that the it paired going eliminated way it was have processed in for dollar But amount the the an states. was XXXX. is of in

perspective, So terms because island in pretty will equal families. of from not years terms qualify. more to kids amount make just be be is cash the of in benefit widespread in not will it deposits. equal the than dollar one the in Puerto the income in It's Rico in higher States. going levels the the And past, certainly terms the that that process to that going impact, the of to It's the be

have a an But change will impact. of bit eventual otherwise, there. little important a there's it So

Alex Twerdahl

just then, Understood. -- switching And gears to the

Jose Rafael Fernandez

commercial second, the third wave consumer also we COVID I I for benefits them of looking quarter, we, to And and paying also. down the only have. the they liquidity stimulus, think because or balances start seeing how cash the think deploying side of also from are their of we the to [Indiscernible]. credit they individuals. are bringing Alex, got And zero that are right, on this the for fourth excess lines

second consumption that year, or of consumers deployed some liquidity into on businesses we they will the see in incrementally Our half the into to expectation is, that be in. excess the the in consumer and or of operate commercial

is growth quarters the as the commercial we past. So in our from have consumer several deposit expectation not for continued seen and

Alex Twerdahl

in September? thinking deadline And expanded for in should about expire bringing talk Got it. been of we of? either the sort it the that commentary, the macro expectation terms unemployment or down forward be to benefits there anything is changing, Has there any of

Jose Rafael Fernandez

going I suspect anything. heard stay I to on the listening not haven't to try away end positions. heard at it's specific from now I too many anything deadline I and have that. really to

Alex Twerdahl

just Okay. then, the switching gears bit. little to ACL a And

anything some to are that you over to historical of are about You guys you look you factors low ACL quantitative low, How see excluding qualitative that Charge are of or still rather guys. other a reserves? lower? before like frankly, thinking Still there the How do you sort quite grind any sort incorporating? now? X%, are releasing right very offs you PPP. think bank, going lot waiting for still gradually Are is

Jose Rafael Fernandez

my picture. said And I Let it agree let me big I will give you details. have we you past. you. Maritza the But with in give the

we spite start been turned pretty, the decades has in of that contraction decades performance bank's has from that last two Now of of economic corner the Rico pretty kind good financial contraction. and also, Puerto two our the of revival, are the while seeing economic

we the continue trend banks the in are that's confirm given this forward Now the certainly revival, agree States, the to toward the equal assessment in the economy. the your States. look of We quarter in to our to peers that some than seeing And going I are are that I quarters come, that for on what to credit States. trends trend we the numbers or think with have better the

I Regarding give will the let you ACL, Maritza the details.

Maritza Arizmendi

and trends Alex, that day to seeing need through are revival that good of as we continue metric mentioned, this I and a towards everybody, one to level qualitative than one coverage accounting. the probability think level at better we we we see as of potential time that economic see for gravitated allowance to company than within this that the and releasing elevated at with start But allowance that, being continue allowance. our we the the tangible level be this to point sustainable we the still to and Well, adjustment have consistent day credit continue have be lower still the

Alex Twerdahl

[Indiscernible].

high then, clean Okay. revenues really look this at realized fee I then but Scotia. I a never also we have seen especially at quarter struck service look when of the and as banking post And the level income I quarter, me

of Is out? that So, right the rate a $XX.X kind is to that run the normalized million, level? start

Jose Rafael Fernandez

kind right we acquisition. Alex. again, comment, of The COVID So on the the full momentum pandemic delayed that in your Scotia on with point brought

we all are what So us, seeing this lot scale. encourages first also acquisition. activity, revenues, but is Scotia look with case to larger with the go systems we business that banking that's service When quarter with because it where the a the at do the is do has also has to and it

to accustomed don't this going and it get on to but limb starts need also like a want to rate go out those look to certainly the is. it levels. say We is I

Alex Twerdahl

question do of current the be kind we hikes end environment? need Or low that can about Great. XX for by something as of help sort that to the achieved is of some ratio kind out? And efficiency rate target last just of XXXX, that to to of me. When mid the you in then, see think

Jose Rafael Fernandez

digital that hikes. XXs and growing just have in environment rate as it's reach growing there. bringing impact efficiency I we certainly quarters In said difficult a will to just Yes. the investments ratio are by expenses. We certainly very, past, making environment, And need an in technology low business very down some and and the

to get wrong for we up. be on I we mentioned the rate also interest So why impact our been inch need investment help compelling far, to deployment earlier little mid better should even that books. rates in some liquidity, have regarding And of more and on That's that to question loans going our from expectation. us returns have the interest we that's portfolio and a up expect improve our commercial rates ratio yes, variable the XXs. And efficiency though and help invest in to so the we bit low

Alex Twerdahl

you Thank taking for Perfect. my questions.

Jose Rafael Fernandez

a great Have Alex. you day. Thank

Alex Twerdahl

You too.

Operator

Jon Thank of [Operator from your And Rubric. is Krautmann you. Instructions]. next question

Jon Krautmann

días. Buenos

Jose Rafael Fernandez

Hi. Good morning.

Jon Krautmann

banks only How there's deposits? island. competition your commercial characterize the future? in rate for three in us interest would you And on that mentioned You the mean, for for does opinion, sensitivities what the

Jose Rafael Fernandez

deposits the Well, strong, commercial side. competition for particularly on is

future? when making on and at But So on individuals. the is that would look level, consumer serve up. rates think aggressive mean go commercial does on customers above it's how see pricing have commercial for a side. when sure of some, we That's side, sensitivities the the the What the interest that lower of side, will levels into we I there for longer expected competitive we landscape our keen say, I the it. I

Jon Krautmann

commercial growth. And switching to loan

new there. really inputs with a with of the larger respect to to economic of had shape take some to on the the in is, some around has construction projects think which island? Alex multipliers good construction of scale when activity discussion there But you construction, see start do be we biggest terms You tended

Jose Rafael Fernandez

approved CDBG that federal Well, to be dependent They island. deployed contracts starting time. the are being are are There all funds some how it's are on in in deployed.

forward. And is, But specific hard year seeing to we to so of growing will the second going those your in half question. incrementally expectation be my the and start

Jon Krautmann

Can the where help loss that now, continue expect loan with drive some the of we we model us out half? were release there. right progress in some the And on of are is just things you reserves? changes that the saw in helped Obviously, some to we macroeconomic there in should provisions. question if those into understanding incorporated reversals continue do back Third

Jose Rafael Fernandez

the the And no basically you then model portfolios. are credit see spits as changes we we which, number the a changes and seeing of of very spits mentioned, and of and on levels that on on negative delinquency having run as is low was it at model based levels are case, provision we offs well they take care since in provision as the performance release. just low out because, level our losses macroeconomic our a We this provisioning the a Alex NPL. There credit out improved, are also The charge assumptions. historically our loan

That out. So with But the have that's system something works that how a economic we when last is that not and do shock we do shock tinker we assumptions. it the happened year. that to

Jon Krautmann

it if is parties economic deal were debt into are to because Moody's reversal? loan provision the our of fair that's accelerate whether So loss economics areas other improving macroeconomic third would or model that like as then the resolution forecasts, that incorporated that say their island, a upgrade it's to on island potentially that would

Jose Rafael Fernandez

you think it, too looking I are into much honestly.

with one all those to don't complete because those all that their and to calculation. allowance the macroeconomics there our But I and modeling has other. we case, stuff and think run make the shift too a much these all include we third quarter for assumptions we dramatically economic model run for the it change these and just in and the discuss island reality economic them parties, assumptions in this Moody's about be or they assumptions whoever, into to

primarily So at the moves it's your of needle. that's a performing. credit end the day, what how loan perspective, is about from the And portfolio,

Jon Krautmann

it. Got

efforts within in that the that investment Okay. in Does within that. say, blessing from, the and the there on to But countries like GXX picture the With see island? if rate, that barriers a some the rate, minimum were GXX talk And around seems and to does impact then of pharmaceuticals something to corporate question. that to and proceed we some were affect minimum be that proceed various how about investment were reinvesting tax global bigger if prospective corporate a island? tax the

Jose Rafael Fernandez

have am a answer level the don't for that. I IQ. I IQ That's normal for higher a guy.

Sorry.

Jon Krautmann

Got it.

conducive office for Okay. And the picture again, out and efforts Governor's Mainland in Rican on question, seeing to local, foreign Puerto last and then promote What bigger of investment Puerto the Rico? of island. that's a in sort the legislature just climate the are you

Jose Rafael Fernandez

said I stay as try away short to from it I answer far as the But landscape possible. political Yes. is nothing. the away earlier, to

Jon Krautmann

you. Thank Okay.

Jose Rafael Fernandez

Thank Yes. your for questions. you

Operator

Anne Thank your next And question you. investment. [Operator Easterly Wickland from of is Instructions].

Anne Wickland

Good morning.

Jose Rafael Fernandez

Hi. Good morning. How are you?

Anne Wickland

I I ratio. to to the CET am good. back wanted circle

a sitting of you are quarter at to last and XX% So you like target currently gave about XX%. more us XX%

wanted So of this question, And much timing then, on that excess Alex how to capital quantify I kind have excess sort of first, second we will capital? can possibilities. garnering and on but and you ask the touched other

non-performing on loan small about syndicated M&A about investments offering? while table maybe customer a bolt-on buildout a at all? talked then your the to financial loan. and Is talked the another is you thing U.S. Or loans. service your in in growth haven't You And help technology

you of on just just that? kind color can if provide some So

Jose Rafael Fernandez

Sure. Yes.

you me remind question. hope I questions. I So three of please don't, three. all If can I remember asked me the

will with question So CET the first. start I

I results earlier, the know year. of our so are As first far we said given capital building the quite fast, we in half

we of that XXX basis capital. around we So excess on. points to that we do XXX can yes, have excess capital recognize It's manage

very tell perspective the the we deploying what deploy Board, be know don't And that to go to capital, a capital. in looking are to you closely into what I going need we do. this management from that here, at strategies but to we So I can specifics terms want of capital and that

don't now M&A. something we Opportunities to here it's in if for M&A. opportunity see are regarding was M&A and do the So, second M&A States, that any focused the any there terms Rico. of in I on in is question Puerto right us not opportunity

we program the you cards. loan me regarding on something update. that's XXXX have question we think And launched give asked our So not have of kind the I U.S. you and an that third that up was then,

So of we geographic part to that as book continue diversification, build our diversification.

it's do. thing think the I right to

We have, say, now the right I would is of market middle book loans. XX%

The other with small in we XX% have a that the loans a that States. bank are partnership commercial

of going we kind it. So that's are at how

commercial of of But that. our originations numbers bucket, to lines term not mostly Certainly questions? I did we of are do miss building see of of the that's We build loans loan how affect longer balances the really this did as that the not and but any are the this Did that Most business loan small And methodically the balance in surely quarter. not that in dent, strategies. we slowly continue commercial credits did book. your that. part significantly any our or book are from quarter, affect

Anne Wickland

Thank No. you. That was great. And quarter. great

Jose Rafael Fernandez

Thank you. Yes.

welcome. are You

Operator

Thank will now you. I turn for [Operator Instructions]. no closing are questions. And back time the to at Jose this over call further remarks. there

Jose Rafael Fernandez

first members have our the to pandemic Thanks you through thanks year. have the stakeholders and in all our great team the of in. operator. have done job all all Thank again a our to who half And customers who helped listened

So have great for a day. the call. forward next looking quarter And

Operator

call. Thank does conference today's you. conclude This

now may disconnect. You

OFG Bancorp (OFG) 21 Jul 212021 Q2 Earnings call transcript