Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Please standby.

Your program is about to begin. [Operator Instructions] Good morning. Thank you for joining OFG Bancorp’s Conference Call. My name is Melinda. operator your be will today. I

José Our and Arizmendi, Chief Officer Fernández, Chair speakers Chief of Officer. Maritza are Vice and the Executive Directors; Rafael Board Financial of

our remarks. in page What’s New the be accompanies the on the It or Results presentation website on today’s found A on Quarterly Investor box Relations home can page.

SEC may and uncertainties are OFG’s statements risks disclosed and Actual expectations. outlined a afterwards. section developments as feature the filings. subject anticipated. forward-looking Factors result any call obligation about statements differ that occur those certain call to may These This management’s update plans Risk in materially information goals, results currently this of disclaim to in of from We

After session. there be All on been will lines Instructions have placed that speakers’ noise. a will the time. question-and-answer mute given background be at prevent remarks, to

to over I the would Mr. turn now Fernández. like call to

José Rafael Fernández

Good joining thank us. for morning you and

first position and quarterly our report supported All OFG quarter a by our to results. pleased franchise, OFG. by banking high the performance to are contributed also environment. strength The quarter’s of strong of This and our places We today’s capital. reflect XXXX in liquidity results well in another levels performed businesses strong

were or let’s levels revenues, improved Now call remain compared customer with and page the credit a stable our quality, leverage only beta. high presentation. of to net quarter. conference to turn three Core operating margin, XX% all balances Deposit interest acquisition at cumulative fourth trends

year-over-year. digital-first field. digital and teller the interactive to Client execute kiosks our XX% increased machines We placing strategy, banking more continue adoption in

levels. at Our key strong performance metrics continued also

drive, continues do teams goals. in Thanks Puerto forward We financial we are Rico well. and excellent consumers helping in our shape to and good customers and ongoing and communities the their serve their to the commitment in achieve economy to execution, Businesses progress for XXXX. look financial

non-interest XX%. million, revenues year-over-year. up totaled pre-provision Looking revenues was diluted million Net Provision X.XX%, up $X.XX, at XX%. expenses XX% million, $XXX Earnings statement. income was totaled up interest XXX and points. up were million, the Core margin $X.X $XX.X $XX.X basis per share net was

at investment Loans balance billion, billion, to $X.X $X.X were slightly also compared for quarter. quarter. held the the up When sheet, customer our totaled fourth up fourth we look deposits slightly over

production the slightly million. at maturities loan the New remained $XXX mortgage-backed totaled the Investments of billion, strong and normal treasuries due quarter $X.X paydown to of securities. down fourth from

million higher Cash $XXX fourth than quarter. was $XXX million, almost the

build ratio All to XX.XX%, strong We capital. fourth performance. very continue CETX quarter. quarter, in all, was excellent The compared to in the XX.XX%

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

Maritza Arizmendi

José. Please you, turn highlights. review Thank to four financial to our page

Let XXXX with interest points, rate core XX me income basis million -- to held Net in quarter. only fourth but fourth quarter of increase steady This total basis revenues. XX effect partial point compared full quarter XXXX. offset start of primarily $XXX the a of increase of the the first reflected the effect increase

the commercial have days yields fourth the on by quarter $X.X quarter, balances higher million. loans, did and auto, Also, to we reduced consumer. in fewer income particular, higher compared two of interest during net which And average

sale the that year. last from the end $X Banking quarter we $XX million in and the in wealth million reductions reflected of $XX of business mortgage insurance were retirement wealth quarter. at This revenues fourth $X December and in announced management fees million, the administration management $X.X compared service recognition the revenues to primarily plan annual million the of from of million valuation, in

increased ago. compared have trends leverage reflected the over we to XX.XX% year. a This ratio. first efficiency with the significantly our at positive minor a That’s It in first quarter. quarter and last Looking the change in the seen year operating was from line better

That about primarily million XXXX. average $XX general sale continue million of quarter a quarter. compared million, of million our $XX part, and was per totaled to costs. of In administrative expenses as Non-interest reflected administration $XX should result costs that to pension $X.X to expenses in the $XX lower fourth lower Non-interest to the in due million business.

Our efficiency the should ratio in target mid-XX% also range. continue

at on asset on common our was return was average X.XX% Looking and performance tangible Return metrics. equity XX.XX%. average

comprehensive Looking reflected of ago quarter quarter. loss. at $XX.XX. compared increased was lower book value increase retained fourth $X the tangible an earnings per the This fourth share, That’s that -- and about to other

our Please highlights. turn review to page operational five to

a consumer from X.X% to increase loans. average is balances of End-of-period they loan fourth of partially quarter and increased residential This growth year-over-year. $XX increased billion. auto lines annualized of to from balances, offset at by quarter. paydowns $X.XX previous -- increase Sequential mortgages credit. reflected was the million and the Looking $X $XX X.X% That loans a to commercial and increased

of yield, X.XX%. quarter. a Looking increases mortgages. auto, versus residential commercial fourth and the to from That’s rate at XX-basis-point increase loan proportion combined with it was consumer That’s Fed loans higher due

Looking high lending new at levels commercial to Rico lending lower auto the Puerto lending was increased This and the origination. continued of commercial compared quarter. fourth loan U.S. reflected in

However, our commercial pipeline remains strong.

Compared Looking end-of-period the decreased, fourth at average quarter, deposits balances increased. but core to deposits.

and Over a to from our business. the management we quarter, shift saw course time of demand lesser deposits the savings deposits wealth to to accounts, a degree

from $XXX.X quarter, million. million to government deposits down the During went $XXX.X

increase in decline of and retail commercial in saw X.X%. X.X% marginal noticeable a a of also deposits We deposits

XX points That quarter Looking at basis core basis from deposits. an ago. XX of points, the increase was

has cumulative deposit XX%. beta about So far, our been

-- deposit well about We for below XX%, of beta expected -- this through expect last level cumulative beta cycle.

Federal two-year Borrowings advance Bank. the increased, Loan Home a reflected million that $XXX from

interest -- net XXX an basis XX at basis and XX and quarter last points margin. points increase of year-over-year. from Looking X.XX%, was That

generally same. outlook the remains NIM Our

was XX%. rate first tax quarter for Our the

year, we XX%. the of For rate tax anticipating an are effective

to our strength. Please turn to and page capital five -- six credit review quality

net to at fourth a They auto in compared charge-offs. totaled Looking That charge-offs. in reflected significant million million, net quarter. the $XX $XX reduction loan

Board. across rate fell the delinquency and addition, In non-performing loans

United That loan held a in credit commercial in a and States. million million, sale due volume, the losses. for provision totaled million $X.X increased $X.X $X.X due million at from increase to reflecting loan recessionary for increase adjustment $X.X Looking risk to

-- loans. the Looking NPL quarter from Overall, total X.XX%. XX non-performing That noticeable ago. basis NPL was was That -- quarter. the a and down fourth year the rate XX improved credit at from from total points basis points non fourth total the

capital to Looking million increased stockholders’ equity quarter at our and up some the of TCE was metrics. $XX other fourth billion. Total $X.X ratio That’s X.XX%. from

here is Now José.

José Rafael Fernández

consumers. eight to rollout. page Maritza. and the Please on economy projects to to Rico part building and outlook. momentum you, activity is show continue the Thank turn continues robust businesses reconstruction Puerto The Business as both of strength for

resilient our helping more must continue retail recession. management This and to wealth to business. with changes, overall create remained infrastructure, stable on but moving a products higher this a our environment, like CDs rate eye and we a customer keep flows Within have deposits mainland to inflation yielding probable watchful is interest to

our levels and easy, High focus liquidity provide to put growing main relationships, in solutions by position our building adding a enables value to in digital plans investing environment, businesses. infrastructure and around-the-clock of to customers banking strong market continue our us technology the clients to people, current fast, this on share for self-service and in us and in stronger

to customers for dedicated their want the members I commitment communities thank and again to team the all serve. we our

we for call please questions. this, With our end the formal presentation. open Operator,

Operator

question Wells Please go you. we Instructions] to from ahead. first go [Operator Timur Braziler with Fargo. our Thank And

Timur Braziler

morning. Good Hi.

José Rafael Fernández

morning. Good

Timur Braziler

starting bigger Maybe a picture just on question.

the of ultimately, So the us base, when level the XXth the back and week island, feeling can What the was that having falling of was of you taking what kind your in dynamic conversations to on what things take place Puerto was Rico? on deposit mainland? March apart the were were with you was own

José Rafael Fernández

at question of banking receiving my right and on share for Sure. the question, kind the environment you to your take in to I’d now Thank how United does all to like overall Rico. translate Timur. that Puerto the thoughts States opportunity if your

I banking the States in in as market, well the exist differences Puerto environment Rico in positive the a brings very difference And banking peers the between as States. the current to that light the with way think United

and you economy Rico continues a you I build market, are banking are in see trends concentration. island’s you higher what much liquidity development seeing banking levels, stable economic capital higher deterioration with that quarter, strong with momentum think it’s and the lower in deposit betas industry at and/or Puerto supportive this credit of is and going more to will levels, that you no an when look really see to the

very compare favorably to these our of All in states. the peers

the think, So were in to events that the of your it two regarding New California institutions that that the March, in York transpired closed. and I question, financial middle whenever was

efficient. in Here but rational that there in the is is solid the and it’s it, news everybody aware Puerto is a understanding strong and and sector come Puerto Rico Rico, banking of

terms been this you in in environment all the banking way about I the market. while a and Puerto spotlight think to I And a for guys of have this the Rico in talking banking positive think a states puts moment

So has that’s view Puerto here XX what see competitive from to the in island. are what’s market have going Certainly, very on how it’s what the Rico. kind But market happened. and years, different accustomed in I of a investors very we last XX a years

come it’s is that deposits, growing, with irrational to rebuild in we it’s has as It’s it’s market and economy playing economy really a the market players turned as that not in and is market a a moneys an does that -- and excess an have also reconstruct. been around that

island as I to of is So I XX in way customers building extremely see almost closer last couple is of being ago, them to and have development as the of the years economic a help been momentum rebuilt OFG, CEO island get and said and the that us sitting here today to also. this I positive -- of I the and am years years my couple our for a support

So view how that’s of kind I this.

Timur Braziler

taking on just That’s expanding you. bit. just that then color. maybe Thank little and a great Great. And that

for outflows have the DDA to products treasuries deposit larger still basis depositor higher yielding institution, as is you at are looking heading a leaving back within there end of as higher to kind an has for into risk have but much system? of in might a seen year, not the at institution -- some going the migration of we either the from remainder otherwise the or the the costing that banking of the or deposits base XXXX, leaving have on are activities element or stemmed the you mainland that where So

José Rafael Fernández

the that the we fourth So of as And are the the right? mark. the trends in in managing billion XXXX, well trends, below remember as XXXX, $XX fourth of quarter quarter were

really also drove, in of particularly XXXX, is kind some to what that XXXX, degree. So in but

the is that, first remix happen So seeing savings you have some and degree, to and what deposits normal stabilizing, seeing CD. higher we is a to are in of Certainly, thing the has taking moving two-year are some quarter place kind happened that the we balances. is that one-year, towards deposit and

We wealth seeing, I going we it too, are mentioned in also to and benefiting from the as think I management. also management my also some flows wealth business in said of our are Maritza seeing remarks

really said dynamics our in but going the banking business our out, based pointed cumulative. modeling and throughout year to the XX% U.S. same remain the just is and occurring again, Maritza we the expectation the how playing just reason we as on I are that to earlier, are seeing how don’t depend that we I to is, beta expectation deposits are year And But do it’s on market. is what stable the remix That’s development, out. for see

Timur Braziler

of Okay. Great. in exposure the broader can how estate mainland on commercial thinking And on real within kind just What in Rico office estate broadly real about commercial you me, estate of you of exposure. commercial Puerto buckets, your last kind us and have estate then on the versus commercial then fill terms if in for any are real looking real mainland? more you commercial

José Rafael Fernández

Yeah. Yeah.

have portfolio, around we have we building the office the office on X% estate CRE. mainland anything of commercial really. Puerto building real Puerto have commercial Rico, in don’t we is here in in What So do an Rico

I am a made overall, X%, So, mistake. I sorry,

is portfolio office it’s X% So building. commercial the of

kind how that of -- so yeah, the So we have. that’s exposure

Timur Braziler

office risk risk -- to office in being in clearly what risk maybe mainland. the the broadly or on publicized loans? and talk those more just around is the Okay. dynamics perceived Rico widely about the Can is Puerto And you is space the

José Rafael Fernández

let them me. So, me pointed just Maritza on numbers. Timur, the myself out to correct

we and building portfolio our CRE X% office So have -- and our XX%. of portfolio is is of CRE a it around

and again, the -- different So ample real has CRE gamut portfolio -- loans. estate office an of

the So of that’s you. sure right making for I kind just got numbers

here building the giving of terms of in terms color And in Puerto Rico. in office you --

So metropolitan primarily buildings, Puerto office there Rico is an are area. concentrations the island, or of so in particularly

it. where you see that’s So

that office and work have in seeing is the the seeing is acute United and my the that trends we those And the We the large stuff. challenges that, global States. we market of same issues building are office right and take in not now. type all this But of from same are hybrid issues don’t having really cities

So trends bit hybrid of work post-pandemic we we even towards from seeing the of quite spite are are perspective, kind deterioration of a there. office high not our dynamics, occupancy occupancy, levels office of and the in any significant seeing and

Timur Braziler

Got Much color. appreciate the it. you Thank for it.

José Rafael Fernández

Yeah.

You are welcome.

Operator

ahead. Group. to with go Rabatin line we Next Please go Hovde the of Brett

Brett Rabatin

Hey. questions. Good morning, everyone. Appreciate the

José Rafael Fernández

Good morning.

Brett Rabatin

not in back was in but I think get, from and Puerto is you it’s index EAI on floor up I the public seen talked earlier a sales auto improvement mainland, and Board to a ascribe of I you that in obviously surprised to like and in a But transportation lending economy, credit pull I system auto in for were I bit specifically, Capital cars, get bit environment. March people And things would get particular? that about March anything the Rico, XXX but the you the XX,XXX a auto color little in specifically. to credit was the if plan improvement so some see wanted José, maybe the to island. with different hoping just great I to platform, around One their their have little There’s across first start, need auto, linked-quarter

José Rafael Fernández

Yeah.

we I pointed and auto what our you in differences we FICO think manage high is seeing the scores. the are out way business

the We are rates making adjustments to interest also.

right X% of now FICO originating score are with average around XXX. loans handle We around

consumers are of deploying the is are we there’s what auto So credit it remodeling how delinquency that and rates into they the autos buying seeing liquidity of in our and the on their homes liquidity confirmation -- they excess and we the are another and terms of optimism. have,

So factors. of multiple I it’s think kind

underwriting We very of the economy side recognize business, the the have that always supportive been also very auto today. on we also conservative is but

Brett Rabatin

of the to kind the PREPA wanted and big as piece ask, the to in getting And remaining in you seen continue wrangling direction around debt. is Okay. mind, I right things -- the my have headed Any be PREPA think you term you from vantage cost any do point, the the a might electricity, resolved near-term and of in here your on think that or it just situation? see be if update that could longer

José Rafael Fernández

to like The things that transmission PREPA that it is things done, of it’s privatization and also a are a noise. recently, now being going to long-term while. But There’s get the situation. privatized. is of being now lot distribution on is it’s a noise right? generation and the So take executed the required

the In the panels think are lose the are sight meantime, government of beneficiary I reason that I not and another from solar sector, on a I federal quite think a private us and perspective being think also that of focus we putting think momentum there’s bit why is we an is economic supporting that I for the let’s sitting Rico where Puerto of Washington today. is on

X PREPA is times times Secretary from take -- there to I has be So public to it’s the X There’s mean, forces. but forces. or to are Energy the visited going I longer going U.S. think private of be going already.

also the government Rico executive panels electricity I supporting of the well together So for for high as sector, PREPA as the for branch financing and private and we with businesses, is think focus solar the Puerto a residents. and Washington for in banks as local

accelerate Rico. in towards Puerto more diversified, kind resilient this it’s lower, production more going of electricity think to shift I

So in in I as can much PREPA terms and I that’s of share itself. electricity as think

much in in So discouraged are and don’t down cost kind place noise improving by of get the to of quality PREPA. its hearing too on The and it rails resiliency. terms bring

Brett Rabatin

still understood a talking that. sure just you maybe I of mid-XXs lastly, are efficiency Appreciate Okay. And I make wanted to ratio. about guidance then

am $X.X net about it the out of expenses doesn’t income ratio? margin if the thinking here But from peaked efficiency quarterly a would your would maybe fair about it I from that income, here. the terms operating maybe and of so just seem much. seem like like the would implicit guidance implications has in And your to Is million $X climb million too way to fee change mid-XXs think that,

José Rafael Fernández

deploying non-interest I Brett. throughout think the know, as anything? add it technology are and investments. at expenses need because way, we I we wants to you have are at way. Maritza capitalize the But looking of terms simply, right the out you Remember, right variability in we the to those quarter-over-quarter are deployment comes don’t looking some just

Maritza Arizmendi

correct. million million to guidance providing from That’s $XX expense a quarterly range. why That’s -- we are of $XX

José Rafael Fernández

And Maritza, to do anything… you add want

Brett Rabatin

Okay.

José Rafael Fernández

income... on the the margin … on

Maritza Arizmendi

my intra-region we year I the same level and will that’s [ph], between full continue That through the the Well, the will in remarks, was be to In full mentioned yeah. last same around we our prepared expectation. as in be that for quarter. range that have so year as the X.XX%, expectation we -- for

José Rafael Fernández

Part has in of you pointing what’s are mentioned to out shifting some us of with driving that’s the mitigate yielding earlier. I that are I assets your of it it it our, do deposit kind helps on it guys and the write-offs higher and think, side

Brett Rabatin

Okay. Great. Thanks for color. the

José Rafael Fernández

good Thank questions. for Yeah. day. you your Have a

Operator

Alex Sandler. Next Twerdahl to ahead. we Piper Please the go go of with line

is line Your open.

Alex Twerdahl

Hey. Good morning.

José Rafael Fernández

Good Alex. morning,

Alex Twerdahl

called only through and am the -- year does break curious today? and how cuts on the morning beta, us time me could this can based to think the just play to when banks and a for cycle to back total this in in hard of the really wanted Rican potential into in you just beta about I deposits what later to get beta actually terms seems just rate that, tried is go market we we commentary down the that getting I deposits, of the XX% to because that hearing if the I around Puerto deposit first on highest rate interest-bearing the was that we it you having are and get any XX% that

Maritza Arizmendi

Yeah.

we -- deposits. are quarter, we have So, and from DDA this I think savings yielding have and how when we seeing time high into how Alex, explained been shifting through things

type to of of So we are expecting the rest that to through see migration the continue year.

far, XX%. has the been beta So cumulative

continue continue the a high customer book to are XX% so yields, end deposit continue we we will looking growing we targeting estimating our or to us that reasoning the So that’s in will the of for scenario, that are see of for we base case see beta time the and year.

José Rafael Fernández

when at and beta retail commercial Alex, think, look the I it commercial, the is also, break we higher. beta the versus into on you

also we case part to for and rates So what see scenario are also commercial of asking that’s beta of some means. our clients XX% going higher base

is is trending lower the year, efficient than simply to think cash kind in be be beta that just higher So, significantly if rest going to the our But see -- mentioned, to you it, as commercial our of clients in are beta we more being next about for expectation XX%. the their management. going Maritza -- retail of the

Alex Twerdahl

over first over quarters be or of in in rates pressures? slow? we roughly think increases you will Okay. of is deposit couple out we kind increase to cost it of you pressure thinking that the How And that of playing rest quarter playing as deposit in it are -- straight more I and next you or think terms the increase line think of mean, the -- seen do year, the the have about more are will then sort you do about the out

José Rafael Fernández

pressured we are in So operating kind of that I feel really a don’t environment.

I have to who knows, need you you an in think this think I and of about answer for terms don’t right? because when,

do profitable the But we build on we that’s think I and thinking on how good need side how too and to think this. to commercial about customer about retain we are also this relations continue

competitive a there’s irrational market too. -- competitive. here are it’s not but It’s We

we So that’s at this. how look

it is of it that how or more thing asking for or there what how to there’s interest shift. us their it’s of are hard throughout to pinpoint in not. very to are going But But doing call our clients be customers kind rates here, to of -- the when going rational wouldn’t going be it terms us general, of doing looks rates higher year, in continuing And pressure, be, management. I cash right I trending that the call a would to normal we

Maritza Arizmendi

cycle… this in mostly But type of

José Rafael Fernández

Correct.

Maritza Arizmendi

think on … have we that rates. we lower maturities had -- and time I have still deposits

So year, maturity higher rates. time happen and the through of the deposits will just replacing with that

José Rafael Fernández

lowering also that that’s starts lower You Well, Fed not scenario turns rates. ourselves and If mentioned base case interest interest are the on. rates. modeling the around we

moves the lower ourselves this the modeling year. are year, We -- on Fed that not lower rates next

holding is crystal from So what later of in bit -- rates don’t have again just levels are are seeing But XXXX. going we until a a I these up moving more on part modeling. then ball Fed and and first we the

Maritza Arizmendi

on and the the add has side and to much beta the through the the been that beta asset -- room deposit just far year dynamics higher side side have so we still asset the And side. having the deposit type for a versus have continue there, beta of on on than to the

Alex Twerdahl

sort was if anything loan just there in terms that in mean, we aware assuming much next that’s, how non-core and of that yields, could quarter stay next more the the that then… there I we of. one Yeah. that’s had Okay. the be basically hike of, question secondly, in of is maybe in then, more lift quote-unquote, months here, be, higher And I couple get pushed first there’s one, should rates

Maritza Arizmendi

So…

Alex Twerdahl

Yeah.

that. with start You

Maritza Arizmendi

Yeah.

points this expansion, XX other points from and of basis cash came investment and X the expansion basis from the XX about basis came quarter, about NIM point loans. think you if So the

there is extraordinary nothing So there. --and

during full -- have next of points -- we effect. that have the so this first increases will we that the have full in effect Fed XX So that have that we benefit we the we that quarter, still the quarter basis will

coming the also we wanted maturities have still mention to just But group. some treasury that from

May, $XXX have that yielding We and in million $XX in we in August maturity the asset in a August, million high with then replenish base. will

can yield We than assume yielding asset. of more be current want, I that what cash if in cash, the but think invest we we will carrying

So positive on is side. a good the beta having very continue today there asset us to a for room

Alex Twerdahl

And so you I curious the of Great. how first NIM, down, mean, then, the guess, of next alluded of NIM am the peaking I I as that the one earlier potentially the the just think, I quarters? trajectory over boil in couple quarter. to questions the is you are seeing NIM

José Rafael Fernández

So to it we year NIM around as are Maritza in X.XX%, seeing for the saw mentioned, quarter. the we equal X.XX%, what fourth end the should X.XX%. The

modeling how of So the for year. full NIM kind that’s we are the

definitely, as throughout down talked we and it is we little hasn’t year last of on so are trending the the of fourth there a changed. bit quarter it a call here, kind about So Alex, repeating

Alex Twerdahl

one on wanted And just helpful. buybacks. question other I ask to That’s Okay. then

with share price quarters? possible activity pulling are thinking over every excess with levels managed sheet liquidity, have next share curious, certainly guys couple buyback capital capital levels. just would very there, the You out balance have consider at pulling least you I or how back for the other am the excess buyback activity guys about -- I bank or to of well excess what

José Rafael Fernández

Yeah.

management. capital you thank been question, also portfolio, the your have So we patient been investment on And on the we Alex. for patient have

the for investment securities capital last into felt in the no we go same that to always years investing -- us there thing of have and in lower management. was about felt the couple rates We rush and

put did buybacks. We We last of a to pause year. the kind it

are it’s patience And think patient is see the we becoming, we patiently so the ourselves now it’s I opportunistic. -- way is actually -- --

opportunity now an with think tax look portfolio there opportunity, benefits. investment for is kind now investment us to X and [ph] of I yielding And at it’s

another that in that’s kind another alternatives. of we point bag So the put of

The with at When same capital. capital. thing look we

looked dividend We the dividend. throughout at several can have consistently years. increase the last We very the

will opportunistic the buyback continue on we on been We be buyback have also and opportunistic too. to the

So around and we have authorization. change in still $XX the million

Alex Twerdahl

Thanks my questions. for taking

José Rafael Fernández

You are welcome, a Have day. Alex. great

Operator

Kelly to with go Motta Please ahead. go Next we the of line KBW.

Kelly Motta

question. Good Hi. the quarter. for Thanks morning. Great

maybe the back I circle to will I think funding.

in Just last, of Puerto and with deposit the unique least or you relief Rico staying in can the in still to guys Puerto whether stem accounts Do you a at like, outflows in it accounts, seeing and the help how have a of Rico, accelerated from lot of of business that’s relief kind that perspective, sticking much the we guys and year -- incremental consumer flowing high on sense accounts wondering up a funding or be money two. mainland? in level that that have ends if are

José Rafael Fernández

Yeah.

the So, franchises Kelly, because that’s U.S. of lot it’s in a nationwide but the kind is have hard the their of a and those good kind question, kind businesses is island, of consumer is are some of fungible there money really and and operations retail that to banking answer, here, of activity. businesses outside Puerto Rico

all in the running the we is seeing all, seeing retail the on all it’s higher commercial individuals balances are what But, liquidity is also system. because on and the that we balances through of are higher and

stayed and it certainly, in hasn’t as same stayed, level than at was started has year a has it -- it starts at it in. to all ago, flowing all before but higher flow activity a level And the the the stayed reconstruction stimulus

that but don’t data wish specific I question, answer that. have I a could I really you So to for the give

Kelly Motta

it. guys entertaining $XXX million talked funding you of the appreciate FHLB think don’t on. about I we two-year brought much Okay. have I

what if behind modeling for of process is to of kind measure thought purposes? midst in that color the of helpful rate defensive on the a of the that mid-March wondering kind was would Just kind that, around and be any

José Rafael Fernández

Yeah. Yeah. Yeah.

the So look question the asked look the Timur going you We do think how I So We read on. the did stuff? see what’s the world? guys at how now at all that deposits call and of regarding beginning mid-March, at news. we

So we just, saying, we and prudent were liquidity let’s ample being have here.

We have availability different kinds Bank places. and liquidity, of we have Home Loan of all the other Federal

just said, let’s we prudent. And be

the by didn’t just defensive anything something advance way, cost it Federal case X.XX%, a take that that million two-year into around and good yield The or [ph] just Let’s Rico. is Home really Puerto the it -- from X.XX% in is the And be Bank. is news and the $XXX Loan trickles hasn’t.

So I we our in that’s in good think balance it. seeing sheet are we and are how of terms overall position a

Kelly Motta

last is Maybe on credit. it. question me for Got

Your NPAs as down delinquencies and well. down, early-stage total are

lot go-forward As where a cadence ahead, sense you charge-off think estimation rates have normalization there been Do the past tick-up good anything from may pre-COVID. you be on are out, a there you a a seeing of term running credit look do on you basis of have couple they were that is here than losses? near could you a or of are in a lower quarters indicate is

José Rafael Fernández

Yeah.

not are reversal. any We seeing

trend for We seeing continuation of not terms delinquency accelerating, and the -- necessarily the because downwards rates in it’s all us envision a hard of are trend a to that.

from we it of been it consumer closer the is before seeing to on revert the hasn’t. of we credit going the waiting pandemic is to and what kind when certainly, kind are the and so, very side have encouraging levels the But year for or last

and terms also lower shift it’s a there’s done business I here think time So of unemployment, a that say Rico’s in is of manufacturing paradigm for in and Puerto and shift terms economy activity, level has us there to all.

positive it’s that trend trends future. credit logical So to continue foreseeable will the in

Kelly Motta

questions. step Thank so back. will I much for you Great. the

José Rafael Fernández

for your welcome. Thank you questions too. are You

Operator

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

José Rafael Fernández

listened team Operator. and in to today. again day enjoy our all upcoming who members to our the Thanks all wonderful and Have a you, Thank weekend. stakeholders

Operator

teleconference. your today’s conclude you We does for This participation. you. Thank thank

disconnect time. may lines You any at your

OFG Bancorp (OFG) 20 Apr 232023 Q1 Earnings call transcript