Earnings call transcript Q2 2023

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Operator

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

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

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

that as to call background SEC All and currently any uncertainties occur be management's update remarks, in the from time. developments statements These This disclosed those section a result anticipated. are results information outlined will on certain obligation of noise. prevent may Factors session. and materially OFG's statements risks disclaim plans at be Actual question-and-answer expectations. speakers' afterwards. call have to a placed this about to the been there subject line Risk will that given Instructions feature may of in filings. We goals, mute forward-looking After differ

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

Jose Rafael Fernandez

joining you and for morning, us. Good thank

contributed well to strong quarterly We businesses our are second performed All pleased quarter to another results. report and our performance.

production, with build. included stable to Highlights core continues beta, loan low increased leverage capital deposits excellent and operating cumulative

strategy continues to lower Key higher and metrics activity. actions result customer strong digital-first visits. at in progress levels. excellent continue The increase service been branch sales has performance with transaction an show overall Our

the a On promotions development business we lead executive our channel and several new leadership front, people announced recruited retail to executive efforts.

we Thanks communities do For the for Puerto to Rico, consumer to continues customers and to financial our goals. and well. team the liquidity to is good achieve commitment helping economy their their serve

call turn to presentation. our Page let's X conference Please of

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

approximately at the investment balance remained up Loans $X.X approximately Total $X.X billion. our at totaled billion. from first held steady quarter. for sheet. deposits $XX Customer billion, were assets Looking X.X%

Investments million. approximately was and the totaled XX% cash first increased $XXX production quarter $XXX from loan million. $X.X New to billion

Looking at XX.X%. ratio CETX capital, the was

OFG second shares. $XX the During XXX,XXX a with us million. about authorization about leaves remaining This back quarter, we bought of

look Please first turn far strategy. X progress to so Page on at our our to digital

Looking XX%. at in X%. increased and enrollment transactions includes XX% year digital transactions last in compared to Overall, this year, kiosk up Self-service data digital is from usage growth That increased loan payments. XX% X%. June growth

XX% this ultimately deposit and on additional through that more channels. transactions of investments our to service opportunities development to And being are our digital self-service our our higher adoption customer now our transactions business for technology customers, XX% and efficiency. increased All providing and on quality detail our and channels, are using registered operating to XX% made platform. key customer provide customers businesses, self-service our of levels, customer retail of digital are total banking continues in value-added to are digital validate

account of launched loan to place, their improvement allows part April, deposit our banking opening servicing to all retail continued digital accounts in our deposits portal This capabilities. including full the As Oriental customers manage and one portal. in digital easily platform, we

So well adoption our early expectations. far, initial the above levels are

continue will with services portal engagement while producing adoption customer Looking ahead, to we drive operating to enhance additional higher products and and this leverage.

to call like would to pass in Maritza I more the Now the to go over detail. financials

Maritza Arizmendi

X review to highlights. Thank Page our you, to financial turn Please Jose.

increase a Net mainly revenues. in over Let first interest first is quarter. was partial higher million. loans, effect of auto, increase average additional increased income interest yields the $X.X average and day. on higher $XXX commercial the XX and income reflected cash XX in effect second basis of million. point X.X% That the This of point higher basis me the first yields the increase by start with higher total quarter, balances core the This one net of on full consumer quarter, balances

Banking reflected first and mainly quarter. wealth up $X That's mortgage This management $XX from the and million. wealth higher million revenues servicing management were revenues.

a Looking at $X.X non-interest income that note. of the $XXX sale million treasury million loss a included of from

it first XX.XX%. Looking the a expenses gain totaled basis sales $X reflects the This XXX foreclosed year first $XX compares ratio, improvement That's Non-interest million more real leverage. an from efficiency and XXX from of points offset quarter ago. expenses points operating more of increased estate. by was from to $X.X higher million. at million. lower $XX million basis This increased than than the on in the quarter. were These credit Operating and expenses

million average about continue should year. the $XX for Non-interest the $XX to quarter million to per expenses rest of

Our efficiency the should low continue in mid-XX to range. ratio percentage

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

first We Total $XX.XX. year-over-year. first continue X.X% XX.X% Tangible common value book per raise and the XX% up year-over-year. tangible share That's quarter was from up and the capital. to was quarter $XXX up million. X.X% from That's equity

review X to Please to operational Page our turn highlights.

balances increased loan Looking at loans growth average and $XXX million. were they reflected from the auto commercial, loans. Sequential quarter. consumer first of increased $XXX million up End-of-period balances,

Looking consumer XX at a basis increases proportion yielding higher loans quarter. loan commercial reflects commercial yields, of variable from it the and larger first That and auto, points was from rate X.XX%, up loans.

increases from loan This small in decline a Puerto partially up loan originations, first commercial XX% lending was quarter Rico. production. they all by offset categories in new at with in Looking the were U.S.

million, $XX the at Looking Retail million End-of-period from $XXX declined deposits. million declined increased quarter. $XX $XXX Average and million. deposits government deposits deposits declined core $XX first declined commercial balances million.

management. time to see We deposits continue wealth to a and shift

that was Looking at from costs, points quarter. XX the XX basis first core up basis points, deposit

cumulative quarter, has deposit our of second been the XX%. beta As

cumulative Through deposit was cycle, we continue about Excluding beta expect XX%. to government this deposits, it of XX%.

quarter. from to million at rate $XXX Average Looking increased to first were balances X.XX% The borrowings. million compared in X.XX%. the $XX

effect Bank. the the from advance quarter Home March of reflects This the Federal full Loan

Yield first cash, was average X.XX% the compared million, at $XXX declined up cash quarter. End-of-period from Looking to $XXX balance X.XX%. $XX million. was million

the the that basis from XXX the flat quarter the rest of margin NIM net first X.XX% to was with up and level year-over-year. quarter year. at for remain points now expect We second Looking interest

tax effective rate, our for for be XX% that anticipate We the quarter. it to the at was year. level Looking it

to review Please to and our strength. Page quality credit X capital turn

Looking they in compares to first $XX.X quarter. totaled That million. at $X.X million net charge-offs, the

The second quarter $X.X first level included a from slightly of reduced Delinquency in quarter. rates rose recovery million. the

X loan for million aggregate loans credit at $X.X totaled and reflects provision balance commercial reserve That increased due with of U.S. two $X.X items, $XX Looking volume. losses a $XX million. that from for to specific million major million

quarter XX basis rate delinquency XX down NPL points up the second to loans, X.XX%, the We rates of for anticipate basis year. the year-over-year. non-performing at level Looking was the first the generally and rest quarter continue points to from and around

strong. to continued credit Overall, be

some increased at capital was our metrics. TCE to Looking slightly from stockholders' and Total billion, of equity quarter XX%. $X.X the ratio other up first

Jose. is here Now

Jose Rafael Fernandez

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

Turning funds participation to economic first labor rising, economy to continues. X.X% flow May index the April increased to X.X% sector year-over-year. the Puerto compared in in are increasing demonstrate Rico, to sales growth rebuild expand. Retail and resiliency year. The federal last continues is private and of infrastructure Wages and activity continues the to increased

a mainland decoupling from the its on eye and optimistic our potential Puerto economic we remain inflation Rico's strength Nonetheless, impact mainland uncertainties. rate recession. continued keeping we're that, about said possible of changes, interest Having and

payments their stable a tax and loan home earlier, cumulative leverage are operating continues spending was auto as production purchases, core and with excellent, down products. Commercial balances OFG, Retail to businesses. improvement, deposit I low As expanding seasonal to excess beta, customers capital some for in of mentioned build. customers their are are increased liquidity investing higher-yielding

High serve. and our commitment levels capital investments increasing it thank of of to OFG in our want provide liquidity We're in with the communities self-service levels channels our team environment. the by technology. the And validates to we all for dedicated today's a strong members and position their banking as encouraged customers I adoption

With presentation. our Operator, please the formal start question-and-answer session. this, end we

Operator

[Operator will Wells with from Our Braziler first Instructions] question come Fargo. Tim

Your is line open.

Timur Braziler

morning. good Hi,

Jose Rafael Fernandez

Good morning.

Timur Braziler

kind then general outlook. for provide quarter. that you the kind that growth, first timing on Maybe quarter? specifically into this growth the heightened got off the some outlook from the any starting across remainder of color just the of loan can the around And pipeline, Pretty the phenomenal yeah, board. Was quarter looking growth any at of of commercial second Maybe year? of on loan quarter pulled kind loan

Jose Rafael Fernandez

sure. your question. Sure, you Thank for

pretty was mentioned, a on for it us, loan strong originating particularly the As you quarter commercial side.

very grow we're looking in pipeline. second good will pretty pretty that a Here a commercial continue for strong try in first the businesses. expanding that we feel we to investing but to we And have their see their be Rico, to businesses and we to year confident going customers have pipeline. ways Puerto strong replicate think still -- half we half, And of the the

again, a focusing what for constructive So and commercial particular. market is on and small the commercial midsized we're good seeing businesses us, in

Timur Braziler

look it's levels. we where ultimately are if a up of the the base that little and mid-XXs can your loan-to-deposit well ratio around funding pre-pandemic then below still And at we renewed ratio, migrate? Okay. What thoughts been the loan-to-deposit bit, picking see

Jose Rafael Fernandez

Yeah.

on ratio. in the the the out, have needle moved we mid-XXs still we So from have to as the some terms space the XXs ratio. loan-to-deposit of there And point you

the our we're we're seeing deposits managed loan at to So, are continue happy very with so us now in to it's will I -- we've the operating right and we environment performance. growth think look require where good our far, it And way the clients.

And of talk side, them deposits On our primary make to as customers, we kind the our we repetitively capture sure look recurrently much at to clients that from a and of possible. relationship we serve their we commercial well, as and it perspective. very

really, X%. stands not the aware, on XX%, you of is investor if all deploying Puerto what's mentioned excess -- Rico's but liquidity around On U.S., call, versus excess as side, the their on liquidity. customers which retail are is most of a I'm of still GDP I around going percentage the retail sure as

and a way the their looking So in the because individuals kind of lot system. that's there's liquidity And life. also. And consumers at of the using are it increased have their this, right to of wages improve still

that So within that make ratio deposits we make backdrop, future to need we we manage consumer that the think just to the I sure mid-XXs. landscape around grow and our into that sure within loan-to-deposit that

Timur Braziler

kind the then of beta a were us lower. get versus this quite of Okay, margin going conservative flat kind beta? on changed. probably what's last deposit -- as of still I'm have guide The a Maritza. seems be going they seeing of one is that that the for level hasn't better at to that, bit still needed XX%, to moment. that half little to saying assumption great. a what hike seems at a moderation there's with That's But that conservative rate expectation would only guidance gotten And if rate lag your just one? after look that's what's kind to this one hike beta way XX% guidance, wondering left, Is like

Maritza Arizmendi

we're what the seen moved you almost from have Well, two seeing XX% first we have the in quarters, XX% Yeah. is during the to as beta quarter.

continue the the we will we increasing. of As have the that funding continue see to as yield earning the in we as have, and loan see in change will growing asset to cost mix side. book mix improve this on the balance we sheet in the well But the funds

for why the X of being fund that's the quarters. also stable cost NIM next we increases continue book yield our So loan increasing, see to but on the

Timur Braziler

then more the Maritza, X me you of of And look on as kind great. aggregate mainland, on you provide at any credit more just focus those the the mainland then just front. the your then areas the credits? on and portfolio, credit similarities last I on on. if putting Okay, in And amount for credits. attention just borrower missed that there's can And any you're the color three broadly,

Maritza Arizmendi

of No. three contaminate to a related loans specific we portfolio. have really are not These rest very as the portfolio or situations very well-diversified were that these the

portfolio We have in -- any and through we U.S. very in concentration don't it's diversified any industries have that well

perspective optimistic And see we also And we three related cases the anything really, don't be those and very we're and on those to were a portfolio. that these to the on really efficient as relates whole specific situations see make the to good. So these supply to management chains, continue restructuring specific. in are That's they because the has I three mentioned, cases. loans in way continued very way really

Jose Rafael Fernandez

add, to million on $XX the amount just is loans. three And the aggregate

Timur Braziler

Great. questions. Okay. for the Thanks quarter. Nice

Jose Rafael Fernandez

Thank you.

Operator

you. Thank

from come Group. will Our next question with Hovde Brett Rabatin

open. line Your is

Brett Rabatin

down and Hey, questions. to tweaked to low-XXs good ratio good sounds been morning. with -- start start and you've that like with Wanted the Maritza, Thanks mid-XXs Wanted morning. for taking in the to to it the had guidance, efficiency mid-XXs.

trajectory to recapture was expenses And quarter know expense minimized gain your quarter. be there give fair you is the the that might on spending what Thanks. ORE still for the back would the there Can in I of it in was impact But levels? this the color so higher expectations a from terms some us here? and or of additional half a expense assume

Maritza Arizmendi

question. the the And out increased quarter, mostly technology. we repossessed, the of million during $X.X gain for Thanks in take that if expenses because

And about have remarks, call, an ongoing as and particularly disclosing my been prior million talking an playing That calls continue to, this quarter. the expense $XX we why mentioned disclosing in we technology for continue I that's element As how we're this for to us. million in prepared going forward. to is will as next be $XX in

it will timing, will some this term, long the the but efficiency, in that know evolve. technology We bring

But will invest, cannot giving efficiency So we $XX strategy. will some that And guidance you to on I we continue it us. million this you are long-term, that's why know executing to will tell our to continue $XX first as happen. bring digital in of we the we when this and million

Brett Rabatin

here. surprised. the about to consumer, might from a just really And you absorb ability as a where was Okay. net for with gross auto second. perspective was little recovery a bit go any we had this little that would just made talk seeing of normalization and see you charge-offs, quarter. a thought auto auto were to year from curious credit light on to I But And inflation. then thoughts this wanted relates obviously a what it their the I

Jose Rafael Fernandez

the the purchase very We're so with higher with sales. demand, strong inventory, of dealers growth. So auto sales at equally surprised are levels. sales. in with maybe Brett, continuing a are auto We're high first, new the of point we of the terms starting new strength still that's equally levels auto Auto loan slowdown also seeing of surprised

changing push as it's a things. One levels and in we customers is a not clients their seen I improved But cars we've often. where are increased FICO too their an kind or later think of their have general, from coming situation couple their they are of environment, And decision And for definitely improved. has and and time. liquidity economic scores that who all

those out So and there doing they big -- ticket feel going purchases. and confident making more they're

It's on we're So focusing high really XXX-plus. really our portfolio. auto FICO score,

increase to continue loan We the yields.

loans booking this in loans average, X.X%. that quarter or think, booked we're around are being I Now

margin. So to to FICO us business other ability it's again, that the is It Maritza mentioned the us it customer earlier, areas bank. with also in us helping a higher on our get for net interest giving do

So to actually, I problem good a call have. it

Brett Rabatin

have quarter. thought you mentioned the level know And still of missed in Okay, activity I million you it, that's you the Obviously, bought then but over back back the year? helpful. if buyback I shares this it, Any capital. half a X.X of high on

Jose Rafael Fernandez

-- that's And the that's But levels deploy for capital loan capital. we we higher higher for now certainly our and what our a also we with customers our program. yields, have communities how having, do we on repurchase look at look dividends So we the main serve. return our at we and growth we're the these with that priority,

have still $XX We million left.

XX% the this way that levels kind be that us to good market. feel gives the of at first pretty clip, we'll of we're And we're earnings and around in generating as done quarter, we CETX of continue in we and it a earnings, we've quarter the confidence. retaining have So the capital

the at dividends repurchase looking and areas, loan well. growth, we're three as So program

Brett Rabatin

thanks. Great, Appreciate color. the Okay.

Jose Rafael Fernandez

for Yeah, Thank you for you Brett. your questions, questions. thank your

Operator

you. Thank

Alex Our from next Twerdahl will with Piper question Sandler. come

open. is line Your

Alex Twerdahl

morning. good Hey,

Maritza Arizmendi

morning. Good

Jose Rafael Fernandez

Alex. morning, Good

Alex Twerdahl

what I update need public Jose, bit us give terms hoping an customer a months some competitive in just been on still a of any you're have First more change in and you offset mentality lot last us outflow there's deposits of of can deposit off, just you deposits. what that pressure But respect can if on seasonality presumably, of retail, of trends in you know around give the little on to sort seeing the over I they was fund color maybe some with environment their couple there's inflows that. in and the island.

Jose Rafael Fernandez

Yeah.

So in the let's split answer two.

the And seeing improvements Let's customers What deposit on side. the side. et side, furniture cetera. lower the that's in start to their a balances at terms and we're buying retail what my non-interest-bearing home, money relation in consumer prepared remarks with retail to is using on direct of I mentioned

they're and that what item So deploying is liquidity, seeing some moving also higher-yielding number one, we're to also, And vehicles. funds that's right?

management coming it through wealth unit. of some is our to And

Rico million quarter, But and were definitely $XX moving we we're monies so we deposits that Rico that's called to versus don't environment. their dynamic any This that might to see mainland. broker-dealer, given see And had competitive the seeing environment landscape in be but the not side. because really has competitive competitive much market, the different our a banking terms rational Puerto a We were the customer of that close it way from Puerto good. right,

Rico we really who island, the time, industry the given are are think So irrational. competitive, at and competitive Puerto same not banking in forces the in but I the

playing it's how of out kind that's side. the on consumer So

we positioned attract be new side. companies, them. are on most our the on to is side, and a of we to take small just only And driven we them. strong working On really also the team by and very we're where not of our of commercial of that side we and beta, midsized customers higher well our a we the have the care And sure where think with relationships, care commercial segment take it's able commercial commercial I customers areas relationship make kind very closely is have focused clients, but that with

deposit overall our and it. of a how seeing on that's an little So we're landscape bit

Into And the commercial next relationships. see same half and see side. year, the of kind slowdown the pretty to on second a think we on primary I starting outflows our side, the the managing on we're retail the behavior of steady

Alex Twerdahl

loan of about second color. this of loan this you've you as to then good year. strong kind think the hoping portfolio have And sort sheet balance to fair management balance we the it level but deposits see that and funded just the to that about quarter sheet How maybe in like did growth you with Is in balance securities be of That's second the we quarter? overall the of assume of deposits had actually the that Great. stable -- will growth obviously, most half the overall alluded think growth you and and sheet should management?

Jose Rafael Fernandez

of couple the short-term portfolio, early a levers year, right? are that's securities There one there, have Yeah, next and some we maturities way.

We earlier. I have loan-to-deposit room with as the excess do wiggle ratio alluded also

can kind we book our So of it grow still with fund loan our and deposits.

if growth sustain But need and had that to are those to of is hard go the we two drivers. really -- the quarter. we So level it's main growth if this loan

expectation manage of some to need balances. will be, be can that. is with securities use we current we that it the able our So deposit if And to our side fund

Alex Twerdahl

And yield that the if the was you average had quarter. wanted wondering the for as gave new then loan for production I during auto new Okay. production, you the the on commercial ask, well. to us I

Jose Rafael Fernandez

On side? the origination

Alex Twerdahl

Yeah.

Jose Rafael Fernandez

Yeah.

On say, Puerto X --- Rico the I commercial is, would

Maritza Arizmendi

Almost X.

Jose Rafael Fernandez

can but don't I provide X.X% between Maritza number to you the X%. have exact X%, and later. it Almost

Alex Twerdahl

Okay, a final And good. very question. then just

it to management. the then of avenues dividend. capital talked given and continue seems loans You earnings and back like grow stock you the the can buy generation, And about

record the regular a over of and the payout the the earnings talk for just payout maybe you ratio a have I long-term your goal fairly guys next, for sort track increasing about been for of on dividend over the of and couple Can You at next dividend pace what are dividend the expectations ratio. the nice quarters? guess,

Jose Rafael Fernandez

Yeah.

ratio So only dividends. we in a payout not look at total,

buybacks. we dividend So at look plus

year. of right halfway payout through ratio the at kind So we're now, XX%

in $XX $XX net of million we $XX $XX and and -- dividends income repurchase, so So in out we've deployed million million there million.

that common and dividend it's to is continue the that's buyback, of closer a up then of complemented goal to our XX% to inch So our the kind our with get payout approach, north to and Alex. ratio

Alex Twerdahl

around Is each in at And correctly, remember guys I year frame. January time look Okay. time correct? that generally you and the that this then again if

Jose Rafael Fernandez

Can you question again? repeat the

Alex Twerdahl

of and July, capital around to frame the the generally I management then terms that capital of outlook, around In changes time year the this it's correctly? time for remembering right January. -- Am

Jose Rafael Fernandez

it Yes, and that's twice correct. July January. We at take year, look a a

Alex Twerdahl

for Thank taking questions. Okay, great. you my

Jose Rafael Fernandez

Alex. great day. Have Yeah, a

Operator

Thank you.

will KBW. question Motta next come Our from with Kelly

Your open. is line

Kelly Motta

Hi, expectation also origination questions. starting I appreciate gave going Thanks to the your the the yields for out, guess deposits. new back morning. around you I the just and color margin, good about color for

came now? at of the from you Just lot looks wondering, compares and that roll-off CDs Can this new you're CDs. it like a how rates growth the provide currently pricing quarter right to what

Jose Rafael Fernandez

You're deposits? about time talking

Kelly Motta

yes. Correct,

Maritza Arizmendi

right XX entry new is to The price in XX now CDs, the is about maturing around ones the basis while X.X% points.

last two one that's you we're drivers these So showing beta on the the quarters. that of

Jose Rafael Fernandez

Yeah. side. is the the And additional I commercial on think X

Maritza Arizmendi

Yeah, and side, yes. the commercial it's

Jose Rafael Fernandez

manage we want make that that. we're and constructive relationships Where with to sure we

Kelly Motta

billion of kind below in Got been on $XX updated balance $XX stabilizing. billion it. and of you by years, the sheet the Do loan asset has the of strong commentary Durbin? really terms growth It the may that seems the like have and in management, kind just be of of past mark. two closing And skirted there, you loop then the implementation timing deposits and crossing any

Jose Rafael Fernandez

Yeah.

XXXX Durbin you pass look our asset starting $XX manage continue to it's terms it's it the So have I think it's So probably the in and loan a safe not to to or reality, -- be if assets less But out book makes grow loans now higher-yielding loan can't and to mark, billion cash, stabilizing but will pointed -- I less also right? opportunity the of the higher-yielding with levels. we guarantee year to that. easier deposits,

be before going going barrier the concerned well probably as we're billion of about year. billion end given not other But $XX our in to like as loans the cross to securities. $XX not assets the cash the on and higher from on XXXX, yields the side, breaking our So we're as

So Kelly, close think mark, coming that to the I on billion we're on $XX a one.

Kelly Motta

color. the appreciate I

of a nicely. up Puerto Rico on been more you the holding in it us you've quite and funds the update of zooming federal seeing kind view, been out on taking and is and the of Just flowing Can look the backdrop ground on does give those high-level like an how have what kind macro pace island?

Jose Rafael Fernandez

Sure. the all Specific in dollar numbers, is and you I in really of of on here of the kind that tell that funds. on But can view all in flows the try redone the construction that to because the stay we're public I significant my away it from place. terms the from over from the ground And island. seeing island broadband and going side is the bridges amount roads being federal

are my seeing, also mentioned commercial in investing I on in of comments own We're We're businesses businesses. seeing the earlier, private a sector. construction as really their lot

to of kind is the that equation. all So adding

also to billion federal Puerto passed in federal want going funds funds, represent, infrastructure, the additional that's $X think, recently federal to Rico coming I down. I laws to on terms point of out that

than that for period a will what's continue is happen, think probably Kelly, to on competitiveness longer getting dependent businesses And growth recurring so also funds the economy in time of several economic able federal flow funds. have build the into be that Rico's and for flowing Puerto to our good really I going is island So anticipated. and resilient to not midsized to small for to be be the and able

outlook down on island. funds in how the federal that's So in are the general, playing my out and things

Kelly Motta

on appreciate much. the expand I question upon maybe and your year first with with so versus you're know kind what there you of doing me. Can you've digital I you're, digital all last you steps a what also for provided next you seeing added Thank team. that? your strategy, strategy to executive really Maybe detail kind of ago. your

digital on what as you. around of for the Thank outlook doing So any really well as color side kind that be would you're interesting.

Jose Rafael Fernandez

Yeah, sure. for Thank question. you your

start So improve one that customer on customer, we got there. it's technology experience? that every investment do, that has we and customer. all that the single digital how the can our about one let's first make, strategy, so is And the we we every deploy focus, and Everything

our How can customers? perspective grow so make grow edge can loan book we and an So it begins, we grow have development a one. business that So our then and how our our number -- of deposits kind easier from business that's right? it all experience and for customer do and that's what

that is with today, how And as we're two beyond them and increase been kiosk are the And the our last really the utilize the able providing we've embracing years. and kind educate I seeing with of to self-service tellers above and chatbot investments the we're tools Number encouraged with the chatbot, consumer adoption to and encouraged made the we XX% in couple the have on the utilization. shared you we're brick-and-mortar. are the levels pretty customers really We're good. of

investments midyear of out, and look kind reflect we our the as in shape. I we're think in So at technology how playing good on

stop. can't again, in live make. market sure, is that what making is Now next competitive We is we we next the need to and a next going need future, on the keep perspective, customer thing, to improvement the addition what the a we and to what from

I get or But have at for reasons. of last two specifics working are been those. a this competitive we general, years. into to working on the couple three want in we don't for the And

a it's the efficiency path, right in to pay not confirmation. heard going we have it's invest got ratio that to today the to because out starting in You be but technology. is say us it's guys feeling mid-XXs only And also we're

the Puerto digital in about of in So that's kind continuing this in and banking to terms innovation of Rico. us of lead in and of feel terms prospects how leading with all encouraged I

Kelly Motta

on I Great. great the really a color. all quarter. back. Congrats I'll step appreciate

Jose Rafael Fernandez

Thank Thank you, you. Kelly.

Operator

[Operator have another Instructions] you. Thank And we Timur Wells with do Braziler Fargo. question from

is line open. Your

Jose Rafael Fernandez

Timur?

Timur Braziler

on Good morning. mute, sorry about Had that. you

Jose Rafael Fernandez

How doing? Timur. are you Hi,

Timur Braziler

up. the for Thanks Good. follow

just you you kind thought sort-rank lead last technology. last catch one give you the perspective the then kind you this of a areas guys can to have? banks? what technology this Maybe other have one Just is island playing update maybe certain a Is other areas? working Is relative on this process might up. extending lead OFG where you're the on that Can around maybe to us an where catch-up from the banks already in some best but do and of

Jose Rafael Fernandez

agree. new only we Yeah. last to from I We're and not the technology in everything a tools our services positioned but lead throughout certainly I in years, mean, side. not in ourselves XX bringing invested the have, customers but

So how -- competitors in I we're use which of from our positioned to in from way to of is differentiate. differentiate strategy challenger differentiation. technology on strategy, and we very we technology? to trying a traditional positioned And think a approach. our the people brick-and-mortar trying of are terms terms business more well to execute as We're well

that's or provides we our of it and we're in one does, and that came branch. in And go kind really you So without what we of solving -- up to place online how it banking with April, have without kind portal might that in launched sense, this having positioned. with deployed your that of kind to call a place platform all to somebody to achieve having issues in one

asking it that help also are a we those And And for it get account of differentiation. you that that. digitally of some a deposit from on -- on stuff keep digitally. like cancel to can basic us opening to and things kind working balance as goes the And show and loan to

are -- have We have pockets formidable they than they us. competitors deeper and

size for we've But the and with. on we're that very of each at focus strategies. we're results we're the with day, the one really of happy continues working their come with ours, And end the up happy our to the bank, way own

Timur Braziler

for that Thanks Great. update.

Jose Rafael Fernandez

you Yeah. No problem. questions. Thank for your

Operator

Thank you.

Our Bernard with next come Polaris will question from Horn Capital Management.

Your is line open.

Bernard Horn

prices. a your any happening risk whether residual us book. market. loan car Yes. first if Rico you Puerto Actually, what's any part on you. question of could the values as second Good thank see you and and morning. that auto is auto give wondering color used for was potential so the U.S. But lower I'm just answered, The my asked seen has on question in on

Jose Rafael Fernandez

Yeah.

certainly it's that of of on the the middle-size focused thing We don't really used and it's autos. and on focused cars higher-end of is on of the of And the the on values, We kind to. we into right, future, on most have cars, market, what the see play One on yet kind the risk we're really are lend terms of but it. type type cars in middle more that a losses. models the to we reduction the Japanese Korean

we point, but values of car kind and others, of little So so way. those the like bit in serves than resale guys, better better an seeing. we're advertisement it give work we're on that's a don't We're that some values what seeing your of hedge to want kind manufacturing, seeing Toyotas some a as I to that on

Bernard Horn

Thanks very clear. much. I'm

Jose Rafael Fernandez

you. Thank Yeah.

Operator

Thank you.

like We turn back have no call further would closing questions so in additional I to for queue, any the remarks. the or to over Jose

Jose Rafael Fernandez

in us our to team again all for all thanks call. members a thanks this and to joining job. operator, And for great you, Thank

Looking the to next call. great Have a day. forward

Operator

participation. this conference We Ladies your and appreciate concludes gentlemen, call. today's

at may any disconnect time. You

OFG Bancorp (OFG) 20 Jul 232023 Q2 Earnings call transcript