BPOP - Earnings call transcript Q3 2020

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Operator

Good day and welcome to the Popular Incorporated Third Quarter Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note, that this event is being recorded. I would now like to turn the conference over to Paul Cardillo, Investor Relations Officer. ahead. go Please

Paul Cardillo

will thank members the and session. our joining With also answer during Soriano. us. Carlos third available for Good and be our quarter today you management is on then They Lidio CRO, call and questions. Alvarez; Q&A our our us results Vazquez; the Other morning your our for review of CEO, the CFO, will Ignacio team

we may SEC we and that are call, differ release Before statements and set forward-looking I are on based could are to to in would are that from actual cause press risks expectations and detailed forward-looking you remind make forth filings. on start, like to uncertainties. current within that Factors these earnings our materially results statements today's management's subject today's

may I to You at CEO, webpage our today's call and over the release find on Alvarez. our SEC our filings press will Ignacio turn now popular.com.

Ignacio Alvarez

the your economy the and call. the million the morning Good the during unprecedented that third rebound generated These reflect to in quarter, experienced federal ones opening uncertain earnings further the well. loved of you activity economic $XXX in results notwithstanding due thank the We hope stimulus. I environment. are economic period for of you joining level and and

Puerto turn in results strong environment X Slide to for Please and also current an management. business Our reflect on risk our revenue diversified of prudent update the sources Rico.

loosened. helped the pandemic. of were Many a were in that strict mid-March the of Following initial the spread May between late gradually curtail lockdown and restrictions that place

improve. to in Employment and non-farm since as still remained employment increased last X% April, the significantly April customer compared but but begun trends business which has have We activity XXXX reopened. economy activity levels. to rapidly also in Economic have revival below are year, to Total X% down by deteriorated September seen trends improve. continued a

XX% up quarter and year-over-year. have in rebounded we're auto the sharply sales New third

third year's other compared the XXXX. quarter sequentially XXXX, bottomed third XXXX. While demand mortgage Similarly, ago forward. Hotel inventory occupancy compared third Year-to-date XX% is up of it versus the sales increased second are have to by both areas last Tourism quarter, compared quarter. sales local may for and strong, the originations third to quarter credit Debit period. in to sales year increased card sales increasing but economy. of lack of impact rebounded, the and to automobiles remained to XX% by improving X% lag quarter XX% going the BPPR's and X.X%. Cement have XX% continues slowly, compared by at the of

to restrictions the to were lifted, of increased July. occupancy as However, XX% levels end

to month While year. has the X. turn airport been were the September gradually Slide during of increasing, Please than previous lower XX% traffic still arrivals

We our are of services branches. offering at full-banking XX%

the team, As the we customers. and measures safety ensure of to of continue operations employees to management take our the our and soundness

of We offering alternative significant a base. for work our portion are employee arrangements

plan will safe activities back currently no than possible, further protocol be our have return ensure work We transition which to XXXX. to to earlier January on-premise when a we strengthened

second period. this special face they branch we unique the quarter, bonus the of During challenges our a recognition in during paid employees to

also environment. are supporting in focused uncertain customers on We this our

XX% respect clients of online and we simplified an deployed program, help. total the our of customers During loan the work the forgiveness. With commercial below are originate payment to and need initial for for to customers continue who period pandemic, to PPP $XX,XXX, still the the loans offered relief those qualifying to retail process. request we platform with them have

XXXX. during the be will quarter fourth process forgiveness the that expect completed of We substantially

to digital of to X million Puerto XX% Rico. have deposits Banco third XX% XX% Mi digital XXXX. compared our Year-to-date, We platform our active to continue channels. monthly more quarter on in of digitally captured We have in been than in deposits users captured the

our million to demographic impressively, to recent Puerto Please customer base Rico's Slide quarter continues to X.X customers. given grow most in turn increasing and X. Finally, trends, the by third XX,XXX

income than $X the higher $XXX net of last quarter than was million $XX same higher quarterly million year. Our million and the quarter second

was Third in by in lower were costs. deposit an quality increase driven results trends and net partially higher offset interest increase higher The and in portfolio lower operating investment were our the solid quarter quarter. revenues by provision expenses. by Credit income driven

of our $XXX as quarter, along completed totaling outlook economic is vigilant of transactions a income In repurchase a interest to liquidity uncertain. a the and turn agency we in of GSE Please margins. improve order X. from still executed were remain securities with we million. the Slide mortgage-backed deploy portion portfolio, to These However, our increase to servicing shift our mortgage investments transactions series short-term bulk to

Carlos, to on to Before Metro network. want of turning it comment realign I York to over branch a our New series actions

of January. that will on. severance Metro XX closing realignment, We branches York will services impact products to We we're remain this providing transition miles the of and Metro assistance. the the two X be in committed locations within another actions our of one customers will closed. These our to are accessibility presence employees, of of in and branches these New the communities area of of be market and the financial critical XX branches. rely most New the completed by closure our end anticipate lower of maintain we'll performing part York current our to receiving be As who

allow to of and us and our mainland current network, network We operate services. detailed Metro United in branches The largest review States. including foot branch enhance operating leverages branch of to difficult to small York will This and to following accessibility realignment proximity, supplemental changing New will continue businesses was customer our throughout a medium-sized digital customer on needs XX support the resources offerings reduce made area, expenses, decision traffic, behaviors. the our retail focus

actions, reflected in of of be to quarter $XX to fourth charge million, these the result a pre-tax with we approximately XXXX. a million record $XX expect As of

forward, we million estimate savings with be two Going payback approximately $XX annual expected years. period an will of

New will to to meet strategy communities our now reposition York and branch operations needs serve. continue in our that Carlos. diverse of turn that strengthen the call the and we confident over we are employees the growing I'll as customers, our We

Carlos Vazquez

Thank and you, good morning. Ignacio Please Slide to turn X.

$XXX in reinstatement for second As mainly details by income the debit of charges $XX.X waived to during Puerto of the second to usual, is customer increased QX million by million service quarter. late the third press were additional increase which million and by million, service from volumes $XX.X as certain information fees, Net higher quarter slide Deposit quarter the by transaction to of in higher an release part fees $XX and $XX.X from provided the Today's due higher $XXX.X income quarter. of million appendix the deck. $X.X activity interest services as card Non-interest increased earnings million, driven the the was pandemic. QX, in were Rico, by fees and other also our in charges credit were response variances million.

the were income reserves there mortgage to bulk million the was million, loan negative loans, to to primarily indemnity releases $XX.X by mainly on reserve MSR a lower repurchases. sold of impact These In loan banking previously mortgage partially a positive related the driven items of repurchases. due adjustment adjustment $X.X by and by offset addition,

will the $XXX expense quarter Provision to normalized income operating for deposit $XXX deposit lower there, the rate that we million million expand is than $XX $XXX were yet quarter. our million was continue prior QX, we not related settle to move $XX per towards the non-interest run short-term, of reduce continue Lidio levels fees. historical may in slightly lower balances high million, some Total quarter. While quarterly to million, which million expenses In at as higher later. $XX.X than

As expenses expenses higher We and a as quarter, client Equipment processing million. increased activity by by cost. increased million, and $X.X as in processing to million, categories, associated by volume in $X.X we mainly expense. had technology interchange increase the two amortization due related well card $X.X higher during corresponding saw

which higher audit to operating well $X.X lower saving prior of we cost million XXX for associated commitments and to XXXX the for expense now in the These guidance million, were tax original million year quarter. had initiatives. as of by $X.X and by the lower in $XXX as for million to losses a foreclosed higher of expenses expenses average million of to $XXX project $XX and per various lower our expect million. response an We due related million QX, excluding rates be the reserves as lower exceed quarter with In comp effect $X.X the increase increases also lower the announced partially million, write-downs actions - and already $XXX forecasting offset partially guidance and offset unused quarterly $XXX commissions expense, our savings of in We around personal interest by in are In implemented costs the than the per bonuses. production than our auto today. approximately decreased announced and and for year first lower branch that of fees, provision operational cost, by quarter, we pandemic, we are target

the Slide XX% tax effective for to quarter X. In XX%. to rate rate tax effective Please XX%. between Our our turn we was expect be and QX,

again offset advances These QX. statement our the a like that advanced repurchase. for for by asset, to impact Based transactions in income net the is interest yield the we FHA on indemnity X.X% in to million basis mortgage recover portion and of detail in income of limit and as early in Loan commercial servicing once that was charge than this repurchase dynamics, the it expect by $XX.X X loans. as the this Please all payments release bulk increase The million, Rico. these related during $XX.X future the NIM million servicing $X the quarter. had for basis eligible the more to $XXX Before and a completed investment related points across In Fannie points, costs of six acquired executed I'd under by repurchased basis for in we loans, the yields higher expense drivers an have higher XX we levels loans months interest The This quarter. of were portfolio, by a But $X.X The to the dropped the QX. losses repurchases quarter income interest the transactions the loans through interest net bulk sundry population from in the Popular less income was significant Ginnie we deposits, was Delinquencies of was points. reflected million About We X.XX%, resulted X QX, primary to guarantee. not of QX, to at These mortgage than interest points pools of increase Mae respectively. well billion our increase and three expenses from do various to deposits Mae turn increased interest repurchases basis deferrals for of loan expense collect in million, is as of in segments in was retail on assets, of to the portfolios to primarily lines the most in bulk fourth move I under million order increase recourse net $XXX were reserve and were driven and slide. expect of QX, increase $XXX noted not balances MSR less basis, net servicing in million amounts, and income. in of QX, margin discuss GSE deposit primarily by The the $XX in net from to X.XX% Rico, and income mortgage service net by and a income. taxable increased to deposits. Slide client in costs the Bank Bank. recognized of led decrease margin PPP our Puerto deposit equivalent quarter. the and growth issued lower saw Puerto public profit similar X. decreased program XX The

is Just loans short-term invested in are to billion in deposits PPP The average related to US QX, lower the which increase in $XXX in asset like in NIM Fed compared Funds QX. Treasuries, mix. overnight average $X.X of higher and million mostly and balances

of a fees PPP remaining by NIM in our of by related are the portion to and asset approximately the million. impacted loans is this loans will changes mix. also quarter, $XX fourth For forgiven which default fees additional The unamortized be PPP

As of higher about Rico of the QX. third roughly Puerto end were public the $XX.X quarter, $XXX in deposits than million billion,

CARES the down come to deposits long-term. for provided Act, to Puerto to public end. Rico mid be governments expect by over must year to continue the used the example, We Under funds assistance of

near-term. assistance balances for potential in federal increase assistance could the the additional COVID-related However,

to average mortgage predict auto partially million. our But driven and loan portfolios quarter. completed In and of in it $XXX and continue quarter make in by lower slightly a consumer loans strong business yielding primarily Our lower growing the offset of card end increased health balances growth by loan fourth QX, demand we for the personal the repayments. portion Economic net balances repurchases and by to difficult and Ending level show by BPPR. leases. balances credit was to at increased balances continue This the in see quarter, higher-yielding of balances loan at PPP uncertainties loans, the onwards. mortgage also

unprecedented as as of PPP Slide XX. to due by lower limited liquidity. to clients' move turn Please to fueled balances loan levels expect forgiveness, demand We well

relative respect to well capitalized requirements. peers levels capital remained Our regulatory with strong as to well mainland

Our our published with simulation, common by dividend Tangible this payments. from very pro ratios, calculation test XX in per by capital forma was In equity quarterly still up points applying net a loss severely not full-blown this CETX somewhat an is This QX end share stress our a last ratio adverse our estimate, the point-in-time offset test. increase from of ratio calculation X stress of strong basis XX.X%. a we $X.XX of XXXX. update, we value DFAST a In income This book Tier ratio increased up was slide, to driven repeat by XX.X%, $XX.XX. QX.

So it future a the typical full does stress PPNR is on test. nine not of quarters that include

allowance this For on our XXXX the XX% DFAST third represents losses quarter for credit estimate. of lost

XX.X%. Our return on equity was average tangible

of to tangible pursue target return equity. will double-digit on We continue our

continue As in about XXXX. we over year, to announcements discussed to call early last able being make to with I Lidio. related to our our April capital and target quarter, expect plan the With regulators that, capital next turn of engage

Lidio Soriano

our you, resumption and stimulus by government the Thank during Carlos morning. aided XXXX, third stable and Overall, performance deferrals, efforts. remains quarter of credit good collection payment the of

we're our highlighted uncertainties, sensitive are on segments number certain of impact the entire Slide portfolio. current Given Yet more pandemic on commercial monitoring are loan XX. the

Rico US nursing is utilization to our is the in in space been exposure have original the mainly a strategy XX%, moderate deferrals of while the Within number is occupancy US in while Rico remained with the of downgrades customer of in is stable The pandemic. have exposure average the this CRE multi-family loan-to-value segment, space, to non-retail exited through mainly hospitals, skilled in liquidity. collection Of our In while Rico are current. multi-family. the segment, mainly facility Puerto office US the customers and Puerto have healthcare comprised Office To-date, segment. is mainly and of there XX% the Puerto exposure exposure accounts strengthen The that just facilities. relates relief, XX%. to

there have have retail, industry assistance requests downgrades in regions, shelter-in-place operations. this of non-essential curtailed Today, and federal segment. been portfolio. this the the number of has deferral local Within orders a both supported and activity For limited

we within XX% experienced deferrals, XX% reported Of a is for surveys while Strip XX%. past-rated number of quarter, and XX% collection to have As that rate. In compared of occupancy deferrals centers and the the general, on have accounts second most shopping are conducted The a exited category. XX% occupancy, occupancy segment malls significant stable remained pre-COVID rate, collection borrower's current. levels. the average customers original in based a XX% this loan-to-value result, downgrades, reported

and reported was in sales strong quarter. a sales, activity in retail the quarter. during third sales to to significantly the segment second resume auto Puerto order decreased the authorization the Rico, subject Upon Regarding this lockdown

the one exposure risk place majority stage have most relationships, our principally to non-accrual a difficulties and of decision late The original construction New one Regarding by prompted Both the COVID difficulty] projects driven in average of which New Metro deteriorate, exhibited in the in the to [technical of segment, high profile our the to is York of them end exposure continued US loan-to-cost relationship crisis, prior XX%, and low to Puerto region. our status. in residential. loan-to-value Rico nominal and two York. completion, are in in and

of we of original to But due exposure total an stood to Puerto mostly end original given At the hotel additional travel. stress loan-to-value of of expired our business quarter, support leisure million limited quarter. at Our is in challenges average has the the the our and in Rico. the extensions industry, $XXX This segment levels Most with foresee exposure third of the elevated XX%. borrowers. experienced deferrals

economy faster the most accounts To exposed has XX% deferrals, had to restaurants. credits. category. current. rebound national airlines credit the discuss million finalize of order. majority after million [ph] carry our million The by the can Governor's out. service or significant a segment, to segment exposure Once the restaurant at pace, exited to. in at balances also quarter, not customers the To-date, especially food second the lockdown at the of to fully experienced even have were downgraded past quick that operate are we not restaurant within downgraded The fast let shared the stress me to energy, [$XX] this which XX% restaurants this segment and borrowers, segment $XXX accounts this We This number shelter-in-place end. deferrals quarter particularly expect of During a has latest in and we a to having capacity. continued to segment reopens, quarter. operate order, In downgrades the material $XXX do are quick of have we Of delivery service

XXX,XXX have through extensions. total modifications loans of and of granted exited relief Turning approximately forbearance loan our We approximately billion customers of of these number remain accounts, consisting deferrals, balances. XX% representing XX% Slide or customer assistance accounts XX% to $X.X to a of relief, have customer provided to current. XX, we

million million US, by with reached relationship construction an to days in this next trend, was visibility discuss encouraged foreclosure number coupled in credit Slide to the trends the delinquency increase loan NPL during expect completed $XX the in lower $XX the levels loan [$XX] deferrals by commercial [ph] previously previous turn driven the an part favorably. $XX At million, mentioned to auto million the by the The by in most of in in the Puerto We the driven to construction of second and $XX loans XX resumption mortgage quarter, the relationship million attentive million, due XX increased part metrics. remain activity. mature the inflows. million to construction renewal mentioned quarter, activity to was offset offset NPL and of that by loan decreased to driven in end of excluding $XX $X while $XX decrease Page The inflows $XX a decrease to an $X inflows, process. driven [technical in of decrease XX NPLs Compared the suspension which commercial and the million the and of renewal The NPL to due an due the total $X was ended the was NPL mainly consumer NPLs X.X% by delinquency by assets Although the by million. increased by the by quarter. $XX ratio sales Rico, million In by loans previously coupled Non-performing decrease with Please million difficulty] $XXX and turn to NPL compared to discuss mentioned impacted quarter. to of of by of OREO inflow million, relationship quarter by $XX mentioned. number Please million, construction earlier. by to million third in was of the US, the X.X% construction $XX reduction quarter returned driven increase mortgage million already earlier.

the On in prior to million XXX% in $XXX to million, to onto ratio increase in million, allowance to of prior to an charge-offs The in charge-offs was quarter. to mainly clients increased charge-offs ratio have million provision US positive compared have The due losses $XX Bank. XXX% points these portfolio. in NPLs X.XX% significantly quarter, a changes the driven first lower macroeconomic granted delinquency also XX%, flat by third compared at in changes Turning the to credit third credit losses for average, the $XX significant quarter. The the XXXX. million, Rico XX driven basis for the In allowance for of million consumer auto loans in charge-offs net XXX% expect XX% XX% half quarter. allowance credit for annualized quarter. The in $XX the net losses. at was by their decreased the decreased by for to has credit since credit of allowance Puerto charge-offs. points We began. CRE of clients to liquidity or lowered Puerto We previous net portfolio changes. of has end The January by quarter. due next to ratio Slide by to impact stimulus our pandemic XX% provision not credit net the under relationships mainly related $XX by to The losses the for increased by losses number scenarios Slide collection XX to compared credit do deferrals reserves to has impact remained held to activity CECL to amounted increased the the impacts, in losses allowance to and $XX had year. XX, the mostly At by discuss Rico, non-portfolio basis million Since adopted our of $X Everything a in are to Please to increased $XXX charge-offs adoption, million compared adoption previous our and credit slightly net a turn the accounted Xst, being CECL or loans given related allowance or About million million thus ratio loans. day resumption for $XX one our the portfolios. on government of net been $X methodology, equal, else for. losses by the The see reflected of P&L XX

For credit portfolio outlook, changes to driven instance, quality. we're and by portfolio economic balances,

highest While our the compared growth Among ACL, to uncertain, and the thereafter. we QX, scenario, scenarios risk. define second we third for weights enhance SX and economic economic quarter three single in process use quarter followed introduce assumes even the first inherently that QX in is one of different outlook outlook probability the in baseline scenarios second September's Moody's more scenarios. of the weights SX our pessimistic economic estimation. by as the were the continued ACL combine scenarios When of from of optimistic to quarter scenario to third We and the economic XXXX baseline uncertainties scenario, the probability, given part estimation SX baseline and a scenarios using activity quarter the the process. the Analytics applied XXXX outputs in quarter Probability each downside increase baseline favorable the with

$XX activity collection attributed the third deferrals, during stable weight. the offset implementation at carries changes. one of credit probability ACL summarize, increase cause a and payment This macroeconomic net portfolio the by loan scenario but increase resumption charge-offs efforts. As aided quality by To considered, metrics of is government our to changes by lowest part and was in portfolio the scenarios million. The the stimulus quarter, and weights

remain evolve, and to extent uncertain. the the disruption full pandemic of as continue However, economic the is fluid, of the effects

you. his pandemic to and Ignacio risk, carefully quarters. call delinquencies economic Thank and for the to exposure the I how turn next continue over remarks. would that, portfolios evolve related changes of to to in outlook With like the charge-offs concluding the few net monitor over will We the

Ignacio Alvarez

update. Thank your you, Lidio and Carlos for

uncertain, scenario While the level economic reflecting million remains we generated $XXX in fueled of federal quarter, by third stimulus. the the the economic earnings unprecedented rebound,

also our Our prudent of strong risk liquidity capital Deposits continue and to reflect robust. sources and revenue levels are diversified management. grow, results our our

month, We XXXth these to And celebrate. despite This anniversary. they customers current continue challenges, much to serve through uncertain have to are times. well their as Popular's we manage our Banco positioned

dedicated We of challenges are colleagues blessed part resilience. be team current a with met have and the to and of courage talented who

an customer base a part to banks Bankers have program. commitment education are financial the we serve. as Commitment one This Award nationwide of We earlier to receive month selected Community we very the in us recognized American of loyal this of for and integral by that XXXX the proud only Association our We're was grow, communities achievement. the continues which seven

For all future these renewed purpose of we look We're reasons, with answer the optimism. forward and to question. to ready sense now your a

Operator

now session. go from Piper question [Operator Twerdahl The from is first Alex We'll question-and-answer the Please begin Instructions] ahead. Sandler.

Alex Twerdahl

guys. morning, Good

Ignacio Alvarez

morning. Good

Carlos Vazquez

Good morning.

Alex Twerdahl

And charge-off over the year. level if, efforts two, heard off of of First off, I into I one, provision wanted a and their expect will collection back said to into gives based the to couple coming you as of extrapolate know, correctly, charge-offs what I you if you net the of didn't you I the that remarks, circle wondering, in and quarters that the your think that should and charge-offs to that levels next to prepared was something said, that - you net Lidio, you confidence change meaningfully the low? progression are we if well? loans things know, deferral that, next on like remain middle

Lidio Soriano

I the next in of we change, to didn't else first everything I expect charge-offs equal. half mentioned the year, mentioned use net word changes meaningful. - being

third level the think high quarter. had a low the level charge-offs significantly and significant second of I of charge-off in we quarter in

the those year. guideposts can of onto next first half So use to try you

Alex Twerdahl

you if commentary stateside? in the pretty some high meaningfully on see wondered real activity in just mortgage rebounding way housing and in Rico, Okay. in it I Puerto reports you the know, noticed seeing strong And activities some that year-over-year. end rebounding estate recently market, mortgage on was what in give then, and we if can I've just Puerto seen I pretty and strong us is general you're Rico

Ignacio Alvarez

have this seen the very clearly areas Yes, but area. [indiscernible] I And about a of of it's the obviously, - especially in the across recovery rebounding. in is Ignacio. many end you've in and different are we strong. yes. high Yes, metropolitan they mean, But read general,

up we're for lot a generally, hasn't demand housing, you know in So been there recent supply years. the seeing supply of

So sales. seen you our We've is We've it operations are - way it way know in is are increasing. that up, up. where OREO applications originations seen

see in the middle higher Metropolitan mostly area, across would residential the say market, income and So that we really especially definitely I the improvement neighborhoods, area. board, in especially but in in the an the Metro

Alex Twerdahl

as and question a when NII? be opportunity are NII, of we volatile helpful. is margin, the final quarters. and deposits, deposits sheet, paying still lower given coming against of bit like some Does the All the forgiveness couple that rates it to little time pretty of for continue that the rate over more I providing expect, pair environment. their than much juice seemed right, that then with at the couple that's cost the balance the to sort big represent a higher you'd quarters look and I look NIM cash going obviously just And on liquidity of me Carlos I and parts just, at in pretty about moving your for a of next PPP then think But amount over the to next

Carlos Vazquez

not cost, rates anything majority was quarter asset respect not when vast totality and there's last was With from mix production margin opposed the I well almost amount of deposit linked actually of to that when have at Rico. we of of And two lower cost the we'll deposit Puerto That's look best-in-class. the Yeah, Rico, we continue margin, his continue and in interest-bearing our or XX look to room XX There's at have, passive as opportunities. basis else. to that you costs to answers to points. total deposit to the there's our mean, basis room too you points, immense to always - all quarter different at the Puerto look then costs question, of and really Alex,

had have States. the room We more in

points cost a basis know, quarter. drop total We You out and deposit deposit this the XX dropped quarter. cost happened in this the in of where that's lot cost US

US. So continue the the in to will we effort pursue

States. which is larger but is yes, So, opportunity deposit in the one opportunity, there our the smaller the book in is

Alex Twerdahl

for me. question final a just then And Okay.

If on for that sale amount would that's pretty ability to the obviously the a capital some the could quarter, guys your were potentially that of and capital there big to change balance return? Or During gain in happen, unrealized were Evertec was you you exploring rumors the return that XXXX? sheet.

Ignacio Alvarez

at we'll will necessarily from that you capital I speculate wouldn't difficulty] to and I get happen [technical one-time it that everything. look - us, any what's capital capital out we come the going shall let if plan and we into necessary more distribute our know, But it. on to immediately. that assume obviously that What want would, would would you Fed know, have

about that's I so we that's think So could that. feel

Alex Twerdahl

you thank my taking Well for questions.

Ignacio Alvarez

Thanks, Alex.

Operator

ahead. The Vandervliet - next go comes from from UBS]. Please Brock USB [sic question

Brock Vandervliet

Thank you.

Ignacio Alvarez

Hey, Brock.

Brock Vandervliet

in question Anything population picture island? the big trends new first. on a just Hey, terms of growth

Ignacio Alvarez

traffic the know know seen recent Obviously, we the I island most that anything very that in that and the is don't people less much pandemic. also right to show you federal in are people, that opportunities No, of was migration haven't it's And to the States down. to was generous. trends the the people leaving how now, than incentive had dramatically. Definitely foot the economic number the tied great stimulus for extent decreased leave. general that

haven't to change world. that's our movement birth, a natural has see there parts be, been little that's been it's you So is to something down But of And decreased. know, we our obviously hasn't many that to statistics bit. lag very birth very important is Those why new in gone much. rate able on much which something the

birth think is I general less rate bothered still So generally low. the is that But in migration.

Carlos Vazquez

those you though know, population But, year to that two, by is it's not flat. you for last know, flat pretty important way half good to the probably always flat XX forget up years, a to population the always last or flat the rate be we continue even we - and us. compared despite for flat are And have roughly

Ignacio Alvarez

increase, thing Yeah. obviously realize the And household same do at home population I one scenario, don't rate. the think flat people not even - that with

in XX:XX. to So where refinanced, talked in independent but opposed Puerto about household, now for in, the And seeing it know, maybe out to still XX:XX that go as a their we you we're is have know, we're healthy Puerto States Rico mortgages, buy Rico, you own children about earlier, their demand homes. there

homes, for demand strong there a lot there's a So been hasn't of supply.

know, for know, So - slowly, momentum creating, households the that's sector. the even good households the increase, you for if housing you

Brock Vandervliet

the Got to just loan-to-cost? your remind what me US the and over is could book loan And and shifting you in it, if Puerto okay. book, total construction mix average between Rico

Lidio Soriano

in starts my US, the in Puerto $XXX will book be the remarks, $XXX Rico. be loan is didn't in thereabouts. which, million, million in but in Loan-to-cost, $XXX mean, the X US, X, prepared total million of majority so a I is rest - provide the the thing that will with I Our

Brock Vandervliet

color. it, for you. Got the okay. Thanks Thank

Ignacio Alvarez

Thank you.

Operator

ahead. Cassidy The from Gerard RBC. question with next go Please comes

Gerard Cassidy

Good morning, gentlemen.

Carlos Vazquez

you How Hello. Gerard? are

Gerard Cassidy

us give what an addition announced the Administration you $XX and aid update, package I Rico came Or in just into Is economy? Puerto flowing September Can money seen from the out hit Hurricane to And billion have Maria? in part it ago? think Trump money that Puerto the for the Good. when the is three Rico hurricane promised to was original about plan? years that of you

Ignacio Alvarez

has actually that relief $XX been about of basically allocated, hurricane the $XX was for numbers billion plan. part mean, original billion right have we dispersed. was about I now, No, is the

it's is So as that the these not CARES the to from billion has strong for get about been relief that are - be the Also estimates billion we $X.X that website, as but relief COVID the is spent. of hurricane difference been the have and one this Act the dispersed. $XX.X is, about independent first we was of there

about that spent. of billion billion know, you there's aid about Federal is you number left there's, $XX to heard be So $XX

is not even XX the the that or X, item that. in These this it's X, reached years, agreement there. single two three albeit out you a it's Now, Federal than ticket I to year the know, the which monies, don't And pace for the of take, but believe saw, years years, restoration it believe was spent the may money especially progressing, be picking slowly, with I progressing faster will hurricane government they as relief money. up, was you it an - four electrical spend system, years, seven mean, biggest I

The there December supposed was So was really while. different, bit XXst. a of by a COVID a that for spent be lot to it'll be

that we'll lose what we'll So it some we'll so or to of rush it to extended. that, see happens spend or gets it

And So get States there's one, and of package also. there. more treated that's, for you be lot the if a were there's a less we to be equal the more a we last expect money can in or country coming obviously, that Federal stimulus as if to we lot x, whole know, spent the underway will money

Gerard Cassidy

that amount gross of the obviously, what's you quickly, product just Puerto state the enormous it's context? you could to period. put money Puerto the multi-year and put economy to Do a support Because for gross And in is it of product Rico, about an Rico? with have what state will a

Ignacio Alvarez

gross Yeah, domestic that pharmaceuticals, the billion. product $XX the and needs to is about

Gerard Cassidy

it to it is share in okay. Federal the about us, And now? is commercial versus Great, sales with quite more consumer remarks more cement related? is programs sector? Can talking And in due private you strong. your of Or more it we're that mentioned like were kind you prepared

Ignacio Alvarez

seeing and equity fixing Rico that in an sort come It's homes, know, answer. know, building the in to is projects immense up think for money you're doing people their couldn't obviously a a I amount went pools, projects. But up a they're some are there improvement the beginning travel, you and also a people they're little infrastructure cement. give municipal are of they you States, things as cement little, require out political I Puerto there's of want everything, we're home as you of of bit to

insurance, hurricane, ago. out seeing not, or some it you're and So buildings came the year believe a from being rebuilt after

So felt that insurance many too announced example, very, months settled they Ritz even Hotel rebuild. they the not begun had they haven't ago, to and the just for complete

going So we home home Puerto government, of lot just everything. It's lot improvement. there not really now, have Rico a is a little rebuilding compares, right bit there's in of of a on

Gerard Cassidy

to then foot make your problem New accelerate clean? mentioned what plans close boroughs branches? good. versus close island you closures type share of know, an But either with know more guys any about to or Florida on Can you in Puerto you York. your, over did to Very it profitability. five traffic? focused to comments determine mentioned even of COVID on And what, could what the these And this analysis in the use to in branches shifting of use you to I in lower the Rico you us these metrics the branch did even you

Ignacio Alvarez

said, number at were branches, looked foot traffic, So And you at looked in probability, these of most a those level basically deposits, those. we like branches. metrics, we the of underperforming sales all

probably we the you subtracted in So, districts, know, they end, to really, that than added the the felt more we retail they franchise. retail

very profitable. kind it Florida And branches, Florida was know, a all only this our of branches We we detailed don't branches. have analysis so, you our know, you all and are task. in XX see there for do We

don't is a the numbers that In decreased The in branches Rico percentage United decreased States by more saw since lower. but Rico, Puerto of much consumer our compared In sales our mean, population with we for loan we there, the they're has Rico I is number the have branches large United strength branches XX,XXX X%. a I the same of by for Puerto is consolidation that in inhabitants. In States deposit People Puerto XX%. of even that So XX source centers recent Puerto most Rico Puerto every see the number recognize XX. a really XXXX in much importantly, Puerto don't products. branches to Rico there. And gathered, are thing, in of Rico our large

real So, the have just and Rico lower. to Florida. road Puerto of And metrics, could in That's mean, out a same looking. of close. the Puerto estate always both personnel differently of pan to US maybe branches costs they compared lot we handful we we're operate our still looking But not be our They're it at are are activity. cost that down low the but and could are very branches to you very Rico transactional even and know, they're course and our generators, a markets sales low they

Gerard Cassidy

example? the And Reserve share repurchase say, through end year, influence guys' banks decision Federal know, suspension in as the the in capital your remains Okay. we remarks, in you your for spring If you question, that of plans Right plans of the just that year. now next programs have action know will to addressed Carlos action capital would buyback June all of largest be doing the let's place, for I final your the another XXXX. think of prepared on suspended touched on

Carlos Vazquez

to we're banks the Fed on information more year, the banks, the how and of going I to, thinking lot share a the largest and the of when we're on dividends is Well, about capital mean, CCAR comments Fed get going resubmissions the end by plans and repurchases.

$XX billion buybacks, number we we'll an our banks, and and they $XX large, discussions - a There there's is So with restriction the increasing them. largest our structure while increasing how have is increasingly to of were add assets. for analysis that there their there, number an that of reinstituted banks the all beginning, the banks very are clear banks, under over billion smaller in

on $XX while including decisions to And a been on Fed that billion be want they they've also ours it. the conservative over has bank quick to clear stated to intent make Now, very significant the bank-by-bank capital, number of the banks basis. continue

of year have our And makes a be gain position. asset know, you tested our intelligent no end, we now the reflected sense. intent. starting point the And in end an information will with in judgment range we'll that try to between know with banks make that that of will them. the of, the strong in day, discussions at what So very have capital Obviously, and I

Gerard Cassidy

you, everyone. thank Great,

Carlos Vazquez

Thanks.

Operator

& next Woods. Bruyette Glen from Manna ahead. comes Keefe, [Operator from Instructions] Please question The go

Glen Manna

Hi, good morning.

Carlos Vazquez

Manna. morning, Good

Ignacio Alvarez

morning. Good

Lidio Soriano

morning. Good

Glen Manna

program, from a the going I the hired guess, which size given anecdotally on SBA heard had mainland bank of the forgiveness the that be program on to people work the X,XXX busy. to loan really We they're about

confidence you 'XX? be the by will XQ gives bulk substantially process completed forgiveness what So that of the

Ignacio Alvarez

done. you on best basically, or get to this our consultation estimate clients of clients, this our our is many our are, it's guess know, based Well, with eager

as based can these guarantee, Now, But that's possible. put wrapped clients know, beginning, it's you in as fast to get these portal, their see we'll is a on up not this process, the a and quickly SBA mostly process this with things. desire conversations our thing, we a new basically, how

Glen Manna

excess that? Would some know this you I of, put it bit for deposits? regardless loan kind would guess, of would from has I kind you liquidity the a But the little a getting all would guys Would of excess these book? forgiveness more government to into assume the government you securities your of it And would feel be is that comfortable check of have plans on? that been Or timing, Okay. the is any pretty of you and kept liquidity. big you might deploying from that the something short-term Federal extending kind kind related increase duration

Ignacio Alvarez

Carlos, that. you answer

Carlos Vazquez

in about. if already as reassess decisions moving of And accounts mentioned lot the the back our the is and been some continue Act. in relate the by be to in in of should weekly we year already have to committee, cash have we we of end, we third we Government in should not answer shorter-term longer agency it to that investments a shifted Glen But in mean, Puerto cash had moved that their done given of we again, way. used extend to billion aggregate Yeah, more have and we has bit a we that, way do our mentioned, and variances portfolio We done that are always some more CARES $X supposed our a we about be is and Ignacio some MBSs. to some quarter. to we've ALCO attentive, continue investment level. it of a forward. looking I dynamically more And you've money will That because to Rico we the of for lot, duration as question, made Treasuries reassess our the lost, at already little theoretically, it's

bottom extended that well. we we between will and But, as Yes, fourth maturity to lot it already attentive actually then. there that yes, a to could amount the consider for significant legislate we we of Congress have Now, happen that in to line, quarter our be may know, to investment extend third things outflows But reassess have you continue may portfolio. be now change during dynamically quarter. the significant and and

Glen Manna

increase your we're again, corporate Okay, plan the in one applicable remind a the rate change great. on of be sourced of increase just the Thanks. again, And an we would And of could income? rate. be me, and only the here just the in have you candidates' remind mainland me possibility that administrations - tax know, to mainland,

Carlos Vazquez

on to Rico to that Yes, bit in our correct. tend Puerto that keep is Well, you little an of a copycat. eye legislators a have is be

up income suit. go it in change not to now, States, Federal follow But rates they as basing. in the the when that our the is want sometimes stands the correct, US-based, taxes only will So affect mainland US

Ignacio Alvarez

in corporate Rico So keep Puerto in mind are that our tax rates higher.

I don't that down [ph] think [route] they'll here. So go

Glen Manna

not. I at over point XX.X%. would confiscatory hope some get by It almost would

Ignacio Alvarez

higher currently have Puerto rates We at so. Rico

Glen Manna

Okay, thank my you taking for questions.

Carlos Vazquez

Glen. Thanks,

Operator

is follow-up a RBC. Gerard ahead. from question next go The Cassidy Please from

Gerard Cassidy

XXXX Do more your is DFAST guys you last One two, helpful Carlos. XX, updated losses. very Thank made your number updates looking a On number? the which when relative question, at DFAST idea when to an Slide you to capital have you.

Carlos Vazquez

publish in as you published that, published, ones, one this just stress, Gerard. you process adverse But, since later they're one it. we're haven't felt actually I well that DFAST doing the using what know, we we're right in mean, not the of that simply year okay as to something We that's ballpark. Yeah, we we detailed published this we XXXX. referred done number reasons other haven't we now this, stress it. every is probably last It's it for the severely to with because it's one tests year right haven't the And required have we know,

some So comfort. you can use of with level that number

Gerard Cassidy

Okay. you. Thank Very good,

Carlos Vazquez

Thanks.

Operator

There concludes turn Alvarez any conference back are session. queue. no closing more the like remarks. Ignacio the this for I'd And question-and-answer questions in over to to our

Ignacio Alvarez

for and and today Thank about your our in We questions. to look care. us the be Take results your share forward continue health focus fourth safety. to Please on January. your and for quarter joining full you diligent the for year

Operator

you now is today's The attending conference for Thank concluded. presentation.

may You disconnect. now

Popular (BPOP) 28 Oct 202020 Q3 Earnings call transcript