BPOP - Earnings call transcript Q4 2020

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Operator

Good morning and welcome to the Popular Fourth Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note 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 questions. the and the our joining With team and be Soriano. us. Carlos full-year also for Good fourth will members and today you session. of is Q&A on quarter They Lidio CRO, call and answer Alvarez; during our our us results Vázquez; the your morning, then our for review Other CEO, available CFO, management Ignacio our

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

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

Ignacio Alvarez

stimulus. for This in the year I thank challenging quarters morning, and the ones generated one high environment, earnings well. the note Despite on million during reflect and the year half of fourth hope and during your second and with ended federal $XXX quarter. joining loved we XXXX, during our economic the the Good our that rebound $XXX level best economic in history. ongoing of was the in you the results These activity a earnings are and you of million a call. experienced unprecedented

to seen on and continued Slide trends fourth the the Rico. which risk third were as reflect X pandemic-related as sources quarter, environment in the momentum restrictions management. to Puerto in quarter loosened. turn upon to below and the the business remained improved, also revenue new were X% year, deteriorated business last diversified gradually prudent results of strong trends and significantly the have building a levels. when Employment but activity has XXXX, XXXX are our XX% current year. Total December May. Our for many still April but improve, customer employment on compared than X% financing an increased update by the down In Please as of result from auto sales non-farm mainly lower out, sales restrictions the previous since in March rapidly auto through In April bottomed employment

quarter of Cement and has but of quarterly as units increased rebounded XX,XXX lag demand recorded remains Fourth since local compared the sector highest to to other are mark period. to year sales However, the sharply going and of in level May robust. by the sales fourth the least XXXX. Tourism back economy. slowly, quarter ago at XX% the areas hospitality continued improving almost

the lower arrivals gradually credit sales December XX% still the While during month Popular’s year's were in has previous increasing, by the increased than traffic compared quarter. last been fourth to debit year. card XX% dollars the and Within airport of clientele,

to turn in and on the to take as XXXX now branches operational to update matters. operational, fully and Auto For third the at our by up to of safety the of disruptions. were PPP and the measures compared mortgage originations in not Slide by year customers. fourth we versus value withstanding saw only and XX% BPPR, the the an originations full-year, XX% dollar by quarter are of our at which increased X% in BPPR increased continue strength X and ensure quarter full-year, to other XX%. were ago we sales the continued the down for increased employees for quarter Most compared loan Similarly, lease Please pandemic-related and XX% XXXX.

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

commercial and we pandemic, the our still retail working with and need customers assistance. During the of clients phase initial payment are offered who those to relief

for We offer significant of our work employee portion base. arrangements a continue alternative to

back which ensure activities, safe April. committed to a are than transition we to be currently We on-premise no planned earlier to

to we base with to COVID-XX We the eligible under are the and vaccination process. local eligible our SBA have million as expedited they efforts, $XXX employee to were under and so. the encouraging promote With authorities actively get as forgiveness originated program, are facilitate soon and do PPP loans respect been for to working are vaccinated of simplified $XXX,XXX

to accepting have SBA. customers applications have million totaling approximately the and submitted have $XXX week. million. than platform, the more an request phase $XXX we this the second PPP loan approximately began last for requests to X,XXX program of online deployed We platform we in received for forgiveness Leveraging forgiveness, online To-date, applications,

continue we million through platform digital have channels. monthly XX% front, on Banco our active Rico. X quarter We than in users digital the captured deposits On to Puerto in more the of Mi fourth

full-year, the For in BPPR captured XX% of digitally XX% at XXXX. were compared to deposits

Rico fourth in base increasing the to than Puerto by turn to more customer Please in X,XXX quarter customers. reach million X. unique X.X to grow, our continues Slide Finally,

of a reflects decrease our Our driven by the pandemic. the largely and and Rico interest in $XXX assets million. expense, a deposit benefited annual was of income results level strong economic net related XXXX and earning approximately caused income of to XXXX lower annual disruption lower The the higher from net fees $XXX record of XX% decrease Puerto from million net U.S. higher income provision both growth by

lowered net quality both year. during of margins XXXX. remains Credit have interest the branches our throughout stable However,

with pleased difficult period. in how portfolios this performed have are We our

XX.X%. equity Our are capital X X capital ratios strong levels Tier at year-end with common Tier and

at our X%, our In loans increased tangible margin interest Please net interest turn was Puerto Slide by value loans we X.XX%. by deposits increase grew X. In our was and Our XX% to our margin XXXX X%, ended we operation, X%, X.X%. Rico, $XX.XX, deposits year-over-year. grew XX%, by net and U.S. book a by

was by million offset by higher quarterly than the of higher $X to related was driven and $XXX than and million Our operating These net year. partially York of provision last expenses pretax quarter million the same revenues, higher our income expenses, million The deposit net in higher the very fourth driven an New including quarter results Credit were interest $XX investment we $X With third Carlos. our income in our increase over program. it and now quarter. pleased increase in with costs. solid Realignment results. All-in-all, quarter Branch were that, to quality are lower turn trends portfolio will by I

Carlos Vázquez

Good you, Thank Ignacio. morning.

I expand we fourth XXXX turn full-year to performance. results, Before will quarter Popular’s

XXXX decreased by driven XX% $X.XX X% net to Our $XXX partially of expense increased costs net Non-interest decreased margins income year-over-year lower by assets. the pandemic-related. primary decreased $X.XX most were impact XX% offset the to billion, as earning by interest year-over-year business with growth provision by expenses in were lower segments primarily the XXXX, by Lower personnel again, pandemic. by for million, income mostly drivers. billion. promotion only and interest to the X% year in Operating expenses

to ended the is position achieved year million tangible capital book value of repurchase preferred common stock, to $X We increase X redemption by robust. common This dropped the Slide nearly X. the Common points improvement million our Our basis the even a was by increasing share $XXX to in after XXX with $XX.XX. per ratio stock Please stock. turn XX.X%. year-over-year and on Tier equity dividend $XX

million, of service interest fees, slide other to of fees $X.X portfolio deposit the $XX $XX.X Non-interest $XX quarter. extent, banking quarter Today's in $XXX repurchase. to and method. More mainly higher income million provided was earnings the equity the gains $XXX service increase increased the details a QX. the additional from These million from agency income an in has pre-pandemic million $X.X bulk fourth the non-interest mortgage release loan and large press million deck. to lower in in we lower partially generated items earnings million million our by for held due variances were impact To from now million the million securities, mortgage appendix investments sales $X.X levels. income is QX of offset information Net Additional income, third on negative returned QX. by specifically, higher under $X.X

is loan Lidio for $XX.X income a $XXX the million in losses. is than million $XX.X to historical reclassification to expand Provision QX, only of $X the previously provision in that expect unfunded commitments million in disclosed higher $XX a it quarter, Bank’s than credit for our to higher include but in tracking for This expenses later. million We were expense was in operating million, includes related the actions. expenses will Total statement. Popular continue change in closure quarter $XX.X the million geography which QX. These branch levels.

higher in related a have additional expense $X.X been the primarily network XXX(k) increase million $X.X expenses Popular cost driven a $X.X related composed the severance was and would personnel in to compensation. termination million, due the net the to costs. $XX to processing Bank’s Bank’s $XX.X service branch closure realignment, cost match branch and and million reclassification, higher by due by expense to of with expense million, of an to million increase increased fees associated payroll Net technology related and realignment. Popular bi-weekly Professional advisory leases $X.X higher incentive higher in higher mainly due expenses a branch cost occupancy million Excluding

Finally, business promotional expenses to due seasonal million advertising higher $X.X expenses. increased by

quarterly webcast is cost $XXX the XXXX. of quarterly response were expenses various we to in million. in $XXX lower million disclosed of implemented during $XX approximately than average initiatives. January This our expenses our expectation full-year, the we the initial For savings average In million pandemic,

the during We have in $XX savings year. targeted million

as ultimately able business reduce of of as $XX to compensation, promotion to savings were These Most will expenses. in were savings on benefits pandemic response million. revert and we However, focused of and pandemic adjustments by expenses were those planned the XXXX the the effect points. many such the

between expect $XXX to be and we quarterly average XXXX, million expenses For million. $XXX

as below we higher and and as increase regulatory, our the average three needs. were cost it digital invest categories. this in achieved and by XXXX incentive year. This to than is from the we savings address cure many in mostly XXXX, quarterly guidance in XXXX training, and following compensation we Personnel, expense While Technology, of to driven in capabilities, obsolescence related our is the is pay. cyber modernize original higher for compliance last benefits, continue expenses still compensation

these were XXXX. investments delayed Some of in

Finally, Business expenses Promotion, programs. client especially reward to related

in growth offerings. XXXX. technology results the of from expenses client and higher category from higher our levels Part the this credit rewards activity in cards of reward related of are digital of revamped expectation Some our and to for

of to this level We in expected will strive come expenses. below

Our effective for the XX% rate XXXX. tax was for quarter

X.XX%, net yields, in to decreased partially BPPR. turn We main in income in Slide driver of drivers basis basis from in taxable asset XX%. portfolio the increase as reflects for offset was by interest QX. were this this of in total of the effective [indiscernible] decrease equivalent loan a be points. Popular On X. and points assets at the to Bank. deposit primarily basis decreased balances repurchased decrease the the loan The Deposits QX. interest $XX.X basis, million, an driven portfolio investment This $XXX.X was also Puerto cost increase QX increase mortgage at increase The by was deposit reduction The XX% X by QX. quarter. primary approximately XX of expect in tax these of quarter the between mostly yield lower of million decrease MBS to end the agency in lower in a and the X.X%. The The points grew Net X.XX% higher of rate NIM an in bulk size deposits Please level yield Rico. cost. a by loan was investment the $XXX X increased earning million margin and margin

stable. we XXXX, to margin expect For be

Asset forgiven the results. at the speed round will drive which are loans originations ultimate and two mix, PPP PPP

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

balances We expect to over public to down time. continue deposit come

the near-term, the in the first increase additional year of and However, tax balances. would stimulus the in half likely revenues federal deposit

by increased the $XXX quarter. balances in loan million average Our

do balances the demand of additional expect half PPP XXXX. two loan in X. loan forgiveness the still balances, loan Slide PPP will expect as of unprecedented liquidity, with Round turn we help impacted first levels federal We fueled to materialize may will but program as growth expand overall transfers. not client further Please limited by be by well to which of

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

by basis book increased common income to QX. This X $XX.XX. Our from $X.XX Tier our somewhat share XX dividend by was driven in by quarterly equity was up increase XX.X%, Tangible QX value payments. per net offset ratio points

on the was return quarter tangible fourth Our for and XX.X% equity XX.X% XXXX. in

We maintaining to will our continue double-digit pursue tangible our and on return target improving equity. on

turn the related capital expect April. to that, With make As to over discussed last call quarter, be we announcements able to I in Lidio.

Lidio Soriano

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

by the our we continue portfolio. extent the the uncertainty the of disruption, impact economic COVID on caused to Given of and pandemic the loan monitor entire

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

on We are across which Slide Please commercial the sensitive moratorium mortgage commercial to highlights attentive but mitigation segments. particular these borrower segments. certain to turn portfolios, activity our performance in number cost to loss XX,

pandemic. average multi-family. downgrades comprised collection Care is while office Within exposure mainly the stable to space, the and the CRE exposure moderate XX% while exited remained a number segment, XX%. this loan-to-value of in nursing Office Non-Retail The our Rico while U.S. Puerto facilities. exposure is have segment, mainly Puerto of Facilities the is Rico In segments. occupancy there in Rico in U.S. relief, the space that skilled hospitals, Puerto current. have mainly the multi-family the and customers through XX%, in been have To-date, the our is the accounts Health is original exposure is U.S. of remain in Of

segment. shelter-in-place activity For supported have retail, in curtailed have both and industry been and of have portfolio. of moderate this regions, a number local deferrals this federal operations. the there Within the downgrades non-essential To-date, orders assistance

experienced our has in customer an withstanding base lifted. long-term were activity orders the increase after Now

and average of So been major there customers the loan-to-value this for moderate the downgrades on The number our portfolio. during with original improvement deferrals, a Of exited is have fourth of stable and remained in XX% of deferrals occupancy have have are discussions In with this segment general, that borrowers, accounts XX%. quarter. based signs collection current.

the and social low in loan-to-cost Regarding high-end to in loan a Metro demand average the for To have U.S. the during projects the has of impacted portfolio, most to of strategies time deferral as hospitality exposure The have and in to stay-at-home residential. risk of late this New orders, loan-to-value with mobility decreased number principally the nominal of quarter. challenges. restrictions region. Construction segment, the a flatten The our industry and such The portfolio. distancing, of to we significantly businesses. and downgrades stages lockdowns, been address unprecedented the pandemic To-date, of exposure our qualitative our majority in our limited work continue added requests the borrowers travel curve is reserve them are completion to and XX% there these York with original to give recover and

million carry and expire improvements This that an out our fast number the Our end XX%. has accounts of segment and customers of The the Rico dining. by higher at by driven hotel and XX restaurant of due turn significant in part NPL due deferrals, $X this through Rico. a number stress of deferrals. exposure a Slide and to Restaurant majority of placed within quarter, by or end. NPLs me mortgage our restriction, elevated not fourth were quarter. was food exited NPLs To-date, has million. finalize, segment exposure decrease in million had additional increase during stress mostly At moratorium. a assets million, of million, has number part driven quarter, stood increase Despite have at of do to downgrades an Of the quarter. balances is given of expiration $XXX driven fourth Operating million the deferrals past an Please by segment Most $XXX this the operate to the are with mainly the $X we been in mainly to $XX limited borrowers, million that category. experienced OREO OREO there $XX $XX million deferrals NPLs. the was to our NPLs Puerto To foreclosure or to delivery indoor the credit in current. foresee quarter a of decrease particularly borrowers. most the service by experienced XX% This activity. progression downgrades offsetting The payment suspension of to total driven on of of $XXX restriction increase discuss continued sales with third decreased significant offset to quick was after volume the in energy, this business let Puerto of national have industry, credits. have original decrease exposure challenges of Non-performing levels commercial loan-to-value average the shared extensions highlight an in million of But the the mortgage travel. we metrics. support by airlines $XX delinquency credit leisure material due by of to To-date, and and

due We overly concerned with are to three factors. this not

to comparable the outflows foreclosure. order pandemic levels are caused NPLs First, by prior without an to of

Second, was held-in-portfolio early is finally, $X by mostly excluding of NPL discuss quarter. we the NPL consumer previously to $XX loans NPLs the related total being of Slide number X.X% to Compared effect everything loans. reserved a NPLs of deferrals. ratio third a increased loans loan by the the million NPL to the from $XX that partially the inflows. to levels of fourth early turn million, due In charge-off quarter, inflows inflows reach days renewal not during in driven In years. The and previously the last to the the decreased the quarter. Please million an the NPL XX loan as increase quarter, flat is was the commercial mainly quarter collateral increase U.S., decrease the construction prior believe $X by trend progression the process. start XX by mortgage rather of And but delinquency on impairment of versus in million in XX impact in period. Puerto Rico, the inflows relationship delinquency quarter trend, do expiration mature forward NPLs expiration decreased U.S., million in prior that that moratorium due and included are Thus was dependent At to reserved at the the while charge-offs the rates equal, to of delinquency end the lowest $XX encouraging. buckets the for

million as recoveries allowance loans charge-offs amounted basis points commercial number million mentioned losses million Slide loans part from average X.XX% to $XX by net credit to XX primarily driven held-in-portfolio previously related million in for in $XXX net following million decreased U.S., to the In increased slide. allowance net of ratio discussed to In $XX the economic Net in portfolio. compared $XX an by of to driven basis or related decreased commercial to losses XX Turning $XX previous and million, for previously by provision The loans loans. The by outflow XX. in Rico, charge-off decreased annualized the or X.XX% mainly primarily commercial reserved slightly by charge-off reserve increasing quarter. further $XX by commercial Puerto to an in offset mostly charge-offs credit third held-in-portfolio million, of on to $X the improved qualitative quarter. higher the the points charge-offs

for point losses Program basis prior to to increases this credit by guarantee NPLs was provision the ratio the of $XX The mortgage compared million. The credit for Protection in loans to X.XX%. XX loans, quarter. Payment XXX% increased losses held-in-portfolio allowance ratio XXX%, to Excluding and

commitments unfunded quarter, expense other to of reclassified for for provision operating the the losses. credit the we $XX expenses During million loan from

for decreased credit the the of the mostly effect, improvements details to losses due million the million, of in discuss quarter. by for the At this XX to scenarios. in Excluding compared to Slide for $XX provision the portfolio $X credit to macroeconomic losses turn loan on quarter, decreased fourth Please allowance on by the the variance credit allowance losses. third end drivers

by driven are and changes, outlook, we quality. economic instance, credit reserves portfolio qualitative For

by compared estimation Analytics framework SX the As the process. followed enhanced scenarios, and the GDP weight We scenario more the of rates scenarios. estimates. given discussed to to The scenarios Moody’s find a scenarios The three the probability the million. SX previous And scenarios, pessimistic ACL different baseline SX by webcast, economic by in shows caused the we XXXX highest combine baseline to probability our our downside risk. introducing the in improvements decrease current change growth, outlook baseline both on in last in macroeconomic uncertainties will ACL and unemployment when $XX

we portfolio stable Puerto caused aided Portfolio exposure To mix potential reserve specific quarter, in the hospitality address added and volume by to and by changes and collection Rico industry exhibited deferrals, to the During quarter, the including conditions increase quality the efforts. risk mainly risks, resumption to payment the stimulus $XX fourth the metrics quality market. to driven our the million. by macroeconomic qualitative credit the during government in ACL the credit $XX summarize, loan of million

how of However, fluid, the full few the The challenging uncertain. is over improvements of as evolve loan extent portfolio operate the successfully disruption and risk our will under in the years the Popular environments. the last to to profile effects positions Management economic of continue the pandemic call remarks. of remain to in that, delinquencies over continue concluding and evolve risks, over monitor for exposure you. would Thank to his net and the the pandemic-related I the economic to next outlook portfolios Ignacio to turn quarters. changes With charge-offs carefully the like few

Ignacio Alvarez

their challenges to be we courage the rapidly and changing of adapt adjusting frontline the to on customers resilience. their certainly a with year. ability in environment. blessed It commitment challenging Carlos colleagues dedicated and working Rico, and devastating was including from are lockdown with shortly Lidio talented of by of updates. creativity or these the of and grateful part Puerto unprecedented a XXXX the impact was substantial for the our began which to pandemic, the you, to economy. met team and earthquake home, have employees Whether to our your followed am I local for serve to Thank quickly who Southwestern

our able We grow customer the communities. over base and focused to we I a end million year continue remain best as net $XXX our in executed plan XXXX, note, high our supporting net We capital on than accomplish million generating share while increased a of redeem of proud In what more been the complete intended. $XX $XXX the repurchase We quarters income income extremely recorded dividend our in in to one am were able we and of we've preferred on million our also history. program, quarterly past year. stock. to

While there footing is eventual for first of that a still solid year, our to that still year. process vaccination XXXX and underway much prospects allow We the normalcy uncertainty, especially excited the the is the about begin for will optimistic return on am half I an desire. we

are questions. ready We your to answer now

Operator

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

Alexander Twerdahl

Hey. Good guys. morning,

Ignacio Alvarez

morning. Good

Carlos Vázquez

Good morning.

Alexander Twerdahl

I So the some on first was Puerto off just economy. hoping more Rican maybe level for thoughts high

deck, in but us the You numbers gave don't tell numbers everything. slide the sometimes good some

could flows I for hiring maybe data. So wage in maybe things home rebuild you And the of the money those was on anecdotal on if the yet. to I Island whether more some federal inflation to example, grid. wondering know then started seen the also help has and projects increase like comment for some prices we've recently Island,

Ignacio Alvarez

Yes.

hasn't $XX about knowledge X.X, really I my money think, flow, the finally billion with the to [indiscernible] an restoration use word optimistic consumer mean, we're program. generally begun that And to Electric reached Authority that the I for FEMA agreement the flow. You Power with

of as it continued So the states and upon. working the payment in is coming that. the that's this we come. been have beginning come we as What yet last on important They're it to to $XXX obviously implementing that's week has seen, week. in It's agreed – last in

closely we of going positive. very it authorities lot there's that these been have to new more working much funds local to looks slowly, funds get like the but CDBG are the It faster. the be spent. a we So administration recognizes out problem are They're to is getting still out going yet out with a that be

seen we So I going the think see really but that it accelerate we're to haven't during yet. year,

come. So more to

big was I third see up I increasing. the – Puerto went the who third up in quarter better we than are in purchases states, – think but like the put do home economy, before, pickup acceleration in we The went had report. by the in don't I the not fourth quarter. home quite home in a had it I Puerto out, know so our Rico X%. saw I purchases prices know don't Rico quarter.

generally these think starting slow direct funds the optimistic we're haven't other Really I impact. individuals. go slowly. goes to a that great have stimulus big to So that out seen than It’s that will

mayors We have level the administration the Juan. a because the a big new of both central in have I of San and many and of government that mayor [CDV], mayors. say at the role changed municipalities that including the

first isn't, it begun said else be take money the much, that's will hasn't of now So year. part they've is the but number the advantage that begin of in it should to one that Again, I the I better, really that If hoping think can I add? it probably all think What priority. we're to flow so that money.

Alexander Twerdahl

to at they coming unemployment you're Do employment think out guess remain, a the that numbers you sustainable stubbornly the going ticket in of employment money the maybe numbers be or million is more remain million When look and I below jobs. to above the sort X flowing you obviously the basis? kind $X getting pandemic, that of but of

Ignacio Alvarez

Yes. I mean… persons? X above mean million You Definitely,

Alexander Twerdahl

jobs. million X Yes.

Ignacio Alvarez

That of impacted. are have on impact sector, they of huge sector seriously sectors. couple employment. been restaurant The a tourism that up larger GDP, do our employment sectors there's have although impacted a Obviously, proportionally that make high amount they has a been don't

United Rico I Puerto obviously this travel so be leisure won't if I be when and think market picks But starting picks see while, in I the on country the to up. they up if a twice I the think economy increasing think will not economy to get restrictions positioned to up, business the because they're And well much, you're picks mean, will sure States. foreign going about can international a for people travel. think some back

that from impact out people always on area become near heard people in the a I've infrastructure gain things generally you once is other week. the our worry construction. a for And people that's – And an hard that are employment in that a has some unemployment will It's big Puerto that having I paying is supermarkets. minimum wage Rico, hire building time people the employees. federal employment. are impact think there, have on industry. again, for The because supplement start hard There are $XXX to

if a hour, week, that XX-hour you're you take competing against $XX an So that's unemployment. so

have you're don't a if go unemployed, So currently to a $XX incentive big hour. than that less get job pays an and out you

do I in they pickup interesting a will be need. demand the see be whether meet to can they to going we're the especially side labor. get how It'll we able the to all construction So have that for employees supply, concerning big industry think

Alexander Twerdahl

moot this that that opening you're just towards number are full things is the reserve the it or are great Thank What the kind you back reserve for conceptually, over enough kind kinds then of there think And portion in as then that reserve to? you color. Or day-one increased at about is the point? quarter. qualitative and change that That's portion was to a looking for paying head of of fourth And qualitative time, should Is I of reverse? this that economy? other attention things think that. CECL I about that level

Carlos Vázquez

there way I think is general more in path quality their is to about the that terms, the forward. clarity to say would reserve

it confidence think that lessened. allow for that more will us give need I has us the

up first lid So economies. to evolve. continues that pick. the a see of open be We would Vaccination my

I will – be in might let my qualitative view, be reserves indication think go. the those for

think how has versus that to there In [indiscernible] wouldn't of point, reserve starting CECL, that think, composition. mean, that. I I terms my I That'd think revert to is of portfolio answer. I the be a but I in significant day-one say mean, changes been

Alexander Twerdahl

Perfect. Thank you for taking my questions.

Ignacio Alvarez

you. Thank

Operator

from UBS. is The of next Vandervliet question Brock

Brock Vandervliet

Great. question. Thanks the very much for

the improvement it in this even question. XX if reading the some some like to from last up are Puerto In QX that I these QX just pretty material clarify the your macro Going Rican baseline. to wanted and other maybe is figures Slide because on words, correctly. of baselines improving of in looks to following I'm

your in fourth In it points like next unemployment addition, after. dropped third you significant employment, in itself the figures? comment those growth year, GDP XXX has X.X% the baseline X.X% looks on you've to from Can the basis And got year quarter.

Carlos Vázquez

have to would unemployment part a has estimating let's to in – relates the unemployment disruption some the with bureau significant do to the change – of of also I crisis go, when some first, or of ability the of the of say the unemployment, the rate unemployment to significant you in difficulty it the survey. do

in of to As rate difficult implement. a the when that – unemployment gets you you is survey, house-to-house based areas disruption, on know, have it

significant baseline a very rest, House agree. both the they They to I quarter third fourth you why Senate. long for the that Puerto The benefit a the floor going think Biden to numbers they very for Rico, and – plan I of very to numbers has to and administration that I high thought the significantly Rico, of didn't see came time, mean, and we they Rico particular, mean, in higher there those we particularly. a unemployment, that Puerto So lot a economists, March Many were that be. and is fruition. is for aggressive people in use. front Moody's Moody's now the on are Puerto of That's the than particularly April between shift the forecast have out the numbers. terms they come – control

Brock Vandervliet

Got it.

Okay. right like much should to – growth doesn't the on heard up we especially I in stable, margin here securities first feeling points from those assuming are guess, taking half, margin, fourth quarter. sound about levels balances. that's given backdrop? And you Thank Loan I'm you How and the is expect NII you. I the that shifting to the

Carlos Vázquez

Yes. in $X longer-term securities, third I we – about mean of Brock. redeployed cash into securities the billion quarter

Not better frankly. clarity, points we that basis continue and So dying in the we probably securities than basis more We to more basis consider some more will is of continue we're that. to continue XXXX. getting extend to But we consider like do XXX XX doing in [indiscernible] points, that it's to as XXX points, right? of that get portfolio what –

actually a my first then coming federal in additional in prepared mentioned in, remarks, year. and the in up, the revenues I of the the to transfers especially expect As the do half year tax we combination go the balances government out from of going and half probably second of

cash probably invest. will that So more to have

fact radar especially of couple attention in keeping this the and implemented the about holders there's that be of will example, the in contained cash publicly, what government $X in a ultimately to one-time of have be, noise that Rico there later things be maybe I of weeks agreement discussed Puerto not balances we but year, that an seems there some sometime If agreement payment Although was the in the some I process debt. of our that we're last a is know last from on, the the that public lot term, the bond of government that in mean, down progress do restructuring of for a is, to happens shorter to that billion.

instances there's in the significant public where here of balances move may deposits So out. amounts the

move to in side on Puerto have to that as an interest try The their expressed to – the has well. Rico mind. funds we'll equation in keep of to government the faster new So

Puerto So there business normal course offers of maybe additional in Rico. government the from of

to to to the will trying consider continue looking although, assets So we'll those somewhat not yield. X% extending all But at in buy portfolio, yes, we investment things. summarize, keep at

Brock Vandervliet

it. Got

Thanks the color. for Okay.

Ignacio Alvarez

welcome. You're

Operator

question is next Bruyette of Glen The Woods. from Manna Keefe, &

Glen Manna

Hi. Good morning.

Ignacio Alvarez

Glen. morning, Good

Carlos Vázquez

Good morning.

Glen Manna

been billion approved clients Island you aid in just where of Puerto some the to Rico. there? maybe the federal the if that color the has on Ignacio, money give down service came wondering where BPOP was down that specific take that and $XX on a able And down previously, thanks came that the of I couple examples was could and advantage economy maybe for

Ignacio Alvarez

in we authorize but they spent. that, Yes. been I of mean, little Well, money. it again, $XX has very PREPA, the billion have not that seen

our been our of the for CDBG reimbursed haven't For of our clients contracts. those and the Neither contractor credit now of we in example, some has advance PREPA in changed CDBG. with their contractor the through improving before several get And with to a PREPA of PREPA money, clients accounts going who program therefore, infrastructure, – lines have extended have they need gotten funds dramatically.

of So is so the that again, being I want to excited limited, emphasize of hurricane that today rather prospects while an funds very we're upside have the the release released, been expectation the money relief those coming. about all

balances flow the direct money get greater that released. the talk a There's lot seen is where a I that they side, – new the really of seen haven't on yet. That that's impact relief see the The commercial loans, that for it's very deposit hurricane our going money [indiscernible]. – PPP us, really our you balance deposit I up. of – relief, up is frustrating has visible see for We those disposition more to moneys on think, we've consumer you in but they again, obviously going all administration What also.

much economy. were example, made as So as that's awarded I And yet has entity. money amount PREPA side, the at record any being is ever think, that for into we given to I amount to – to progress we which complicated the to team a bright have it. that's These pumped criticize processes. And the given is look be

So here. make down everyone's to these dollars. want done are big Again,

yet. You're money not seeing that spent

Glen Manna

Thank you. I the could the And in you've of on between what guidance, what Puerto the on and wondering you do growth split what kind mainland. you thanks expected kind And In of up that loan if was the Carlos, is? on again Okay. guidance. for for you outlook Rico XXXX the expected it past,

Carlos Vázquez

is of loans both on – away, I clouded the think mean little Glen. the going by bit $X.X I sides, outlook Yes. billion PPP

how that's So it drives the thing. whole

billion actually this that $X.X year. round that two means Ignacio PPP. the mentioned [indiscernible] doing matured keep successfully we than originated more we So

that but anywhere We expect also to not do help, original close the magnitude that PPP. be the to of expect we to

continued that So confident in the doing which are to before will Glen, Puerto Rico, I if think and continue U.S. more anything, hold we the stability. that is bank, we’re that probably in more commentary true growth

Glen Manna

Thank for Thank Okay. my you. question. you taking

Operator

of from Cassidy is The Markets. next Capital RBC question Gerard

Gerard Cassidy

you? Good morning, everyone. are How

Ignacio Alvarez

Good Gerard. you? morning, are How

Gerard Cassidy

I'm Well, down storm I XX snow and here. hope Good. sunny sunny. it's there. a hope in it's I up

So two of different parts the world.

Ignacio Alvarez

It's today. beautiful

Okay, sorry about that.

Gerard Cassidy

No surprise.

you other maybe that been with administration was there's administration, of. then Ignacio lucky. And the aware President administration all obviously – are could and went in Cuba direction. share in change guys opening under the up we're the he obviously the Obama's this You with that administration us, in Trump a relationships

in those that you opportunities us if Cuba. administration this reopens arise to may Cuba? some do you're down with Assuming for banking permitted with Popular relationships Can share

Ignacio Alvarez

topic. always Yes. Cuba a is difficult

that were the a may hoops. put It When Trump Cuba. Biden will additional interested of while think take procedural probability some do I great a that up, there's revert in so in. him to President that restrictions Obama very through we opened

in and noticed you only get I U.S. credit awhile think, I us be issued don't we if took know were of to that. it cards used two one that that to Cuba could banks that

– to the meaningful Cuba think people really Really radically mean, economy. I there, you I always going see expect impact I However, it's U.S. to have unless are different a on change perspective short-term. it don't economically government don't to big think a the in approach the Cuba from from our takes

expect that don't signs happen, I seen happen. haven't so that's to We to going dramatic anything

I bigger think issues. has Biden

of think the I era. was I revert will President beginning of you'll saw think not he that those it things, Although the was some And see of in when you enthusiasm like level don't I'm Obama optimistic. the new power.

the time operating. don't wasn't money really us, on did to use last credit begin much We we'll I So does to it very way that that to – in the It we it. time. card for frankly. and little get see by like that open, invest if opportunity Again, explore

So it wasn't a moneymaker.

I think it's to be near the future. for going don't again, mover So in us a

Gerard Cassidy

them questions you draw once as answered you with the the get my some normal whenever And what public the repayment mentioned What a is? would deposits debt. those and estimate could Carlos, level guys you. down. that normalcy to deposits of you of we of one Thank Okay. public of

Carlos Vázquez

the go be well, look about That's will back Yes. think Unfortunately, historically, and work. like right? that that when question number bankrupt, the oh, looked lot government moved banker reaction accounts happened the When really now, question. and right let's We the in that to your doesn't went and that of talked lot GDB, be, use have GDB we history before have when balances lot. to good because what it did those stuff accounts must a a that this didn't we we normal about of a a that that you then number, say from Because they us.

So that have don't accounts. of historical those flows we

be big very of nowhere but carbon dollars a would be you giving that you close get number had $XX things various somewhere GDB between they and billion. probably can't it billion. range, to that billion a to But it's normalize before with add up. if were deposits frank everything when I'm realized range big $XX to you. I going of smarter So disappeared, I we $X I assume any But billions than

Gerard Cassidy

to your Okay. give capital plans announce. you you can't us action Thank dollar you. And just then I finally, know plan of actual amount the that

income us share process within just with process CCAR your be reintroduction I Can the will announce Can your to us share think with you you for you capital it's just April. action what because Fed plans? of said DFAST, the the repurchases the limit? obviously banks with tell changed

Carlos Vázquez

banks. lot are our seek Sure. the A only rules we that are all of to know really – applicable

on the telegraphs to that They It us. Fed consider conceptually. to hardly everybody the sort rules those willing while of set stage. right, is to So is applied what

rules So our are. very we those this as what continue sorry. so Gerard, we're time, to historically I'm watching have At attentively planning process in point we – are Bernard

Gerard Cassidy

[Indiscernible]

Carlos Vázquez

We'll call you [indiscernible].

go in We feedback. their capital with through Get discussions We with Fed. whole the plan them. our are

in response response necessary. April. this all may get are given We for our we from in their us that response webcast adjustments hopeful for an some we of we in them get are sometimes whatever will announcement to the only need are Sometimes part parts, still make time

mindful has changed have largely that not so our public, far process our have too much. the Fed we the unchanged. So we We're continued process, made boundaries of but

Gerard Cassidy

you, Thank good. Carlos. Very

Carlos Vázquez

you. Thank

Operator

Difficulties] would session. The conference over I conference you to now remarks. [Technical has Thank like for this the for Alvarez And closing back turn our concludes Ignacio attending. to question-and-answer any now concluded.

disconnect. Have You day. may a now great

Popular (BPOP) 28 Jan 212020 Q4 Earnings call transcript