BPOP - Earnings call transcript Q4 2021

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Operator

00:01 Hello and welcome to the Popular, Inc. Q4 2021 Earnings Call. My name is Emily, and I will be coordinating the call today. [Operator Instructions] 00:14 I will now hand the call over to your host, Paul Cardillo, Investor Relations Officer at Popular Inc. Please go ahead.

Paul Cardillo

thank joining and morning, Good you us. for XX:XX today CEO, our Ignacio us Soriano. Carlos on our our call the Lidio CRO, Ferrer; With Alvarez; is COO, and our Vázquez; CFO, Javier results will answer then for They questions. our the year quarter your and full and fourth review Q&A of members the team be available will Other also management during our session. to XX:XX on are may subject we statements that and today's based and start, management's risks make would expectations to like I we call, Before remind that current on you uncertainties. forward-looking are Factors cause these results earnings differ forward-looking detailed to statements and today's filings. in release that within actual could materially our SEC are from set press are forth

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

Ignacio Alvarez

morning and for joining you thank the XX:XX call. Good

important begin, I Chief and acknowledge Officer appointed Chief I Officer, our initiatives as recently made to to would Javier XXXX Legal Popular Operating Before past these joined contributions in our years. Ferrer. strategic Javier like has

to Legal with will has Javier to XX:XX guidance senior COO, baton our has he José of operational and XXXX. team. provide the position Chief José the strategic Coleman, management assumed legal to Popular who since Officer. been passes As continue

which appointments achieved that confident reflect in each an record strengthen are results We management earnings. of will we XX:XX and senior year outstanding Today's these team. our another quarter solid

preferred our X.X% revenue, our XXX security. capital series us diversified common continue stock per with Our of actions to position, the in to beginning results common evidenced quarter prudent which our increase allows redemption of of Additionally, we include this franchise. while execute in of XX% the in These that the activity, pleased year. our program invest management. continued sources X. to XX:XX Slide am in we January, million XXXX $X.XX economic intend the actions XX:XX the of very plan share a we capital XX:XX report turn planned million. to we reflect of in actions of trust the recovery quarterly to our to company's dividend that an repurchase second capital stock risk and to up I XXX These capital completed return November shareholders, to in the and strength our Please announced

interest quality in million, charge-offs partially year. XX% higher level Our increase million Credit below reflects for XXXX, year. X points points the both net net with Rico have improve fees, in The by in annual lower higher XXXX prior particularly XXX to basis XXX offset an growth was XX:XX Puerto above of and assets U.S. by pleased net continued the decreased are benefited expense, driven XX annual or [ph] how portfolios and was charge-offs higher million income strong net and XXX our our outperformed, to income also expenses. NPL by increase compared and of provision basis of with [XX] income, earning XXX We XXXX. largely net throughout points deposit a XX:XX the were XXXX higher and million. from of results basis

equity strong levels ratio common XX.X%. are capital year-end tier X a of Our with

$XX.XX, Our year-over-year. a turn ended Slide book to Please value X. at tangible XXXX X% increase XX:XX

by Popular commercial and partially in lower fee third driven XX%. expenses, the higher loans the quarter saw was variance Bank, million XXXX. quarter, The the higher interest of XX:XX for XXX net income of quarterly was losses, a million offset lower than quarter, credit million and income income. same XX increase XX benefit by the net solid Loan Our lower in growth than higher by in sequential provision was particularly we

asset mix. our be to impacted continue Our margins the environment and by rate low

charge-offs. the However, U.S. favorable and turn quality the recoveries expansion continue lower are trends in Slide the encouraged NPLs Please we period net margin with be with in XX:XX Credit to to and X.

customer channels of to customers. Active was our continue X,XXX XXXX. two-thirds grew at to platform to on base to digital and X.XX users Mi levels. and million the continued deposits dollar significantly customers channels. our XXXX Adoption remains our BPPR in Banco of than and fourth at higher be nearly million quarter in We unique higher, have customers XXXX XX,XXX by which have ago by of X% increasing strong. reach since among sales XX% in Our a in Puerto through value XXXX, the compared captured exceed grown by by strong. for December very quarter The year This trend as credit X.X XXXX. debit compared December XX:XX Rico to lease digital card originations XX:XX remained during period XX% same pre-pandemic X%, trend of loan and by retail have the and Auto

originations quarter macro In value mortgage and activity quarter, well quarter, Slide the fourth in to full-year customer year-over-year XX% housing fourth XX% Please XXXX, [increased] increased of BPPR by robust. [ph] by of decreased The to as in solid. continues dollar trends economy compared it the the higher The the to XX:XX the also but as were X XXXX. be Rico. environment While for compared XXXX. update performed current remains fourth to an to on origination in the market turn business they Puerto sequentially XX%

to traffic other level have the Puerto the sales auto strong it also sold, in sales sales XXXX. pre-pandemic surpassed improve. been returned generation reflect to highest Cement York, has quickly which XX:XX higher, now doubled XXXX, continued reported in economic to have of activity XXXX Airport Rico New year, Puerto strong in Activity XXXX. to and compared hospitality new cement auto For jurisdictions consumer XX% index, employment been XXX,XXX employment, annual XXXX. it volumes XX,XXX Rico XX:XX units levels compared Employment last also by sales also in total XXXX, source XXXX, to strength has In Federal were a as units The for gasoline XX:XX tourism X%, sector in Reserve of remained recent recovered strong. sales, demand. levels which and levels Bank compared improving year, have sales and used many of year. in and have and New is levels. includes local XXXX, and in a November a XX:XX and continued has in According by than itself pre-pandemic more improve. to Passenger the to levels. were electricity increased to was economy the compared the study have

may sustainable and clarity we significant effort Puerto investments this the plan recent resources cases get in the point, catalyst recent While near-term important us destination refocusing XX:XX adjustment invested Rico’s in growth. be provides necessary long-term impact of an be the Rico’s revenue. plan confidently recovery. amount items, and look on approval COVID of The popular time forward to mainland and to and industry Rico for Puerto Puerto to quarter toward should [indiscernible] The development. surge these or economic XX:XX continues to uncertainty eliminates the A has a been fiscal to economic the

quarter. will call the over details economy. fourth may turn financial more the the are results evolving prospects We attentive Carlos the I'll the yet be on health to our XX:XX now for remain with impact could to the optimistic We future, very pleased for to our have about situation results.

Carlos Vázquez

you, XX:XX morning. Ignacio. Thank Good

XXXX turn today's this to we and fourth Before results, is Popular’s presentation let the expand me to in release. press which quarter included on performance, full-year the appendix

Operating the of in reported year-over-year was the year-over-year X.XX a X% higher to expenses XXX X.XX assets. the more by charge-offs. of increased continued levels to a the growth by technology, recovery, economic in primary for expense income projections regulatory strength Non-interest interest compared of benefit versus increased income XXXX net benefit provision increased XXX X% for and million billion, current cost Our by of XX:XX higher earning in to XXXX, drivers. the low year provision with driven In personnel, million The we segments and to XX% billion XXXX. provision XX:XX XXXX.

the year a X. by ended than common robust. stock. tangible We value is notwithstanding Slide of XX:XX position book per turn of million capital $X the $XX.XX, repurchase Please Our more share to to with increasing XXX

additional of XX expenses a commissions, mostly by losses the quarter, XX and million impacted was higher QX. a to This was a XXX quarter variances slide commissions the we deck. third salary under the Today's by in million, driven average by of details XX X.X the This expenses to million, interest] grew X and fees. contingent two increase the higher million, sale higher is higher due million, $X quarter. amortization million and third operating million increases, office for variances were and million. an The XX:XX of million by were by label higher with higher held on X offset XX business the provided increase an non-interest X was XX impact the XXX equipment for credit X earnings expense results, the income the and and million includes million credit the from Also, press corporate X information release provision write-down million card of [Net XXX higher termination in gain lower the cost Going that fourth expenses XX:XX million by X up X expenses. undeveloped [ph] million appendix income two up method, million. XXX million are Total that QX million losses of quarterly by million, a equity As QX. including partially related increase promotional was of in recorded from of buildings due These XX:XX increased million to compensation to quarter. negative which from QX. card usual, billion cards to white properties level income the by X will Net by employee Other interest seasonal million to associated lower The intangibles decreased in in these seasonal to items fourth concluded income incentives, of a benefit contract in XX:XX forward, X of XXX than operating rewards insurance by million. credit QX. be XX trademark. quarter around X million benefit permit sundry expect investments

at impairments XX:XX in been and [ph], the in continue XX The write-downs prior invest expenses expenses mainland. by related to Technology as to will mentioned, be This driven and regions average to we the compensation in we is have the cost training our higher Promotion, XX:XX to especially also [Personnel] obsolescence a compliance categories. we driven finally, increase address expect within following quarterly cure programs increasing. in For labor is just million. and for XXXX, the benefit needs. XXXX Rico capabilities, And guidance market in digital expenses for tight our QX. of and as XXX reward the in million continue our on where our around expenses we Excluding regulatory, and with related modernize Business clients. operate Puerto cyber,

reward in of below this expectations these higher of to Obviously, Some activity. client higher strive of XX:XX and effective expenses of level our are come we levels expenses. will related technology to

PCD the lease taxable a XX:XX X with of loans basis to Our in XX%, taxable Net In was interest quarter and tax XX% in XXXX, and higher a recognized X. of on of towards income in adding margin XXX XXXX, tax public million loan accelerated the interest points releases was to to loans. activity we flat. from yielded and million remaining outstanding program. XXX full-year XXX provision of recognized the repayment essentially third increase mainly PPP was basis In effect rate increase balance income PPP higher net end XX:XX this half million, as first the this in in the was is Please turn PPP tax in XXXX and PCD the quarter. XX%. during of increased higher forgiveness. loans by recently income this mostly effective million, a compared year. Again, recognition due portfolio commercial a is in year-end The our to fourth public XX we fees, million increase for of by to our the unamortized deposits related QX. repayment fees be of acquired well rate to than of tax total the billion. million. basis in expect As retail XX fees The from recognize interest XXXX XX:XX as was XXX portion the on Slide The yield equivalent XX.X% the for related was XX the QX, deposits. quarter. The approximately roughly XX:XX to Net refinancing loans XX.X% PPP equivalent quarter, X for of expect million in XX% we effective our was fee higher XXXX. XX:XX were Deposits of on in income deposits, grew the growth quarter, in which quarter billion The between business. and the the rate Rico Puerto XX BPPR

yielding be would As [reach basis will Given It's the position to our adjustment, This [ph] or Fed X deposits, have the balance the these a the assets to XX:XX [ph] to XX:XX important sheet. net billion income of million these quarter. X a be asset to deposits cash of bank billion elevated liquidity early approval that change sensitive XXXX, large XX public deposit points. that by deposits basis asset points the continue expected with must this low margin second to X driven in on As anticipated by the event outflow Rico, public by the] change funds by December of as X XX:XX of X we outflow end anticipate reiterate reduce in decrease will interest billion continue balances. not for we Even due law being final We approximately every will deposits to first basis million X deposits be collateralized. XX [business] in of bank to per public correspond interest would net will our sensitive. points increased in quarter XX/XX, our the quarter. in Puerto of

the XXX balances the XXX in higher decrease as which part The Rico. portfolio loans. by and card, balances million million million loan Bank construction in high U.S. include Excluding in quarter. Puerto balances, added trend loan PPP, grew to ending balances Acquisition million. balance in of lesser [ph] in were and a XXX impact loans. Our XX:XX QX, balances credit of [run-up] of the increase These Puerto increases XX:XX PPP same in This auto, by in U.S. personal, both of the by Rico, in the Popular XXX the commercial occurred well loan in mortgage Rico continued XXX commercial lower million by KX, extent increased like of as reflecting and increase Puerto

We seeing remain demand the should the year expected overall are are when encouraged at materialize by these of XX:XX XX:XX resulting PPP credit Puerto segments. expect and to not Slide for loan do the demand Despite economic Capital run-off. to Please trends, and BPPR already growth in our loans the growth we most turn in from until of outpace middle this X. forgiveness growth levels strong. Rico positive mortgage

to QX in Tier approximately accumulated QX. the X% the unrealized common primarily losses in XX.XX, was with decreased ratio by XX.X% value quarter X by book investments. higher on Tangible equity Our flat driven

capital XX.X% from tangible quarter. at our in equity actions, announced plan redeemed share, in quarterly for acquired review mentioned last capital XXX trust. healthcare was – per XXX the million actions. million. To stock, per $X.XX our repurchased our includes share Ignacio And today's As XXXX high-cost million common fourth in return of to XX:XX XXX we increased by XX:XX call, equipment start XXXX business Our leasing year, the two a on finally national $X.XX dividend

in common share First, Popular’s starting by $X.XX in an $X.XX dividend QX. to increase quarterly per

executing be million. a to stock up of Secondly, program repurchase we common will XXX

have buyback capital ASR, returned plan should capital which programs no this under for schedule, buyback still than our XXXX XX:XX been XXXX to an planning executed recent January Popular’s normal consideration. implementation our result our is announced via the have in We While later actions webcast.

to opportunities explore during We future XX:XX to call that, of will and the I’ll continue Lidio. our structure XXXX over in the turn manage capital periods. to With remaining

Lidio Soriano

continued strong and good quality with low recoveries trends and Carlos, XX:XX and [indiscernible] non-performing Thank Overall decreasing to net loans. costs you, Popular credit morning. credit exhibit

changes quality resumption and We At pace XX status recent the payment with The that borrower economic performance, optimistic by new COVID-XX the period. in in X related by consumer to to performance. to troubled to to ratio to U.S., continue did outlook, the emerge. economic the we're loan by commercial the XX decrease variants in Puerto in improvement portfolio mainly NPLs with driven mainly million by XX the mortgage was improvements previously XX:XX and X.XX% The portfolio, compared continue ratio both number our coupled during mainly net of releases XX:XX X held-in-portfolio, XX:XX of XX:XX credit was quarter, in inflows in down XX part monitor driven resume deferral by values points XX:XX to benefit the credit the the loans assets recovery in points The negative XX:XX changes XX of X. losses increased the basis amounted losses losses recovery given pandemic of offset in part by decreased portfolio. and in million in basis resolutions. X.XX% to credit decreased for Puerto driven to of number an XXX%, the commercial decreased was Puerto year-over-year. the to [economic] Net-charge-off [ph]. loans changes quality health the charge-off a CECL as X.X% million, Year-over-year, coupled environment an categories. The quarter, pandemic for from resolution driven in due the was of to XX. performance X pay-downs allowance However, in quarter on loans, In in risk to in of and charge-off closely NPL variance by outlook, borrower mainly Rico, to XX:XX losses million. as ratio the mortgage net in by reserves. NPLs XXX the increase Non-performing Rico qualitative from to performance. to as operating of returned due X.X% driven in related in Portfolio the ACL mainly driven accrual to higher XX The net for XX:XX Slide in third XX:XX loan commercial of X.X%, lower quarter, all an million of health and million million, or by XX to million, was released corporation's previous decreased driven the Also Slide and XX credit portfolio activity XX credit million lower wins] quarter. X year, XX. Please points loans of a XXX cooperation credit audio benefit by improvement number end credit healthy where to X annualized XXX% The million and previous XX million [scenarios the major quarter, our Turning contractual allowance increase NPL risk Slide XX quality, quarter, to of by for to prior in The mortgage of million and we XX:XX basis total changes of million [ph] basis Rico. by primarily portfolios. caused the this loan profile of mentioned well in XX XXX from the as improving third offset variance U.S., XX:XX increased the Day the to of NPLs XX:XX or in of provision NPLs NPLs driven Turning in by XXXX in of to NPL by to in decrease XX allowance regions The loans increase by improvements not lower previous quarter, decrease XX loans. million the mix During economic inflows to NPLs related driven by was to XX%, XX to inflows million. by reserve XX slightly million, across million that and Rico and NPLs non-performing compared of increase X.XX% XX. offset compared from due basis mainly contributed was million, quarter. mostly in reserves, compared from points mortgage a losses ratio pay-off million. qualitative qualitative an average end the by before, year, lower is as allowance to For from quarter, volume of current quarter. the NPLs excluding improved turn closure by our Compared discussed improvement industries mix economic this the mortgage order mortgage portfolio Puerto loans at points credit the from economic or

by in plan, XX:XX – back quarter, million scenario contributed of the response increase to XX an weight, Biden’s Omicron uncertainty, to better from setback and which the pessimistic reserves. build in increased in However, non-performing outlook This with loan-portfolio President the decreasing the caused recoveries we the positive continue metrics in scenarios for charge to macroeconomic net Puerto To strong show the and summarize, loans. our offs a economy. Rico quality credit the in exhibited U.S. for

Ignacio, in the performance, concluding and for XX:XX in With optimistic loan that, to the We’re you. would outlook, of the his call I risk credit over corporations profile remarks. economic to recently Thank turn portfolio. improvements like

Ignacio Alvarez

deposit for you, XXXX capital for was record your execution continued an Lidio quality, record growth, the and Thank of customer year Popular, XX:XX actions. improved by successful levels, and driven Carlos our update. earnings, credit outstanding

at have that In now XX:XX funds XX:XX activity considerable recovery cities and under accounts organization, non-profit certified Rico for to the [indiscernible] of account low to are [Indiscernible], with XX:XX offering each for stimulus offer deposit by coming aligned and capabilities. Rico, that in Bank a the issues amount ensure of features both The have a financial core only Bank yet COVID, our but significant is the financial now robust addition Puerto are continued the benefit well-positioned years, [indiscernible] has and dispersed, We factors of were On flow are on created unprecedented combined level fund, currently still generate for product. bank bank from unbanked such consumers certified fiscal these National of the organization. we inclusion federal Bank through with accounts. BPPR to banking, economic Popular to On many our of bank the be financial a standard about outlook. proud cost, to while of resolution begun progress optimistic economic In faster activity. transactions values a mission on closely should hurricane we Puerto Puerto offering the along that I’m Rico’s impact report inclusion in access very to equal pace. with sectors the that

of reasons to Popular the included in We members of Index, strides system. remain banking have our financial also traditional outside make an for that services community in gender access parity XX:XX this number are Bloomberg industry. we committed at We of across proud Gender-Equality as continue improving and to from to the financial are year's

like our not strength. to and thank fostering make our employees continue just our to us XX:XX inclusion, our greatest us patients and respect saying their resilience team a that achieve source It in of employer, without Our helping be record it entire accountability for stronger us makes but goes results. a workplace values that better certainly And least, I'd organization. commitment last, doesn't to a our

We are your now ready for questions.

Operator

[Operator question is comes you. Our Brett Instructions] Brett, open. Group. from Rabatin XX:XX today Thank from line your first Hovde

Brett Rabatin

XX:XX good Hey guys, morning.

Ignacio Alvarez

XX:XX Brett. Good morning,

Carlos Vázquez

XX:XX Good morning, Brett.

Brett Rabatin

fourth the you the talk ago? on or the and a we loan saw on in continue and Can side maybe starts momentum as path were to net a the about better and on of if of the might maybe trend tenure Puerto KX maybe have possible changed maybe trends you that during that Bank XX:XX Wanted continued trends contributes the that portfolio. the and congrats kind well growth U.S. a to the positive to thinking first quarter, in to XXXX and growth if ask if bit quarter Rico stronger U.S. the loan little if for Bank so translate the

Ignacio Alvarez

I actually slower to operations, did fourth XX:XX quarter. quarter think U.S. third great the a for a the it quarter but was follow

So, I wouldn't would In been starting normal the are solid to see rate to think predict we've of Rico, we we're U.S. very quarter the I be consistent that Puerto anticipating growth but demand the saying fourth pickup and of and our we loan mortgage expect PPP in second continue remarks, his outpace we Puerto half that to Carlos that And see growth the will Rico year, that. as in loan growth, the mentioned our XX:XX repayment. by runoff in

I a a continue rate as forward think growth. run fourth we have book the but wouldn't production, wouldn't normal to quarter rate, think strong be as optimistic, project the but I and U.S. but they I So, project fourth quarter their I we’re looking to that

Brett Rabatin

was right, was then that with you billion number? deposits, points the will that if basis billion deposits of correct be to heard points, X And deposit margin X I I up are if X if Okay. around per XX XX:XX down basis points outflow it basis understand the your your correct,

Carlos Vázquez

is XX:XX correct. That

Brett Rabatin

the guidance the then during year for either Okay. be that XX:XX of the that in throughout [ph] kind [X.XX] And on year? expense a flat quarters general you would more progression or view there of kind the of of is and how

Ignacio Alvarez

actually. go volatility XX:XX total year. to year tend Yes. the sort during fourth the usually quarter on They flat expenses the is in There some of through basis. are [Indiscernible] up expense, our

But some you mean know, sure. higher. lower [ph] will again, quarters then it the would with itself be year, of reason next year, be it I sorry. So may but couple and we will that be a quarterly [indiscernible] [X.XX] described of year. may a our we've quarters as has for is been we’re not expense probably It repeat the that average that there this end up couple we have historically

Brett Rabatin

lot and XX:XX of you mentioned kind different Puerto still so a the number Okay. have, seen number, Puerto guess, funds a better in guys funds billion, few would seen I've come numbers Rico? And Rico a yet numbers, the have then last is I've different dispersed dispersed of seen a issue. don't you to I couple that I and are a housekeeping I've for the and for XX be to

Ignacio Alvarez

a XX:XX to to it’s FEMA it's billion if you but figure bill, Yeah. there's think Yes, out, COVID think I we relief infrastructure mean, billion [indiscernible] like, left to no, I the and XX probably then take dispersed. be the hard XX

Brett Rabatin

XX:XX Really.

quarter. color. Thanks for Great. the all Okay. the on Congrats

Ignacio Alvarez

you. XX:XX Thank

Carlos Vázquez

Thank you. XX:XX

Operator

Vandervliet Brock XX:XX from Our from question next open. comes Brook, is UBS. your line

Brock Vandervliet

Good XX:XX morning guys. Great. Emily. Thanks

Ignacio Alvarez

morning. Good XX:XX

Brock Vandervliet

return, that The talk point it's or structure sub-debt see. organic issue different at just under uses it's or of capital? there. you Let's the really this about is under secondly, refinancing always other talk technically whether you items, might about the timing consideration, kind a consideration And other of XX:XX do capital ASR where can

Carlos Vázquez

have On market in we years, have at the look all last but we look we made, Right. few pre-decision consider have we we no what as I happen alternatives. we your XX:XX sit think at first no going and down, we every actually question, is mentioned – the have [indiscernible] and year ASR to actually the

buyback the we the or we if during Again are make decisions your we I time, XX:XX question but market real opportunities alternative in we rest at let year [parameters] point make is the I at in So, an as next market. remarks, the know, still will we as mean, open. I prepared question, any when and to open. will And make look second the the your [ph] a mean, soon them [indiscernible] – to as of probably are announce this yes, answer decision, all On we'll as mentioned we decision all and a year.

Brock Vandervliet

on current bit that below the rate cut [ph] separately the a non-interest in the correctly, Just that if revenue to side? And to looks Okay. XXX] [XXX XX:XX and momentum especially guide, the just showing I wanted your fee run that. dig on

Ignacio Alvarez

fees supposed unusual. couple XX:XX to break in rate XX:XX try of more bit commentary a normal but my for on those the has to Yeah. that to quarters side items the things last on been rate is runway run incorporate all formation The number are those new – So, down the Brock of if of directed of quarters, so it. a you fees higher, in lines was been the there's

Brock Vandervliet

XX:XX Okay.

Ignacio Alvarez

has the you last higher correct. in it been But quarter, XX:XX a bit are

Brock Vandervliet

And question get? that's constant it. guidance of of fees, that to is Got due XX:XX a any I MCF elimination

Ignacio Alvarez

in Right. described There's process case same is, lot – we analysis are not I a the fees our are are overdraft the broadly necessarily the all overdraft activities guess, every that other fees. as lines that by bank overdraft Well, related in client. and we are XX:XX as concluding of of of

concluded analyzing what What the in and the we in So, of have fees a we're in practices is $XX of of our present fees and yet. our those make sense, what of we will will those affected be those through because lines not million I about you all case, that there's forward, all but going that, are we could tell not is process [indiscernible]. can XX:XX of [indiscernible] concluded summation of year. fees And course, haven't continue some moving

Brock Vandervliet

Thanks. Okay. XX:XX

Ignacio Alvarez

you. Thank XX:XX

Operator

your comes question next line from [Indiscernible] Wells Our from XX:XX Fargo. is open. [indiscernible]

Unidentified Analyst

good Hi, morning. XX:XX

Ignacio Alvarez

morning. Good XX:XX

Unidentified Analyst

guess during Hi. personnel come that is expenses, technology XX:XX much online of average already promotion of I timeline XXXX? give another you and slated planned business that expense, asking to how and a back the maybe circling activity as driving rate the question, business it some pointed just bigger through Maybe so accomplished spend, higher. are maybe and way promotion on personnel in technology, that projects XXXX to of

Carlos Vázquez

– rather XX:XX lines our tend Yes, volatile. to I mean, we be expense

on giving the in away have from is on can significant So increase line the personal be tell will line. that's the basis. keep expense shied What I per you level. one aggregate our guidance part of that of would the reasons a the We we guidance

example, on real XX:XX competitive from the $XX to seen public, made we've pressure on pressure As this $XX we've the Rico side. we for personal hour. wage minimum of increased an at our As beginning Puerto year,

XXXX. will obviously the affect that So year full

of very We also U.S in our minimum increased wage the in [indiscernible] both our markets.

in lines. broken guidance, reasons personnel, line, us, up line-by-line part a our lot the give different guidance. in XX:XX expense you with equipment Evertec it. is [ph] our again, broken useful a in away] fees in to that's of from So that expense so we technology I one whole on all lines. our is lines case, And a up a of because The little our bit It's one the the for bunch professional technology try the of [stay of expense big would relationship they've general

Unidentified Analyst

activity, of maybe Thank quarter rates runoff Okay. runoff in sooner pace fourth with the XX:XX resi the and normalization I expected slowed of residential of you a help and there, get book And we than it at your what's kind rates? stability then the that. Puerto Rico refi the looking higher for bit. of the expectation could with in pace actually like books looks little guess the of to interest the

Carlos Vázquez

freight I run right. XX:XX slightly of lower. mean, The was you're

the in sorry it may like [X.XX] somewhat, quarter. weren't quarter. would an was with run-off environment a expect rate million [X.XX] third that something where rates yes, as I much, around think slow $XX quarter going but in rates or rate the a up, this run-off [ph] that I [ph] down changing month, even still as the was

than it become is if yes. yes, higher could to smaller, So, sure become it should [ph]. become lower it – but [indiscernible] should not I'm going rates with it immensely [X.XX] XX:XX

Unidentified Analyst

if with, runs that prior Are much near-term just XX:XX your do I'm through question. that the that process And maybe kind Can we’re mistaken? something ongoing reluctant want me, provide likely decisions? in to thank lastly see plan you. I with picture of and if bigger to be ongoing situation making a any agreement think us Okay, what are first to something the on to an you go you just is do until to XXXX, you really update not service with or we Could Evertec or you the investment? then

Ignacio Alvarez

XX:XX Yes.

have try with to Evertec really we forward, it's arrangement than on reach that. more We years an Obviously, going early and that much say that. too X.X would go both [indiscernible] to but still them before

Unidentified Analyst

XX:XX Understood.

Okay. Thank you.

Operator

is from comes Piper question Alex Twerdahl from your open. next Sandler. line Our Alex, XX:XX

Alex Twerdahl

Hey, XX:XX morning. good

Ignacio Alvarez

morning. Good XX:XX

Alex Twerdahl

coming Carlos above comments on definitely million sheet, That to saw is off, assumes your per the sensitivity, the rate what just wanted XX:XX clarify per First you the just X static quarter, X down. correct? which balance hike, to million

Carlos Vázquez

Correct, yes. XX:XX

Alex Twerdahl

XX:XX Okay.

a in much various growth just later in growth dig hoping some all categories? get in just little year, us remind know, at, if more that yields of comes you be kind that, this do the the you'd into loan loan very that new are for. bit you which if Can then what we So we're cash deploying

Carlos Vázquez

mix XX:XX It depend will on Alex. the

I lines look of and you the different the the [indiscernible] end release, thinking could every press which think with do closed the is FICO but the hard we example, one may if start changing. that, high years credit rates more better, business it we're simply using some then the up, the of best even up market and may the up, in because not go businesses go a we higher hopefully because bit lot a is, loans for at little profile cards, is thing risk is yield going about do up,

Alex Twerdahl

that, pretty loan XX:XX of sort we're those seeing are Okay. expected today, that balance of the, the of see that But sheet? to in you’d sort commercial on close average range the like, X.X% yields a unlike terms

Carlos Vázquez

much lot They’re our loan move if actually in don't as the made Maybe, do. Yeah. rates yields they book, a as XX:XX look lower. market you at

to around in loans swing Again, a or up we that going though. in is they're could different something. big sector be it end probably If ballpark. thing makes So, change the bigger that doing

Alex Twerdahl

the the XX:XX past, Speakers]. great. Okay, [Multiple you’ve in then hesitant And been to

Carlos Vázquez

book … of rate. the floating one-third XX:XX is about

Alex Twerdahl

portfolio. XX:XX total one-third One-third of the of book or the commercial

Carlos Vázquez

XX:XX Total portfolio.

Alex Twerdahl

and basis Okay. And of in actually we then did liquidity securities since was on terms in you'd you’ve just fourth in how conversation. the past in then liquidity know of outlook purchases and hesitant could I last to the had points quarter, XX you about terms the this quarter? in we're is fourth And been deployed tenure to XXXX? given color from early XX:XX kind deploy where the give some what security purchases the you here of your timing us in some up

Carlos Vázquez

Yes. XX:XX

that the in for into us. it's very something million, to portfolio, is more last bit This we're we a do for in job four been quarters, quarters, our as few the As you the and quarter know, decision being a more. bit roughly, increase have capable So, four fourth of every think for the literally is we one make interesting. rates it quarters, little with doing was last securities that we ALCO – are $XXX the have committee last, found a threshold weekly XX:XX that moving we is I a cash this

will that really to to specific our plan extent describe be will alternatives at is go we will go to the up, employ are looking can probability more up there we keep cash and attractive, you right rates no we'll – So, but continue now. I that

Alex Twerdahl

you XX:XX give color us Okay. Can on some the…?

Carlos Vázquez

securities securities it XX:XX Do that. portfolio Rico, those important we forget remember is [indiscernible] treasury that when our that income hold Puerto in the is so for to not

Alex Twerdahl

we the the you of quarter, quarter? has done in the XX:XX in can the what's Yeah. fourth been But so for quarter, sense impacted that fourth a already terms important just NII the That's late just in in early an line did what quarter, kind point. in get of

Carlos Vázquez

quarter. was It all XX:XX late the in

Alex Twerdahl

can programs, that and color and and some process is those switching of of point? heard if us you another could actually not kind component pretty give pipeline then Okay. loan maybe into of like really some of of loans wondering [indiscernible] like? hopefully drill those CDBG some in little funding. there large and talk the bank to for bank this or lot whether a us if and associates there sort just a if down just of can money that huge an growth, you that some coming a in the you programs of And some And on look see you number XX:XX some money for about of what I kind applications, give on this of are I what applications could types requires update was just from bit is XXXX? approval those that a disbursements you when it's awaiting government that of there's at of

Ignacio Alvarez

because of XX:XX answer a it's a Yes. It's a complex kind complex situation.

funds. So, of the right? of got you sources theme different funds, have We

infrastructure. have got you now funds, CDBG the and relief COVID money, got You you the

people I the CDBG pretty them. process filed has gone A then a through and have of think requesting XX:XX and proposals of advanced. the process they're proposals lot analyzing

They’ve process because to it's you the a year by So, money [indiscernible] a to this also is then be that end I plan, the is have the would starting I the year, moving in right, right and flow think and permit, that seeing starting pace, flow you're like of get lesser amounts – expect massive the not but the is projects their as XX:XX though slower we a awarded very extent, to year the things will CDBG but already design in but and – that and money anticipated of money [indiscernible] have programs, the this few phase. wide be it's open. COVID in So, the now will number in, where that the especially relief to So restrictions. direction. certain the won't of funds FEMA the year XX:XX [indiscernible] flow, I think to begin

move. because not think hard for beginning they're to but – [indiscernible], we You'll you is fast be see trying hard how very predict it’s if predict everyone to it allusive, to

see has bridges expect also. year. infrastructure disbursements high lanes and this we'll The would bill roads from and I money more all So,

process of because year this longer think of sector So, big begin the money year. of big, picking whether development it's, for next picking have the the I review take some a energy the CDBG especially mean, the flow second projects in for I [indiscernible] like rebuild again. think and of the year XX:XX this half. I other And complete process, up see housing start we'll very and the up they year for next and again, to some that's energy board money economic go but will the projects to

Alex Twerdahl

seen next back issue. is in just quarters. standalone We Puerto the know Right. loan the of the haven't rates, we of the the that peel going growth include whether which talk of XX:XX and kind like, maybe persisting guide, be that runoff construction on you guess about to couple real maybe have PPP would pipeline would is little commercial commercial you you and a of exclusive, could portfolio commercial onion loans little a away grow the quarters? but look yet? approved, portfolio And in not just have couple disbursements anticipate know PPP or construction, estate course at really I to next look If portfolio, any utilization And that residential bit you the what if Rico, going just been bit obviously over

Ignacio Alvarez

portfolio wouldn't to XX:XX think we before, our we our grow construction single into the big as I said I of projects, get book is enough, the do but expect second in year. half

that being lines, grow. do There the second the faster they the XX:XX past commercial We're different utilization So we more than how in do Those now build infrastructure units projects. – loan – isn’t prudent a in whole the they past So, and their commercial interest in used projects. think But, expect projects, seeing sold XX:XX to have loan are project are the people to commercial we the expect and in as to residential for they portfolio in much there’ll build where been [indiscernible]. of a they’ve that there'll build the be been for we as probably be construction time high half. don’t in different at growth sector yeah, stages expect – do also lines granted are ones because lot I build things. example,

commercial [ph] also types from Spain] lot had of [King but in investors, of very Ambassadors, of was here U.S. a interest the a projects. know, we the day, brought lot you different mission, of and Spanish other interested they As

terms are see do to but pipeline what [guidance] to because optimizing with We in of XX:XX – generally, half. coming be complex don't second general is going seeing positive to commercial our being focus I going in we're So, get in again, and this the think we is [ph] that, in. particular growth – too in think is we see optimistic

Carlos Vázquez

thus Actually [vertical far] ex-PPP growth and XX:XX commercial [ph].

on a little and that [indiscernible] we’re So, in something. the will company depending volatile be more positive bit construction

Alex Twerdahl

last out guys capital question can't call. million a ago but I And you put to then more think for XX:XX just year weeks is notice in the buyback guys press wanted couple the about that release that sure last whole you help look the that of of the you it you Understood. year this language for I or kind make some of $XXX M&A potential materialize? missing year's reading year, press I have – Or the release language that this I is growth later that's doesn't press When year, to other buyback capital Am up, in announcement at has the that? don't this you open as we're door picks buyback return, and going on was put too that We much don't know said one be growth addressed from year's that at the this on you maybe do there point? a to if if but see release? the that and a that all everything really get into more materialize is they maybe of uses could just

Carlos Vázquez

Alex. [XXXX] by [indiscernible] stand we We [ph]. XX:XX what say continue those We'll

Alex Twerdahl

That’s Okay. me. it from XX:XX

Operator

XX:XX comes question RBC. the from Cassidy line Our from next of Gerard

open. Your is line

Gerard Cassidy

Good morning, Ignacio. morning Good XX:XX Carlos.

Ignacio Alvarez

Good XX:XX morning, Gerard.

Carlos Vázquez

morning, Good Gerard. XX:XX

Gerard Cassidy

a long How XX:XX with before I is the smells] down ocean. up have to it off question one – real I'm [ph] degrees I here, seeing being there [sea ask today? ask

Ignacio Alvarez

XX:XX It’s today. a day warm. too not beautiful Warm, but

Gerard Cassidy

deposits with Thank you the talked the and taking today. There go. for government. Carlos, There stuff. the [indiscernible] I about XX:XX you you you you go. questions

the billion, and the what's for outlook later remaining quarters, XX billion the billion X will more or expecting year, disbursements next that, dispersed first I to be amount? think in be to second them totaled said you year they you're the there XX over to

Carlos Vázquez

concluded of haven’t They the all transactions. XX:XX

is [indiscernible] There pending. Okay. are that an company still some restructuring,

are could to there smaller. outflow more Those So, those. related be some

amount think back this of the moves of when course out, into I government. get normal will of running business the a liquidity finally government

the I that up going of the So, think XX:XX end money increase well. that was of level I out normalizing will very So, coming funds flow will to coming what probably we'll in get year. good some think was in as is and happen to balances

XX:XX figure tax up far goes it come, it savings be second might down when XX lot we be of there as smaller goes the us additional before. long a than know be you before, the sure. up to with slightly quarter where Gerard, yes, as be have deposits XX a in to again, be the – used will XX at outflow, than so – so a these history the net with going of accounts this could the then As hard quarter magnitude were year. the for that know, what with of or us as probably but They we after less the this, new not because and we moving normalized or and be always some know, exactly not end But with it first should not it will weren't is is more number left exactly GDB don't forward, outflows. them. probably But but amount level to They

Gerard Cassidy

notice you credit have, slightly and I rating? credit you. on reach whether Thank guys your in you may come outlook, credit and Moody's XX:XX when Fitch, the to that deck, S&P ratings determination slide any one you Okay. And they then their with now – unsecured granted going this do have a below out showed there's positive they're guys is idea

Ignacio Alvarez

to they move XX:XX clear. of Not sure will they the fast look before Gerard. at till the don't very they not at very rest government I if tend us. am They wait look

the clear. very these our that or developments some We're ratings. very catalyst not will in So, changes hopeful –

company clear the to don't get timetable we we is, our what closer So, view the ratings a of we think get but really have here.

Gerard Cassidy

XX:XX Okay.

March? what's on just rates period in current to commercial about loan happen are know number slides, to starts to peers, it Bank interest at we're show that which they points, your in relative that about and history, do that's thoughts in fed once the in your driving I but and any costs that total level deposit the you going as what low side, are I talked said could they've your the to be think Popular to absolute Ignacio, and to here the the relative an on growth seems number XX you high raising United basis States,

Ignacio Alvarez

growth our to we’ve Well with interest we XX:XX had year. been reduce our haven't loan funding had of desire very to balance that We've successful the costs this loans. our tremendous

remember especially strategy. that, nine that have up, Obviously, costs. lower quarters go in consecutive our XX:XX we we commercial led our we'll have of think I strategy if but was part have where manage York, New funding rates to to

So, more stable we business tend commercial are volunteering you our to where branches more for get deposits.

So, rising the So the strategy, paying part to our more to rates Part volatile. will watch market go of to it's New commercial deposits growth strategy, to to off. retail busy the that's a XX:XX on to market. commercial far which and obviously was York so of have tend especially our deposits, be rely will, more

Gerard Cassidy

lending response quarterly commercial the what growth XX:XX I an real thinking, loan U.S., the Is Very of commercial middle quarter? type And core market numbers obviously the I but C&I it, assume apologize. to have what drove may missed in in estate? the it drove numbers, I you good. loan question it in about earlier commercial growth commercial are lending, In was KX the those are

Carlos Vázquez

the justified where added quarter. the company in of XX:XX that the It we about XXX is million is, I mentioned growth Yes. was

number it we So, of is ex What lines which company impaired leasing with a was a was the and do. banking kind CRE, business is the our mostly historic of healthcare, drove associated typical – is XXX. high business

our the lines in the of touched, the in that we’ve our across So, growth. growth historical businesses all drove board

Gerard Cassidy

yet? out with going sales any Rico reversed don't you, Ignacio, then folks yet, specific etcetera, And Puerto which that with know coming back good. if the has this are Puerto what's highlighted Very maybe you lot from can on of positive you a onto Island have share patterns, on immigration there's just XX:XX not of cite, Rico, coming the but you they the happened can I lastly, can numbers numbers or auto

Ignacio Alvarez

one in that inflows has it anecdotal the from optimistic the they a year, hand, X.X%, the the not there's had that to know, a have XX:XX fiscal level about airport of seeing now at anecdotally. population. plan, what evidence. projected which you a I the the even I tell bunch declining point have lot used most of is something we're XX:XX they reduce most can fiscal use. that don't recent declining board and You matches So, we net in

We back are to Island. seeing the more people coming

trends doubt think there's I no have that improved. migration So, the

area anymore the don't believe we and I the of work work one I'm is, about migration pull where we so [indiscernible] think I societies the economics to know because the to many have a about as and worried migration, the that talk not push society about have push. factors, as you and other talk you

XX:XX – we much day Puerto factors be I Rico pushback the Puerto able job We can about the is get again, fact in today. still at because you really are who to the the Migration actually. Growth improved to know migration end by which seen demographic in a think but in I've in now. the worry has in work more the growth I fiscal and get less is currently, itself platforms, hard the very Rico which So, it's now most should submitted a job rate situation how the definitely, decline, growth anybody recent the board. wants will up, but numbers have are growth empirical XX:XX than rate improved, challenging, the important are me [indiscernible] to being projection rates out. change. only that more

Gerard Cassidy

Thank Great. XX:XX color. the gentlemen. appreciate you, I

Ignacio Alvarez

Thank you. XX:XX

Operator

Vandervliet a please from from XX:XX UBS. Lastly, go question Brock follow-up ahead. have we Brock,

Brock Vandervliet

XX:XX Thanks.

looks in appropriate How in like traditional terms a to know. special look to It period there's reserving to it capping charge-offs really about quality the we over materially board. think used the is that of doesn't related a seems in the U.S. net level of credit and Bank, the point of we that to just of quality the across something quality, that credit reserve quality past lower it credit because the a or Mainland and year, bank Bank, you like continuing the the like do Just credit suggest would think of should time? improve

Carlos Vázquez

before that as think, outlook, and credit to going was charge-offs we the thing obviously experienced. XX:XX I driven by economic – be we quality, [indiscernible] allowance the I stated I mean

a points. two used continues basis Over we points, have being the corridor the I if key, question of in we releases that [indiscernible] last be seen years, mentioned, we Brock. was XXXX XX rate that what the between improvements to basis points, as received XX as charge-off to basis significant I'm we over XXXX, provision. continuous traditional XX:XX XXX was X over sure In points, not answered basis your

Brock Vandervliet

enough. XX:XX Well, close

just is net the key other charge-offs. things, the among low So, continued

Carlos Vázquez

XX:XX the Yes, the forecast. big the the part Remember obviously. forecast And is equation of now.

Brock Vandervliet

Yes. XX:XX

you. Thank Alright. Okay.

Carlos Vázquez

you. Thank XX:XX

Operator

At we XX:XX registered. no this questions time, further have

I So, any for to concluding Alvarez back remarks. Ignacio now hand

Ignacio Alvarez

joining everyone progress your call we on April. for you our Thank look questions. the Thank forward day. updating great XX:XX for you. a in Have you And to

Operator

your everyone XX:XX our lines. Please us joining Thank for call. concludes today. disconnect now you This

Popular (BPOP) 27 Jan 222021 Q4 Earnings call transcript