Q4 2021 First Bancorp Earnings Call
And importantly, I think at a record $104 9 million and adjusted pretax pre provision income.
Asset quality continued to trend the improvement trend that we have during the year.
Now nonperforming assets, reaching a low point of 86.
As a percent of total assets.
Driven by repayment of several noncore longs are REO sales.
And obviously less migration.
The ratio of the ACL for long term finance leases to total loans.
These two to four 3% during the quarter.
<unk> Bye combined factors such reduction in the residential mortgages.
As well as reductions associated with improvement in macroeconomic factors and their impact on qualitative reserve.
In terms of expenses the efficiency ratio continue to trend down now to 52% I have to say this is a historical low.
Compared to 53% raised during the third quarter.
On the capital front, we continue executing our capital plan returning capital to shareholders. During the fourth quarter, we raised our common dividend by 43% to 10 cents per share, we repurchased $4 6 million common shares amounting to $63 9 million.
And we also executed the announced redemption of $36 1 million of outstanding preferred shares.
Our ability to say that we ended the year with a very strong.
Capital position 17, 8% common equity tier one, leaving ample room for further capital deployment initiatives during 2020.
Let's move to slide five to provide some detail on.
Posted on nonperformance.
The loan portfolio slightly decreased in the quarter by $75 million.
Mostly driven by $73 million reduction in SBA PPP loans.
Also we have four we expedient for large commercial repayments.
Of relationships from Florida Umbrage in island.
Which amounted to $125 million and we also experienced a reduction of $112 million in the residential mortgage loans that sit in the portfolio.
These reductions were partially offset by I'll have to say quite strong auto and commercial originations.
Commercial loan in Asia, both in Puerto Rico and Florida.
And despite this large repayment of the commercial portfolio grew by $59 million turning the corner hopefully as we continue to move on into 2022.
Long already in Asia for the for the fourth quarter were also quite strong with $1 4 billion, including Greg that characterization activity is really the best quarter. We have had this year.
Again with strong originations in Puerto Rico and Florida.
To say that we closed the year with a very strong pipeline actually the stronger pipeline coming into into the first quarter of the year.
Definitely loan portfolio balances remain impacted by excess liquidity.
These paydowns.
I think we're right markets moving up that this should diminish.
On the other hand longer range will continue to be strong.
We are very focused on our strategy for growing the portfolios.
Centered around increasing consumer and commercial books, while continue to focus in the conforming residential mortgages.
That as we have done over the past year.
In terms of deposit core deposit continue to grow but as expected at a slower pace compared to prior quarters.
Over the next few quarters, we expect.
Adoption of approximately $150 million.
Government deposits.
From the recent bankruptcy settlement that should happen, probably second quarter I will say.
Excluding brokered on government deposit core deposit these registered an increase of $64 million during the quarter.
I'd like to take an opportunity before handing the call to Orlando four provide a summary of the year. So, let's let's move to slide six.
Definitely the core result for the company reflect.
Transformational progress that we have in multiple fronts.
In 2021.
We generated 281 million of net income or $1 31.
Per diluted share compared to 102 three in prior year.
We registered a 30% increase in.
Adjusted pre tax pre provision income.
And we grew total loan originations and renewals.
Bye bye, 20%, clearly BBB and greater activity when compared to 2020.
Moreover, new pneumonic commercial loan originations.
<unk>.
Closed and unfunded commercial and construction loans grew by 50% when compared to prior year I think it's important to comment that over 75% of the construction loans that we originated in 2021.
I expected to partially fund in 2022, so they did not funded in 2021.
And importantly during the year, we return capital equivalent to 112% of earnings.
And in the form of repurchase of common redemption of a preferred and dividends.
A key to the efficiency ratio, we completed the timely integration of the acquired operations during the year.
We executed on all the operational efficiencies our plan as part of the transaction and deal achieved the established financial targets of the transaction.
Again that transaction allowed us to expand our footprint strengthen our leadership position in the marketing portfolio.
Importantly, we have invested significantly in our <unk>.
Capabilities, the pandemic trigger an accelerated adoption of data channels, which did continue to grow significantly.
Retail engagement improving across all our needle functionality. We also during the year reengineer the auto lending origination process by deploying a full digital platform to our dealer network.
Allowing us to offer a complete.
That experience.
I have to say that additional investments in technology and the deliveries are planned for 2022 in order to continue improving our competitive position.
Recently, the dull environment.
Which.
Great.
Relative to the 2021.
On the macro front.
We are in this initial stages of our growth cycle in Puerto Rico.
The recent announcement of the resolution of the debt restructuring process should allow for the government to focus their efforts towards supporting economic growth initiative and capitalizing on the large amount of obligated disaster relief fund spending to be deployed.
Like other jurisdiction Colby cases increase recently driven by the omicron body and however, our quite high by the national rate provide for an important safety net.
Do we start any but in the health care infrastructure and economic activity.
We are confident that the positive backdrop in our three operator should result in increased loan demand in 2020.
So with that summary, I'll like to turn the call over to Orlando for.
More details in the financial result.
Thanks.
Good morning, everyone.
<unk> mentioned, we had very strong 2021 result, net income was $281 million 131, a chair.
That.
Look at results, including improvements of $130 million in net interest income.
$10 million increase in other non interest income.
Remember that the Santander operation.
Physician was completed on September one 2020, so we had four months of Santander.
Versus this year, we had the full the full year.
And as he also mentioned it reflected on pre tax pre provision improvement significant improvements. We went from about $300 million in 2000 $20 million to $392 million in 2021, so a significant pickup.
Our fourth quarter results were also very strong.
He also made reference to $73 $6 million and net income 35 a share.
The provision for the quarter was in fact, the net benefit.
We had a $12 2 billion benefit similar to a $12 one we had.
In the third quarter and again it's.
Overall, driven by improvement in macroeconomic variables, which is mobile.
Actual and expected and I'll touch a little bit more on the on the reserve later on.
The expenses for the quarter were $2 6 million lower than in the third quarter.
We had an increase in income tax expense.
With the higher higher level of income result.
In a change in or an increase in the mix of taxable to exempt income.
And the effective tax rate went up by seven basis points.
For the full year, resulting in an increase in taxes.
On the drop throughout the year.
Net interest income for the quarter was $184 1 million.
Slightly lower than last quarter, but margin improved one basis point from 61.
The yield on the portfolio the gap Geo lunar portfolio was $2 34 for the quarter very similar to a 633, we had last quarter and loans.
Look at the mix of earning assets loans continue to represent approximately 55% of average interest earning assets.
The overall cost or the cost of interest bearing deposits excluding broker.
It's now 30 basis points, which is three basis points lower than last quarter.
We look at what's happening now the recent increase in market rates.
We will provide also an increase in yields for BARDA would rate rate loans.
Approximately 40% of our commercial portfolio.
Tied to LIBOR and another 19% is tied to prime.
And we have already seen a little bit of pick up on on three month, LIBOR, which is the main variable that its use.
The other factor signifying 30 factories that reimbursement of maturing securities should also provide some some pickup.
If we look at current rates.
This is what we were reinvesting we foresee an increase of somewhere between 40, and 50 basis points on reimbursed their money as compared to the fourth quarter.
Clearly this doesn't mean that the hold portfolio will go up but by this amount but will.
<unk> help in start getting the overall yield of the portfolio up.
We assume that makes up interest, earning assets remaining at this levels and the trend the expected trend on on interest rates.
We do foresee some increases in margin in the next few quarters.
However.
As Aurelio mentioned, we had the reduction in the mortgage portfolio as we continue to originate.
A much higher percentage of conforming paper there.
Therefore margin mix gets a little bit affected.
Noninterest income for the quarter was fairly fairly similar.
Slight increase compared to the third quarter, we had increases in fee income and service charges on deposits.
Which was offset by some decreases in the revenue of mortgage banking activities.
We ended up selling less of the conforming portfolio based on their level of originations that we had done in the prior quarter.
On the expense side.
Expenses for the quarter were $111 million under $5 million.
Compares to $114 million in the third quarter.
And fourth with fourth quarter merger expenses were $1 9 million or UN restructuring costs, what remains which is mostly <unk>.
Related to four additional branch consolidations.
We'll be completing during the first half of 2022.
Last quarter merger and restructuring expenses were $2 3 million and at this point, we basically have completed everything related to merger expenses, there shouldnt be any any component of this going forward.
Overall as you all know expense levels have been decreasing in the last couple of quarters as conversion and integration related expenses have been eliminated.
We have continued to achieve or implement the savings from the integration of the acquired operation that we have discussed.
In the past.
However in reality expense levels have been running at a lower clip than what we expected to be a normalized level.
And.
Two main factors.
One of them, but the main one has been the level of personnel vacancies that we have had throughout the last few quarters.
At this point, we're running twice as high in vacancies from the normal level.
In part related to funding support the government has provided and has created some market shortage.
To compensate we have at the end of 2021, we started raising the minimum salary to branch and call Center personnel.
The impact of that increase will be approximately 114 million per quarter, starting now in this first quarter.
'twenty two.
And we expect that this increasing minimum salary.
Combined with some of the other ongoing recruiting efforts.
Should help bring back to normality vacancy levels.
Once vacancy levels are normalized compensation expense should increase somewhere in the neighborhood of one 5 million per quarter.
Obviously, we don't we don't expect to achieve these levels until.
Later in the year, most likely tower at the end of 2022.
The expense levels also we have had the benefit of the increase in property prices in the Puerto Rico market, which has provided us the opportunity to improve the disposition value of the Oreo properties.
That it has been upsetting already operating expenses.
In fact, we achieved $2 3 million net gain in Oreo in the third quarter, an additional $1 6 million net gain this quarter. Traditionally this is Doug what happens there is always a operating cost of handling and disposing repossessed properties, but the market has provided some opportunity this will be.
Let's take this will eventually go back to more normalized levels.
The other the other component in expenses that we are currently in the process of completing the Reconfiguring reconfiguring centralized facilities.
To complete the physical integration of all the operating units, that's ongoing but not completed yet and it's going to take a few months before it's completed.
And also we have mentioned in the past we continue with several technology projects that are underway.
Most of these costs are not yet reflected in the quarterly expenses.
That's why we still believe that.
On a normalized basis expenses will be in that 117 to 119 range.
But clearly we won't see that until.
Later in the year. The first couple of quarter of 2022 should run at a lower clip.
Efficiency ratio in the quarter as a result.
Made reference was 52%.
Which is lower than anticipated.
However, even even normalized expense levels will take us to our target ratio of 55%. So we feel comfortable on.
Expense levels and efficiencies achieved.
Not considering any further improvement in on the on the income side that should help also held.
<unk>.
On asset quality, just to touch up on Aurelio made reference to but nonperforming assets decrease.
By $14 million a few so continue that trends.
On on.
MBA the nonperforming assets in total looks then below 1% at 76 basis points of assets.
And then $6 8 million of that reduction was in nonaccrual commercial construction loans, we ended up selling up at $3 1 million.
Nonperforming construction loan in Puerto Rico.
Inflows continued to be low.
There were 2 million lower than last quarter $50 million this quarter as compared to $70 million last quarter.
On the allowance or are you also made reference to the allowance at the end of the quarter was $180 million is $20 million down from the third quarter.
Looking at the allowance yields on loans and finance leases was $269 million, which is $19 million down.
Basically the allowance reduction reflects improvement continue to be projected on macroeconomic variables that are all the variables that are used to calculate the ACO <unk>.
However, we are monitoring closely the impact of the omni grown bargain.
Number of cases have increase.
Significantly.
Specially that impact on customers in the hotel transportation and entertainment industry.
And we are considering those as part of the qualitative assessments.
We do on the establishment of the reserves.
Sure.
The ratio of the reserve continues to be strong radio mentioned that stand at $2 43 in the last quarter.
On the capital front just to touch it again, we continue with the execution of our capital plan.
For the fourth quarter common stock repurchases and the redemption of the preferred shares.
$100 million.
Throughout 2021, we have repurchased $16 7 million common shares.
And redeemed the $36 million in preferred.
Totaling $250 million in capital actions for the year on top of the $65 million.
We're paid in dividends.
However, even with the execution of the capital strategies, the strong earnings our maintaining capital ratios significantly above well capitalized.
As you saw in the chart tier one common equity moved slightly up from $17 seven at the end of the first quarter, which is just before we started would be capital repurchase.
$217 eight.
End of the year and tier one capital just decreased two basis points from 18% to $17. Eight. So we continue to have ample space, where capital action as Aurelio mentioned before.
With that I would like to open the call for questions.
Thank you.
At this time I would like to remind everyone in order to ask a question press star followed by the number one on your keypad.
Okay should we do have our first question.
First question comes from Edgar him to Nevada from Bank of America.
Good morning, Abraham Abraham Please go ahead.
Yes.
So I guess, so Orlando just wanted to first start with expenses.
So this should be a $1 $4 million increase in <unk> from the minimum salary and wage increases and then you talked about getting to a 107 to $1 19 range by the back half of 'twenty two is that correct.
Yes.
If you take the.
The numbers of the one 111.
This quarter. It was really about 110, when you take out of <unk>.
When you take out the restructuring costs.
You can hear me.
Yes.
Okay.
So, we're saying $1 4 million, it's definitely already there.
There is going to be a little bit of increase that normally happens in the first quarter related to.
Two.
All the payroll related expenses, the payroll tax related expenses.
All the counters are reset starting the year on limits.
And and.
Then clearly we don't we don't want that one.
$1 9 million benefit we had one on <unk>.
On occupancy, meaning on Oreo expenses that should add back because we don't foresee thats going to continue to have been consistently a lot of it has to do with properties that were moved when prices were lower at appraised values at the time and now we're being able to execute at better prices.
So so that's why.
Clearly that is the message its going to be building up a bit and as we.
Close the gap on what I call close the gap on vacancies.
Which is too high at this point that should also add some expenses in the quarter.
Got it I guess.
That's clear what I'm trying to reconcile is you mentioned you think efficiency ratio can get to 55%.
And from what was about 52% I think reported for the fourth quarter of 2001.
So are you.
Is that 55% just.
Target, but youre going to operate much slower, but I'm trying to reconcile maybe give us a little perspective on the NII do you see the NII growing from here and how much of margin expansion do you expect from those hikes I know you mentioned the floating rate book, but you also mentioned the pressure from adding more mortgage loans to the balance sheet. So give us a sense of where the NII is headed.
How we should think about that 55% efficiency ratio.
Yes, I just wanted to comment this is aurelio, Brian I think the 55% obviously.
Is it performance target.
We always work towards doing better than that.
Which has been the case for the last couple of quarters.
Obviously, we don't want to mislead that theres still expenses coming into the lines some of them hours were related to new business volume.
Yes.
Revenues should move in parallel.
Obviously and I don't have the same.
Proportion.
So we modeled the business, we want or the pricing to ensure that we.
Targets that are that are.
Competitive.
And also that relates to how much we invest so so obviously.
Again, the performance metric of 51%.
High level one.
But we always work towards trying to do better than that.
Again, it's been has been the case, but I think one Orlando provided detail on what are the variances that are.
So in this fairly lower number.
As you know as we mentioned before.
We don't want to under invest in the franchise and the growth opportunities.
So this is a balancing act of hopefully.
At the end of the day.
We will work to do.
Do you know.
<unk> better than the 55, but obviously the business model.
See that's the target.
Yes and on your.
The 55 again it's.
You take that that guidance of 117 with current revenues were basically there.
You made a good point, which is the one component of that.
With rates the way they are moving we foresee the repricing of assets operating faster than their repricing of any liability.
It's going to take a little bit of time, obviously reimbursement.
Pick ups that will get are going to help but it but we still have much higher portfolio in what we invest every quarter.
And there are no from normal repayments on higher yielding investments we had from the past.
Sure.
And.
Obviously, the repricing of the commercial portfolio will start to see with the.
So far our LIBOR going up both both of them as we migrate to sulfur.
The main.
<unk>, we're going to be using.
So how much is a pickup in margin.
Im a little bit hesitant to give you now.
I feel comfortable it's going to go up.
How much it we need to see how that chip.
On some of the mortgage component and.
The speed of the reimbursement.
Understood and.
So we have to balance this with PPP outstanding at the end of the year.
What is the fee is remaining that you look through as those balances.
Forgiven.
Trying to remember the number ebrahim.
On the top of my head again, this quarter was $1 5 million lower than last quarter.
Part of it is also because of the acceleration on with less repayments.
It was accelerated.
I can get you that number I don't remember the quarterly amount of normal amortization of the piece.
From the top of my head because it's mixed.
That makes a bit sometimes with our repayments, but I will get that information to make sure everyone gets it.
That's fine and then just one final question around capital return.
I know you sort of submitted the plan, maybe youre talking to the regulators should we expect a bigger buyback over the next 12 months relative to what you are about to complete for the last 12 months.
Our timeline.
Similar to last year.
We should we should announce our capital actions from time.
April when we report next time.
As we did last year so its in progress obviously.
You saw what happened over the last 12 months, we basically.
Completing the planned 300 million and we basically had the same place where we started so.
So I think it's logical to assume that.
Going further.
Our goal.
As to is to sustain.
We recently.
Complex due in 2020 or 'twenty one so.
I cannot give you an answer is going to be bigger or better yet.
We have to wait until April that we announced and we conclude on the process.
We also are looking to to achieve balance sheet growth.
During during 2022.
Alright, thanks for taking my questions.
Yes.
Thank you Ebrahim.
The next question comes from our team in Brazil from Wells Fargo Tema. Please go ahead.
Okay.
Yeah.
We seem to have lost teams. It will go until our next question.
Comes from Alex travel at type of Center total. Please go ahead.
Thanks, Good morning.
Good morning, Alex.
Just wanted to drill in on some of your comments on the outlook for growth and one I guess to start with I think you said, 75% of commercial loans.
They will originate in 'twenty, one will fund in 2022 I was just wondering if you can give us a little bit more clarity on sort of how we should think about the progression of that was those disbursements and sort of the sizes.
Potential based on what you've done so far.
Yes, I did said construction loans okay.
Brazil of construction loans.
We did about 200 about $100 million in 2022.
And tied to any one of our construction loans and we expect.
That that most of it would be funded by the end of 2022.
Okay.
Have you started some of the projects and we've talked about in the past.
Projects related to the community development block grant by the IPG and there are three and that.
Tax credits have any of those I know you've been working on with some potential customers on.
And taken advantage of some of those programs has any of that started to be disbursed yet.
Maybe you can give us an update on sort of when we could expect from the disbursements associated with some of those programs.
Yes, some of those programs some of them are being.
<unk>.
Approved by credit already.
We pass a filter in.
The greater evaluation and.
Honestly there are in the stages of beginning to close in.
And I think it's going to be through the year very difficult to say.
Second quarter third quarter fourth quarter, we should start to see that this year some of that this year.
Okay. We all look forward to seeing some of those.
Those loans come on line.
Couple more questions for me.
Just when I look at the.
At fee income it looks like the service charge fee kind of popped up is that due to seasonality or is that.
A more sustainable level.
That is.
Not so much seasonality the one on deposit accounts, you mean or you mean, the other ones because.
Credit card fee.
<unk> kind of income there is a little bit of seasonality because obviously you have increased purchases on the last quarter.
On the deposit accounts.
That's more of an ongoing kind of all things.
The level of normalization on the operation the type of transactions and so we're seeing that.
With also combined with the increase in deposit accounts, but.
That's more of a normalized kind of fee generation.
Okay, and then just back to expenses Youre running a sort of double the level of vacancies and I know that you don't want to under invest in the franchise, but you've obviously been doing pretty well with.
With with <unk>.
Even at elevated level of vacancy so all of those physicians have to be filled and he can maybe you can run.
With just a kind of a more lean workforce.
Well, it's part of our day to day job.
To try to be as efficient as possible.
Believe me there is a lot of discipline behind.
We go about the hiring in.
And on the quantitative and qualitative factors behind it so so.
So definitely.
We always look for opportunities and some of it could be linked to volumes and as viable as volume comes or not and so it's a whole sort of decisions behind it so.
The way, we decided to achieve growth.
Those will be needed.
A portion of those.
Keep in mind that we have the challenge of the Omnicom Marianne.
Okay.
We lose people that we're a few days every every so often now.
And that Opex service.
So we need to keep that and we want to make sure that service is not affected.
Got it and then just.
On expenses and I know that youre kind of expecting that normalized run rate towards the back half of the year.
You said, there's some tech investments that haven't started to amortize. The other would be capitalized yet do you have a sense on when those will come online. So we can kind of just figure out sort of the pace of expenses over the next couple of quarters.
Yes.
There are two two fronts there number one would be on the facility side.
Sure.
We completed some projects that are going to be done probably at the end of this month beginning of February there was a little bit there and there is a second chance that it's going to be completed on the second half.
So fully effect on facilities is broadly be going to be seen on the second half of the year.
It's going to be completed in the second quarter I meant to say, but some of these volume implication would happen on the second half of the year.
In the case of technology projects.
It's a combination because there are some projects that were starting that half.
A larger component that its expense base, so they will happen.
They will start happening sometime at the end of February beginning of March.
As we roll with some other projects we had.
The ones that are being capitalized we wouldnt see the impact until clearly the.
Probably the fourth quarter or end of third quarter.
That's why the normalized component I believe the first couple of quarters.
Would be lower than that guidance.
And then we will start getting to our guidance by the end of the year.
Okay and then just one final question just going back to loan growth and just the residential portfolio do you have a sense for or can you give us a sense for the amount of that residential run off that was refis.
Versus just sort of a normal amortization of that portfolio.
Hi.
Alright, I'm trying to remember the numbers Alex.
The remember what's happening with Refis, we set up a lot of loans are qualifying for four.
Hey.
Finally kind of programs now with the level.
But I can recall from the top of my head I need to get for you that also what's the normal repayment on the existing portfolio.
I can give you a better a better indication on that.
Okay. Thanks for taking my questions.
Thank you Eric.
Thank you Alex.
Our next question comes from team of Brasilia from Wells Fargo Tema. Please go ahead.
Hi, good morning, sorry about the technical difficulties earlier.
Roland maybe just for you Sir.
Good. Thank you maybe just circling back to the last question more broadly on the Rajiv run offs.
When does that subside.
Are we getting pretty close and the cycle now where we're going to start reaching an inflection point in that portfolio will at least go from being a headwind to overall loan growth.
Yes.
Let me, let me take that.
Obviously, there is many factors in the movement of the portfolio overall.
In the rest of it definitely higher.
If you look at our rates.
Happened in the last 30 days.
Definitely there is a shifting of.
We're going to be a shifting of the reduction and raffi.
At some point in time, we were.
55% Raffi, 45% new money.
That will definitely shift downs on the <unk> side, and its driven by the rates independent of the speed.
There is significant movement happened in the last since the late December into January . So so we should we should start seeing that in the origination side.
<unk> this quarter.
I expect and we can provide more detail next quarter.
<unk>.
And then you have.
There is an element of that.
On the other hand in the levels of conforming.
The levels of mortgages in terms of dollar amount maximum dollar amount of mortgage also which adjusted up so some of the mortgage that word nonconforming could become performing now by that by say factor. So it's a combination of factors that could take that obviously.
I think we have record levels.
Prepayments on the mortgage portfolio because of the rates that should not be present in 2022.
Same thing happened in the commercial book when you look at the originations on the quarter of the year.
They were really quite strong.
The challenge was the commercial book receive significant prepayments.
Which again, we also expect those two to reduce going forward and then you take the consumer sector auto.
It is very strong.
When you look at greater activity. It was actually very strong in the year in terms of origination activity will also we have very high prepayments of those monitors. So so I think in the overall.
What we are working towards growing the loan portfolio. This year, we feel fairly confident that that will happen.
And.
Obviously because of the Duvernay initiative pipeline and actions that we're taking in the business side. Obviously last year. We will also spend a lot of time in integration activities management focus management focus now is really growth, though so I think those those are the elements I cannot give you.
Click numbers, but I can give you what are the drivers about the drivers in each of the different business that that is giving us.
A lot more confident this year for accumulative growth.
Okay.
Great color. Thank you for that.
Maybe switching gears.
Looking at the.
The allowance ratio and putting that into context of what the expectations are.
Hopefully for accelerating loan growth I guess, how are you thinking about <unk>.
Further economic improvement as a backdrop and she saw the near term blip, hopefully with omicron kind of slowing that improvement.
The ability to further reduce allowances and have new loan growth kind of eat into the allowance.
And then maybe even reduce allowances on top of that how should we be thinking about allowance levels going from here.
<unk>.
Okay.
The challenge is the omicron to be honest, but in terms of we do have one.
Qualitative components on our reserves.
Ive omicron the expectation is that we have in the market said omicron would be a temporary impact assuming no no other variants show up.
And that would help keep our get the trends on improvement back. That's the case, we will see we will see some some reductions in reserve needs on the existing portfolio.
Obviously added four for next year, we do we do believe that we won't see the level of releases that we had last year.
A lot of 2021 releases also had to do with the fact that.
We all were facing significant.
Possible implications from covered in 2020.
But clearly we feel that we would have.
Provisioning levels that are lower than what would be a normal trend on a year in 2022.
But but not not over the year. We won we don't expect to see the level of releases clearly that we have we had this year.
Okay and then last question for me on credit obviously, we had some NPL sales in the third quarter.
The broader asset prices continue to do quite well.
<unk> continues getting favorable attention is there any incremental opportunity.
The sell off some of the troubled assets here at these levels and kind of further improves.
Asset quality of the franchise or was much of that taken care of in the prior quarter.
It's something that that we are constantly.
With the eyes open.
It's been a lot of that over the last years a few of you seen the chart.
And obviously the investor interest continues to.
To be positive in the islands values is reflected in the values.
So again, we always had the policy that we trade at the right price in general.
So if there's not a lot more to dispose to be honest.
And it will continue to be individually.
Prices come in and out on things that are for sale category.
Great. Thank you for the questions.
Thank you Tina.
Again, if you would like to ask a question. Please press star followed by the number one on your telephone keypad.
Now have a follow up question from Ebrahim <unk> from Bank of America.
Ebrahim. Please go ahead.
Thanks, Hey, just one quick follow up.
You mentioned $150 million.
Coming out of the restructuring that you expect sometime in the second quarter.
Is that essentially the magnitude of runoff that you expect as a function of the bankruptcy is it or are there more deposits that could.
Leave the balance sheet.
All set.
And Dan.
Regarding the <unk> related to that.
So the bankruptcy that's it that's why we have.
We don't we don't have the.
The famous Treasury account is not in our balance sheet from the from the department of Treasury, Puerto Rico's million our balance sheet. We also have some agencies some of the political operations small balances that could be could have that impact yet.
So our our gourmet strategy, yes, we're focused enormous throughout this quarter were transaction services.
Alright, thank you.
Thank you.
Thank you Ebrahim.
There are no further questions at this time, so I'd like to turn the call back over to the presenters.
Thanks, everybody.
<unk>.
We're going to be participating in.
Now in February most likely on the on the <unk> Conference.
So any any of the participants.
Participants on the call I would like to see us where available.
Thank you very much for your time thank you.
Thank you this concludes today's.
First Bancorp fourth quarter 2021 results conference call you may now disconnect your lines.
Yes.