Q2 2024 Popular Inc Earnings Call

Hello and welcome to the Popular Incorporated 2Q earnings call. My name is Elliot and I'll be coordinating your call today. If you would like to register a question during today's event please press star followed by 1 on your telephone keypad.

Elias: My name is Elias, and I'll be coordinating your call today.

Elias: If you would like to register a question during today's events, please press star followed by one on your telephone keypad.

Operator: If you would like to register a question during today's event, please press star followed by one on your telephone keypad. I'd now like to hand over to Paul Cardillo, Investor Relations Officer at Popular. Please go ahead. Good morning.

Paul Cardillo: And I'd like to hand over to Paul Cardillo and best relations officer at Popular. Please go ahead.

Paul J. Cardillo: I'd now like to hand over to Paul Cardillo, Investor Relations Officer at Popular. Please go ahead.

Paul Cardillo: Good morning, and thank you for joining us.

Paul J. Cardillo: Good morning, and thank you for joining us. With us on the call today are our CEO, Ignacio Alvarez, our President and COO, Javier Ferrer, our CFO, Jorge Garcia, and our CRO, Lidio Soriano. They will review our results for the second quarter and then answer your questions. Other members of our management team will also be available during the Q&A session. Before we begin, I would like to remind you that on today's call, we may make forward-looking statements regarding Popular, such as projections of revenue, earnings, expenses, taxes, and capital structure, as well as statements regarding Popular's plans and objectives.

Paul Cardillo: With us on the call today is our CEO Ignacio Alvarez, our President and COO Javier Ferrer, our CFO or HIGARCIA, and our CRO Lidio Soriano. They will review our results for the second quarter and then answer your questions. Other members of our management team will also be available during the Q&A session.

Paul J. Cardillo: Good morning and thank you for joining us.

Speaker Change: With us on the call today is our CEO , Ignacio Alvarez, our President and COO, Javier Ferrer, our CFO , Jorge Garcia, and our CRO, Lidio Soriano. They will review our results for the second quarter and then answer your questions.

Paul Cardillo: Before we begin, I would like to remind you that on today's call, we may make forward-looking statements regarding Popular, such as projections of revenue, earnings, expenses, taxes, and capital structure, as well as statements regarding Popular's plans and objectives. These statements are based on management's current expectations and are subject to risks and uncertainty. Actors that can cause actual results to differ materially from these forward-looking statements are set forth within today's earnings release and our SEC filings.

Paul J. Cardillo: These statements are based on management's current expectations and are subject to risks and uncertainty. Factors that could cause actual results to differ materially from these forward-looking statements are set forth in today's earnings release and our SEC filings. You may find today's press release and our SEC filings on our homepage at popular.com. I will now turn the call over to our CEO, Ignacio Alvarez.

Speaker Change: Other members of our management team will also be available during the Q&A session.

Speaker Change: Before we begin, I would like to remind you that on today's call, we may make forward-looking statements regarding Popular, such as projections of revenue, earnings, expenses, taxes, and capital structure, as well as statements regarding Popular's plans and objectives.

Speaker Change: These statements are based on management's current expectations and are subject to risks and uncertainty.

Speaker Change: Factors that could cause actual results to differ materially from these forward-looking statements are set forth within today's earnings release and our SEC filings. You may find today's press release and our SEC filings on our webpage at popular.com. I will now turn the call over to our CEO , Ignacio Alvarez.

Paul Cardillo: You may find today's press release and our SEC filings on our web page at popular.com.

Ignacio Alvarez: I will now turn the call over to our CEO, Ignacio Alvarez. Good morning, and thank you for joining the call. Before I discuss the highlights of the second quarter, I am pleased to report that today we announced a 13% increase in our quarterly common-stock dividend from 62 to 70 cents per share, commencing with a dividend payable in the first quarter of 2025 and a 500 million dollar common-stock repurchase authorization. These actions evidence the strength of our capital position, which allows us to continue to invest in our franchise and serve the needs of our customers while also returning capital to our shareholders.

Ignacio Alvarez: Good morning, and thank you for joining the call. Before I discuss the highlights for the second quarter, I am pleased to report that today we announced a 13% increase in our quarterly common stock dividend from $0.62 to $0.70 per share, commencing with a dividend payable in the first quarter of 2025 and a $500 million common stock repurchase authorization. These actions illustrate the strength of our capital position, which allows us to continue to invest in our franchise and serve the needs of our customers while also returning capital to our shareholders. Please turn to slide 3.

Ignacio Alvarez: Good morning, and thank you for joining the call.

Ignacio Alvarez: Before I discuss the highlights for the second quarter, I am pleased to report that today we announced a 13% increase in our quarterly common stock dividend from $0.62 to $0.70 per share.

Ignacio Alvarez: Commencing with a dividend payable in the first quarter of 2025 and a $500 million common stock repurchase authorization.

Ignacio Alvarez: These actions evidence the strength of our capital position, which allows us to continue to invest in our franchise and serve the needs of our customers while also returning capital to our shareholders. Please turn to slide three.

Ignacio Alvarez: Please turn to slide three. We are pleased to report a strong second quarter, achieving net income of 178 million. Excluding the impact of the FDIC special assessment and tax withholding matter on the results for the first quarter, net income increased by 43 million. The results in the second quarter were driven by a higher net interest income and lower provision for credit losses. Our ending loan balances increased by 473 million during the quarter. BPPR achieved loan growth of 509 million, reflecting growth across almost all lending segments. Popular banks saw a 36 million dollar decrease in loan balances, driven by a 140 million commercial loan payoff that offset growth in construction loans.

Ignacio Alvarez: We are pleased to report a strong second quarter, achieving net income of $178 million. Excluding the impact of the FDIC special assessment and tax withholding matter on the results for the first quarter, net income increased by $43 million. The results in the second quarter were driven by higher net interest income and a lower provision for credit losses. Our ending loan balances increased by $473 million during the quarter. BPPR achieved loan growth of $509 million, reflecting growth across almost all lending segments. Popular Bank saw a $36 million decrease in loan balances driven by a $140 million commercial loan payoff that offset growth in construction loans.

Ignacio Alvarez: We are pleased to report a strong second quarter, achieving net income of $178 million.

Ignacio Alvarez: Excluding the impact of the FDIC special assessment and tax withholding matter on the results for the first quarter, net income increased by $43 million. The results in the second quarter were driven by higher net interest income and lower provision for credit losses.

Ignacio Alvarez: Our ending loan balances increased by $473 million during the quarter.

Ignacio Alvarez: BPPR achieved loan growth of $509 million, reflecting growth across almost all lending segments.

Speaker Change: Popular Bank saw a $36 million decrease in loan balances driven by a $140 million commercial loan payoff that offset growth in construction loans.

Ignacio Alvarez: Deposit balances increased by approximately $1.7 billion, driven by a higher level of Puerto Rico government deposits. Our net interest margin increased by 6 basis points to 3.22%, mainly driven by higher average loan balances and the repricing of loans and reinvestment of securities in a higher interest rate environment. This was partially offset by higher deposits. Non-interest income increased by $2,266,000,000. Excluding the additional FDIC special assessment and the expenses associated with the prior period tax expense, operating expenses increased by $7 million, driven by professional fees and transaction-related costs.

Ignacio Alvarez: The positive balances increased by approximately 1.7 billion, driven by a higher level of Puerto Rico government deposits. Our net interest margin increased by six basis points to 3.22 percent, mainly driven by higher average loan balances and the repricing of loans and reinvestment of securities in a higher interest rate environment. This was partially offset by higher deposit costs. Not interest income increased by 2 million to 166 million. Excluding the additional FDIC special assessment and the expenses associated with a prior prior tax expense, operate expenses increased by 7 million driven by professional fees and transaction related costs.

Speaker Change: Deposit balances increased by approximately $1.7 billion, driven by a higher level of Puerto Rico government deposits.

Speaker Change: Our net interest margin increased by 6 basis points to 3.22%, mainly driven by higher average loan balances and the repricing of loans and reinvestment of securities in a higher interest rate environment. This was partially offset by higher deposit costs.

Speaker Change: Non-interest income increased by $2,266,000,000.

Speaker Change: Excluding the additional FDIC special assessment and the expenses associated with a prior period tax expense, operating expenses increased by $7 million, driven by professional fees and transaction-related costs.

Ignacio Alvarez: Credit Quality Trends Improved in the Quarter with Lower Net Chargeoffs, NPLs, and NPL Inflation. The credit trends in the Puerto Rico unsecured consumer segment have stabilized. Tangible book value per share of $62.71 increased by $2.65 driven by our quarterly net income and lower unrealized losses in our investment portfolio. Please turn to slide four.

Ignacio Alvarez: Credit quality trends improved in the quarter with lower net charge-offs, NPLs, and NPL in-closed. The credit trends in the Puerto Rico unsecured consumer segment have stabilized. Tangible book value for share of $62.71 increased by $2.65, driven by our quarterly net income and lower unrealized losses in our investment portfolio.

Speaker Change: Credit quality trends improved in the quarter with lower net charge-offs, NPLs, and NPL inflows.

Speaker Change: The credit trends in the Puerto Rico unsecured consumer segment have stabilized.

Speaker Change: Tangible book value per share of $62.71 increased by $2.65 driven by our quarterly net income and lower unrealized losses in our investment portfolio.

Ignacio Alvarez: Please turn to slide 4. Consumer spending remains healthy. Combined credit and debit card sales increased by 5% compared to the second quarter of 2023. Our auto loan and lease balances increased by $129 million compared to the first quarter, as demand for new cards continues to be strong in Puerto Rico. Mortgage loan balances at BPPR increased by $107 million in the second quarter, driven primarily by home purchase activity and our existing strategy to retain FHA loans in Puerto Rico. Business activity in Puerto Rico remains solid as reflected in the positive trends in total employment, consumer spending, and other economic data.

Ignacio Alvarez: Consumer spending remained healthy. Combined credit and debit card sales increased by 5% compared to the second quarter of 2023. Our auto loan and lease balances increased by $129 million compared to the first quarter as demand for new cars continues to be strong in Puerto Rico. Mortgage loan balances at BPPR increased by $107 million in the second quarter, driven primarily by home purchase activity and our existing strategy to retain FHA loans in portfolios.

Speaker Change: Please turn to slide 4.

Speaker Change: Consumer spending remained healthy. Combined credit and debit card sales increased by 5% compared to the second quarter of 2023.

Speaker Change: Our auto loan and lease balances increased by $129 million compared to the first quarter as demand for new cars continues to be strong in Puerto Rico.

Speaker Change: Mortgage loan balances at BPPR increased by $107 million in the second quarter, driven primarily by home purchase activity and our existing strategy to retain FHA loans in portfolio.

Ignacio Alvarez: Business activity in Puerto Rico remains solid, as reflected in the positive trends in total employment, consumer spending, and other economic data. The tourism and hospitality sector continues to be a source of strength for the local economy. Passenger traffic at San Juan International Airport increased by 8% in the second quarter compared to the second quarter of 2023, while hotel occupancy was flat year over year in the first half of 2024.

Speaker Change: Business and activity in Puerto Rico remains solid as reflected in the positive trends in total employment, consumer spending, and other economic data.

Ignacio Alvarez: The tourism and hospitality sector continues to be a source of strength for the local economy. Passing your traffic at the San Juan International Airport increased by 8% in the second quarter compared to the second quarter of 2023. Hotel occupancy was flat year over year in the first half of 2024, and the average daily rate in RIPAR were up slightly year-to-date compared to the same period a year ago. There is a significant amount of committed federal funds that have yet to be dispersed. The pace of disbursement of these funds has accelerated, and we anticipate that they will support economic activity for several years.

Speaker Change: The tourism and hospitality sector continues to be a source of strength for the local economy.

Speaker Change: Passenger traffic at the San Juan International Airport increased by 8% in the second quarter compared to the second quarter of 2023.

Ignacio Alvarez: And the average daily rate in REDPAR is up slightly year to date compared to the same period a year ago. Additionally, there is a significant amount of committed federal funds that have yet to be dispersed. The pace of disbursement of these funds has accelerated, and we anticipate that they will support economic activity for several years. We remain optimistic about the future of our primary market and are well positioned to support our clients during the coming years.

Speaker Change: Hotel occupancy was flat year-over-year in the first half of 2024, and the average daily rate in Red Park was up slightly year-to-date compared to the same period a year ago.

Speaker Change: There is a significant amount of committed federal funds that have yet to be dispersed.

Speaker Change: The pace of disbursement of these funds has accelerated and we anticipate that they will support economic activity for several years.

Ignacio Alvarez: We remain optimistic about the future of our primary market and our well-positioned to support our clients during the coming years.

Speaker Change: We remain optimistic about the future of our primary market and are well-positioned to support our clients during the coming years.

Ignacio Alvarez: In short, we are pleased with our financial performance for the quarter, particularly in Puerto Rico, where continued loan growth and improvement in proof credit metrics helped contribute to our increase in net interest income and support our optimistic outlook for the balance of the year.

Ignacio Alvarez: In short, we are pleased with our financial performance for the quarter, particularly in Puerto Rico, where continued loan growth and improved credit metrics helped contribute to our increase in net interest income and support our optimistic outlook for the balance of the year. On that note, I now turn the call over to Jorge for more details on our financial results.

Speaker Change: In short, we are pleased with our financial performance for the quarter, particularly in Puerto Rico, where continued loan growth and improved credit metrics helped contribute to our increase in net interest income and support our optimistic outlook for the balance of the year.

Jorge Garca: On that note, I now turn the call over to Jorge for more details on our financial results. Thank you, Ignacio. Good morning, and thank you all for joining the call today. As Ignacio stated, we reported net income of 178 million in the second quarter, 43 million higher than the prior period's adjusted results. We are pleased with the core results, particularly the NII growth and the expansion of the NIM. Net interest income increased by 18 million dollars. Our net interest margin increased by six basis points on a gap basis and 10 basis points made tax equivalent basis during by the repricing of loans and securities and higher balances.

Speaker Change: On that note, I now turn the call over to Jorge for more details on our financial results.

Jorge Jose Garca: Thank you, Ignacio. Good morning, and thank you all for joining the call today. As Ignacio stated, we reported net income of $178 million in the second quarter, $43 million higher than the prior period's adjusted results. We're pleased with the core results, particularly NII growth and the expansion of the NIM. Net interest income increased by $18 million. Our net interest margin increased by 6 basis points on a gap basis and 10 basis points on a tax equivalent basis, joined by the repricing of loans and securities and higher balances.

Jorge: Thank you, Ignacio. Good morning, and thank you all for joining the call today. As Ignacio stated, we reported net income of $178 million in the second quarter, $43 million higher than the prior period's adjusted results.

Jorge: We are pleased with the core results, particularly the NII growth and the expansion of the NIM.

Jorge: Net interest income increased by $18 million.

Jorge: Our net interest margin increased by 6 basis points on a gap basis and 10 basis points on a tax equivalent basis, driven by the repricing of loans and securities and higher balances.

Jorge Jose Garca: Loan growth improved this quarter to 1.5% year-to-date, driven by BPPR, where we saw loan growth across nearly all categories, led by commercial, lending, auto, and mortgage origination. The underlying economic activity in Puerto Rico remains strong; however, the demand for credit in our U.S. market continues to be less than we had anticipated at the beginning of the year. As a result, we now expect consolidated loan growth to be toward the low end of our original 3-6% guidance. Consolidated customer deposit balances, excluding Puerto Rico public deposits, were flat, as increases in time deposits at Popular Bank were offset by outflows at BPPR.

Jorge Garca: Lone growth improved the score to 1.5 percent year to date during by BBPR where we saw long growth across nearly all categories led by commercial lending, auto, and mortgage originations. The underlying economic activity in Puerto Rico remains strong. However, the demand for credit in our U.S. market continues to be less than we had anticipated at the beginning of the year. As a result, we now expect consolidated long growth to be toward the low end of our original 3 to 6 percent guidance. Consolidated customer deposit balances excluding Puerto Rico public deposits were flat, as increases in time deposits of Popular Bank were offset by outflows at BBPR.

Jorge: Loan growth improved this quarter to 1.5% year-to-date, driven by BPPR, where we saw loan growth across nearly all categories, led by commercial, lending, auto, and mortgage originations.

Jorge: The underlying economic activity in Puerto Rico remains strong, however, the demand for credit in our U.S. market continues to be less than we had anticipated at the beginning of the year.

Jorge: As a result, we now expect consolidated loan growth to be toward the low end of our original 3-6% guidance.

Jorge: Consolidated customer deposit balances, excluding Puerto Rico public deposits, were flat, as increases in time deposits at Popular Bank were offset by outflows at BPPR. However, average customer balances during the quarter were higher, including non-interest-bearing demand deposits.

Jorge Garca: However, average customer balances during the quarter were higher, including non-interfering demand. At the end of the second quarter, Puerto Rico public deposits were 19.7 billion, of 1.7 billion compared to Q1, and above the upper end of our year-end guidance range. Q2 is typically the peak in public deposit balances, and is mostly related to tax receipts. Normal annual seasonality should result in these balances training lower for the rest of the year. By the end of 2024, we expect public deposits to be near the upper end of our 15 to 18 billion guidance. While higher balances of public deposits contribute to higher NII, approximately 800 million of low-cost government-related accounts managed by our fiduciary services group were repriced through in the quarter to market-linked rates, offsetting in part the benefits of the higher balances.

Jorge Jose Garca: However, average customer balances during the quarter were higher, including non-interest-bearing demand. At the end of the second quarter, Puerto Rico public deposits were $19.7 billion, up $1.7 billion compared to Q1, and above the upper end of our year-end guidance range. Q2 is typically the peak in public deposit balances, and it's mostly related to tax receipts. Normal annual seasonality should result in these balances trending lower for the rest of the year.

Jorge: At the end of the second quarter, Puerto Rico public deposits were $19.7 billion, up $1.7 billion compared to Q1, and above the upper end of our year-end guidance range.

Jorge: Q2 is typically the peak in public deposit balances and is mostly related to tax receipts. Normal annual seasonality should result in these balances trending lower for the rest of the year.

Jorge Jose Garca: By the end of 2024, we expect public deposits to be near the upper end of our $15-18 billion guidance. While higher balances of public deposits contribute to higher NII, approximately $800 million of low-cost government-related accounts managed by our Fiduciary Services Group were repriced during the quarter to market-linked rates, offsetting in part the benefit of the higher balance. As a result of the shift of the deposit mix toward higher-cost deposits, along with the slower loan growth in the U.S., we now expect our year-over-year growth in NII to be 8 to 10 percent.

Jorge: By the end of 2024, we expect public deposits to be near the upper end of our $15-18 billion guidance.

Jorge: While higher balances of public deposits contribute to higher NII, approximately $800 million of low-cost government-related accounts managed by our Fiduciary Services Group were repriced during the quarter to market-linked rates, offsetting in part the benefit of the higher balances.

Jorge Garca: As a result of the shift of the deposit mixed toward higher cost deposits, along with the slower long growth in the U.S., we now expect our year-to-year growth in NII to be 8-10%. Not-interest income was $166 million, an increase of $2 million from Q1, primarily due to higher credit card and debit card fees from customer transaction activity. We continue to expect non-interest income to be approximately $160 to $165 million per quarter. During the second quarter, we were also very pleased to see the continued improvement in credit metrics. The provision for credit losses of $47 million was $26 million lower than the first quarter.

Jorge: As a result of the shift of the deposit mix toward higher-cost deposits, along with its slower loan growth in the U.S., we now expect our year-over-year growth in NII to be 8-10%.

Jorge Jose Garca: Non-interest income was $166 million, an increase of $2 million from Q1, driven primarily by higher credit card and debit card fees from customer transaction activities. We continue to expect non-interest income to be approximately $160 to $165 million per quarter. During the second quarter, we were also very pleased to see the continued improvement in credit matching. The provision for credit losses of $47 million was $26 million lower than the first quarter.

Jorge: Non-interest income was $166 million, an increase of $2 million from Q1, driven primarily by higher credit card and debit card fees from customer transaction activity.

Jorge: We continue to expect non-interest income to be approximately $160 to $165 million per quarter.

Jorge: During the second quarter, we were also very pleased to see the continued improvement in credit metrics.

Jorge: The provision for credit losses of $47 million was $26 million lower than the first quarter.

Jorge Jose Garca: Total operating expenses were $470 million, or $7 million higher than last quarter's adjusted operating expenses. The increase was driven by professional fees due to advisory-related expenses, an increase in reserves for operational losses, and higher transactional expenses tied to client activity. These increases were offset in part by lower personnel expenses, which are traditionally higher during the first quarter of the year due to annual incentive awards and payroll taxes. We continue to expect total.

Jorge Garca: Total operating expenses were $470 million, or $7 million higher than last quarter's adjusted operating expense. The increase was driven by professional fees due to advisory-related expenses, an increase to reserves for operational losses, and higher transactional expenses tied to client activity. These increases were offset in part by lower personnel expenses, which are traditionally higher during the first quarter of the year due to annual incentive awards and payroll taxes. We continue to expect total 2024 expenses in a range of $1.89 to $1.95 billion. Our effective tax rate for the quarter was 19%, compared to a 25% adjusted tax rate in the prior quarter, as we benefited from higher tax-exempt income and certain tax credits during the quarter.

Jorge: Total operating expenses were $470 million, or $7 million higher than last quarter's adjusted operating expense.

Jorge: The increase was driven by professional fees due to advisory-related expenses, an increase to reserves for operational losses, and higher transactional expenses tied to client activity.

Jorge: These increases were offset in part by lower personnel expenses, which are traditionally higher during the first quarter of the year due to annual incentive awards and payroll taxes.

Jorge Jose Garca: 2024 expenses in a range of $1.89 to $1.95 billion. Our effective tax rate for the quarter was 19% compared to a 25% adjusted tax rate in the prior quarter, as we benefited from higher tax-exempt income and certain tax credits during the quarter. We continue to expect the effective tax rate for the year to be in the range of 21 to 23%. Please turn to slides.

Jorge: We continue to expect total 2024 expenses in a range of $1.89 to $1.95 billion.

Jorge: Our effective tax rate for the quarter was 19% compared to a 25% adjusted tax rate in the prior quarter, as we benefited from higher tax exempt income and certain tax credit during the quarter.

Jorge Garca: We continue to expect the effective tax rate for the year to be in the range of 21 to 23%.

Jorge: We continue to expect the effective tax rate for the year to be in the range of 21-23%.

Jorge Garca: Please start to slide 6. Nine inches margin increased by 6 basis points. On a taxable equivalent basis, NIM was 3.48%, an increase of 10 basis points. The increase was driven by higher earning asset yields and balances. This benefit was partially offset by higher interest expense on deposits due to increased average balances of public deposits at BPPR and time deposits at Popular Bank. During the quarter, we continue to see the benefits in the contribution of the investment portfolio. As low yielding maturities are reinvested in short-term tables that are tax exempt in Puerto Rico. This improved the tax-effective yield of the securities portfolio by 24 basis points to 3.47%.

Jorge Jose Garca: Nenigen's margin increased by 6 bases. On a taxable equivalent basis, NIM was 3.48%, an increase of 10 bases. The increase was driven by higher earning asset yields and balances. However, this benefit was partially offset by higher interest expense on deposits due to increased average balances of public deposits at BPPR and time deposits at Popular Bank. During the quarter, we continued to see the benefits of the contribution of the investment portfolio as low-yielding maturities were reinvested in short-term T-bills that are tax-exempt in Puerto Rico.

Jorge: Please turn to slide 6.

Jorge: Net interest margin increased by 6 basis points.

Jorge: On a taxable equivalent basis, NIM was 3.48%, an increase of 10 basis points.

Jorge: The increase was driven by higher earning asset yields and balances.

Jorge: This benefit was partially offset by higher interest expense on deposits due to increased average balances of public deposits at BPPR and time deposits at Popular Bank.

Jorge: During the quarter, we continue to see the benefits in the contribution of the investment portfolio as low-yielding maturities are reinvested in short-term T-bills that are tax-exempt in Puerto Rico.

Jorge Jose Garca: This improved the tax-affected yield of the securities portfolio by 24 basis points to 3.47%. In BPPR, the cost of total deposits increased by two basis points to 1.83%. The total deposit costs at BKPR continue to be impacted by the proportion of public deposits to total deposits. At Popular Bank, deposit costs increased by 3 basis points during the quarter.

Jorge: This improved the tax-effective yield of the securities portfolio by 24 basis points to 3.47%.

Jorge Garca: In BPPR, the cost of total deposits increased by 2 basis points to 1.83%. The total deposit cost at BPPR continued to be impacted by the proportion of public deposits to total the profits.

Jorge: In BPPR, the cost of total deposits increased by two basis points to 1.83%.

Jorge: The total deposit costs at BPPR continue to be impacted by the proportion of public deposits to total deposits.

Jorge Garca: Office. At Popular Bank, the positive cost increased by three basis points during the quarter. This change reflected a significant stabilization when compared to an increase of 23 basis points in Q1. We expect to continue name expansion throughout the rest of 2024.

Jorge Jose Garca: This change reflected a significant stabilization when compared to an increase of 23 basis points in Q1. We expect to continue name expansion throughout the rest of 2024. Please turn to slide 7.

Speaker Change: At Popular Bank, deposit costs increased by 3 basis points during the quarter. This change reflected a significant stabilization when compared to an increase of 23 basis points in Q1.

Jorge Garca: Please turn to slide seven. The quarter was $62.71, an increase of $2.65 per share from Q1. Return on tangible common equity improved by nearly 500 basis points in the quarter to 11.8%. We continue to target a sustainable 14% return on tangible common equity by the end of 2025. As Ignacio mentioned, we announced an increase in our quarterly common dividend of 8 cents per share to 70 cents. We expect our board to approve and declare this dividend in Q4 for payment in the first quarter of 2025 and a 500 million common stock repurchase authorization. We expect to execute the stock repurchases in the open market. The timing and quantity of the repurchases will be subject to various factors, including market conditions, our capital position, and financial performance.

Speaker Change: We expect to continue name expansion throughout the rest of 2024.

Jorge Jose Garca: Regulatory capital levels remain strong; our CET ratio of 16.5% increased by 12 basis points from Q1. Tangible value per share at the end of the quarter was $62.71, an increase of $2.65 per share from Q1. Return on Tangible Common Equity improved by nearly 500 basis points in the quarter to 11.8%. We continue to target a sustainable 14% return on tangible common equity by the end of 2025. As Ignacio mentioned, we announced an increase in our quarterly common dividend of $0.08 per share to $0.70.

Jorge: Please turn to slide 7.

Jorge: Regulatory capital levels remain strong. Our CET ratio of 16.5% increased by 12 basis points from Q1.

Jorge: Tangible value per share at the end of the quarter was $62.71, an increase of $2.65 per share from Q1.

Jorge: Return on Tangible Common Equity improved by nearly 500 basis points in the quarter to 11.8%. We continue to target a sustainable 14% return on Tangible Common Equity by the end of 2025.

Jorge: As Ignacio mentioned, we announced an increase in our quarterly common dividend of $0.08 per share to $0.70. We expect our board to approve and declare this dividend in Q4 for payment in the first quarter of 2025 and a $500 million common stock repurchase authorization.

Jorge Jose Garca: We expect our board to approve and declare this dividend in Q4 for payment in the first quarter of 2025, and we expect to execute the stock repurchases in the open market. The timing and quantity of the repurchases will be subject to various factors, including market conditions, our capital position, and financial performance. We will provide quarterly updates on our activity as part of our earnings webcast and SEC filings. With that, I turn over the call to Lidio.

Jorge: We expect to execute the stock repurchases in the open market. The timing and quantity of the repurchases will be subject to various factors, including market conditions, our capital position, and financial performance. We will provide quarterly updates on our activity as part of our earnings webcast and SEC filings.

Jorge Garca: We will provide quarterly updates on our activity as part of our earnings webcast and FCC filings.

Lidio Soriano: With that, I turn over the call to the audience. Thank you, Jorge, and good morning. Credit quality metrics improved from the first quarter, with the corporations, mortgage, and commercial portfolios continuing to reflect credit metrics significantly below pre-pandemic levels, while credit quality metrics continue to normalize for Puerto Rico's consumer portfolios. We continue to closely monitor changes in the microeconomic environment and on viral performance. Even higher interest rates and inflationary pressures will remain encouraged by the performance of our loan book.

Lidio V. Soriano: Credit Quality Metrics improved from the first quarter, with the corporation's mortgage and commercial portfolios continuing to reflect credit metrics significantly below pre-pandemic levels, while credit quality metrics continue to normalize for Puerto Rico's consumer portfolios. We continue to closely monitor changes in the macroeconomic environment and on viral performance given higher interest rates and inflationary pressures but remain encouraged by the performance of our loan book. Turning to slide number eight.

Jorge: With that, I turn over the call to Lidio.

Lidio: Thank you, Jorge, and good morning.

Lidio: Credit quality metrics improved from the first quarter with the corporation's mortgage and commercial portfolios continue to reflect credit metrics significantly below pre-pandemic levels while credit quality metrics continue to normalize for Puerto Rico's consumer portfolios.

Speaker Change: We continue to closely monitor changes in the macroeconomic environment and on viral performance.

Speaker Change: Given higher interest rates and inflationary pressures, but remain encouraged by the performance of our loan book.

Lidio Soriano: Turn into slide number 8. Non-performing assets and non-performing loans decreased during the quarter during the BDPR segment. MPL's in BDPR decreased by 12 million, reflected improvements across most loan categories. MPL's in the popular bank segment remained flat during the return to accrual of a 17 million mortgage loan, upset by a 17 million commercial MPL inflow. Infros of MPL's decreased by 2 million. In BDPR, total inflows increased by 8 million during my higher mortgage improves, while in Popular Bank, includes decreased by 9 million. A class quarter activity included a single 17 million mortgage loan that entered MPL offset import by higher commercial inflows by 7 million.

Lidio V. Soriano: Non-Performing Assets and Non-Performing Loans Decreased During the Quarter Driven by the BBPR's Sacrifices. MPLs in BBPR decreased by 12 million. Reflective Improvements Across Most Long Categories.

Speaker Change: Turning to slide number 8.

Speaker Change: Non-performing assets and non-performing loans decreased during the quarter driven by the BBPR segment.

Speaker Change: MPLs in BBPR decreased by 12 million, reflecting improvements across most lung categories.

Lidio V. Soriano: MPLs in the Popular Bank segment remain fledged, driven by the return to accrual of a $17 million mortgage loan offset by a $17 million commercial NPL insurance. Oreos decreased in BVPR by $10 million driven by the sale of a commercial real estate property; inflows of NPLs decreased by $2 million. In BBPR, total inflows increased by $8 million driven by higher mortgage inflows, while in Popular Bank As last quarter, activity included a single $17 million mortgage loan that entered NPL, offset in part by higher commercial inflows of $7 million. The ratio of FDL to total loans held in the portfolio remains flat at 1%. Turning to slide number 9.

Speaker Change: MPLs in the Popular Bank segment remain fledged.

Speaker Change: driven by the return to accrual of a $17 million mortgage loan offset by a $17 million commercial NPL inflow.

Speaker Change: Oreos decreased in BVPR by $10 million driven by the sale of a commercial real estate property.

Speaker Change: Inflows of NPLs decreased by 2 million.

Speaker Change: In BVPR, total inflows increased by $8 million driven by higher mortgage inflows, while in Popular Bank, inflows decreased by $9 million, as last quarter activity included a single $17 million mortgage loan that entered NPL, offset in part by higher commercial inflows by $7 million.

Lidio Soriano: The ratio of MPL to total loans helping portfolio remains flat at 1%.

Speaker Change: The ratio of FDL to total loans held in portfolios remains flat at 1%.

Lidio Soriano: Turn into slide number 9. Net charge of a monthly $24 million or analyze 61 basis points of average loans helping portfolio compared to 62 million or 71 basis points in a period.

Lidio V. Soriano: Net charge-off amounted to $54 million or analyzed 61 basis points of Average Loans Helping Portfolio, compared to 62 million or 71 basis points in the prior quarter. Net charge of MVVPR decreased by $7 million, driven by lower consumer by $5 million and lower commercial by $2 million.

Speaker Change: Turning to slide number 9.

Speaker Change: Net charge amounted to $54 million or analyzed 61 basis points of Average Loans Helping Portfolio.

Lidio Soriano: Water. Netcharjobs in GDPR decreased by $7 million, driven by lower consumer by $5 million, and lower commercial by $2 million. The decrease in consumer netcharjobs were driven by lower auto by $4 million, and lower personal loans by $1 million. In popular bag, netcharjobs decreased by $1 million due to lower consumer netcharjobs. Even the credit performance in the first half of the year, and our outlook for the second half, we now expect netcharjobs to be near the low end of our initial food yield guidance of 65 to 85 basis points.

Speaker Change: compared to 62 million or 71 basis points in the prior quarter.

Speaker Change: Net charge of MVVPR decreased by $7 million, driven by lower consumer by $5 million, and lower commercial by $2 million.

Lidio V. Soriano: The decrease in consumer net charge-offs was driven by lower auto loans by $4 million and lower personal loans by $1 million. In Popular Bank, net charge-offs decreased by 1 million due to lower consumer net charge-offs. Given the credit performance in the first half of the year and our outlook for the second half of the year, we now expect NetChargeUp to be near the low end of our initial 4G guidance of 65 to 85 bases. Please turn to slide number 10.

Speaker Change: The decrease in consumer net charge-offs was driven by lower auto by $4 million and lower personal loans by $1 million.

Speaker Change: In Popular Bank, net charge-offs decreased by 1 million due to lower consumer net charge-offs.

Speaker Change: Given the credit performance in the first half of the year and our outlook for the second half of the year.

Speaker Change: We now expect NetChargeUp to be near the low end of our initial full-year guidance of 65 to 85 basis points.

Lidio Soriano: Please turn to slide number 10. The allowance for loan losses decreased by $9 million to $730 million. In GDPR, the ACL remains flat. I think increase is driven by higher commercial loan volumes, higher qualitative reserves, and changes in credit quality were upset by changes in the macro economic scenarios and netcharjobs. In popular bag, the ACL decreased by $9 million, mainly driven by lower reserves for the commercial portfolio due to risk-raving improvements. The corporation ratio of ACL to loans held in portfolio decreased slightly from 2.11% to 2.05%, while the ratio of ACL to MPL improves slightly from 209% in the previous quarter to 214% this quarter.

Lidio V. Soriano: The allowance for loan losses decreased by $9 million to $730 million. NBDPR, the AGL remained flat, as increases driven by higher commercial loan volumes. Higher Qualitative Reserves and Changes in Credit Quality were upset by changes in macroeconomic scenarios and net charges. In popular banks, the ACL decreased by $9 million, mainly driven by lower reserves for the commercial portfolio due to risk rating improvements. The Corporation Ratio of ACL to Loans Helping Portfolio

Speaker Change: Please turn to slide number 10.

Speaker Change: The allowable for loan losses decreased by $9 million to $730 million.

Speaker Change: In BVPR, the AGL remained flat, as increases driven by higher commercial loan volumes.

Speaker Change: Higher Qualitative Reserves, and Changes in Credit Quality were upset by changes in the macroeconomic scenarios and net charge-off.

Speaker Change: In popular banks, the ACL decreased by 9 million, mainly driven by lower reserves for the commercial portfolio due to risk rating improvements.

Speaker Change: The corporation ratio of ACL to Loans Helping Portfolio decreased slightly from 2.11% to 2.05%, while the ratio of ACL to NPL improved slightly from 209% in the previous quarter.

Lidio Soriano: The provision for low losses was $4 million compared to $7.2 million in the prior quarter, reflecting lower losses, changes to credit quality, and improvements in macroeconomic scenarios. In GDPR, the provision was $49 million compared to $61 million, while in popular bag, the provision was a benefit of $4 million compared to an expense of $11 million in the first quarter.

Lidio V. Soriano: [inaudible] 214% The provision for loan losses was $44 million, compared to $72 million in the prior quarter, reflecting lower losses, changes to credit quality, and improvements in macroeconomic scenarios. In BBR, the provision was $49 million, compared to $61 million, while in Popular Bank, the provision was a benefit of $4 billion, compared to an expense of $11 million in the first quarter. Credit quality metrics improved during the second quarter, and we remain encouraged by the performance of our loan book. With that, I would like to turn the call over to Ignacio for his concluding remarks.

Speaker Change: to 214% this quarter.

Speaker Change: The provision for loan losses was $44 million, compared to $72 million in the prior quarter, reflecting lower losses, changes to credit quality, and improvements in macroeconomic scenarios.

Speaker Change: In BBVR the provision was $49 million compared to $61 million, while in Popular Bank the provision was a benefit of $4 billion compared to an expense of $11 million in the first quarter.

Lidio Soriano: To summarize, credit quality metrics improved during the second quarter, and we remain encouraged by the performance of our loan book.

Speaker Change: To summarize, credit quality metrics improved during the second quarter, and we remain encouraged by the performance of our loan book. With that, I would like to turn the call over to Ignacio for his concluding remarks.

Ignacio Alvarez: With that, I would like to turn the call over to Ignacio for each concluding remarks. Thank you, Lydia and Hode, for your updates. Our results for the first half of 2024 were strong, driven by a higher net interest income and expanding net interest margin, and improved credit quality. We are continuing to execute on our transformation to better serve our customers in drive returns over time. We are investing in talent and technology to deepen our relationships with clients and maximize the opportunities inherent in our unique franchise. I am optimistic about our prospects for the remainder of the year.

Ignacio Alvarez: Thank you, Lidio, and Jorge for your updates. Our results for the first half of 2024 were strong, driven by higher net interest income and an expanding interest margin and improved credit quality. We are continuing to execute on our transformation to better serve our customers and drive returns over time. We are investing in talent and technology to deepen our relationships with clients and maximize the opportunities inherent in our unique franchise. I am optimistic about our prospects for the remainder of the year.

Ignacio Alvarez: Thank you Lidio and Jorge for your updates.

Speaker Change: Our results for the first half of 2024 were strong, driven by higher net interest income and expanding net interest margin and improved credit quality.

Ignacio Alvarez: We are continuing to execute on our transformation to better serve our customers and drive returns over time. We are investing in talent and technology to deepen our relationships with clients and maximize the opportunities inherent in our unique franchise.

Ignacio Alvarez: Business trends and Puerto Rico continue to be positive, and we are well positioned to participate in the economic activity that is expected to be generated in the coming years. We are mindful of the responsibility we have to Puerto Rico as the leading banking institution and to all the communities that we proudly serve.

Ignacio Alvarez: Business trends in Puerto Rico continue to be positive, and we are well positioned to participate in the economic activity that is expected to be generated in the coming year. We are mindful of the responsibility we have to Puerto Rico as the leading banking institution and to all the communities that we proudly serve. In June, we released our annual corporate sustainability report. We continue to focus on providing opportunities for progress. Protecting the environment and promoting trust

Ignacio Alvarez: I am optimistic about our prospects for the remainder of the year. Business trends in Puerto Rico continue to be positive and we are well positioned to participate in the economic activity that is expected to be generated in the coming years.

Ignacio Alvarez: We are mindful of the responsibility we have to Puerto Rico as the leading banking institution and to all the communities that we proudly serve.

Ignacio Alvarez: In June, we released our annual corporate sustainability report. We continue to focus on providing opportunity for progress, protecting the environment, and promoting trust. One of the highlights of the report included the financing of one of the largest transactions to date in the renewable energy sector in Puerto Rico: a solar farm that produces enough electricity to supply the needs of approximately 7,000 homes in Puerto Rico.

Ignacio Alvarez: In June , we released our Annual Corporate Sustainability Report.

Ignacio Alvarez: We continue to focus on providing opportunity for progress, protecting the environment, and promoting trust.

Ignacio Alvarez: One of the highlights of the report includes the financing of one of the largest transactions to date in the renewable energy sector in Puerto Rico, a solar farm that produces enough electricity to supply the needs of approximately 7,000 homes in Puerto Rico. Finally, providing opportunity in our community starts with ensuring Popular remains a great place to work. I want to thank all our colleagues for their continued education and commitment to serve our customers and contribute to our success. We are now ready to answer your questions.

Ignacio Alvarez: One of the highlights of the report included the financing of one of the largest transactions to date in the renewable energy sector in Puerto Rico, a solar farm that produces enough electricity to supply the needs of approximately 7,000 homes in Puerto Rico.

Ignacio Alvarez: Mexico. Finally, providing opportunity in our community starts with ensuring Popular remains a great place to work. I want to thank all our college for their continued education and commitment to serve our customers and contribute to our success.

Ignacio Alvarez: Finally, providing opportunity in our community starts with ensuring Popular remains a great place to work.

Ignacio Alvarez: I want to thank all our colleagues for their continued education and commitment to serve our customers and contribute to our success.

Elias: We are now ready to answer your questions. Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two.

Operator: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Kelly Motta with KBW. Your line is open, please.

Ignacio Alvarez: We are now ready to answer your questions.

Speaker Change: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally.

Elias: When preparing to ask your question, please ensure your device is unmissed locally.

Kelly Motta: Our first question comes from Kelly Motta; we have KBW. Your line is open. Please go ahead.

Speaker Change: Our first question comes from Kelly Motta with KBW. Your line is open, please go ahead.

Ignacio Alvarez: Hi, good morning. Thanks for the question. I would like to start out with the capital plan. It certainly came at least a quarter sooner than I had expected. I know you guys were waiting for some clarity on the outlook before coming out with something. Has anything changed in terms of your comfort level with where you're viewing the capital position and the outlook ahead that allowed you to come out with this in July? Also, wondering any guideposts we should be thinking about in terms of what your constraining capital ratio is and how you're thinking about stepping in with a buyback, especially with the run we've had in the stock.

Kelly Ann Motta: Hi, good morning. Thanks for the question.

Kelly Ann Motta: Um, I would like, I would like to start out with the capital plan. It certainly came at least a quarter sooner than I had expected. Just wondering, I know you guys were waiting for some clarity on the outlook before, you know, coming out with something. Has anything changed in terms of your comfort level with where you view the capital position and the outlook ahead that, you know, allowed you to come out with this in July?

Kelly Ann Motta: Hi, good morning. Thanks for the question.

Kelly Ann Motta: I would like to start out with the capital plan. It certainly came at least a quarter sooner than I had expected. Just wondering, I know you guys were waiting for some clarity on the outlook.

Speaker Change: before, you know, coming out with something.

Speaker Change: Has anything changed in terms of...

Speaker Change: Unknown Speaker You know, your comfort level with where you're viewing the capital position, and the outlook ahead that, you know, allowed you to come out with this in July , and also wondering, you know, any

Kelly Ann Motta: And also wondering, you know, any guideposts we should be thinking about in terms of what your constraining capital ratio is and how you're thinking about stepping in with a buyback, especially with the run we've had in the stock. Thanks.

Speaker Change: Guideposts we should be thinking about in terms of what you're contributing capital ratio is and how you're thinking about stepping in with the buy back especially with the run we've had in the stock. Thanks.

Ignacio Alvarez: Thanks. You know, we obviously, we hear our investors and our board and managers are very conscious that people wanted a statement from us on where we were on a capital return. We worked very hard with their group. We went through some analysis of our credit book and what we thought about the future. We thought that the 500 million dollar authorization was the appropriate amount given the circumstances. We also thought, given our view that the dividend increase was important. I think that's an important piece of the puzzle. Obviously, that shows our confidence in the future. In terms of what we're going, we're going to do open market purchases.

Ignacio Alvarez: Yeah, you know, we obviously hear investors and our board and managers very conscious that people wanted a statement from us on where we were on capital return. We worked very hard with our group; we went through, you know, some analysis of our credit book and what we thought about the future. And we thought that the $500 million authorization was the appropriate amount given the circumstances. We also thought, given our view that the dividend increase was important, I think that's an important piece of the puzzle.

Speaker Change: Yeah, you know, we.

Speaker Change: Obviously, we hear investors and our board and managers very conscious that people wanted a statement from us on where we were on capital return. We work very hard with our group, we went through, you know, some analysis of our, of our credit book and what we thought about the future. And we thought that the

Speaker Change: The $500 million authorization was the appropriate amount given the circumstances. We also thought, given our view, that the dividend increase was important. I think that's an important piece of the puzzle. So obviously that shows our confidence in the future.

Ignacio Alvarez: So obviously, that shows our confidence in the future. In terms of where we're going, we're going to do open market purchases. We still think that the stock is fairly valued. So, you know, we'll keep more insight than that. But we still believe that the stock is fairly valued, especially relative to our peers and others in the industry.

Ignacio Alvarez: We still think that the stock is fairly valued. So, you know, we, you know, I want to keep more insight into that, but we still believe that the stock is fairly valued, especially relative to our peers and others in the industry.

Speaker Change: In terms of where we're going, we're going to do open market purchases. We still think that the stock is fairly valued. So I won't give more insight than that, but we still believe that the stock is fairly valued, especially relative to our peers and others in the industry.

Kelly Motta: Got it. Okay. That's really helpful.

Kelly Ann Motta: Got it. Okay, that's really helpful. And then with the NII Outlook being reduced, just a point of clarification: the 8 to 10% growth that you're currently projecting for this year, is that on a gap basis or an FTE basis? Because there are some moving parts with the FTE adjustment this year that does make it somewhat meaningful.

Speaker Change: Got it. Okay. Um, that's, that's really helpful. Um, and then with the NII Outlook, um, being reduced.

Kelly Motta: And then with the NII outlook being reduced, just a point of clarification, the 8 to 10 percent growth that you're currently projecting for this year is that on a gap basis or an FTE because there are some moving parts with the FTE adjustment this year that does make it somewhat meaningful. Thank you for the question, Kelly. All of our guidance is gap basis. Got it. That's helpful.

Speaker Change: Just a point of clarification, the 8 to 10 percent growth that you're currently projecting for this year, is that on a gap basis or an FTE? Because there are some moving parts with the FTE adjustment this year that does make it somewhat meaningful. Thank you.

Jorge Jose Garca: Thank you for the question, Kelly. All of our guidance covers gaps.

Speaker Change: Thank you for the question, Kelly. All of our guidance is GAP-based.

Jorge Jose Garca: Got it. That's helpful. And with your outlook for government deposits to decline off of that $19.7 billion level we're at now, as we look ahead, should we be thinking about the balance sheet as being relatively flat from here, given the movement in government funds between now and year-end?

Kelly Motta: And with your outlook for government deposits to decline off of that 19.7 billion level we're at now. As we look ahead, should we be thinking about the balance sheet as being relatively flat from here, given the movement in government funds between now and your end. I would expect the movement; if you see a decrease in the positive, we would not be leveraging of the balance sheet with alternative sources of liquidity. So, I think that's a fair statement in terms of more or less around that level of decrease of public funds. Got it. Thank you.

Kelly Ann Motta: Got it. That's helpful. And with your outlook for government deposits to decline off of

Speaker Change: that $19.7 billion level we're at now. As we look ahead, should we be thinking about the balance sheet as being relatively flat from here, given the movement in government funds between now and year-end?

Jorge Jose Garca: I mean, certainly you. I would expect a movement. If you see a decrease in deposits, we would not be leveraging up the balance sheet with alternative sources of liquidity. So I think that's a fair statement in terms of, more or less around that level of public.

Speaker Change: I mean, certainly, if

Speaker Change: I would expect a movement. If you see a decrease in deposits, we would not be leveraging up the balance sheet with alternative sources of liquidity. So I think that's a fair statement in terms of.

Jorge Jose Garca: Got it. Thank you. I'll step back. Now, we turn to

Kelly Motta: I'll step back.

Speaker Change: More or less around that level of decrease of public funds.

Timur Braziler: We now turn to Timur Braziler with Wells Fargo. Your line is open; please go ahead. Hi, good morning. Wondering on the 800 million of low-cost government deposits managed by the Fiduciary Services that were reprised this quarter. Just wondering what drove that, when did that happen in the quarter and how much of a head went from an average standpoint, will flow into three key from those actions? Thank you, Timur. First, the reprising is based on our guidelines, so our updated guidance takes into account this reprising. It happened towards the end of the quarter, and I think at the beginning of June, so I don't know if there's any other part of the question there, Timur.

Operator: We now turn to Timur Braziler with Wells Fargo. Your line is open. Please go ahead.

Speaker Change: Got it. Thank you. I'll step back.

Speaker Change: We now turn to Timur Braziler with Wells Fargo. Your line is open, please go ahead.

Timur Felixovich Braziler: Hi, good morning.

Timur Felixovich Braziler: wondering on the 800 million of low cost government deposits managed by fiduciary services that were repriced this quarter. Just wondering what drove that? When did that happen in the quarter? And how much of a headwind from an average standpoint will flow went to three key from those actions?

Timur Felixovich Braziler: Good morning, Mr. Warren.

Timur Felixovich Braziler: Wondering on the $800 million of low-cost government deposits managed by fiduciary services that were repriced this quarter, just wondering what drove that, when did that happen in the quarter, and how much of a headwind from an average standpoint will flow into 3Q from those actions?

Jorge Jose Garca: Thank you, Timur. First, the repricing is based on our guidelines. So our updated guidance takes into account this repricing. It happened towards the end of the quarter and, I think, at the beginning of June. So, I mean, I don't know if there's any other part of the question there. I think I'm missing a part of that, I don't...

Speaker Change: Thank you, Timur. First, the repricing is baked into our guidelines, so our updated guidance takes into account this repricing. It happened towards the end of the quarter, I think at the beginning of June .

Speaker Change: So, I mean, I don't know if there's any other part of the question there.

Ignacio Alvarez: Just what drove that decision? If you know what I mean, these are client relationships. We have communications and coverage with our clients, and we react to market conditions and client expectations.

Timur Felixovich Braziler: just what drove that what drove that.

Speaker Change: Can you, I think I'm missing a part of that, I don't know.

Speaker Change: And just what what drove that what drove that decision?

Jorge Jose Garca: As you know, I mean, these are client relationships. We have communications and conversations with our clients, and we react to market conditions and client expectations.

Speaker Change: As you know, these are client-client relationships. We have communications and conversations with our clients, and we react to market conditions and client expectations.

Ignacio Alvarez: Okay, and then maybe just following up on Kelly's FTE question, can you just give us an update on where you expect FTE for the year in context of the updated guide? How much of that revision was done by the FTE basis? Our guidance is all gap basis. The tax rate; we do provide the tax rate, so it allows you to at least get a sense of the flow to EPS. Okay, but should we expect further reinvestment into tax-advantaged T-bills, or has that remixing largely played out? Now, if you probably remember, we have about a billion dollars a quarter in maturities in our investment portfolio. We currently continue to invest in T-bills or fund loan growth.

Timur Felixovich Braziler: And then, maybe just following up on Kelly's FTE question, can you just give us an update on where you expect FTE for the year in context of the updated guide? How much of that revision was done by the FTE? We don't usually get guidance on an FTE basis. Our guidance is all on a GAAP basis. The tax rate, you know, we do provide you with the tax rate, so it allows you to at least get a sense of the flow to EPS. Okay, but should we expect further reinvestment into tax-advantaged T-bills, or has that remixing largely played out?

Speaker Change: Okay, and then maybe just following up on Kelly's FTE question, can you just give us an update on where you expect FTE for the year in context of the updated guide? How much of that revision was...

Speaker Change: The tax rate, you know, we do provide you the tax rate, so it allows you to at least get a sense of the flow to EPS.

Speaker Change: Okay, but should we expect further reinvestment into tax advantage T-bills or has that remixing largely played out?

Jorge Jose Garca: Now, as you probably remember, we have about a billion dollars a quarter in maturities in our investment portfolio. We currently continue to invest in T-bills or fund loan growth. So, ultimately, we haven't exhausted our potential for tax-extent security. But again, all this is in both the arts and tax efficient.

Speaker Change: Now, as you probably remember, we have about a billion dollars a quarter in maturities in our investment portfolio. We currently continue to invest in T-bills or fund loan growth. So ultimately, we haven't exhausted our potential for tax-extended securities.

Ignacio Alvarez: So ultimately, we have an exhaust that are potential for tax assistance securities. Okay, but again, I'll, I'll, and I guess it's a lot, and tax effective rate.

Speaker Change: But again, all this and that is in bold art.

Ignacio Alvarez: Okay, got it.

Ignacio Alvarez: And then just a lot for me, just around the cadence for buybacks, is the expectation that we go back to a January authorization as we've seen in the past, or is this 500 million more or less for a year, and the next board authorization or board decision will take place a year from now in July. Now this is an open-ended authorization; we don't have a time limit on it, and we will execute under this authorization. This thing's changed, and we'll let you know, but this is an open-ended authorization with no specific time limit. And we're not expecting to go back to the annual January cadence.

Speaker Change: and Tax-Effective Rate.

Speaker Change: Okay, got it. And then just last for me, just around the cadence for buybacks, is the expectation that we go back to

Jorge Jose Garca: of a January authorization, as we've seen in the past, or is this $500 million more or less for a year, and the next board authorization or board decision will take place a year from now, in July?

Speaker Change: a January authorization as we've seen in the past, or is this 500 million more or less for a year and the next board authorization or board decision will take place a year from now in July ?

Jorge Jose Garca: Now, this is an open-ended authorization. We don't have a time limit on it. And, you know, we will execute under this authorization, and if things change, you know, we'll let you know. But this is an open-ended authorization with no specific time limit. And we're not, we're not

Speaker Change: No, this is an open-ended authorization. We don't have a time limit on it. And we will execute under this authorization, and if things change, we'll let you know. But this is an open-ended authorization with no specific time limit.

Jorge Jose Garca: We're not expecting to go back to the annual January cadence. Instead, we want to have the flexibility to react to market conditions.

Ignacio Alvarez: We want to have the flexibility to react to market conditions.

Speaker Change: We're not expecting to go back to the annual January cadence. We want to have the flexibility to react to market conditions.

Ignacio Alvarez: Great, thanks for that.

Timur Felixovich Braziler: Thanks a lot.

Ignacio Alvarez: and Ignacio Alvarez.

Jared Shaw: Our next question comes from Jared Shaw with Barclays. Your line is open; please go ahead.

Operator: Our next question comes from Gerard Shaw with Barclays. Your line is open, please go ahead.

Matt: Thanks Matt.

Speaker Change: Our next question comes from Gerard Shaw with Barclays. Your line is open, please go ahead.

Jared Shaw: Hey, good morning. Maybe first just if we look at the fees and expenses to get into your guidance range, where should we expect to see lower fees and where should we expect to see a faster pace of expense growth? Let's talk about the expenses first. You know, the various seasonality and expenses, for example, merit increases. Our personal costs are a significant portion of our expenses. Our merit increased schedule is in the summer, so that is an expense that will be accreted or an incremental expense. I will see the second half of the year. We continue to have efforts around the transformation, professional fees, technology; you know, these are not symmetric throughout the year.

Gerard Sean Cassidy: Hey, good morning. Maybe first, just, you know, if we look at the fees and expenses to get into your guidance range, what's Where should we, I guess, expect to see lower fees? And where should we expect to see a faster pace of expense growth?

Gerard Sean Cassidy: Hey, good morning. Maybe first, just, you know, if we look at, if we look at the fees and expenses to get into your, your guidance range, what's

Gerard Sean Cassidy: Where should we, I guess, expect to see lower fees and where should we expect to see a faster pace of expense growth?

Jorge Jose Garca: Let's talk about the expenses first. You know, there is seasonality in expenses. For example, merit increases, our personal costs, are a significant portion of our expenses. Our merit increase schedule is in the summer, so that is an expense that will be accretive or an incremental expense that we'll see in the second half of the year. We continue to have efforts around the transformation, professional fees, and technology. These are not, you know, symmetric throughout the years.

Speaker Change: Let's talk about the expenses first.

Speaker Change: You know, you know, the various seasonality and expenses, for example, merit increases, our personal costs are a significant portion of our expenses. Our merit increase schedule is in the summer. So that is an expense that will be accretive or an incremental expense that we'll see in the second half of the year.

Speaker Change: We continue to have efforts around the transformation, professional fees, technology, these are not symmetric throughout the year. In terms of fee income, you know,

Jared Shaw: So, in terms of fee income, you know, there are a lot of components to that fee income. Some of it comes from our equity and pick up investment in Banco-Biachide and Dominican Republic. There's, you know, transactional activity from clients. I mean, there are a lot of variances and, frankly, you know, two or three million dollars and, you know, up or down any quarter, it's not an unusual variance. Okay.

Jorge Jose Garca: In terms of fee income, you know, there are a lot of components to that fee income. Some of it comes from our equity pickup investment in Banco Viache Day in the Dominican Republic. There's transactional activity from clients. I mean, there are a lot of variances, and frankly, two or $3 million up or down any quarter is not an unusual variance.

Speaker Change: There are a lot of components to that fee income. Some of it comes from our equity pick-up investment in Banco Biachete in the Dominican Republic. There's transactional activity from clients. I mean, there are a lot of variances, and frankly, you know, two or three million dollars up or down any quarter, it's not an unusual variance.

Gerard Sean Cassidy: Okay. All right. Thanks.

Jared Shaw: All right, thanks.

Jared Shaw: And then, you know, when we look at credit, you know, good trends in credit and charge-offs, do you think that we've seen peak consumer charge-offs here? And where should we expect to see the ACL settle out? Is this a good rate as a ratio of loans, or is there still, you know, room for that to move lower? You know, a lot of that where you are going to be economy-dependent. We feel and we're comfortable with the state of the economy and the economy of the outlook for the economy going forward.

Gerard Sean Cassidy: And then, um... When we look at credit, you know, good, good trends in credit and charge-offs, do you think that we've seen peak consumer charge-offs here? And, and where should we expect to see the ACL settle out? Is this a good rate as a ratio of loans? Or is there still, you know, room for that to move lower?

Speaker Change: Okay. All right. Thanks.

Speaker Change: You know, when we look at credit, you know, good trends in credit and charge-offs, do you think that...

Speaker Change: We've seen peak consumer charge-offs here, and where should we expect to see the ACL settle out? Is this a good rate as a ratio of loans, or is there still...?

Gerard Sean Cassidy: A lot of that, what you have, is going to be economy dependent. We feel. Unknown Speaker, of the Outlook for the Economy going forward. Okay, that's all right now, though you still

Speaker Change: You know, room for that to move lower.

Speaker Change: A lot of that, what you have, is going to be economy-dependent. We feel comfortable with the state of the economy and the outlook for the economy going forward.

Jared Shaw: So I leave it at that. I mean, the rate and the charge-off and the double the ACL will depend on the economy.

Ignacio Alvarez: and Ignacio Alvarez.

Jared Shaw: Okay.

Gerard Sean Cassidy: Okay, good. So right now, though, you still feel pretty confident on the general trajectory at this point, it sounds like.

Jared Shaw: That's all right now, though. You still, you still feel pretty confident on the general trajectory at this point. It sounds like. We're doing it.

Speaker Change: Okay, but so right now though you still you still feel pretty confident on the the general trajectory at this point it sounds like.

Jared Shaw: Okay.

Jared Cassidy: Thank you. We now turn to Jared Cassidy with RBC. Your line is open. Please go ahead.

Ignacio Alvarez: We do. We do, yes.

Operator: We now turn to Gerard Cassidy with RVC. Your line is open, please go ahead.

Speaker Change: Great, thank you.

Speaker Change: We now turn to Gerard Cassidy with RBC. Your line is open, please go ahead.

Thomas Leddy: Hi, good morning. This is Thomas Letty calling on behalf of Gerard. Long growth has remained pretty solid now for several consecutive quarters, while some of your peers have seen negative growth in recent periods, acknowledging you guys have guided to the lower end of your overall long growth range.

Thomas Arthur Leddy: Hi, good morning. This is Thomas Leddy calling on behalf of Gerard.

Thomas Arthur Leddy: Long growth has remained pretty solid now for several consecutive quarters, while some of your peers have seen negative growth in recent periods, although acknowledging you guys have guided to the lower end of your overall loan growth range. As you look ahead, given the remaining sort of idiosyncratic tailwinds for the island specifically, could loan growth for BPPR actually accelerate from here as some of the construction projects you guys have referenced historically sort of come online?

Speaker Change: Hi, good morning. This is Thomas Leddy calling on behalf of Gerard.

Thomas Arthur Leddy: Long growth has remained pretty solid now for several consecutive quarters while some of your peers have seen negative growth in recent periods.

Ignacio Alvarez: As you look ahead, given the remaining sort of idiosyncratic tailwinds for the island specifically, could long growth for BPR actually accelerate from here as some of the construction progress projects you guys have referenced historically sort of come online. Well, this is Ignacio. I think we would reiterate the guidance we've given. I think we feel pretty good about the economic activity in Puerto Rico. We are seeing a lot of positive economic activity, investment from outside the island, entrepreneurs locally. So we feel pretty good. And if you saw the results, we are seeing longer than Puerto Rico.

Speaker Change: Acknowledging you guys have guided to the lower end of your overall loan growth range.

Speaker Change: As you look ahead, given the remaining sort of idiosyncratic tailwinds for the island specifically, could loan growth for BPPR actually accelerate from here as some of the construction projects you guys have referenced historically sort of come online?

Ignacio Alvarez: Well, this is Ignacio. I think we should reiterate the guidance we've given. I think we feel pretty good about the economic activity in Puerto Rico. We are seeing a lot of positive economic activity, investment from outside the island, and entrepreneurs locally. So we feel pretty good. And as you saw in the results, we are seeing growth in Puerto Rico. What's holding us back a little bit is that the U.S., like many of our peers in the U.S., you know, especially those that focus a lot on commercial real estate, loan growth has been slower and slower than we expected. So again, in general, we reiterate the guidance. We feel good about Puerto Rico. But, you know, we feel that the U.S. has been a bit slower than we actually had expected.

Speaker Change: Well, this is Ignacio. I think we would reiterate the guidance we've given. I think we feel pretty good about the economic activity in Puerto Rico. We are seeing a lot of...

Speaker Change: Positive Economic Activity, Investment from Outside the Island, Entrepreneurs Locally.

Ignacio Alvarez: What's holding us back a little bit is that the US, like many of our people in the US, you know, especially the focus a lot on commercial real estate. That long growth has been slower and slower than we expected. So again, in general, we reiterate the guidance. We feel good about Puerto Rico, but you know, we feel that the US has been a bit slower than we actually had expected.

Speaker Change: So we feel pretty good, and as you saw the results, we are seeing growth in Puerto Rico. What's holding us back a little bit is that the U.S.

Speaker Change: Like many of our peers in the U.S., you know, especially that focus a lot on commercial real estate.

Speaker Change: That loan growth has been slower and slower than we expected. So again, in general, we reiterate the guidance. We feel good about Puerto Rico, but we feel that the U.S. has been a bit slower than we actually had expected.

Ignacio Alvarez: Okay, that's helpful. And then I guess just more broadly, can you give us some color regarding your appetite for actually growing that mainland portfolio in the face of what's expected to remain a pretty uncertain credit environment in the back end of this year and then to early next year. You know, I would say generally, we're comfortable with the portfolio that we have, but obviously we've been, as most banks. We have been put in looking at the market and, you know, we are, you know, being careful, especially the commercial real estate sector, but we're very comfortable with the portfolio we had.

Thomas Arthur Leddy: Okay, that's helpful. And then, I guess just more broadly, can you give us some color regarding your appetite for actually growing that mainland portfolio in the face of what's expected to remain a pretty uncertain credit environment at the back end of this year and into early next?

Speaker Change: Okay, that's helpful. And then I guess just more broadly, can you give us some color regarding your appetite for actually growing that mainland portfolio in the face of what's, you know, expected to remain a pretty uncertain credit environment in the back end of this year, and then to early next year?

Ignacio Alvarez: You know, I would say generally, I don't know if Lidio can answer me, we're comfortable with the portfolio that we have, but obviously we've been, as most banks, we have been prudently looking at the market and, you know, we are, you know, being careful, especially in the commercial real estate sector, but we're very comfortable with the portfolio we had. So, again, you know, there is a lot of, you know, pressure in general from regulators and others to sort of make sure your growth in that area is cautious, so we'll be cautious like the rest of the market commercial real estate, but, you know, we have other areas that we're hopeful, the condominium association I think is an area we're expecting to see some more growth from, but, yeah, we'll be cautious with the commercial real estate just like everyone else.

Lidio: You know, I would say generally, I don't know if Lidio can answer me, we're comfortable with the portfolio that we have, but obviously we've been, as most banks, we have been prudently looking at the...

Lidio: at the market and, you know, we are, you know, being careful.

Ignacio Alvarez: So again, you know, there is a lot of, you know, pressure in general from regulators and others to sort of make sure your growth in that area is cautious. So we'll be cautious like the rest of the market commercial real estate, but you know, we have other areas that we're hopeful the condominium association that I think is an area we're expecting to see some more growth from. But yeah, we'll be cautious with the commercial real estate, just like everyone else. Okay, that's helpful.

Speaker Change: especially in the commercial real estate sector, but we're very comfortable with the portfolio we had. So again, you know, there is a lot of, you know, pressure in general from regulators and others to...

Speaker Change: to sort of make sure your growth in that area is cautious.

Speaker Change: So we'll be cautious like the rest of the market commercial real estate, but you know, we have other areas that we're hopeful.

Ignacio Alvarez: and Ignacio Alvarez.

Thomas Arthur Leddy: Okay, that's helpful. Thank you for taking the time to answer my question.

Thomas Leddy: Thank you for taking my questions.

Speaker Change: Okay, that's helpful. Thank you for taking my questions.

Elias: As a reminder, if you'd like to ask a question, please press star one on your telephone. Keep up now.

Operator: As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad now. We now turn to Samuel Varga with UBS. Your line is open, please go ahead.

Speaker Change: As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad now.

Samuel Vargo: We now send you Samuel Vargo with UBS. Your line is open. Please go ahead.

Ignacio Alvarez: We now turn to Samuel Varga with UBS. Your line is open, please go ahead.

Samuel Vargo: Good morning. I'm sure to turn back to those lower cost of government deposits for question. After the hearing that's already been reprised. How much more do you have in lower cost balances? And can you give any sense for the sort of difference between the reset yield and the original one? Yeah, we're not going to give specific information on the reset. I will tell you that you can see in the levels and yield. These deposits are categorized as time deposits, so you can get a sense of the increase in the cost of that in that segment of our levels and yield schedule.

Samuel Varga: Good morning. I just wanted to turn back to those lower cost government deposits for a question. After the ARM million that's already been repriced, how much more do you have in lower cost balances? And can you give any sense of the sort of difference between the reset yield and the original one?

Samuel Varga: Good morning. I just wanted to turn back to those lower cost of government deposits for a question. After the $800 million that's already been repriced, how much more do you have in lower cost balances and can you give any sense for the sort of...

Speaker Change: Difference between the the reset yield and the original one.

Jorge Jose Garca: I'm not going to give specific information on the reset. I will tell you that you can see in the levels and yield. These deposits are categorized as time deposits, so you can get a sense of the increase in the cost in that segment of our levels and yield schedule. In terms of other large, low costs, I'm not aware of any significant amounts that would reprice or are subject to reprice.

Speaker Change: I'm not going to give specific information on the reset. I will tell you that you can see in the levels and yield, these deposits are categorized as time deposits, so you can get a sense of the increase.

Samuel Vargo: In terms of other large low cost, I'm not aware of any significant amount that would reprise or subject to reprising.

Speaker Change: In terms of other large low costs, I'm not aware of any significant amount that would reprice or are subject to repricing.

Samuel Vargo: Yeah, thank you very much.

Samuel Varga: Got it. Thank you very much.

Kelly Motta: We have a follow-up question from Kelly Mottor with KBW. Your line is open. Please go ahead.

Operator: We have a follow-up question from Kelly Motta with KBW. Your line is open. Please go ahead.

Speaker Change: Got it. Thank you very much.

Speaker Change: We have a follow-up question from Kelly Motta with KBW. Your line is open, please go ahead.

Kelly Motta: Hey, thank you so much for letting me back in. I have two questions that I could sneak in. The first is on just a clarification on the tax rate. The tax advantage income brought down the tax rate considerably this quarter from last, and I think you also had some discrete items impacting last quarter. I know you guide on a full year basis, but it would be fair to say within that range. Hugh is a good starting point for forecasting the back half of this year. I think, as you mentioned, the quarter did have some discrete events that may not recur.

Kelly Ann Motta: Hey, thank you so much for letting me back in. I have two questions if I could sneak in. The first is just a clarification on the tax rate. The tax advantage income brought down the tax rate considerably this quarter from last, and I think you also had some discrete items impacting last quarter. I know you guide on a full year basis, but would it be fair to say, within that range, 2Q is a good starting point for forecasting?

Kelly Ann Motta: Hey, thank you so much for letting me back in. I have two questions, if I could sneak in. The first is on just a clarification on the tax rate. The tax advantage income brought down the tax rate considerably this year.

Speaker Change: quarter from last. And I think you also had some discrete items impacting last quarter. I know you you guide on a full year basis, but would it be fair to say, you know, within that range,

Speaker Change: You know, 2Q is a good starting point to for forecasting the back half of this year.

Jorge Jose Garca: I think, as you mentioned, the quarter did have some discrete events that may not recur. So, you know, that is something that. Unknown Speaker We've given you the guidance. I think you can work on it. I think you know what the first quarter was, and the second quarter, and I think you can get a sense of what the rest of the session has to do with you.

Speaker Change: I think, as you mentioned, the...

Kelly Motta: That is something that wouldn't certainly not multiply times three, I guess. So, I mean, we've given the guidance. I think you know what the first quarter was, second quarter, and I think you can get it. So, what the reason is that we have to do it. Fair enough.

Speaker Change: The quarter did have some discrete events that may not recur, so I, you know, that is something that I would certainly not multiply times three, I guess. So I mean, we've given the guidance. I think you can work on to, you know.

Speaker Change: [inaudible]

Kelly Ann Motta: Fair enough. And then I was hoping you could spend a minute talking about your insurance subsidiary. We've seen, you know, a couple of banks sell those at a considerable gain as well as your stake in the Dominican Bank. Just wondering how management is viewing these businesses and if there's any potential gains that could be harvested from that.

Ignacio Alvarez: And then I was hoping if you could spend a minute, you know, talking about your insurance subsidiary. We've seen, you know, a couple of banks sell those at the considerable gain, as well as you're taking the Dominican bank. Just wondering if, you know, how management is viewing these businesses and if there's any potential, you know, gains that could be harvested from that. Yep.

Speaker Change: Fair enough. And then I was hoping if you could spend a minute, you know, talking about your insurance subsidiary.

Speaker Change: a couple banks sell those at a considerable gain, as well as your stake in the Dominican Bank. Just wondering how management is viewing these businesses and if there's any potential gains that could be harvested from that?

Ignacio Alvarez: Yep. Let me start by saying we don't have any current plans to sell either of those investments. Obviously, like any business, we always look at every opportunity, but it's not in our current plans. In terms of the BHT, that's been a very successful investment for us. It produces a steady amount of income every quarter, as Jorge has mentioned. The equity pickup has been very good.

Ignacio Alvarez: Let me start by saying we don't have any current plans to sell either those investments. Obviously, you know, like any business, we always look at every opportunity, but it's not in our current plans. In terms of the BHD, that's been a very successful investment for us. It produces a steady amount of income every quarter. As mentioned, the owner was mentioned; the equity pickup has been very good. They also produce a cash driven in which brings money to the holding company. It's a well-run bank in a growing economy. So, you know, we'd have to have a much better use for our money.

Speaker Change: Yep. Let me start by saying we don't have any current plans to sell either of those investments. Obviously, you know, like any business, we always look at every opportunity, but it's not in our current plans. In terms of the BHT,

Speaker Change: That's been a very successful investment for us. It produces a steady amount of income every quarter, as was mentioned, the equity pickup has been very good.

Ignacio Alvarez: They also produce a cash dividend, which brings money to the holding company. It's a well-run bank in a growing economy, so we'd have to have a much better use for our money. The tax implication of selling that would not be great. The Dominican Republic, so it wouldn't be...

Jorge: They also produce a cash dividend, which brings money to the holding company.

Jorge: It's a well-run bank in a growing economy, so, you know, we'd have to have a much better use for our money. The tax implication of selling that would not be great, the Dominican Republic, so it wouldn't be, you know...

Ignacio Alvarez: The tax, the tax implication of selling that would not be great. The Dominican Republic does so.

Ignacio Alvarez: Right now, we've looked at it, but really, I think we're going to hold that investment. And our insurance is very important for us. It's one of those things.

Ignacio Alvarez: So, it wouldn't be, you know, right now, we've looked at it, but really, I think we're going to hold that investment.

Ignacio Alvarez: And our insurance, it's very important for us. It's one of the things. And one of our thesis is how we can become more embedded in the lives of our clients. And I think insurance is an area in Puerto Rico where many of our citizens are underinsured, and we think we can add value to them by bringing a comprehensive suite of services. So, that's not something that, in my mind right now, we would tell. I think it's an important part of our fee business, and we like it.

Jorge: Right now, we've looked at it, but really, I think we're going to hold that investment in our insurance. It's very important for us.

Ignacio Alvarez: One of our goals is how we can become more embedded in the lives of our clients. And I think insurance is an area in Puerto Rico where many of our citizens are underinsured, and we think we can add value to them by bringing a comprehensive suite of services. So that's not something that, in my mind right now, we would sell. I think it's an important part of our fee business, and we like it.

Jorge: It's one of those things, you know, one of our theses is how we can become more embedded in the lives of our clients, and I think insurance is an area in Puerto Rico where...

Jorge: Many of our citizens are underinsured and we think we can add value to them by bringing a comprehensive suite of services. So that's not something that in my mind right now we would sell. I think it's an important part of our free business and we like it.

Kelly Motta: Great. Thanks for taking the time.

Kelly Ann Motta: Great, thanks for taking the time.

Speaker Change: Great, thanks for taking the time.

Elias: This concludes our Q&A.

Ignacio Alvarez: This concludes our Q&A. I will now hand over to Ignacio Alvarez, CEO, for closing remarks.

Ignacio Alvarez: I will now hand back to Ignacio Alvaro's CEO for closing remarks. Thank you very much for joining us today and for your questions. And we look forward to updating you and talking to you again on our third quarter results in October. Thank you very much.

Speaker Change: Carlos Vzquez, Jorge Garca, Paul Cardillo, Ignacio Alvarez, Paul Cardillo, Ignacio Alvarez,

Speaker Change: This concludes our Q&A. I will now hand back to Ignacio Alvarez, CEO , for closing remarks.

Ignacio Alvarez: Thank you very much for joining us today and for your questions, and we look forward to updating you and talking to you again about our third quarter results in October. Thank you very much.

Operator: Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.

Ignacio Alvarez: Thank you very much for joining us today and for your questions. And we look forward to updating you and talking to you again on our third quarter results in October . Thank you very much.

Elias: Ladies and gentlemen, the day school has now concluded. We'd like to thank for your participation.

Elias: You may now disconnect your lines.

Speaker Change: Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.