Q1 2026 Popular Inc Earnings Call

April 23, 2026

Speaker #1: At this time, all participants are in a listen-only mode, after the speaker's presentation there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

Speaker #1: I would now like to hand the conference over to the Investor Relations Officer at POPULAR, Inc. Paul Cardillo, please go ahead.

Speaker #2: Good morning, and thank you for joining us. With me on the call today is our President and CEO, Javier Ferrer, our CFO, Jorge Garcia, and our CRO, Lidio Soriano.

Speaker #1: After record crews' arrivals in 2025, arrivals accelerated sharply in the first two months of 2026, with year-to-date arrivals through February up 40% year over year.

Speaker #2: They will review our results for the first quarter and then answer your questions. Other members of our management team will also be available during the Q&A session.

Speaker #2: Before we begin, I would like to remind you that during today's call we may make forward-looking statements regarding POPULAR, such as projections of revenue, earnings, credit quality, expenses, taxes, and capital, as well as statements regarding POPULAR's plans and objectives.

Speaker #2: These statements are based on management's current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements are discussed in today's earnings release and our SEC filing.

Speaker #2: You may find today's press release and our SEC filings on our POPULAR.com. I will now turn the call over to Javier.

Speaker #3: Thank you, Paul, and good morning, everyone. Please turn to slide 4, where we share highlights of our strong operating performance in the first quarter.

Speaker #3: We reported net income of $246 million, and earnings per share of $3.78, up 12 million, and 25 cents per share, from the fourth quarter.

Speaker #3: The improvement was driven by higher net interest income, margin expansion, and lower operating expenses. Net income and EPS improved by 38% and 48%, respectively, compared to the first quarter of 2025.

Speaker #3: We continue to invest in our businesses, and expand our capabilities in support of our strategic objectives. When we deliver for our customers, our franchise strengthens, and our shareholders benefit.

Speaker #3: Overall credit trends remain favorable, with lower MPLs and improved MPL ratios. Quarterly net charge-offs increased primarily due to a single previously identified commercial relationship.

Speaker #3: We also demonstrated our commitment to returning capital to our shareholders by repurchasing $155 million in common stock and paying a quarterly common stock dividend of 75 cents per share.

Speaker #3: Our ROTC was 15.5%, up from 14.4% in the fourth quarter of 2025, and 11.4% a year ago. We are very pleased with these returns and remain focused on reaching our 14% through the cycle objective.

Speaker #3: Before turning the call over to Jorge, I will comment on the business environment in Puerto Rico. Business activity in Puerto Rico remains positive, supported by steady trends in employment and consumer activity, with manufacturing, construction, and tourism leading the way.

Speaker #3: We're closely monitoring ongoing geopolitical developments, as sustained higher oil and commodity prices can impact our customer base. As of the end of the first quarter, we have not seen significant signs of economic stress.

Speaker #3: The labor market remains healthy, with the unemployment rate at 5.6%, stable near historic lows. Three sectors have outperformed the broader labor market: construction, transportation and warehousing, and leisure and hospitality.

Speaker #3: Consumer spending remains healthy, combined credit and debit card purchase by Banco Popular customers increased by approximately 5% compared to the first quarter of 2025.

Speaker #3: We continue to see healthy demand for homes in Puerto Rico, mortgage balances at Banco Popular increased modestly during the quarter. Momentum in the construction sector continues to be solid, with public and private investment fueling higher employment and strong activity.

Speaker #3: We're optimistic that these trends will persist given the backlog of obligated federal disaster recovery funds. On the private side, real estate and tourism development projects and the renewed focus on reshoring to Puerto Rico by global manufacturing companies should continue to support economic growth on the island.

Speaker #3: The tourism and hospitality sector continues to be an important contributor to the Puerto Rico economy. Year-to-date, through February, hotel occupancy increased to 83%, up from 76% in the same period last year.

Speaker #3: Over the same period, RevPAR increased 6%. Hotel demand averaged roughly $400,000 room nights, representing 10% growth versus the same month in 2025. Passenger traffic at Luis Muñoz Marín International Airport was down 2% in the first quarter, after a record year in 2025.

Speaker #3: JetBlue also announced an expansion of its San Juan hub, with five new nonstop domestic routes beginning in the spring of 2026. Cruise activity has also been a meaningful tailwind.

Speaker #3: After record cruise arrivals in 2025, arrivals accelerated sharply in the first two months of 2026, with year-to-date arrivals through February up 40% year over year.

Speaker #3: In addition, the Puerto Rico Tourism Company announced a strategic partnership with Royal Caribbean, beginning in July of this year, that would establish San Juan as the cruise line's homeport.

Speaker #3: Moving to our strategic framework, we continue to advance our three objectives. A growing number of initiatives are gaining traction simultaneously, and the pace of execution is accelerating.

Speaker #3: One of our objectives is to be the number one bank for our customers by delivering exceptional service and products. A key part of that is making it easier for customers to engage with POPULAR through our digital channels.

Javier D. Ferrer: After record cruise arrivals in 2025, arrivals accelerated sharply in the first two months of 2026, with year-to-date arrivals through February up 40% year-over-year. In addition, the Puerto Rico Tourism Company announced a strategic partnership with Royal Caribbean beginning in July of this year that would establish San Juan as the cruise line's homeport. Moving to our strategic framework, we continue to advance our three objectives. A growing number of initiatives are gaining traction simultaneously, and the pace of execution is accelerating. One of our objectives is to be the number one bank for our customers by delivering exceptional service and products. A key part of that is making it easier for customers to engage with Popular through our digital channels. We recently launched an integrated marketplace within our digital app, Mi Banco, one of Puerto Rico's most widely used mobile apps.

Speaker #3: We recently launched an integrated marketplace within our digital app, Mi Banco, one of Puerto Rico's most widely used mobile apps. The platform gives our retail customers access to exclusive offers, discounts, and benefits from a wide variety of merchants, while enabling businesses—many of them small and medium-sized—to reach a high volume of potential customers.

Javier D. Ferrer: A growing number of initiatives are gaining traction simultaneously, and the pace of execution is accelerating. One of our objectives is to be the number one bank for our customers by delivering exceptional service and products. A key part of that is making it easier for customers to engage with Popular through our digital channels. We recently launched an integrated marketplace within our digital app, Mi Banco, one of Puerto Rico's most widely used mobile apps.

We continue to advance our three objectives.

Speaker #3: This allows us to create meaningful connections between our retail and commercial customers and strengthens the value of banking with POPULAR. We also launched two new corporate credit cards, the Sign, to facilitate payments and optimize cash flow.

A growing number of initiatives are gaining traction simultaneously, and the pace of execution is accelerating.

1 of our objectives is to be the number 1 Bank for our customers by delivering exceptional service and products.

Speaker #3: Both have gained traction and driven purchase volume. In addition to our core retail and commercial efforts, we are advancing targeted segment strategies to improve service and enable more personal, relationship-based engagement and position POPULAR as the primary bank earlier in our relationship with our customers.

A key part of that is making it easier for customers to engage with popular through our digital channels.

Javier D. Ferrer: The platform gives our retail customers access to exclusive offers, discounts, and benefits from a wide variety of merchants while enabling businesses, many of them small and medium-sized, to reach a high volume of potential customers. This allows us to create meaningful connections between our retail and commercial customers and strengthens the value of banking with Popular. We also launched two new corporate credit cards designed to facilitate payments and optimize cash flow. Both have gained traction and driven purchase volume. In addition to our core retail and commercial efforts, we are advancing targeted segment strategies to improve service, enable more personal, relationship-based engagement, and position Popular as the primary bank earlier in our relationship with our customers. A recent example is our newly launched program designed to meet the unique financial needs of doctors, dentists, and veterinarians.

We recently launched an integrated marketplace within our digital app, Miango, one of Puerto Rico's most widely used mobile apps.

Speaker #3: A recent example is our newly launched program designed to meet the unique financial needs of doctors, dentists, and veterinarians. The momentum behind this initiative reflects the energy and focus of our teams.

The platform gives our retail customers access to exclusive offers, discounts, and benefits from a wide variety of merchants, while enabling businesses.

Javier D. Ferrer: This allows us to create meaningful connections between our retail and commercial customers and strengthens the value of banking with Popular. We also launched two new corporate credit cards designed to facilitate payments and optimize cash flow. Both have gained traction and driven purchase volume.

Speaker #3: We are encouraged to see that execution translating into stronger results and we expect the benefits to become more visible over time. And with that, I turn the call over to Jorge for more details on our financial results.

Many of them, small and medium-size to reach a high volume of potential customers. This allows us to create meaningful connections between our retail and Commercial customers and strengthens the value of banking with popular.

Javier D. Ferrer: In addition to our core retail and commercial efforts, we are advancing targeted segment strategies to improve service, enable more personal, relationship-based engagement, and position Popular as the primary bank earlier in our relationship with our customers. A recent example is our newly launched program designed to meet the unique financial needs of doctors, dentists, and veterinarians.

We also launched 2 new corporate credit cards, the signed to facilitate payments and optimize cash flow, both have gained traction and driven purchase volume.

Speaker #4: Thank you, Javier. Good morning, and thank you all for joining the call today. As Javier mentioned, our quarterly net income increased by $12 million to $246 million.

Speaker #4: And our EPS improved by 25 cents to $3.78. Compared to adjusted net income in the fourth quarter, which excluded a partial reversal of the FDIC special assessment reserve, net income increased by 22 million.

in addition to our core retail and Commercial efforts, we are advancing targeted segment strategies to improve service enable more personal relationship based engagement and position popular as the primary Bank earlier in our relationship with our customers,

A recent example is our newly launched program designed to meet the unique financial needs of doctors dentists and veterinarians.

Javier D. Ferrer: The momentum behind these initiatives reflects the energy and focus of our teams. We are encouraged to see that execution translating into stronger results, and we expect the benefits to become more visible over time. With that, I turn the call over to Jorge for more details on our financial results.

Speaker #4: These results were driven by better NII, higher NIM, and lower expenses, partly offset by a slightly higher provision for credit losses. Our objective is to deliver sustainable financial results and we're pleased to have generated a $15.5% royalty for the period.

The momentum behind this initiative reflects the energy and focus of our teams.

We are encouraged to see that execution— that execution translating into stronger results.

Speaker #4: We will continue to use all levers to position the company as a top-performing bank when compared to our mainland peers. Please turn to slide seven.

And we expect the benefits to become more visible over time.

And with that,

Jorge J. García: Thank you, Javier. Good morning, and thank you all for joining the call today. As Javier mentioned, our quarterly net income increased by $12 million to $246 million, and our EPS improved by $0.25 to $3.78. Compared to adjusted net income in Q4, which included a partial reversal of the FDIC special assessment reserve, net income increased by $22 million. These results were driven by better NII, higher NIM, and lower expenses, partly offset by a slightly higher provision for credit losses. Our objective is to deliver sustainable financial results, and we're pleased to have generated a 15.5% ROCE for the period. We will continue to use all levers to position the company as a top-performing bank when compared to our mainland peers. Please turn to slide 7.

Jorge J. García: Thank you, Javier. Good morning and thank you all for joining the call today. As Javier mentioned, our quarterly net income increased by $12 million to $246 million, and our EPS improved by $0.25 to $3.78. Compared to adjusted net income in Q4, which included a partial reversal of the FDIC special assessment reserve, net income increased by $22 million.

I turn the call over to Jorge for more details on our financial results.

Speaker #4: Net interest income of $670 million increased by approximately $13 million. Driven by fixed-rate asset repricing and a higher balance of investments, due to higher deposit balances, and lower deposit costs at both banks.

Thank you Javier. Good morning, and thank you all for joining the call today.

Mentioned our quarterly, net income increased by 12 million, to 20046 million and our EPS improved by 25 cents to 3.78.

Speaker #4: Net interest margin expanded five basis points to 3.66% on a gap basis. On a taxable equivalent basis, the margin improved by 11 basis points to 4.14%.

Jorge J. García: These results were driven by better NII, higher NIM, and lower expenses, partly offset by a slightly higher provision for credit losses. Our objective is to deliver sustainable financial results, and we're pleased to have generated a 15.5% ROCE for the period. We will continue to use all levers to position the company as a top-performing bank when compared to our mainland peers. Please turn to slide seven.

Compared to adjusted net income in the fourth quarter, which excluded a partial reversal of the SBIC special assessment reserve, net income increased by $22 million.

Speaker #4: Driven primarily by lower interest expense, including a meaningful reduction in the cost of Puerto Rico public deposits. Ending loan balances were essentially flat at 39.3 billion.

These results were driven by better NII, higher NIM, and lower expenses.

Hardly offset by a slightly higher provision for credit losses.

Speaker #4: Down about $38 million from the fourth quarter. Driven primarily by lower balances at POPULAR Bank due to paydowns in the construction segment and runoff from the exited residential mortgage business.

Our objective is to deliver sustainable financial results, and we're pleased to have generated a 15.5% rally for the period.

We will continue to use all levers to position the company as a top performing Bank, when compared to our Mainline peers.

Jorge J. García: Net interest income of $670 million increased by approximately $13 million, driven by fixed-rate asset repricing and a higher balance of investments due to higher deposit balances and lower deposit costs at both banks. Net interest margin expanded five basis points to 3.66% on a GAAP basis. On a taxable equivalent basis, the margin improved by 11 basis points to 4.14%, driven primarily by lower interest expense, including a meaningful reduction in the cost of Puerto Rico public deposits. Ending loan balances were essentially flat at $39.3 billion, down about $38 million from Q4, driven primarily by lower balances at Popular Bank due to paydowns in the construction segment and runoff from the exited residential mortgage business. At BPPR, modest growth in the mortgage and commercial segments were somewhat offset by weaker trends in auto lending.

Please turn to slide 7.

Speaker #4: At BBPR, modest growth in the mortgage and commercial segments was somewhat offset by weaker trends in auto lending. Given the slower demand in the consumer and auto segments, we expect consolidated loan growth in 2026 to be at the low end of our original three to four percent range.

Net interest income of $670 million increased by approximately $13 million, driven by fixed rate asset repricing and a higher balance of investments due to higher deposit balances and lower deposit costs at both banks.

Speaker #4: In our investment portfolio, we have maintained our strategy of reinvesting proceeds from bond maturities into US Treasury notes and bills. During the quarter, we purchased approximately $1.9 billion of Treasury notes, with a duration of 2.6 years and an average yield of around 3.7%, taking advantage of a modestly steeper curve.

Net, interest margin expanded 5 basis points to 3.66% on a gap basis.

On a taxable equivalent basis, the margin improved by 11 basis points to 4.4%.

Jorge J. García: Ending loan balances were essentially flat at $39.3 billion, down about $38 million from Q4, driven primarily by lower balances at Popular Bank due to paydowns in the construction segment and runoff from the exited residential mortgage business. At BPPR, modest growth in the mortgage and commercial segments were somewhat offset by weaker trends in auto lending.

During primarily by lower interest expense, including a meaningful reduction in the cost of Puerto Rico, public deposits.

Speaker #4: The positive balance has ended the quarter at 67.6 billion. $1.4 quarter. Retail and commercial deposits increased by 1.2 billion, driven by tax refund activity.

Ending loan balances were essentially flat at $39.3 billion, down about $38 million from the fourth quarter.

Driven primarily by lower balances at Popular Bank due to paydowns in the construction segment and runoff from the exit of the residential mortgage business.

Speaker #4: On an average basis, total deposits increased by 1.1 billion, or by $384 million when excluding Puerto Rico public deposits. Puerto Rico public deposits increased by 250 million to end the quarter at 19.7 billion.

Jorge J. García: Given the slower demand in the consumer and auto segments, we expect consolidated loan growth in 2026 to be at the low end of our original 3% to 4% range. In our investment portfolio, we have maintained our strategy of reinvesting proceeds from bond maturities into US Treasury notes and bills. During the quarter, we purchased approximately $1.9 billion of Treasury notes with a duration of 2.6 years and an average yield of around 3.7%, taking advantage of a modestly steeper curve. Deposit balances ended the quarter at $67.6 billion, $1.4 billion higher than Q4. Retail and commercial deposits increased by $1.2 billion, driven by tax refund activity. On an average basis, total deposits increased by $1.1 billion or by $384 million when excluding Puerto Rico public deposits. Puerto Rico public deposits increased by $250 million to end the quarter at $19.7 billion.

At bbpr models growth in the mortgage and Commercial segments where somewhat offset by weaker Trends in Auto Lending.

Range.

Speaker #4: We continue to expect public deposits to be in a range of 18 to 20 billion for the year. Total deposit costs decreased by 12 basis points quarter over quarter to 1.56%, with improvement in both of our banks.

Jorge J. García: During the quarter, we purchased approximately $1.9 billion of Treasury notes with a duration of 2.6 years and an average yield of around 3.7%, taking advantage of a modestly steeper curve. Deposit balances ended the quarter at $67.6 billion, $1.4 billion higher than Q4. Retail and commercial deposits increased by $1.2 billion, driven by tax refund activity. On an average basis, total deposits increased by $1.1 billion or by $384 million when excluding Puerto Rico public deposits. Puerto Rico public deposits increased by $250 million to end the quarter at $19.7 billion.

In our Investment Portfolio. We have maintained our strategy of reinvesting proceeds, from Bond maturities into US treasury notes and bills.

Speaker #4: Excluding Puerto Rico public deposits, total deposit costs decreased by five basis points to 1.09%. At BBPR, deposit costs decreased by 11 basis points, mostly as a result of Puerto Rico public deposits repricing lower by 31 basis points due to lower short-term rates.

During the quarter, we purchased approximately 1.9 billion of treasury notes with a duration of 2.6 years and an average yield of around 3.7%.

Taking advantage of a modestly steeper curve.

The positive balance has ended the quarter at 67.6 billion.

$1.4 billion higher than the fourth quarter.

Speaker #4: At POPULAR Bank, the 16 basis points reduction in deposit costs was primarily related to lower online savings deposit costs and repricing of timed deposits.

Retail and Commercial deposits, increase by 1.2 billion driven by tax refund activity.

On an average basis, total deposits increased by $1.1 billion, or by $384 million. When excluding Puerto Rico, public deposits...

Speaker #4: Given positive deposit trends in Puerto Rico, we now expect 2026 net interest income growth at the upper end of our five to seven percent guidance range.

Jorge J. García: We continue to expect public deposits to be in a range of $18 to $20 billion for the year. Total deposit costs decreased by 12 basis points quarter over quarter to 1.56%, with improvement in both of our banks. Excluding Puerto Rico public deposits, total deposit costs decreased by five basis points to 1.09%. At BPPR, deposit costs decreased by 11 basis points, mostly as a result of Puerto Rico public deposits repricing lower by 31 basis points due to lower short-term rates. At Popular Bank, the 16 basis points reduction in deposit costs was primarily related to lower online savings deposit costs and repricing of time deposits. Given positive deposit trends in Puerto Rico, we now expect 2026 net interest income growth at the upper end of our 5% to 7% guidance range. Please turn to slide eight.

Puerto Rico, public deposits increased by 250 million to end the quarter at 19.7 billion.

Speaker #4: Please turn to slide eight. Net interest income was 166 million in line with Q4 and at the high end of our quarterly guidance. With solid performance across most of our fee-generating segments.

We continue to expect public deposits to be in a range of $18 to $20 billion for the year.

Total deposit costs decreased by 12 basis points quarter of a quarter to 1.56% with Improvement in both of our banks.

Speaker #4: Compared to the first quarter of 2025, net interest income improved by 9%, driven by growth in debit and credit card fees of 14 and 6 percent, respectively, as well as 13% increase in asset management and insurance fees.

Excluding Puerto Rico, public deposits total deposit costs decreased by 5 basis points to 1.09%.

Speaker #4: Demonstrating our ability to benefit from our breadth of product offerings. We continue to expect quarterly net interest income to be in the range of 160 to 165 million.

Bbpr deposit cost decreased by 11 basis points. Mostly As a result of Puerto Rico, public deposits repricing lower by 31 basis points, due to lower short-term rates,

A popular bank. The 16 basis points reduction in deposit cost was primarily related to lower online. Savings deposit costs and repricing of time, deposits.

Speaker #4: Please turn to slide nine. Total operating expenses were 467 million. A decrease of 6 million when compared to Q4. Excluding the FDIC reversal in Q4, operating expenses decreased by 22 million.

Given positive deposit Trends in Puerto Rico. We now expect 2026 net interest income growth at the upper end of our 5 to 7% guidance range.

Jorge J. García: Non-interest income was $166 million, in line with Q4 and at the high end of our quarterly guidance, with solid performance across most of our fee-generating segments. Compared to Q1 2025, non-interest income improved by 9%, driven by growth in debit and credit card fees of 14% and 6% respectively, as well as 13% increase in asset management and insurance fees, demonstrating our ability to benefit from our breadth of product offerings. We continue to expect quarterly non-interest income to be in the range of $160 to $165 million. Please turn to slide 9. Total operating expenses were $467 million, a decrease of $6 million when compared to Q4. Excluding the FDIC reversal in Q4, operating expenses decreased by $22 million.

Please turn to slide 8.

Speaker #4: The decrease was primarily driven by lower personnel costs, as the fourth quarter included a profit-sharing accrual of approximately 13 million, along with the impact of fewer calendar days in the first quarter.

Net interest income was $166 million.

In line with Q4 and at the high end of our quarterly guidance, with solid performance across most of our fee-generating segments,

Speaker #4: This quarter also benefited from lower employee healthcare-related costs. We also saw lower seasonal business promotion expenses and lower professional fees partly offset by higher technology and software expenses reflecting our continued investment in technology and transformation initiatives.

Compared to the first quarter of 2025, non-interest income improved by 9%, driven by growth in debit and credit card fees of 14% and 6%, respectively, as well as a 13% increase in asset management and insurance fees.

Demonstrating our ability to benefit from our breadth of product offering.

Speaker #4: We expect full-year expenses to increase by 2 to 3 percent compared to our original guidance of 3%. We will continue to prioritize investments in our people and technology and continue to target expense efficiencies.

We continue to expect quarterly non-interest income to be in the range of 160 to 165 million.

Please turn to slide 9.

Total operating expenses were 467 million.

a decrease of 6 million when compared to Q4,

Speaker #4: Our effective tax rate in the first quarter was 16%, unchanged from the fourth quarter. We now expect effective tax rate for the year to be at the low end of our original 15 to 17 percent guidance range, due to higher projected income.

Jorge J. García: The decrease was primarily driven by lower personnel costs, as the Q4 included a profit-sharing accrual of approximately $13 million, along with the impact of fewer calendar days in the Q1. This quarter also benefited from lower employee healthcare related costs. We also saw lower seasonal business promotion expenses and lower professional fees, partly offset by higher technology and software expenses, reflecting our continued investment in technology and transformation initiatives. We expect full year expenses to increase by 2% to 3%, compared to our original guidance of 3%. We will continue to prioritize investments in our people and technology and continue to target expense efficiencies. Our effective tax rate in the Q1 was 16%, unchanged from the Q4.

Excluding the FDIC reversal in Q4 operating expenses decreased by 22 million.

The decrease was primarily driven by lower Personnel costs, as the fourth quarter included, a profit sharing approval of approximately 13 million.

Speaker #4: Please turn to slide 10. Tangible value per share at the end of the quarter was $84.98. An increase of $2.33 per share. Driven by our net income and offset in part by our capital return activity.

Along with the impact of fewer calendar days in the first quarter.

This quarter also benefited from lower employee healthcare-related costs.

Speaker #4: During the quarter, we repurchased approximately $155 million in common stock. We ended the quarter with $126 million remaining under our active repurchase authorization. Which we expect to exhaust during the second quarter.

We also saw lower seasonal business promotion expenses and lower professional fees, partly offset by higher, technology, and software expenses, reflecting our continued investment in technology and transformation initiatives.

We expect full-year expenses to increase by 2% to 3%, compared to our original guidance of 3%.

Speaker #4: As we have said in the past, we seek to maintain an active repurchase authorization in place and we are targeting an update on capital actions before the second quarter's earnings call.

We will continue to prioritize investments in our people and technology and continue to Target expense efficiencies.

Speaker #4: In addition to common stock repurchases, we also expect to continue evaluating capital optimization alternatives and pursue a dividend increase during the year. Of course, our plans are subject to market conditions, regulatory considerations, and any required board approvals.

Jorge J. García: We now expect the effective tax rate for the year to be at the low end of our original 15% to 17% guidance range due to higher projected exempt income. Please turn to slide 10. Tangible book value per share at the end of the quarter was $84.98, an increase of $2.33 per share, driven by our net income and offset in part by our capital return activity. During the quarter, we repurchased approximately $155 million in common stock. We ended the quarter with $126 million remaining under our active repurchase authorization, which we expect to exhaust during Q2. As we have said in the past, we seek to maintain an active repurchase authorization in place, and we are targeting an update on capital actions before Q2's earnings call.

Our effective tax rate in the first quarter was 16% on change from the fourth quarter.

We now expect the effective tax rate for the year to be at the low end of our or original 15 to 17% guidance range.

Due to higher projected extent income.

Please turn to slide 10.

Speaker #4: With that, I turn the call over to Lidio.

Speaker #1: Thank you, Jorge. And good morning to all. Credit quality metrics remain stable during the first quarter, with lower early delinquency MPLs and inflows and higher net charge-offs.

Tangible book value per share. At the end of the quarter, was $4.98, an increase of $2.33 per share, driven by our net income and offset in part by our Capital return activity.

During the quarter, we repurchased approximately $155 million in common stock.

Speaker #1: Despite the uncertain economic environment, our consumers' businesses remain resilient. We continuously monitor our portfolios for signs of stress, for our data remain consistent, with normal seasonal behavior and no deterioration.

We ended the quarter with $126 million remaining under our active repurchase authorization.

Which we expect to exhaust during the second quarter.

Jorge J. García: In addition to common stock repurchases, we also expect to continue evaluating capital optimization alternatives and pursue a dividend increase during the year. Of course, our plans are subject to market conditions, regulatory considerations, and any required board approvals. With that, I turn the call over to Lidio.

As we have said, in the past, we seek to maintain an active repurchase authorization in place and we are targeting an update on Capital actions before the second quarter's earnings call.

Speaker #1: Turning to slide number 11. Non-performing assets and loans decreased by 37 million and 40 million, respectively, mainly due to Banco Popular de Puerto Rico.

In addition to common stock repurchases, we also expect to continue evaluating Capital optimization Alternatives and pursue a dividend increase during the year.

Speaker #1: MPLs in BBPR decreased by 39 million. This was driven by reductions in the commercial portfolio due to an $11 million charge-off related to a commercial real estate facility classified as MPL in the third quarter of 2025, and consumer due to lower auto MPLs driven by increased payment activity.

of course, our plans are subject to market conditions regulatory considerations and any required board approvals

Lidio V. Soriano: Thank you, Jorge, and good morning to all. Credit quality metrics remained stable during the first quarter, with lower early delinquency, NPLs, and inflows, and higher net charge-offs. Despite the uncertain economic environment, our consumers, businesses remained resilient. We continuously monitor our portfolios for signs of stress, where our data remain consistent with normal seasonal behavior and no deterioration. Turning to slide 11. Non-performing assets and loans decreased by $37 million and $40 million respectively, mainly due to Banco Popular de Puerto Rico. NPLs in BPPR decreased by $39 million. This was driven by reductions in the commercial portfolio due to an $11 million charge-off related to a commercial real estate facility classified as NPL in Q3 2025, and consumer due to lower auto NPLs driven by increased payment activity. In the US, NPLs decreased by $2 million.

With that, I turn the call over to Lydia.

Credit quality remained stable during the first quarter.

With lower early delinquency mpls.

And influence and higher, net charges.

Despite the uncertain economic environment.

Speaker #1: In the US, MPLs decreased by 2 million. Inflows of MPLs decreased by 7 million with an improvement of 5 million in the US and 2 million in BBPR.

Our consumers.

Businesses remained resilient.

We continuously monitor our portfolios for signs of stress.

For our data remain consistent.

Speaker #1: The ratio of MPLs to total loans held in portfolio was 1.17% compared to 1.27% in the previous quarter. Turning to slide number 12. Net charge-off amounted to 60 million or annualized 61 basis points.

With normal normal, seasonal behavior and no deterioration.

Turning to slide number 11.

Non-performing assets and loans decreased by $37 million.

And $40 million, respectively, mainly due to Banco Popular de Puerto Rico.

Npls in VPR.

Increased by 39 million.

Speaker #1: Compared to 50 million, or 51 basis points in the prior quarter. Last quarter results included 5 million in recoveries from the sales of previously charge-off auto loans and credit cards.

This was driven by reductions in the commercial portfolio.

Due to an $11 million charge related to a commercial real estate facility.

Classify as MPL in the third quarter of 2025.

Speaker #1: Excluding this, the net charge-off ratio for the fourth quarter was 57 basis points. Net charge-off in BBPR increased by 10 million, driven by the $11 million commercial net charge-off mentioned previously.

And consumer due to lower Auto mpls driven by increased payment activity.

In the US.

Lidio V. Soriano: Inflows of NPLs decreased by $7 million, with an improvement of $5 million in the US and $2 million in BPPR. The ratio of NPLs to total loans held in portfolio was 1.17% compared to 1.27% in the previous quarter. Turning to slide number 12. Net charge-off amounted to $60 million or annualized 61 basis point, compared to $50 million or 51 basis points in the prior quarter. Last quarter results included $5 million in recoveries from the sales of previously charged-off auto loans, and credit cards. Excluding this, the net charge-off ratio for Q4 was 57 basis points. Net charge-off in BPPR increased by $10 million, driven by the $11 million commercial net charge-off mentioned previously. Based on current trends and macroeconomic outlook, we reiterate our 2026 annual net charge-off guidance of 55 to 70 basis points.

Npl decreased by 2 million.

Inflows of npls decreased by 7 million.

With an improvement of 5 million in the US and 2 million in bapr.

Speaker #1: Based on current trends and macroeconomic outlook, we reiterate our 2026 annual net charge-off guidance of 55 to 70 basis points. The allowance for credit losses increased by 16 million to 824 million.

The ratio of npl to Total loans held in portfolio.

Was 1.17%.

Compared to 1.27% in the previous quarter.

Turning to slide number 12.

Net charge on amounted to 60 million.

Speaker #1: The change was mostly in BBPR, which had higher reserves in the commercial portfolio due to loan modifications and additional specific reserves for a single borrower in the telecommunication industry.

Or annualized 61 basis point.

Compared to 50 million.

Or 51 basis points in the prior quarter.

Last quarter results included.

5 million in the recoveries from the sales of previously, charged of auto loans and credit cards.

Speaker #1: Additionally, the ACL for the mortgage portfolio increased slightly due to changes in the macroeconomic scenarios. This increases were offset in part by a reduction in the ACL for consumer loans mainly in the auto portfolio reflecting the improvements in credit quality.

Excluding this.

The new actual ratio of the forms quarter was 67 basis point.

Net charge of in vvpr increased by 10 million.

Driven by the 11 million commercial. Net charge of mentioned previously.

Based on current trends and macroeconomic Outlook.

Speaker #1: In the US, the ACL increased by 1.4 million from the previous quarter. The corporation ratio of the ACL to loans held in portfolio was 2.10% compared to 2.05% in the previous quarter.

We reiterate our 2026 annual net charge of guidance.

Of 55 to 70 basis points.

Lidio V. Soriano: The allowance for credit losses increased by $16 million to $824 million. The change was mostly in DPR, which had higher reserves in the commercial portfolio due to loan modifications and additional specific reserves for a single borrower in the telecommunication industry. Additionally, the ACL for the mortgage portfolio increased slightly due to changes in the macroeconomic scenarios. These increases were offset in part by a reduction in the ACL for consumer loans, mainly in the auto portfolio, reflecting the improvements in credit quality. In the US, the ACL increased by $1.4 million from the previous quarter. The coverage ratio of the ACL to loans held in portfolio was 2.10%, compared to 2.05% in the previous quarter, while the ratio of the ACL to NPLs held in portfolio increased to 180% from 162%. With that, I would like to turn the call over to Javier for his concluding remarks.

The 11 occurred losses increased by $16 million.

To 824 million.

The change was mostly in BPR.

Speaker #1: While the ratio of the ACL to MPLs held in portfolio increased to 180% from 162%. With that, I would like to turn the call over to Javier for his concluding remarks.

Which had higher resource in the commercial portfolio.

Due to loan modifications and additional specific research.

For a single borrower in the telecommunication industry.

Speaker #1: Thank you.

Speaker #2: Thank you, Lidio and Jorge, for your updates. We're happy with our strong first quarter results. We grew in interest income, expanded our margin, and reduced operating expenses, all while continuing to invest in the franchise and advance our strategic priorities.

Additionally, the ACL for the mortgage portfolio increased slightly.

Due to changes in the macroeconomic scenarios.

This increases were offset in part by reduction in the ACL for Consumer loans.

Mainly in the auto portfolio reflecting the improvements in quality.

Speaker #2: While we are very pleased with the quarter, we remain focused on execution: growing deposits, regenerating loans, and maintaining strong expense discipline. We are confident that the sustained execution of our strategy will advance our ultimate goal: to be a top-performing bank with excellent talent, delivering sustainable, profitable growth, and long-term value to our shareholders.

In the US.

The ACL increase by 1.4 million for the previous quarter.

The corporation ratio of the ACL to launch Health in portfolio.

Was 2.10%.

compared to 2.05% in the previous quarter.

Well, the ratio of the ACL to npls helping portfolio.

Increased 280%.

From 162%.

Lidio V. Soriano: Thank you.

Javier D. Ferrer: Thank you, Lidia and Jorge, for your updates. We're happy with our strong Q1 results. We grew our interest income, expanded our margin, and reduced operating expenses, all while continuing to invest in the franchise and advance our strategic priorities. While we are very pleased with the quarter, we remain focused on execution, growing deposits, originating loans, and maintaining strong expense discipline. We are confident that the sustained execution of our strategy will advance our ultimate goal: to be a top-performing bank with excellent talent, delivering sustainable, profitable growth and long-term value to our shareholders. On a more personal note, this past February marked a milestone for Popular. We brought together our 9,200 employees for the first time in over 20 years, and I have to say it was awesome.

Javier D. Ferrer: Thank you, Lidio and Jorge, for your updates. We're happy with our strong Q1 results. We grew our interest income, expanded our margin, and reduced operating expenses, all while continuing to invest in the franchise and advance our strategic priorities. While we are very pleased with the quarter, we remain focused on execution, growing deposits, originating loans, and maintaining strong expense discipline. We are confident that the sustained execution of our strategy will advance our ultimate goal: to be a top-performing bank with excellent talent, delivering sustainable, profitable growth and long-term value to our shareholders. On a more personal note, this past February marked a milestone for Popular. We brought together our 9,200 employees for the first time in over 20 years, and I have to say it was awesome.

With that, I would like to turn the call over to Javier for his concluding remarks. Thank you.

Speaker #2: And more personal note, this past February marked a milestone for POPULAR. We brought together our 9,200 employees for the first time in over 20 years and I have to say it was awesome.

Thank you, lady on, Jorge for your updates.

We're happy with our strong first quarter results.

We grew it in interest income, expanded our margin, and reduced operating expenses, all while continuing to invest in the franchise.

And Advance our strategic priorities.

Wow, we are very pleased with the quarter.

We remain focused on execution.

Speaker #2: The event reminded each one of us what it means to be part of POPULAR and connected us with our history. The excitement was palpable and it was simply an unforgettable day.

Growing the deposits regaining in loans.

And maintaining strong expensive discipline.

We are confident that the sustained execution of our strategy will advance our ultimate goal.

Speaker #2: On behalf of my colleagues, I thank our clients and shareholders for their continued trust and support. We are very proud to be the leader in the Puerto Rico market.

To be a top performing bank with excellent Talent delivering sustainable profitable growth.

And long-term value to our shareholders.

Speaker #2: We're ready to answer your questions.

More personal note.

Speaker #3: Thank you. We will now conduct the question and answer session. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced.

This past February marked, milestone for Bob.

Speaker #3: To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And our first question comes from Jared Shaw of Barclays.

9,200 employees for the first time in over.

20 years.

And I have to say, it was

awesome.

Javier D. Ferrer: The event reminded each one of us what it means to be part of Popular and connected us with our history. The excitement was palpable, and it was simply an unforgettable day. On behalf of my colleagues, I thank our clients and shareholders for their continued trust and support. We are very proud to be the leader in the Puerto Rico market. We're ready to answer your questions.

Speaker #3: Your line is

The event reminded each 1 of us what it means to be part of popular.

Speaker #4: Hi, thanks. Good afternoon. Good morning.

Speaker #5: Good morning.

And connected us with our history.

Speaker #4: Maybe just starting with the great growth on the deposit side, how should we think about average and end-of-period deposits sort of over the next few quarters as some of the tax refunds maybe get spent?

The excitement was palpable.

And it was simply an unforgettable day.

On behalf of my colleagues. I thank our clients and shareholders for their continued trust and support.

Speaker #5: Yeah. So traditionally, we do see increases in ending deposits in the first quarter. This quarter, we saw also increases in average deposits that we're bringing in the strength from the fourth quarter results.

We are very proud to be the leader in the Puerto Rico market.

Operator: Thank you. We will now conduct the question and answer session. As a reminder, to ask a question, please press * one one on your telephone and wait for your name to be announced. To withdraw your question, please press * one one again. Please stand by while we compile the Q&A roster. Our first question comes from Jared Shaw of Barclays. Your line is open.

We're ready to answer your questions.

Speaker #5: Historically, in the second quarter, we would also expect ending balances to trend lower, but average balances higher as the tax season overlaps the March and April and people kind of spend that money through the quarter.

Thank you. We will now conduct the question and answer session as a reminder, to ask a question. Please press star 1, 1 on your telephone and wait for your name to be announced to withdraw your question. Please, press star, 1 1 1, again please, stand by while we compile the Q&A roster,

Speaker #5: And then, as you know, the third quarter is where we actually see ending balances coming down and then in the fourth quarter, we tend to see ending balances come back up historically.

Jared Shaw: Hi, thanks. Good afternoon. Good morning.

And our first question comes from Jared, Shaw of Barclays, your line is open.

Javier D. Ferrer: Good morning.

Hi thanks. Good afternoon. Good morning.

Jared Shaw: Maybe just starting with the great growth on the deposit side, how should we think about average and end-of-period deposits over the next few quarters as some of the tax refunds maybe get spent?

Speaker #5: So our guide increased towards the higher end of the guide because we are expecting more retention of those deposit balances. Our teams are very much focused on not only retention but also in deposit growth and so we while we would expect ending balances to perhaps come down from these levels, we do not expect them to see a run-off as we saw in 2024, for example.

Good morning.

Javier D. Ferrer: Yeah. Traditionally, we do see increases in ending deposits in Q1. This quarter, we saw also increases in average deposits that we're bringing in the strength from the Q4 results. Historically, in Q2, we would also expect ending balances to trend lower, but average balances higher as the tax season overlaps March and April, and people kind of spend that money through the quarter. As you know, Q3 is where we actually see ending balances coming down, and then in Q4, we tend to see ending balances come back up historically. Our guide increased towards the higher end of the guide because we are expecting more retention of those deposit balances. Our teams are very much focused on not only retention, but also in deposit growth.

Um, maybe just starting, you know, with the, with the great growth on the deposit side. How should we think about average and end of period, deposits sort of over the next few quarters? As some of the, the tax refunds, maybe get, uh, get spent

Speaker #4: Okay. So I mean, overall, though, I mean, you're still feeling like average account size is stabilized at a higher level and so the magnitude of what, like you said, in the past, may not be as severe.

Yeah, so, um, traditionally we do see increases in ending deposits in the first quarter. Um, this quarter, we saw also increases in average deposits that we bring in, the strength from the fourth quarter results.

Speaker #5: Yeah. So I think we saw the peak in 2022. Those averages were like 40% higher; those have come down to like the low 30s, 30, 32.

Speaker #5: And that's been stable for the last couple of years. We are bringing in new clients; that's resulting in higher balances. We're seeing strength across not only the retail but commercial.

Speaker #5: We see strength in our small and middle market clients. Our corporate clients also have a lot of liquidity, but they tend to be managing their treasury excess cash a little bit better.

Javier D. Ferrer: While we would expect ending balances to perhaps come down from these levels, we do not expect to see a runoff as we saw in 2024, for example.

Historically in the second quarter, we would also expect ending balances to Trend lower but average balances higher as the tax season you know, overlap the margin of April and and people kind of spend that money through the quarter. And then as you know, the third quarter is where we actually see ending balances coming down. And then in the fourth quarter, we tend to see ending bounces come back up historically. So, um, you know, I our guide increased and towards the the higher end of the guide because we are expecting, um, you know, more retention of of those deposit. Balances, our teams are very much focused on, not only retention but also in the positive growth. And um, so we you know,

Speaker #5: So overall, we've been very happy with the trends.

Speaker #4: Okay. Thanks. And then in the past, you've talked about looking for potential acquisitions in the mainland that match up with your geographic focus. Any update on your thoughts there?

Jared Shaw: Okay. Overall though, you're still feeling like average account size is stabilized at a higher level, and so the magnitude of what, like you said, in the past may not be as severe?

um, while while we would expect ending balances to perhaps come down from these levels, we do not expect them to um, to to see a runoff as we as we saw, like, in 2024, for example,

Speaker #4: And if you're not able to find something that fits could we expect maybe more of an organic de novo expansion utilizing some of your capital?

Javier D. Ferrer: Yeah. I think we saw the peak in 2022. Those averages are, like, 40% higher. Those have come down to the low thirties, 30, 32, and that's been stable for the last couple of years. We are bringing in new clients. That's resulting in higher balances. We're seeing strength across not only the retail but commercial. We see strength in our small and middle market clients. Our corporate clients also have a lot of liquidity, but they tend to be managing their treasury excess cash a little bit better. Overall, we've been very happy with the trends.

Okay, so, I mean, overall though, I mean, you're still feeling like average account size is is stabilized at a higher level. And so, like the magnitude of what like you said in the past, uh, may not be as as severe

Speaker #5: Javier, I'll go for the first one. No change in our outlook on M&A. Our primary focus continues to be our transformation efforts and growing profitability of the institution.

Speaker #5: I'm going to take a second one.

Speaker #2: And in terms of de novo growth strategy, I mean, it's tough to compete in the US markets in retail, which is what normally you would see with de novos.

Speaker #2: We have been successful in expanding some of our national businesses. Through either team acquisition or team hires, and maybe that's an opportunity. It's not unusual for banks our size to be looking at that, leveraging those niche businesses.

Jared Shaw: Okay, thanks. In the past you've talked about looking for potential acquisitions in the mainland that match up with your geographic focus. Any update on your thoughts there? If you're not able to find something that fits, could we expect maybe more of an organic de novo expansion utilizing some of your capital?

Yeah, so it and I think we saw that peak in 2022. Those averages are like 40% higher. Those have come down to like the third low 30s 3032 and that's been stable for the last couple of years. Um, we are bringing in a new clients that that's resulting in higher balances. We're seeing you know, strength across, not only the retail but commercial um we see strengthen our small and Middle Market clients. Um, our corporate clients also have a lot of liquidity but they they tend to be um managing their treasury. Uh excess cash uh, a little bit better. So um overall we've been very happy with with the trends.

Speaker #2: But I think at this stage, we have opportunities to improve profitability in our US operations. Organically, but not necessarily through investing in a big branch de novo expansion.

Okay. Thanks and then you know in the past you've talked about looking um for potential Acquisitions in the mainland that that match up with your Geographic Focus any update on your your thoughts there and if you're not able to find something that that fits

Would we, uh, could we expect maybe more of an organic, de novo expansion, utilizing some of your capital?

Javier D. Ferrer: I'll go for the first one. No change in our outlook on M&A. Our primary focus continues to be our transformation efforts and growing profitability of the institution. Now I'm going to take the second one.

Speaker #5: Yeah. I mean, Puerto Rico, frankly, I mean, we're the strongest in the market given our branch footprint. It's a differentiating factor for us. Continues to be.

Speaker #5: And the United States, as I was saying, I mean, our strategy is more commercial-led. So I mean, it's going to be difficult to actually expand in any major way our footprint in terms of branches.

Um, have you I'll go for the the first 1, I know no change in our, in our outlook on on m&a, our primary focus continues to be our transformation efforts and growing profitability of of the institution.

Jorge J. García: In terms of de novo growth strategy, it's tough to compete in the US markets in retail, which is what normally you would see with de novos. We have been successful in expanding some of our national businesses through either team acquisition or team hires. Maybe that's an opportunity. It's not unusual for banks our size to be looking at that, leveraging those niche businesses. But I think at this stage we have opportunity to improve profitability in our US operations organically, but not necessarily through investing in a big branch de novo expansion.

Speaker #5: So that's where we're at.

Speaker #4: Okay. Okay. Thanks. And if I could just ask one final one, just have you been seeing any spread compression on the loan portfolio or on new loans and where you're putting on new loans in the quarter?

Speaker #5: If you look at the levels and yields, we continue to be successful in expanding and are keeping our loans yields fairly flat even with rates coming down.

Speaker #5: So we have not seen that broad base. I mean, we talked in the last call how competition, particularly in Puerto Rico and auto, and you've seen kind of with the trends in that portfolio that we could see it's potentially maybe more competition in pricing.

Javier D. Ferrer: Yeah. In Puerto Rico, frankly, we're the strongest in the market given our branch footprint. It's a differentiating factor for us, continues to be. In the United States, as Jorge is saying, our strategy is more commercially led. It's going to be difficult to actually expand in a major way our footprint in terms of branches. That's where we're at.

Dating factor for us.

Uh, continues to be and the United States. As I was saying, I mean, it our strategy is more commercial LED

Speaker #5: But so far, we've tried to get our teams to focus, particularly in the US business, where we see maybe particularly at the beginning of the year more competitive pricing.

So, I mean, it's going to be—it's going to be difficult to actually expand in any major way, our footprint in terms of branches.

Jared Shaw: Okay. Thanks. If I could just ask one final one. Just have you been seeing any spread compression on the loan portfolio or on new loans? Where were you putting on new loans in the quarter?

so,

Speaker #5: We've tried to push our teams to be smart and provide profitable loan growth, not just loan growth, and focus on relationship banking, making sure that those relationships are coming in with deposits.

As we're okay.

Speaker #5: So that gives us kind of a fresh start on making sure that we're not chasing irrational pricing on loans. So

Jorge J. García: If you look at the levels in yields, we continue to be successful in expanding and are keeping our loan yields fairly flat, even with rates coming down. We have not seen that in broad base. We talked in the last call how competition, particularly in Puerto Rico and auto, and you've seen kind of with the trends in that portfolio that we could see potentially maybe more competition in pricing. So far, we've tried to get our teams to focus, particularly in the U.S. business where we see maybe particularly beginning of the year, more competitive pricing. We've tried to push our teams to be smart and provide profitable loan growth, not just loan growth, and focus on relationship banking, making sure that those relationships are coming in with deposits.

Okay, thanks. And if I could just ask 1 final 1 just um, have you have you been seeing any spread compression on on the the loan portfolio or on new loans? And and where, where are you putting on new loans in the quarter?

Speaker #4: Okay. All right. Thanks.

Speaker #6: Thank you. And our next question comes from Brett Rabatin of Stonex Group. You're logging has been—

Speaker #4: Hey, good morning, everyone. Wanted to start on the NII guide. And it was great to see the first quarter higher NII than expected, lower expenses.

Speaker #4: Just thinking about the high end of the guide, would with the slight growth in balance sheet, would kind of imply the margin is fairly flattish, but you still have securities that are maturing?

Jorge J. García: that gives us kind of a fresh start on making sure that we're not chasing irrational pricing on loans.

Speaker #4: Any thoughts on—I know you don't like to give margin guidance—but any thoughts on the margin and then just as you see it, maybe the opportunities relative to NII growth from here?

I mean, if you look at um, the levels and yields we we continue to be successful in expanding and or keeping our, our loans yields fairly flat even with rates coming down. So we have not seen them broad base. I mean, we talked in the last call how competition particularly in Puerto Rico and auto. Um, and, you know, you you've seen kind of with our with the trends in that portfolio that we could see. It's potentially um, you know, maybe more competition in pricing. Um, but so far, you know, we've we've tried to get our teams to focus particularly in the US business where, where we see, um, maybe particularly beginning of the year. More competitive pricing. We've tried to push our teams to be, uh, smart and provide. You know, profitable long growth, not just long growth and focus on relationship banking, making sure that those relationships are coming in with deposits. So that, you know, you know, gives us kind of a a fresh start on making sure that we're not chasing um, irrational pricing on loans.

so,

Jared Shaw: Okay. All right. Thanks.

Operator: Thank you. Our next question comes from Brett Rabatin of StoneX Group. Your line is open.

Okay, all right. Thanks.

Speaker #2: We do expect the margin to grow by the end of the year. We had a nice expansion the first quarter. Driven a lot by the repricing of the public deposits.

Thank you.

Brett Rabatin: Hey, good morning, everyone. Wanted to start on the NII guide, and it was great to see the Q1 higher NII than expected, lower expenses. Just thinking about the high end of the guide with the slight growth in balance sheet would kind of imply the margin is fairly flattish, but you still have securities that are maturing. Any thoughts on, I know you don't like to give margin guidance, but any thoughts on the margin? Just as you see it, maybe the opportunities relative to NII growth from here.

And our next question comes from Brett Rabbitin of StoneX Group. Your line is open.

Speaker #2: We don't expect that level of repricing to occur. That's going to be dependent on what happens to short-term rates. And certainly, they price with a lag.

Speaker #2: So I think I would expect the expansion of the margin to be slower in the second quarter, but then continue to expand as we drive to that higher NII guidance.

Speaker #2: So as you said, we do have the tailwinds of the fixed rate investment portfolio. To continue to reprice, so. That hasn't changed.

Hey, good morning everyone. Um, wanted to start on the knee guide and you know, it was great to see the first quarter higher and I hadn't expected lower expenses. Um, just thinking about the the high end of the guide would would with a with the slight growth and balance sheet would kind of imply, the margin is fairly flattish, uh, but you still have securities.

Speaker #4: Okay. And if the Fed doesn't cut interest rates, would that put you above the higher end of the range on NII?

Jorge J. García: We do expect the margin to grow by the end of the year. We had a nice expansion in Q1, driven a lot by the repricing of the public deposits. We don't expect that level of repricing to occur. That's going to be dependent on what happens to short-term rates, and certainly they price with a lag. I think I would expect the expansion of the margin to be slower in Q2, but then continue to expand as we drive to that higher NII guidance. As you said, we do have the tailwinds of the fixed rate investment portfolio to continue to reprice. That hasn't changed.

That are uh maturing um, you know any any thoughts on. I know you don't like to get March guidance. But any thoughts on the margin and then just as you see it, maybe the opportunities um, relative to knee growth from here.

Speaker #2: Our current guidance assumes no further cuts in 2026. For us, I'd love to see the steepening of the curve, but margin really depends on the mix of deposits.

We we do expect, uh, the margin to grow by the end of the year. Um, you know, we had a nice extension, the first quarter, um,

Speaker #2: If we are heavier on public deposits, that will have an impact on that margin. Really, the NII guidance is kind of how we see the front now.

Speaker #2: Deposit balances will, as we said, and the deposit cost, are really kind of the drivers of that spread. And being able to get above the current guidance.

Driven a lot by the repricing of the public deposit. Um, we don't expect that that level of repricing to occur that's going to be, you know, dependent on what happens to the short term rates. And certainly, you know, they price with the lag. Um, so I think, you know, I would expect the expansion of the margin to be slower in the second quarter, but then continue to expand as we drive to that higher nii guidance. So,

um,

you know, as you said the, the the we do have the Tailwinds of the fixed rate Investment Portfolio to continue to reprice. Um,

Speaker #4: Okay. That's helpful. All right. And then the other question I had was just around capital. And 15.9% CET1. And it sounds like you're going to give a lot more color in Q2.

So that that that hasn't changed.

Brett Rabatin: Okay. If the Fed doesn't cut interest rates, would that put you above the higher end of the range on NII?

Jorge J. García: Our current guidance assumes no further cuts in 2026. For us, I'd love to see the steepening of the curve. Margin really depends on the mix of deposits. If we are heavier on public deposits, that will have an impact on the margin. Really, the NII guidance is kind of how we see the front now. Deposit balances will, as we said, and the deposit costs are really kind of the drivers of that spread and being able to get above our current guidance.

Okay. And if the Fed doesn't cut interest rates, would that put you above the higher end of the range on NII?

Speaker #4: And I think it's great that you guys have kind of acknowledged that investors have wanted to see the capital-based deployed. Any—excuse me—any color that you can give us just around your thoughts on end-of-year capital ratios or targets or anything that, as you're working through this, that you could share with us on your progress there?

our current guidance assumes no further Cuts in 2026. Um, you know, for us, I'd love to see, uh, the, the steepening of, of the curve. But you know, margin really depends on on the mix of deposits. You know, if we are heavier on public deposits, that will have an impact on the margin. Um, you know, really, um,

Speaker #2: We want them to be lower than they're now than they are now unless we make a lot of money and not. But no, I mean, we are committed.

Speaker #2: We obviously have said in the past that we want this to be—we want to do it in a kind of overtime in a controlled manner.

You know, the, the knee, the knee guidance is kind of how we see the the, the front. Now, um, deposit balances will, you know, as we said, you know, and the deposit costs are really kind of the, the drivers of that spread and and being able to get above the

Brett Rabatin: Okay. That's helpful, Jorge. The other question I had was just around capital and 15.9% CET1, and it sounds like you're going to give a lot more color in Q2. I think it's great that you guys have kind of acknowledged that investors have wanted to see the capital base deployed. Any color, excuse me, that you can give us just around your thoughts on end of year capital ratios, or targets, or anything that as you're working through this that you could share with us on your progress there?

Our current guidance.

Okay.

Speaker #2: But we certainly are committed to doing that. We're trying to be more intentful in our language and how we communicate about this. And we are committed to executing.

That's helpful. All right. Um and then the other question I had was just around Capitol and you know, 15.9% cet1 and it sounds like you're going to give

Speaker #5: Yeah.

Speaker #4: Okay. Great. Appreciate all the color. Thanks, guys.

Speaker #6: Thank you. And our next question comes from Timur Brazillier of UBS. Your line is open.

Speaker #7: Hi. Good morning.

Speaker #5: Good morning, Timur.

Javier D. Ferrer: We want them to be lower than they are now unless we make a lot of money and not. No, we are committed. We obviously have said in the past that we want to do it over time in a controlled manner. We certainly are committed to doing that. We're trying to be more intentional in our language and how we communicate about this. We are committed to executing.

Speaker #7: Going back to the profitability comments, two straight quarters now above that 14% objective. I guess, Javier, I was a little surprised to kind of hear you reiterate that comment on remaining focused on reaching that 14% through the cycle objective.

A lot more color, um, and 2q. Um, and it's I think it's great that you guys, it's kind of acknowledge that investors have wanted to see um, you know, the capital base deployed, any any color, excuse me, any color that you can give us just around your thoughts on, you know, the end of year Capital ratios or targets or anything that you know as you're as you're working through this you could share with us on on your progress there.

We want them to be lower than they're not, and then than they are now unless we make a lot of money. And, and, and, and,

said in the past that we want this to be, you know, we want to do it in

Speaker #7: Are we not there yet? And I guess that phrase, "through the cycle," how far out are we looking in terms of that level of sustainability?

Brett Rabatin: Okay. Great. Appreciate the color. Thanks, guys.

A kind of overtime in a control manner um but we certainly are are committed in doing that. We're trying to be more intentful in our language and how we communicate about this. And um you know, we are, you know, committed to executing

Speaker #5: Well, thank you for your question. I think that, I mean, two quarters, two great back-to-back roughly quarters, a trend doesn't necessarily make so. I mean, we'd like that to continue.

Okay.

Um,

Great. Appreciate all the caller. Thanks guys.

Operator: Thank you. Our next question comes from Timur Braziler of UBS. Your line is open.

Thank you.

Speaker #5: Obviously, and I think that through the cycle, comment refers to a period when, of course, we were seeing stress, major stress in the economy.

And our next question comes from Tamar Brasilia of UPS. Your line is open.

Timur Braziler: Hi. Good morning.

Javier D. Ferrer: Good morning, Timur.

Hi, good morning.

Timur Braziler: Going back to the profitability comment. Two straight quarters now above that 14% objective. I guess, Javier, I was a little surprised to hear you reiterate that comment on remaining focused on reaching that 14% through the cycle objective. Are we not there yet? I guess that phrase through the cycle, how far out are we looking in terms of that level of sustainability?

Speaker #5: And so that we actually demonstrate that facing this sort of more sort of headwinds, we deliver on profitability targets. So that's how we're thinking about it.

Morning. Tamar going back, going back to the, uh, the profitability comments, 2, Straight quarters. Now, above that 14% objective, I guess Javier. I was a little surprised to, to kind of hear you reiterate that comment on remaining focused on reaching that 14% through the cycle objective.

Speaker #5: Again, I think the teams are doing great. But we don't want to remember that we also use the concept of sustainability. It needs to be sustainable.

Javier D. Ferrer: Well, thank you for your question. I think that two great back-to-back ROIC quarters, a trend doesn't necessarily make. We'd like that to continue. Obviously. I think that through the cycle comment refers to a period when of course, we were seeing major stress in the economy. That we actually demonstrate that facing this more sort of headwinds, we deliver on profitability targets. That's how we're thinking about it. Again, I think the teams are doing great. Remember that we also use the concept of sustainability. It needs to be sustainable. That will take a little bit longer for us to claim victory. Of course, once we get there, we're not stopping there. That's important. Remember that we used the 14 when we launched a little bit over three years ago, our transformation program.

Speaker #5: So that will take a little bit longer for us to claim victory. And of course, once we get there, we're not stopping there. And that's important.

Are we not there yet? Um, and I guess that phrase, 'through the cycle'—like, how far out are we looking in terms of that level of sustainability?

Well, thank you for your question. I I think that um,

Speaker #5: I mean, remember that we used the 14 when we launched a little bit over three years ago our transformation program. So again, very happy with the mindset shift and what we're producing for shareholders.

I mean, 2 2 2, quarters, 2, great back-to-back Road. Sea quarters.

A trend doesn't necessarily make.

So, I mean, we—we'd like that to continue.

Speaker #5: But we're not there yet.

Speaker #7: Got it. Okay. That's good color. I appreciate that. Maybe sticking on the capital question, any kind of color you can provide on just Basel III proposal?

Speaker #7: What type of impact that might have on your capital gain?

Speaker #5: Yeah. So as you know, first, we're not subject to the Category 4 with AOCI. So we are small enough that that doesn't impact us.

Um, obviously, and I think that through the, through the cycle, uh, comment refers to a period when, of course, we were seeing stress, you know, major stress in the economy, and, um, um, so that, so that we actually demonstrate that if, you know, facing this sort of more, sort of, headwinds, we, we, we deliver on profitability targets. So that's, that's how, how, how we're thinking about it. Um, again, I think, I think, I think the teams are doing great.

Speaker #5: We've done the preliminary review, Timur. And basically, we are estimates are consistent with what the Fed guidance is. That will be the impact for smaller banks.

Um, but we, we don't want to remember that. We also use the concept of sustainability, it needs to be sustainable so that that will take a little bit longer for us to claim victory. And, of course, once we get there, we're going to stopping there. Uh, and and that that's important. I mean, remember that we use the 14 when we launched

Speaker #5: Obviously, the end result will depend on our balance sheet when that goes into place. And whatever the final rule has. But right now, it's consistent with the estimates.

Javier D. Ferrer: Again, very happy with the mindset at Shift and what we're producing for our shareholders. We're not there yet.

A little bit over 3 years ago, our transformation program.

Javier D. Ferrer: Again, very happy with the mindset at Shift and what we're producing for our shareholders. We're not there yet.

Um, uh so uh again very happy with, with the mindset uh, shift and what we're producing for for shareholders.

But we're not there yet.

Timur Braziler: Got it. Okay. That's good color. I appreciate that. Maybe sticking on the capital question, any kind of color you can provide on just Basel III proposal, what type of impact that might have on your capital base?

Speaker #5: And that's a reduction in risk-weighted assets, basically.

Speaker #7: Yep. Okay. And then just one more for me. Appreciate the full-year guide on public funds. Just wondering, second quarter specifically, if there's any reason why we shouldn't be penciling in kind of a historical-type run rate for the planned increase in public funds in Q2?

Got it. Okay, that's a good caller, I appreciate that. Um, maybe sticking on the capital question, any kind of color you can provide on just bottle 3 proposal? Um,

Javier D. Ferrer: Yeah. First, we're not subject to the category four with AOCI. We're small enough that that doesn't impact us. We've done the preliminary review, Timur, and basically our estimates are consistent with what the Fed guidance is. That will be the impact for smaller banks. Obviously, the end result will depend on our balance sheet when that goes into place and whatever the final rule has. Right now it's consistent with the estimates.

What type of impact I might have on your capital, de?

Speaker #5: I mean, I don't want to speculate. I mean, as you know, it's over 200 different clients, thousands of accounts. We talk to our clients, our relationship officers talk to our clients.

Speaker #5: We have some visibility. But some of these things are big numbers that move around. So we're going to stick to the 18 to 20 billion dollar range.

Timur Braziler: Great.

So, you know, um, you know, if you know, first, we we're not subject to the, you know, um, category 4, you know, with aoci. So we, we are, we're small enough that that doesn't impact us. We've done the Berlin preliminary review Timur and basically, the we're, our estimates are consistent with what the FED guidance is, that will be the impact for smaller Banks. Uh, obviously the, the end result will depend on our balance sheet when that goes into place and, um, whatever the final, you know, uh, rule has. But right now, it's consistent with the estimates.

Javier D. Ferrer: It's a reduction in risk-weighted assets, basically.

Speaker #7: Okay. And then, sorry, just I just want to make sure I'm understanding the Basel III impact. I think it was around 7% was the Fed guidance.

Timur Braziler: Yep. Okay. Just one more for me. Appreciate the full-year guide on public funds. Just wondering, Q2 specifically, if there's any reason why we shouldn't be penciling in a historical type run rate for the planned increase in public funds in Q2?

And and that's a a reduction in Risk weighted assets, basically?

Speaker #7: Is that kind of what you're alluding to in terms of impact on RWA?

Speaker #5: That is correct.

Speaker #7: Okay. Thank you.

Speaker #6: Thank you. And our next question comes from Arren Cyganovich of Truist. Your line is open.

Javier D. Ferrer: I don't want to speculate. As you know, it's over 200 different clients, thousands of accounts. We talk to our clients, our relationship officers talk to our clients. We have some visibility. Some of these are big numbers that move around. We're going to stick to the $18 to $20 billion range.

Yeah. Okay. And then just 1 more for me. Um, I appreciate the the full year guide on on public funds. Just wondering second quarter. Specifically, if there's any reason why we shouldn't be penciling in uh, kind of a historical type run rate for the, the plan increase in public funds in 22.

Speaker #2: Thanks, just want to hear your views on the onshoring of manufacturing in Puerto Rico. Obviously, last year, there were a lot of large announced investments that I haven't really seen any kind of new ones yet this year or anything that you're hearing in terms of new potential investments in have you seen any actual benefits yet from the ones that were announced last year?

I mean I don't I don't want to speculate. I mean, as you know, it's, it's

Over 200 different clients, thousands of accounts, you know, we—we talked to our, our, our clients, or our relationship officers talk to our clients, we have some visibility, but, you know, some of these things are big numbers that move around. So, we're going to stick to the $18 to $20 billion range.

Timur Braziler: Okay. Sorry, I just want to make sure I'm understanding the Basel III impact. I think it was around 7%. Was the Fed guidance. Is that kind of what you're alluding to in terms of impact on RWA?

Speaker #5: Well, you're right. There hasn't been any new public announcements by the government. So we don't want to get in front of them. But they continue working through the grapevine.

Javier D. Ferrer: That is correct.

Timur Braziler: Okay. Thank you.

Okay, and then sorry just I just want to make sure I'm understanding the the Basel 3, um, impact. I think it was around 7% was the, the FED guidance is that kind of what you're alluding to in terms of impact on on rwa. That is correct.

Okay, thank you.

Operator: Thank you. Our next question comes from Arren Cyganovich of Truist. Your line is open.

Speaker #5: They continue working on more entities coming in. There's two more entities that we've heard about. So again, looking at what's happening in the world, it's totally rational to believe that the momentum in continued investment, be it in big operations that are already located in Puerto Rico or new entities coming into Puerto Rico, not only in the United States, but also from Canada and the Far East, and Europe even, should continue.

Thank you.

Arren Cyganovich: Thanks. Just want to hear your views on onshoring of manufacturing in Puerto Rico. Obviously, last year there were a lot of large announced investments. I haven't really seen any kind of new ones yet this year or anything you're hearing in terms of new potential investments. Have you seen any actual benefits yet from the ones that were announced last year?

And our next question comes from Aaron ciganovich of truist. Your line is open.

Speaker #5: So we are again expecting announcements from the Puerto Rico government on it. But we don't want to get in front of rumors. But so far, all the rumors we've heard before, the actual announcements from last year, the Eli Lillys, the Amgen's, of the world panned out.

Javier D. Ferrer: You're right. There hasn't been any new public announcements by the government, so we don't want to get in front of them. They continue working through the grapevine. They continue working on more entities coming in. There's 2 more entities that we've heard about. Again, looking at what's happening in the world, it's totally rational to believe that the momentum in continued investment, be it in big operations that are relocating to Puerto Rico or new

Puerto Rico. Um, you know, obviously last year, there were a lot of large announced Investments. Um, I haven't really seen any kind of new ones yet this year, or any anything you're hearing, uh, in terms of new potential investments in, um, have you seen any any actual, uh, benefits yet from from the ones that were announced last year?

Speaker #5: So we're we have our fingers crossed that the momentum will continue. On reshoring for Puerto Rico. And as you know, manufacturing represents approximately 44% of our GDP.

Hold on. Um there you're right there, haven't hasn't been any any new uh public announcements like the government. So we don't want to get in front of them but they continue working through the grapevine. You know, they continue working on on more

On more entities coming in, there's two more entities, uh, that, that you know. Um, um,

we've heard about, so,

but um,

Speaker #5: So it's an important contributor to our economy. Not only direct jobs, but also indirect jobs, most importantly.

Speaker #2: Have any of the ones that were announced last year started to get produced yet or any movement there? Is it going to take some time?

Javier D. Ferrer: It is coming to Puerto Rico, not only from the United States, but also from Canada and the Far East, and Europe even, should continue. We are, again, expecting announcements from the Puerto Rican government on it. We don't want to get in front of rumors. So far, all the rumors we've heard before, the actual announcements from last year, the Eli Lilly, the Amgen of the world panned out. We have our fingers crossed that the momentum will continue on reshoring for Puerto Rico. As you know, manufacturing represents approximately 44% of our GDP, so it's an important contributor to our economy, not only direct jobs, but also indirect jobs, most importantly.

Yeah, looking at what's happening in the world? It's it's totally rational to to, to believe that the momentum in continued investment, be it in a big operations that are very low. Okay, in Puerto Rico for new

Speaker #5: It's going to take some time. We have seen some new ones coming in and opening accounts with us. And purchasing property and stuff like that.

Entities coming into Puerto Rico, know anything, I stayed also from Canada and the Far East, uh and Europe even should should continue.

Speaker #5: So they're setting up. Typically, it's a process where once they announce, the government announces, that means that they've gotten to an agreement with the companies.

Speaker #5: And then the companies, after that, start opening bank accounts and investing in real estate, getting third-party service providers coming in and doing the work.

Speaker #5: So we've seen some of that. So it has started. But as we've always said, it's going to take three to five years to actually get the actual numbers and the impact.

Speaker #2: Yeah. And the largest announcements are expansions of facilities. So they will require some significant construction investment and time. So we will first see that impact on the construction side.

So um, we are again expecting expecting announcements from the Portugal government on it. Uh, but we we want to, I want to get in front of rumors. But um, so far all the rumors we've heard before the actual announcement from last year, the a is the ambience of the world um, found out. So we're you know, we're we're we have our fingers crossed that that the momentum will continue on reassuring for Puerto Rico and as you know, manufacturing represents approximately 44% of our GDP. So it's, you know, it's a important contributor to our economy. Not only direct jobs are also indirect jobs. Most importantly

Arren Cyganovich: Have any of the ones that were announced last year started to get produced yet or any movement there, or is it going to take some time?

Speaker #5: Great.

Javier D. Ferrer: It's going to take some time. We have seen some new ones coming in and opening accounts with us and purchasing property and stuff like that. They're setting up. Typically, it's a process where once they announce, the government announce, that means that they've gotten to an agreement with the companies, and then the companies after that start opening bank accounts, investing in real estate, getting third-party service providers coming in and doing the work. We've seen some of that. It has started. As we've always said, it's going to take 3 to 5 years to actually get the actual numbers and the impact.

Speaker #2: And then lastly, just Lidio, you had mentioned some loan modifications in commercial. Are these anything new, abnormal, increases, decreases? Just curious if you could give us a little color on that.

have any of the the ones that were announced last year or started to to get you know, produced yet or or any movement there is that going to take some time

Speaker #5: I mean, nothing that I would characterize as being affecting the broader portfolio. Just one-offs some clients are having some financial difficulty. And we executed some loan modification, but nothing that impacts the whole portfolio.

Speaker #2: Okay. Thank you.

Jorge J. García: The largest announcements are expansions of facilities, so they will require some significant construction investment and time. We will first see that impact on the construction side.

Speaker #6: Thank you. And our next question comes from Kelly Matta of KBW. Your line is open.

Can I take some time? We have seen some new ones coming in and opening your accounts with us and, you know, and and purchasing property and stuff like that. So they're they're setting up, typically, it's a process where, you know, once they announced the government announced, that means that they've got them to an agreement with the companies and then the companies after that start opening bank accounts investing in real estate you know, getting third-party service providers coming in and doing the work. So we've seen some of that. Uh so it has started but as we've always said it's it's going to take 3 to 5 years to actually get the actual uh numbers, you know uh and the impact and and the largest announcements are expansions of facilities so they will

Speaker #8: Hey, good morning. Thanks for the question. Maybe to kick it off on expenses, I mean, you were very well-controlled in the first quarter. And the guidance range was brought down a bit.

It requires some significant construction investment, uh, investment in time. So we will first see that impact on the construction side, uh, you know,

Arren Cyganovich: Great. Lastly, just Lidio, you had mentioned some loan modifications in commercial. Are these anything new, abnormal, increases, decreases? Just curious if you could give us a little color on that.

Speaker #8: Just wondering if you can opine upon the drivers of that variance. I know there's some transformation efforts in play. Wondering if some of those investments have been kicked out another year or two.

Javier D. Ferrer: Nothing that I would characterize as being affecting the broader portfolio. Just one-offs. Some clients are having some financial difficulty, and we executed some loan modification, but nothing that impacts the whole portfolio.

Lidio V. Soriano: Nothing that I would characterize as being affecting the broader portfolio. Just one-offs. Some clients are having some financial difficulty, and we executed some loan modification, but nothing that impacts the whole portfolio.

Great. Uh, and then, uh, lastly, just Lydia, you had mentioned some loan modifications in commercial. Are these, uh, anything, uh, new? Abnormal increases, decreases? Um, just curious if you can give us a little color on that.

Speaker #8: Thanks.

Speaker #5: Yeah. Thank you, Kelly. I mean, there's always part of projects that maybe are slow to start. I wouldn't say that anything has been canceled or that is resulting in that reduction.

I mean nothing that I would characterize as being a affecting the broader uh portfolio just 1 off uh some clients are having some financial difficulty and we executed some normal modification but nothing

that impacts the whole portfolio.

Arren Cyganovich: Okay. Thank you.

Operator: Thank you. Our next question comes from Kelly Motta of KBW. Your line is open.

Okay, thank you.

Thank you.

Speaker #5: But we are seeing we did benefit from a handful of things: better negotiations, some adjustments to expected expenditures that were lower in the first quarter.

Kelly Motta: Hey, good morning. Thanks for the question. Maybe to kick it off on expenses. I see you were very well-controlled in Q1, and the guidance range was brought down a bit. Just wondering if you can opine upon the drivers of that variance. I know there's some transformation efforts in play. Wondering if some of those investments have been kicked out another year or two. Thanks.

And our next question comes from Kelly, Mada of KBW. Your line is open.

Speaker #5: We reduced some excess accruals from the incentive payouts for profit sharing from last year. So those are all things that you see the benefit in the first quarter.

Speaker #5: And that benefit will sustain for the year. There's others that are timing differences and but we'll continue to invest in technology. We'll continue to invest in people.

Hey, good morning. Thanks for the question. Um, maybe, maybe to kick it off on expenses. Um, I see. I mean you were very well controlled in the first quarter and the guidance range was brought down a bit. Just wondering if you can opine upon um, the drivers of of that variance. Um,

Jorge J. García: Thank you, Kelly. There's always part of projects that maybe are slow to start. I wouldn't say that anything has been canceled or that is resulting in that reduction. We are seeing we did benefit from a handful of things, better negotiations, some adjustments to expected expenditures that were lower in Q1. We reduced some excess accruals from incentive payouts for profit-sharing from last year. Those are all things that you see the benefit in Q1, and that benefit will sustain for the year. There's others that are timing differences. We'll continue to invest in technology. We'll continue to invest in people. We will continue efficiency efforts. Our expense targets for the year already included around $50 million of efficiency efforts. We continue to improve upon some of those. That's all part of our embedded guidance.

I know there's some transformation efforts in play wondering if you know some of some of those Investments have been have been kicked out another year or so thanks.

Speaker #5: We will continue efficiency efforts. Our expense targets for the year already included around 50 million dollars of efficiency efforts. We continue to improve upon some of those.

Speaker #5: So that's all part of our embedded guidance. So there's just a lot of things going on. But at no moment are we pulling back on our technology and transformation efforts.

Yeah, thank you, Kelly. Um, I mean, there's always part of projects that maybe are slow to start. I wouldn't say that anything has been canceled or, you know, that that is resulting in that, um.

Speaker #5: They are shifts. For example, we went live on our ERP in January. So there are shifts in how those costs translate in terms of expenses that things maybe were being capitalized before and now they're being amortized.

Speaker #5: But overall, we are happy with the level of focus of our teams on cost control. And in execution.

In, in that reduction, but we are seeing we did benefit from a handful of things that are negotiations. Uh, you know, some, some adjustments to expected expenditures that were lower in the first quarter, we reduced, um, some excess across from the incentive payouts, you know, for profit sharing from from last year? So those are all things that you see the benefit in the first quarter and and that benefit will sustain for the year. There's others that are timing differences. Um,

Speaker #8: Got it. And just as a point of clarification, I guess, this guidance range doesn't include any of that excess profit sharing. So if you were to, say, be your NII outlook, that's the type of thing where those expenses would kick in.

Speaker #8: Is that the correct way to think through that cadence?

Jorge J. García: There's just a lot of things going on, but at no moment are we pulling back on our technology and transformation efforts. There are shifts. For example, we went live on our ERP in January, so there are shifts in how those costs translate in terms of expenses, that things maybe were being capitalized before and now they're being amortized. Overall, we are happy with the level of focus of our teams on cost control and in execution.

Speaker #5: That is the correct way. I mean, we'd love to be able to pay profit sharing. We believe that those programs are aligned with our shareholders.

Speaker #5: That means that we are performing better than expectations. And if you assume that our original guidance are based in part by our expectations and budgets, then our interest should be aligned.

Speaker #5: Our current guidance does not include any profit sharing, expense. But remember last year, even with a near 40 million dollar profit sharing expense, we were able to deliver on our original expense guidance.

Um, and and, um, you know, but but you know, I will continue to invest in technology will continue to invest in people. We will continue efficiency efforts our our expense targets for the year. Um, already included around 50 million dollars of efficiency efforts, we continue to improve upon some of those so that that's all part of of our embedded guidance. So there's just a lot of things going on, but at no moment, are we like pulling back on our our technology and transformation efforts? They are shifts. For example, we went live on our Erp in January, so there are shifts in how those costs uh translate you know in in terms of expenses, you know, that things maybe were being capitalized before and now they're being advertised.

Kelly Motta: Got it. Just as a point of clarification, I guess, this guidance range doesn't include any of that excess profit-sharing. If you were to, say, beat your NII outlook.

but overall, we, we are happy with the level of focus of our teams on cost control and in execution

Speaker #5: And of course, we always want to challenge our teams to be able to do more and absorb any incremental expenses that were not part of our plan.

Speaker #8: Got it. Maybe last question, if I can just flip it in on the size of the balance sheet. Cash, money, market investments have come down year over year.

Jorge J. García: Yeah

Kelly Motta: that's the type of thing where those expenses would kick in. Is that the correct way to think through that cadence?

Jorge J. García: That is the correct way. We'd love to be able to pay profit-sharing. We believe that those programs are aligned with our shareholders. That means that we are performing better than expectations. If you assume that our original guidance are based in part by our expectations and budgets, then our interests should be aligned. Our current guidance does not include any profit-sharing expense. Remember last year, even with a near $40 million profit-sharing expense, we were able to deliver on our original expense guidance. Of course, we always want to challenge our teams to be able to do more and absorb any incremental expenses that were not part of our plan.

Speaker #8: They're relatively flat about 4.8, 4.9 billion-ish the past two quarters. Is that a good level on a go-forward basis? Or would you anticipate continued roll into securities and loans off that 485 level?

Got it. And um just just um as a point of um, clarification I guess, um this this guidance range doesn't include any of that excess profit sharing. So if you were to say be you know your knee Outlook. That's that's the type of thing where, where those expenses would kick in is that the correct way to think? Think through that Cadence, that that is the correct way. I mean, we we we love to be able to to pay profit sharing that, you know, we believe that those programs are aligned with our shareholders. That means that we are performing better than expectations. And if you assume that our original guidance are

Speaker #8: Thanks.

Speaker #5: Yeah. I think we've had that level for the last two or three quarters. We're comfortable with where we're at on that. We still have, yeah, I'll leave it at that.

Speaker #8: Okay. Thank you so much.

Speaker #6: Thank you. And our next question comes from Gerard Cassidy of RBC. Your line is open.

Kelly Motta: Got it. Maybe last question, if I can just slip it in on the size of the balance sheet. Cash money market investments have come down year over year. They're relatively flat, about $4.8 billion-ish, $4.9 billion-ish the past two quarters. Is that a good level on a go-forward basis, or would you anticipate continued roll into securities and loans off that $4.85 billion level? Thanks.

Our base, in part, is by our expectations, and budgets, and our interests should be aligned. Um, our current guidance does not include any profit-sharing expense. But remember last year, uh, I mean, even with the near $40 million profit-sharing expense, we were able to deliver on our original expense guidance and, uh, of course, we always want to challenge our teams to be able to do more and absorb any incremental, uh, expenses that were not part of our plan.

Got it. Maybe maybe last question. If I can just um, slip it in on, on the size of the balance sheet. Um,

Speaker #5: I have the air. Hi, Jorge.

Speaker #2: Hello, Gerard.

Speaker #5: Good morning.

Speaker #2: If I recall my credit ratings, correctly, in looking at your slide deck, you showed that S&P and Moody's have you on watch list with a positive implication.

Speaker #2: And it looks like you're a notch below investment grade by those two rating agencies. I know Fitch is, I think, at an investment grade.

Javier D. Ferrer: Yeah. I think we've had that level for the last two or three quarters. We're comfortable with where we're at on that. We still have-

Jorge J. García: Yeah. I think we've had that level for the last two or three quarters. We're comfortable with where we're at on that. We still have-

Speaker #2: Can you share with us when you think they'll determine whether they're going to lift that credit rating? And can you also remind us, what was the last time Popular was rated investment grade by Moody's or S&P?

Uh, Cash Money Market Investments have come down. You know, year-over-year, there are relatively flat about 4.8 4.9 billion, is the past 2 quarters. Is that is that a good level on on a go forward basis or would you anticipate you know, continued role into Securities and and Loans off off that 485 level. Thanks. Yeah. I think I think we've had that that level of the last 2 or 3 quarters. Um, you know, we're comfortable with with with where, where we're at on that. Um,

Kelly Motta: Got it.

Javier D. Ferrer: Yeah. I'll leave it at that.

Jorge J. García: Yeah. I'll leave it at that.

We still have, you know? Yeah.

Kelly Motta: Okay. Thank you so much.

I'll leave it at that.

Operator: Thank you. Our next question comes from Gerard Cassidy of RBC. Your line is open.

Okay, thank you so much.

Thank you.

Speaker #5: Well, I'd love to be able to guess at the answer of the first question, Gerard. What I would say is that we are focused on discussions with the rating agencies we had an advocacy effort to make sure we continue to educate them and spending time making sure that they are up to date on everything that's going on with Popular and Puerto Rico.

Gerard Cassidy: Hi, Javier. Hi, Jorge.

And our next question comes from Gerard Cassidy of RBC. Your line is open,

Javier D. Ferrer: Hello, Gerard.

Jorge J. García: Hey, Gerard. Good morning.

Gerard Cassidy: If I recall my credit ratings correctly, in looking at your slide deck, you showed that S&P and Moody's have you on watchlist with positive implications, and it looks like you're a notch below investment grade by those two rating agencies. I know Fitch, I think, is at investment grade. Can you share with us when you think they'll determine whether they're going to lift that credit rating? And can you also remind us, when was the last time Popular was rated investment grade by Moody's or S&P?

I have a year. Hi. Good morning.

Speaker #5: But I cannot begin to guess. We believe that our ratings should be better. Frankly. But how long has it been? And my guess, it's probably go back to 2005, 2006 before the financial crisis.

If I recall my credit ratings correctly—I'm looking at this, your slide deck—you showed that S&P and Moody's have you on...

Speaker #2: It's an insightful question. I think that if you we have sort of retaken the efforts to meet with S&P and Moody's and visit with them and sort of was suggesting if you look at if you look at the purely numerical thresholds for us to be considered investment grade, I mean, we were there.

Javier D. Ferrer: Well, I'd love to be able to guess at the answer to the first question, Gerard. What I would say is that we are focused on discussions with the rating agencies. We've had an advocacy effort to make sure we continue to educate them and spending time making sure that they are up to date on everything that's going on with Popular and Puerto Rico. I cannot begin to guess. We believe that our ratings should be better, frankly. How long has it been? My guess is probably go back to 2005, 2006, before the financial crisis.

Watch lists with a positive implications. And it looks like you're not a notch below investment grade by those 2 rating agencies. I know Fitch is I think is an investment grade. Um, can you share with us when you think they'll determine whether they're going to lift that credit rating? And can you also remind us, what was the last time popular was and rated investment grade by Moody's or S&P?

Speaker #2: But there are other things that may come into their consideration of us as a Puerto Rico's largest financial institution. As they see Puerto Rico and so but I think, again, if you only if you were to look at us as a peer banks given our performance, we would definitely be investment grade rated.

Well, I I'd love to be able to guess at the answer, the first question Gerard, um, you know what I would say is that we are we are focused on discussions with the rating agencies. Uh, we had an advocacy effort to make sure we continue to educate them and and spending time making sure that they are up to date and everything that's going on with with popular and Puerto Rico. Um, but I can I cannot begin to guess. We believe that our ratings should be better. Uh, frankly but um,

You know, and how long has it been? And my guess is, it's probably go back to, you know, 2005 2006 before the financial crisis. Um,

Javier D. Ferrer: It's an insightful question. I think that we have sort of retaken the efforts to meet with S&P and Moody's and visit with them, as Jorge was suggesting. If you look at the purely numerical thresholds for us to be considered investment-grade, we were there. There are other things that may come into their consideration of us as Puerto Rico's largest financial institution, as they see Puerto Rico. I think, again, if you were to look at us as a peer banks, given our performance, we would definitely be investment-grade rated.

Speaker #5: But we'll take the potential positive outlook. We'll take that as momentum.

Speaker #2: Yeah. We'll take that as momentum. Yeah.

It's an insightful question. Um, you know, I—I—I think that if you

Speaker #5: Yeah. I agree. I agree. As a follow-up question, I know you guys talked about the price of oil. You haven't seen any significant signs of economic stress at these elevated price levels.

Um, we have sort of, uh, retake in the efforts to meet with this and PM Modis, and this is with them. I thought it was suggesting. If you look at it, if you look at the, uh,

Speaker #5: Can you share with us a couple of things? Do you recall in the first quarter of 2022 when Russia invaded Ukraine? Obviously, the price of oil shot up.

Speaker #5: What kind of impact did that have on credit quality back then? And then second, if oil stays elevated at 125 dollars a barrel, let's say, throughout the year, would it appear to weigh on the not only the Puerto Rican economy, but the US economy as well?

Ation.

Uh, of us as a Puerto Rico's, largest financial institution, um, as a city Puerto Rico. And, um,

And so, so, but, but I think again, if you only, if you were to look at us as a peer banks,

Speaker #5: And what do you think that could do to credit quality? And then lastly, can you also remind us I know the island's very dependent upon oil for its energy.

Jorge J. García: We'll take the change to positive outlook. We'll take that as momentum.

Given our performance, we would definitely be investing greatly.

Jorge J. García: We'll take the change to positive outlook. We'll take that as momentum.

Javier D. Ferrer: Yeah, we'll take that as momentum. Yeah.

Gerard Cassidy: Yeah. I agree. As a follow-up question, I know you guys talked about the price of oil. You haven't seen any significant signs of economic stress at these elevated price levels. Can you share with us a couple of things? Do you recall in Q1 2022 when Russia invaded Ukraine? Obviously, the price of oil shot up. What kind of impact did that have on credit quality back then? Then second, if oil stays elevated at $125 a barrel, let's say, throughout the year, it would appear to weigh on not only the Puerto Rican economy, but the US economy as well. What do you think that could do to credit quality?

Speaker #5: But I thought and the island was moving to other alternative sources, maybe. Natural gas. LNG. If you can update us on anything, if I remember that correctly.

But we'll take the positive outlook. We'll take that as a moment. Yeah, we'll take that as momentum. Yeah.

Speaker #5: Thank you. I would say, Gerard, this is Lidio. I would say that the answer to that is going to depend on the length where the price of oil stays at this level.

I agree that I I agree as a follow-up question. Uh, I know you guys talked about, you know, the price of oil. You haven't seen any significant signs of economic stress at these elevated price levels?

Speaker #5: I mean, similar to the in 2022, I mean, the situation was or the increasing oil prices was short-lived. And that had very minimal impact in terms of the delinquencies and the credit quality of our portfolio.

Speaker #5: So for us, I think the key is and the key and the impact for Puerto Rico and our portfolio is going to be the length of time in which we have elevated oil prices in the island.

Gerard Cassidy: Lastly, can you also remind us? I know the island's very dependent upon oil for its energy, but I thought the island was moving to other alternative sources, maybe natural gas, LNG. If you can update us on anything, if I remember that correctly. Thank you.

Speaker #5: As we noted in our preparing mark, we are very comfortable with our portfolios. We have seen no deterioration in the credit quality. We've seen normal seasonal patterns.

Can you share with us a couple of things? Do you recall in the first quarter of 2022 when Russia invaded? Ukraine, obviously the price of oil shot up? What kind of impact did that have on credit quality back then? And then second if oil stays elevated at $125, a barrel let's say throughout the year it would appear to weigh on the not only the Puerto Rican economy, but the US economy as well. And what do you think that could do to credit credit quality? And then, lastly, um, can you also remind us, I know the Island's very dependent upon oil for its energy, but I thought you and the island was moving to other alternative sources. Maybe natural gas LNG if you could update us on.

Speaker #5: And actually, our delinquencies are better than the last quarter, obviously, and much better than this time last year. So we're very, very pleased with our portfolios.

Lidio V. Soriano: I would say, Gerard, this is Lidio. I would say that the answer to that is going to depend on the length where the price of oil stays at this level. Similar to in 2022, the situation was, or the increase in oil prices was short-lived, and that had very minimal impact in terms of the delinquencies and the credit quality of our portfolio. For us, I think the key is, and the key and the impact for Puerto Rico on our portfolio is going to be the length of time in which we have elevated oil prices in the island. As we noted in our prepared remarks, we are very comfortable with our portfolios. We have seen no deterioration in the credit quality. We've seen normal seasonal patterns. Actually, our delinquencies are better than the last quarter, obviously, and much better than this time last year.

Anything, if I remember that correctly. Thank you.

I will say, uh, you you are. This is lady. I will say that.

Speaker #2: So the premise, Gerard, the premise in your question is spot on. I mean, we're no different than financial institutions in the United States. If the conflict continues for a long time and oil doesn't come down, as you know, we're dependent on that to create generate electricity in Puerto Rico.

The answer to that is going to depend on the length. Uh where where the principal stays at this level. I mean,

Similar to in 2022. I mean, the situation was, or the increasing oil prices was short-lived and had very minimal impact in terms.

Speaker #2: There's been growth in other sources of energy for Puerto Rico. But I don't think we're going to be able to switch quick enough not to have higher oil prices for longer impact us and our customers.

Of the delinquency and the correct quality portfolio.

Speaker #2: So but so far, so far, we haven't seen it. I think the second quarter will be will tell the tale. More accurately, if in fact the conflict continues and the price continues to go up or stay higher for longer.

So for us, I think the key is and the key and the impact for Puerto Rico and our our portfolio is going to be the length of time in which we have elevated oil prices in the island.

And as we noted in a remark, we are very comfortable with

Lidio V. Soriano: We're very pleased with our portfolios.

Speaker #5: Very good. And Lidio, can I just circle back on your comment about delinquencies? Is it as simple as the health of the economy being as good as it is?

Lidio V. Soriano: We're very pleased with our portfolios.

Javier D. Ferrer: The premise, Gerard, the premise in your question is spot on. We're no different than financial institutions in the United States. If the conflict continues for a long time and oil doesn't come down, as you know, we're dependent on that to generate electricity in Puerto Rico. There's been growth in other sources of energy for Puerto Rico, but I don't think we're going to be able to switch quick enough not to have higher oil prices for longer impact us and our customers. So far, we haven't seen it.

Our portfolios, and we have seen no deterioration in the quality. We've seen normal seasonal patterns, and actually our delinquencies are better than last quarter, obviously, and much better—and better than, uh, this time last year. So we're very, very pleased with our portfolios.

Speaker #5: You guys mentioned the unemployment rate is near record lows. Is it that straightforward that the health of the economy is the underlying factor why the delinquencies in credit are as strong as they are and the consumer books?

So, the premise that you are—the premise in your question is put on—I mean, we're no different than international institutions in the United States.

Speaker #2: As always, a combination of factors. But certainly, I mean, the driver for the performance of consumer books is employment. In addition to that, as alluded by Jorge in his remarks, you also have to in the first quarter, refund activity.

Javier D. Ferrer: I think the Q2 will tell the tale more accurately if, in fact, the conflict continues and the price continues to go up or stay high for longer.

Speaker #2: In Puerto Rico, we have given based on data provided by the local IRS, they have refund to customers around 2.2 billion, which is slightly ahead of the pace of last year, about 300 million ahead of the pace of last year.

Gerard Cassidy: Very good. Lidio, can I just circle back on your comment about delinquencies? Is it as simple as the health of the economy being as good as it is? You guys mentioned the unemployment rate is near record lows. Is it that straightforward that the health of the economy is the underlying factor why the delinquencies in credit are as strong as they are in the consumer books?

If if, if the conflict continues, you know, for a long time and oil doesn't come down as, you know, we're dependent on that to create, uh, generate electricity in Puerto Rico. There's been, uh, growth in in, in other sources of energy for Puerto Rico, but I don't think we're going to be able to switch quick enough not to have, you know, higher oil prices for longer impact us and our customers. So, but so far, you know, um, so far we haven't seen it. Uh, I think the second quarter will be, will be, you know, um, uh, you know, will tell the tale, uh, more accurately, if in fact, the conflict continues, and the price continues to go up or stay higher for longer,

Very good and Lydia. Can I just circle back on your comment about the delinquencies? Um,

Speaker #2: That's obviously impacted the liquidity of consumers in Puerto Rico and their ability to pay their loans.

Speaker #5: Great. Thank you, guys.

Speaker #4: Thank you.

Speaker #1: Thank you. And as a reminder, if you have a question, please press star 11. And our next question comes from Manuel Navas at Piper Sandler.

Lidio V. Soriano: It's always a combination of factors. Certainly, the driver for the performance of consumer books is employment. In addition to that, as alluded by Jorge in his remarks, you also have, in Q1, refund activity. In Puerto Rico, based on data provided by the local IRS, they have refunded to customers around $2.2 billion, which is slightly ahead of the pace of last year, about $300 million ahead of the pace of last year. That's obviously impacted the liquidity of consumers in Puerto Rico and their ability to pay their loans.

Is it as simple as the health of the economy being as good as it is? You guys mentioned the unemployment rate is near record lows. Uh, is it that straightforward that the health of the economy is the underlying factor—why the liquidity is incredible or as strong as they are in the consumer books?

Speaker #1: Your line is open.

Speaker #2: I think this builds off a little bit of the last commentary. But you added reserves on the commercial NPL from the third quarter. But most other loan buckets had lower reserves, especially with the auto and consumer especially with delinquencies down.

As always, a combination of factors. But certainly, I mean the driver for the performance of consumer books is the employment. In addition to that, as noted by her and as in his remarks, you also have in the first quarter.

refund activity in Puerto Rico, we have

Speaker #2: Could there be some upside in provisioning from here? Reserves coming down or what do you how do you feel the progression should go forward from here in credit costs?

Based on data provided by the local IRS, they have returned refunds to customers of around $2.2 billion, which is slightly ahead of the pace of last year—about $300 million ahead of the base of last year. That's obviously impacted the liquidity of consumers in Puerto Rico and their ability to pay their loans.

Gerard Cassidy: Great. Thank you, guys.

Lidio V. Soriano: Thank you.

Speaker #5: I mean, I like your thoughts. But I mean, I agree with you. I mean, we had very strong performance from our consumer books. And that led to a release of reserves, particularly in the auto portfolio.

Great. Thank you guys.

Operator: Thank you. As a reminder, if you have a question, please press star 11. Our next question comes from Manuel Navas at Piper Sandler. Your line is open.

Thank you.

Thank you. And as a reminder, if you have a question, please press *11.

Speaker #5: We have done a lot over the last few years in order to improve the performance. So it is not by chance. It's also by the work that we have done.

And our next question comes from Manuel Novas at Piper Sandler. Your line is open.

Manuel Navas: I think this builds off a little bit of the last commentary. You added reserves on the commercial NPL from Q3. Most other loan buckets had lower reserves, especially with the auto and consumer, especially with delinquencies down. Could there be some upside in provisioning from here, reserves coming down? Or how do you feel the progression should go forward from here in credit costs?

Speaker #5: In the commercial book, as we have said in the past, this is mostly a corporate book. So every now and then, we have situation may one or one-off clients that we may need to reserve for.

A little bit of the last commentary, uh, but you, you added reserves, um, on the commercial NPL from the third quarter. Uh, but most other, uh,

Speaker #5: We haven't seen anything that indicate that we have broad-based issues with our portfolios. We have dealt, as we mentioned in the third quarter of last year, and to some extent in the first quarter of this year with two particular cases.

Loan buckets had lower reserves, especially with the auto and and consumer. Um, with with especially with delinquencies, down could there be some uh, upside upside in uh, provisioning from here? Um, uh, reserves coming down or um,

Speaker #5: One related to a commercial real estate in the US and one related to a telecom company in Puerto Rico. But we think if the economy stays where we are and delinquency at this level, that there might be an opportunity in the quarters ahead.

What, what do you how do you feel the progression should come go forward from here in credit costs?

Lidio V. Soriano: I like your thoughts. I agree with you. We have very strong performance from our consumer books, and that led to a release of reserves, particularly in the auto portfolio. We have done a lot over the last few years in order to improve the performance. It is not by chance. It's also by the work that we have done. In the commercial book, as we have said in the past, this is mostly corporate book. Every now and then we have a situation with one of our clients that we may need to reserve for. We haven't seen anything that indicates that we have broad-based issues with our portfolios.

Speaker #5: So we'll see.

Speaker #2: And that opportunity, it could show up in a couple of different places. And I'm going to probably ask a question that has already been asked a couple of times.

But I mean, I—I agree with you. I mean, we have very strong performance from our consumer books, and that led to, like, a release of reserves, particularly in the auto portfolio. We have done a lot over the last few years in order to improve the performance. So, it is not by chance; it is also by the work that we have done.

Speaker #2: Do you anticipate the buyback accelerates?

Speaker #4: I mean, we'll be consistent. We'll come back to you as to the levels. We'll be consistent in trying to bring down the level of capital but frankly, I mean, we're looking at it over a multi-quarter period to try to get to levels that target levels that make sense.

In the commercial book, as we have said in the past, this is mostly a corporate book. So every now and then we have a situation with one or more of our clients that we may need to reserve for. We haven't seen anything that indicates that we have...

Lidio V. Soriano: We have dealt, as we mentioned that in the Q3 of last year, and to some extent in the Q1 of this year, with two particular case, one related to commercial real estate in the US and one related to a telecom company in Puerto Rico. We think if the economy stays where we are and the delinquency at this level, that there might be an opportunity in the quarters ahead. We'll see.

Speaker #4: And I'm not sure that any given quarter, any provision changes in our projected provision or where we're at is going to make a difference in our repurchase strategy.

Speaker #2: Understandable. Is the update that we're expecting at some point this quarter would it include business line changes? Anything beyond just an update on a reauthorization of shares?

Manuel Navas: That opportunity could show up in a couple of different places, and I'm going to probably ask a question that has already been asked a couple of times, is do you anticipate the buyback accelerates?

Drop base issues with our portfolios. We have dealt as we mentioned that in the to of last year and to some extent in the first quarter of this year with 2, particular 2 particular case, 1 related to commercial real estate uh in the US and 1 related to a telecom Telecom company in Puerto Rico. And but we think if the economy states where we are and the linguistic this level that there might be an opportunity in the in the quarters ahead. So we'll see.

That opportunity could show up in a couple different places and I'm, I'm going to probably ask a question that has already been asked a couple times is. Do you anticipate the buyback accelerates?

Speaker #4: just our traditional kind of update on kind of authorization from our board. And perhaps dividend increases, etc.

Jorge J. García: We'll be consistent. We'll come back to you and as to the levels. We'll be consistent in trying to bring down the level of capital. But frankly, we're looking at it over a multi-quarter period to try to get to target levels that make sense. I'm not sure that any given quarter, any provision really, changes in our projected provision or where we're at is going to make a difference in our repurchase strategy.

Okay.

Speaker #2: Okay. I appreciate it. Thank you.

Speaker #5: Thank you.

Manuel Navas: Understandable. Is the update that we're expecting at some point this quarter? Would it include business line changes, anything beyond just an update on a reauthorization of shares?

I mean, we, we, you know, um, will be consistent, you know, we'll come back to you and, and to the levels, um, you know, we'll be consistent in trying to bring down the level of, um, of capital. But frankly, I mean, we're looking at it over a multi-, you know, quarter period to try to get to, you know, levels that, you know, target levels that make sense. And, um, I'm not sure that any given quarter or any provision really, you know, uh, changes in our projected provision or where we're at is going to make a difference in our, uh, repurchase strategy.

Jorge J. García: We're talking about just our traditional kind of update on kind of authorization from our board and perhaps dividend increases, et cetera.

Manuel Navas: Okay. I appreciate it. Thank you.

Understandable. Is that the update that we're expecting at some point? This quarter would it include business line changes anything beyond. Um, just an update on a re reauthorization of of shares, we're talking about, just our traditional kind of update on kind of a authorization from our, from our board and um and perhaps dividend increases Etc.

Jorge J. García: Thank you.

Okay. I I appreciate it. Thank you.

Operator: Thank you. I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating, and you may now disconnect.

Thank you.

Thank you. I'm showing no.

Questions.

At this time.

Thank you for participating, and you may now disconnect.

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