Popular, Inc.

Good morning and welcome to the Popular, Inc. First Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw from the question queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Paul Cardillo, Investor Relations Officer at Popular. Please go ahead.

Good morning and thank you for joining us. With us on the call today is our CEO, Ignacio Alvarez, our CFO, Carlos Vazquez, and our CRO, Lidio Soriano. 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. Before we start, I would like to remind you that on today's call, we may make forward-looking statements that 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 set forth within today's earnings press release and are detailed in our SEC filings. You may find today's press release and our SEC filings on our webpage at popular.com. I will now turn the call over to our CEO, Ignacio Alvarez.

Good morning, and thank you for joining the call. I hope that you and your loved ones are well. We began the year with a very strong quarter, achieving net income of $263 million. Before I discuss the highlights for the first quarter, I am pleased to report that earlier this month, we announced a series of planned capital actions that we intend to execute this year. These actions include a 12.5% increase in the company's quarterly common stock dividend from 40 to 45 cents per share and a common stock repurchase program of up to 350 million. These actions evidence the strength of our capital position, which allows us to return capital to our shareholders while we continue to invest in our franchise and serve the needs of our customers. Please turn to slide three. Our quarterly net income of 263 million was 86 million higher than the fourth quarter. These results were $228 million higher than the same quarter last year. Both quarters were impacted, albeit in opposite directions, due to changes in economic forecasts due to the pandemic and its impact under CECL. First quarter results were primarily driven by an $82 million benefit in the provision for credit losses, as well as higher revenues. The increase in net interest income was driven by higher PPP-related fees, and increase in our investment portfolio and lower deposit costs. Our non-interest income increased due to higher mortgage banking income driven by higher MSR valuation. Credit quality trends were positive in the quarter with lower MPLs, lower MPL inflows and lower net charge-offs. Our results reflect the ongoing rebound in economic activity experienced over the past few quarters in large part due to the unprecedented level of federal stimulus as well as our diversified sources of revenue and prudent risk management. Please turn to slide four for an update on PPP and other operational matters. With respect to the PPP program, we have funded 42,000 loans totaling $1.9 billion in both rounds. In round two, we have originated nearly 13,000 loans for $478 million. of the loans originating in round one, close to 650 million, or 46%, have been forgiven as of the end of the first quarter. In Puerto Rico, as of March 31st, we have funded 62% of all PP loans that have been originated on the island in both programs. We have seen an acceleration in the adoption of digital channels. Active users of our Mi Banco platform in Puerto Rico have grown by 17% since March 2020. We captured 69% of deposits in the first quarter through digital channels. While slightly lower than the 71% observed in the fourth quarter, it was considerably higher than the 56% registered in the first quarter of last year. We believe that these trends may adjust downward somewhat as the economy continues to reopen, but we expect them to remain higher at pre-pandemic levels. Finally, our customer base in Puerto Rico continues to grow. increasing by 12,000 in the first quarter to reach more than 1.9 million unique customers. Please turn to slide five for an update on the current macroeconomic environment in Puerto Rico. In the first quarter, business trends and customer activity continued to improve, building upon the momentum seen in the second half of 2020 as many of the restrictions that were in place were gradually loosened. Vaccinations in Puerto Rico have progressed along a similar trajectory as in the mainland. While the number of the cases on the island has increased in recent weeks, COVID-related hospitalizations remain below national levels. Employment levels have improved but are still lower compared to last year. Total non-farm employment has increased by 2% since December 2020 but remains 4% below the March 2020 levels. New auto sales have remained robust, with sales of 32,000 units in the first quarter. This is the second highest quarterly level, only exceeded by the prior quarter's record level. Cement sales increased by 68% in the first quarter as compared to the year-ago period, which is the highest level since at least 2016. The tourism and hospitality sector continue to improve. With much of the world travel limited, Puerto Rico has become a popular destination for mainland residents during the pandemic. Airport traffic is improving at a rapid pace. While year-to-date arrivals were down 20% from the year-ago period, arrivals during the month of March were 40% higher than the previous year. Hotel demand has also picked up significantly. The current hotel booking rate for the remainder of 2021 is above the booking level at the same time in 2019, which was a record year for tourism in Puerto Rico. Within Poplar's clientele, credit and debit card sales in dollars increased by 39% compared to last year's first quarter and have been higher than pre-pandemic levels. Auto loan originations at BPBR increased by 15% compared to the year-ago period. Similarly, we have contingency strength in the housing market. While the dollar volume of mortgage originations at BPPR decreased by 15% compared to last quarter, it has increased 127% versus the first quarter of 2020. All in all, we are extremely pleased with our results for the first quarter and encouraged by the economic outlook. I now turn the call over to Carlos for more details on our financials.