Popular, Inc.

Good morning and welcome to the Popular, Inc. Second 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. 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 Vasquez, and our CRO, Lidio Soriano. They will review our results for the second quarter and then answer your questions. Other members of our management team will also be available during the Q&A session. Before we 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. The second quarter was another strong quarter in which we achieved net income of $218 million. Our results reflect the continued rebound in economic activity and the unprecedented level of federal stimulus. They also reflect our diversified sources of revenue and prudent risk management. Please turn to slide three. Our quarterly net income of $218 million was $45 million lower than the first quarter and $90 million higher than the same quarter of 2020. The quarter-over-quarter variance was driven by a lower benefit in the provision for credit losses compared to last quarter, higher revenues, and lower expenses. The increase in net interest income was driven by higher income from our investment portfolio and lower deposit costs. Our non-interest income increased to the higher volume of credit and debit card transactions. Credit quality trends were positive in the quarter with lower MPLs and net recoveries. During the quarter, we continued to return capital to our shareholders. In late April, we entered into a 350 million accelerated share repurchase program, and on July 1st, we paid a dividend of 45 cents per common share, an increase of five cents. Please turn to slide four for an update on various business metrics. Our customer base in Puerto Rico continues to grow, increasing by 17,000 in the second quarter, and by nearly 30,000 year-to-date to reach more than 1.9 million unique customers. Adoption of digital channels among our retail customers continues to be strong. Active uses on our Bbanco platform exceeds 1.1 million and have grown by 18% since March 2020. We captured 66% of our deposits in the second quarter through digital channels. As expected, these trends have adjusted slightly lower compared to the level seen over the past year, but remain significantly higher than pre-pandemic levels. With respect to the PPP program, we funded nearly 50,000 loans totaling $2.1 billion across both rounds. We originated more than 29,000 loans or $1.4 billion in round one and nearly 21,000 loans or $678 million in round two. In Puerto Rico, we funded 62% of all PP loans that were originated on the island. Of the loans originated in round one, close to $965 million, or 68%, have been forgiven as of the end of June. Within Poplar's clientele, the dollar value of credit and debit card sales have continued to trend higher, increasing by 17% compared to last quarter and by 45% compared to the second quarter of 2019. Auto loan and lease originations and PPR increased by 8% in the second quarter compared to the first quarter and by 32% compared to the second quarter of 2019. Similarly, we have continued to see strength in the housing market. The dollar volume of mortgage originations at Banco Popular increased by 6% compared to last quarter and by 63%. compared to the second quarter of 2019. Please turn to slide five for an update on the current macro environment in Puerto Rico. In the second quarter, business trends and customer activity continue to improve, building upon the momentum seen in recent quarters as most of the COVID-related restrictions that were in place have been either relaxed or eliminated. Puerto Rico has continued to make solid progress on the vaccination front, According to the CDC website, 1.9 million or 66% of the population over 12 years old have been vaccinated and 2.2 million or 76% of the population over 12 years old have received at least one dose. Yield auto sales continue to reflect strong consumer demand with sales of more than 35 units in the second quarter. Year-to-date, auto sales have more than doubled compared to the first six months of 2020 and are up 31% from the same period in 2019. Demand sales have remained strong. Year-to-date sales through May were higher than the level of sales that were seen during the same time period in 2018 and 2019 when the island was rebuilding following the 2017 hurricanes. The improvement in the tourism and hospitality sector has been extraordinary. With much of the world travel still somewhat limited, Puerto Rico continues to be a popular destination for mainland residents that have become more comfortable with traveling. Additionally, earlier this month, the CDC improved its assessment of the risk of contracting COVID in Puerto Rico to level 2 or moderate. This action should help further stimulate travel to the islets. Hotel demand has picked up dramatically. In June, occupancy rates in Puerto Rico were nearly 79%. Additionally, the revenue per available room reached $216, the highest level on record, and compares to $129 in June of 2019. Airport traffic has continued to improve at a rapid pace. Year-to-date passenger traffic is 75% higher than last year, and is down only 6% compared to 2019. In the month of June, traffic was up 372% compared to the same month a year ago and was 14% higher than in June 2019. In fact, June was the highest level of passenger traffic seen at the airport since it was privatized in 2013. Cruise ships are now scheduled to recommence during the first week of August. Employment levels have improved, but are still below pre-pandemic levels. Total non-farm employment has increased by 2% since December 2020 and by 7% since June 2020. We are extremely pleased with the results for the second quarter. We continue to be very optimistic about the economic recovery, but will remain attentive to how the evolving health situation may impact the economic outlook. I now turn the call over to Carlos for more details on our financial results.