Popular, Inc.

Hello, everyone, and welcome to the Popular, Inc. Third Quarter 2021 Earnings Call. My name is Bethany, and I'll be coordinating this call for you today. If you would like to register a question at Q&A, please press star followed by one on your telephone keypad. I will now hand the call over to your host, Paul Cardillo, Investor Relations Officer at Popular. Over to you, Paul.

Good morning, and thank you for joining us and also for your patience as we dealt with some connectivity issues. 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 third 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.

Ignacio Alvarez Good morning, and thank you for joining the call. The third quarter was another strong one in which we achieved net income of $248 million. Our results reflect the continued strength in economic activity driven by the unprecedented levels 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 $248 million was $30 million higher than the second quarter and $80 million higher than the same quarter of 2020. The sequential variance was driven by a higher benefit in the provision for credit losses, partially offset by higher expenses. Net interest income was in line with the second quarter. Our non-interest income increased primarily due to the sale of two corporate office buildings. A higher volume of credit and debit card transactions in the quarter also contributed to the increase. Credit quality trends continue to be favorable in the period with lower MPLs and low levels of net charge-offs. During the quarter, we continued to return capital to our shareholders. On September 9th, we completed the previously announced $350 million accelerated share repurchase program. And on September 30, we announced the redemption of our 6.7% trust-referred securities, of which $187 million is currently outstanding. 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. Please turn to slide four. On October 15, we acquired K2 Capital Group, a national healthcare equipment leasing business with $119 million in assets. This transaction will complement and expand our existing niche healthcare lending business. Our customer base in Puerto Rico continues to grow, increasing by 12,000 in the third quarter and by nearly 42,000 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 users on our MeBanco platform exceed 1.1 million and have grown by 18 percent since March 2020. We captured 66 percent of our deposits in the first quarter through digital channels. As expected, these trends have adjusted slightly lower but remain significantly higher than pre-pandemic levels. Within Populous clientele, the dollar value of credit and debit card sales have continued to trend higher. increasing by 5 percent compared to the same quarter a year ago. Sales are also well above pre-pandemic levels, 34 percent higher than in the third quarter of 2019. Auto loan and lease originations at BPPR have remained extremely strong. While they had decreased slightly compared to the third quarter in 2020, which reflected the reopening of the economy, they were 26 percent higher versus the third quarter in 2019. We have continued to see strength in the housing market. While the dollar value of mortgage originations at BPPR decreased by 3% compared to the third quarter of 2020, they increased by 51% compared to the third quarter of 2019. Please turn to slide five for an update on the current macro environment in Puerto Rico. In the third quarter, business trends and customer activity remain robust. We continue to see strong momentum in recent quarters as most of the COVID-related restrictions that were in place have either been relaxed or eliminated. Puerto Rico has continued to make solid progress on the vaccination front. We are proud to say that we are now, we have the highest vaccination rate of any US state or territory. According to the CDC website, 81% of the population over 12 years old have been fully vaccinated and 90% have received at least one dose of the vaccine. New auto sales continue to reflect strong consumer demand and are on a record pace, with 31,000 units sold in the third quarter. Year to date, auto sales are up 66% compared to the first nine months of 2020, and are up 32% from the same period in 2019. Cement sales have also remained strong, Year-to-date sales through August were higher than the level of sales seen through the same periods in 2018 and 2019 when the island was rebuilding following the 2017 hurricane. Activity levels in the tourism and hospitality sector have continued to be a source of strength for the local economy. With much of world travel still somewhat limited, Puerto Rico continues to be a popular destination for mainland residents. Hotel demand remains strong during the quarter. In August, occupancy rates in Puerto Rico have exceeded a comparable period in 2019 with a fourth consecutive month. Airport traffic has continued to improve. Year-to-date passenger traffic has more than doubled compared to last year and has now exceeded comparable 2019 levels. In September, traffic was up 130 percent compared to the same month a year ago and was 20 percent higher than in September of 2019. This was the sixth consecutive month that passenger traffic has surpassed the comparable figures in 2019. Cruise ship arrivals recommenced in August. According to the Puerto Rico Tourism Company, more than 300 trips are anticipated for the remainder of the 2021-2022 season. Employment levels have improved but are still somewhat below pre-pandemic levels. Total non-farm employment has increased by 3% since December 2020 and by 1% since August 2020. We are pleased with the results for the third quarter and continue to be optimistic about the prospects for the future. However, we will remain attentive to how the evolving health situation may impact the economy. I will now turn the call over to Carlos for more detail on our financial results.