Popular, Inc.

Hello, everyone, and a warm welcome to the Popular Inc. Q1 2022 earnings call. My name is Simona, and I'll be coordinating your call today. If you would like to register a question in preparation for the Q&A session, please press star followed by one on your telephone keypad. With that, I have the pleasure of handing over to Paul Cardillo, Investor Relations Officer at Popular Inc. Please go ahead, Paul.

Good morning, and thank you for joining us. With us on the call today is our CEO, Ignacio Alvarez, our COO, Javier Ferrer, our CFO, Carlos Vasquez, 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 filing. 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. We began the year with a very strong quarter, achieving a net income of $212 million. Our results reflect the continued recovery and economic activity, our diversified sources of revenue, and prudent risk management. Please turn to slide three. Our quarterly net income of $212 million was $6 million higher than the fourth quarter and $51 million lower than the same quarter of 2021, which included significant reserve releases. The sequential variance was driven by lower expenses and a lower tax rate, partially offset by a lower benefit in the provision for credit losses, lower net interest income, and lower fee income. During the quarter, loan growth was solid and broad-based, both geographically and across all loan segments. Commercial loans grew during the period at both PPPR and PB, despite the continued runoff of PPP loans. Our margins in Puerto Rico continue to be impacted by our asset mix. However, we are well-positioned to benefit from higher market rates. Credit quality trends continue to be favorable during the period, with a low level of net charge-offs and decreasing non-performing loans. With increasing expectations to digitize and improve our customer experience, we are constantly assessing and investing in our capabilities. In February, we entered into an agreement with Evertech to acquire key customer-facing channels and to extend important commercial agreements. We expect this transaction will allow us to enhance our client experience and provide us with greater flexibility to meet our customers' needs. During the quarter, we continue to return capital to our shareholders. In March, we entered into a 400 million accelerated share repurchase program, and on April 1st, we paid a dividend of 55 cents per common share, an increase of 10 cents per share. Please turn to slide four. Our customer base in Puerto Rico grew by more than 6,000 since March 2021 and by 19% since March 2020. We captured two-thirds of the power, increased by $302 million, or 4%. Auto loan and lease balances at BPPR increased by 1.25%, and consumer demand remains robust. The dollar value of credit and debit card sales for our customers has continued to trend higher, increasing by 5% compared to the same quarter a year ago. The housing market continues to be strong. However, mortgage originations have been impacted by rising rates. The dollar value of mortgage originations at BPPR decreased by 28% year over year in the first quarter, but was more than 60% higher than the same period in 2019 in 2020. Please turn to slide five for an update on the current macroeconomic environment in Puerto Rico. The Puerto Rico economy performed well during the first quarter with business trends and customer activity remaining solid. Auto sales increased by 1% in the first quarter compared to the same period in 2021. This was the highest level of new auto sales seen during the first quarter in more than a decade. The Puerto Rico Economic Activity Index, which includes total employment, cement sales, electricity generation, and gasoline sales, has been steadily improving and has exceeded pre-pandemic levels for more than the past five months. We are particularly encouraged by the positive employment trends. In March, total employment in Puerto Rico reached its highest level in recent history. Additionally, the March 22 unemployment rate of 6.5% is the lowest since records began nearly 60 years ago. It is especially encouraging that the decrease in unemployment levels was accompanied by an increase in the participation rate. Airport traffic also continued to improve. Passenger volume during the first quarter increased 35% compared to the same period a year ago and also exceeded the very strong traffic seen in the first quarter of 2019. The tourism and hospitality sector continues to be a source of strength for the local economy. Puerto Rico is a popular destination for mainland residents, and the recent increase in COVID cases does not appear to be having the same impact on consumer demand for travel as prior surges have had. We believe that the recently completed debt restructuring should be an important catalyst for Puerto Rico's fiscal and economic recovery. In short, we are very pleased with the results for the quarter. We continue to be optimistic about the prospects for the future, yet remain attentive to how the evolving geopolitical inflation and health situations may impact the economy and our clients. I now turn the call over to Carlos for more detail on our financial results.