Popular, Inc.

Good morning. Thank you for attending today's Popular, Inc. Second Quarter Earnings Call. My name is Frances, and I'll be your moderator today. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to our host, Paul Cardillo, Investor Relations Officer at Popular.

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 second quarter results 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 at 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 one in which we achieved net income of $211 million. Our results reflect the strength of economic activity in our markets are diversified sources of revenue and prudent risk management. Our quarterly net income was in line with the first quarter and $7 million lower than the same quarter of 2021. Compared to the first quarter, second quarter results were characterized by positive variances in net interest income and fee income, which were offset by higher provision for credit losses, operating expenses, and tax rate. During the quarter, loan growth was solid and broad-based, both geographically and across most loan segments. Commercial loan growth was particularly healthy during the period at both Banco Popular and Popular Bank. Our margin in Puerto Rico improved in the second quarter, but continues to be impacted by our asset mix. We are positioned to benefit from higher market rates, although to a lesser extent due to lower asset sensitivity. Credit quality trends continue to be favorable during the period, with a low level of net charge-offs and decreasing non-performing loans. On July 1st, we closed the previously announced agreement with Evertech to acquire key customer-facing channels and to extend important commercial agreements. This transaction will allow us to continue to accelerate our ongoing digital and business transformation as we continue improving our clients' experience. With the ability to manage our key customer channels and greater flexibility to choose our technology partners, we will be able to enhance the service and customer solutions that we offer with greater agility. We will continue to enhance our omnichannel experience to meet the changing needs and expectations of our clients. Finally, we continue to return capital to our shareholders. On July 12th, we completed the previously announced $400 million accelerated share repurchase program. Please turn to slide four. Our customer base in Puerto Rico grew by approximately 6,000 in the second quarter to reach 1.96 million unique customers. Adoption of digital channels among our retail customers continues to be strong. Active users on our MeBanco platform exceeded 1.1 million, or 57% of our customer base. Additionally, we are now capturing nearly two-thirds of our deposits through digital channels. This trend remains significantly higher than pre-pandemic levels. Commercial loan growth was strong. Excluding PPP loans, commercial loan balances at BPPR and PB increased by $327 million and $275 million, respectively. Auto loan and lease balances at BPPR increased by 114 million or 2% versus the first quarter. The dollar value of credit and debit card sales of our customers remained at very healthy levels during the quarter, just 1% below the high watermark set during last year's second quarter. While there continues to be strong demand for housing in Puerto Rico, mortgage originations have been impacted by rising rates and limited inventory of available properties. The dollar value of mortgage originations at BPPR decreased by 42% compared to the second quarter of last year. Please turn to slide five for an update on the current macro environment in Puerto Rico. The local economy continued to perform well during the second quarter as business activity and customer spending remained strong. 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 the last seven months. We remain encouraged by the strong employment levels. In the second quarter, total non-farm employment in Puerto Rico reached its highest level in a decade. The June 2022 unemployment rate of 6.1%, is the lowest for at least the past 60 years. It is especially encouraging that the decrease in the unemployment rate was accompanied by continued stability in the participation rate. New auto sales decreased by 10% in the second quarter compared to the same period in 2021, but remained above pre-pandemic levels. The auto industry continues to be affected by supply chain product shortages. Despite these challenges, there continues to be remote demand for cars in Puerto Rico. The tourism and hospitality sector continues to be a source of strength for the local economy as Puerto Rico is a popular destination for mainland residents. Airport traffic has remained robust. Year to date, total passenger traffic has increased by 17% compared to 2021. Hotel demand has also remained strong. In June, Occupancy rates in Puerto Rico were 77%. Year to date, the average daily room rate is nearly $300, which is the highest level in more than a decade. In short, we are very pleased with our results for the second quarter. While attentive to the evolving geopolitical and inflation risk and their impact on the economy and our clients, we continue to be optimistic about the prospects for the future. I will now turn the call over to Carlos for more details on our financial results.