Popular, Inc.

Hello all and welcome to Popular Inc's first quarter earnings call. My name is Lydia and I'll be your operator today. If you'd like to ask a question after the prepared remarks, you can do so by pressing star followed by the number one on your telephone keypad. I'll now hand you over to your host, Paul Cardillo, Investor Relations Officer to begin. Please go ahead.

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, Jorge Garcia, 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 begin, I would like to remind you that on today's call, we may make forward-looking statements regarding Popular, such as projections of revenue, earnings, expenses, taxes, and capital structure, as well as statements regarding Popular's plans and objectives. These statements are based on management's current expectations and are subject to risks and uncertainty. Factors that could cause actual results to differ materially from these forward-looking statements are set forth within today's earnings release and 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. We are pleased to report a solid first quarter. The income totaled $103 million. which includes the impact of an additional accrual for the FDIC special assessment and a tax expense related to prior intercompany distribution. Excluding these items, net income would have been $135 million compared to adjusted net income of $140 million in the previous quarter. The results in the first quarter were driven by higher net interest income and a lower provision for credit losses, offset in part by lower non-interest income and a slightly higher operating expenses. Our ending loan balances increased by 54 million during the quarter, with large commercial payoffs impacting both banks. Our average loan balances, however, increased by 612 million, driven by a substantial amount of loan activity toward the end of the fourth quarter. BPPR generated loan growth of 124 million, driven by growth in mortgage and auto, offset in part by decreases in personal and commercial loans. Popular Bank saw a $70 million decrease in loan balances driven by commercial loan payoffs that offset growth in construction loans. Deposit balances increased by approximately 191 million, driven primarily by a higher level of retail demand deposits in BPPR, which increased by 232 million, offset somewhat by lower Puerto Rico public deposits. Our net interest margin increased by eight basis points to 3.16%, mainly driven by higher average loan balances and the repricing of loans and securities in a higher interest rate environment. This was partially offset by higher deposit costs. Non-interest income remained solid at $164 million. Excluding the additional FDIC assessment and the expenses associated with the prior period tax expense, operating expenses increased by $3 million. Credit quality trends remain generally favorable with slightly lower MPLs and delinquencies. We have continued to see credit normalization in the Puerto Rico unsecured consumer segments, which began in the second half of last year, and we continue to be attentive to the evolving credit landscape. Tangible value per share increased by 32 cents as our quarterly net income was offset in part by dividends and an increase in unrealized losses in our investment portfolio. Please turn to slide four. Last year, we crossed a significant milestone in Puerto Rico and now serve more than 2 million unique customers. We believe that there continues to be opportunity to deliver more value and services to our clients and deepen those relationships. For the past two years, we have been engaged in a company-wide transformation, and we are confident that these efforts will help us capitalize upon that opportunity. Consumer spending remained healthy. Combined credit and debit card sales increased by 2% compared to the first quarter of 2023. Our auto loan and lease balances increased by $80 million compared to the fourth quarter, as demand for new cars continues to be strong in Puerto Rico. Mortgage zone balances at BPPR increased by $92 million in the first quarter, driven primarily by home purchase activity and our strategy to retain FHA loans in portfolio. The Puerto Rico economy performed well during the quarter. Business activity is solid, as reflected in the positive trends in total employment and other economic data. The tourism and hospitality sector continues to be a source of strength for the local economy. Passenger traffic at the San Juan International Airport increased by 12% in the first quarter compared to the first quarter of 2023. Additionally, in March, the hotel occupancy rate increased to 84% from 79% in March of 2023. The average daily rate and rep par increased by 10% and 17%, respectively, compared to the same month a year ago. There are a significant amount of committed federal funds that have yet to be dispersed. The pace of disbursement of these funds has accelerated and we anticipate that they will support economic activity for several years. We are encouraged by the performance of the Puerto Rico economy. We remain optimistic about the future of our primary market and are well positioned to support our clients during the coming years. In short, we are pleased with the results for the quarter, particularly in Puerto Rico. where continued loan growth and the strength of our deposit pays help contribute to our increase in net interest income and support our optimistic outlook for the balance of the year. On that note, I now turn the call over to Jorge for more details on our financial results.