Popular, Inc.

Hello and welcome to the Popular Incorporated 2Q earnings call. My name is Elliot and I'll be coordinating your call today. If you would like to register a question during today's event, please press star followed by one on your telephone keypad. I'd now like to hand over to Paul Cardillo, Investor Relations Officer at Popular. Please go ahead.

Good morning and thank you for joining us. With us on the call today is our CEO, Ignacio Alvarez, our President and COO, Javier Ferrer, our CFO, Jorge Garcia, 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 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 uncertainties. 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. Before I discuss the highlights for the second quarter, I am pleased to report that today we announced a 13% increase in our quarterly common stock dividend from 62 to 70 cents per share, commencing with a dividend payable in the first quarter of 2025 and a $500 million common stock repurchase authorization. These actions evidence the strength of our capital position, which allows us to continue to invest in our franchise and serve the needs of our customers while also returning capital to our shareholders. Please turn to slide three. We are pleased to report a strong second quarter, achieving net income of $178 million. Excluding the impact of the FDIC special assessment and tax withholding matter on the results for the first quarter, net income increased by $43 million. The results in the second quarter were driven by higher net interest income and lower provision for credit losses. Our ending loan balances increased by $473 million during the quarter. BPPR achieved loan growth of $509 million, reflecting growth across almost all lending segments. Popular banks saw a $36 million decrease in loan balances, driven by $140 million commercial loan payoff that offset growth in construction loans. Deposit balances increased by approximately $1.7 billion, driven by a higher level of Puerto Rico government deposits. Our net interest margin increased by six basis points to 3.22%, mainly driven by higher average loan balances and the repricing of loans and reinvestment of securities in a higher interest rate environment. This was partially offset by higher deposit costs. Non-interest income increased by $2 million to $166 million. Excluding the additional FDIC special assessment and the expenses associated with the prior period tax expense, operating expenses increased by $7 million driven by professional fees and transaction-related costs. Credit quality trends improved in the quarter with lower net charge-offs, NPLs, and NPL inflows. The credit trends in the Puerto Rico unsecured consumer segment have stabilized. Tangible book value per share of $62.71 increased by $2.65 driven by our quarterly net income and lower unrealized losses in our investment portfolio. Please turn to slide four. Consumer spending remained healthy. Combined credit and debit card sales increased by 5% compared to the second quarter of 2023. Our auto loan and lease balances increased by 129 million compared to the first quarter as demand for new cars continued to be strong in Puerto Rico. Mortgage loan balances at BPPR increased by $107 million in the second quarter, driven primarily by home purchase activity and our existing strategy to retain FHA loans in portfolio. Business activity in Puerto Rico remains solid as reflected in the positive trends in total employment, consumer spending, 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 8% in the second quarter compared to the second quarter of 2023. Hotel occupancy was flat year over year in the first half of 2024. And the average daily rate in Red Park were up slightly year to date compared to the same period a year ago. There is 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 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 our financial performance for the quarter, particularly in Puerto Rico, where continued loan growth and improved credit metrics helped 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.