First BanCorp. New

Hello, everyone. Good morning, and welcome to the first Bancorp 3Q 2021 Financial Results Call. My name is Emily, and I'll be coordinating the call today. All participants are currently in a listen-only state. However, during the presentation, you will have the opportunity to ask a question by pressing Start followed by 1 on your telephone keypads. I now have the pleasure of handing the call over to today's host, Ramon Rodriguez. Ramon, please go ahead.

Thank you, Emily. Good morning, everyone, and thank you for joining First Bank Corp's conference call and webcast to discuss the company's financial results for the third quarter of 2021. Joining you today from First Bank Corp are Aurelio Alemán, President and Chief Executive Officer, and Orlando Verges, Executive Vice President and Chief Financial Officer. Before we begin today's call, it is my responsibility to inform you that this call may involve certain forward-looking statements, such as projections of revenue, earnings, and capital structure, as well as statements on the plans and objectives of the company's business. The company's actual results could differ materially from the forward-looking statements made due to the important factors described in the company's latest SEC filings. The company assumes no obligation to update any forward-looking statements made during the call. If anyone does not already have a copy of the webcast presentation or press release, you can access them at our website at onefirstbank.com. At this time, I'd like to turn the call over to our CEO, Aurelio Aleman.

Thank you, Ramon. Good morning, everyone, and thanks for joining us today. Please let's move to slide four of the presentation for covering some highlights. It was a very strong quarter for First Bank Corp. I will say both in terms of financial performance and operational progress. I would like to cover the operational highlights before discussing our financial results. As planned, during the quarter we completed the integration of the acquired operations and all remaining system conversions. I have to say that lots of resources and management time was required to achieve this important milestone on time and on budget, which is also important. I would like to thank all my colleagues involved in the integration for completing this very complex process actually in less than a year after closing the transaction. Now the fully integrated organization with expanded sales resources and origination capacity will allow us to continue growing market share across basically all products and services. Now, going forward, our full dedication of resources will be geared towards growing the franchise and servicing the clients. In terms of our Puerto Rico franchise, we have now the second largest market share among banks across all products and channels. This will allow us to definitely better serve our clients and communities with additional opportunity for organic growth. Our focus on digital solutions have proven effective. More clients continue to adopt our digital experience, as online banking users grew by 12% during the quarter, and approximately 40% of all deposits were captured through digital and self-service channels. Our expanded data functionalities includes not only transactions, but the ability to process mortgages, credit cards, personal loans applications, through our corporate portal, and on the commercial front, the loan forgiveness requests for the PPP loans that are still pending. As we look ahead over the next years, definitely increased efforts and capabilities will be added towards enhancing the existing digital offerings and also developing new functionalities focused on the ease of use and best-in-class customer experience. But also, we will continue to optimize our branch network across the island. On the macro front, we're pleased to see improvements in the economic backdrop within our three operating regions. We see the improvement in Puerto Rico, including obviously all the stimulus. In the Virgin Islands, similar investments also made in reconstruction. Obviously, Florida economy continues to be very, very solid. Both pandemic and disaster relief funding continue to support the economic activity. It's important to also highlight that Puerto Rico reached one of the highest vaccination rates of any state in the U.S. jurisdiction. This has led to an accelerated reopening of the economy, material improvement in the tourism, and an overall improvement in the business environment and consumer confidence. This should result in increased loan demand. We're also optimistic, I have to say, about the resolution of the Puerto Rico bankruptcy and then settlement in the near future, which has been going on for quite some years now. Let's move now to slide five to review some of the financials. During the quarter, we generated $75.7 million in net income, $0.36 per share, and I think importantly, a record $103.6 million, to be exact, in pre-tax, pre-provision income. Clearly, it's reflecting the benefit of our expanded franchise. The efficiency ratio continues to trend down to 53% during the quarter, compared to 60% registered during the second quarter. Very important, as the quality metrics continue to improve during the quarter, non-performing assets reach a decade load of 0.81% of total assets. Reduction in MPAs was primarily driven by the risk in sale of 52 million in NOAA cross-residential mortgages. Also, there was the sale of REOs, which were important during the quarter. MPL sales drove the ACL ratio down also a bit to 2.59 for the quarter, but also there were releases associated with the improvement in the microeconomic factors. Finally, on the capital front, I think we continue to make significant progress in our capital plan and continue to return capital to our shareholders. During the quarter, we completed the repurchase of 4.2 million shares, amounting to 50 million. Year-to-date, that amount has reached 150 million in repurchases. Also, we announced the redemption of the 36.1 million of the preferred stock, which will happen in this fourth quarter. And as we announced on Friday, we increased the common dividend by 43% to 10 cents per share. All these capital actions are in parallel with the strength of our balance sheet and our commitment to increase shareholder value. Please let's move to slide six. I would like to cover some details on the loan and deposits. Low originations, we consider they're healthy at $1.2 billion. But they're definitely still short of our goals, and that's really the focus of the management team. The loan portfolio decreased largely driven by the effect of the reduction of $130 million in SBA PPP loans and the mortgage de-risking sale of $52 million. Also, as we have mentioned before, our mortgage portfolio strategy is focused on the conforming paper, which will continue to see some decrease in the loans. the mortgage loans, consumer loans grew nicely, and commercial excluding GDP are finally stabilizing. Our focus will continue to be centered on consumer and commercial growth, and that's the key objective of the management team. We have to say that credit demand is picking up as government stimulus subsides, and we expect that actually to continue improving during this quarter of 2022 as the economy fully reopens and large-scale disaster relief-related projects begin to emerge. Core deposits continue to grow nicely, excluding broker and government. Core deposits raised to an increase of $288 million during the quarter. So liquidity is still out there. We're all trying to define, you know, how much is coming. Well, now, you know, with those comments, I will turn the call to Orlando to provide you more details on the financial. Thanks to you all.