OFG Bancorp

Good morning, thank you for joining OFG TimeCorps conference call. My name is Nikki and I will be your operator today. Our speakers are Jose Rafael Fernandez, Chief Executive Officer and Chairman of the Board of Directors. Maritza Arizmendi, Chief Financial Officer. And Cesar Ortiz, Chief Risk Officer. A presentation accompanies today's remarks. It can be found on the homepage of the OFG website under the fourth quarter 2025 section. This call may feature certain forward-looking statements about management's goals, plans, and expectations. These statements are subject to risks and uncertainties outlined in the risk sectors section of OFG's SEC filings. Actual results may differ materially from those currently anticipated. We disclaim any obligation to update information disclosed in this call as a result of developments that occur afterwards. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. Instructions will be given at that time. I would now like to turn the call over to Mr. Fernandez.

Good morning and thank you for joining us. We are pleased to report our fourth quarter and 2025 results. Let's go to page three of the presentation to review the fourth quarter. Earnings per share diluted were up 17% year over year on 2% growth in total core revenues. This was driven by disciplined core operations and a favorable tax benefit. Asset quality and credit metrics were sound and well controlled throughout the quarter. During the quarter and year, in line with our strategies, we saw increased commercial loans and broad acceptance of our flagship mass market Libre account and mass affluent elite deposit account. Performance and credit metrics remain strong, capital continued to grow, and we repurchased $40 million of common shares in the fourth quarter. Maritza will go into more detail on these numbers shortly. Please turn to page four. We accomplished many of our strategic and financial goals last year. Earnings per share increased 8.3 percent on a 2.8 percent increase in total core revenues. Total assets grew 8.4 percent to a record $12.5 billion. Core deposits grew 5 percent to $9.9 billion. Loans grew 5.3 percent to $8.2 billion, with commercial loans growing to $3.5 billion, now representing 43 percent of our loan books. In addition, new loan production increased 11.5% to $2.6 billion. We repurchased close to $92 million of shares and increased our dividend 20%. Business activity is robust in Puerto Rico. The outlook for economic growth is positive and businesses and the consumer are resilient. Having said all that, One of our biggest strategic and financial accomplishments of 2025 was the progress we made with our Digital First strategy. Please turn to page five. Over the last two years, we have clearly emerged as a leader in banking innovation in Puerto Rico. Our digital focus gives us a differentiated approach and provides customers with a unique, enhanced experience. In 2024, we introduced the Libre account for the mass market and the Elite account for the mass affluent market. Both Libre and Elite have been successful in attracting deposits from new and existing customers. In addition, we enhanced our OrientalBiz account suite, making treasury management easier and more secure for small businesses, driving a 5% increase in commercial customers during 2025. We have further enhanced the customer experience through technology. In 2025, we launched our Omnichannel platform. This provides customers with a seamless banking experience anywhere they choose to interact, transforming the branch into a place for building customer relationships. With our intelligent banking model, customers now receive tailored insights based on cash flows and payment habits, helping them access and monitor their finances with real-time value-added tools to improve their financial life from their mobile phones. Please turn to page six. All this has directly contributed to our increased market share in retail deposits and a 4% growth in retail customers. To put this into perspective, we have provided data showing our progress over the last two years. As you can see, OFG is well positioned for continued success in the coming years. Now here's Maritza to go over the financials in more detail.

Thank you, Jose. Let's turn to page seven to review our financial highlights. All comparisons are to the third quarter, unless otherwise noted. Core revenues total $185 million, an increase of $1.4 million. Total interest income was $197 million, a decrease of $3 million. This reflected higher average balances of loans and cash at lower average yields. This was partially offset by higher average balances of investment securities at slightly higher yields. Total interest expense was $44 million. A decrease of $1 million. This reflected higher average balances of deposits and borrowings at lower average rates. Total banking and financial service revenues were $33 million. an increase of $3.4 million. This mainly reflected increased wealth management revenues due to $2.3 million in annual insurance commission recognition. The other income category was a loss of $1.1 million compared to a profit of $2.2 million in the third quarter. The change reflected $6.1 million for accelerated amortization of technology-related assets. Gains of $3.9 million on the sale of non-performing loans and $1.1 million on sales of real estate. Please note that the third quarter benefited from gains from OFG Ventures' investment in FinTech funds. Looking at non-interest expenses, they totaled $105 million, up $8.5 million from the third quarter. This reflected $3.3 million in professional services fees related to performance-based advisory costs. This was part of the cost savings renegotiation of a technology services contract. $2.5 million of business licensing and $1 million related to the previously mentioned accelerated amortization of technology-related assets. Compared to the third quarter, there were $1.7 million in increased costs related to an additional accumulation of performance bonuses, expanded marketing activities, and the sale of foreclosed assets. For 2026, we currently expect that total non-interest expense to be between $380 million to $385 million. Income tax was a benefit of $8.5 million due to two discrete items. $12.9 million from the expiration of a tax agreement from the 2019 acquisition of Scotia and Puerto Rico and USVI operations and $3.9 million from a release evaluation allowance of deferred tax assets at the holding company level. Excluding discrete benefits, the estimated tax rate for 2025 was 21.8%. Looking at some other metrics, tangible book value was $29.96 per share, efficiency ratio was 56.7%, Return on average assets was 1.81%, and return on average tangible common equity was 17.2%. Now, let's turn to page eight to review our operational highlights. Average loan balances were $8 billion, up slightly from the third quarter. This reflected increases in Puerto Rico commercial loans partially offset by lower balances in auto and residential mortgage. Loan yield was 7.73%, down 70 basis points. This was mainly due to the effect on variable rate commercial loans from the Fed's 50 basis rate cut in the fourth quarter. New loan production was $606 million compared to $624 million. This reflected decreases in Puerto Rico and U.S. commercial and consumer lending, partially offset by increases in auto and residential mortgage lending. Average core deposit balances were $9.9 billion, up almost 1% from the third quarter. This reflected increase in retail, commercial, and government balances. By account type, it reflected increase in demand, time, and saving deposits. Core deposit cost was 1.42%, down five basis points. This was mainly due to lower cost of government deposits. Excluding public funds, cost of deposit was 102 basis points compared to 103 basis points in the third quarter. Investment totaled $2.8 billion, down $96 million. This reflected principal pay downs and maturities, and it was partially offset by purchases of $25 million of mortgage-backed securities and residential mortgage securitization of $21 million. Average borrowings and brokerage deposits were $787 million, compared to $769 million in the third quarter. The aggregate rate paid was 4.03%, down eight basis points from the third quarter. End of period balances were $897 million compared to $746 million. This reflected increased broker deposits for liquidity management. End of period cash at $1 billion was 41% higher. reflecting increased core and brokerage deposits. Net interest margin was 5.12% within the range we had expected. Please turn to page nine to review our credit quality and capital strengths. Credit quality continues to be resilient. Provision for credit losses was $31.9 million, up $4 million from the third quarter. This reflected $21 million for increased loan volume, $5.1 million for a specific reserve on a Puerto Rico telecommunications commercial loan, $2.4 million related to the US macroeconomic factors, and $1.7 million in charge of from the sale of non-performing loans. Net charge of total $27 million, up $6.7 million. Net charge-offs included $4.8 million related to the sale of non-performing loans, of which $3.1 million had been previously reserved. Looking at other credit metrics, we observed the typical seasonal pattern of higher delinquency and non-performing levels during the EJR end period. Despite this, overall credit quality remains within expected ranges. Early delinquency rate was 2.8%, down from the third quarter and down year-over-year. Total delinquency rate was 4.18%, up from the third quarter but down year-over-year. The non-performing loan rate was 1.59% due to the move to non-accrual classification of the Puerto Rico telecommunication loan that I mentioned. On the capital side, our CDT1 ratio was 13.97%. Stockholders' equity totaled $1.4 billion, up $15 million, and the annual common equity ratio decreased eight basis points to 10.47%. To summarize the year, loans and core deposits both grew about 5% in 2025. This year, we expect loans to continue to grow in low single digits. We also expect retail and commercial deposits to increase with Libre Plus, Elite, Oriental Biz, and our digital offerings driving customer growth. As for the Puerto Rico, as for the large Puerto Rico government deposit, $500 million moved this month to our wealth management business as an advisory account. The remaining $600 million is sustained as a variable rate core deposit. Net interest margin was 5.27% for 2025. Looking ahead, net interest margin should range between 4.95% to 5.05% in 2026. That takes into account two more 25 basis point costs, the effect of the partial exit of the government deposit and the incremental cost of funding to replace it. Non-interest expense total $89 million in 2025. We currently expect them to be between $380 million to $385 million a year. Credit should remain steady, reflecting the strong economic environment in Puerto Rico. Our effective tax rate for 2026 should be around 23%, excluding any possible discrete items. Capital should continue to build, enabling us to continue to return capital to shareholders through dividends and buyback shares on a regular basis. Now, here's Jose.

Thank you, Maritza. Please turn to page 10. The Puerto Rico economy continues to be steady with a sustainable long-term outlook. Liquidity is solid, businesses and consumers remain resilient, and unemployment is low. Public reconstruction funds and private investments are providing economic tailwinds. Manufacturing investments are continuing from multinational companies seeking unshoring solutions, particularly in the pharmaceutical and medical devices sectors. Having said that, we always have to closely monitor all the global macroeconomic and political uncertainties these days and their political impact on Puerto Rico. Turning to OFG, the success of our differentiated positioning has been evident over the last several years. We will continue to focus on the client experience with enhanced product tailoring strategies. Our Libre Plus and Elite accounts offer AI insights and tools not available elsewhere in Puerto Rico. Commercial loan and deposit account growth is benefiting from deeper relationships and services, and credit and asset quality are sound and well controlled. The technology investments we make and our continuous improvement culture are starting to produce tangible efficiencies. All of these give us confidence in sustainable long-term growth across our core businesses. As always, we could not have achieved these results without the hard work of our dedicated team members. We're very thankful to them and excited about our future. With this, we end our formal presentation. Operator, let's start the Q&A.

Thank you. And if you have a question at this time, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, press star two. Again, if you would like to ask a question, press star, then the number one on your telephone keypad. We'll take our first question from Kelly Mota of KBW. Please go ahead. Your line is open.

Hey, good morning. Thanks for the question. Maybe to just kick it off with credit, just given that provisions were a bit elevated for the second quarter now, can you provide additional color into the larger Puerto Rico charge-offs this quarter, as well as, you know, there was some movement in MPLs with some sales. Can you provide more color as to, you know, what was done there and what migrated back in? Thank you.

Yep. Hi, Kelly. This is Jose. I'll let Cesar take that question.

So the charge-offs that you're looking in the quarter are the result of a sale that we perform that released $17 million in non-performing loans during the quarter. And that release triggered charge-offs, et cetera, but the result at the end of the day was a gain of $3.9 million that we reported. Offset, of course, by the entry of a loan, telecommunications loan, that was recorded as non-accrual non-performing during this quarter. So that's basically the moment in non-performing during the quarter in commercial.

So when you look at it, it's $45 million on the communication loan minus the $17 million on the sale of the MPLs, and that's why you see the increase in MPLs in the quarter, and particularly on the commercial. So it's only one loan, and it's not something that it's... across the portfolio. We just see this as very idiosyncratic.

Yeah, and just to add, and I share a little bit of my prepared remarks, there was a charge-off related to the sale of about $4.8 million, and a big portion of it was already reserved. It was about $3.1 million that was already reserved.

Got it. And then on loan growth, I mean, you've been talking about auto being more competitive in prior calls and such. In terms of your outlook for low single-digit loan growth ahead, can you provide additional color in terms of what's the driver of that? Is the expectation that auto will be kind of more muted like the past two quarters? Thanks.

Yeah, that's a great point. We see auto starting to stabilize at these levels. As again, in Puerto Rico, you also are starting to see a stabilization in the new car sales. So we look at auto balances to be down in the year between 2% and 3%. We also see commercial loans up 5%, 6% during the year, both Puerto Rico and US. So with that kind of setup, we see consumer going up a bit. Mortgage also is trending down, but less than in years past, we see low single digits as a reasonable target for us for loan growth overall.

Got it. Last question, if I can just sneak it in, is on your expenses. $380,000 to $385,000 relative to your operating is relatively flat year over year. Can you provide your confidence in that and the drivers of those increased efficiencies?

well um yeah thank you for your question kelly the the range reflects our continuous investment in technology technology and people capabilities talent to continue driving the digital first strategy that we are we are deploying constantly in the bank and and we have seen certain efficiencies like this year we have if you look at our full-time equivalent employees there are 30 less people. Sixty. Sixty altogether, no? So we continue to expect that number to go down, but we need to continue reinvesting. That's why we see expenses to continue to be flat this year, but we're thinking that by the end of the year, we will start seeing some of that saving, and the 2027 and 2028, we see savings to accelerate. And we will see that more in a tangible way for 2027, 2028.

It's something that we've always kind of been very cognizant of. These investments in technology, they certainly have enhanced the customer experience in a significant way, and it's providing us the ability to grow and differentiate ourselves. But it also has a very intentional effort to bring efficiencies to the bank. And this is the first year where we are seeing in 2026, we're seeing the expense range flattening out. And it has everything to do with a little bit of what we've done in the past, but it's been more importantly on the culture of continuous improvement and how do we look at processes to simplify them, make them more agile, and really try to eliminate interactions and processes that are very manual and with very little value add, try to convert them into technologies and use the blockchain and all the technology, all the robotics and all. We're starting to use all those things, and we feel more confident in our expense ranges in 26, for sure, and we will continue to work hard to bring additional expense reductions in 27 and 28. Maritza mentioned.

Great. Thank you so much. I'll step back. Appreciate the caller.

Yep. Thank you, Kelly.

Thank you. Our next question comes from Aaron Siganovich of Turist. Please go ahead. Your line is open.

Thank you. Good morning. Jose, I was wondering if you could talk a little bit about what you're viewing as the best strategic initiatives or your focus on strategic initiatives for 2026, maybe relative to 2025. It seems like you're making a good push on the deposit side and, of course, always investing in technology.

Yep. Thank you, Aaron. So we will continue to enhance our retail efforts. It's not something that we're going to decelerate. So we will continue to invest in enhancing the customer experience, adding additional functionality to our Omnichannel platform and drive additional benefits for our customers on the retail side. And you'll see some of those playing out throughout 2026. But in 2026, our focus is going to be much more on commercial. And we see a good opportunity. As you saw, we grew 5% our commercial customers last year. And I think we have an opportunity here to continue to translate the same strategies that we have done in terms of technology and digital translated as it is appropriate on the commercial side. And it's going to be a journey. It's going to be three years or so for us to be able to deploy all this and all that stuff. But that's where we're going to be putting more effort. We see an opportunity for us to keep growing our commercial business. And we think the Puerto Rican economy is supporting that. And us as a bank feel compelled to invest in small and mid-sized businesses clients and help them grow because that's critical for the growth of our economy here in Puerto Rico. We're really focused on the Puerto Rico market, and we feel that we have a great opportunity there.

Thanks. And on capital return, I think Marita said that she expects capital to build to return capital to shareholders. I'm just trying to balance the two, what's the expectations for account for return for 2026?

I think the fourth quarter capital actions that we took in terms of the buyback, I think it's going to become more, given our valuation, right? Given the way the market is valuing our stock and given the multiples that they're assigning to us versus our peers, We feel the best use of our capital after loan growth and balance sheet growth is buying back shares. And so we will continue to be very intentional there. We certainly will also look at the dividend, but again, we see some differentiation in the valuation there and we feel that it's the best way to reward our shareholders by buying back shares.

Great and then just lastly, some clarification on your answer about expenses. The expense reductions in 27 and 28 is that. More so thinking about the efficiencies that you're going to get from the actions you're making this year. Correct. I guess I'm just thinking, like, is it actually going to go down or are you going to have some part going down and some growth on top of that?

I don't want to put the car in front of the horses, right? But I tell you, we're working very hard to bring additional efficiencies during 2026. that will play out in 27 and 28. We will give you more details as we execute on those initiatives. But as Marisa mentioned, we are looking at FTEs and where can we redeploy our people talent to more customer facing and value add, building relationships type of talent versus having FTEs sitting behind a desk in operations and servicing and pushing papers and dealing with Excel spreadsheets to manage different functions. And I can give you an example. We have been able to optimize the entire fraud management processes just simply by using robotics and being able to eliminate several FTEs that were basically managing fraud on a daily basis. And those are some of the small examples that we can provide. And I'm sure, you know, many banks in the U.S. and in Puerto Rico are also doing the same. We're trying hard to bring down expenses, not without investing in technology, investing in our people, and continuing to do the right thing for the long term of our franchise, which is critical for us. It's important. Great. Thank you. Yeah, you're welcome.

Thank you. We will move next with Brett Rabatton of Hovde Group. Please go ahead. Your line is open.

Hey, good morning, everyone. Wanted to start on the margin and just on the fourth quarter, wanted to get a little better color on the link quarter change in the loan yields, which had been fairly stable up until this quarter. So just the 17 basis point link quarter change was just hoping to figure out how much of that was the large non-accrual loan and any other comments on the loan portfolio yield changeling quarter.

Thank you, Brett, for your question. Remember that we are asset sensitive and we continue to be asset sensitive. This quarter, as I mentioned in my prepared remarks, the loan yield went down basically because of First, the 50 basis point cost during the quarter, but also we have the full effect of the September 25 basis cost. So that's one of the main drivers for the reduction in the NIEM, and we were able to compensate that through our government deposit variable rate, because it also get a reduction there, but it reflects our sensitive positioning.

I think also you're also on the loan side, you're starting to see since we have moved our auto originations to higher, significantly higher quality, we have been able to, we are also seeing a slight decrease in the yield coming in on the auto lending side. And that's just a testament to the credit quality that we're bringing in, better credit quality.

Okay. That's helpful. And then just thinking about the margin guidance for 26, you know, it was nice to see that the funding costs, which were up a little bit in 3Q, moved back down in the fourth quarter. Is the margin guidance for 26, you know, does that reflect some additional leverage to lower funding costs from here? You know, one of the key things that's always been a question is Puerto Rico has lower cost upon us. The mainland, you know, how much can those go down? as rates go down given they're already fairly competitively priced.

Yeah, the reality is when you look forward for this year, 2026, we will have a change in our funding mix because the $500 million exiting the bank, moving to the wealth management business. And we will replace that with wholesale funding, and that carries a higher cost of about 25 basis points to 40 basis points. on the term of that wholesale funding, but the reality is that we will have that change, and that's part of the impact of the NIEM. But when you look at 2026, 2026 will have the full effect of the 75 basis point cuts that happened in the Fed in the last part of 2025. You will have all that full effect, plus we are also foreseeing two additional costs during 2025. And we are sensitive. We have more assets repricing than the deposit side, and that's why we are giving that indicative in the margin, okay? That guidance. And when you look at 2024 versus 2025, it reflects that. You know, we had a margin in 2024 of 5.43%. This year, it was 5.27. It was about 16 basis point reduction, and it's It's related to the rate cost at 100 basis point late 2024 and this year 75 basis point end of 2025.

Brett, and I could also add, and as you saw this quarter and you saw throughout 2025, core deposits, excluding government, went up on the retail side as well as on the commercial side. And that is also something that we expect to help mitigate what Maritza just said, right? Because the more core funding that we bring in, it's going to be cheaper than wholesale funding. So, you know, our margin guidance is the margin guidance, and that's how we see it, but we're going to be working hard to beat that margin guidance, as you guys can expect. So we'll update everybody on the first quarter when we talk again.

Okay. If I could ask one last one, the other thing I was hoping to figure out was if you look at slide 20, it has the auto portfolio net charge off rate. It was a little bit higher in the fourth quarter as were NPLs, and just wanted to see if, you know, the higher level in 4Q, if that seems to be an anomaly or a year-end cleanup of the portfolio or what have you, versus something maybe you're seeing with the book.

Yeah, Cesar can take that one. This is, like Marisa mentioned before, it's typical that the seasonality of the portfolio starts very low in terms of delinquencies and non-performing loans in the first quarter of the year, and then it thickens up until fourth quarter. And at the fourth quarter, upper level of that equation. But net chart jobs, if you compare the net chart jobs, we usually compare it to last year, same period last year, and what you see there is 1.63 last year, but that was benefited because we sold a chart job portfolio. Without that sale, that number would have been 1.86%, and we are right now at 1.81%. This quarter, It is a positive sign, but again, the seasonality of the portfolio will result in an increased delinquency in this quarter, but we expect that benefit in the next quarter. You're going to see a positive effect on all those metrics.

Okay. It's just end of the year seasonality. And we'll keep you guys updated in the first part of the year and see if that turns around again. But that's what we've seen in the last three years. We'll be watching closely in the first part of this year to see if that replicates again.

Okay.

Great. Sorry for interrupting. Thanks for all the color.

Yeah. Thank you for your questions, Fred.

Thank you. Our next question comes from Timor. Braceler with Wells Fargo. Please go ahead. Your line is open. Hi, Timur.

Hi, good morning. Maybe bigger picture. Hi, can you hear me?

Operator, we can't hear Timur.

Hear one second. I don't know.

Can you hear me? Timur, yes, I can hear you.

Hello, can you hear me now?

Timur, we are able to hear you. One moment, please. And for the interruption speakers, are you able to hear us?

Is it better?

Now I can hear you. Now I can hear you. Perfect. Sorry about that. Maybe just a bigger picture on credit. You know, if we look at kind of 1% full year charge off rate, is that kind of a good proxy for where we are in this, you know, post pandemic cycle? And then if you look at the allowance ratio, you know, year over year, you added a little bit over $25 million to allowance. You built that to almost, you know, 2.46% of loans. I guess, how do we think about the allowance bill in 2025, what that might portend for charge off activity in 2026? And then what does a stabilized level of credit activity look like going forward here?

Well, I think that the 1% A range that you're mentioning is within what we can expect here in HR CHOP. If we look at 2025 without any specifics of the sales or any particular case, that should be a good run rate. When we think about how we build the reserve, please be mindful that there's some specific reserve at the end of this year related to the telecommunication loan. So that's a very isolated case, very specific. So setting that aside, I think that we could continue monitoring credit and building reserve as needed, but 1% nature of, delinquency remaining at the level that we're managing this year, maybe we won't be reserved at the same level because of the specifics that we have this quarter, but definitely it could be about flat from what we have right now, excluding any specific case that we have managed during the year, okay?

Got it. And then the telecom credit this quarter, was there anything incremental that happened in 4Q that drove the activity or is this just really recalibration or maybe what the other banks were talking about in the third quarter and you guys kind of catching up to that same level of reserving in the fourth quarter?

No, it's basically we receive financials every period. So last period, you know, they didn't, you know, warranted right away, you know, no accrual status, but this period, it repeated the deterioration on the financial. So basically we decided, yeah, this is a situation that merits the non-accrual status.

Yeah, and at the end, this is a loan that is continuing to pay. You know, it's paying. So what we're doing is being prudent and giving the specific situation of the company that comes from the outcome of a merger, we decided to put it in non-accrual.

got it that's great color thank you and then just last for me you guys have had really good success rolling out some of these retail deposit products during the course of 2025 that have been you know differentiated from what the island typically sees i'm just wondering from a competitive standpoint um what's been the reaction and as you think about you know puerto rico x public fund deposits during 2026 during 2027 Does it feel like the competitive nature is shifting now, and do you still think you can maybe get those lower with these rate cuts, or is the competitive nature such that even with these rate cuts, the costs of the corn Puerto Rican deposits are likely continuing to rise here?

Yeah, I think the competitive landscape is slowly but surely intensifying. I think each institution has its own drivers, right, and... Some of the drivers that come in from the reinvestment in the investment portfolio at a higher yield gives flexibility to be more competitive and more aggressive on some of the CD offerings and stuff like that. So I'm not saying that we are going out crazy here in the market in Puerto Rico in terms of deposits, but it's slightly slowly but surely getting more intense in terms of deposit competition. Also be aware that we have credit unions, U.S. credit unions that are and have been for the last three or four years very aggressive. They remain so. And that is also, you know, part of the equation here in Puerto Rico. These tax-exempt credit unions, they have another lever there that allows them to be more aggressive on the deposit side. So our strategy is to target the mass and the mass affluent. We have come up with the products. We have come up with the differentiation in terms of our platforms in technology and the way we do the business. That's the formula that we're using, and it's paying off. I'm sure our friendly and larger competitors are also doing their thing, and I'm sure they're going to be very competitive throughout. So it's just now blocking and tackling and trying to achieve organic growth on the loan side and on the deposit side. And it's exciting for us at this juncture how we are well positioned to achieve both.

Got it. Thanks for the call. Appreciate it. Yeah. Thank you, Timo.

Thank you. We will move next. We have Manuel Navas with Viper Sandler. Please go ahead. Your line is open.

Hey, good morning. I just wanted to follow up on that last question. Has there been any price response from other players on the island from your new Libra and Elite products? And where are those having the most success? Happy to hear a little bit more on those two products as well.

So there's no need to have a price response because we're not paying high yields. So I don't know where the idea that we're kind of bringing in higher yields or so. Actually, Libra account is a non-interest-bearing account. So I don't know where that comes from. But Elite, it does pay... 1.28% average cost of funds on the balances that we have. And that is the way we approach the mass affluent and it's paying off and it's doing well because it's not about the rate only. It's about what we offer as a product and what is the value proposition that we bring into the equation here. And it's not only a rate, it's more than a rate. It's the functionality, it's the accessibility, it's the every day, every time, anywhere, wherever you are, and the fast, the agile way we service our customers in any interaction that they have with us that brings us the ability to attract, deepen, and expand relationships across the markets that we operate, which is here in Puerto Rico. So reaction from the competition? Zero. There's no increasing in competition in terms of rates here, what we're seeing is more on a targeted basis, CD rates. And that's what I mentioned earlier, Manuel.

I appreciate that. And it is pretty early innings, but you're seeing that deeper relationship. Are you seeing younger clientele in these accounts as well, given they're a little bit more digital forward?

Actually, that's a good point, Manuel. Even Puerto Rico's demographics, what we're seeing is that... I'll share this information. 75% of the accounts that we're opening on the Libre account are new customers. 40% of those are 29 years or younger. And to us, that is extremely positive because it allows us to build a long-term relationship and build a long-term franchise with them. So it's exciting times for us. That's kind of the crux of the matter. You actually pointed out one of the great things that is going on in the last couple of years.

I appreciate that extra color. Going back to the NIM for a moment, as you're targeting a little different industry, auto client and commercial loans are adjusting? What are kind of some of your new yields coming on, especially in those two categories, in auto and commercial?

So commercial, remember, our commercial originations are 50% fixed, 50% viral. And the rates are depending on the type and the size of the commercial loan, but it ranges between, let's say, 275 to 350 basis points above the term that we're lending at. So that's kind of, I'm giving you a range, and you can get on the lower end when it's a larger account, a larger loan, or if it's small business or a larger commercial account or loan. So that's on the commercial side. On the auto side, I think the yields are in the eight handle, eight and change. It is coming from the higher eight levels. It's now stabilizing around 830 or 840 or something like that, between 830 and 850. And it's all about certainly competition, but also us originating close to 90% of our loans in prime and super prime levels.

Okay, that's really helpful. And then I guess just my last question is, is there a level, you know, I appreciate the commentary around the buyback. The pace was a little accelerated in the fourth quarter. Do you think we stay at this fourth quarter pace? And is there any price sensitivity or where is there some price sensitivity on repurchases?

I'll repeat what I said earlier, Manuel, because we don't have a price target. We do see... the market being kind of penalizing us a bit in terms of the multiples that they're pricing us at. So I think we kind of look at the market in general. We see where we can deploy our capital in terms of loan growth. This year we're probably going to grow single digits, as I said earlier, low single digits because of what I mentioned earlier on the auto. So we might have more ability to deploy capital through buybacks throughout the year, but we don't have a set number or a set stock price to go after. It's just part of our natural, ongoing capital management strategies.

I really appreciate the commentary. Thank you.

Yep. Thank you for your questions, Manuel. And welcome to the calls.

Thank you.

Yeah.

Thank you. And once again, if you would like to ask a question, please press star, then the number one on your telephone keypad. We'll pause a moment to allow any further questions to queue. And at this time, if there are no further questions, I will now turn the call back over to management for closing remarks.

Thank you, operator. And thanks again to all our team members. Thanks to all our shareholders who have listened in. Looking forward to our next call. Have a great day.

Thank you. These thoughts conclude today's program. Thank you for your participation, and you may disconnect at any time.