Financial Data and Key Metrics Changes - Earnings per share diluted increased to $1.16, up 16% year over year, with total core revenue rising by 5.6% [4] - Total interest income reached $200 million, an increase of $6 million, primarily due to higher loan and investment balances [11] - Total interest expense rose to $45 million, up $3 million, reflecting higher average balances of core deposits and wholesale funding [12] - Tangible book value was reported at $28.92 per share, with an efficiency ratio of 52% [13] - Return on average assets was 1.69%, and return on tangible common equity was 16.39% [13] Business Line Data and Key Metrics Changes - Loans and core deposit balances increased year over year, with a particular focus on commercial loans [4] - Average loan balances were $8 billion, up nearly 2% from the second quarter, while end-of-period loans held for investment totaled $8.1 billion [14] - Core deposits increased by $287 million or 3% year over year, with average core deposits at $9.9 billion [16] Market Data and Key Metrics Changes - The Puerto Rico economy is performing well, with high levels of wages and employment, and solid consumer and business liquidity [25] - The company is experiencing growth in digital banking, with digital enrollment up 8% and net new customer growth at 4.6% [6] Company Strategy and Development Direction - The company is focusing on a digital-first strategy, enhancing customer engagement through innovative product offerings and AI-driven insights [6][8] - The introduction of the Liberty and Elite accounts has successfully attracted deposits from new and existing customers [7] - The company aims to continue growing its market share in retail deposits and commercial lending [9][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the commercial pipeline and credit trends, anticipating annual loan growth of 5% to 6% [22] - The company remains watchful of global macroeconomic and geopolitical uncertainties but is optimistic about the Puerto Rican economy [26] - The anticipated effective tax rate for the year has been adjusted to 23.06% from a previous estimate of 24.99% [23] Other Important Information - The company repurchased $20.4 million of common shares during the quarter [5] - Credit quality remains stable, with a provision for credit losses of $28.3 million [19] - The company is actively investing in technology and AI to improve operational efficiency [61] Q&A Session Summary Question: Dynamics impacting deposit costs - Management indicated that higher deposit costs are driven by strategic positioning to attract mass affluent clients through the Elite account, which offers higher rates [31][32] Question: Outlook for commercial loan growth - Management noted that while there were paydowns on lines of credit, the commercial pipeline remains solid, with confidence in future growth [33][34] Question: Credit quality concerns - Management reassured that the recent charge-offs are idiosyncratic and not indicative of broader market issues, with a focus on managing risk within the portfolio [45][46] Question: Auto loan trends - Management acknowledged a seasonal increase in charge-offs but expressed optimism about the overall credit quality and growth in auto lending [50][49] Question: Margin guidance and Fed funds assumptions - Management discussed expectations for margin guidance in the fourth quarter, factoring in potential Fed rate cuts [58][60] Question: Investments in AI and operational efficiencies - Management highlighted ongoing investments in AI to enhance customer service and operational efficiencies, with a focus on delivering unique insights to customers [62][63] Question: Capital management priorities - Management outlined capital priorities, emphasizing loan growth, share buybacks, and dividends as key focuses moving forward [66]

Financial Data and Key Metrics Changes - The company reported diluted earnings per share of $1, driven by strong operating execution and loan and deposit growth [4] - Core revenues totaled $178 million, with total interest income at $189 million, reflecting a decline of $941,941 due to two fewer business days [9] - Total interest expense decreased to $40 million, down $874,000, primarily due to the same two fewer business days [10] - The efficiency ratio was 52.42%, return on average assets was 1.56%, and return on tangible common equity was 15.28% [12] Business Line Data and Key Metrics Changes - Average loan balances were $7.8 billion, up nearly 1%, with loans held for investment totaling $7.9 billion, up 44.2% year-over-year [13] - New loan origination was $559 million, down 9.3% from the fourth quarter but up 4.2% year-over-year [14] - Average core deposits were $9.6 billion, up nearly 1%, with end-of-period balances increasing by $308 million or 3.3% quarter-over-quarter [15] Market Data and Key Metrics Changes - The company experienced a 12% year-over-year growth in digital enrollment and a 21% increase in digital loan payments [6] - The net charge-off rate was 1.05%, up 23 basis points sequentially, with consumer net charge-off ratio increasing to 4.34% [19][20] Company Strategy and Development Direction - The company continues to invest in technology through a digital-first strategy, enhancing customer relationships and operational efficiency [5][25] - The management emphasized the importance of adapting to the economic environment in Puerto Rico, with a focus on consumer credit trends and maintaining a strong balance sheet [24][25] Management's Comments on Operating Environment and Future Outlook - The management noted that while the business environment in Puerto Rico is positive, there are concerns about macroeconomic and geopolitical volatility impacting the economy [24] - The company is committed to methodically executing its business plan and supporting clients and communities [25] Other Important Information - The company bought back $23.4 million of shares and raised its dividend by 20% during the quarter [12] - The CET1 ratio was 14.27%, indicating a strong capital position [21] Q&A Session Summary Question: Digital channel deposit account openings - The company confirmed that approximately 25% to 26% of checking accounts and certificates of deposits are opened through digital channels [32] Question: Deposit growth and seasonality - The management acknowledged that the first quarter has seasonal components affecting deposits, including tax refunds [34] Question: Consumer charge-offs normalization - The Chief Risk Officer indicated expectations for stabilization in consumer charge-offs, particularly in the auto portfolio [42] Question: Bond book duration and cash flow - The duration of the bond book is around five to six years, with repayments of $84 million this quarter [49] Question: Margin trajectory - The management expects the net interest margin to remain in the range of 5.3% to 5.4% for the year, depending on funding side dynamics [50] Question: Competitive environment in Puerto Rico - The management noted that competition remains high, but they are pleased with core performance in deposits [79] Question: Onshoring opportunities in pharmaceuticals - The management expressed optimism about potential onshoring opportunities for pharmaceuticals but noted it is too early to see significant movement [82]