Financial Data and Key Metrics Changes - Earnings per share diluted increased by 17% year-over-year, driven by a 2% growth in total core revenues [3] - Total assets grew by 8.4% to a record $12.5 billion, while core deposits increased by 5% to $9.9 billion [4] - Loans grew by 5.3% to $8.2 billion, with commercial loans now representing 43% of the loan book [4] - The efficiency ratio was reported at 56.7%, with a return on average assets of 1.81% and return on tangible average common equity at 17.2% [10] Business Line Data and Key Metrics Changes - New loan production increased by 11.5% to $2.6 billion, with commercial loans growing by 5%-6% expected in the upcoming year [4][25] - The average loan yield decreased to 7.73%, down 70 basis points due to the Fed's rate cut [11] - Non-interest expenses totaled $105 million, up $8.5 million from the previous quarter, reflecting increased professional services fees and performance bonuses [9] Market Data and Key Metrics Changes - The Puerto Rico economy is reported to be steady with a positive outlook for economic growth, supported by public reconstruction funds and private investments [16] - The company noted a 4% growth in retail customers, attributed to the success of its digital-first strategy [7] Company Strategy and Development Direction - The company is focusing on enhancing customer experience through technology and product differentiation, particularly with its Libre and Elite accounts [5][16] - There is a strategic emphasis on commercial loan growth, with plans to invest in small and mid-sized clients to support economic growth in Puerto Rico [36] - The company aims to maintain a digital-first strategy while also improving operational efficiencies through technology investments [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustainable long-term growth, citing sound credit quality and asset management [17] - The company anticipates low single-digit loan growth for the upcoming year, with a focus on stabilizing auto loans and increasing commercial loans [25][36] - Management acknowledged the competitive landscape in Puerto Rico is intensifying, particularly in deposit offerings [80] Other Important Information - The company repurchased $40 million of common shares in the fourth quarter and increased its dividend by 20% [4] - The net interest margin for 2025 was reported at 5.27%, with expectations for 2026 to range between 4.95%-5.05% [15] Q&A Session Summary Question: Can you provide additional color into the larger Puerto Rico charge-offs this quarter? - The charge-offs were a result of a sale that released $17 million in non-performing loans, which triggered charge-offs but resulted in a gain of $3.9 million [21][23] Question: What is the outlook for loan growth? - The company expects auto loans to stabilize with a projected decline of 2%-3%, while commercial loans are expected to grow by 5%-6% [25] Question: Can you provide confidence in the expense guidance for 2026? - The expense range reflects continuous investment in technology and talent, with expectations for efficiencies to materialize in 2027 and 2028 [28][30] Question: What are the strategic initiatives for 2026? - The focus will be on enhancing retail efforts and translating successful strategies from retail to commercial banking [36] Question: What is the expectation for capital return in 2026? - The company plans to continue share buybacks as a primary method of returning capital to shareholders, alongside potential dividend considerations [38][90]

Financial Data and Key Metrics Changes - Earnings per share diluted increased by 17% year-over-year, driven by a 2% growth in total core revenues [3] - Total assets grew by 8.4% to a record $12.5 billion, while core deposits increased by 5% to $9.9 billion [4] - Loans grew by 5.3% to $8.2 billion, with commercial loans now representing 43% of the loan book [4] - The efficiency ratio was reported at 56.7%, with a return on average assets of 1.81% and return on tangible common equity at 17.2% [10] Business Line Data and Key Metrics Changes - Core revenues totaled $185 million, reflecting an increase of $1.4 million, while total interest income decreased by $3 million [8] - New loan production increased by 11.5% to $2.6 billion, with average loan balances at $8 billion [11] - Wealth management revenues increased due to $2.3 million in annual insurance commission recognition [8] Market Data and Key Metrics Changes - The Puerto Rico economy is showing positive growth, with robust business activity and resilient consumer behavior [4][16] - The company reported a 4% growth in retail customers, attributed to the success of its digital-first strategy [7] Company Strategy and Development Direction - The company is focusing on enhancing customer experience through technology and product differentiation, particularly with its Libre and Elite accounts [5][16] - There is a strategic emphasis on commercial loan growth, with expectations of a 5%-6% increase in commercial loans [36] - The company aims to leverage its digital offerings to attract new customers and deepen existing relationships [5][86] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainable long-term growth of the Puerto Rican economy, supported by public reconstruction funds and private investments [16] - The company anticipates continued growth in loans and deposits, driven by its digital offerings and customer-focused strategies [14][36] - Management acknowledged the need to monitor global macroeconomic uncertainties that could impact Puerto Rico [16] Other Important Information - The company repurchased $40 million of common shares in the fourth quarter and plans to continue returning capital to shareholders through dividends and buybacks [3][15] - The net interest margin for 2025 was reported at 5.27%, with expectations for 2026 to range between 4.95%-5.05% [15] Q&A Session Summary Question: Can you provide additional color into the larger Puerto Rico charge-offs this quarter? - The charge-offs were primarily due to a sale that released $17 million in non-performing loans, which triggered charge-offs but resulted in a gain of $3.9 million [21][23] Question: What is the outlook for loan growth? - The company expects low single-digit loan growth, with commercial loans projected to increase by 5%-6% [25][36] Question: Can you provide confidence in the expense guidance for 2026? - The expense range reflects continuous investment in technology and talent, with expectations for efficiencies to materialize in 2027 and 2028 [26][30] Question: What are the strategic initiatives for 2026? - The focus will be on enhancing retail efforts and translating successful strategies to the commercial side, with an emphasis on small and mid-sized clients [36] Question: How does the competitive landscape look for deposits? - The competitive landscape is intensifying, but the company is not seeing a need for high yield responses, focusing instead on product differentiation [79][86]

Financial Data and Key Metrics Changes - The company reported diluted EPS of $1.16, a 16% increase year over year, with total core revenue rising by 5.6% [3] - Total interest income reached $200 million, up $6 million, while total interest expense increased to $45 million, up $3 million [7][8] - Net interest margin was 5.24%, down from 5.31% in the previous quarter [11] - Return on average assets was 1.69%, and return on tangible common equity was 16.39% [9] Business Line Data and Key Metrics Changes - Loans and core deposit balances increased year over year, with a particular focus on commercial loans [3] - Average loan balances were $8 billion, up nearly 2% from the second quarter, while end-of-loans held for investment totaled $8.1 billion, reflecting a 5% year-over-year increase [9][10] - Core deposits were up $287 million or 3% year over year, with average core deposits at $9.9 billion [10] Market Data and Key Metrics Changes - The Puerto Rico economy is performing well, with high levels of wages and employment, and a boost from tourism [16] - The company is seeing strong business activity in Puerto Rico, contributing to its growth outlook [3][16] Company Strategy and Development Direction - The company is pursuing a digital-first strategy, enhancing its position in banking innovation in Puerto Rico [4] - New product offerings, such as the Libre and Elite accounts, are aimed at attracting deposits from new and existing customers [5] - The company is leveraging AI to provide tailored insights to customers, enhancing customer engagement and operational efficiency [5][6] 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% [14][16] - The company remains watchful of global macroeconomic and geopolitical uncertainties but is optimistic about its growth prospects [17] - The anticipated effective tax rate for the year has been adjusted to 23.06% from a previous estimate of 24.9% [15] Other Important Information - The company repurchased $20.4 million of common shares during the quarter [3] - Credit quality remains stable, with a non-performing loan rate of 1.22% [14] Q&A Session Summary Question: Dynamics impacting deposit costs - Management indicated that higher deposit costs are driven by a strategic focus on attracting mass affluent clients through competitive rates on accounts [20][21] 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 [22][23] Question: Credit quality and charge-offs - Management clarified that recent charge-offs are idiosyncratic and not indicative of broader market issues, with a focus on managing risk within the portfolio [31][32] Question: Guidance on net interest margin - Management provided guidance for the fourth quarter net interest margin at 5.10% to 5.20%, influenced by recent Fed rate cuts [42][45] Question: Investments in AI and operational efficiencies - Management discussed ongoing investments in AI to enhance customer service and operational efficiencies, with a focus on delivering unique insights to customers [46][47] Question: Capital management priorities - Management emphasized that capital priorities include funding loan growth, share buybacks, and dividends, supported by a strong economic outlook in Puerto Rico [49][50]

Financial Data and Key Metrics Changes - The company reported diluted EPS of $1.16, a 16% increase year-over-year, with total core revenue rising by 5.6% [3] - Core revenues totaled $184 million, with total interest income at $200 million, reflecting a $6 million increase [7] - Net interest expenses were $96.5 million, up $1.7 million, while the efficiency ratio was 52% [8][9] - Return on average assets was 1.69%, and return on tangible common equity was 16.39% [9][14] Business Line Data and Key Metrics Changes - Loans and core deposit balances increased year-over-year, particularly in commercial loans, while auto loans moderated [3][10] - Average loan balances were $8 billion, up nearly 2% from the second quarter, with year-over-year loans increasing by 5% [9][10] - Core deposits were up $287 million or 3% year-over-year, with average core deposits at $9.9 billion [10][11] Market Data and Key Metrics Changes - The Puerto Rico economy is performing well, with high levels of wages and employment, and a boost from tourism [16] - The company is seeing strong business activity in Puerto Rico, with a solid commercial pipeline and credit trends [16] 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 [4][5] - The Libre and Elite accounts are designed to attract mass affluent clients, contributing to growth in core deposits and loans [16] - The company is actively pursuing share buybacks and anticipates continued growth in both retail and commercial accounts [15][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Puerto Rican economy and its impact on business growth, while remaining cautious about global macroeconomic uncertainties [16][17] - The company anticipates annual loan growth in the range of 5%-6% and expects to maintain a net interest margin within the target range [14][15] Other Important Information - The company repurchased $20.4 million of common shares during the quarter [3] - Credit quality remains stable, with a non-performing loan rate of 1.22% and a CET1 ratio of 14.13% [12][14] Q&A Session Summary Question: Dynamics impacting deposit costs - Management indicated that higher deposit costs are driven by a strategic focus on attracting mass affluent clients through the Libre and Elite accounts [20][21] Question: Outlook for commercial loan growth - Management noted a solid pipeline for commercial loans and confidence in business activity in Puerto Rico [22][23] Question: Competitive landscape for savings account deposits - The average cost for the Elite account is around 1%+, targeting mass affluent clients while focusing on deepening customer relationships [30] Question: Credit quality and charge-offs - Management discussed idiosyncratic issues in the commercial loan portfolio but expressed overall confidence in credit quality [31][32] Question: Guidance on net interest margin - Management provided guidance for Q4 net interest margin at 5.10%-5.20%, influenced by recent Fed rate cuts [41][44] Question: Investments in AI and operational efficiencies - Management highlighted ongoing investments in AI to enhance customer service and operational efficiencies [46][47] Question: Capital management priorities - The company prioritizes loan growth, share buybacks, and dividends, supported by a strong capital position [50]

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 EPS of $1.16, a 16% increase year over year, with total core revenue rising by 5.6% [3] - Total interest income reached $200 million, up $6 million, while total interest expense increased to $45 million, reflecting higher average balances of core deposits and wholesale funding [7][9] - Net interest margin was 5.24%, down from 5.31%, influenced by increased interest income from the securities portfolio and a slightly higher cost of deposits [12][14] Business Line Data and Key Metrics Changes - Core revenues totaled $184 million, driven by solid performance across key areas, with banking and financial services revenues at $29 million, a decrease of $1 million [7][8] - 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, reflecting a year-over-year increase of 5% [10][11] - Core deposit balances were $9.9 billion, up close to 1% year over year, with a cost of deposits at 1.47%, up five basis points [11][12] Market Data and Key Metrics Changes - The Puerto Rico economy is performing well, with historically high levels of wages and employment, and a boost from increased tourism [16] - The company is experiencing strong business activity in Puerto Rico, with a solid commercial pipeline and credit trends [16] Company Strategy and Development Direction - The company is focusing on a digital-first strategy, enhancing its position as a leader in banking innovation in Puerto Rico [4][6] - The introduction of innovative product offerings, such as the Libre and Elite accounts, is aimed at attracting new deposits and deepening customer relationships [5][16] - The company is leveraging AI to provide tailored insights to customers, enhancing customer engagement and operational efficiency [5][47] Management's Comments on Operating Environment and Future Outlook - Management remains watchful of global macroeconomic and geopolitical uncertainties but is optimistic about the company's growth prospects [17] - The company anticipates annual loan growth in the range of 5% to 6%, supported by a solid commercial pipeline [14][16] - The effective tax rate for the year is now expected to be 23.06%, down from a previous estimate of 24.9% [15] Other Important Information - The company repurchased $20.4 million of common shares during the quarter, reflecting strong capital growth [3][14] - Credit quality remains stable, with a non-performing loan rate of 1.22% and a CET1 ratio of 14.13% [14] Q&A Session Summary Question: Dynamics impacting deposit costs - Management indicated that higher deposit costs are driven by a strategy to attract mass affluent clients through competitive rates on the Libre and Elite accounts [20][21] Question: Outlook for commercial loan growth - Management expressed confidence in the commercial pipeline, noting solid business activity in Puerto Rico and expectations for continued growth [22][23] Question: Competitive rates for savings account deposits - The average cost for the Elite account is around 1% to 1.5%, targeting mass affluent clients while focusing on deepening customer relationships [28] Question: Credit quality and charge-offs - Management noted that recent charge-offs in the commercial portfolio are idiosyncratic and not indicative of broader market issues, with a focus on managing risk [29][30] Question: Q4 margin guidance and Fed funds assumptions - The company expects a net interest margin of 5.10% to 5.20% for Q4, factoring in anticipated Fed rate cuts [40][41] Question: Investments in AI and operational efficiencies - Management highlighted ongoing investments in AI to enhance customer value and operational efficiencies, with a focus on delivering unique insights [46][47] Question: Capital management and buyback outlook - The company plans to be more active in share buybacks, prioritizing loan growth and capital management in a favorable economic environment [49][50]