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 - 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]