Popular(BPOP) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net income of $210 million and EPS of $3.09 per share, an increase of $32 million and $0.53 per share respectively compared to the first quarter [6][14] - The return on tangible common equity improved to 13.3%, an increase of 190 basis points from the previous quarter [14][15] - Net interest income increased by $26 million to $632 million, driven by balance sheet growth and lower deposit costs [16][19] Business Line Data and Key Metrics Changes - Loan growth exceeded $900 million during the quarter, with significant contributions from commercial and construction lending [7][18] - Mortgage balances increased by $158 million, while auto loan and lease balances rose by $76 million [9] - Non-interest income was $168 million, an increase of $16 million compared to Q1, driven by higher transaction activity [22] Market Data and Key Metrics Changes - The unemployment rate in Puerto Rico remained low at 5.5%, with consumer spending showing resilience [8] - Combined credit and debit card sales for Banco Popular customers increased by approximately 4% compared to the same quarter last year [8] - The tourism sector is expected to generate approximately $200 million in additional local economic activity due to a major concert event [9][10] Company Strategy and Development Direction - The company announced a new common stock repurchase program of up to $500 million and a 7% increase in its quarterly dividend to $0.75 per share, reflecting a strong capital position [6] - Ongoing transformation efforts aim to enhance customer experiences, modernize technology, and drive sustainable growth [11][12] - The company is focused on maintaining its market position and promoting economic progress in Puerto Rico [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in growth opportunities in Puerto Rico, supported by federal disaster recovery funds [10][11] - The company expects to exceed a 12% return on tangible common equity for the full year, driven by improved credit outlook and net interest income [15] - Credit quality metrics improved, with lower non-performing loans and charge-offs, indicating a strong risk profile [28][34] Other Important Information - Total operating expenses increased by $22 million to $493 million, with personnel costs being the largest contributor [23] - The company repurchased approximately $112 million in shares during the quarter, with $33 million remaining on the previous repurchase authorization [27] Q&A Session Summary Question: Impact of stablecoins on Popular's business - Management is exploring potential use cases for stablecoins following the approval of the Genius Act, acknowledging its future impact on the industry [40][41] Question: Profit sharing accruals and revenue guidance - The profit sharing accrual of $13 million is based on exceeding budgeted net income by at least 3%, with expectations to reach the maximum cap of $40 million if performance continues [43][44] Question: Deposit competition and seasonality - Management noted increased competition for commercial deposits but emphasized their focus on deposit retention strategies [47][49] Question: Loan growth and federal stimulus impact - The company is seeing deployment of federal funds in Puerto Rico and expects more projects to be announced soon [70][71] Question: Fee income guidance and trends - Management indicated that second and fourth quarters typically see higher transactional activity, with updated guidance reflecting steady trends [72][74] Question: Capital and buyback pace - The current pace of share buybacks is considered reasonable, with management finding the share price attractive [76]