Popular(US:BPOP)2024-04-23 20:39Financial Data and Key Metrics Changes - The company reported a net income of $103 million for the first quarter, which includes an additional accrual for the FDIC Special Assessment and a tax expense related to prior intercompany distributions. Excluding these items, adjusted net income would have been $135 million, compared to $140 million in the previous quarter [19][32] - The net interest margin (NIM) increased by 8 basis points to 3.16%, driven by higher average loan balances and the repricing of loans and securities in a higher interest rate environment [20][26] - Deposit balances increased by approximately $191 million, primarily due to a higher level of retail demand deposits [20] Business Line Data and Key Metrics Changes - The ending loan balance increased by $54 million during the quarter, with average loan balances increasing by $612 million driven by substantial loan activity [20] - BPPR generated loan growth of $124 million, primarily from mortgage and auto loans, while Popular Bank saw a $70 million decrease in loan balances due to commercial loan payoffs [20] - Noninterest income was $164 million, a decrease of $5 million from the previous quarter, driven by lower contingent commissions in the insurance business [32] Market Data and Key Metrics Changes - The Puerto Rico economy showed positive trends, with total employment and business activity remaining strong. Passenger traffic at San Juan International Airport increased by 12% compared to the first quarter of 2023 [23] - The hotel occupancy rate in Puerto Rico increased to 84% from 79% in March 2023, with average daily rates and RevPAR increasing by 10% and 17%, respectively [23] Company Strategy and Development Direction - The company is engaged in a companywide transformation aimed at delivering more value and services to clients and deepening relationships. This includes a new marketing campaign in Puerto Rico [22][41] - The company targets a sustainable 14% return on tangible common equity (ROTCE) by the end of 2025, with ongoing efforts to create operational efficiency and manage costs [27][41] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the economic conditions in Puerto Rico, expecting loan growth of 3% to 6% in 2024, supported by committed federal funds that will enhance economic activity [32][41] - The company anticipates continued NIM expansion throughout 2024, with net interest income expected to increase by approximately 9% to 13% from 2023 levels [32] Other Important Information - The provision for credit losses was $73 million, compared to $79 million in the previous quarter, indicating stable credit quality metrics [32][39] - The allowance for credit losses increased by $10 million to $740 million, with the ratio of ACL to loans held in portfolio remaining flat at 2.1% [39] Q&A Session Summary Question: Update on share repurchase program - Management is working on a potential announcement regarding capital actions in the second half of the year, emphasizing that any new capital actions will depend on various factors [56][60] Question: Optimal mix of money market and investment securities - The company is comfortable maintaining the current range of 45% to 50% for money market and investment securities relative to loans, but this may gradually decrease over time [46][66] Question: Update on bankruptcy proceedings - Management expressed confidence that the bankruptcy proceedings will conclude this year, although the timeline remains uncertain due to ongoing legal complexities [100][102]