Hello, everyone. Good morning, and welcome to the First BanCorp's 3Q 2021 Financial Results Call. My name is Emily, and I'll be coordinating the call today. All participants are currently in a listen-only state; however, during the presentation, you'll have the opportunity to ask a question [Operator Instructions] I now have the pleasure of handing the call over to today's host, Ramon Rodriguez. Ramon, please go ahead.

Thank you, Emily. Good morning, everyone. Thank you for joining First BanCorp's conference call and webcast to discuss the company's financial results for the third quarter of 2021. Joining you today from First BanCorp are Aurelio Alemán, President and Chief Executive Officer; and Orlando Berges, Executive Vice President and Chief Financial Officer. Before we begin today's call, it is my responsibility to inform you that this call may involve certain forward-looking statements such as projections of revenue, earnings and capital structure, as well as statements on the plans and objectives of the company's business. The company's actual results could differ materially from the forward-looking statements made due to the important factors described in the company's latest SEC filings. The company assumes no obligation to update any forward-looking statements made during the call. If anyone does not already have a copy of the webcast presentation or press release, you can access them at our Web site, at 1firstbank.com. At this time, I'd like to turn the call over to our CEO, Aurelio Alemán. Aurelio Alemán: Thank you, Ramon. Good morning, everyone, and thanks for joining us today. Please, let's move to slide four of the presentation for covering some highlights. It was a very strong quarter for First BanCorp, I will say, both in terms of financial performance and operational progress. I would like to cover the operational highlights before discussing our financial results. As planned, during the quarter, we completed the integration of the [acquired] (ph) operations and all remaining systems conversions. I have to say that lots of resources and management time was required to achieve this important milestone on time and on budget, which is also important. I would like to thank all my colleagues involved in the integration for completing this very complex process, actually in less…

Good morning, everyone. Aurelio, did provide some details, but I'll cover some other items here. Again, not to be repetitive, but as he mentioned, net income for the quarter was $75.7 million, which is $0.36 a share compared to $0.33 a share last quarter of 2021 with $70 million. Credit quality components continue to behave extremely well for the quarter, and as Aurelio also mentioned the projected macroeconomic variables have also continued to show improvements. As a result, we had a net benefit of $12.1 million in the provision for credit losses, which is lower than the $26.2 million we had last quarter, but still a benefit. The after tax benefit on the provision it's approximately $0.04 per share, last quarter was about $0.08 per share. Another significant component of results for the quarter was also as Aurelio mentioned the completion in July of the last pending system conversion. This resulted in reduction in merger and restructuring costs to $2.3 million from what we had last quarter, which was $11 million. If we look at net interest income was basically similar to last quarter $184.7 million. Our margin was down to 360 from 381, most of it has to do with a mix of interest earning assets that has led to this reduction. If we look at the components on a GAAP basis the combined deal on the loan portfolio was 633 for the quarter, which is very similar to 634 we have last quarter. Our loans are now 55% of average earning assets compared to 59% last quarter. Money market and investment securities on the other hand now represent 45% of average earning assets versus 41% last quarter. The yield on this instrument is slightly down from 96 basis points in the second quarter to 92 basis points now.…

Thank you. [Operator Instructions] Our first question today comes from Alex Twerdahl from Piper Sandler. Alex, your line is now open.

Thank you. Good morning, guys. Aurelio Alemán: Morning, Alex.

First off, wanted to hone in a little bit on the comment you made, Aurelio, in your prepared remarks, that credit demand is picking up, and you expect that to continue. If you can give us a little bit more specifics, I guess, I'm assuming you're talking mostly about commercial and maybe also construction. But maybe if you can give us some sort of -- just a little bit more to go on in terms of what you mean by that commentary? Aurelio Alemán: All right, when you -- obviously, liquidity in the consumer also started to subside a bit. And when you look at personal consumer loans and credit cards, we're seeing over recent months, including September, better activity. Also, when you look at the pipeline of small loans, that that actually is improving, and I have to say that the [pipeline] (ph) on the commercial side, including construction, it's also continued to show improvement. As you know, it takes time from pipeline to closing, but if I have to, say, compare the pipeline to where we were in the first quarter, we are, overall, in a better place in all the commercial products itself. Order continue very strong, and I think that's, obviously -- even with the challenges on the inventory, obviously, we have a very focused strategy, and like we had before. And we have been achieving portfolio growth and market share growth in that business for a couple of years now, that we expect that to continue to be the case based on how we're running the business and how we're executing our strategy. And then, when you look at mortgages, that that, obviously, it's two important components, rates, which drive the refinancing volume which are still high and should start to come down as long-term rates move up. But on the other hand, it's really our strategy to continue to focus on the origination side, on the conforming. I have to say that the prepayment of mortgages is higher than we estimated when you look at the year numbers, which also contributed to some of the contraction of our loan portfolio, but, in general, a lot going on, a lot of new investments, new investors coming into the market. So, we feel very optimistic that that would translate into loan demand.

That's great. I guess two more questions, kind of related. One, in terms of line utilizations, I think last time we spoke they were running well below normalized levels. Have you seen -- starting to see those pick up or any indication that those would be picking up any time soon? Aurelio Alemán: Some of it happened late in the quarter, but not a lot, but it started to pick up.

Okay, and then the other -- Aurelio Alemán: I think the wildcard is the other -- the wildcard is the liquidity, how much -- we're really monitoring how the liquidity is moving. Our focus is not in government deposits, it's really in the core businesses. So, we're doing -- dedicating a lot of time to make sure that we monitor individual clients, different type of products on the deposit front so we get a better forecast of when liquidity, overall, will subside or not. And then there is also a lot of funds coming into the construction sector which will capture some of those too, yes.

Great. And then the other piece is the paydowns, which are still elevated, and I know there are some large paydowns, but that worked against your origination volume this quarter. Do you have any line of sight on to any larger paydowns that are coming in the next couple months? Aurelio Alemán: No, we monitor refinance, that, obviously, some of that also is part of the corporate portfolio that we have in Florida of participation, so the refi activity -- is linked to the refi activity and the rates. I think the more the rates continue to move up the less paydowns and the less refinancing activity we will see in the commercial market. That that's definitely -- is a reduction versus what we had in the first two quarters, when you look at the paydowns that we had in the third quarter, yes. And we don't have anything on the horizon that we say could come in this quarter, to be honest with you. I don't -- but then, sometimes they come as a surprise too. So, to be realistic -- have to be realistic.

Okay, perfect. And then switching gears a little bit to the bankruptcy and sort of the macro. We've seen some headlines; I think the senate has postponed their vote on the new debt until tomorrow. I was wondering if you just had any line of sight or any more information on to how close the senate vote was or anything else you can kind of give us in terms of what here to go off of other than the headlines on the expectations for the bankruptcy? Aurelio Alemán: Well now, there was a lot of local articles over the weekend. Obviously, there is no perfect deal when you're dealing with bankruptcy. But I think this is a balanced deal. This is a balanced deal that everybody have time to negotiate, put their views. We know there is an important hearing today with all members of executive and also legislative and the fiscal board with the judge. So, I have to say that we're optimistic that this should move forward, and we think it's a balanced deal for -- and is a great milestone if Puerto Rico could achieve this in the short-term. And would probably be -- it's the closest we've been with all the parties dedicating their time, focus, and effort in making efforts to get it done. So, I think everyone here is trying to get it done; it's just, obviously, different views on how much goes where, and how much it costs to the different entities involved in this very complex negotiation. So, I have to say that we haven't seen it closer to where it is today, and that's why we feel optimistic about it.

Great, thanks. And just a final question for me just on capital, as I think about the amount or the sort of the pace of capital deployment via the buyback, you saw $100 million in the second quarter, $50 million in the third. Going into the fourth quarter, I guess two questions. One is how should we think about the pace of capital deployment via the buyback? And as part of that, is the preferred redemption, does that count towards the overall capital deployment plan such that we could see a much lower level of buyback in the fourth quarter as a result of that $36 million being used towards the preferred redemption? Aurelio Alemán: Yes, the first -- I'm going to answer the first. Yes, when we announced the buyback, we did included the $36 million as part of the $300 million, that's -- answers that question. Our goal this quarter is to try to reach $250 million of the overall $300 million, that's our goal. And then, obviously, we'll move from there. But that's our goal this quarter. So, you will include the $36 million plus another $60 million-something. Yes, that's our goal.

Great. Thank you for taking our questions. Aurelio Alemán: Thank you, Alex.

We currently have no further questions, so this now concludes today's call. Thank you, everyone, very much for joining us today. And you may now disconnect your lines.

Thank you. Aurelio Alemán: Thank you.