First BanCorp (FBP) Q2 2025 Earnings Call Transcript | The Motley Fool

DATE

• Tuesday, July 22, 2025, at 10 a.m. EDT

CALL PARTICIPANTS

• President and Chief Executive Officer — Aurelio Aleman
• Chief Financial Officer — Orlando Berges
• Chairman — Ramon Rodriguez

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TAKEAWAYS

• Net Income: Net income was $80 million, resulting in earnings per share of $0.50.
• Return on Assets: 1.69% return on assets, up from the prior quarter, attributed to record net interest income (GAAP) and stable asset quality.
• Net Interest Income: $215.9 million in net interest income, a $3.5 million sequential increase, including a $1.6 million benefit for an extra day.
• Net Interest Margin: 4.56% on a GAAP basis, up four basis points from last quarter; normalized margin increased eight basis points sequentially when excluding prior period nonrecurring fees.
• Pretax Pre-Provision Income: Pretax pre-provision income was up 9% compared to the prior year, slightly below the previous quarter.
• Efficiency Ratio: 50%, at the low end of the 50%-52% target range.
• Total Loan Growth: 6% annualized, led by commercial loan production in Puerto Rico and Florida.
• Deposit Change: Decline concentrated in large commercial accounts, with five customers accounting for a $120 million outflow; retail deposits remained stable.
• Allowance for Credit Losses: $248.6 million allowance for loan losses, reflecting portfolio growth and improving unemployment outlook in Puerto Rico; ratio decreased two basis points to 1.93%.
• Net Charge-Offs: Net charge-offs were $19.1 million, representing 60 basis points of average loans, down from 68 basis points in the first quarter. However, the first quarter included $2.4 million in recoveries related to a bulk sale of consumer charge-off loans; excluding that, the net charge-off rate for the first quarter would have been 76 basis points.
• Non-Performing Assets (NPA) Ratio: 0.68% of total assets, unchanged from the prior quarter.
• Operating Expenses: $123.3 million in operating expenses, flat compared to the prior quarter; guided to rise to $125-$126 million in the next couple of quarters (excluding OREO gains or losses) due to ongoing investments.
• Tax Rate Guidance: Management expects an effective tax rate of 23% for the full year 2025.
• Investment Purchases: $397 million in securities purchased at a 4.78% average yield.
• Capital Actions: $29 million in dividends declared and $28 million in share repurchases, with a remaining $100 million of buyback authorization for 2024.
• Tangible Book Value Per Share: Tangible book value per share increased 5% to $11.16; accumulated other comprehensive loss (AOCL) represents $2.69 in tangible book value.
• Technology Investments: Ongoing focus on cloud migration and digital channel expansion, supporting efficiency and customer engagement initiatives, as evidenced by an 8% annual rise in active digital customers achieved consistently over the past five years (2020 to 2025).
• Guidance: Management reiterated confidence in achieving mid-single-digit loan growth for the full year, based on current pipelines and reduced market uncertainty.

SUMMARY

First BanCorp (FBP -1.51%) reported modest sequential improvements in net interest margins on a GAAP basis, driven by asset mix optimization and disciplined funding cost management. Management emphasized that the reduction in customer deposits was mostly attributable to nonrecurring outflows from a small number of large commercial clients, while retail deposits remained stable, and customer counts increased. The company achieved sequential improvements in key credit quality indicators, while maintaining stable non-performing asset ratios (GAAP) at 0.68% and lowering charge-off rates. Operating expenses remained well controlled despite ongoing technology investments, with management reiterating its 50%-52% efficiency ratio target for future quarters and guiding to modestly higher expense levels for the coming quarters. Strategic capital deployment remained focused on shareholder returns, with ongoing share repurchases and dividends, and a clear commitment to using excess investment portfolio cash flows to support anticipated loan growth in the second half of the year.

• The company noted anticipated investment portfolio cash flows exceeding $1 billion in the second half of 2025, of which $460 million of that in the third quarter and $600 million in the fourth quarter. targeted for redeployment into loans.
• Chief Financial Officer Orlando Berges stated, “We continue to sustain the five to seven basis point pickup in the margin in each of the next quarters, as we mentioned during the first quarter call.”
• President and Chief Executive Officer Aurelio Aleman described the labor market as remaining strong and resilient in core markets.
• Aleman said the bank’s buyback program aims to deploy 100% of our annual earnings to shareholders in the form of capital actions for FY2024. Roughly $100 million of the 2024 buyback authorization remains and is expected to be executed over the next two quarters.

INDUSTRY GLOSSARY

• OREO: Other Real Estate Owned, referring to property acquired by a bank through foreclosure or similar proceedings, held for eventual sale.
• AOCL: Accumulated Other Comprehensive Loss, a component of shareholders’ equity reflecting unrealized losses on securities or other items not included in net income.
• PCE Ratio: Presumed to be Price-to-Common Equity Ratio as used in context, representing the ratio of market capitalization to common equity.
• Nonaccrual Loans: Loans on which the bank has stopped accruing interest due to uncertainty about repayment.

Full Conference Call Transcript

Aurelio Aleman: Good morning to everyone, and thanks for joining our earnings call today. As usual, I will begin with discussing our financial performance in the second quarter and then provide some high-level macro observations and also share some business highlights. We are very pleased to report another strong quarter. The financial results underscore the strength of the franchise and ability to deliver returns to our shareholders. We earned $80 million in net income, which translated into a strong return on assets of 1.69%, driven by record net interest income, solid loan production, and well-managed expense growth. Pretax pre-provision income was slightly below the prior quarter but up 9% when compared to the prior year.

More importantly, we sustained our top card file efficiency ratio at 50%, actually in the low end range of our range of 50% to 52%. Turning to the balance sheet, we were very encouraged to see commercial loan origination activity pick up during the quarter, a clear indication of a stable macro across our markets and obviously the successful execution of our teams. We grew total loans by 6% for the quarter annualized, mostly driven by strong commercial loan production in Puerto Rico and Florida. Commercial lending pipelines actually continue to be strong as we enter the second half of the year, which is crucial for our strategy.

Moving on to deposits, we did see a reduction in customer deposits during the quarter, mostly driven by frustration in a few large commercial accounts, while retail deposit accounts remain fairly stable. When we actually look at the detail of this decline, it was concentrated on very high balance, large commercial accounts. As an example, five customers accounted for $120 million of that reduction. In terms of asset quality, the environment continues stable, I will say stable to improving from a credit standpoint, with most recent metrics moving in the right direction. Recent vintages are performing better than prior vintages. Non-performing assets remained flat at 68 basis points of total assets, and net charge-offs came down during the quarter.

This highlights the benefit of prior year’s credit policy calibration and the improvement in the consumer vintages. Finally, our capital continues to build quite nicely even though we continue to execute on our capital deployment plan during the first half of the year. Consistent with the strategy that we announced year to date, we have deployed over 107% of earnings in the form of dividend buybacks and relation with drops. We definitely feel this action best suits the long-term interest of the franchise and our shareholders. So let’s turn to page five to provide some highlights on the macro. Talking about the main market, we believe the economic conditions and business activity in Puerto Rico and Florida are trending favorably.

Obviously, there are economic concerns and uncertainty around tariffs and changes in US policies. The potential effect of this represents a degree of uncertainty for both retail and commercial customers. But we continue to see investments and commitment moving forward. The labor market remains strong and resilient, reflecting the lowest unemployment rate in decades. After a few months of government transition, we’re seeing some encouraging trends in disaster relief inflow, which continue to support economic activity and infrastructure development on the island. Those projects, which we also participate in as it relates to affordable housing. In terms of the franchise, our key investments are in technology, and we continue to increase that investment to achieve long-term growth for our business.

We’re also contributing to deliver our best-in-class efficiency ratio. The franchise investment remains focused on improving our interaction with customers and providing them with a seamless experience through our multiple channels. The successful execution of our omnichannel strategy has been evidenced by the 8% annual rise in digital active customers achieved consistently over the past five years, coupled with a steady reduction in branch active customers over the same period. When we look at our strategy for the franchise, supporting economic development in our market is a main priority. Lending to both consumers and corporations.

If we break down our loan growth for the first half of the year, commercial credit demand has been very strong while residential mortgage saw a slight increase and consumer credit demand has been relatively steady. Based on current lending pipelines, reduction in broader market uncertainty, and our outlook for improving consumer health in Puerto Rico, we remain confident that we can achieve our mid-single-digit loan growth guidance for the full year. We still have half of the year to catch up. Our track record will continue to be return-focused and allocate our capital where it makes more sense to our customers and shareholders.

As we do every year, we are reviewing our capital plan and will provide an update when we report third-quarter results in October. Remember that we still have $100 million left of our 2024 buyback authorization, which we expect to opportunistically execute over the next two quarters aiming to achieve our target of deploying 100% of our annual earnings to shareholders in the form of capital actions. Thank you for your interest and support, and thanks to our colleagues for their collective achievements supporting our customers. I will now turn the call to Orlando to go over financial results in more detail. Orlando?

Orlando Berges: Good morning to everyone. As Aurelio mentioned, we had a strong second quarter, highlighted by a net income of $80 million, which is $0.50 a share. The return on assets that he mentioned increased to 1.69% and an expansion of the net interest margin to 4.56% for the quarter. The provision for the quarter decreased $4 million from $24.8 million in the first quarter, which was driven by reductions in net charge-offs in consumer net charge-offs and improvements in the macroeconomic forecast. Specifically, the projected unemployment rate in Puerto Rico, which has an impact on projected losses. The income tax expense for the quarter includes a benefit of $500,000 related to a reversal of a tax contingency accrual.

But also the effective tax rate is coming in lower based on a higher proportion of exempt income. Considering the projected consolidated income for the year, we believe that the effective tax rate for the year should be around 23%. In terms of net interest income, it increased to $215.9 million in the quarter, $3.5 million higher than last quarter. This quarter includes a $1.6 million improvement for an extra day in the quarter. However, as we discussed in the previous quarter earnings call, the net interest income for the first quarter included $1.2 million in fees on penalties collected on the early cancellation of a $74 million commercial mortgage loan. This quarter, we didn’t have anything similar to that.

On average, the commercial and construction loan portfolios grew $100 million this quarter, but yields were down four basis points to 6.67% when considering normalization of the second quarter yield. In the case of the consumer portfolios, the average balances were slightly down $2 million, basically on the unsecured lending. Auto and leasing portfolios grew $24 million on average. The yields on the overall consumer portfolios were down from 10.68% to 10.57%, in part due to a change in the mix as auto loans have a lower yield than some of the other unsecured lending portfolios. Regarding the investment securities portfolio, we’re starting to see the pickup in yields.

We saw a growth of six basis points in the quarter as we continue to reinvest the lower-yielding maturing cash flows into higher-yielding instruments. This quarter, we purchased $397 million in securities at an average yield of 4.78%. On the funding side, we completed the redemption of the remaining junior subordinated debentures and paid down at the end of the first quarter $180 million in Federal Home Loan Bank advances that were higher-cost funding. As a result, the overall cost of interest-bearing liabilities decreased $2.3 million for the quarter, and the average cost was 2.14%, which is nine basis points lower.

In the case of deposits, even though at the end of the quarter they were down, as Aurelio mentioned, on average, interest-bearing deposits, excluding brokered, were $110 million higher than last quarter. The cost of interest-bearing transaction accounts was 1.38%, which is six basis points lower than last quarter, and the cost of time deposits was 3.36%, which is three basis points lower. All of this translates into a net interest margin of 4.56%, which is four basis points higher than the 4.52% reported last quarter on a GAAP basis.

However, as we discussed in the prior earnings call, if we exclude the items I mentioned before, the fees on the loan that we canceled, the normalized margin for the first quarter was really 4.48%, thus resulting in an eight basis point sequential margin increase this quarter as compared to the first quarter. In terms of guidance, we continue to sustain the five to seven basis points pickup in the margin in each of the next quarters as we mentioned during the first quarter call. Assuming the normal flow of deposits, we’re confident we’ll be able to continue to reinvest incoming cash flows from lower-yielding securities into higher-yielding assets over the coming months and into 2026.

Investment portfolio cash flows are expected to reach just over $1 billion in the second half of 2025, about $460 million of that in the third quarter and $600 million in the fourth quarter. In terms of other income, it was $30.99 million, which is down $4.8 million versus the prior quarter, but most of the decrease was related to seasonal contingent insurance commissions we received in the first quarter and lower realized gains on the purchase of income tax credits. On the other hand, we were slightly better in service charges on deposit accounts and mortgage banking fees for the quarter. Operating expenses were $123.3 million, relatively in line with the $123 million we had last quarter.

Compensation expense was down $2.1 million, driven by bonuses and stock-based compensation that was recognized during the first quarter, and also the decrease in payroll taxes as employees reach the maximum taxable amount. On the other hand, we had an increase in credit card and debit card processing expenses due to expense reimbursements we received from the network in the first quarter. This quarter, we also had a reduction of $500,000 in the gains on OREO operations. Excluding OREO, expenses would have been about almost $124 million, which compares to $124.2 million in the first quarter. The efficiency ratio, as Aurelio mentioned, was 50%, pretty much in line with last quarter.

Expenses for the quarter were below the guidance range we had provided in the prior earnings call, but based on the expense trends for ongoing technology projects and business promotion efforts that are geared towards the second half of the year, we do expect that our base for the next couple of quarters will be closer to the guidance that we provided before, that $125 to $126 million range excluding the OREO gains or losses. The efficiency ratio, we still believe it’s going to be between that 50% to 52% range, considering the expense changes and the income changes that are being forecasted. In asset quality, NPAs decreased $1.4 million in the quarter.

We had a $2.5 million reduction in nonaccrual consumer loans and a $3 million reduction in OREO and other repossessed assets. On the other hand, we had a $4 million migration to non-performing in the commercial construction loan portfolio in the Puerto Rico region. The NPA ratio remained flat at 68 basis points of assets. Inflows to nonaccrual were $34.4 million, which is down $9 million versus the prior quarter, mostly due to a $12.6 million commercial mortgage loan that went into nonaccrual in the first quarter in Florida. Inflows for consumer and residential mortgage loans combined were down $400,000 this quarter. In general, as we mentioned before, CreditMetrics seem to be holding up well.

Loans in early delinquency registered a slight increase of about $2.8 million to $134 million, mostly in the auto portfolio. As Aurelio mentioned, we continue to monitor consumer credit closely, and we’re seeing improvement in recent vintages, which is a result of the credit policy adjustment that was done back in 2023. The allowance for the quarter increased $1.3 million to $248.6 million, mostly the allowance increased based on the growth in the commercial portfolio during the quarter. But we did have a reduction in the allowance for consumer loans, resulting from the improved unemployment rate forecast in Puerto Rico.

The ratio of the allowance, the overall allowance, decreased two basis points to 1.93%, mostly due to a six basis point reduction in the allowance for the consumer portfolio. Net charge-offs for the quarter were $19.1 million, 60 basis points of average loans, down from 68 basis points in the first quarter. But keep in mind that the first quarter net charge-offs included $2.4 million in recoveries that were related to the bulk sale of consumer charge-off loans. If we were to exclude that sale, the net charge-off for the first quarter would have been 76 basis points, so we had a 16 basis point reduction as compared to that number.

On the capital front, Aurelio commented, we executed on our capital deployment strategy during the quarter by redeeming the remaining subordinated debentures, declaring the $29 million in dividends, and repurchasing $28 million in stock. Just to clarify there, remember we had a plan of about $50 million per quarter? During the first quarter, we purchased and redeemed the $50 million of the props, but also based on the way the market was moving, we accelerated some repurchases of the second quarter amounts, and we repurchased $22 million in the first quarter. So we completed the second quarter, the $28 million, to reach the $50 million.

And on top of that, we redeemed the remaining $11 million or so of the remaining props. In terms of the tangible book value per share, it increased 5% during the quarter to $11.16. The PCE ratio expanded to 9.6%, mostly due to a $41 million increase in the fair value of the investment portfolio. So far this year, the fair value has improved $125 million. The remaining valuation allowance, AOCL, that we have on the books represents $2.69 in tangible book value and 200 basis points of the tangible common equity range. Again, we will continue to deploy our excess capital in a thoughtful manner, always looking for the best interest of the franchise and the shareholders.

This concludes our prepared remarks, and operator, please open the call for questions.

Operator: Thank you. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Brett Rabatin from Hovde Group. Your line is now open. Please go ahead.

Brett Rabatin: Hey. Good morning, gentlemen. Wanted to just make sure from a housekeeping perspective, the tax rate that you guys expected, I thought I heard 23%. Is that for the full year or was that for the back half of 2025?

Orlando Berges: For the full year, Brett. That would be the estimated effective tax rate based on the forecasted mix of exempt and taxable income and some of the other components for the year.

Brett Rabatin: Okay. If you mind, that And then We do have just one comment. Keep in mind that one of the benefits of the redemption of the props is that they were sitting at the holding company level. And the expense the interest expense there because we don’t have profit at the holding company level was really not getting any tax benefit. So that’s part of the reason we’re getting some of the effective tax rate improvements.

Brett Rabatin: Okay. That’s helpful. And then just the comments on the deposit, decline that seemed to be kind of high net worth or commercial, Any additional color there? Do you think that migration has run its course? Or can you give us any other color around, you know, what you’re seeing on larger deposits? You know, there is a you know, there’s a lot of know, moving parts primarily it’s really recurring business purpose, actually capital investments. There’s some tax payments that took place. There is even settlements. You know, there’s significant number of those balances that we saw this quarter, we believe, are nonrecurring in nature. And there’s some there’s some, you know, high yielding seeking behaviors too.

In that, you know, very high balances segment. So you know, but, you know, when you look at it, it was highly concentrated As I mentioned, you know, top five customers represent a hundred and twenty percent, and, you know, 25 customers, the overall variance is around 25 customer overall. So in front of the commercial segment itself. So on the retail side, you know, very stable. Net, you know, net customers are growing and net accounts are growing. Which is an important metric that we that we follow.

Brett Rabatin: Okay. And then just on credit, I mean, credit, you know, outside of the you know, kind of the consumer you know, is just really, really good. Would you guys expect the level of charge-offs to increase from here, or is or do you think this is a sustainable level? For the overall portfolio?

Aurelio Aleman: Is you know, we believe it’s sustainable to improving. The trend on the charger for the consumer portfolios.

Brett Rabatin: Okay. Great. Thanks. Appreciate all the color, guys.

Aurelio Aleman: Thank you. Thanks, Brett.

Operator: Thank you. Our next question comes from Timur Braziler from Wells Fargo. Your line is now open. Please go ahead.

Timur Braziler: Hi. Good morning. We’re back on the back on the deposit commentary, I think last quarter, the comments were that the deposit stability you’re seeing more deposit stability versus the last couple of years. Were these outflows surprising? Is this kind of excess liquidity that you’re expecting to leave at some point, and it just culminated in 2Q? And then the comment on to 25 customers overall, is that the total in this larger commercial segment, or is that the total that made up the composition of the 2Q decline?

Aurelio Aleman: No. It’s it’s the total that made it the composition of the decline. We have a lot more customers on that segment. It’s just, you know, top customers that show variances altogether. You know, some of them were surprised because of the movement took place, but, you know, some of them are just, you know, know, recurring business purposes that it just you know, a lot of things that happen in the same time in the same quarter. Also, tax events of tax payments on the April due We saw some of that We believe, you know, most of them are not recurring.

But, obviously, you combine that with, you know, the higher pronged rates, you know, that high yielding behavior long as rates are high, that high yielding behavior will continue. And we do have we do have, you know, certain parameters up to which point we compete also.

Timur Braziler: Got it. And I guess as we look into 3Q specifically with your comments around maintaining the mid single digit loan guide that implies some accelerating on the loan growth front. If I’m not mistaken, I think 3Q is a little bit more challenging from a deposit standpoint from seasonality. Can you just give us some parameters on what the expectation is internally for funding the second half loan growth?

Orlando Berges: You know, the second half, we’ve we believe stability you know, that we’re gonna achieve a stability in the deposit. There’s again, there’s some, you know, deltas on the government side that are difficult to predict When they come in and out, there’s some variances you know, sometimes on the government accounts, on the large accounts. Money flowing in and flowing out. Terms of the most some of the, you know, payments that come in from different funds. So You know? No tax, delta should happen in the second half or minimum?

You know, we will say, you know, stability, obviously, a lot of the liquidity that you’re gonna see coming in the second half, it’s you know, Orlando may mentioned, is more than a billion dollars. From the cash flows on the investment portfolios. That the primary objective is to deploy that in loans, not necessarily securities. But the excess will go back to securities.

Timur Braziler: Got it. Okay. That’s good color. And then just lastly for me on the loan growth a good start to the year out of the mainland. Just the composition that you’re expecting in the second half of the year, is that gonna be more so from Puerto Rico on the commercial side, or is the expectation still up here that the mainland is gonna drive much of the near term loan growth?

Aurelio Aleman: It’s a combination. It’s a combination. Florida will continue to contribute you know, as well as, you know, the Puerto Rico commercial sector is where we see of the growth. Stability on the consumer, and actually some growth in the in the red residential mortgage we have already have achieved on this year.

Timur Braziler: Great. Thanks for the call.

Orlando Berges: Okay.

Operator: Thank you. Our next question comes from Steve Moss from Raymond James. Line is now open. Please go ahead.

Chase: Hey. This is Chase on for Steve. Good morning.

Orlando Berges: Good morning.

Chase: So first, was curious where loan yields have been coming in these days.

Orlando Berges: You could you could you repeat that question? We couldn’t hear you well.

Chase: Oh, sorry. Just curious where loan yields have been coming in these days.

Orlando Berges: Well, as I was saying, if you look at the yields on the C and I portfolio, came down four basis points. The yield on the on the consumer portfolios are very much similar. The difference has been more than anything the change on mix As you know, credit cards are based out of Prime, personal loans, We have two components, typical unsecured personal loans and that thirteen percent range and beyond the small loans under special legislation in Puerto Rico are closer to the thirty percent The auto portfolio, it’s on the eight percent range. So we’ve seen some reductions on the commercial side, not so much on the on the consumer side.

And mortgage, it’s a it’s a market function. It’s similar to what you see in the states that we’re seeing that you know, six and a half to six and three quarter kind of deals that in general. Depending on the type of product.

Chase: Gotcha. Thanks for that color. And one last one for me. How much room do you think there is to continue pushing down funding costs and do you expect to pay down your remaining SHLB advances as they mature?

Orlando Berges: See, I mean, the there are there are few components. What we have in broker deposits that we used to fund the Florida operation, or part of the Florida operation. Though those will continue to come down as the market is lower than what some of the things have matured. Time deposits, there’s a little bit of space but it’s coming as it’s been coming down, clearly, rates staying at this level consistently will stop that a little bit. The Fed on hold loan bank advances would be a function of needs at the time and funding time frames management. As you saw, we paid down the one hundred and eighty million in the first quarter.

We didn’t need the funding with the cash flows coming in from the investment portfolio. We might have some opportunities. So I so there is there is some opportunities. In reality, the Federal Home Loan Bank advances the what matures in within the next three months, it’s only thirty million. So we’ll probably, you know, pay those down. But there’s about ninety million on the six months to a year time frame that we’ll see based on the on the funding mix. But, yeah, the idea is to get those costs down eliminating some of it or just repricing some of it.

Chase: Alright. Thank you, my caller. That’s all my questions. Thank you so much.

Orlando Berges: Thanks.

Operator: Thank you. Our next question comes from Kelly Motta from KBW. Your line is now open. Please go ahead.

Kelly Motta: Hey. Good morning. Thanks for the question. I think maybe going back to the loan growth in the mid single digits, you guys had some nice loan growth this quarter. It looks like, as you called out, a lot of it was in commercial and C&I. Just wondering if you were seeing any changes in the utilization rate and in terms of the loan growth in the back half of the year, how your expectations are do you feel better about it than you did maybe the same time three months ago?

Just wondering kind of your overall level of confidence in the mid single-digit loan growth and kind of any utilization rate factors that we should be considering here.

Aurelio Aleman: You know, I can tell you, you know, the pipeline looks pretty good. We will look at it today. Actually, a little better when we look at it at the beginning of this year. The end of the last year. So from that standpoint, we’re, you know, pretty confident on the continuous, you know, movement of that pipeline into closing. Regarding my utilization, I don’t have you know, the data. I don’t wanna you know, just do it from the top of my head. You know, we can get back to you on that or the overall, you know, in our investor presentation when we update.

Kelly Motta: Got it. That’s that’s helpful. And then just on a on a high level on the efficiency, continue to kinda target that, I think, 52% efficiency ratio. And for the past several quarters now, you’ve been coming in quite below that. As we look ahead to next year, are there any significant investments in technology or things you’re you’re looking at to you know, drive longer term efficiencies that we should be considering when building out a longer term expense run rate here?

Orlando Berges: Well, you know, we’ve been doing we’re making those investments for some time, and those will continue. I think we provide some highlights earlier in the year of, you know, competing important steps in our cloud migration, and eliminating the mainframe that existed in Puerto Rico in the first quarter as an example. The adoption of cloud based technology, the movement of everything that we still have in the open environment here will continue. You know, investment in additional, you know, self-service tools and functionality in the applications, the digital applications across different businesses and products, including mortgage auto and deposits. Will continue. You know, it’s it’s been it’s been a significant amount of the expense base for some time.

So it will continue to be a you know, some obviously, process automation-related as the new tools bring, you know, some AI components into it. So I will say, you know, you know, we don’t expect a big peak of those because we continue to sustain, you know, the levels that we’ve been doing, been very active in those investments. Like last year, Dencino platform implementation was one of them. Some of the process automation and the risk management, you know, tools.

Kelly Motta: Got it. Thanks so much. I’ll step back.

Orlando Berges: Thanks, Kelly. Thanks.

Operator: Thank you. We currently have no further questions, so I’ll hand back to Ramon Rodriguez for closing remarks.

Ramon Rodriguez: Thanks to everyone for participating in today’s call. We will be attending Raymond James Financial Services Conference in Chicago on September 3. We look forward to seeing a number of you at this event. We greatly appreciate your continued support. Have a great day, and thank you.

Aurelio Aleman: Thank you all.

Operator: This concludes today’s call. Thank you for joining. You may now disconnect your lines.